Don’t tell me America needs innovation and then act like don’t bother us – we’re doing it as planned even when it isn’t working – about crude oil spewing into the Gulf of Mexico

My Note -

I sent this (email immediately below) to bloomberg and cnn – just to feel better about it. I don’t expect they will read it, however – I think the answers that could work which I found yesterday and those other people are offering need to get on the menu for the recovery team decision-makers in the Gulf – so after emailing this, I’m looking up the University of Mississippi, engineering dept.

- cricketdiane, 05-01-10

***

Do you know -

What is this process? Why did they drill and then cap a producing well? Are they running around the Gulf, drilling and then capping rather than pumping it to harvest the crude? How do they place  a “cement” cap 5000 feet underwater?

And – there was a senior editor from PopSci on bloomberg just now who explained that the companies, and engineers in the Gulf are going to do the plan as planned without trying anything else in the interim. Not only was his attitude really shitty, for lack of a better word – we can see already what there “plans” are producing and burning off 100 gallons at a time where 210,000 gallons per day are pouring into the Gulf waters is a sad note in the history of engineering and innovation in America.

Just wanted to say – notwithstanding Mr. Bjorn Carey being very informative, his patronizing and exclusionary attitude about solutions which could work long before the ones they are using or planning to use – is unacceptable. Is that also the attitude shared by the oil companies, recovery companies, engineer teams in the area and others making the decisions about fixing the problem? Is there any way they could have some other choices on their menu or are we to watch them continue for five weeks or three months to destroy the economies and wealth of the sea throughout the Gulf Coast and Gulf of Mexico. How about finding out -

Thanks,
cricketdiane

***

The University of Mississippi, School of Engineering -

http://www.engineering.olemiss.edu/

(I’ll  track this on my blog as I do it – )

Go to

Alumni & Friends

Go to

Engineering Publications

http://www.engineering.olemiss.edu/alumni/olemiss_engineer/

Go to -

(get a cup of coffee – this is going to take awhile)

spring 2009 (at bottom of list)

go to page (2)

It says -

From the Dean’s Office

call them..

***

Go To

Faculty & Staff (on bar under logo)

- although there is a comments and suggestions email link at the bottom of the page, it is most likely a webmaster and may or may not get anything to the department. Use it or don’t – these are not generally checked regularly and immediately.

under the list for faculty & staff

Go to

Civil Engineering

Dr. Douglas Shields, Jr.

(click on their name to double check that they are appropriate – they are)

and

Dr. Madhu Rao Suryadevara

(email them)

be honest and forthright about concerns – don’t dick around with this, it is too important. They might be able to access the teams out in the Gulf and they might not but at the very least they know what is happening there, the danger it poses and are aware of the engineering that would be involved in whatever you are suggesting as solutions. (my note to others who might be intending to offer solutions to teams in the Gulf to clean up the oil, recover the oil, cap the oil, or stop the continuing introduction of spewing oil from these subsea pipes. – Don’t expect a response from these sources, and don’t expect to stop at that point if you have any idea that could work.)

***

Go to

Texas A & M – engineering and physics departments

google search offers first on the list -

department of engineering physics – but it isn’t directly a Texas A & M page

Go to it

In the list at the bottom of the page – see Graduate Study – Texas A & M

see – Hydrology

see – Other Engineering Fields

Down the page – Note

Tarleton State University

and

ABET (American Board of Engineering and Technology)

find them

***

Go back to google search using terms -

Texas A & M – engineering and physics departments

choose second or third entry that has in the web address (http) the word

“tamiu”

go to it

Department of Engineering, Mathematics and Physics

http://www.tamiu.edu/coas/depts/dmps/

Go to middle bar link – “Professional Links”

Click “Society for Industrial and Applied Mathematics”

Click left bar link – “About SIAM”

Go to

Officers, Board and Council (SIAM)

http://www.siam.org/about/board.php

Go to (on separate tab)

ABET (American Board of Engineering and Technology)

http://www.abet.org/

Go to (on separate tab or window)

Society of Civil Engineers

http://www.asce.org/

***

listening to General Honore right now on CNN – and he’s right, we need something done right now (2.48 pm) – thanks, Ali Velshi and producers at CNN

Northern Command has deployed a forward command Brig Gen Bosilica? with national guard – who is making the engineering decisions?

***

On page of officers, board and council (SIAM)

see – Morgot Gerritsen

Department of Energy Resources Engineering

School of Earth Sciences (Stanford University)

- although this listing is on the “Society for Industrial and Applied Mathematics” website

email her and anybody else that might be appropriate on this list or email them all – only with ideas, information and request that they will help to manage the engineering solutions available to the teams in the Gulf who are making those decisions – do not expect any money, do not expect any fame, and damn sure don’t expect anybody to acknowledge your idea, is your goal to help or for something else? – if it is something else – don’t do it this way . . .

- cricketdiane

***

Go to – (open tab with Society of Civil Engineers)

http://www.asce.org/

Go to “Professional Development”

Conferences (in middle of page)

http://www.asce.org/AggregateContent.aspx?id=761

**

Go to – righthand side of page – blogs

http://www.asce.org/Content.aspx?id=2147486078

President’s Blog

Bridging the Gap — A Young Engineer’s Perspective

Talk About Civil Engineering

Our Failing Infrastructure: Government Relations Blog

Leadership and Management in Engineering

interact here – with these above

fuss here – with this one – but don’t cuss -

Coastal Solutions

***

Go back to Texas A & M Department of Engineering, Mathematics and Physics

Click Faculty/Staff in left sidebar – Click “Faculty Senate”

(and)

Go to

ABET (open in tab)

http://www.abet.org/

they are an accreditation team for engineering programs in universities, but look who is here -

(by the way, this stuff really matters to them, so do not treat them with contempt – they are just like us, but they really care about what they do and what engineering means to the public safety, well-being and the critical nature of engineering to all of us.)

Click Workshops, Webinar and IDEAL on left sidebar -

Go to entry

Faculty Workshop on Sustainable Assessment Processes

Get this from middle of the page –

About the Workshop Leader

The leader of this workshop is Gloria Rogers, Ph.D., who has been active in disseminating information on program improvement and institutional effectiveness for 20 years. She has authored or co-authored over 30 publications, made over 80 invited presentations and seminars at national and regional conferences, and given presentations or workshops on over 90 college campuses, 23 of which were outside U.S. borders. She has also served as an external evaluator on 17 NSF-funded projects and currently serves on advisory committees for the National Science Foundation, American Association of Colleges & Universities, and Southern Association of Colleges and Schools. Rogers is currently the Managing Director, Professional Services, at ABET. (note this)

Go to

Gloria Rogers Launches New Program Assessment Blog

(from right sidebar)

**

Note -

Governor Bobby Jindal is currently in a press gig on CNN describing the efforts being made. Do not email the Governors’ offices in these states – they are very, very busy and do not have any ability to facilitate possible solutions any one bit different from what is already being done. They are making other arrangements right now and cannot afford to be flooded with extra crap.

- cricketdiane

***

On

Go back to Texas A & M Department of Engineering, Mathematics and Physics

Click Faculty/Staff in left sidebar – Click “Faculty Senate”

Dr. Arturo Limon -

email Senate president about concerns and ask if there are efforts underway by Texas A&M – president of faculty senate at Texas A&M is -

Dr. William W. Riggs

(and click on past presidents – copy entire list)

***

Secretary Salazar is now on CNN – amazing man – very intelligent and genuinely cares about what is happening in the Gulf 3.24 pm – CNN Live

I’m glad he’s on the team working to fix this

- cricketdiane

**

Go back to Texas A & M Department of Engineering, Mathematics and Physics

at the middle bar – click on faculty and staff

http://www.tamiu.edu/coas/depts/dmps/profile_master/index.shtml

see – list

Professor and Chair
Dr. Rafic A. Bachnak

Dr. Juan Homero Hinojosa, Professor of Physics

Dr. Young-Man Kim, visiting Assistant Professor of Engineering

Dr. Chen-Han Sung, Professor of Mathematics, Computer Science and Industrial Engineering

email them – (alumni pages will have other member of the engineering teams of faculties and current professionals, graduates and others that are concerned who could possibly get placement of solutions by interacting with engineering teams and academics in the area with the Gulf oil spill currently ongoing.)

***

(also)

from ABET site -

Click “Washington Accord” in text

http://www.washingtonaccord.org/

International Engineering Accords

There are six international agreements governing mutual recognition of engineering qualifications and professional competence.

View the complete Engineering Technologist Mobility Forum Agreement in PDF Format.To view a list of other ETMF documents click here.

The agreement

As a result of an agreement by the Sydney Accord signatories to explore mutual recognition for experienced engineering technologists, representatives of the engineering profession in each of the signatories to the Sydney Accord met in Sydney in November 1999, and Thornybush South Africa in June 2001.

http://www.washingtonaccord.org/ETMF/

See Members on left sidebar

Online Registers

(found here)

http://www.washingtonaccord.org/ETMF/signatories.cfm

***

Go to

IEA Interim Meetings 2010 (on left sidebar)

of Washington Accord page at

http://www.washingtonaccord.org/ETMF/

which will go here -

http://www.washingtonaccord.org/IEAM2010.cfm

yielding this – (email with specific request that Intnl Engineering members be brought into the solutions side of this situation in the Gulf, please. They may or may not include it in their concerns but it won’t be because they don’t know they were invited to participate in creating workable solutions that can be used.)

secretariat@ieagreements.org


***

I’m going to try a search for (ON GOOGLE) — “Houston Petroleum Producers Coalition”

(wanna see how you go around the world in about ten minutes?)

see google search – Houston Petroleum Producers Coalition

Go to

Landman Association – Houston Association of Professional Landmen

Landmen Oil and Gas Mineral Rights, Energy Association Landmen Association

at
www.hapl.org

Houston Association of Professional Landmen

2640 Fountain View, Suite 209,

Houston, TX 77057

phone – (713) 622-6868

(don’t cuss them – but they do have friends in the politicians, party members and oil industries that did this)

and on the left sidebar

Go to

Business Directory

and

Industry Links

***

Professional Associations

Government Websites

Industry Associations

Oil & Gas History Websites

(from)

http://hapl.org/en/cms/?56

***

(email all of them)

Go to

left sidebar of

www.hapl.org

Houston Association of Professional Landmen

rollover – HAPL Committees

Go to

“Directory” that appears on the list that appears on rollover

which goes to

http://hapl.org/en/cmt/?30

where you will find this -

Committee Members

# Name Company Phone
1 Dick, Carolyn ConocoPhillips Company (432) 688-6011
2 Eisterhold, Ben ConocoPhillips Company (832) 486-2624
3 Haag, Garrett ConocoPhillips Company (832) 486-2782
4 Hough, William Anadarko Petroleum Corp (832) 636-3037
5 Schnell, Karen Yuma Exploration and Production Company, Inc. (713) 968-7068
6 Womack, Jack Crew Land Research, Ltd. (713) 784-5263

E-mail To A Friend E-mail this committee to a friend (requires login).

***

(I’m taking a break – call the jackasses listed above and email anybody else on the lists above that might help solve the problem. Try not to be shitty to any of them even if they work with the petroleum industry because they might accidentally give a damn, too – unlikely, but possible.)

***

(Back – I had to go eat something.)

The goal of this is to “fix it” and to encourage, inspire and insist that other ways of doing it are considered and utilized – and not just whatever they are already doing or planning to do that isn’t working – in the Gulf of Mexico crude oil recovery, clean-up, and capping off the wells that are pouring oil into the waters of the Gulf (5000 feet down on the seabed in a canyon – 41 miles from shore)

Every one of these people above – either knows somebody that is involved with the decision-making process in some way, is involved in an association or professional organization that is involved with it and was involved with the initial engineering and understandings of safety about it which were given to the public and politicians making the decisions to drill for oil in the Gulf of Mexico (and elsewhere) – and accredited or gave their seal of approval to the engineering that went into it and to what engineering principles and ethics and safety considerations will go into it in the future

- cricketdiane

***

Go to

http://www.abet.org/mut_reco.shtml

Mutual Recognition Agreements
A mutual recognition agreement (MRA) is an agreement formed between ABET and an international accreditation system (or multiple systems, in some cases).  MRAs recognize the substantial equivalency of certain international accreditation systems with respect to the preparation of graduates to begin professional practice at the entry level. Signatories agree to recommend that graduates from recognized programs be afforded the same rights and privileges as those graduates in the home country. These agreements are not binding on colleges, universities, employers, or licensing agencies.  Contact us for more information.

Washington Accord (Engineering)

Signatories:

  • ABET
  • Accreditation Board for Engineering Education of Korea (ABEEK)
  • Board of Engineers Malaysia
  • Canadian Engineering Accreditation Board of Engineers Canada
  • Engineering Council of South Africa (ECSA)
  • Engineering Council UK (ECUK)
  • Engineers Australia
  • Engineers Ireland
  • Hong Kong Institution of Engineers (HKIE)
  • Institute of Engineering Education, Taiwan (IEET)
  • Institution of Engineers Singapore (IES)
  • Institution of Professional Engineers New Zealand (IPENZ)
  • Japan Accreditation Board for Engineering Education (JABEE)

Further information: www.washingtonaccord.org

***

These associations can be looked up individually online – each of them have directories of members, conferences that are coming up soon which need to be alerted to this situation in the Gulf and that their abilities will likely be needed to fix it and prevent this kind of disaster in the future – they are capable of understanding what can be designed to resolve the issues that have already occurred with existing equipment to make it safer and possibly get involved in the teams that are working there in the Gulf now in order to give back up resources to their efforts – both academic research that is most recent and other international teams, knowledge and resources specific to it.

- cricketdiane

***

But, I haven’t even started doing anything yet -

chemical engineering

Kuwait and Persian Gulf resources that have successfully resolved these kinds of things in their region before this

desalination pumps in the Gulf area that could be utilized to some measure

BP’s backup Cambridge team

physics groups that know a thing or two more about this than I do

***

And from my Encyclopedia Britannica – under the heading “Enzyme” on page 897; vol. 6 -

“Any systematic classification of enzymes should be based on a common property or quality that varies sufficiently to be useful as a distinguishing feature. In this regard, three properties of enzymes could serve as a basis for enzyme classification -

the exact chemical nature of the enzyme,

the chemical nature of the substrate,

the nature of the reaction catalyzed.

(etc. – it goes on to say)

Adequate information about the detailed chemical structures of more than a few enzymes does not yet exist.” (1978, it does now.)

“Although some enzymes consist only of protein, many are complex proteins; i.e., they have a protein component and a so-called cofactor. A complete enzyme is called a holoenzyme; if the cofactor is removed, the protein, no longer enzymatically active, is called the apoenzyme.”

A cofactor may be a metal – such as iron, copper, or magnesium – a moderately sized organic molecule called a prosthetic group, or a special type of substrate molecule known as a coenzyme. The cofactor may aid in the catalytic function of an enzyme, as do metals and prosthetic groups, or take part in the enzymatic reaction, as do coenzymes.”

Lookup online -

Coenzymes and apoenzyme research for petroleum / subsea cleanup applications that may have been researched or already made available for use – either oceanographic crude oil or ocean water regeneration studies

***

Enzymes are usually very specific as to which reactions they catalyze and the substrates that are involved in these reactions. Complementary shape, charge and hydrophilic/hydrophobic characteristics of enzymes and substrates are responsible for this specificity. Enzymes can also show impressive levels of stereospecificity, regioselectivity and chemoselectivity.[21]

on wikipedia entry for enzyme which came up when I searched for apoenzyme

Induced fit model

Diagrams to show the induced fit hypothesis of enzyme action.

In 1958, Daniel Koshland suggested a modification to the lock and key model: since enzymes are rather flexible structures, the active site is continually reshaped by interactions with the substrate as the substrate interacts with the enzyme.[29] As a result, the substrate does not simply bind to a rigid active site; the amino acid side chains which make up the active site are molded into the precise positions that enable the enzyme to perform its catalytic function. In some cases, such as glycosidases, the substrate molecule also changes shape slightly as it enters the active site.[30] The active site continues to change until the substrate is completely bound, at which point the final shape and charge is determined.[31]

  • Providing an alternative pathway. For example, temporarily reacting with the substrate to form an intermediate ES complex, which would be impossible in the absence of the enzyme.
  • Reducing the reaction entropy change by bringing substrates together in the correct orientation to react. Considering ΔH alone overlooks this effect.
  • Increases in temperatures speed up reactions. Thus, temperature increases help the enzyme function and develop the end product even faster. However, if heated too much, the enzyme’s shape deteriorates and only when the temperature comes back to normal does the enzyme regain its shape. Some enzymes like thermolabile enzymes work best at low temperatures.

Interestingly, this entropic effect involves destabilization of the ground state,[33] and its contribution to catalysis is relatively small.[34]

(and)

An example of an enzyme that contains a cofactor is carbonic anhydrase, and is shown in the ribbon diagram above with a zinc cofactor bound as part of its active site.[48] These tightly bound molecules are usually found in the active site and are involved in catalysis. For example, flavin and heme cofactors are often involved in redox reactions.

Enzymes that require a cofactor but do not have one bound are called apoenzymes or apoproteins. An apoenzyme together with its cofactor(s) is called a holoenzyme (this is the active form). Most cofactors are not covalently attached to an enzyme, but are very tightly bound. However, organic prosthetic groups can be covalently bound (e.g., thiamine pyrophosphate in the enzyme pyruvate dehydrogenase). The term “holoenzyme” can also be applied to enzymes that contain multiple protein subunits, such as the DNA polymerases; here the holoenzyme is the complete complex containing all the subunits needed for activity.

http://en.wikipedia.org/wiki/Enzyme

(just for my own knowledge, and then at top of entry – go to “Biocatalyst”)

On Situation Room – with Wolf Blitzer, he is talking to Senator Bill Nelson from Florida right now – yep, they are starting to realize what the problem is with the idea of another five weeks of oil pumping into the Gulf at the rate of 210,000 gallons a day – Hmmm. . . he says Florida’s residents along the Gulf are in a panic – I don’t doubt it. He says this was an “exploratory well” that exploded and caused this.

Now, where did I see that oil slick cleanup stuff  -

Go to Engineers Australia

http://www.engineersaustralia.org.au/

also on another tab would be open this

http://en.wikipedia.org/wiki/Biocatalysis

and under the circumstances, you just gotta see this -

Tampa Bay Water Desalination Project

The Tampa Bay Water Desalination project was originally a private venture led by Poseidon Resources.

This project was delayed by the bankruptcy of Poseidon Resources’ successive partners in the venture, Stone & Webster, then Covanta (formerly Ogden) and its principal subcontractor Hydranautics.

Poseidon’s relationship with Stone & Webster through S & W Water LLC ended in June 2000 when Stone & Webster declared bankruptcy and Poseidon Resources purchased Stone & Webster’s stake in S & W Water LLC.

Poseidon Resources partnered with Covanta and Hydranautics in 2001, changing the consortium name to Tampa Bay Desal.

Through the inability of Covanta to complete construction bonding of the project, the Tampa Bay Water agency was forced to purchase the project from Poseidon on May 15, 2002, and underwrite the project financing under its own credit rating.

Tampa Bay Water then contracted with Covanta Tampa Construction, which produced a project that did not meet required performance tests, and Covanta Tampa Construction filed bankruptcy in October 2003 to prevent losing the contract with Tampa Bay Water, which resulted in nearly six months of litigation between Covanta Tampa Construction and Tampa Bay Water.

The plant was not fully operational until 2007[24]. The plant currently runs at the capacity of 25 million gallons per day[52]. (my note – it has pumps – really, really big pumps.)

http://en.wikipedia.org/wiki/Desalination

(and you’ve just gotta see this right quick too)

found by google search using these terms -

coenzymes crude oil ocean

EIA Energy Kids – Oil (petroleum)

– 3:59pmAbout 53% of the crude oil and petroleum products used in the United States in Most of the energy we get from the ocean is extracted from the ground.
tonto.eia.doe.gov/kids/energy.cfm?page=oil_home-basics

and from this about halfway down the page – check it out -

http://tonto.eia.doe.gov/kids/energy.cfm?page=oil_home-basics

Technology Helps Reduce Drilling’s “Footprint”

Exploring and drilling for oil may disturb land and ocean habitats. New technologies have greatly reduced the number and size of areas disturbed by drilling, sometimes called “footprints.”2 Satellites, global positioning systems, remote sensing devices, and 3-D and 4-D seismic technologies make it possible to discover oil reserves while drilling fewer wells.

The use of horizontal and directional drilling makes it possible for a single well to produce oil from a much bigger area. Today’s production footprints are also smaller those 30 years ago because of the development of movable drilling rigs and smaller “slimhole” drilling rigs.

When the oil in a well becomes uneconomic to produce, the well must be plugged below ground, making it hard to tell that it was ever there. As part of the “rigs-to-reefs” program, some old offshore rigs are tipped over and left on the sea floor to become artificial reefs that attract fish and other marine life. Within six months to a year after a rig is toppled, it becomes covered with barnacles, coral, sponges, clams, and other sea creatures.

Eight Percent of the Oil in the Sea Comes from Tank Vessel Spills

If oil is spilled into rivers or oceans, it can harm wildlife. When we talk about “oil spills,” people usually think about oil that leaks from a ship that is involved in an accident. Although this type of spill can cause the biggest shock to wildlife because so much oil is released at one time, a study by the National Research Council says only 8% of all oil in the sea comes from ship or barge spills.3 The amount of oil spilled from ships dropped significantly during the 1990s partly because new ships were required to have a “double-hull” lining to protect against spills.

The Greatest Share of Oil in the Sea Comes from Natural Seeps

While oil spills from ships are the most well-known source of oil in ocean water, more oil actually gets into water from natural oil seeps coming from the ocean floor.

Leaks also happen when we use petroleum products on land. For example, gasoline sometimes drips onto the ground when people are filling their gas tanks, when motor oil gets thrown away after an oil change, or when fuel escapes from a leaky storage tank. When it rains, the spilled products get washed into the gutter and eventually flow to rivers and into the ocean. Another way that oil sometimes gets into water is when fuel is leaked from motorboats and jet skis.

When a leak in a storage tank or pipeline occurs, petroleum products can also get into the ground, and the ground must be cleaned up. To prevent leaks from underground storage tanks, all buried tanks are supposed to be replaced by tanks with a double lining.

1. U.S. Environmental Protection Agency, Climate Change State of Knowledge.
2. U.S. Department of Energy, Environmental Benefits of Advanced Oil and Gas Exploration and Production Technology (October 1999).
3. National Academies Press, Oil in the Sea III, Chapter 3 (2002).

(from)

http://tonto.eia.doe.gov/kids/energy.cfm?page=oil_home-basics

(talk about something that is evidently wrong about the impacts which are very evidently now being experienced in the Gulf of Mexico and along every one of the Gulf Coast states – just had to share the perspective found on that page, which is interesting under the circumstances . . . )

***

Go back to

Engineers Australia site (on tab)

Code of Ethics Review – have your say

(and clicking on tab at bottom link “groups” of page – gives this)

Centre for Engineering Leadership and Management

CELM was created as a strategic response to the demands of the complex and changing business environment in which engineers work. CELM complements the work of the Colleges and Societies and contributes to the growth, strength, standing and influence of the engineering profession.

http://www.engineersaustralia.org.au/app_templates/corepagelets/mainsite/colleges/groups.cfm

(I’m trying to find a place to ask a dumb question that probably will result in about four dumb questions I don’t know yet and where to find the most recent pubs about crude oil cleanup, engineering stuff, etc. – and what they did in the occasions that happened there – that worked.)
I clicked on this one – (from the above list)

Engineering Associates

The National Committee of Engineering Associates Australia (NCEAA) is committed to promoting, developing, supporting, engaging and representing Engineering Associates and their role withing the engineering team.

http://www.engineersaustralia.org.au/app_templates/ajax.cfm?ajaxTemplate=ajaxpagelets_groups.cfm&circuit=F225AA9E-CE5F-85CB-9CA8-2C9D1F5A414F

I found this -

on May 5, 2010

http://www.engineersaustralia.org.au/groups/engineering-associates/engineering-associates_home.cfm

(and)

Contact Us

Please address all correspondence in the first instance to

Mr Bill Chaffey
Committee Administrator
Phone: ( 02) 62706558
Fax: ( 02) 62732358
associates@engineersaustralia.org.au
11 National Circuit

BARTON ACT 2600

http://www.engineersaustralia.org.au/ieaust/index.cfm?2A9323DA-A43A-EE04-4E3A-3F39703FED04#NCEAA

from a page with a list of committee members – I could email them and ask how the cleanups there were done and exploratory wells capped when this happened off the coast of Australia.

Hmmm . . . need to think about it  – maybe there is another way to find the answers.

***

Go back to

http://en.wikipedia.org/wiki/Biocatalysis

Biocatalysis is the use of natural catalysts, such as protein enzymes, to perform chemical transformations on organic compounds. Both enzymes that have been more or less isolated or enzymes still residing inside living cells are employed for this task.[1][2][3]

The key word for organic synthesis is selectivity which is necessary to obtain a high yield of a specific product. There are a large range of selective organic reactions available for most synthetic needs. However, there is still one area where organic chemists are struggling, and that is when chirality is involved, although considerable progress in chiral synthesis has been achieved in recent years.

Enzymes display three major types of selectivities:

  • Chemoselectivity: Since the purpose of an enzyme is to act on a single type of functional group, other sensitive functionalities, which would normally react to a certain extent under chemical catalysis, survive. As a result, biocatalytic reactions tend to be “cleaner” and laborious purification of product(s) from impurities emerging through side-reactions can largely be omitted.
  • Regioselectivity and Diastereoselectivity: Due to their complex three-dimensional structure, enzymes may distinguish between functional groups which are chemically situated in different regions of the substrate molecule.
  • Enantioselectivity: Since almost all enzymes are made from L-amino acids, enzymes are chiral catalysts. As a consequence, any type of chirality present in the substrate molecule is “recognized” upon the formation of the enzyme-substrate complex. Thus a prochiral substrate may be transformed into an optically active product and both enantiomers of a racemic substrate may react at different rates.

These reasons, and especially the latter, are the major reasons why synthetic chemists have become interested in biocatalysis. This interest in turn is mainly due to the need to synthesise enantiopure compounds as chiral building blocks for drugs and agrochemicals.

Another important advantage of biocatalysts are that they are environmentally acceptable, being completely degraded in the environment. Furthermore the enzymes act under mild conditions, which minimizes problems of undesired side-reactions such as decomposition, isomerization, racemization and rearrangement, which often plague traditional methodology.

( . . . )

The racemic mixture has now been transformed into a mixture of two different compounds, making them separable by normal methodology. The maximum yield in such kinetic resolutions is 50%, since a yield of more than 50% means that some of wrong isomer also has reacted, giving a lower enantiomeric excess.

(etc.)

External links

***

so , from that list -

TU Delft – Biocatalysis & Organic Chemistry (BOC)

and maybe -

KTH Stockholm – Biocatalysis Research Group

(My Note – I’m going this direction with it because I don’t think they are going to do anything differently than they have planned to use the tent system I suggested to capture the oil as it is being spewed out – nor anything anybody else comes up with in all likelihood – so the best choice, is for me to pursue how to fix that much oil being in the Gulf at that rate and in that volume of ocean water / along the beaches / in the bayous and marshes / and throughout the intercoastal waterways as quickly as possible)

I’ve been listening to the news as I’ve been going through this – if you didn’t catch that as I went along.

((( – cricketdiane

***

Go to -

TU Delft – Biocatalysis & Organic Chemistry (BOC)

(also just had a thought – Who is the lead chemical engineer on site at the oil spill decision-making team in the Gulf or wherever their decisions are being made – in fact, now that I think about it – where is their command decisions central location?)

Also – just took a moment and submitted an article -

Crude Oil overtaking the Gulf of Mexico at 210,000 gal/day due to engineered blow-out preventer failure

Crude oil is currently overtaking the waters in the Gulf of Mexico as a direct result of a blow-out preventer failure engineered to never allow this to happen again. There is an immediate need for legitimate and practical efforts by the engineering community to help resolve the resulting issues of ecological damage, reclamation of the health of the ocean water in the Gulf, recovery and capping the crude source on the subsea bed along with solutions for the reclamation of coastal areas.

I haven’t written the accompanying article. There are many across the internet written by Associated Press and others.

We need your help. Haven’t the solutions developed and applied in Australia been successful in situations such as this? Could you come help – these people aren’t going to listen to us, but they might listen to you.

We need -
Crude oil is currently overtaking the waters in the Gulf of Mexico as a direct result of a blow-out preventer failure engineered to never allow this to happen again. There is an immediate need for legitimate and practical efforts by the engineering community to help resolve the resulting issues of ecological damage, reclamation of the health of the ocean water in the Gulf, recovery and capping the crude source on the subsea bed along with solutions for the reclamation of coastal areas. (that’s the part I’m writing about it and I mean it sincerely – we need your expertise to help us in America, no matter what the officials involved in running the recovery might say. The things they are doing are not working and not even designed to work in a situation of this massive a release of crude and this dynamic type of ocean environment and in this volume of unique oceanographic currents, fisheries and marine space generally.)

http://www.engineersaustralia.org.au/news/submit-a-news-item.cfm

submitted article today, 04-30-10, 6 pm

***

on their website – and clicked an inclusion for these folks – but I don’t know that they will – it was not exactly a news article -

  • Who Is This News Item Relevant To?

  • Divisions and Overseas Chapters
    NATIONAL (ie All Divisions)

National Committees and Panels

Applied Mechanics Automation Control and Instrumentation Biomechanics of Impact Injury Clinical Engineering Coastal and Ocean Construction Engineering Fuels and Energy Mechatronics Nano-tech Quality Engineering Rehabilitation Engineering Software Engineering Space Engineering Transport Engineering Water Engineering
and -

Technical Societies

Australian Geomechanics Society (AGS) Australian Society for Bulk Solids Handling (ASBSH) Australian Society for Defence Engineering (ASDE) Mining Electrical and Mining Mechanical Engineering Society (MEMMES) Risk Engineering Society (RES) Society for Sustainability and Environmental Engineering (SSEE)

Interest Groups

Centre for Engineering Leadership and Management (CELM) Engineering Associates Engineering Heritage Australia Engineering Technologists Women in Engineering Young Engineers Australia
**
Which gives a whole lot of places around the world and throughout the US who could be of help and the types of places where they can be found, what their specialties are and what kinds of associations are available also with the same concerns and vested interests in this -
- cricketdiane, my note
***
On other tab -

TU Delft – Biocatalysis & Organic Chemistry (BOC)

http://www.bt.tudelft.nl/live/pagina.jsp?id=d99c1746-87a1-40c0-b4f3-ec5493b41763&lang=en

The research in the Biocatalysis and Organic Chemistry group is directed towards the development of atom-efficient, low-waste processes for the synthesis of high added value chemicals, such as pharmaceuticals and chiral intermediates. Within the framework of green chemistry the aim is to respond to the public need towards the 12 principles of green chemistry (for explanations see ‘links’).

Catalysis is one of our guiding principles to achieve selectivity and waste minimization. Biocatalytic as well as biomimetic catalytic methods are investigated. Other research themes are the use of non-conventional media (ionic liquids for e.g. biocatalysis), the immobilization of enzymes, e.g. via the technique of cross-linked aggregates (CLEAS’s), the application of catalytic cascade reactions, and the use of renewable resources. Furthermore the evolution of enzymes by means of DNA-shuffling is explored to search for reaction-designed biocatalysts both in collaboration with an industrial partner and together with other groups in the Department.

***

(from pp. 898, vol 6 – entry “enzyme), Encyclopedia Britannica, 1978)

The Nature of Enzyme-Catalyze Reactions -

The nature of catalysis.

In a chemical reaction – for example, one in which substance A is converted into product B – a point of equilibrium eventually is reached at which  no further chemical change occurs; i.e., the rate of conversion of A to B equals the rate of conversion of B to A.

The  so-called thermodynamic-equilibrium constant expresses this chemical equilibrium. A catalyst may be defined as a substance that accelerates a chemical reaction but is not consumed in the process.The amount of catalyst has no relationship to the quantity of substance altered; very small amounts of enzymes are very efficient catalysts.

Because the presence of an enzyme accelerates the rate of conversion of a compound to a product; it accelerates the approach to equilibrium; it does not however, influence the equilibrium point attained.

The molecules in the watery medium of the cell (or molecular configuration, my note) are in constant thermal motion but, because they are more or less stable compounds, they would react only occasionally to form products in the absence of enzymes.

There exists an energy barrier to the reaction of a molecule. The energy required to overcome the barrier to reaction is called the energy of activation. A reaction proceeds to equilibrium only if the molecules have sufficient energy of activation to form an activated complex, from which products can be derived.

Enzymes greatly increase the chances for reactions by their ability to make large numbers of specific molecules more reactive (i.e., unstable) by forming intermediate compounds with them.

The unstable intermediates quickly break down to form stable products, and the enzymes, unchanged by the reaction, are able to catalyze the formation of additional products.

***

And, I found this part here -

The expertise in the field of catalysis is reflected by the membership of the Netherlands Institute for Catalysis NIOK and the NRSC-Catalysis (Top Research School Catalysis Controlled by Chemistry and Design).

Group leader
prof.dr. Isabel W.C.E. Arends

Permanent staff
dr.ir. Fred van Rantwijk (associate professor)
dr. Ulf Hanefeld (associate professor)
dr.ir. Joop A. Peters (associate professor)
prof.dr. Roger A. Sheldon (em. professor)

Key words
Enzymes in organic synthesis, Enzyme immobilization, Biocatalysis, Enzymes in novel media, Green chemistry, Oxidation catalysis, Catalysis in water, Homogeneous catalysis, Heterogeneous catalysis, Asymmetric catalysis, Directed evolution, DNA-shuffling, Molecular recognition, Magnetic Resonance Imaging.

Contact Information
Department of Biotechnology
Julianalaan 136
2628 BL Delft
The Netherlands
Tel: +31 (0)15 27 82683
Web: www.bt.tudelft.nl/boc

(from)

http://www.bt.tudelft.nl/live/pagina.jsp?id=d99c1746-87a1-40c0-b4f3-ec5493b41763&lang=en

(and on left sidebar – click on the word – “people”)

to go here -

http://www.tnw.tudelft.nl/live/pagina.jsp?id=078fb682-fe95-46df-b1d1-5fa4ce5cc460&lang=en

(email them and see if they know anything that could help in the enzymes they have been studying or if they know who does have some success to show in this area.)

Scientists

PhD students and postdocs

see the list research projects of the BOC group

***

(also found this – )

might have some leads to possible solutions and resources for solutions to cap the undersea pipes -

Enterprise Offshore Port System, LLC, an affiliate of Enterprise Products Partners L.P. (NYSE:EPD EPD

expected progeny difference. ), has also elected to dissociate from TOPS effective April 16, 2009.

In August 2008, affiliates of TEPPCO, Enterprise and Oiltanking Holding Americas, Inc. formed a joint venture to design, construct, own and operate a new Texas offshore crude oil port and pipeline system to facilitate delivery of waterborne crude oil to refining centers along the upper Texas Gulf Coast. The TOPS project includes an offshore port, two onshore storage facilities with approximately 5.1 million barrels of total crude oil storage capacity, and an associated 160-mile pipeline system with the capacity to deliver up to 1.8 million barrels per day Barrels per day (abbreviated BPD, bbl/d, bpd, bd or b/d) is a measurement used to describe the amount of crude oil (measured in barrels) produced or consumed by an entity in one day.  of crude oil. The total cost of the project had been estimated at $1.8 billion.

TEPPCO Partners, L.P., is a publicly traded energy logistics partnership with operations that span much of the continental United States United States territory, including the adjacent territorial waters, located within North America between Canada and Mexico. Also called CONUS. . TEPPCO owns and operates an extensive network of assets that facilitate the movement, marketing, gathering and storage of various commodities and energy-related products. The partnership s midstream network is comprised of approximately 12,500 miles of pipelines that gather and transport refined petroleum products, crude oil, natural gas, liquefied petroleum gases (LPGs) and natural gas liquids, including one of the largest common carrier pipelines for refined petroleum products and LPGs in the United States. TEPPCO s storage assets include approximately 27 million barrels of capacity for refined petroleum products and LPGs and about 14 million barrels of capacity for crude oil. TEPPCO also owns a marine business that operates primarily on the United States inland and Intracoastal Waterway systems, and in the Gulf of Mexico Noun 1. Gulf of Mexico – an arm of the Atlantic to the south of the United States and to the east of Mexico
Golfo de Mexico

Atlantic, Atlantic Ocean – the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east . For more information, visit TEPPCO s website (www.teppco.com). Texas Eastern Products Pipeline Company, LLC, the general partner of TEPPCO Partners, L.P., is owned by Enterprise GP Holdings (

(from here – )

http://www.thefreelibrary.com/United+States:+TEPPCO+Exits+Texas+Offshore+Oil+Port+and+Pipeline+…-a0198484889

***

And took a google search for biochemical engineering university Louisiana

giving -

The Chemical Engineering Department at Louisiana State University

http://www.che.lsu.edu/ourdepartment/general_info.htm

It says -

The Chemical Engineering Department at Louisiana State University is a leader in research, teaching and service in a field that is crucial to the economy of the Gulf South. It is the largest and most active chemical engineering department at both the undergraduate and graduate levels in the State. The Department has received international recognition for its contributions to chemical engineering research, education and service, and the doctoral program received a “commendation for excellence” from the previous review by the Board of Regents.

The Department of Chemical Engineering developed from the Audubon Sugar School, which officially became part of the University in 1897.

(These folks definitely can help)

**

Along left sidebar of TU Delft

TU Delft – Biocatalysis & Organic Chemistry (BOC)

(click on Biotechnology) – which goes here -

http://www.tnw.tudelft.nl/live/pagina.jsp?id=57b749a1-b9e1-4f0a-ac27-514b9a07d13a&lang=en

and on another tab where I had the TEPPCO thing -(I’m watching 11 Alive Atlanta and NBC Nightly News to see what their coverage of this is like – not bad)

I’m going to find this -

http://www.niok.nl/

NIOK | Netherlands Institute for Catalysis Research

NIOK, which stands for ‘Nederlands Instituut voor Onderzoek in de Katalyse’ (Netherlands Institute for Catalysis Research), is a virtual institute consisting of Dutch University Groups active in all areas of catalysis. It is a nationwide graduate school (‘Onderzoekschool’) which fosters the advancement of both higher education and research and stimulates collaboration between scientists of different disciplines and Universities. NIOK acts as the platform and sparring partner for national and international contacts on catalysis with academia, industry and government. It was established in 1991 by the major catalysis groups of seven Dutch Universities.

Later, NIOK was recognised by the Royal Netherlands Academy of Sciences (KNAW) and it is supported by an industrial advisory board VIRAN which consists of members from Dutch and multinational industries involved in many aspects of catalytic processes.

(found here)

http://www.niok.eu/en/introduction/

***

(and)

Biotechnology

Welcome to the Department of Biotechnology.

Head of the department
prof.dr. J.H. de Winde

Introduction
The department of Biotechnology concentrates on the multidisciplinary fields of Biocatalysis, Metabolic Engineering & Fermentation Technology, Environmental Biotechnology and Bioprocess Technology as well as the exciting developments in the area of Life Science & Technology – in particular, genomics and metabolomics.

Biotechnology research activities consist of the following research groups:

Intensive collaboration with industry and other national research groups has led to the establishment of two national research centres, both coordinated by the Department of Biotechnology:

The department is home to the accredited Graduate Research School Biotechnological Sciences Delft Leiden (BSDL) which organizes annual, International Advanced Courses for PhD and postgraduate training.

[Short URL of this website: www.bt.tudelft.nl]

(from)

http://www.tnw.tudelft.nl/live/pagina.jsp?id=57b749a1-b9e1-4f0a-ac27-514b9a07d13a&lang=en

**

(and from this on left sidebar – National Academy of Engineering Members)

http://www.che.lsu.edu/ourdepartment/general_info.htm

gives this -

http://www.che.lsu.edu/ourdepartment/nae.htm

National Academy of Engineering Members

The Department is proud to have three graduates elected as members of the National Academy of Engineering (NAE), along with one Professor Emeritus. Election to the NAE is the highest professional distinction bestowed to an engineer in the United States.

  • Nai Y. Chen (MS 1954)
    Elected NAE Member in 1990
  • Marcelian F. Gautreaux, Jr. (BS 1950, MS 1951, PhD 1958)
    Elected NAE Member in 1977
  • P.L. Thibaut Brian (BS 1951)
    Elected NAE Member in 1975
  • Danny D. Reible, ChE Professor Emeritus
    Elected NAE Member in 2004

(and this from message of department chair)

Our department is undergoing significant changes with several faculty retirements and additions. We added two new faculty (Professor Judy Wornat and Associate Professor Jerry Spivey) in 2003. Cain Chair # 1 Professor Jose Romagnoli, from the University of Sydney, joined us in Fall 2005 as did Assistant Professor James Henry, from Texas A&M University. In August 2006, we welcomed Associate Professor John Flake from Georgia Tech. In Fall 2007, we welcomed two more new Assistant Professors – Michael Benton from the University of Wisconsin, Madison and Francisco Hung from North Carolina State University. In the Fall of 2009, Prof. K Nandakumar joined the department as Cain Chair #2.

Our teaching and research laboratories are undergoing major improvements. For example, our refurbished Unit Operations Laboratory is one of the finest in the nation. Our graduate program is one of the highest rated programs in the University and is growing. Our undergraduate curriculum is undergoing restructuring to meet the changing requirements of the industrial and academic employers of our graduates.

In order to obtain the full story about these changes, to learn about the research conducted by our faculty, to get information about our graduate and undergraduate degree programs, to catch up on the latest news and to find out about lectures and events hosted by our department, we invite you to explore our web site. As always, please feel free to contact us or visit our beautiful campus in picturesque Baton Rouge, Louisiana.

Kalliat T Valsaraj
Department Chair and
Charles and Hilda Roddey Distinguished Professor in Chemical Engineering Ike East Professor

http://www.che.lsu.edu/faculty/valsaraj/greetings.htm

***

I just had to stop and look this up -

from Encyclopedia Britannica, vol. 16, pp. 280 – 281, entry, “Saudi Arabia”

Remember – this is a 1978 entry because that is the set of Enclycopedia I have – It says,  -

“Other institutes include the Higher Institute of Technology, (. . . ), the College for the Arabic Language, the Technical Institute – etc. all at Riyadh; the University of Petroleum and Minerals (Petromin) at Dhahran; (etc.) and the Saudi Arabian Institute  for Higher Education, (at Mecca) and the School of Applied Arts – (at Medina – and schools of industrial education at Riyadh, Jidda, Medina and ad-Dammam. (roughly paraphrased)

and on down the page -

“The urbanization resulting from oil-related activity already pushed much of Arabia’s traditionalism back from a present reality to a receding memory. The now omnipresent automobile has brought about a reduction in effective physical distances within the kingdom. Similar has been the effect of the airplane and satellite communication. This is not to say, however, that Saudi society has become homogenized, for social distances have not been similarly reduced.” (which means I can’t ask them anything, but our government, oil industries and government agencies / State Department can ask them for specific help in this spilling oil in the Gulf of Mexico.)

On page 281 -

“The Eastern province (Saudi Arabia), where the oil industry is centered, has been most affected, and the changes that have been wrought there are phenomenal. Dhahran is a pleasant suburban community in the American style, with even a golf course, though the “greens” are black, consisting of hardened crude oil spread over a smoothed desert surface. (etc.)”

“Saudi Arabia’s historic isolation is at an end. Change is clearly the norm. The powerful traditional religious mores and convictions remain, and are all-pervading. But the pull of new ideas and new material values is also strong and is increasing.  (etc.)”

But, that was from 1978.

They might help with information – there have been this kind of economic and ecological damage where they are working with crude oil also. – my note

(but, I can’t ask them.)

***

Anyway – before going back to the online research for solutions that will take the oil out of the waters, out of the marine lines and restore the beaches and wetlands – I flipped over in the same volume 16, of my Encylopedia Britannica to see the entry, “slime mold” on page 892 – at the very end of its entries because at one time, I had seen something about a type of slime mold used in oil crude cleanup / recovery research somewhere and was thinking about that – so, here is what I was checking right quick -

Groups Resembling Slime Molds

Often included in discussions of slime molds, at at times classified with them, these organisms are now considered unrelated to any of the above groups. They are included here for completeness.

Order Labyrinthulales (Net SLime Molds).-

Marine, terrestrial, or freshwater parasites or saprobes (organisms obtaining food from dead organic matter) with spindle-shaped cells that congregate in networks of mucous filaments or tubes. (etc.)

Swarm cells, where known, have 2 flagella inserted at the side, one of which bears fine, lateral, filamentous processes (tinsel flagellum); hence completely unlike swarm cells in the slime molds. The order includes the genus Labyrinthula, and 3 other doubtful genera, with about a dozen species.

(and)

Order Myxobateriales (Slime Bacteria) -

Rod-shaped bacterial cells often held together as a slowly moving pseudoplasmodium in a common mucous sheet. Fruiting structures consist of clumps of aggregated cells forming globular masses, ridges, or branched tree-like structures. Eleven genera with about 60 species. Myxococcus and Chondromyces are the largest genera.

And generally about slime molds -

The slime molds are opsimorphic organisms, which means that they have in common a clear distinction in time between growth in terms of increase in mass or of cell number and development. The active stages are amoeboid, whether as single cells, as it ( . . . ), or a true plasmodium, as in ( . . . )

Otherwise, the active stages are quite different, and the term slime mold is more a convenient, if misleading designation than a term inferring relationship. In their possession of true plasmoidal stages, swarm cells with two flagella at the anterior end, the Myxomycetes and Plasmodiophorales seem to be related. (etc.)

On the page before, I noticed a couple things interesting to the problems at hand and I’m going to look it up online later -

“A unique group of organisms, the Myxobacteria, form thin, spreading amoeboid colonies consisting of bacteria-like cells embedded in a slimy sheet. The whole colony can act as a unit, very much as does the acrasian aggregation stage in building a fruiting structure, in some cases forming simple spheres, in other cases complicated treelike forms. All evidence, however, points to the Myxobacteria being either true bacteria or closely related to them and, hence, distinct from any slime mold.” pp. 890

Class Myxomycophyta (Mycetozoa)

Class Myxomycetes *(true slime molds)

pp. 891

Encyclopedia Britannica, 1978; vol. 16, pp. 890-892, Entry – “Slime Mold”

***

And from this page -

http://www.tnw.tudelft.nl/live/pagina.jsp?id=72253f8a-e321-4958-b714-083e0b111e7a&lang=en

Environmental Biotechnology (EBT)

Front The Environmental Biotechnology group aims at developing and improving mixed culture bioprocesses for waste treatment and product formation. For this purpose, microbial ecosystems are studied at all levels ranging from molecule to full-scale bioprocesses.

The research is based on the exploration of microbial and biochemical cycling of elements in nature. We study the organisms involved in the conversions of Sulfur, Nitrogen, Phosphate and Iron compounds. These conversions are used in the development of processes for water air and gas treatment. The process engineering focus is on biofilm and gradient systems. The microbiological focus is on the development of molecular ecology approaches for studying the ecophysiology of mixed microbial cultures. A special line of research is the development of processes for production of chemicals by mixed microbial cultures.

The Environmental Biotechnology group collaborates with the Bioprocess Technology group (prof. Sef Heijnen) and the Bioseparation Technology group (prof. Luuk van der Wielen). The group is strongly involved in the research of the Delft Centre for Life Science and Technology (programme 3) and in the research and education of the Graduate Research School BSDL (sector 3).

Group Leader
prof.dr.ir. Mark C.M. van Loosdrecht
Staff
dr. Gerard Muyzer (Associate Professor)
dr. Cristian Picioreanu (Assistant Professor)
dr.ir. Robbert Kleerebezem (Assistant Professor)
prof.dr.ir. Mike S.M. Jetten (part-time)
prof.dr. J. Gijs Kuenen (emeritus professor)
prof.dr. D. Brdanovic (endowed professor)
dr.ir. Cees van Sluis (guest)

Key-words
biofilms, DGGE, DNA-microarrays, environmental microbiology, functional genomics, metabolic modelling, sulfur bacteria, system biology

Contact Information
Department of Biotechnology
Julianalaan 67
2628 BC Delft
The Netherlands
Tel: +31 (0)15 278 2342
Web: www.bt.tudelft.nl/ebt

***

Now- I’m going to start looking for the specific and exact research which has been being done that could be used to fix this in the Gulf -

- cricketdiane

***

Solution to stop the Crude Oil spill that is pumping into the Gulf of Mexico – right now pumping 210,000 gallons of crude into the Gulf per day without ceasing from the Deepwater Horizon oil drilling explosion

My Note – I took out the middles so it is easier to read – this is the same as the last post more or less – a practical solution to the oil that is pumping out into the Gulf of Mexico – this follows the process as I was figuring out what might work. – (cricketdiane)

*****

My Note -

There have been news stories tonight on CNN about the oil spill and how they are expecting to fix it – I couldn’t believe that what they are suggesting will take 5 weeks of oil continuing to pump into the water. No – no – no – NO.

No.

That is not acceptable.

I might not be down there helping with it but the least I can do is find something that will first work right now – faster than that. Then they can get along with whatever they’re doing.

So, this is the process. First I looked up a few of the articles to find the depth where the pipes are spewing oil into the ocean of the Gulf of Mexico.

And below these, I started looking for what the depth pressures would be and remembering “into my notes” the other things that I’ve heard on the news or read about the oil spill.

- cricketdiane

2. Pressure at a certain depth in water

Scuba divers know that as you go down to greater depths, the water pressure increases. In fact, the increase in pressure is 14.7 psi for every 34 feet of additional depth. A diver that descends to a depth of 100 feet must withstand a pressure of …

( 100 ft / 34 ) x 14.7 = 43.24 psi

This pressure is in addition to the normal atmospheric pressure at the surface. The pressure limits the depth to which unprotected divers can go, and the pressure causes lots of problems.

http://www.challengers101.com/Pressure.html

My Notes -

I know the oil being pumped under the water is at approximately 5000 feet down, high pressure, irregular surface area likely, and they have been using robotic submersibles -

there are three pipes, they are leaking 210,000 gallons per day / more or less
CNN reported tonight that the pipes where it is leaking are about a foot diameter? is that correct? And, there is a blow-out protector on top of at least one – or what? was it 50 feet tall on that BOP or was that what they said?

on bloomberg last night’s ticker said the BOP was made by Cameron- which I looked up earlier today – no size immediately noticed – will have to go back to find it – (maybe not necessary) – Cameron Blowout Preventer link below

the oil is getting swept by currents and due to its chemical and characteristic nature is floating quickly toward the surface – but, they also admit that they don’t know the degree to which it is coating undersea surfaces in the immediate area

strong current area?

what type of irregularities exist in the surface features?

how large is the flow area under the water – and how tall are the pipes and BOP together?
could something be designed for later after whatever will fix it now – yes, they are already doing that – and it will have to have some consideration in the immediate design.

get me a tanker, a boom rig and about four boats that can withstand the currents and winds without getting knocked around too bad (plus maybe the submersible rover to check it after the actions.)

where could we get it and what industry has it – doesn’t have to be close by but that would be handier.

(I recognize that I didn’t say the “what” of that sentence but I’ve got an idea and I’m not sure if it would work or even be likely to work yet)

- cricketdiane, 04-29-10

***

First,, I need to find what the bottom of the ocean looks like right there and what the immediate ocean currents are in the area – which means google map maybe and the NOAA satellite stuff or where?

“According to GCAGS Transactions, it has an average width of 8 kilometers (km), and a length of 120 km.” – Gulf of Mexico seafloor canyon where the crude oil was being drilled -

(from)
Mississippi Canyon – wikipedia

Mooring (oceanography) – wikipedia

The Deepwater Horizon, a semi-submersible offshore drilling rig in the Gulf of Mexico, exploded on April 20, 2010, and sank two days later, taking with it eleven lives and causing a significant oil spill. It is the worst accident since the blowout of Ixtoc I.
Deepwater Horizon drilling rig explosion

http://en.wikipedia.org/wiki/Deepwater_Horizon_drilling_rig_explosion

and was designed for operations in water depths of up to 8,000 feet (2,400 m). Maximum drill depth was 30,000 feet (9,100 m).[1]

The semi-submersible drilling rig was owned by Transocean Ltd and was leased by BP[2] until September 2013. At the time of the fire Deepwater Horizon was on BP’s Mississippi Canyon Block 252, referred to as the Macondo prospect, in the U.S. sector of the Gulf of Mexico, about 41 mi (66 km) off the Louisiana coast.[3][4]

(wikipedia)

***

http://en.wikipedia.org/wiki/Mooring_%28oceanography%29

***

Okay, that would work -

“An acoustic release connects the mooring to an anchor weight on the sea floor. The weight is released by sending a coded acoustic command signal from a ship. The weight (e.g. old rail wheels) is unrecoverable. Floaters permit the mooring to come up to the surface to be recovered by a research vessel.” – wikipedia entry about oceanographic mooring

Now, to go find the other part – (my note)

***

http://stadium.dallascowboys.com/

I remember there was an accident where the practice field that was covered by a huge architectural fabric came down on the players – I was thinking that was the Dallas Cowboys stadium – but it was the practice field – that is what they need – a large fabric like that, then drop the architectural fabric like a tent over the pipes using the acoustic weight mooring system (e.g. old rail wheels). Then, they can take a pipe up under the “tent” and fill a tanker with the stuff to bleed off the oil until they can get the other things built to solve the problem in a more permanent manner. (cricketdiane, 04-29-10)

(from the article below about the practice field – )

“The no-frills building was pretty much a 100-yard football field with a few more yards of clearance all the way around. The roof was 80 feet high, the equivalent of an eight-story building.”
Dallas Cowboys Stadium

Dallas Cowboys Stadium – architectural “dome” fabric could be used to capture oil from Deepwater Horizon spill in the Gulf of Mexico

***

Dallas Cowboys' Practice Facility Collapses - that fabric could be used to tent cap the oil spewing into the Gulf of Mexico

Dallas Cowboys' Practice Facility Collapses - that fabric could be used to tent cap the oil spewing into the Gulf of Mexico

IRVING, Texas — Whenever a storm hits while the Dallas Cowboys are inside their practice facility, the sound of rain pelting the tent-like structure can drown out conversation. No matter the noise, safety rarely was an issue — until Saturday.

Winds that were just shy of tornado strength, and perhaps stronger, ripped through the roof during a rookie minicamp practice, essentially popping the so-called bubble.

(etc.)
Before Bill Parcells was hired as coach in 2003, the Cowboys rarely practiced indoors, unless weather was bad enough for them to ride buses to a high school team’s bubble. Parcells suggested that owner Jones build one, and it was finished in time for Parcells’ first season at a cost of more than $4 million.

The no-frills building was pretty much a 100-yard football field with a few more yards of clearance all the way around. The roof was 80 feet high, the equivalent of an eight-story building.

AP Photo caption from photo by/Tony Gutierrez – A firefighter stands surrounded by the collapsed canopy that covered the Cowboys’ indoor practice facility in Irving, Texas.

(from)

http://sports.espn.go.com/nfl/news/story?id=4127852

**

My Note -

These architectural fabrics wouldn’t cost $4 million dollars for this function, since the Cowboys and other facilities that use it have to accommodate a structure for it which wouldn’t be necessary, and the safety of people using it had to be considered for a building but not for this.

This type of architectural building fabric used for semi-domed roofs like the pro-football practice field is strong enough – it can stay put in the currents – the submersibles can tug on it to put it into place a little better if it is generally lined up right to begin with and the pressures on the ocean floor at those depths won’t hurt it any.

It can also be weighted effectively with some number of weights (old rail wheels or something), and floater system without having a bunch of equipment having to be attached. The tent to capture the oil and its weight system to keep it in place, could be set up for nearly nothing in comparison to the other available choices and placed across an undulating and irregular ocean floor surface and still work.

- it can work – but somebody needs to tell them about it – how likely is that?

Engineers can then get the other programs done without this continuation of pumping 210,000 gallons of oil per day into the gulf for five weeks to three months or however long their programmed solutions will take to get in place.

- cricketdiane

Now, let me see if I can figure out how to get the solution to anybody out there at BP or the whoever that might do something with it.

***

Hmmm . . .

Doing it this way – by using architectural fabric such as the Cowboys practice field used, to tent the oil over the pipes where it is pouring out – the setting of the tent and weighted system for it could be accomplished in less than twenty-four hours. It would probably take a day or two to round up the doming fabric – preferably from some use where its pre-made size could be used intact and not manufactured specifically to this purpose.

Where could that be found along the coast somewhere – what about NASA or the NASA complex in Alabama?

- cd9

***

http://en.wikipedia.org/wiki/Deepwater_Horizon_drilling_rig_explosion

Mooring (oceanography)
From Wikipedia, the free encyclopedia

Sketch of a mooring with traps and current meters

A mooring in oceanography is a collection of devices, connected to a wire and temporarily anchored on the sea floor. The devices are current meters to measure the direction and speed of ocean currents, sediment traps to catch settling particles from the water column or experimental chambers, e.g. to measure the solubility of certain substances in sea water. A mooring can be free floating or anchored for some days to weeks (short-time). Long-time moorings might be deployed for a maximum duration of two years. An acoustic release connects the mooring to an anchor weight on the sea floor. The weight is released by sending a coded acoustic command signal from a ship. The weight (e.g. old rail wheels) is unrecoverable. Floaters permit the mooring to come up to the surface to be recovered by a research vessel.

http://en.wikipedia.org/wiki/Mooring_%28oceanography%29

Sketch of a mooring with traps and current meters

Sketch of a mooring with traps and current meters - same system could be used to weight down "domed tent" on sea floor to capture crude oil spilling into Gulf of Mexico from drill pipes

(Article below excerpt from CNN Student Report – )

First Up: Oil Update

AZUZ: The federal government will use “every single available resource” to help contain that oil spill in the Gulf of Mexico. The secretary of Homeland Security declared it an incident of “national significance.” What that means is that resources from other parts of the country can be used to try and control the spill. Louisiana Governor Bobby Jindal already declared a state of emergency to help free up resources for the effort. Yesterday afternoon, the oil was about 16 miles off the Louisiana coast and headed toward shore. When it does start hitting the coast, it could threaten hundreds of species of wildlife: birds, shrimp, crabs, otters. In fact, the entire Gulf Coast fishing industry could be affected.

Yesterday, we told you that the Coast Guard was going to try and contain part of the spill by setting it on fire. They did; you can see the smoke from that fire right here. They were hoping to set another controlled burn yesterday, but the weather wasn’t cooperating. Some authorities think this spill is getting worse, much worse. At first, the estimate was that the spill was leaking out about a thousand barrels of oil per day. Now, the Coast Guard is saying that’s increased to as many as 5,000 barrels. That’s more than 200,000 gallons per day.

http://edition.cnn.com/2010/US/studentnews/04/29/transcript.fri/

***

Cameron Blowout Preventer – Undersea  / Sub sea gizmo on oil pipes?

http://www.c-a-m.com/content/products/product_detail.cfm?pid=2797

(reported on bloomberg ticker last night as the manufacturer of the blowout preventer on the oil pipes in the Gulf that are spewing crude into the water right now.) – didn’t find a height or dimension, might not matter doing the plan described by tenting the oil in place as it is. – cricketdiane

***

Oil spill in the Gulf of Mexico – right now pumping 210,000 gallons per day

My Note -

There have been news stories tonight on CNN about the oil spill and how they are expecting to fix it – I couldn’t believe that what they are suggesting will take 5 weeks of oil continuing to pump into the water. No – no – no – NO.

No.

That is not acceptable.

I might not be down there helping with it but the least I can do is find something that will first work right now – faster than that. Then they can get along with whatever they’re doing.

So, this is the process. First I looked up a few of the articles to find the depth where the pipes are spewing oil into the ocean of the Gulf of Mexico.

And below these, I started looking for what the depth pressures would be and remembering “into my notes” the other things that I’ve heard on the news or read about the oil spill.

- cricketdiane

***

April 28, 2010
Evening Buzz: Burning Gulf Oil Spill
Posted: 09:40 PM ET
| 13 Comments

Maureen Miller
AC360̊ Writer

It’s not what you expect to see in the Gulf of Mexico: a massive wall of flames and thick smoke. But that’s what could happen as crews today began a last-ditch effort to burn up an oil spill before it hits land and potentially causes an environmental disaster. They did a test burn this evening. We expect to see the first video of the burn any minute now and we’ll check in with Chad Meyers for breaking news details on how this dangerous work is being done.

The spill continues to grow as 42,000 gallons of oil leaks from an underwater well that was broken open when a drill rig exploded and sank last week. 11 workers are believed to have died in the blast. Their bodies have never been recovered.

The slick stretches for about 100 miles across the north-central gulf and is about 30 miles wide at some points.
It’s within 16 miles of the mouth of the Mississippi, the U.S. Coast Guard reports.

Efforts to cap the well using remote-controlled submarines have failed. Louisiana officials fear the oil could reach the state’s shoreline late Friday or early Saturday and damage shellfish and wildlife.

BP, which owns the oil well, is spending $6 million a day trying to control the spill. The company’s CEO said today the explosion could have been prevented and he’s putting them blame on the rig owner Transocean Ltd. A spokesman for Transocean has declined to respond to BP’s comments. But Transocean’s Vice President has said the oil rig had no signs of a problem before the blast.

***

(NECN/CNN) – Officials say an oil spill in the Gulf of Mexico is much worse than originally thought.

Wednesday night, the Coast Guard said about 5,000 barrels of oil — more than 200,000 gallons — are leaking each day.  It is five-times worse than originally estimated.

Skimmers, barriers and oil absorbing booms are stacked ceiling high in a staging warehouse.  They are the traditional means by which to fight an oil spill.  But with an estimated total of 5,000 barrels leaking from three different areas per day, other methods are being tested — all in hopes of preventing massive damage to the coastline.

Officials experimented with burning off the thicker areas of crude in a controlled fire Wednesday.  And engineers are fabricating a new idea: Buidling a dome they hope willc apture the leaking oil underwater.

As a barrier was being loaded to spread along parts of the Louisiana shoreline.  Still, one sobering fact remains: Not every inch can be protected.

CNN’s Reynolds Wolf reports in the video player above.

Tags: Coast Guard, Louisiana, oil rig, Gulf of Mexico, oil slick

***

***

CNN Student News) — April 30, 2010

Download PDF maps related to today’s show:

• Gulf of Mexico
• Santa Clara, California

Transcript

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

CARL AZUZ, CNN STUDENT NEWS ANCHOR: Arbor Day is awesome! Especially when it falls on a Friday. To celebrate, we are branching out into a bunch of topics in today’s show. I’m Carl Azuz. Let’s get to it.

First Up: Oil Update

AZUZ: The federal government will use “every single available resource” to help contain that oil spill in the Gulf of Mexico. The secretary of Homeland Security declared it an incident of “national significance.” What that means is that resources from other parts of the country can be used to try and control the spill. Louisiana Governor Bobby Jindal already declared a state of emergency to help free up resources for the effort. Yesterday afternoon, the oil was about 16 miles off the Louisiana coast and headed toward shore. When it does start hitting the coast, it could threaten hundreds of species of wildlife: birds, shrimp, crabs, otters. In fact, the entire Gulf Coast fishing industry could be affected.

Yesterday, we told you that the Coast Guard was going to try and contain part of the spill by setting it on fire. They did; you can see the smoke from that fire right here. They were hoping to set another controlled burn yesterday, but the weather wasn’t cooperating. Some authorities think this spill is getting worse, much worse. At first, the estimate was that the spill was leaking out about a thousand barrels of oil per day. Now, the Coast Guard is saying that’s increased to as many as 5,000 barrels. That’s more than 200,000 gallons per day.

http://edition.cnn.com/2010/US/studentnews/04/29/transcript.fri/

***

AP Top News at 9:45 p.m. EDT

(AP) – 1 hour ago

VENICE, La. — An oil spill that threatened to eclipse even the Exxon Valdez disaster spread out of control and started washing ashore along the Gulf Coast Thursday night as fishermen rushed to scoop up shrimp and crews spread floating barriers around marshes. The spill was bigger than imagined — five times more than first estimated — and closer. Fingers of oily sheen were reaching the Mississippi River delta, lapping the Louisiana shoreline in long, thin lines.

The Associated Press

Oil booms that were placed in preparation of the looming oil spill from last week’s collapse and spill of the Deepwater Horizon oil rig are seen strewn along the shoreline from choppy seas in Port Eads, Thursday, April 29, 2010. (AP Photo/Gerald Herbert)

http://www.google.com/hostednews/ap/article/ALeqM5g8-DEMtAE9q4i4ySQ0eV_qZefmRQD9FD3CFG0

***

The Deepwater Horizon, a semi-submersible offshore drilling rig in the Gulf of Mexico, exploded on April 20, 2010, and sank two days later, taking with it eleven lives and causing a significant oil spill. It is the worst accident since the blowout of Ixtoc I.
Deepwater Horizon drilling rig explosion

http://en.wikipedia.org/wiki/Deepwater_Horizon_drilling_rig_explosion

and was designed for operations in water depths of up to 8,000 feet (2,400 m). Maximum drill depth was 30,000 feet (9,100 m).[1]

The semi-submersible drilling rig was owned by Transocean Ltd and was leased by BP[2] until September 2013. At the time of the fire Deepwater Horizon was on BP’s Mississippi Canyon Block 252, referred to as the Macondo prospect, in the U.S. sector of the Gulf of Mexico, about 41 mi (66 km) off the Louisiana coast.[3][4]

Investigation

The Coast Guard and the Minerals Management Service have launched an investigation on possible causes of the explosion. Production casing was being run and cemented at the time of the accident. Once the cementing was done, it was due to be tested for integrity and a cement plug set to abandon the well for later completion as a subsea producer. According to Transocean executive Adrian Rose “undoubtedly abnormal pressure” had accumulated inside the marine riser and as it came up it “expanded rapidly and ignited”, an event known as a blowout.[18]

Due to potential oil spills which are likely during explosions, the Environmental Protection Agency’s teams were on a standby in Morgan City, Louisiana, to assess possible environmental damage as soon as the fire is put out. The Mineral Management Service officials said there have been 39 fires or explosions offshore in the Gulf of Mexico in the first five months of 2009, the last period with statistics available.[5][6] Seventy-nine of the total 126 workers were Transocean employees, six were from BP and forty-one were contracted.[10] BP spokesperson Darren Beaudo said all BP employees were safe.[7]

**

Oil spill
This photo from a NASA satellite shows the oil slick in the Gulf of Mexico on April 25, 2010.

Although initially the undersea wellhead appeared to be contained, on April 24 it was found that the wellhead was damaged and was leaking oil into the Gulf.[19] Coast Guard Rear Admiral Mary Landry described it as “a very serious spill, absolutely.”[19] BP, which was leading the cleanup, employed remotely operated vehicles (ROVs), 700 workers, four airplanes and 32 vessels to contain the oil.[19] Up to 1,000 barrels of oil a day (1.84 litres/second) were originally estimated to be leaking from the wellhead according to BP,[19] but they have since adjusted it to 5,000 (9.2 litres/second).[20] Other sources using satellite imagery have put that number as high as 5,000 to 10,000 barrels a day (9.2 to 18.4 litres/second).[19] Estimating the flow is very difficult, as there is no metering of the flow underwater.[20] However, the slick was estimated, as of April 29, to cover 4,700 square miles (12,000 km2), an area approximately equivalent to that of Jamaica.[20][21] The oil slick may eventually exceed the volume of oil in the 1989 Exxon Valdez oil spill, as the spill may take months to contain and is quickly approaching the Delta National Wildlife Refuge.[22][23] The same day, Governor of Louisiana Bobby Jindal declared a state of emergency in the state after weather forecasts predicted the slick would reach the Louisiana coast by April 30[24] while President Barack Obama announced that the Federal Government is using “every single resource at our disposal”[24] to control the slick.[24]
[edit] Clean up activities

After the discovery that the undersea wellhead was leaking, the oil cleanup was being hampered by high waves on April 24 and 25.[25] By April 25, the oil spill covered 1,500 square km, and was only 50 km from the Chandeleur Islands, ecologically sensitive barrier islands, damaged in 2005 by Hurricane Katrina.[25] Mike Miller of fire-fighting company Safety Boss that specializes in oil wells, expects the oil spill to be the biggest in history.[20]

On April 28, it was announced that the US Military was joining the cleanup operation and would commence controlled burning of the oil. Doug Suttles, chief executive officer of BP welcomed the assistance of the US military.[20]

By April 29, 69 vessels including skimmers, tugs, barges and recovery vessels are active in clean up activities. In an attempt to minimize impact to sensitive areas in the Mississippi River Delta area, over 100,000 feet of booms have been deployed along the coast.[26]

Response boats work to clean up spilled fuel and oil from the rig and undersea wellhead.

In this image, the Mississippi River Delta is at image center, and the oil slick is a silvery swirl to the right.

The slick seen from NASA’s EO-1 satellite.
Activities to stop the oil leak

BP planned to use ROVs to close the blow out preventer (BOP) valves on the well head 5,000 feet below the surface of the water.[27] The valve closing procedure was estimated to take 24 to 36 hours as of April 25.[25] As of April 28, BP has been unsuccessful in accomplishing this.[27] BP engineers are working on two other options to secure the source. The first and fastest is to place a dome over the well head that will capture the oil and pipe it to the surface to be contained in a storage vessel, but it will still take weeks for the design and fabrication of the dome before it can be put in place. BP is also preparing to drill a relief well into the original well to relieve it. Transocean Development Driller III has arrived on site and is preparing to drill. Transocean’s Discoverer Enterprise is also underway should a second relief well be necessary. This operation will take two to three months to stop the flow of oil, however. [20][26] Re-drilling the well straight down was done in Australia after the Montara oil spill. In this case, once the second drilling operation reached the original borehole the operators pumped drilling mud into the well to stop the flow of oil.[28][29]

Coordinates: 28̊45?19.34?N 88̊23?15.65?W? / ?28.7553722̊N 88.3876806̊W? / 28.7553722; -88.3876806
Retrieved from “http://en.wikipedia.org/wiki/Deepwater_Horizon_drilling_rig_explosion”
Categories: Explosions in the United States | 2010 in the United States | Disasters in Louisiana | Oil platform disasters | Maritime incidents in 2010 | Gulf of Mexico | Oil spills in the United States | Environmental disasters

http://en.wikipedia.org/wiki/Deepwater_Horizon_drilling_rig_explosion

***

What is the PSI at 400 feet below sea level?
In: Units of Measure

The pressure of liquid acting on a container or other body increases at the rate of 1 atmosphere or about 14.7 lbs. per square inch for every increase of 33 feet in depth. So doing the math results in: 400ft./33ft. = 12.121. Multiplying that by 14.7 lbs. per square inch yields about 178 lbs. per square inch at 400 feet deep.

http://wiki.answers.com/Q/What_is_the_PSI_at_400_feet_below_sea_level

***

2. Pressure at a certain depth in water

Scuba divers know that as you go down to greater depths, the water pressure increases. In fact, the increase in pressure is 14.7 psi for every 34 feet of additional depth. A diver that descends to a depth of 100 feet must withstand a pressure of …

( 100 ft / 34 ) x 14.7 = 43.24 psi

This pressure is in addition to the normal atmospheric pressure at the surface. The pressure limits the depth to which unprotected divers can go, and the pressure causes lots of problems.

The point is that as you descend deeper into a fluid, whether it be water or air or whatever, the pressure increases. And if you go upward toward the surface, the pressure becomes less.

Here is another view of the pressure at the bottom of a tank of water. Suppose the tank is rather tall so that the depth of water in the tank is 10 feet. What will be the pressure at the bottom of the tank?

We can use the relationship above to find the answer:

( 10 ft / 34 ) x 14.7 = 4.32 psi

This means that each square inch of surface area on the bottom of the tank is being pushed downward with a force of 4.32 pounds.

Now consider this: suppose we have a tall, skinny column of water 10 feet tall, with the column being one inch on each side. That is, its bottom surface area is 1 square inch. How much would the column of water weight?

Sparing you the details of the math, the weight of the column of water would be 4.32 pounds.

Here’s the point: the pressure at the bottom of the tank in psi is the same as the weight of the water supported by each square inch of the bottom surface of the tank.

http://www.challengers101.com/Pressure.html

***

My Notes -

I know the oil being pumped under the water is at approximately 5000 feet down, high pressure, irregular surface area likely, and they have been using robotic submersibles -

there are three pipes, they are leaking 210,000 gallons per day / more or less
CNN reported tonight that the pipes where it is leaking are about a foot diameter? is that correct? And, there is a blow-out protector on top of at least one – or what? was it 50 feet tall on that BOP or was that what they said?

on bloomberg last night’s ticker said the BOP was made by Cameron- which I looked up earlier today – no size immediately noticed – will have to go back to find it – (maybe not necessary)

the oil is getting swept by currents and due to its chemical and characteristic nature is floating quickly toward the surface – but, they also admit that they don’t know the degree to which it is coating undersea surfaces in the immediate area

strong current area?

what type of irregularities exist in the surface features?

how large is the flow are under the water – and how tall are the pipes and BOP together?
could something be designed for later after whatever will fix it now – yes, they are already doing that – and it will have to have some consideration in the immediate design.

get me a tanker, a boom rig and about four boats that can withstand the currents and winds without getting knocked around too bad (plus maybe the rover to check it after the actions.)

where could we get it and what industry has it – doesn’t have to be close by but that would be handier.

(I recognize that I didn’t say the “what” of that sentence but I’ve got an idea and I’m not sure if it would work or even be likely to work yet)

- cricketdiane, 04-29-10

***

alrighty then – first, I need to find what the bottom of the ocean looks like right there and what the immediate ocean currents are in the area – which mean google map maybe and the NOAA satellite stuff or where?

According to GCAGS Transactions, it has an average width of 8 kilometers (km), and a length of 120 km.

(from)

Mississippi Canyon

From Wikipedia, the free encyclopedia

Jump to: navigation, search

The Mississippi Canyon is an undersea canyon in the Central Gulf of Mexico, south of Louisiana. According to the U.S. Geological Survey GLORIA Mapping Program, it is the dominant feature of the north-central Gulf of Mexico. According to GCAGS Transactions, it has an average width of 8 kilometers (km), and a length of 120 km.

On April 20, 2010, the Deepwater Horizon oil platform, located in the Mississippi Canyon about 40 miles off the Louisiana coast, suffered a catastrophic explosion; it sank a day-and-a-half later.[1] Although initial reports indicated that relatively little oil had leaked, by April 27 it was discovered that approximately 5000 barrels (208,000 gallons) of oil per day were issuing from the wellhead, a mile below the surface on the ocean floor.[2] The resulting oil slick quickly expanded to cover hundreds of square miles of ocean surface, posing a threat to marine life and adjacent coastal wetlands.[3]

References

  1. ^ “Burning oil rig sinks, setting stage for spill; 11 still missing”, by Kevin McGill and Holbrook Mohr (Associated Press), Boston Globe, April 23, 2010
  2. ^ “Well from sunken rig leaking oil”, by Cain Burdeau (Associated Press), Boston Globe, April 25, 2010
  3. ^ “Race to plug leaking oil well off La. spurs new tactics”, by Cain Burdeau (Associated Press), Boston Globe, April 27, 2010

External links

Stub icon This article about a specific oceanic location or ocean current is a stub. You can help Wikipedia by expanding it.

v • d • e

***

Mooring (oceanography)

From Wikipedia, the free encyclopedia

Jump to: navigation, search

Sketch of a mooring with traps and current meters

A mooring in oceanography is a collection of devices, connected to a wire and temporarily anchored on the sea floor. The devices are current meters to measure the direction and speed of ocean currents, sediment traps to catch settling particles from the water column or experimental chambers, e.g. to measure the solubility of certain substances in sea water. A mooring can be free floating or anchored for some days to weeks (short-time). Long-time moorings might be deployed for a maximum duration of two years. An acoustic release connects the mooring to an anchor weight on the sea floor. The weight is released by sending a coded acoustic command signal from a ship. The weight (e.g. old rail wheels) is unrecoverable. Floaters permit the mooring to come up to the surface to be recovered by a research vessel.

http://en.wikipedia.org/wiki/Mooring_%28oceanography%29

***

Okay, that would work -

An acoustic release connects the mooring to an anchor weight on the sea floor. The weight is released by sending a coded acoustic command signal from a ship. The weight (e.g. old rail wheels) is unrecoverable. Floaters permit the mooring to come up to the surface to be recovered by a research vessel.

Now, to go find the other part – (my note)

***

http://stadium.dallascowboys.com/

I remember there was an accident where the practice field that was covered by a huge architectural fabric came down on the players – I was thinking that was the Dallas Cowboys stadium – but it was the practice field – that is what they need, then drop the architectural fabric like a tent over the pipes using the acoustic weight mooring system (e.g. old rail wheels). Then, they can take a pipe up under the “tent” and fill a tanker with the stuff to bleed off the oil until they can get the other thing built. (cricketdiane, 04-29-10)

(from the article below about the practice field – )

“The no-frills building was pretty much a 100-yard football field with a few more yards of clearance all the way around. The roof was 80 feet high, the equivalent of an eight-story building.”

Dallas Cowboys Stadium

Dallas Cowboys Stadium - architectural "dome" fabric could be used to capture oil from Deepwater Horizon spill in the Gulf of Mexico

***

IRVING, Texas — Whenever a storm hits while the Dallas Cowboys are inside their practice facility, the sound of rain pelting the tent-like structure can drown out conversation. No matter the noise, safety rarely was an issue — until Saturday.

Winds that were just shy of tornado strength, and perhaps stronger, ripped through the roof during a rookie minicamp practice, essentially popping the so-called bubble. Between the falling debris and the furor to get out, special teams coach Joe DeCamillis broke his back and 11 more people were hospitalized.

( . . . )

NFC East blog

When you look at the destruction, it’s hard to imagine how everyone survived, writes ESPN.com’s Matt Mosley. Blog.

• More from Cowboys’ facility

( . . . )

Just before the facility was flattened, winds were clocked at 64 mph, a single mph shy of the threshold for a weak tornado. However, National Weather Service meteorologist Gary Woodall said a “microburst” may have pushed the wind beyond 70 mph at the top of the structure. A microburst also was to blame for a 1985 Delta Airlines crash at nearby DFW airport that killed 137 people.

“The fact that there weren’t more injuries is rather miraculous,” Woodall said.

Also incredible: An Irving police spokesman said there was hardly any damage beyond the Cowboys’ facility.

[+] EnlargeCowboys Facility

AP Photo/Tony GutierrezA firefighter stands surrounded by the collapsed canopy that covered the Cowboys’ indoor practice facility in Irving, Texas.

“We checked and we can’t find any other damage than this particular location,” said David Tull, an Irving police spokesman. “The nearby area didn’t have any reports of structural damage.”

Before Bill Parcells was hired as coach in 2003, the Cowboys rarely practiced indoors, unless weather was bad enough for them to ride buses to a high school team’s bubble. Parcells suggested that owner Jones build one, and it was finished in time for Parcells’ first season at a cost of more than $4 million.

The no-frills building was pretty much a 100-yard football field with a few more yards of clearance all the way around. The roof was 80 feet high, the equivalent of an eight-story building.

On Saturday, there were 27 players — almost all drafted last weekend or signed as undrafted rookies — working out when the storm hit. Also in the building were coaches, support staff and media.

Overhead lights swayed violently, prompting players, coaches, staff members and reporters to vacate the building. Several people were trying to exit the facility as the roof came down at about 4:30 p.m. ET.

( . . . )

Eatman and colleague Josh Ellis tried freeing Archer but the structure wouldn’t budge. “It was like a car,” Eatman said. Then safety DeAngelo Smith and linebacker Brandon Williams managed to lift it just enough for Archer to squirm out.

(etc.)

Information from ESPN.com’s Matt Mosley and The Associated Press

http://sports.espn.go.com/nfl/news/story?id=4127852

***

My Note -

These architectural fabrics wouldn’t cost $4 million dollars for this function, since the Cowboys and other facilities that use it have to accommodate a structure for it besides and the safety of people must be considered. It is strong enough – it can stay put in the currents – the submersibles can tug on it to put it into place a little better if it is generally lined up right to being with and the pressures on the ocean floor at those depths won’t hurt it any.

It can also be weighted effectively with some number of weights and floater system without having a bunch of equipment having to be attached for nearly nothing and placed across an undulating and irregular ocean floor surface and still work.

- it can work – but somebody needs to tell them about it – how likely is that?

Engineers can then get the other programs done without this continuation of pumping 210,000 gallons of oil per day into the gulf for five weeks to three months or however long their programmed solutions will take

- cricketdiane

Now, let me see if I can figure out how to get the solution to anybody out there at BP or the whoever might do something with it.

***

Hmmm . . .

Doing it this way – by using architectural fabric such as the Cowboys practice field used, to tent the oil over the pipes where it is pouring out – the setting of the tent and weighted system for it could be accomplished in less than twenty-four hours. It would probably take a day or two to round up the doming fabric – preferably from some use where its pre-made size could be used intact and not manufactured specifically to this purpose.

Where could that be found along the coast somewhere – what about NASA or the NASA complex in Alabama?

- cd9

Group W banking, but then you’d have to know Alice –

My Note -

I am intelligent. I am intelligent enough to know this about myself and about the world in general, (see mantra below). It is, after considerable thought, what I can offer as my great contribution to this greater world. After reading pages and pages of US Code, International Law, Science, Economics, Business Finance and Wall Street lists of hedge funds, market makers and “deals” – I was reminded this morning, of something I wrote a long time ago when I lived with roommates who kept a war zone in our living room -

***

A mantra that I wrote during another troubled time in our history as a nation, (before 1990 something) -

It is called, “a mantra for the real world” -

It says -

I am an asshole. You are an asshole. We are all assholes. If we all shut down, shut up and don’t work together, the shit backs up and the world explodes. I am an asshole. You are an asshole . . . We are all assholes.

I think the original version was a little longer. It has been paraphrased by overuse.

- cricketdiane, 04-29-10

***

And then I forget that – and still find myself offended when I’m being an asshole or someone else is being an asshole or when some group of people or situation is intolerable and asinine.

The original version had something about “flow” in it – probably intended as a solution at the time beyond the recognition that we are the problem and therefore, the solutions as well.

Do you know, there are literally hundred of thousands upon thousands of pages of laws written precisely because humans, including me – are not inclined to play nice with one another on a regular basis? That is astounding.

It isn’t so astounding because we don’t play nice with each other some or even a lot of the time, it is astounding that someone thought enough of it to write it down, legislate it, take it to court, spend hours of their lives debating it, and academically, taught it, discussed it, intellectualized it, wrote about it, felt it necessary to review it, disseminate those reviews, alter it somewhat in how it was applied in case law somewhere at some time and for some reason along with paying thousands of lawyers and judges to adjudicate and consider it.

That is what is amazing.

I am literally dumbfounded by it.

There was a man who built a wall. His neighbor would have an advantage in having the wall along his property as well. The two had a talk over where the fence would be. The man who felt he could build the wall said he would and told the neighbor about his plans to do it.

So, ultimately when the wall was built, the man who put his time, labor and materials into building the wall that he wanted – sued the neighbor for payment for building the wall. Now, who would’ve thought that would take up pages and pages of written materials, discussion, thought, legal hours of representation for both sides and judges and orators and legislators and some of the brightest minds in our history to figure out?

But, aside from being an example intended to show a legal premise about rights, unspoken communication and commitments intended or otherwise, it is also an example of the massive consideration being given to the most trite of circumstances in human activities.

And it is the direct result of several very basic things – failure to recognize that the communication was not perceived nor received the same on both sides, failure to work together effectively – since both of the bastards should’ve been building the wall, and a massive failure by society to give these people the tools to work effectively together and play with one another appropriately at every stage of the event.

We have children and adults saying to one another, when they don’t like what was said or the way someone looked at them, that they’ll go get their gun. Well, that is no surprise reading the laws.

Apparently, that has been a problem which could’ve been solved a long time ago – with solutions that effect options for better resolutions and social tools in the hands of those people so that the only option on the menu wouldn’t be a gun or a bat or a weapon of permanent and irreparable harm.

That “beat the hell out of somebody” solution is always on the menu for any human being, but the tragedy and shame is for it to be the only solution on the menu for anybody, especially after this much of civilization has passed before us.

We have traders on Wall Street, money managers within investment firms and chief executive officers who were not even capable of hearing or understanding what the Senators on the investigative committee were saying to them.

It isn’t a failure of the Senators, their staff members and the general public to understand the language of Wall Street – it was the final analysis that shows, Wall Street is used to playing in a very isolated and rarefied atmosphere where everyone sees it the same way they do, where everything appears fine and wonderful, and where no one really knows what they are doing outside of that isolated and intellectually-biased sphere.

With the advent of the internet and resources of information broadly and immediately available, they failed to realize that everyone can know what they are doing and understand how they are doing it instantly. It isn’t hard to understand chicanery and con, there are pages and pages and pages of law devoted to it. Apparently, that is also a problem we could’ve solved a long time ago, by taking all those people and families whose trade involved finance and letting them sell to the “get a bat” people.

But, no . . . we wouldn’t do that.

- cricketdiane

***

I still agree with Chris Rock that the way to solve the problem of violence isn’t to outlaw guns – just raise the price of the bullets.

For $650 a bullet -  it changes the idea of that solution. But, then we would have to outlaw 2 x 4′s.

There is a law under discussion in Alabama and a candidate for Governor playing on it along with a bunch of very twisted well-meaning internet chatter that would make the driving test only given in English. And, every time I heard that story I’m thinking that as a driver, I want to know that the person next to me knows how to drive the car and the rules of the road, not whether they’re going to cuss me out in Russian, Japanese, Spanish or French because they can’t speak “American.”

And, I would hope they don’t give a test on English to the people in Alabama – all things considered. People from Japan, Europe and most of the rest of the world, are not going to have the problems with it that we have – they speak several languages besides ours.

***

There was a story yesterday which has also been brewing about hedge funds moving to Hong Kong and Singapore – particularly some that are currently enjoying English law in London. I hope they do, too. Because they can do math in that part of the world and they’re not going to put up with it.

The shit that they come up with in hedge funds just doesn’t come out the same everywhere. It isn’t going to break the Bank of England if they leave and go to Singapore or Hong Kong. I would send a letter of condolence to them and tickets to take the trip and figure it out.

- cricketdiane

***

See yah . . .

ANd, yes there’s more – there’s always more . . .

http://www.institutionalinvestor.com/

Institutional Investor Magazine

Institutional Investor is proud to announce this year’s manager nominees for the 8th Annual Hedge Fund Industry Awards. The winners will be announced at a dinner and awards ceremony on Monday, June 21, 2010. The awards dinner is held in conjunction with Institutional Investor Conferences’ Hedge Fund Investor Symposium, June 22-23, 2010, in New York.

At the Hedge Fund Industry Awards dinner, to be held at the Mandarin Oriental in New York City, Julian Robertson Jr., Founder and Chairman, Tiger Management Corp, will be presented with the lifetime achievement award. Orin Kramer, Chairman, New Jersey State Investment Council, will be honored for his outstanding contribution to the hedge fund industry.

The manager nominees are:

Institutional Hedge Fund Firm of the Year Nominees
D.E. Shaw & Co.
Highbridge Capital Management
Och-Ziff Capital Management Group
Paulson & Co.
York Capital Management

Emerging Hedge Fund Firm of the Year Nominees
1798 Global Partners
Arrowhawk Capital Partners
Atalaya Capital Management
HealthCor Management
Merchants’ Gate Capital

Credit-Focused Hedge Fund of the Year Nominees
Appaloosa Management
Avenue Capital Group
Canyon Capital Advisors
Centerbridge Partners
Pacific Investment Management Co.

(et. – there are a bunch of them)

http://www.institutionalinvestor.com/alternatives/Articles/2475251/Paulson-and-Co-SAC-Capital-Appaloosa-Management-Among-Nominees-For-Hedge-Fund-Industry-Awards.html

(from)

About the Hedge Fund Industry Awards
For the past 8 years, the Hedge Fund Industry Awards have recognized the people and firms across the industry whose innovation, savvy, achievements and contributions made them stand out among their peers.  Award honorees, nominees and winners are chosen by the editorial staff of Institutional Investor magazine based on their market intelligence, performance data and additional information received from the industry following a public call for nominations.

Alternatives

Paulson & Co, SAC Capital, Appaloosa Management Among Nominees For Hedge Fund Industry Awards

Institutional Investor announces this year’s manager nominees for the 8th Annual Hedge Fund Industry Awards.

***

Amazing.

And just in case it wasn’t clear about this English only crap -

I am for every driving test, driving manuals, training tools for driving and rules of the road materials  for learning and testing the understanding of it, to be available in every language.

And, I’m for every person in America to be able to fluently and proficiently converse in the American version of English, including people who were born American and those who came from somewhere else.

And – I’m very much for every person in America learning more languages than the one they came into this world learning in the family where they originated.

That would make all the difference, but when it comes to the skills and laws associated with driving – make sure that people can understand and express what they know about it in the language with which they are most familiar – so that we are all on the same damn page when we are driving on the same damn roads with each other and our lives, safety, well-being, physical wholeness and the lives of those we love are at stake.

Here is what I had written earlier – and, by the way, for use of the English language being a problem to people born and raised in Alabama generally – they may as well not get offended because they are in good company with at least 70% of the rest of America that don’t have the excuse of being born in some other country -

There is a law under discussion in Alabama and a candidate for Governor playing on it along with a bunch of very twisted well-meaning internet chatter that would make the driving test only given in English. And, every time I heard that story I’m thinking that as a driver, I want to know that the person next to me knows how to drive the car and the rules of the road, not whether they’re going to cuss me out in Russian, Japanese, Spanish or French because they can’t speak “American.”

And, I would hope they don’t give a test on English to the people in Alabama – all things considered. People from Japan, Europe and most of the rest of the world, are not going to have the problems with it that we have – they speak several languages besides ours.

***

The other thing I was going to note – I had written and then put on another document intending not to publish it, but here it is -

We have Barney teaching children, “I love you, you love me, we’re just one big family . . . ” and then turn around to them in a school classroom during grade school and say, “what do you mean you think you’re special?” and subject them to psychoanalysis to prescribe drugs to “fix that.” No wonder they have futility thinking by the time they’re in middle school and everyone is bullying one another to prove that they are at least in some way better than some other kid or group of kids down the hall. We taught them that. First, we teach them they are special and unique and important and valued and valuable – then what?

We want them to learn to read and think and talk about things and then, we force them into a desk in a classroom for eight hours without moving and expect them to be healthy, not obese, happy, intelligent, learning, non-abusive to their classmates, feeling valued and important – and then tell them to sit down, shut up and listen for hours on end to stuff we wouldn’t want to hear for ten minutes of constant uninterrupted discourse.

What the hell kind of learning is that? And, then people wonder why there is a problem in our schools and 70% of America is illiterate. What did they think would happen when the normally alive, vivacious, curious wonderment of their children was chained into a school desk for hours after being subjected to an enclosed gas chamber of diesel fumes for an hour? What were the expected results of that situation?

I have listened to hours of teachers saying they are not the problem, to health care workers, nurses, doctors, politicians, agencies, decision-makers and academics saying they’re aren’t the problem, to Wall Street brokers, bankers and financial legislative committee members, political policy makers, political party policy makers, union leaders, citizens, parents, students, school systems, school board members, and countless others waste my time saying they aren’t the problem. They’ve wasted all of our time saying they aren’t the problem, they didn’t cause the problems, they had nothing to do with it. Well, I’m here to tell you that they did.

And, we all know that.

What I want to do is tell them to put both their hands out in front of them, tell them to then reach around to their backsides and see if they can find their own ass using both the hands designed to do so. That’s what I want to do, because if they can’t do that – they don’t need to be teaching school, politicking, policing, leading, financing, running banks, doing business, unionizing, serving up health care to anybody nor parenting any child we want to see to its adulthood.

Two things – one, it shows they can’t follow directions.

And, two – it shows either they do or do not know where the solutions are generated and implemented. – and that is, at the end of their arms where their hands are located using the mind that the system designer put between those hands to get the job done successfully. Maybe people have forgotten, but we didn’t design the system (that is a human being) and it works.

To make it more simple – a basic skills test for generating solutions that work, that are workable and that can work – exists in the knowledge that you can find your own ass with your own two hands (without help.) And some people, even those who need help finding their own ass are capable of generating and implementing solutions that work because we are all designed that way to be capable of doing that.

But, there is absolutely no incentive for them to change anything they’re doing in the way they have been doing it such that it would improve anything for anybody in the situations where they find themselves accountable. And, neither do I. Maybe it is a human thing. Maybe we all lack the discretion necessary to do anything better than what has become familiar to us, no matter how intolerable it is. And, no matter what we know about the outcome. We seem infinitely capable of dissuading ourselves from the truth, whatever it is. Like, that just because that last four years of students came out of our classes not able to read doing it that way, doesn’t mean the next four sets of students won’t be able to read by doing it and teaching it in the same way we just did. That is delusional. But, that is what we do.

And, no – this part is not funny. But, if you think about it – the first part of what I wrote today wasn’t funny either. But, I laughed when I read it after having written it. That’s because I have already come to accept the hideousness of it, and that shared humanity about it – makes it funny (to me.)

Yes, the people in Alabama might not pass a test in English – but they would be in good company apparently with the people of Arizona who just passed a law to stop anybody with a tan and ask for papers documenting their legal birth somewhere in order to walk down the street of America. Well, that’s no surprise.

I watched that sheriff from Arizona proudly boasting about the 200,000 people they had stopped already and the 38,000 they put into custody. And, yet – the crime still goes on. How is that possible if they are doing such a bang em’ up good job by stopping everybody demanding birth certificates and documents. Maybe they are in the wrong business in Arizona law enforcement. Maybe they need to be in the business of stopping crime instead of chasing papers and people who obviously didn’t do a crime when they were stopped in the first place (or it wouldn’t even be under discussion.)

There is a great job somewhere for that sheriff and the legislators, politicians and whoever else came up with this push for focusing on documentation instead of solving the crime problem in Arizona and their cities. Maybe we need them on the banking regulators’ staff and we could find out what papers we’re missing there from banks, investment firms, stock market wizards and others engaged in driving our country into the ground. Surely it isn’t the people making $4.00 an hour in the hot sun laying bricks for our buildings that are the ones doing it.

In Georgia, over the many years of walking to go to the store and buy something, I don’t have a tan, am not black or brown or drunk or stoned or carrying a bat or a gun or a weapon of mass destruction or acting like a moron or talking to the wind and still get stopped by police and demanded of my identification and answers about where I’m going and where I live and where I was born and where I came from and why am I there and who is somebody I know and on and on and on – even right around the corner from where I live, bothering nobody, and doing nothing out of the ordinary. But, when I first started walking to go places where I needed to go – buying groceries, getting to the bus stop two miles away, going to the Wal-Mart or mall, there weren’t many people walking. Well, there was nobody walking.

Now, there are lots of people who walk to buy their groceries and walk to work or use the bus. And, as racist as it sounds – I’m here to be the one to say it – I didn’t have any better luck with America in my lifetime than people of many different races and situations have had. There is just a tendency for assumptions to be made, regardless of the color of my skin, too. And, that is a shame – some of those people would’ve really liked to have gotten to know me, if they could’ve gotten past what they thought about me in the first place without ever having found out what was really there.

That bunch up in Washington, and the bunch up there on Wall Street in New York and its offices around the world need to get in touch with two simple things. One, the history they are making is written today by their actions or failure to take actions. And two, they are not alone, whether they know it or not – we all fit into a much bigger world. When I screw something up, I’ll be getting a band-aid for my big toe. When they screw something up, our children and our children’s children will be studying it in school along with experiencing an entirely different world than the one we have today – for better, or for worse.

And that sheriff down there in Arizona – he will be in the history books whether he likes it or not as the biggest excuse for the picture of remaining bigotry and prejudice we continue to endure in America to this day.

And, no that is not funny either.

- cricketdiane

***

Oh yeah, tell those Senators that they can go pick out 100 of the most dog-ass likely to fail defaulting loans and Goldman Sachs will package it up right quick where they can buy a short on it and some credit derivatives that are guaranteed to pay off to them. What’s a billion dollars here or there?

Better yet, they can borrow somebody else’s money to do it, leverage that instead of really using it, pay 1% insurance on the whole package and then get 100% payoff on the value of the entire thing – however much that is. Oh wait – maybe that’s why they don’t want to regulate the damn thing, because they’re doing that already.

***

Group W banking, but then you’d have to know Alice -

just in case – The Group W bench in the title which becomes Group W banking could be an obscure reference to Alice’s Restaurant by Arlo Guthrie, and not just something I made up.

But this – I did make up this, while I was taking my bath awhile ago (earlier today) -

Those epic efforts out in the Gulf of Mexico to clean up the oil might have tried those pleated, white filters that are used on heaters – wired together in a long row, because water goes through them but oil does not. It would cost about $20 to get one and find out if it works or not, but it does which I accidentally discovered doing something else trying to filter cement dust out of the air at my parent’s house recently. Somebody needs to go out there and tell them, I’m not the one with a 600 mile wide oil spill, hundreds of people trying to manage it unsuccessfully and with crude oil heading towards the shore.

But, then I’ve been there and done that, so to speak. I’ve been to the beaches in California after an oil spill with the birds laying on the shore covered in black crude and brown gunk from the sand, flopping around with the sounds of dying. And, I’ve stepped over the blanket of tar laden kelp and smelled the fishes that lay dead and dying in the foam of the surf and along the beach.

I’ve used the Ajax powder to try and get the black petroleum off my shoes and off the carpets in the car after we all walked along that beach. I know the dread and horror of what that will be to the businesses and tourist industries along that entire gulf coast from Florida to Louisiana and Texas. But, then – you couldn’t tell them anything about drilling for oil out there in the Gulf – we need that oil – we need those revenues – we need those oil company leases paying off those rigs, etc., etc., etc.,

I can see those tourist brochures now – white sandy beaches covered in coal black mcnasty – oh well. Y’all come now, yah hear? Just like old Granny Clampett says – ya’ll just come on back and spend your money on vacation. And that’s going to be some shrimp jambalaya with a new kind of twang.

What were they thinking? Can I say that they can do as the Republicans suggest and tell each other it doesn’t exist, if they don’t agree with it? Maybe they can hire a pr firm and call it “black sand beaches” and “tar marsh nature lessons camp”. They are not going to like it when that stuff gets to shore, finishes getting to shore and then does what it always does once it is onshore.

Nope, they are not going to think much of the economic revenue that oil is at that point. But, then you just couldn’t tell them anything. Ask Haley Barbour – everything is fine . . .

- cricketdiane

***

Financialization – what a pathetic excuse for an intelligent free market capitalism in action – Greece, Spain, Ireland, Iceland, Britain, US, UK, Portugal, – do the financial _____ even care that real people live in these places?

Foreign exchange trading

The demise of fixed exchange rates initiated a rapid rise in the level of foreign exchange trading (forex). In the United States, forex leaped from $110.8 billion in 1970, 10.7 percent of U.S. Gross Domestic Product, to $5.449 trillion in 1980, 195.3 percent of U.S. GDP.

These figures are estimates, but in April 1977, the U.S. Federal Reserve Bank of New York undertook to measure the actual amount of forex in the United States, surveying forex trading at 44 large money center banks, which the Fed believed probably represented 98 percent of all forex in the United States at that time.

This April 1977 study found there was $4.8 billion in daily forex trading, or around $1.2 trillion a year. However, this study did not include all the trading in futures trading for various currencies. Currency futures were first created at the Chicago Mercantile Exchange (CME) in 1972, the year after fixed exchange rates were abandoned.

Financial turnover compared to gross domestic product

Other financial markets exhibited similarly explosive growth. Trading in U.S. equity (stock) markets grew from $136.0 billion or 13.1 percent of U.S. GDP in 1970, to $1.671 trillion or 28.8 percent of U.S. GDP in 1990. In 2000, trading in U.S. equity markets was $14.222 trillion, or 144.9 percent of GDP. Most of the growth in stock trading has been directly attributed to the introduction and spread of program trading.

According to the March 2007 Quarterly Report from the Bank for International Settlements (see page 24.):

Trading on the international derivatives exchanges slowed in the fourth quarter of 2006. Combined turnover of interest rate, currency and stock index derivatives fell by 7% to $431 trillion between October and December 2006.

Thus, derivatives trading – mostly futures contracts on interest rates, foreign currencies, Treasury bonds, etc had reached a level of $1,200 trillion, $1.2 quadrillion, a year.

By comparison, U.S. GDP in 2006 was $12.456 trillion.

http://en.wikipedia.org/wiki/Financialization

**

***

While the housing and credit bubbles built, a series of factors caused the financial system to both expand and become increasingly fragile, a process called financialization.

Policymakers did not recognize the increasingly important role played by financial institutions such as investment banks and hedge funds, also known as the shadow banking system.

Some experts believe these institutions had become as important as commercial (depository) banks in providing credit to the U.S. economy, but they were not subject to the same regulations.[17]

These institutions as well as certain regulated banks had also assumed significant debt burdens while providing the loans described above and did not have a financial cushion sufficient to absorb large loan defaults or MBS losses.[18]

These losses impacted the ability of financial institutions to lend, slowing economic activity. Concerns regarding the stability of key financial institutions drove central banks to provide funds to encourage lending and restore faith in the commercial paper markets, which are integral to funding business operations. Governments also bailed out key financial institutions and implemented economic stimulus programs, assuming significant additional financial commitments.

By September 2008, average U.S. housing prices had declined by over 20% from their mid-2006 peak.[25][26] As prices declined, borrowers with adjustable-rate mortgages could not refinance to avoid the higher payments associated with rising interest rates and began to default. During 2007, lenders began foreclosure proceedings on nearly 1.3 million properties, a 79% increase over 2006.[27] This increased to 2.3 million in 2008, an 81% increase vs. 2007.[28] By August 2008, 9.2% of all U.S. mortgages outstanding were either delinquent or in foreclosure.[29] By September 2009, this had risen to 14.4%.[30]

http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932010

(***

Financialization is a term sometimes used in discussions of financial capitalism which developed over several decades leading up to the 2007-2010 financial crisis, and in which financial leverage tended to override capital (equity) and financial markets tended to dominate over the traditional industrial economy.

Financialization is a term that describes an economic system or process that attempts to reduce all value that is exchanged (whether tangible, intangible, future or present promises, etc.) either into a financial instrument or a derivative of a financial instrument. The original intent of financialization is to be able to reduce any work-product or service to an exchangeable financial instrument, like currency, and thus make it easier for people to trade these financial instruments. Workers, through a financial instrument such as a Mortgage, could trade their promise of future work/wages for a home. Financialization of risk-sharing makes all Insurance possible, the financialization of the U.S. Government’s promises (Bonds) makes all deficit spending possible. Financialization also makes Economic_rent possible.

(etc.)

Foreign exchange trading

The demise of fixed exchange rates initiated a rapid rise in the level of foreign exchange trading (forex). In the United States, forex leaped from $110.8 billion in 1970, 10.7 percent of U.S. Gross Domestic Product, to $5.449 trillion in 1980, 195.3 percent of U.S. GDP. These figures are estimates, but in April 1977, the U.S. Federal Reserve Bank of New York undertook to measure the actual amount of forex in the United States, surveying forex trading at 44 large money center banks, which the Fed believed probably represented 98 percent of all forex in the United States at that time. This April 1977 study found there was $4.8 billion in daily forex trading, or around $1.2 trillion a year. However, this study did not include all the trading in futures trading for various currencies. Currency futures were first created at the Chicago Mercantile Exchange (CME) in 1972, the year after fixed exchange rates were abandoned.
Financial turnover compared to gross domestic product

Other financial markets exhibited similarly explosive growth. Trading in U.S. equity (stock) markets grew from $136.0 billion or 13.1 percent of U.S. GDP in 1970, to $1.671 trillion or 28.8 percent of U.S. GDP in 1990. In 2000, trading in U.S. equity markets was $14.222 trillion, or 144.9 percent of GDP. Most of the growth in stock trading has been directly attributed to the introduction and spread of program trading.

According to the March 2007 Quarterly Report from the Bank for International Settlements (see page 24.):

Trading on the international derivatives exchanges slowed in the fourth quarter of 2006. Combined turnover of interest rate, currency and stock index derivatives fell by 7% to $431 trillion between October and December 2006.

Thus, derivatives trading – mostly futures contracts on interest rates, foreign currencies, Treasury bonds, etc had reached a level of $1,200 trillion, $1.2 quadrillion, a year.

By comparison, U.S. GDP in 2006 was $12.456 trillion.

http://en.wikipedia.org/wiki/Financialization

***

Global Hedge Fund Assets Now Total $1.89 Trillion

March 8, 2010, 4:10 am

. . . the total assets are a far cry from the record $2.7 trillion under management in 2007.

(etc.)

The Telegraph noted that, according to the survey, New York remained the most popular home address, with 118 firms managing a billion dollars or more based there.

That far outshines London, the No. 2 home to hedge funds. The British capital now counts 55 hedge funds that manage more than a billion dollars, compared with 65 at the end of 2008.

http://dealbook.blogs.nytimes.com/2010/03/08/global-h-f-assets-hit-1-82-trillion/

***

Financial Instruments have hijacked all the monetary resources in the world

Financial Instruments have hijacked all the monetary resources in the world - Derivatives, exotic financial products, futures, speculation, CDOs, MBS, commercial paper, devised and deceptive credit and credit derivatives, and Wall Street sapping the strength and resources to their own pockets

(from)

http://en.wikipedia.org/wiki/Financialization

***

In the wake of the 2007-2010 financial crisis, a number of economists and others began to argue that Financial services had become too large a sector in the U.S. economy, with no real benefit from society accruing from the activities of increased financialization. Some, such as former IMF chief economist Simon Johnson even went so far as to argue that the increased power and influence of the financial services sector had fundamentally transformed the American polity, endangering representative democracy itself.[2]

In February 2009, white-collar criminologist and former senior financial regulator William K. Black listed the ways in which the financial sector harms the real economy. Black wrote, “The financial sector functions as the sharp canines that the predator state uses to rend the nation. In addition to siphoning off capital for its own benefit, the finance sector misallocates the remaining capital in ways that harm the real economy in order to reward already-rich financial elites harming the nation.”[3]

(from above wikipedia entry about financialization)

***

Hedge Funds -

Because the effect is to ‘hedge’ that part of the risk due to overall market movements, this became known as a hedge fund.

Industry size

Estimates of industry size vary widely due to the lack of central statistics, the lack of a single definition of hedge funds and the rapid growth of the industry. As a general indicator of scale, the industry may have managed around $2.5 trillion at its peak in the summer of 2008.[2] The credit crunch has caused assets under management (AUM) to fall sharply through a combination of trading losses and the withdrawal of assets from funds by investors.[3] Recent estimates find that hedge funds have more than $2 trillion in AUM.[4]

http://en.wikipedia.org/wiki/Hedge_fund

***

About Market Makers -

In currency exchange

Most foreign exchange trading firms are market makers and so are many banks, although not in all currency markets. In foreign exchange (or FX) trading, where most deals are conducted over-the-counter and are, therefore, completely virtual, the market maker sells to and buys from its clients and is compensated by means of price differentials . . . etc.

In the United States, the New York Stock Exchange (NYSE) and American Stock Exchange (AMEX), among others, have Designated Market Makers, formerly known as “specialists”, who act as the official market maker for a given security. The market makers provide a required amount of liquidity to the security’s market, and take the other side of trades when there are short-term buy-and-sell-side imbalances in customer orders. This helps prevent excess volatility, and in return, the specialist is granted various informational and trade execution advantages.

Other U.S. exchanges, most prominently the NASDAQ Stock Exchange, employ several competing official market makers in a security. These market makers are required to maintain two-sided markets during exchange hours and are obligated to buy and sell at their displayed bids and offers. They typically do not receive the trading advantages a specialist does, but they do get some, such as the ability to naked short a stock, i.e., selling it without borrowing it. In most situations, only official market makers are permitted to engage in naked shorting.

There are over two thousand market makers in the USA[2] and over a hundred in Canada.[3]

London

On the London Stock Exchange (LSE) there are official market makers for many securities (but not for shares in the largest and most heavily traded companies, which instead use an automated system called TradElect). Some of the LSE’s member firms take on the obligation of always making a two-way price in each of the stocks in which they make markets. Their prices are the ones displayed on the Stock Exchange Automated Quotation system and it is they who generally deal with stockbrokers buying or selling stock on behalf of clients.

Proponents of the official market making system claim market makers add to the liquidity and depth of the market by taking a short or long position for a time, thus assuming some risk in return for the chance of a small profit. On the LSE one can always buy and sell stock: each stock always has at least two market makers and they are obliged to deal.

Unofficial market makers are free to operate on order driven markets or, indeed, on the LSE. They do not have the obligation to always be making a two-way price but they do not have the advantage that everyone must deal with them either.

How a market maker makes money

A market maker makes money by buying stock at a lower price than the price at which they sell it. Note that because a market maker can take short positions, purchase and sale may be either way round – a market maker may sell stock and then buy it back later at a lower price. Therefore a market maker can make money in both rising or falling markets, as long as they correctly predict which way a stock’s price will move.

Stock market makers also receive liquidity rebates from electronic communication networks for each share that is sold to or purchased from each posted bid or offer. Conversely, a trader who takes liquidity from a bid or offer posted on an ECN is charged a fee for removing that liquidity.

http://en.wikipedia.org/wiki/Market_maker

***

There are over two thousand market makers in the USA[2] and over a hundred in Canada.[3]

Unjust enrichment means when a person unfairly gets a benefit by chance, mistake or another’s misfortune for which the one enriched has not paid or worked and morally and ethically should not keep. A person who has been unjustly enriched at the expense of another must legally return the unfairly kept money or benefits. Unjust enrichment is an equitable doctrine applied in the absence of a contract and used to prevent one person from being unjustly enriched at another’s expense.

Five elements must be established to prove unjust enrichment:

  1. An enrichment;
  2. An impoverishment;
  3. A connection between the enrichment and the impoverishment;
  4. Absence of a justification for the enrichment and impoverishment; and
  5. An absence of a remedy provided by law.

http://definitions.uslegal.com/u/unjust-enrichment/

Liability under the principle of unjust enrichment is wholly independent of liability for wrongdoing. Claims in unjust enrichment do not depend upon proof of any wrong. However, it is possible that on a single set of facts a claim based on unjust enrichment and a claim based on a wrong may both be available. A claim based on unjust enrichment always results in an obligation to make restitution. A claim based on a wrong always results in an obligation to make compensation, but may additionally result in an obligation to make restitution and on the other hand it will result in an obligation to make reimbursement which will allow the normal citizen to the courts for its wrongdoing which it never intended to do so.

http://en.wikipedia.org/wiki/Unjust_enrichment

***

In finance, a derivative is a financial contract with a value linked to the expected future price movements of the asset it is linked to – such as a share or a currency. There are many kinds of derivatives, with the most notable being swaps, futures, and options. However, since a derivative can be placed on any sort of security, the scope of all derivatives possible is near endless. Thus, the real definition of a derivative is an agreement between two parties that is contingent on a future outcome.

A common misconception is to refer to derivatives as assets. This is erroneous, since a derivative is incapable of having value of its own. However, some more commonplace derivatives, such as swaps, futures, and options, which have a theoretical face value that can be calculated using formulas, such as Black-Scholes, are frequently traded on open markets before their expiration date as if they were assets.

http://en.wikipedia.org/wiki/Derivative_%28finance%29

Derivatives are used by investors to

  • provide leverage or gearing, such that a small movement in the underlying value can cause a large difference in the value of the derivative
  • speculate and to make a profit if the value of the underlying asset moves the way they expect (e.g., moves in a given direction, stays in or out of a specified range, reaches a certain level)
  • hedge or mitigate risk in the underlying, by entering into a derivative contract whose value moves in the opposite direction to their underlying position and cancels part or all of it out
  • obtain exposure to underlying where it is not possible to trade in the underlying (e.g., weather derivatives)
  • create optionability where the value of the derivative is linked to a specific condition or event (e.g., the underlying reaching a specific price level)

Speculation and arbitrage

Derivatives can be used to acquire risk, rather than to insure or hedge against risk. Thus, some individuals and institutions will enter into a derivative contract to speculate on the value of the underlying asset, betting that the party seeking insurance will be wrong about the future value of the underlying asset. Speculators will want to be able to buy an asset in the future at a low price according to a derivative contract when the future market price is high, or to sell an asset in the future at a high price according to a derivative contract when the future market price is low.

Individuals and institutions may also look for arbitrage opportunities, as when the current buying price of an asset falls below the price specified in a futures contract to sell the asset.

Speculative trading in derivatives gained a great deal of notoriety in 1995 when Nick Leeson, a trader at Barings Bank, made poor and unauthorized investments in futures contracts. Through a combination of poor judgment, lack of oversight by the bank’s management and by regulators, and unfortunate events like the Kobe earthquake, Leeson incurred a $1.3 billion loss that bankrupted the centuries-old institution.[4]

http://en.wikipedia.org/wiki/Derivative_%28finance%29

Examples

The overall derivatives market has five major classes of underlying asset:

Other examples of underlying exchangeables are:

Possible large losses

The use of derivatives can result in large losses because of the use of leverage, or borrowing. Derivatives allow investors to earn large returns from small movements in the underlying asset’s price. However, investors could lose large amounts if the price of the underlying moves against them significantly. There have been several instances of massive losses in derivative markets, such as:

  • The need to recapitalize insurer American International Group (AIG) with $85 billion of debt provided by the US federal government.[12] An AIG subsidiary had lost more than $18 billion over the preceding three quarters on Credit Default Swaps (CDS) it had written.[13] It was reported that the recapitalization was necessary because further losses were foreseeable over the next few quarters.
  • The loss of $7.2 Billion by Société Générale in January 2008 through mis-use of futures contracts.
  • The loss of US$6.4 billion in the failed fund Amaranth Advisors, which was long natural gas in September 2006 when the price plummeted.
  • The loss of US$4.6 billion in the failed fund Long-Term Capital Management in 1998.
  • The bankruptcy of Orange County, CA in 1994, the largest municipal bankruptcy in U.S. history. On December 6, 1994, Orange County declared Chapter 9 bankruptcy, from which it emerged in June 1995. The county lost about $1.6 billion through derivatives trading. Orange County was neither bankrupt nor insolvent at the time; however, because of the strategy the county employed, it was unable to generate the cash flows needed to maintain services.

Large notional value

Derivatives typically have a large notional value. As such, there is the danger that their use could result in losses that the investor would be unable to compensate for. The possibility that this could lead to a chain reaction ensuing in an economic crisis, has been pointed out by famed investor Warren Buffett in Berkshire Hathaway‘s 2002 annual report. Buffett called them ‘financial weapons of mass destruction.’ The problem with derivatives is that they control an increasingly larger notional amount of assets and this may lead to distortions in the real capital and equities markets. Investors begin to look at the derivatives markets to make a decision to buy or sell securities and so what was originally meant to be a market to transfer risk now becomes a leading indicator. (See Berkshire Hathaway Annual Report for 2002)

Leverage of an economy’s debt

Derivatives massively leverage the debt in an economy, making it ever more difficult for the underlying real economy to service its debt obligations, thereby curtailing real economic activity, which can cause a recession or even depression. In the view of Marriner S. Eccles, U.S. Federal Reserve Chairman from November, 1934 to February, 1948, too high a level of debt was one of the primary causes of the 1920s-30s Great Depression.

(etc.)

http://en.wikipedia.org/wiki/Derivative_%28finance%29

**

Counting one dollar per second, it would take 32 million years to count to one Quadrillion. The numbers we are dealing with are absolutely astronomical and from the realms of super computing we have stepped into global economics. There is a sense of no sustainability and lack of longevity in the “Invisible One Quadrillion Dollar Equation” of the derivatives market especially with attendant Black Swan variables causing multiple implosions amongst financial institutions and counterparties.

The single conceptual pitfall at the basis of the disorderly growth of the global derivatives market is the postulate of hedging and netting, which lies at the basis of each model and of the whole regulatory environment hyper structure. Perfect hedges and perfect netting require functioning markets. When one or more markets become dysfunctional, the whole deck of cards could collapse swiftly.

Three Historical Examples

1. The so-called rogue trader Nick Leeson who made a huge derivatives bet on the direction of the Japanese Nikkei index brought on the collapse of Barings Bank in 1995.

2. The collapse of Long Term Capital Management (LTCM), a hedge fund that had a former derivatives and bond dealer from Salomon Brothers and two Nobel Prize winners in Economics as principals, collapsed because of huge leveraged bets in currencies and bonds in 1998.

3. Finally, a lot of the problems of Enron in 2000 were brought on by leveraged derivatives and using derivatives to hide problems on the balance sheet.

(but this is the best part, my note – this article was from 2008)
Let us think about the invisible USD 1.144 quadrillion equation with black swan variables — ie, 1,144 trillion dollars in terms of outstanding derivatives, global Gross Domestic Product (GDP), real estate, world stock and bond markets coupled with unknown unknowns or “Black Swans”. What would be the relative positioning of USD 1.144 quadrillion for outstanding derivatives, ie, what is their scale:

1. The entire GDP of the US is about USD 14 trillion.

2. The entire US money supply is also about USD 15 trillion.

3. The GDP of the entire world is USD 50 trillion. USD 1,144 trillion is 22 times the GDP of the whole world.

4. The real estate of the entire world is valued at about USD 75 trillion.

5. The world stock and bond markets are valued at about USD 100 trillion.

6. The big banks alone own about USD 140 trillion in derivatives.

7. Bear Stearns had USD 13+ trillion in derivatives and went bankrupt in March. Freddie Mac, Fannie Mae, Lehman Brothers and AIG have all ‘collapsed’ because of complex securities and derivatives exposures in September.

8. The population of the whole planet is about 6 billion people. So the derivatives market alone represents about USD 190,000 per person on the planet.

Whilst outstanding derivatives are notional amounts until they are crystallised, actual exposure is measured by the net credit equivalent. This is normally a lower figure unless many variables plot a locus in the wrong direction simultaneously.

This could be because of catastrophic unpredictable events, ie, “Black Swans”, such as cascades of bankruptcies and nationalisations, when the net exposure can balloon and become considerably larger or indeed because some extremely dislocating geo-political or geo-physical events take place simultaneously.

Also, the notional value becomes real value when either counterparty to the OTC derivative goes bankrupt.

By Tom Foremski – October 16, 2008

The Size of Derivatives Bubble = $190K Per Person on Planet

By Tom Foremski – October 16, 2008

More must read financial analysis from DK Matai, Chairman of the ACTA Open.

The Invisible One Quadrillion Dollar Equation — Asymmetric Leverage and Systemic Risk

According to various distinguished sources including the Bank for International Settlements (BIS) in Basel, Switzerland — the central bankers’ bank — the amount of outstanding derivatives worldwide as of December 2007 crossed USD 1.144 Quadrillion, ie, USD 1,144 Trillion. The main categories of the USD 1.144 Quadrillion derivatives market were the following:

1. Listed credit derivatives stood at USD 548 trillion;

2. The Over-The-Counter (OTC) derivatives stood in notional or face value at USD 596 trillion and included:

a. Interest Rate Derivatives at about USD 393+ trillion;

b. Credit Default Swaps at about USD 58+ trillion;

c. Foreign Exchange Derivatives at about USD 56+ trillion;

d. Commodity Derivatives at about USD 9 trillion;

e. Equity Linked Derivatives at about USD 8.5 trillion; and

f. Unallocated Derivatives at about USD 71+ trillion.

Quadrillion? That is a number only super computing engineers and astronomers used to use, not economists and bankers.

(etc.)

http://www.siliconvalleywatcher.com/mt/archives/2008/10/the_size_of_der.php

***

My Note -

As I watch the Greek economy treated with the same bond / pushing credit interest rates required of them / buying of credit default swaps so that when the bonds fail, the total amount will be paid out to third parties with no risk and unchallenged reward / credit ratings agencies downgrading their credit even as the interest payments alone are exaggerated beyond all measure / and seeing that identical “play” that was made on Fannie and Freddie driving it into the ground and on other countries around the world – driving their economies into the ground, as well -

I’m thinking . . .

and, thinking . . .

and, still considering that . . .

not one thing is going to change or be changed in all of it.

It wasn’t going to be changed five years ago, when the risk of total market collapses and the destruction of economies around the world were known to be a possibility.

It wasn’t going to be changed in 2006, when the evidence of what was before us was very, very clear and certainly known by anyone involved in the financial markets, banking, investments and academic economists.

It wasn’t going to be changed – not one iota, even in 2007 – not in 2008 and sure as hell, isn’t going to be changed now any more than it was going to be fixed, changed, regulated, repaired, or made into something right anytime before this day. In fact, there is no intention of it being changed even today.

I thought that it was because the evidence of the damage was not obvious, at the mark five years ago – except to people around the world trying to prevent it before the collapsing economies happened.

Those times are passed and the changes that were known to be ways that could prevent the collapse and ensuing crisis around the world – just would not be put in place by anybody in Washington or Wall Street or anywhere else that could’ve done it. They knew to put greater liquidity requirements on banks and insurance companies and etc., etc., etc.,

They knew the leveraging that was in play. One of many companies listed as a Fortune 500 company that would also apply to this, admitted to 96% of their operating capital being acquired by loans and re-financing loans to pay off loans simply to cover day-to-day operations. Not to be the only one to say so -  but that is insane.

And there is not one thing in any of it that is going to be made any one bit different regardless … there, in all likelihood, is the same bullshit we will be living with twenty years from now as we watch all our children turn to the same gang violence as Chicago and Juarez for lack of any other economic opportunity in the US of A, throughout Europe and across most of the world.

- cricketdiane, 04-29-10

***

Credit derivative

From Wikipedia, the free encyclopedia

In finance, a credit derivative is a securitized derivative whose value is derived from the credit risk on an underlying bond, loan or any other financial asset. In this way, the credit risk is on an entity other than the counterparties to the transaction itself.[1] This entity is known as the reference entity and may be a corporate, a sovereign or any other form of legal entity which has incurred debt.[2] Credit derivatives are bilateral contracts between a buyer and seller under which the seller sells protection against the credit risk of the reference entity.[2]

Stated in plain language, a credit derivative is a wager, and the reference entity is the thing being wagered on. Similar to placing a bet at the racetrack, where the person placing the bet does not own the horse or the track or have anything else to do with the race, the person buying the credit derivative doesn’t necessarily own the bond (the reference entity) that is the object of the wager.

He or she simply believes that there is a good chance that the bond or CDO in question will default (go to zero value).

Originally conceived as a kind of insurance policy for owners of bonds or CDO‘s, it evolved into a freestanding investment strategy.

The cost might be as low as 1% per year. If the buyer of the derivative believes the underlying bond will go bust within a year (usually an extremely unlikely event) the buyer stands to reap a 100 fold profit.

A small handful of investors anticipated the credit crunch of 2007/8 and made billions placing “bets” via this method.

The parties will select which credit events apply to a transaction and these usually consist of one or more of the following:

  • bankruptcy (the risk that the reference entity will become bankrupt)
  • failure to pay (the risk that the reference entity will default on one of its obligations such as a bond or loan)
  • obligation default (the risk that the reference entity will default on any of its obligations)
  • obligation acceleration (the risk that an obligation of the reference entity will be accelerated e.g. a bond will be declared immediately due and payable following a default)
  • repudiation/moratorium (the risk that the reference entity or a government will declare a moratorium over the reference entity’s obligations)
  • restructuring (the risk that obligations of the reference entity will be restructured)…

http://en.wikipedia.org/wiki/Credit_derivative

***

Maybe if everybody playing the credit derivatives on the Greece debt will finish making this money off it being in possible default, then just maybe they’ll stop dicking around and get some rescue package over to them before it all goes to hell.

Definitely my note – cricketdiane, 04-29-10

***

Financial Discernment – Information and Vagaries of Law or Common Sense Applications of the Law even when it concerns financial investment players and Wall Street derivatives and synthetically constructed financial products – International Law

Federal Lanham Act Remedies for False Advertising -

1. Historical Background -

Section 43(a) of the Lanham Act prohibits any false description or representation of goods. Although this section was originally construed narrowly, to reach only “passing off” and other behavior resembling trademark infringement, modern cases regard the statute as providing a federal remedy against false advertising.

2.  Standing:  Who May Invoke Section 43 -

A plaintiff seeking injunctive relief under § 43(a) must show a likelihood of economic injury due to the defendant’s conduct in order to be entitled to relief. If the plaintiff seeks damages, it must demonstrate an actual loss of sales (and / or loss of revenue, my note – actual money, but can include lost opportunity costs.)

3.  What Constitutes a False Description or Representation -

Any falsehood with a tendency to mislead or deceive is actionable under section 43(a), provided it is material. The plaintiff need not prove that the defendant acted intentionally.

(from – “Capsule Summary”)

pp. 20 – 21, also pp. 148 – 150

Unfair Trade Practices & Intellectual Property,

author – Roger E. Schechter,

Black Letter Series, West Publishing Co., St. Paul, Minn.; 1986

Hmmmm . . . . – wonder if those laws still exist? After watching the Goldman Sachs hearings in the Senate committee yesterday, when investors are told that a thing is good investment securities, when they know it is not – isn’t that applied to laws like this? Or rather, aren’t laws like this applied to situations like that?

I found another section of this book which had this sentence – “Nonetheless, some courts will impose a duty to pay if the equities of the situation require it to prevent unjust enrichment.” – What constitutes “unjust enrichment”?

my notes -

cricketdiane, 04-28-10

***

  1. Unjust enrichment – Wikipedia, the free encyclopedia

    Unjust enrichment is a legal term denoting a particular type of causative event in which one party is unjustly enriched at the expense of another,

    en.wikipedia.org/wiki/Unjust_enrichmentCachedSimilar

  2. English unjust enrichment law – Wikipedia, the free encyclopedia

    English unjust enrichment law is a developing area of law in unjust enrichment. Traditionally, work on unjust enrichment has been dealt with under the title
    en.wikipedia.org/wiki/English_unjust_enrichment_law – CachedSimilar

***

English unjust enrichment law is a developing area of law in unjust enrichment. Traditionally, work on unjust enrichment has been dealt with under the title of “restitution“. Restitution is a gain-based remedy, the opposite of compensation, as a loss-based remedy. But the event it responds to is the “unjust enrichment” of one person at the expense of another.

Among -

Ultra vires

  • Hazell v. Hammersmith and Fulham LBC [1992] 2 AC 1. Banks paid councils a lump sum (for Islington, £2.5m). The councils then paid the banks back at the prevailing interest rate. Banks paid councils back a fixed interest rate (this is the swap part). The point was that councils were gambling on what interest rates would do. So if interest rates fell, the councils would win. As it happened, interest rates were going up and the banks were winning. Islington was due to pay £1,354,474, but after Hazell, it refused, and waited to see what the courts said. At first instance Hobhouse J said that because the contract for the swap scheme was void, the council had been unjustly enriched with the lump sum (£2.5m) and it should have to pay compound interest (lots) rather than simple interest (lots, but not so much). But luckily for local government, three law Lords held that Islington only needed to repay with simple interest. There was no jurisdiction for compound interest. They said this was because there was no ‘resulting trust’.
  • Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669, the council had no authority to enter into a complex swap transaction with the German bank. So the House of Lords held that the council should repay the money they had been lent and a hitherto unknown ‘unjust’ factor was added to the list. Birks argued that the better explanation in all cases is an ‘absence of basis’ for the transfer of property. Searching through or adding to a list of open ended unjust factors simply concludes on grounds of what one wishes to prove, grounds that ‘would have to be constantly massaged to ensure that they dictated an answer as stable as is reached by the shorter ‘non basis’ route.’ (Birks (2005) 113)

The following eleven categories are examples of “unjust factor” (or what Peter Birks argued could be unified under one principle of a basis of a right being absent) which may ground a claim of restitution for unjust enrichment.[1]

Mistake

Ignorance

Failure of consideration

Duress

Main article: Duress in English law

Undue influence

Exploitation

Necessity

Illegality

Incapacity

Ultra vires

Foreign comparisons

Unjust enrichment is a developed and coherent field in continental civil law systems. Continental lawyers say someone is unjustly enriched when there is no basis for their possession or title to some right or property. A more correct way of saying it is that someone has been “unjustifiedly enriched”. In German, the term is Ungerechtfertigte Bereicherung (§812 BGB) and in France the term is Enrichissement sans cause. English lawyers, however, have been accustomed to identify an “unjust factor”. The difference between “unjust factors” and “absence of basis” as a unifying principle has generated a lot of debate, particularly since Peter Birks changed his mind in his second edition of Unjust Enrichment (2005) in the Clarendon Law Series, and argued that the continentals had got it right.

The two leading theorists that have revived unjust enrichment were Lord Goff, who produced Goff and Jones on Restitution and Professor Peter Birks.

(from – English Law)

http://en.wikipedia.org/wiki/English_unjust_enrichment_law

***

(from – “Appendix A”)

pp. 226 – 227

Unfair Trade Practices & Intellectual Property,

author – Roger E. Schechter,

Black Letter Series, West Publishing Co., St. Paul, Minn.; 1986

(excerpt – )

To constitute “unfair” conduct, an advertisement or commercial practice must pose a risk of substantial, unmitigated, unavoidable consumer injury.

(further – )

These advertisements may be deceptive, however, if analyzed under the historic definition of that term. Under the classic test, an advertising claim is deceptive if it has any tendency to deceive a significant number of consumers.

(also found on pp. 225 – )

2.  True.  The original version of the statute [VIII. Federal Trade Commission Regulation of Unfair and Deceptive Practices] only dealt with “unfair methods of competittion.” The 1938 Wheeler-La Amendment added the “unfair and deceptive acts and practices” language.

(and on pp. 228)

4.  True.  Such statutes have been applied against defendants who were making casual sales of used goods.

(and therefore, why shouldn’t it be applied to investment firms, banks, hedge funds and others in the investment community who engaged in deceptive and misleading practices that would’ve been illegal in any other context, including as the laws and statutes are applied to regular Americans being involved in casual sales of goods that were unlikely to have created the huge ramifications that the Wall Street players caused, my note.)

***

Unjust enrichment

From Wikipedia, the free encyclopedia

Jump to: navigation, search

Unjust enrichment is a legal term denoting a particular type of causative event in which one party is unjustly enriched at the expense of another, and an obligation to make restitution arises, regardless of liability for wrongdoing.

Liability under the principle of unjust enrichment is wholly independent of liability for wrongdoing. Claims in unjust enrichment do not depend upon proof of any wrong. However, it is possible that on a single set of facts a claim based on unjust enrichment and a claim based on a wrong may both be available. A claim based on unjust enrichment always results in an obligation to make restitution. A claim based on a wrong always results in an obligation to make compensation, but may additionally result in an obligation to make restitution and on the other hand it will result in an obligation to make reimbursement which will allow the normal citizen to the courts for its wrongdoing which it never intended to do so. For discussion of restitution for wrongs, see the page on restitution.

At common law, a claim based on unjust enrichment can be submitted to five stages of analysis. These can be summarized in the form of the following questions:

  1. Was the defendant enriched?
  2. Was the enrichment at the expense of the claimant?
  3. Was the enrichment unjust?
  4. Does the defendant have a defense?
  5. What remedies are available to the claimant?

[edit] Was the enrichment unjust?

There are two established approaches to this issue. Traditionally, common law systems such as those of England and the US have proceeded on the basis of what may be termed the ‘unjust factor’ approach. Traditionally, civil law systems such as those of France and Germany have proceeded on the basis of what may be termed the ‘absence of basis’ approach. More recently, many common law systems have showed signs of a possible move towards the ‘absence of basis’ approach (see for example the law of North Dakota in the section on the United States below). Both approaches will be discussed.

The ‘unjust factors’ approach requires the claimant to point to one of a number of factors recognized by the law as rendering the defendant’s enrichment unjust. English law clearly recognises at least the following unjust factors:

  1. Mistake of fact
  2. Mistake of law
  3. Duress
  4. Undue influence
  5. Total failure of consideration
  6. Miscellaneous policy-based unjust factors such as ‘withdrawal within the locus poenitentiae’

It is at least arguable that English law also recognizes the following unjust factors, but some controversy surrounds each:

  1. Ignorance/powerlessness
  2. Unconscionability
  3. Partial failure of consideration
  4. Absence of consideration

‘Absence of consideration’ is particularly controversial because the cases that support its existence as an unjust factor can also be used to support the view that English law has begun to favour the ‘absence of basis’ approach (see next paragraph).

The ‘absence of basis’ approach does not deal in individual unjust factors. Instead it seeks to identify enrichments with no legitimate explanatory basis. Imagine that A contracts with B that A will pay $150 up front for B to clean his house. A pays the money. B’s enrichment has a legitimate explanatory basis – he was paid under a valid contract. However, let us now change the example and assume that the contract was in fact void. This is discovered after A has paid the money but before B cleans the house. B’s enrichment no longer has a legitimate explanatory basis so B must repay the $150 to A.

Notice that in the example just given, exactly the same conclusion would be reached using the ‘unjust factors’ approach. Under that approach, A would not be able to point to an unjust factor provided that the contract was valid, but could point to the unjust factor of total failure of consideration once we assume that it was void. In the vast majority of cases, a properly developed ‘unjust factors’ approach and a properly developed ‘absence of basis’ approach will reach the same result.

[edit] What remedies are available to the claimant?

It is necessary to distinguish personal remedies from proprietary remedies. A personal remedy asserts that the defendant must pay the claimant a sum of money. By contrast, a proprietary remedy asserts that some property in the defendant’s possession belongs to the claimant, either at common law or in equity. There are several arguable examples in the English case law of the courts giving a proprietary remedy in an unjust enrichment claim. However, some commentators maintain that, in English law, unjust enrichment only ever triggers a personal remedy.

There are several reasons why it may be important for the claimant to seek a proprietary rather than a personal remedy. The most obvious is that showing that one is entitled to a proprietary interest in some property means that one need not compete with the defendant’s unsecured creditors in the event of his insolvency. It is also generally accepted, although with little justification, that a claimant who is entitled to a personal remedy only will be restricted to simple interest, while a claimant who is entitled to a proprietary remedy can get compound interest. The availability or non-availability of a proprietary remedy may also have consequences for limitation periods and for the conflict of laws.

English law gives effect to restitutionary proprietary interests (assuming that it does at all) through a number of devices. One of these devices will be discussed and another two will be mentioned briefly.

(etc.)

http://en.wikipedia.org/wiki/Unjust_enrichment

***

My Note -

It doesn’t matter if you are a “market maker” or not, such as Goldman Sachs and about 2000 others are – they still can’t store explosives under their desks because they must abide by the laws which apply to that just as we all do, and they still can’t engage in failing to meet OSHA standards for a work place, nor can they be exempted from the regulations, statutes and laws governing the rest of us and the business laws that generally apply to everything.

I know yesterday during the hearings, the term “market maker” was used as a declaration of why “we get to get away with doing it this way, by  law – because we qualify as a market maker.” That doesn’t mean everything else in the law and in international law doesn’t apply to them. It does not exclude their businesses, their business participation, their business practices and decisions, their business processes and their marketing practices from the laws governing everything else.

- cricketdiane

***

2008–2010 Icelandic financial crisis

From Wikipedia, the free encyclopedia

Jump to: navigation, search

An Icelandic 1000-krónur note. The value of the Icelandic króna declined significantly during 2008.

Economic growth in Iceland, Denmark, Norway and Sweden from 2000 to 2007. Iceland is in red.

The 2008–2010 Icelandic financial crisis is a major ongoing economic crisis in Iceland that involves the collapse of all three of the country’s major banks following their difficulties in refinancing their short-term debt and a run on deposits in the United Kingdom. Relative to the size of its economy, Iceland’s banking collapse is the largest suffered by any country in economic history.[1]

In late September 2008, it was announced that the Glitnir bank would be nationalised. The following week, control of Landsbanki and Glitnir was handed over to receivers appointed by the Financial Supervisory Authority (FME). Soon after that, the same organisation placed Iceland’s largest bank, Kaupthing, into receivership as well. Commenting on the need for emergency measures, Prime Minister Geir Haarde said on 6 October, “There [was] a very real danger … that the Icelandic economy, in the worst case, could be sucked with the banks into the whirlpool and the result could have been national bankruptcy.”[2] He also stated that the actions taken by the government had ensured that the Icelandic state would not actually go bankrupt.[3] At the end of the second quarter 2008, Iceland’s external debt was 9.553 trillion Icelandic krónur (€50 billion), more than 80% of which was held by the banking sector.[4] This value compares with Iceland’s 2007 gross domestic product of 1.293 trillion krónur (€8.5 billion).[5] The assets of the three banks taken under the control of the FME totaled 14.437 trillion krónur at the end of the second quarter 2008.[6]

The financial crisis has had serious consequences for the Icelandic economy. The national currency has fallen sharply in value, foreign currency transactions were virtually suspended for weeks, and the market capitalisation of the Icelandic stock exchange has dropped by more than 90%. As a result of the crisis, Iceland is currently undergoing a severe economic recession; the nation’s gross domestic product decreased by 5.5% in real terms in the first six months of 2009.[7] The full cost of the crisis cannot yet be determined, but already it exceeds 75% of the country’s 2007 GDP. Outside Iceland, more than half a million depositors (far more than the entire population of Iceland) found their bank accounts frozen amid a diplomatic argument over deposit insurance. German bank BayernLB faces losses of up to €1.5 billion, and has had to seek help from the German federal government. The government of the Isle of Man will pay out half of its reserves, equivalent to 7.5% of the island’s GDP, in deposit insurance.

( . . . )

On 24 October, it emerged that Norway’s semi-public export credit agency Eksportfinans had made a complaint to Norwegian police concerning the alleged embezzlement of 415 million Norwegian kroner (€47 million) by Glitnir since 2006. The Icelandic bank had acted as an agent for Eksportfinans, administering loans to several companies: however Eksportfinans alleges that, when the loans were paid off early by borrowers, Glitnir kept the cash and merely continued with the regular payments to Eksportfinans, effectively taking an unauthorized loan itself.[81]

Stock market

The value of the OMX Iceland 15 from January 1998 to October 2008

OMX Iceland 15 closing prices during the five trading weeks from September 29, 2008 to October 31, 2008

Trading in shares of six financial companies on the OMX Nordic Iceland Exchange was suspended on 6 October by order of the FME.[82] On Thursday 9 October, all trading on the exchange was frozen for two days by the government “in an attempt to prevent further panic spreading throughout the country’s financial markets”. The decision was made to do so due to “unusual market conditions”,[83] with share prices having fallen 30% since the start of the month.[84] The closure was extended through Monday 13 October due to continuing “unusual market conditions”.[85]

The market reopened on 14 October with the main index, the OMX Iceland 15, at 678.4, which corresponds to a plunge of about 77% compared with 3,004.6 before the closure.[84] This reflects the fact that the value of the three big banks, which form 73.2% of the value of the OMX Iceland 15,[86] had been set to zero.[87] The values of other equities varied from +8% to –15%.[88] Trading in shares of Exista, SPRON and Straumur-Burðarás (13.66% of the OMX Iceland 15) remains suspended. After a week of very thin trading, the OMX Iceland 15 closed on 17 October at 643.1, down 93% in króna terms and 96% in euro terms from its historic high of 9016 (18 July 2007).

Trading in the shares of two financial services companies, Straumur–Burðarás and Exista, resumed on 9 December: together the companies account for 12.04% of the OMX Iceland 15. The values of the shares in both companies dropped sharply, and the index closed at 394.88, down by 40.17% on the day. Trading in shares in SPRON and Kaupthing remains suspended, at prices of ISK 1.90 and ISK 694.00 respectively.[89]

Sovereign debt

Ratings of Icelandic sovereign debt
(long-term foreign currency)
Agency 29 Sept. 10 Oct.
Fitch A+ BBB–
Moody’s Aa1 A1
R&I AA BBB–
S&P A– BBB

The four credit rating agencies which monitor Iceland’s sovereign debt all lowered their ratings during the crisis, and their outlook for future ratings changes is negative.[90] The Icelandic government had a relatively healthy balance, with sovereign debt of 28.3% of GDP and a budget surplus of 5.5% of GDP (2007).[91] Debt is now 90 percent of GDP with a budget deficit.[92]

In addition, the value of foreign currency bonds which mature in the remainder of 2008 is only $600 million, and foreign currency debt service in 2009 is only $215 million,[93] well within the government’s ability to pay. However the agencies believe that the government will have to issue more foreign currency bonds, both to cover losses as the banks’ overseas operations are liquidated and also to stimulate demand in the domestic economy as Iceland goes into recession.[94]

A team of experts from the International Monetary Fund (IMF) arrived in Iceland at the start of October 2008 for talks with the government. Industry Minister Össur Skarphéðinsson was said to be “favourable” to help from the IMF to stabilise the króna and to allow interest rates to be lowered.[95]

(etc.)

On 24 October, the IMF tentatively agreed to loan €1.58 billion.[103] However the loan had still not been approved by the Executive Board of the IMF on 13 November.[104] Apparently, UK and the Netherlands had halted IMF’s aid to Iceland as the Icesave dispute had not been resolved.[citation needed] Due to the delay Iceland found itself caught in a classic catch-22 situation, loans from other countries could not be formally secured until the IMF program had been approved. The Icelandic government spoke of a $500M (€376M) gap in the funding plans. Dutch finance minister Wouter Bos stated that the Netherlands would oppose the loan unless agreement was reached over deposit insurance for Landsbanki customers in the Netherlands.[105]

The IMF-led package of $4.6bn was finally agreed on 19 November, with the IMF loaning $2.1bn and another $2.5bn of loans and currency swaps from Norway, Sweden, Finland and Denmark. In addition, Poland has offered to lend $200M and the Faroe Islands have offered 300M Danish kroner ($50M, about 3% of Faroese GDP).[106] The Icelandic government also reported that Russia has offered $300M.[107] The next day, Germany, the Netherlands and the United Kingdom announced a joint loan of $6.3bn (€5bn), related to the deposit insurance dispute.[108][109]

Causes

In 2001, banks were deregulated in Iceland.[110] This set the stage for banks to upload debts when foreign companies were accumulated.[110] The crisis unfolded when banks became unable to refinance their debts. It is estimated that the three major banks hold foreign debt in excess of €50 billion,[4] or about €160,000 per Icelandic resident, compared with Iceland’s gross domestic product of €8.5 billion.[5][111] As early as March 2008, the cost of private deposit insurance for deposits in Landsbanki and Kaupthing was already far higher (6–8½% of the sum deposited) than for other European banks.[112] The króna, which was ranked by The Economist in early 2007 as the most overvalued currency in the world (based on the Big Mac Index),[113] has further suffered from the effects of carry trading.[114]

Coming from a small domestic market, Iceland’s banks have financed their expansion with loans on the interbank lending market and, more recently, by deposits from outside Iceland (which are also a form of external debt). Households also took on a large amount of debt, equivalent to 213% of disposable income, which led to inflation.[115] This inflation was exacerbated by the practice of the Central Bank of Iceland issuing liquidity loans to banks on the basis of newly-issued, uncovered bonds[116] — effectively, printing money on demand.

In response to the rise in prices — 14% in the twelve months to September 2008,[9] compared with a target of 2.5% — the Central Bank of Iceland has held interest rates high (15.5%).[10] Such high interest rates, compared with 5.5% in the United Kingdom or 4% in the eurozone for example, have encouraged overseas investors to hold deposits in Icelandic krónur, leading to monetary inflation: the Icelandic money supply (M3) grew 56.5% in the twelve months to September 2008, compared with 5.0% GDP growth.[117] The situation was effectively an economic bubble, with investors overestimating the true value of the króna.

As with many banks around the world, the Icelandic banks found it increasingly difficult or impossible to roll over their loans in the interbank market, their creditors insisting on repayment while no other banks were willing to make fresh loans. In such a situation, a bank would normally have to ask for a loan from the central bank as the lender of last resort. However, in Iceland the banks were so much larger than the national economy that the Central Bank of Iceland and the Icelandic government could not guarantee the repayment of the banks’ debts, leading to the collapse of the banks.[118] The official reserves of the Central Bank of Iceland stood at 374.8 billion krónur at the end of September 2008,[119] compared with 350.3 billion krónur of short-term international debt in the Icelandic banking sector,[4] and at least £6.5 billion (1,250 billion krónur) of retail deposits in the UK.[120]

The Icesave logo, advertising it as “part of Landsbanki, Reykjavik, Iceland”

The situation was made worse by the fact that Icesave was operating as a branch of Landsbanki, rather than as a legally independent subsidiary. As such, it was completely dependent on the Central Bank of Iceland for emergency loans of liquidity, and could not turn to the Bank of England for help. The UK Financial Services Authority (FSA) was aware of the risk, and was considering imposing special liquidity requirements on Icelandic deposit-taking banks in the weeks before the crisis.[121] However the plan—which was never implemented—would have forced the Icelandic banks to cut interest rates or stop taking new deposits, and might even have sparked the sort of bank run it was designed to prevent. The Guernsey authorities were also planning on bringing in restrictions on foreign banks operating as branches and on transfers of funds between Guernsey subsidiaries and parent banks (“parental upstreaming”).[122] Landsbanki operated in Guernsey through a legally independent subsidiary.

The existence of a bank run on Landsbanki accounts in the UK in the period up to 7 October seems confirmed by a statement from the bank on 10 October, which said “Landsbanki Íslands hf. transferred substantial funds to its UK branch during this time to fulfil its Icesave commitments.”[123] The transfer of funds from Landsbanki Guernsey to Heritable Bank,[42] a Landsbanki subsidiary in the UK, also suggests a bank run in the UK. A transfer of “substantial funds” from Iceland to the UK would have been a significant downward push on the value of the króna, even before the effects of any speculation.

(etc.)

http://en.wikipedia.org/wiki/2008%E2%80%932010_Icelandic_financial_crisis

(and)

Effects

Within Iceland

The current economic climate in the country has affected many Icelandic businesses and citizens. With the creation of Nýi Landsbanki, the new organisation which replaces the old Landsbanki, around 300 employees will lose their jobs due to a radical restructuring of the organisation which is intended to minimise the bank’s international operations. Similar job losses are expected at Glitnir and Kaupthing[134] The job losses can be compared with the 2,136 registered unemployed and 495 advertised vacancies in Iceland at the end of August 2008.[9]

Other companies have also been affected. For example, the private Sterling Airlines declared bankruptcy on 29 October 2008. The national airline Icelandair has noticed a significant slump in domestic demand for flights. However, the airline states that year-on-year international demand is up from last year. Guðjón Arngrímsson, a spokesman for the airline, said “we’re getting decent traffic from other markets… we are trying to let the weak [króna] help us.” He has also stated that it is impossible to predict whether the company will be profitable this year.[135] Morgunblaðið, an Icelandic newspaper, is cutting some jobs and merging parts of its operations with the media corporation 365. The newspaper 24 stundir has ceased publication due to the crisis, resulting in the loss of 20 jobs.[135]

Importers are particularly hard hit, with the government restricting foreign currency to essential products such as food, medicines and oil.[136] The €400 million loan from the central banks of Denmark and Norway is sufficient to pay for a month’s imports,[9] although on 15 October there was still a “temporary delay” which affected “all payments to and from the country”.[137]

The assets of Icelandic pension funds are, according to one expert, expected to shrink by 15–25%.[138] The Icelandic Pension Funds Association has announced that benefits will in all likelihood have to be cut in 2009.[139] Iceland’s GDP is expected by economists to shrink by as much as 10% as a result of the crisis, putting Iceland by some measures in an economic depression.[140] Inflation may climb as high as 75% by the end of the year.[141]

Unemployment had more than tripled by late November 2008, with over 7000 registered jobseekers[142] (about 4% of the workforce) compared to just 2136 at the end of August 2008.[9] As 80% of household debt is indexed and another 13% denominated in foreign currencies,[143] debt repayment is going to be more costly. Since October 2008, 14% of the workforce have experienced reductions in pay, and around 7% have had their working hours reduced. According to the president of the Icelandic Federation of Labour (ASÍ), Gylfi Arnbjörnsson, these figures are lower than expected. 85% of those currently registered as unemployed in Iceland stated that they lost their job in October, after the economic collapse.[144]

**

Outside Iceland

Over £840 million in cash from more than 100 UK local authorities was invested in Icelandic banks.[146] Representatives from each council are meeting to try to persuade the Treasury to secure the money in the same way that customers’ money in Icesave was fully guaranteed.[146] Of all the local authorities, Kent County Council has the most money invested in Icelandic banks, currently £50 million.[146] Transport for London, the organisation that operates and coordinates transport services within London, also has a large investment at £40 million.[146] Local authorities were working under government advice to invest their money across many national and international banks as a way of spreading risk. Other UK organisations said to have invested heavily include police services and fire authorities,[146] and even the Audit Commission.[147] It is hoped that about one-third of the deposited money will be available fairly rapidly, corresponding to the liquid assets of the UK subsidiaries: liquidation of other assets, such as loans and offices, will take longer.[148]

In an emergency sitting of Tynwald on 9 October, the Isle of Man government raised compensation from 75% of the first £15,000 per depositor to 100% of £50,000 per depositor.[149] The Chief Minister of the Isle of Man, Tony Brown, confirmed that Kaupthing had guaranteed the operations and liabilities of its Manx subsidiary in September 2007, and that the Manx government was pressing Iceland to honour this guarantee.[150] Depositors with Landsbanki on Guernsey found themselves without any depositor protection.[151]

On 11 October, an agreement was reached between the Icelandic and Dutch governments on the savings of about 120,000 Dutch citizens. The Icelandic government will cover the first €20,887 on savings accounts of Dutch citizens held by Landsbanki subsidiary Icesave, using money lent by the Dutch government. The total value of Icesave deposits in the Netherlands is €1.7 billion.[152] At the same time, Iceland and Britain reached an agreement on the general contours of a solution: Icesave deposits in the UK total £4 billion (€5 billion) in 300,000 accounts.[153] The figure of €20,887 is the amount covered by the Icelandic Depositors’ and Investors’ Guarantee Fund (DIGF; Tryggingarsjóður in Icelandic):[154] however, the DIGF had equity of only 8.3 billion krónur at the end of 2007,[155] €90 million at the exchange rates of the time and far from sufficient to cover the Dutch and British claims.

The cost of deposit insurance in the UK is not completely clear as of November 2008. The Financial Services Compensation Scheme (FSCS) paid around £3 billion to transfer deposits from Heritable Bank and Kaupthing Singer & Friedlander to ING Direct, while the UK Treasury paid an additional £600 million to guarantee retail deposits that were higher than the FSCS limit.[156] The Treasury also paid out £800 million to guarantee Icesave deposits that were higher than the limit. A loan of £2.2 billion to the Icelandic government is expected to cover the claims against the Icelandic DIGF relating to Icesave, while the exposure of the UK FSCS is expected to be £1–2 billion.

The crisis also prompted the Ministry of Foreign Affairs to reduce its foreign aid to developing nations, from 0.31% to 0.27% of GNP. The effect of the aid cut was greatly amplified by the falling value of the krona, leading the Icelandic International Development Agency (ICEIDA) to see its budget fall from $22 million to $13 million. Since Iceland’s foreign aid is targeted in sectors for which the country has particular expertise (e.g. fisheries, geothermal power), the cutbacks will have a substantial impact in countries which receive Icelandic aid – most noticeably in Sri Lanka, where ICEIDA is pulling out altogether.[157]

On February 27, 2009, the Wall Street Journal reported that Iceland’s new government is trying to raise $25 million by selling its ambassadorial residences in Washington, New York, London and Oslo.[158]

On August 28, 2009, Iceland’s parliament voted 34-15 (with 14 abstentions) to approve a bill (commonly referred to as the Icesave bill) to repay the United Kingdom and the Netherlands more than $5 billion lost in Icelandic deposit accounts. Initially opposed in June, the bill was passed after amendments were added which set a ceiling on the repayment based on the country’s Gross Domestic Product. Opponents of the bill argued that Icelanders, already reeling from the crisis, should not have to pay for mistakes made by private banks under the watch of other governments. However, the government argued that if the bill failed to pass, the UK and the Netherlands might retaliate by blocking a planned aid package for Iceland from the International Monetary Fund (IMF). Under the deal, up to 4% of Iceland’s Gross Domestic Product (GDP) will be paid to the UK, in sterling terms, from 2017-2023 while the Netherlands will receive up to 2% of Iceland’s GDP, in euro terms, for the same period.[159] Talks between Icelandic, Dutch and UK ministers in January of 2010 dubbed as “Icesave” did not result in any specific actions being agreed upon. [160]

Criminal investigation

In April 2009, Iceland’s state prosecutor hired Eva Joly, the Norwegian-French investigator who led Europe’s biggest ever fraud investigations into bribery and corruption at oil group Elf Aquitaine, as special consultant to a 20-member ”economic crime team” to “investigate suspicions of criminal actions in the period preceding the collapse of the Icelandic banks” which may involve several Iceland’s business and banking leaders.[161] Joly stated that the investigation will require a minimum of 2–3 years to build up enough evidence to secure prosecutions.[133]

In an interview Joly stated that:

“Finding proof will start at home in Iceland, but my instinct is that it will spread. If there are things relevant to the UK we will get in touch with the Serious Fraud Office. If there are things relevant to Germany we will get in touch with their authorities. In Iceland, there is more than enough for a starting point for the investigation, given all the talk about market manipulation and unusual loans. If these are proved they are embezzlement and fraud. The priority is tracing any flow of assets from the banks and getting them back.”[133]

The investigation is expected to focus on a number of questionable financial practices engaged in by Icelandic banks:

  • Almost half of all the loans made by Icelandic banks were to holdings companies, many of which are connected to those same Icelandic banks.
  • Money was allegedly lent by the banks to their employees and associates so they could buy shares in those same banks while simply using those same shares as collateral for the loans. Borrowers were then allowed to defer paying interest on the loan until the end of the period, when the whole amount plus interest accrued was due. These same loans were then allegedly written off days before the banks collapsed.
  • Kaupthing allowed a Qatari investor to purchase 5% of its shares. It was later revealled that the Qatari investor “bought” the stake using a loan from Kaupthing itself and a holding company associated with one of its employees (i.e. the bank was, in effect, buying its own shares).[133]

Scrutiny of Icelandic business leaders

Since the crisis began, many of Iceland’s business leaders, who had previously been considered financial gurus who greatly developed Iceland’s economy, are now under intense public scrutiny for their roles in causing the financial crisis:

Reportedly, all of those under scrutiny are now rarely seen in public and some have apparently left the country. They are also reportedly the subjects of an ongoing investigation to determine if any of their business practices warrant criminal prosecution.[133]

Statements from former politicians

Former Prime Minister Davíð Oddsson has claimed that Iceland needs to investigate “unusual and unconventional loans” given by the banks to senior politicians during the years before the crisis.[133]

Björn Bjarnson, the former Minister for Justice and Ecclesiastical Affairs, has started a blog detailing the problems with the business sector and the efforts to cover them up. This was cited as an example of how politicians and businessmen, who traditionally held a tight grip over the Icelandic media, have lost this control and that dozens of similar blogs have been created. Björn stated that:

“I have written a lot about problems in the business sector over the last 14 years, and I can only compare some parts of it to Enron. Here companies have been playing a game, using the media and publishing to make themselves look good. We only hope that the foreign media will soon begin to understand what has been going on.”[133]

Political aftermath

Some of the 6000 protesters in front of the Alþingishús, seat of the Icelandic parliament, on 15 November 2008.

Parts of the Icelandic public have arranged protests against the Central Bank, the Parliament and the government’s alleged lack of responsibility before and after the crisis, attracting between 3000 and 6000 people (1–2% of Iceland’s population) on Saturdays.[164]

*(etc.)*

http://en.wikipedia.org/wiki/2008%E2%80%932010_Icelandic_financial_crisis

***

And a little about the Freedom of Information Act and financial firms -

§   38:249 (US Code)

K. Eighth Exemption:  Reports by Financial Institutions

1. In General

§   38:249 (US Code)   Introduction

5   USCS §  552(b) (8) provides an exemption from FOIA disclosure for matters that are contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions.

Accordingly, a number of federal offices and agencies, including the Treasury Department, the Comptroller of the Currency, the Federal Reserve System, and the Pension Benefit Guaranty Corporation have promulgated regulations affirmatively applying Exemption 8 to relevant information in their possession.

Some regulations, however, such as those of the Federal Deposit Insurance Corporation, may contain provisions for the discretionary release of reports that are otherwise exempt.

As stated in the legislative history of the FOIA, Exemption 8 is designed to insure the security and integrity of financial institutions, since the sensitive details collected by government agencies which regulate financial institutions could cause great harm if they were to be indiscriminately disclosed. A major concern is that the disclosure of such reports containing frank evaluations of investigated banks might undermine public confidence in the soundness of such institutions and cause unwarranted runs on banks.

A secondary purpose behind the enactment of Exemption 8 is to safeguard the relationship between the banks and the supervising agencies. There was concern that if bank examinations are freely made available to the public and to the banks’ competitors, the banks will be less likely to give the agencies their full co-operation – (which they don’t do now, my note).

The courts have indicated that Exemption 8, like the other FOIA exemptions, must be narrowly construed, but this does not mean that the plain meaning of the language of the exemption can be overlooked.

Practice pointer:  Although reports prepared by bank regulatory bodies are beyond the scope of FOIA disclosure, such reports might nevertheless be subject to discovery in the course of litigation.

Exemption 8 does not create independently any evidentiary privilege, its effect being only to permit the withholding of such information from the public generally.

If, however, the federal banking agency forbids the bank to disclose a report of an examination without agency approval, discovery of examination reports must be sought from the agency and not from the bank as part of pretrial discovery in litigation involving the bank. (or financial investment, financial brokerage, stock market records, or investment “auction” facility, my note).

(from pp. 256 – 257, 15 Fed Proc, L Ed;    )

§  38:250.   What “financial institutions” are governed by
Exemption 8?

The term “financial institution” has been interpreted to include banks and other related institutions.

Thus, two sets of federal regulations, those of the Comptroller of the Currency and the Federal Reserve System, indicate that the exemption is applicable to reports relating to the affairs of any bank or affiliate thereof, bank holding company or subsidiary, broker, finance company, or any person engaged, or proposing to engage, in the business of banking, extending credit, or managing or controlling banks.

It has been held that examination reports of federal savings institutions are also exempt from disclosure. Although some fears have been expressed that if Exemption 8 is construed literally, the records relating to a closed bank will be perpetually sealed, it has been held that such records come within the scope of Exemption 8, at least where the bank has only recently been closed and where the records have not yet been turned over to GSA.

One question is whether national securities exchanges are considered to be “financial institutions” within the meaning of Exemption 8.

In one case, a Securities and Exchange Commission staff study on an off-board trading problem raised by a rule of the New York Stock Exchange, as well as of the transcripts made and documents received by the SEC in the course of its investigation, were held not? to be exempted from FOIA disclosure by reason of Exemption 8.

But it has been held that an SEC report regarding an inspection of one of the lesser stock exchanges is exempt as pertaining to a financial institution.

(and from pp. 259, 15 Fed Proc, L Ed)

§  38:252   Other exempt information

Other types of information that have been held to be exempted from disclosure under 5  USCS §  38:252 (b) (8)  include reports of the Comptroller of the Currency concerning the policies of a national bank, reports of FDIC examiners, and reports of the Federal Home Loan Bank Board concerning the financial conditions of savings associations.

Information concerning disciplinary proceedings involving specific stock exchange members, since it is of value to SEC supervision of the stock exchange, is protected by Exemption 8.


(from)

Freedom of Information

Federal Procedure, Lawyers Edition; 1990

§   38:249 (US Code)

§   38:250 (US Code)

§   38:252 (US Code)

Volume 15, §   38:1 – 38:600

So much for the concept of transparency. It seems that is simply a term to be used in public displays of political arena working and not an application used in fact, in process, nor in financial services processes.

- cricketdiane

***

Conflict of Laws -

Entry, pp. 1085, Vol. 4, Encyclopedia Britannica, 1978

The law of conflict of laws has to do with the resolution of problems that result from the fact that there exists in the world a multiplicity of different sets of courts and different systems of private laws; that is, law dealing with relations between persons. As the earth is presently organized, its surface is divided among nations that are independent of each other and that have no world government above them. Each of these nations maintains its own set of courts in complete independence of every other nation, and each nation has its own set of laws, written or unwritten.

The Law of Conflict of Laws:  Function and Sources -

While in such countries as France, Sweden, Peru, or Japan, one single system of law obtains for the whole country, diversity exists in many others, especially nations organized upon a federal pattern, such as the United States, Canada, and, to a minor degree, West Germany, Switzerland, Mexico, or Soviet Union [today, Eastern European nations and Russia]. ( . . . )

Even in countries whose political structure is of the unitary rather than the federal pattern, differences can be found. In the United Kingdom, for example, considerable difference exist between the laws of England, Scotland, the Isle of Man, the Channel Islands, and Northern Ireland. (I’m not sure the extent to which that is true today, my note).

Diversity of laws exists frequently between a country and its colonies. (etc.)

Diversity of laws develops where a country is divided. (etc.)

Diversities of law within one country may also exist on an ethnic or religious basis. (etc.)

Because of the spread of Western civilization over the entire planet, the laws of modern nations, at least insofar as they are concerned with relations between private individuals, present a considerable measure of uniformity. (to some extent, my note).

They are sufficiently different, however, to make it important to know to what situations one ought to apply the law of one country, state, region, or group rather than that of another, especially when dealings are carried on between persons of different law units.

This question of determining which of the world’s numerous laws is the proper one to apply in a particular situation is in itself a legal question.

Those rules of law by which such questions of choice of law are determined constitute a major part of that field of the law that is known as private international law or the law of conflict of laws.

Other parts of this field of the law are concerned with the problem of jurisdiction — that is, the problem of determining in what cases the courts of a particular country or state are, or are not, to go into action — and, furthermore, with the problem of stating what weight, if any, is to be given in one country or province to the judgments and other decisions of the courts or other agencies of other countries or provinces.

In countries adhering to the French legal tradition it is customary to regard as parts of private international law also those rules that deal with nationality and with the legal position of aliens and nonresidents.

In accordance with usage in countries of the English legal tradition, however, the present article will be limited to jurisdiction, foreign judgments, and choice of law.

The name private international law, which is generally used in countries of European-continental tradition, and occasionally also in England, seems to indicate that it is a part of international law  — that is, that system of law that is superior to all sovereign states and that, at least in theory, is uniform throughout the world.

This view was commonly held for many centuries, and when the name private international law was coined in the 19th century it was meant to signify that the supranational body of international law consisted of two parts, public and private international law.

While the former would determine the proper conduct of sovereign nations toward each other in both peace and war, the latter would, in a uniform way, tell all nations in what cases their courts ought or ought not to take jurisdiction, under what conditions foreign judgments were to be enforced or otherwise recognized, and in what cases the laws of one nation were to be applied rather than those of another.

(etc.)

pp. 1087, Vol. 4 (same entry – Conflict of Laws)

In the United States, the Constitution provides that “full faith and credit shall be given in each state to the public acts, records and judicial proceedings of every other state.”

Under this clause, the states, and by statute, the territories, are obliged mutually to enforce their money judgments and to recognize the res judicata and law-changing effects of their judicial acts, provided the state by which the judgment was rendered was acting within the scope of its jurisdiction as defined by the Supreme Court of the United States.

The only other defenses that might be raised are grave irregularity of the proceedings in which the judgment was obtained and, in certain cases, lack of finality.

In countries that follow the general principles of the common law, a foreign judgment usually is willingly enforced and otherwise recognized unless (1) the country by which it was rendered lacked jurisdiction according to the notions prevailing in the place where recognition is sought, or (2) the proceedings in which the judgment was obtained were tainted with fraud or were otherwise grossly unfair, or (3) the recognition or enforcement of the foreign judgment would seriously interfere with an important public policy of the country or state where recognition or enforcement is sought.

In addition to these requirements, most civil-law countries (except, of course, those few in which foreign judgments as such are not enforced at all) also demand that reciprocity with the country whose judgment is sought be recognized. (. . . )

Nowhere will a foreign judgment be enforced or recognized unless the country by which it was rendered had jurisdiction to do so under the notions obtaining where recognition is sought. These limits are sometimes wider, however, than those that a country will concede to others for the exercise of their jurisdictions.

(etc.)

pp. 1088, Vol 4

The greatest difficulties have arisen in the field of contract. Many courts and writ have held that problems of the law of contract are generally to be decided under the law of the place where the contract was made.

Under a refinement of this theory (1978, my note), problems concerning performance are to be decided under the law of the place where the contract was to be performed.

But where is a contract made when it was concluded by the exchange of letters between Tokyo and Paris, or San Francisco and Chicago? Where is the contract of sale to be performed when the seller has to obtain the goods in New Orleans and ship them from New York to Amsterdam, and the buyer, a business firm in Oslo, has to pay the price at a bank in London?

furthermore, what intrinsic connection with the parties’ relationship does the place of contracting have at all, if, as frequently happens, the contract was made at a place at which quite accidentally the parties’ minds met. Should German law really be applied to a contract concluded by a Dane and an Italian while they were flying over Germany in an airplane?

The view most widely followed by the courts of both civil-law and common-law countries is that problems concerning an alleged contract are to be decided in accordance with that law which the parties expressly agreed to be applicable, or which is recognizably that law upon the basis of which the parties negotiated and made their contract.

Theoretical objections to this practical view still carry some weight, especially in the United States. Where no particular law can be discovered as the one upon the basis of which the parties transacted their business, detailed differentiations must be made depending on the kind of contract in question (sale, insurance, transportation, contract for services, suretyship, etc.) and on the particular problem to be decided.

Although the field of contract is the most important for international and interstate trade, it is the one beset with the most uncertainties as to choice of law. Fortunately, the substantive laws do not widely differ from one another, and business has learned to avoid many of the difficulties through resorting to arbitration and appropriate drafting. Through skillful draftsmanship the experienced international lawyer can prevent many of the difficulties that can so easily arise under private international law.

(out of the order offered in the text – but important here)

The notion that the courts of a country should ever have to decide problems under foreign law rather than invariably deciding all problems coming before them under the law of their own country is by no means self-evident.

It has its rationale mainly in the thought that it would be unjust to teh parties concerned if a problem were decided under a law that they did not know might cover their situation when they began the transaction that led to the subsequent litigation. (but does not apply to false advertising, misrepresentation, fraud and other illusory, illegal, fraudulent, corrupt, unfair, unscrupulous or criminal business practices, my note, because even at a very basic level, those engaging in it know by its nature to be wrong and likely to fail the merits of any legal test of acceptable practices. – cricketdiane)

(further, on pp. 1088, Vol 4 – Conflict of Laws)

The necessity to apply the law of a foreign country or province, however, constitutes an inconvenience to the court and the parties. Although judges are familiar with the law of their own country, they cannot be expected to be familiar with the laws of the whole world. (but they can read at least as good as I can, my note.) Foreign law must therefore be especially pleaded and proved, often at considerable inconvenience and expense.

European and American scholars of the late 19th centuries attempted to reduce the whole field of choice of law to a few principles that could be expressed in a small number of highly generalized maxims.

Their results, however, proved impractical. Since the problems of choice of law are almost as manifold as those of substantive private law, these efforts turned out to constitute oversimplifications.

Mid-20th-century writers and courts regard it as their task to elaborate patiently those detailed rules of narrow application that are necessary to do justice to the infinite variety of actual life.

Some U.S. scholars also stress the interests of states to implement their policies over divergent policies of other states. The results of the manifold efforts can be found in the works listed in the bibliography. Here no more can be done that state some overall approaches, which must not be regarded as rules of immediate applicability. (their note, not mine.)

(also out of order from the text – )

In their general approach to the problem of jurisdiction, the common-law countries still proceed from the long-obsolete notion that no civil suit could be commenced in any way other than by the defendant’s arrest by the sheriff. Consequently, an action can still be brought in any place in which the defendant is personally served with process, (or in which they own property or have conducted business, my note), even though he may be there only for a few minutes to change airplanes.

In modern times it has come to be widely held, however, that personal service upon the defendant is no longer an indispensable requirement of jurisdiction and that an individual may be sued in the country or state of his residence, even if the summons is not personally pressed upon him. a corporation can always be sued in the country or state in which it has been incorporated.

(and, also out of order – but very interesting – )

As another example, the courts of New York regard themselves as an “inconvenient forum” for suits between nonresidents concerning a tort committed outside New York.

With few exceptions, Anglo-U.S. courts will not try controversies concerning title to, or trespass upon, land situation outside the state. (my note, but this changes when it involves money, securities, exchange of securities, fraud, fraudulent business practices, currency manipulation or currency forms as the property in question.)

(etc. – lots more good information here, but I need to lookup something else.)

(from)

Encyclopedia Britannica, 1978

pp. 1085 – 1088; Vol. 4, “Conflict of Laws”

***

Essentials of Business Law, Second Edition –

1984, 1986, West Publishing Company, St. Paul, Minn.

authors – Smith, Mann, Roberts

pp. 700 – 701, 702 – Part Nine, Regulation of Business

Figure 39 – 3 Restraints of Trade

Restraint  -  Standard

Price fixing   …   Per se illegal

Market allocations   …   Horizontal:  per se illegal

Vertical:  rule of reason

Group boycotts   …   per se illegal

Tying arrangements   …   per se illegal (* if seller has power in tying product or a not insubstantial amount of interstate commerce is affected in the tied product.)

However, in the text -

Monopolies -

Economic analysis indicates that a monopolist will use its power to limit production and increase prices. Therefore, a monopolistic market will produce fewer goods at a higher price than a competitive market. Addressing the problem of monopolization, Section 2 of the Sherman Act prohibits monopolies, attempts to monopolize, and conspiracies to monopolize.

Thus Section 2 prohibits both agreements among businesses and, unlike Section 1, unilateral conduct by one firm.

Monopolization -

Although the language of Section 2 appears to prohibit all monopolies, the courts have not interpreted it in that manner. Rather, they have required that in addition to the mere possession of market power there also must be either the unfair attainment of the monopoly power or the abusive use of that power once attained.

It is extremely rare to find an unregulated industry with only one firm, so the issue of monopoly power involves defining what degree of market dominance constitutes monopoly power. Monopoly power is the ability to control prices or to exclude competitors from the marketplace. The courts have grappled with this question of monopoly power and have developed a number of approaches, but the most common test is market share.

A market share greater than 75 percent generally indicates monopoly power, while a share less than 50 percent does not. (but what constitutes the actual market base is subjectively determined, my note). A 50 to 75 percent share is inconclusive (1986).

Market share is the fractional share possessed by a firm of the total relevant product and geographic markets, but defining the relevant markets is often a difficult and subjective project for the courts.

The relevant product market, as demonstrated in the case which follows (at the bottom of pages 701 – 702), includes products that are substitutable for the firm’s product on the basis of price, quality, and adaptability for other purposes. For example, although brick and wood siding are both used in buildings as exteriors it is not likely that they would be considered as part of the same product market. On the other hand, Coca Cola and Seven-Up are both soft drinks and would be considered part of the same product market.

(etc.)

The relevant geographic market is the territory in which the firm sells its products or services. This may be at the local, regional, or national level. (or in the cases we have today – in the international arenas, my note.)

For instance, the relevant geographic market for the manufacture and sale of aluminum might be national, whereas that of a taxi company would be local. The scope of the relevant geographic market will depend on such factors as transportation costs, the type of product or services, and the location of competitors and customers.

If sufficient monopoly power has been proved, it must then be shown that the firm has engaged in unfair conduct. The courts have not yet agreed on what constitutes unfair conduct (that is not true even when it was written and certainly not now – my note).

One judicial approach is that a firm possessing monopoly power has the burden of proving that it acquired such power passively or that it had the power “thrust” upon it. An alternative view is that monopoly power, when combined with conduct designed to exclude competitors, violates Section 1. a third approach requires monopoly power plus some type of predatory practice, such as pricing below marginal costs (among others, my note.)

(from – )

Essentials of Business Law, Second Edition –

1984, 1986, West Publishing Company, St. Paul, Minn.

authors – Smith, Mann, Roberts

pp. 700 – 701, 702 – Part Nine, Regulation of Business

***

excerpt from “Operations Management, Strategy and Analysis” by Krajewski, Ritzman:  1993, Addison-Wesley Publishing Co.

(pp. 296 – 299:  also pp.  300 about diseconomies of scale, found below first reference passages and Managerial Practice 8. 1 “The Agony of Too Much – And Too Little – Capacity”)

Capacity is the maximum rate of output for a facility. The facility can be a work station or an entire organization. The operations manager must provide the capacity to meet current and future demand or suffer the consequences of missed opportunities.

Capacity plans are made at two levels. Long-term capacity plans, which we describe in this chapter, deal with investments in new facilities and equipment. These plans look at least two years into the future, but construction lead times alone can force much longer time horizons.

Currently, U.S. investment in new plant and equipment is $550 billion annually (1986). Service industries account for more than 64 percent of the total. Such sizable investments require top-management participation and approval because they are not easily reversed.

Short-term capacity plans, which we discuss in later chapters, are constrained by long-term plans. Short-term plans focus on work-force size, overtime budgets, inventories, (short-term capital plays, etc., my note), and the like, rather than on capital investment decision.

Capacity planning is central to the long-term success of an organization. Too much capacity can be as agonizing as too little, as Managerial Practice 8. 1 demonstrates. When choosing a capacity strategy, managers have to consider questions such as, should we have one large facility or several small ones? Should we expand capacity before the demand is there or wait until demand is more certain? A systematic approach is needed to answer these and similar question and to develop a capacity strategy appropriate for each situation.

Measuring Capacity

Capacity planning requires a knowledge of current capacity and its utilization. A statistic often used to indicate the degree to which equipment, space, or labor (or throughput of product, my note) is currently being utilized is the average utilization rate, calculated as follows:

Average Utilization Rate = Average Output Rate divided by Capacity

and expressed as a percentage. The average output rate and the capacity must be measured in the same terms, that is, time, customers, units, or even dollars.

(etc.)

Output Measures – are the usual choice of product-focused firms. Nissan Motor Company confidently states its capacity to be 450,000 vehicles per year at its Tennessee plant. Capacity is well understood as an output rate because customization is low.

For multiple products, however, the capacity measure must recognize the product mix. For example, ( . . . )

Input Measures – are the usual choice of process-focused firms. For example, managers of a job shop think of capacity as machine hours or number of machines. Just as product mix can complicate output capacity measures, so also can demand complicate input measures.

Demand, which invariably is expressed as an output rate, must be converted to an input measure. Only after making the conversion can a manager compare demand requirements and capacity on an equivalent basis.

(pp. 297 – Managerial Practice 8. 1)

The Agony of Too Much and Too Little Capacity

Too Much Capacity -

The commercial real estate market in most major U.S. cities is sick, (1993) caused in part by the recession in the early 1990s. At the same time many tenants, especially those in the financial industry, are undergoing restructurings expected to cut demand for office space for years to come.

The vacancy rate of office space is 26 percent in Miami, Oklahoma City, Phoenix, and Dallas alike; it is 20 percent nationwide. Values have declined as much as 30 percent in some markets, and the capacity glut hurts everyone. For example, the CenTrust Tower in Miami, a 47-tower building built by a failed thrift for $165 million, was recently sold for only $38 million.

To make matters worse, the real estate industry is suffering from a virus becoming known as the “rollover risk.” Tenants from well-planned and pricey buildings are being lured to cheaper, empty buildings.

With the exception of the credit squeeze, rollover risk may be the single greatest obstacle to the recovery of the real estate market.

“There isn’t a tenant in Washington who pays the rent who isn’t getting two calls a week from brokers asking the tenant to break the lease and move into cheap space elsewhere,” says a banking consultant in Washington, D.C. “The entire market is being cannibalized.”

Too Little Capacity -

In the late 1980s the world’s airlines re-equipped their fleets and vied to buy a record number of commercial passenger jets. Orders for Boeing, Airbus, and McDonnell Douglas surged to more than 2600 planes.

Douglas alone had a backlog of some $18 billion in firm orders for its MD-80 and new MD-11 widebody. That’s enough to keep its plant fully utilized for more than three years.

Despite the number of orders, Douglas’ commercial aircraft division announced a startling loss, Airbus had yet to make money, and even the mighty Boeing fought to improve subpar margins.

The large number of orders caused many problems. For one, Douglas’ suppliers in the metal forging industry were unable to keep pace with sales. Another problem was with its own work force:  In two years, Douglas’ work force doubled, but training periods were abbreviated and the new hires were much less productive than seasoned employees.

Plant managers tried to keep on schedule by pushing planes along the assembly process, even if all the work at one particular station had not been completed.

Work was also subcontracted to other plants, including a sister plant that makes combat planes and a leased plant owned by the U.S. Air Force.

Because of the capacity shortage, costs skyrocketed and profits plummeted. By the start of the 1990s, the capacity pressure was relieved because American had cut back on the hypergrowth strategy that had set the pace for the entire airline industry in the 1980s.

Sources: “Office Buildings, Under Pressure Already, Face Threat to Their Leases,” Wall Street Journal, September 27, 1991; and “Planemakers Have It So Good, It’s Bad,” Business Week, May 8, 1989.

(from pp. 297, Operations Management, Strategy and Analysis, 1993)
***

Diseconomies of Scale -

New Rules Breed Wasteful Mergers – Law in the News pp. 705, Part Nine – Regulation of Business, Essentials of Business Law, Second Ed., 1986

inset -

New Rules Breed Wasteful Mergers by Herman Schwartz

Public policy is always fertile ground for irony. Today, for example, the economic landscape is strewn with merger fiascos, but current antitrust policy toward these combinations is increasingly lenient. “economic efficiency” is now the “only goal” of merger policy, according to a former Justice Department official.

As a result, the merger wave of the 1980s surges ahead, reachinng a new peak last week with the Allied Corporation’s $5 billion plaanned union with the Signal Companies, the largest industrial merger ever (outside the oil industry).

This preoccupation with economic efficiency ignores Congressional intent and judicial precedent. The legislative history of the antitrust laws contains almost no mention of efficiency, production or price. Rather, there is an insistent Jeffersonian concern for the small entrepreneur – for social, not economic reasons.

Thus, the Supreme Court has always ruled that efficiencies cannot save an otherwise illegal merger.

(etc.)

Steel mergers were supposed to “rationalize” a sick industry. But LTV, for example, is having so much trouble digesting Republic that, even though LTV’s own steel sales rose substantially in the first quarter of 1985, it lost $156 million and operated less efficiently than the other top steelmakers; before the merger LTV had been among the most efficient.

Elsewhere, the once-voracious ITT will spin off 12 industrial technology acquisitions in its third major asset sale in eight months, with more to follow. G.E. has shed Utah International, after a loss of perhaps $3 billion.

Du Pont’s acquisition of Conoco was described by one market analyst as “dead weight pulling Du Pont down all the time.” And the history of railroad mergers like that of Penn Central (permitted in the name of “efficiency”) is dismal: in 1979, Forbes magazine concluded that 14 out of 17 rail mergers were unsuccessful.

At least some of these deals would have been blocked by an antitrust policy more consistent with Congressional intent and established law. ( . . . )

(etc.)

One merger consultant estimated that 70 percent fail.

(out of order in the content of the article – )

Nevertheless, when the Administration (1985 article, my note), took office, William F. Baxter, then the Assistant Attorney General in charge of anti-trust, promptly redrew Federal guidelines to ease restrictions on mergers between competitors. The guidelines further legitimized virtually any “vertical” merger — between customer and suppliers –  or between companies in neither a directly competitive nor supply relationship.

Soon, deals  — such as the proposed Allied-Signal merger — were proposed “that never would have been . . . before the Reagan Administration took office,” as one businessman put it. (etc. Last June, the Antitrust Division further softened the guidelines.

Experience shows that the supposed benefits of a merger are often illusory.

( . . . )  Today, Mobil is trying to spin off Montgomery Ward, after pouring over $600 million into it, and is taking a $500 million charge against earnings. Exxon has written off a $1.3 billion investment in Reliance Electric. . . . And Arco’s divestiture of its refining and retailing operations shows that vertical integration may yield not efficiencies, but trouble.

(etc.)

pp. 705, Essentials of Business Law, 2nd Ed.

inset article from New York Times Company, 1985

***

Managerial Considerations in Job Design and Work Measurement pp. 279 – 281, Operations Management, Strategy and Analysis

Compensation Plans –

Compensation plans based on work measurement typically involve incentive schemes. Those used most often are piece rate and individual incentive plans.

Piece Rate Plans – piece rate is a compensation plan based on the number of units processed during a day or week. (my note – that is whether it is stocks, bonds, investment “deals”, seams in a pair of blue jeans or what management must specify as a “fair day’s work.” – that last part came from the text.)

Individual Incentive Plants – sometimes, incentive plans are used to motivate workers. Such plans reward output that exceeds a predetermined base level. (etc.)

Quality and Compensation Plans – the purpose of incentive pay is to encourage high levels of output from employees. However, a high rate of output may be achieved at the expense of quality. What is the advantage to a company if a worker produces at 115 percent of standard but has a 20 percent defective rate?

In Chapter 3, when we discussed total quality control, we argued that quality at the source is critical for achieving world-class quality performance. Incentive plans that do not recognize and reward quality may not motivate the worker to produce high-quality goods.\

Two basic approaches are used to recognize quality in incentive pans. The first is the autocratic approach, which docks the worker’s pay for defective production or requires the worker to repair all defects at a lower rate of pay.

The second is the motivational approach, which is based on the concept of extra pay for extra effort. (etc.)

Many variants (including game theory popular in the last twenty-five years whereby the extreme levels of compensation, rewards, perks and bonuses of the executives are used as a motivating carrot for all mid-level performs who would be enticed to think they could have that eventually too, my note) of the motivational approach of including quality in work measurement are used in practice. the important point is that quality should be clearly recognized when compensation plans are being developed.

(Apparently, there also needs to be a standard set for what represents “quality” especially in the financial investment industries – because not every deal qualifies as “the deal” nor should it be, as exemplified by yesterday’s Senate hearings with the mid-level management / decision makers of the Wall Street investment firm, Goldman Sachs, – 04-27-10, Senate investigations committee.)

***

The financial crisis of 2007–present is a crisis triggered by an insolvent United States banking system.

It has resulted in the collapse of large financial institutions, the bailout of banks by national governments and downturns in stock markets around the world. In many areas, the housing market has also suffered, resulting in numerous evictions, foreclosures and prolonged vacancies.

It is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s.[1]

It contributed to the failure of key businesses, declines in consumer wealth estimated in the trillions of U.S. dollars, substantial financial commitments incurred by governments, and a significant decline in economic activity.[2]

Many causes have been proposed, with varying weight assigned by experts.[3] Both market-based and regulatory solutions have been implemented or are under consideration,[4] while significant risks remain for the world economy over the 2010–2011 periods.[5]

http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932010

World map showing GDP real growth rates for 2009

World map showing GDP real growth rates for 2009

***

And on pages 300 – 301 of the same book – Operations Management, Strategy and Analysis, 1993 -in the section titled “Economies of Scale”

there is also – Diseconomies of Scale

. . . Historically, many organizations have subscribed to the concept of economies of scale. The concept seems simple: Increasing a facility’s size (or scale) decreases the average unit cost.

But in reality, it’s not at all simple. At some point a facility (or business, corporation, bank or conglomerate, my note) becomes so large that diseconomies of scale set in. Excessive size can bring complexity, loss of focus, and inefficiencies, which raise the average unity cost. (etc.)

muckety map - good example of diseconomies of scale - AIG / Goldman Sachs / Wall Street bailouts

muckety map - good example of diseconomies of scale - AIG / Goldman Sachs / Wall Street bailouts

(Figure 8.1 found on page 300 of the book below – not really applicable)

Figure 8.1 also shows a second dimension to the concept. Not only is there an optimal size for a facility but also an optimal operating level for a facility of a given size. Economies and diseconomies of scale are represented not just between cost curves but also within each one.

As the output rate approaches a facility’s best operating level, economies of scale are realized. Beyond that level, diseconomies set in.

pp. 300 – 301, Operations Management, Strategy and Analysis

***

See also

  • Swedish banking rescue, a systemic crisis in the early 1990s which cost the Swedish taxpayer 4% of GDP in the short term (much of the money was later recovered)
  • Savings and loan crisis in the United States in the 1980s and 1990s, costing $125 billion to the U.S. taxpayer (about 2% of GDP)
  • Crédit Lyonnais, a French state bank which almost failed in 1993, costing the French taxpayer €16 billion (about 1% of GDP)
  • Washington Mutual, formerly the largest savings and loan association in the United States, intervened by the U.S. government in September 2008
  • Darien scheme, a historical failure of overseas expansion, resulting in the loss of one-fifth of the wealth of Scotland at the end of the seventeenth century

(from)

http://en.wikipedia.org/wiki/2008%E2%80%932010_Icelandic_financial_crisis

***

My Note – I had another chart or two about these general concepts and some online information that I found awhile back, however – by the time I find it in my computer – it could be awhile. Therefore, I’m going to take a break, start a new blog entry and check online for the ones I was trying to find, which would have to be easier.

- cricketdiane

***

Share in GDP of U.S. financial sector since 1860 - must not include derivatives

Share in GDP of U.S. financial sector since 1860 - must not include derivatives - Leonard N. Stern School of Business at New York University - Thomas Philippon, The future of the financial industry

Derivatives were suggested to be over $600 Trillion dollars – I don’t think that is included in the GDP . . .

(of anywhere, now that I think about it, my note) – cricketdiane

***

When credit default swaps paid out 100% to the hedge funds and Wall Street players – where did they think the payout on that money came from? Did they not know it was the education money for somebody’s kids, their nest egg for retirement, the money they sacrificed and put away that they had earned the hard way – by working for it – just to have Wall Street put their hands into the till and claim it belonged to them – that is organized crime –

History

The fusor was originally conceived by Philo Farnsworth, better known for his pioneering work in television. In the early 1930s he investigated a number of vacuum tube designs for use in television, and found one that led to an interesting effect. In this design, which he called the multipactor, electrons moving from one electrode to another were stopped in mid-flight with the proper application of a high-frequency magnetic field. The charge would then accumulate in the center of the tube, leading to high amplification. Unfortunately it also led to high erosion on the electrodes when the electrons eventually hit them, and today the multipactor effect is generally considered a problem to be avoided.

What particularly interested Farnsworth about the device was its ability to focus electrons at a particular point. One of the biggest problems in fusion research is to keep the hot fuel from hitting the walls of the container. If this is allowed to happen, the fuel cannot be kept hot enough for the fusion reaction to occur. Farnsworth reasoned that he could build an electrostatic plasma confinement system in which the “wall” fields of the reactor were electrons or ions being held in place by the multipactor. Fuel could then be injected through the wall, and once inside it would be unable to escape. He called this concept a virtual electrode, and the system as a whole the fusor.

Work at Farnsworth Television labs

New fusors based on Hirsch’s design were first constructed in the late 1960s. The first test models demonstrated that the design was effective. Soon they were showing production rates of up to a billion neutrons per second, and rates of up to a trillion per second have been reported.

All of this work had taken place at the Farnsworth Television labs, which had been purchased in 1949 by ITT Corporation with plans of becoming the next RCA. In 1961 ITT placed Harold Geneen in charge as CEO. Geneen decided that ITT was no longer going to be a telephone/electronics company, and instituted a policy of rapidly buying up companies of any sort. Soon ITT’s main lines of business were insurance, Sheraton Hotels, Wonderbread and Avis Rent-a-Car. In one particularly busy month they purchased 20 different companies, all of them unrelated. It didn’t matter what the companies did, as long as they were profitable.

A fusion research project was not regarded as immediately profitable. In 1965 the board of directors started asking Geneen to sell off the Farnsworth division, but he had his 1966 budget approved with funding until the middle of 1967. Further funding was refused, and that ended ITT’s experiments with fusion.

The team then turned to the AEC, then in charge of fusion research funding, and provided them with a demonstration device mounted on a serving cart that produced more fusion than any existing “classical” device. The observers were startled, but the timing was bad; Hirsch himself had recently revealed the great progress being made by the Soviets using the tokamak. In response to this surprising development, the AEC decided to concentrate funding on large tokamak projects, and reduce backing for alternative concepts.

Work at Brigham Young University

Farnsworth then moved to Brigham Young University and tried to hire on most of his original lab from ITT into a new company. The company started operations in 1968, but after failing to secure several million dollars in seed capital, by 1970 they had spent all of Farnsworth’s savings. The IRS seized their assets in February 1971, and in March Farnsworth suffered a bout of pneumonia which resulted in his death. The fusor effectively died along with him.

http://en.wikipedia.org/wiki/Fusor

Believe it or not – this true story is the real destruction that the Wall Street business approach consistently provides. We might today have actual nuclear fusion to generate electricity for America and the world along with untold countless other wonderful things – if this inventor and his team could’ve had the support of the business he created and the rewards from the inventions he designed.

But no, look what happened in the middle of the story and the damages that occurred as a result – we all live with that diminished real return and so do generations of children and families long past his life or ours. That is because of what he didn’t get to do as a direct result of the greed at the expense of all else which took over the way Harold Geneen mis-handled it. He traded the great breakthroughs of our lifetime to buy up businesses that already existed and didn’t need his help to be available to all of mankind and to improve people’s lives for generations as these inventors were dependent on it and denied it.

And that’s what “Atlas Shrugged” is about – what happens when the intelligent aren’t allowed, the creative aren’t tolerated, the greatest are denied access and the endless possibilities inherent in the human mind are leashed by the hideous short-sighted manipulations of “a few in pursuit of greed above all, and to the exclusion of all else.” (my paraphrase)

- cricketdiane, 04-28-10

This is Mr. Farnsworth’s machine – it is a damn good start – sits on a table top instead of taking up miles and miles of space and the absurd energy used in the Tokamak et al. – and that’s some of what we’ve lost because of Wall Street greed – I hope that Mr. Geneen remains in hell forever -

Farnsworth–Hirsch Fusor during operation in so called "star mode" characterized by "rays" of glowing plasma which appear to emanate from the gaps in the inner grid - produces neutrons by trillions

Farnsworth–Hirsch Fusor during operation in so called "star mode" characterized by "rays" of glowing plasma which appear to emanate from the gaps in the inner grid. - produces neutrons by trillions

***

Standard and Poor’s has downgraded the sovereign debt ratings for both Greece and Portugal, with the Greek debt lowered to junk status. FULL STORY

***

They were smooth, confident and proved why Goldman employees are known as the best on Wall Street. They explained complex mortgage products and their role in them. It was all very impressive — until the questions started. FULL STORY

***

My Note -

The other thing that I noticed about the ways that products on Wall Street have been made that profit only when others fail or when loans fail or when the markets are failing or when businesses fail – is this -

That same money which was drawn into that game would’ve otherwise been the same money to invest in the success of businesses, the underwriting of real innovations, research and develop of businesses, start-ups of new businesses and other types of investments which would’ve provided a return at the success of where it was made available.

The tragedy of having brought that money into a game based on making money when failure occurs – it also assured those funds weren’t available to support commercial real estate, retailers, manufacturers, businesses, startups and other truly innovative business and economic things of an advantage to our society. All that money has been tied up in this game to steal it, convert it into bonuses and Wall Street profits to serve themselves and making 100% return to themselves specifically because tens of thousands of people lost their homes and businesses.

Tell the people of Iceland who lost their life savings and all the revenues of their city budgets, their school’s program budgets, their country treasury, their banks and countless businesses – that the money in the pockets of the Wall Street members who sold them those financial products and also made off their banks’ failure wasn’t constructed intentionally to do so.

Ask the people of Greece, Portugal, Ireland, and countless others if there is nothing wrong with what Goldman Sachs, and every other Wall Street banker, investment firm and hedge fund have been and are still doing.

-  cricketdiane

***

History

Some theories hold that the practice was invented in 1609 by Dutch trader Isaac Le Maire, a big shareholder of the Vereenigde Oostindische Compagnie (VOC). In 1602, he invested about 85,000 guilders in the VOC. By 1609, the VOC still was not paying dividend, and Le Maire’s ships on the Baltic routes were under constant threats of attack by English ships due to trading conflicts between the British and the VOC. Le Maire decided to sell his shares and sold even more than he had. The notables spoke of an outrageous act and this led to the first real stock exchange regulations: a ban on short selling. The ban was revoked a couple of years later.[2]

Short selling has been a target of ire since at least the eighteenth century when England banned it outright.[citation needed] It was perceived as a magnifying effect in the violent downturn in the Dutch tulip market in the seventeenth century. In another well-referenced example, George Soros became notorious for “breaking the Bank of England” on Black Wednesday of 1992, when he sold short more than $10 billion worth of pounds sterling.

The term “short” was in use from at least the mid-nineteenth century. It is commonly understood that “short” is used because the short seller is in a deficit position with his brokerage house. Jacob Little was known as The Great Bear of Wall Street who began shorting stocks in the United States in 1822.[citation needed]

Short sellers were blamed for the Wall Street Crash of 1929.[3] Regulations governing short selling were implemented in the United States in 1929 and in 1940.[citation needed] Political fallout from the 1929 crash led Congress to enact a law banning short sellers from selling shares during a downtick; this was known as the uptick rule, and this was in effect until July 3, 2007 when it was removed by the SEC (SEC Release No. 34-55970).[4] President Herbert Hoover condemned short sellers and even J. Edgar Hoover said he would investigate short sellers for their role in prolonging the Depression. Legislation introduced in 1940 banned mutual funds from short selling (this law was lifted in 1997).[citation needed] A few years later, in 1949, Alfred Winslow Jones founded a fund (that was unregulated) that bought stocks while selling other stocks short, hence hedging some of the market risk, and the hedge fund was born.[5]

Some typical examples of mass short-selling activity are during “bubbles“, such as the Dot-com bubble.[citation needed] At such periods, short-sellers sell hoping for a market correction. Food and Drug Administration (FDA) announcements approving a drug often cause the market to react irrationally due to media attention; short sellers use the opportunity to sell into the buying frenzy and wait for the exaggerated reaction to subside before covering their position.[citation needed] Negative news, such as litigation against a company, will also entice professional traders to sell the stock short.

During the Dot-com bubble, shorting a start-up company could backfire since it could be taken over at a higher price than what speculators shorted. Short-sellers were forced to cover their positions at acquisition prices, while in many cases the firm often overpaid for the start-up.

Short selling restrictions in 2008

In September 2008 short selling was seen as a contributing factor to undesirable market volatility and subsequently was prohibited by the U.S. Securities and Exchange Commission (SEC) for 799 financial companies for three weeks in an effort to stabilize those companies.[6] At the same time the U.K. Financial Services Authority (FSA) prohibited short selling for 32 financial companies.[7] On September 22, Australia enacted even more extensive measures with a total ban of short selling.[8] Also on September 22, the Spanish market regulator, CNMV, required investors to notify it of any short positions in financial institutions, if they exceed 0.25% of a company’s share capital.[9][10] Naked shorting was also restricted.

In an interview with the Washington Post in late December 2008, U.S. Securities and Exchange Commission Chairman Christopher Cox said the decision to impose a three-week ban on short selling of financial company stocks was taken reluctantly, but that the view at the time, including from Treasury Secretary Henry M. Paulson and Federal Reserve chairman Ben S. Bernanke, was that “if we did not act and act at that instant, these financial institutions could fail as a result and there would be nothing left to save.” Later he changed his mind and thought the ban unproductive.[11] In a December 2008 interview with Reuters, he explained that the SEC’s Office of Economic Analysis was still evaluating data from the temporary ban, and that preliminary findings point to several unintended market consequences and side effects. “While the actual effects of this temporary action will not be fully understood for many more months, if not years,” he said, “knowing what we know now, I believe on balance the Commission would not do it again.”[12]

Mechanism

Short selling stock consists of the following:

  • The investor instructs the broker to sell the shares and the proceeds are credited to his broker’s account at the firm upon which the firm can earn interest. Generally, the short seller does not earn interest on the short proceeds.
  • Upon completion of the sale, the investor has 3 days (in the US) to borrow the shares. If required by law, the investor first ensures that cash or equity is on deposit with his brokerage firm as collateral for the initial short margin requirement. Some short sellers, mainly firms and hedge funds, participate in the practice of naked short selling, where the shorted shares are not borrowed or delivered.
  • The investor may close the position by buying back the shares (called covering). If the price has dropped, he makes a profit. If the stock advanced, he takes a loss.
  • Finally, the investor may return the shares to the lender or stay short indefinitely.
  • At any time, the lender may call for the return of his shares e.g. because he wants to sell them. The borrower must buy shares on the market and return them to the lender (or he must borrow the shares from elsewhere). When the broker completes this transaction automatically, it is called a ‘buy-in’.

Shorting stock in the U.S.

In the U.S., in order to sell stocks short, the seller must arrange for a broker-dealer to confirm that it is able to make delivery of the shorted securities. This is referred to as a “locate.” Brokers have a variety of means to borrow stocks in order to facilitate locates and make good delivery of the shorted security.

The vast majority of stocks borrowed by U.S. brokers come from loans made by the leading custody banks and fund management companies (see list below). Institutions often lend out their shares in order to earn a little extra money on their investments. These institutional loans are usually arranged by the custodian who holds the securities for the institution. In an institutional stock loan, the borrower puts up cash collateral, typically 102% of the value of the stock. The cash collateral is then invested by the lender, who often rebates part of the interest to the borrower. The interest that is kept by the lender is the compensation to the lender for the stock loan.

Brokerage firms can also borrow stocks from the accounts of their own customers. Typical margin account agreements give brokerage firms the right to borrow customer shares without notifying the customer. In general, brokerage accounts are only allowed to lend shares from accounts for which customers have “debit balances”, meaning they have borrowed from the account. SEC Rule 15c3-3 imposes such severe restrictions on the lending of shares from cash accounts or excess margin (fully paid for) shares from margin accounts that most brokerage firms do not bother except in rare circumstances. (These restrictions include the broker must have the express permission of the customer and provide collateral or a letter of credit.)

Most brokers will allow retail customers to borrow shares to short a stock only if one of their own customers has purchased the stock on margin. Brokers will go through the “locate” process outside their own firm to obtain borrowed shares from other brokers only for their large institutional customers.

(etc.)

Dividends and voting rights

Where shares have been shorted and the company which issues the shares distributes a dividend, the question arises as to who receives the dividend. The new buyer of the shares, who is the “holder of record” and holds the shares outright, will receive the dividend from the company. However, the lender, who may hold its shares in a margin account with a prime broker and is unlikely to be aware that these particular shares are being lent out for shorting, also expects to receive a dividend. The short seller will therefore pay to the lender an amount equal to the dividend in order to compensate, though as this payment does not come from the company it is not technically a dividend as such. The short seller is therefore said to be “short the dividend”.

A similar issue comes up with the voting rights attached to the shorted shares. Unlike a dividend, voting rights cannot legally be synthesized and so the buyer of the shorted share, as the holder of record, controls the voting rights. The owner of a margin account from which the shares were lent will have agreed in advance to relinquish voting rights to shares during the period of any short sale.[14] As noted earlier, victims of Naked Shorting attacks sometimes report that the number of votes cast is greater than the number of shares issued by the company.[15]

http://en.wikipedia.org/wiki/Short_position

***

As noted earlier, victims of Naked Shorting attacks sometimes report that the number of votes cast is greater than the number of shares issued by the company.[15]

RBS’s aggressive expansion strategy turned the regional Scottish lender into a global bank with a large investment operation. But it backfired.

By the fall of 2008 RBS, one of Britain’s biggest banks, had been nationalized in all but name. The government started with a minority holding that fall, when it pulled the bank from the brink of collapse, but continued to tighten its grip as the share price eroded. By February 2009 it owned a 68 percent stake, allowing it to exert de facto control over bank management — which was replaced in a shake-up — as well as in lending and strategic decisions.

In the last week of February, the bank announced a £24.1 billion loss for the year, the largest in British corporate history. The bank has become the first bank to sign up for Britain’s asset protection plan. RBS said it would dump £325 ($466 billion) of mainly toxic assets into the program, a step that could raise the state’s stake to 95 percent.

(etc.)

http://topics.nytimes.com/top/news/business/companies/royal-bank-of-scotland-group-plc/index.html

**

A Routine Deal Became an $840 Million Mistake

By LANDON THOMAS Jr.
Published: April 22, 2010

LONDON — To the bankers here, it seemed like a chance to make a quick $7 million — risk free.

Instead, their sweet deal turned into a $840.1 million debacle.

In May 2007, a handful of bankers in London agreed to take a role in a complex mortgage investment being devised by Goldman Sachs.

http://www.nytimes.com/2010/04/23/business/23cdo.html

Abacus, which is now at the center of accusations that Goldman defrauded investors, was one of countless mortgage deals that ricocheted between Wall Street and Europe during the heady days of the boom.

Indeed, after R.B.S., the biggest loser in Abacus was IKB Deutsche Industriebank of Germany, which was a big player in such mortgage investments.

( . . . )

The $840.1 million that Abacus cost R.B.S. represented a small part of the crippling losses that led the British government to rescue the bank in the costliest bailout of any bank worldwide. Today R.B.S. is all but nationalized; the British government owns about 84 percent of it.

Gordon Brown, Britain’s prime minister, has called for an investigation into the Abacus deal, as has the German chancellor, Angela Merkel.

When the Abacus investment soured, Royal Bank of Scotland, under the terms of the deal, was obligated to cover the $840.1 million in losses. The British bank paid that sum to Goldman Sachs, which, in turn, paid John A. Paulson, the hedge fund manager who had bet against the deal. According to the Securities and Exchange Commission, Goldman had devised the investment to fail from the start so that Mr. Paulson could wager against it.

(etc.)

http://www.nytimes.com/2010/04/23/business/23cdo.html

***

Muckety Map of John Paulson -

http://www.muckety.com/John-A-Paulson/81605.muckety

**

A passenger waited for a train at the Rossio station in Lisbon as transport workers in both Portugal and Greece went on strike against austerity measures on Tuesday.

By JACK EWING and JACK HEALY
Published: April 27, 2010

FRANKFURT — Greece’s credit rating was lowered to junk status Tuesday by a leading credit agency, a decision that rocked financial markets and deepened fears that a debt crisis in Europe could spiral out of control.

The ratings agency, Standard & Poor’s, downgraded Greece’s long-term and short-term debt to non-investment status and cautioned that investors who bought Greek bonds faced dwindling odds of getting their money back if Greece defaulted or went through a debt restructuring. The move came shortly after S.&P. reduced Portugal’s credit rating and warned that more downgrades were possible.

(etc. – and now the investment funds that may be holding that debt will probably have to dump it because its now called, “junk” along with the mega-interest rates and fees that Greece is paying on it regardless, and the credit default swaps will all be paid out to the bondholders and hedge funds, the investment firms and inside players at 100% on the dollar from whoever is holding those – it is obscene.)

“This is a signal to the markets that the situation is deteriorating rapidly, and it’s not clear who’s in a position to stop the Greeks from going into a default situation,” said Edward Yardeni, president of Yardeni Research. “That creates a spillover effect into Portugal and Spain and raises the whole sovereign debt issue.”

( . . . )

http://www.nytimes.com/2010/04/28/business/global/28drachma.html?src=me&ref=business

***

My Note – there is no Wall Street reform that is going to fix this. Something else is required to fix this, probably taking all the money from the Wall Street players and freezing their accounts to teach them the meaning of the term – ZERO. Al Capone had to be taught the meaning of the word Zero and so should it be explained to them. Freeze their accounts, their company accounts and their personal accounts – stop the process by which they have gained at the expense of the funds they stole from every individual across the US and in every country it has affected.

Those funds did not belong to them. They weren’t playing with their own money. They probably borrowed the $7 million dollars to pay for the credit default swap bought from RBS which required the depositors, investors and citizens of the United Kingdom and the United States to pay out $840 million (and no telling how much more on the same deal to other players involved. – John Paulson made $1 Billion dollars on the deal – how did he come up with that much money on it? Whose life savings was that he put in his pocket? How many children’s educations did he divert to put those profits into his own bank account? Did he ever do anything to earn it or did he do no more than find a sophisticated way to convert other people’s money into his own?)

- cricketdiane note, 04-28-10

***

Paulson a major behind-the-scenes player in Goldman Sachs case

Apr 18, 2010 John Paulson made $3.7 billion in 2007, $2 billion in 2008. He made $2.3 billion last year to . . .

news.muckety.com/2010/04/18/paulson-a-major…in…/25651

***

John A. Paulson

Gender: Male
John A. Paulson lives and/or works in
New York, NY.
Muckety news stories featuring John A. Paulson
George Bailey’s desperate efforts to avoid the collapse of Bailey’s Savings & Loan have a special resonance this Christmas.
December 20, 2009

John A. Paulson current relationships:

92nd Street Y – director
Forbes billionaires list – ranked # 45 in 2010
Paulson & Company – president
Spence School – trustee

John A. Paulson past relationships:

Bear Stearns Companies Inc. – managing director
Gruss Partners – mergers arbitrager

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Muckety map information sources include:
Alpha Magazine
Muckety draws information from thousands of sources. For a list of primary government and news sites, see our Sources page.

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Comments and suggestions:

If you’re providing information or a photograph about John A. Paulson that you would like us to include in the Muckety database, please cite the source.

–>

John A. Paulson campaign contributions:
(Donations of $3,000 or more during 2007-2008 cycle)
McCain Victory 2008 – $85,700 on 5/15/2008

http://www.muckety.com/John-A-Paulson/81605.muckety

So far, Mr. Potter is winning

By Laurie Bennett

December 20, 2009 at 12:30pm


George Bailey’s desperate efforts to avoid the collapse of Bailey’s Savings & Loan have a special resonance this Christmas.

The number of U.S. bank failures in 2009 has reached 140, the highest number in 17 years. Many experts, including FDIC Chair Sheila Bair, predict that the number will increase next year.

While the FDIC risks losing millions on each failure, investors with cash reserves are seizing opportunities.

The most recent batch of takeovers involved some prominent names: billionaires J. Christopher Flowers, John Paulson and George Soros, Texas banker D. Andrew Beal and Steven T. Mnuchin, head of Dune Capital Management.

( . . . )

Flowers, Paulson and Soros invested with Mnuchin in OneWest Bank, which bought IndyMac bank earlier this year. Last week, the firm bought the failed First Federal Bank of California.

http://news.muckety.com/2009/12/20/so-far-mr-potter-is-winning/23181?tpLink

My Note -

So, Mr. Paulson was a managing director at Bear Stearns -

Bear Stearns Companies Inc. – managing director

and now owns IndyMac bank – and First Federal Bank of California

Here is a little more of an overall look at the bigger picture -

http://news.muckety.com/2009/12/20/so-far-mr-potter-is-winning/23181?tpLink

Who knew? Well, it turns out that Goldman Sachs knew. Magnetar knew. John Paulson knew. Michael Burry knew.
http://www.muckety.com/John-A-Paulson/81605.muckety
Muckety map link above – the news article above that is from the muckety site

Muckety Map showing relationship and players in Paulson company -( above)

Paulson & Company

muckety map – see this page and roll over names below map

Paulson & Company

People related to Paulson & Company:

Alan Greenspan – advisory board member
Andrew Hoine – SVP & research director
John A. Paulson – president

Other current Paulson & Company relationships:

Paulson & Company past relationships:

ABACUS 2007-AC1 – helped determine portfolio
Capitol Counsel LLC – lobby firm
Paolo Pellegrini – hedge-fund manager

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Muckety map information sources include:
U.S. Senate Office of Public Records

***

SEC vs. Goldman Sachs & Fabrice Tourre
Goldman Sachs Group, Inc. PAC
Goldman Sachs (Asia) LLC
Goldman Sachs Asset Management
Goldman Sachs Bank USA
Goldman Sachs Capital Partners
Goldman Sachs Europe Limited
Goldman Sachs Group Inc.
Goldman Sachs Hedge Fund Strategies LLC
Goldman Sachs International
Goldman Sachs Japan
Goldman Sachs Foundation
***
Friday, April 24, 2009

Finance

A record number of hedge funds liquidated in 2008

Philadelphia Business Journal – by Gregg Barr Special to the Business Journal

Hedge fund industry consolidation continued through the end of 2008, with a record number of hedge funds liquidating in the fourth quarter, according to a study from Hedge Fund Research Inc. released in March.

During the fourth quarter, investors withdrew a record amount of just over $150 billion from hedge funds, and 778 funds liquidated during the period, more than doubling the previous quarterly record of 344, set in the third quarter.

The total number of liquidations in 2008 was 1,471, an increase of more than 70 percent from the previous record of 848 liquidations in 2005.

( from )

http://philadelphia.bizjournals.com/philadelphia/stories/2009/04/27/focus5.html***

In most jurisdictions hedge funds are open only to a limited range of professional or wealthy investors who meet certain criteria set by regulators but, in exchange, hedge funds are exempt from many regulations that govern ordinary investment funds. The regulations thus exempted typically include restrictions on short selling, the use of derivatives and leverage, fee structures, and on the liquidity of interests in the fund. Light regulation and performance fees are the distinguishing characteristics of hedge funds.

The net asset value of a hedge fund can run into many billions of dollars, and the gross assets of the fund will usually be higher still due to leverage. Hedge funds dominate certain specialty markets such as trading within derivatives with high-yield ratings and distressed debt.[1]

( . . . )

Estimates of industry size vary widely due to the lack of central statistics, the lack of a single definition of hedge funds and the rapid growth of the industry. As a general indicator of scale, the industry may have managed around $2.5 trillion at its peak in the summer of 2008.[2] The credit crunch has caused assets under management (AUM) to fall sharply through a combination of trading losses and the withdrawal of assets from funds by investors.[3] Recent estimates find that hedge funds have more than $2 trillion in AUM.[4]
The business models of most hedge fund managers provide for the management fee to cover the operating costs of the manager, leaving the performance fee for employee bonuses. However, in large funds, the management fees may form a significant part of the manager’s profit.[6] Management fees associated with hedge funds have been under much scrutiny, with several large public pension funds, notably CalPERS, calling on managers to reduce fees.
However, the range is wide with highly regarded managers charging higher fees. For example Steven Cohen‘s SAC Capital Partners charges a 35-50% performance fee,[10] while Jim Simons‘ Medallion Fund charged a 45% performance fee.
Performance fees have been criticized by many people, including notable investor Warren Buffett, who believe that, by allowing managers to take a share of profit but providing no mechanism for them to share losses, performance fees give managers an incentive to take excessive risk rather than targeting high long-term returns.
( . . . )
The mechanism does not provide complete protection to investors: A manager who has lost a significant percentage of the fund’s value may close the fund and start again with a clean slate, rather than continue working for no performance fee until the loss has been made good.[12] This tactic is dependent on the manager’s ability to persuade investors to trust him or her with their money in the new fund.
(etc.)
Leverage – in addition to money invested into the fund by investors, a hedge fund will typically borrow money or trade on margin, with certain funds borrowing sums many times greater than the initial investment. If a hedge fund has borrowed $9 for every $1 received from investors, a loss of only 10% of the value of the investments of the hedge fund will wipe out 100% of the value of the investor’s stake in the fund, once the creditors have called in their loans. In September 1998, shortly before its collapse, Long-Term Capital Management had $125 billion of assets on a base of $4 billion of investors’ money, a leverage of over 30 times. It also had off-balance sheet positions with a notional value of approximately $1 trillion.[13]
(also)
Lack of transparency – hedge funds are private entities with few public disclosure requirements. It can therefore be difficult for an investor to assess trading strategies, diversification of the portfolio, and other factors relevant to an investment decision.
Lack of regulation – hedge fund managers are, in some jurisdictions, not subject to as much oversight from financial regulators as regulated funds, and therefore some may carry undisclosed structural risks.

**

Investigators name companies doing business with Iran

April 23, 2010 at 9:43am

Federal investigators have identified 41 foreign companies helping Iran to develop its energy capacity.

**

Hedge fund structure

A hedge fund is a vehicle for holding and investing the money of its investors. The fund itself has no employees and no assets other than its investment portfolio and cash. The portfolio is managed by the investment manager, which is the actual business and has employees.

As well as the investment manager, the functions of a hedge fund are delegated to a number of other service providers. The most common service providers are:

Prime brokerprime brokerage services include lending money, acting as counterparty to derivative contracts, lending securities for the purpose of short selling, trade execution, clearing and settlement. Many prime brokers also provide custody services. Prime brokers are typically parts of large investment banks.
Administrator – the administrator typically deals with the issue and redemption of interests and shares, calculates the net asset value of the fund, and performs related back office functions. In some funds, particularly in the U.S., some of these functions are performed by the investment manager, a practice that gives rise to a potential conflict of interest inherent in having the investment manager both determine the NAV and benefit from its increase through performance fees. Outside of the U.S., regulations often require this role to be taken by a third party.
Distributor – the distributor is responsible for marketing the fund to potential investors. Frequently, this role is taken by the investment manager.

[edit] Domicile

The legal structure of a specific hedge fund – in particular its domicile and the type of legal entity used – is usually determined by the tax environment of the fund’s expected investors. Regulatory considerations will also play a role. Many hedge funds are established in offshore financial centres so that the fund can avoid paying tax on the increase in the value of its portfolio. An investor will still pay tax on any profit it makes when it realizes its investment, and the investment manager, usually based in a major financial centre, will pay tax on the fees that it receives for managing the fund.

Around 60% of the number of hedge funds in 2009 were registered in offshore locations. The Cayman Islands was the most popular registration location and accounted for 39% of the number of global hedge funds. It was followed by Delaware (US) 27%, British Virgin Islands 7% and Bermuda 5%. Around 5% of global hedge funds are registered in the EU, primarily in Ireland and Luxembourg. [14]

Investment manager locations

In contrast to the funds themselves, investment managers are primarily located onshore in order to draw on the major pools of financial talent and to be close to investors. With the bulk of hedge fund investment coming from the U.S. East coast – principally New York City and the Gold Coast area of Connecticut – this has become the leading location for hedge fund managers. It was estimated there were 7,000 investment managers in the United States in 2004.[15]

London is Europe’s leading centre for hedge fund managers, with three-quarters of European hedge fund investments, about $400 billion, at the end of 2009. Asia, and more particularly China, is taking on a more important role as a source of funds for the global hedge fund industry. The UK and the U.S. are leading locations for management of Asian hedge funds’ assets with around a quarter of the total each.[16]

http://en.wikipedia.org/wiki/Hedge_fund

Although hedge funds are investment companies, they have avoided the typical regulations for investment companies because of exceptions in the laws. The two major exemptions are set forth in Sections 3(c)1 and 3(c)7 of the Investment Company Act of 1940. Those exemptions are for funds with 100 or fewer investors (a “3(c) 1 Fund”) and funds where the investors are “qualified purchasers” (a “3(c) 7 Fund”).[19] A qualified purchaser is an individual with over US$5,000,000 in investment assets. (Some institutional investors also qualify as accredited investors or qualified purchasers.)[20] A 3(c)1 Fund cannot have more than 100 investors, while a 3(c)7 Fund can have an unlimited number of investors. The Securities Act of 1933 disclosure requirements apply only if the company seeks funds from the general public, and the quarterly reporting requirements of the Securities Exchange Act of 1934 are only required if the fund has more than 499 investors.[21] A 3(c)7 fund with more than 499 investors must register its securities with the SEC.[22]

In order to comply with 3(c)(1) or 3(c)(7), hedge funds raise capital via private placement under the Securities Act of 1933, and normally the shares sold do not have to be registered under Regulation D. Although it is possible to have non-accredited investors in a hedge fund,[citation needed] the exemptions under the Investment Company Act, combined with the restrictions contained in Regulation D, effectively require hedge funds to be offered solely to accredited investors.[23] An accredited investor is an individual person with a minimum net worth of $1,000,000 or, alternatively, a minimum income of US$200,000 in each of the last two years and a reasonable expectation of reaching the same income level in the current year. For banks and corporate entities, the minimum net worth is $5,000,000 in invested assets.[23]

In December 2004, the SEC issued a rule change that required most hedge fund advisers to register with the SEC by February 1, 2006, as investment advisers under the Investment Advisers Act.[25] The requirement, with minor exceptions, applied to firms managing in excess of US$25,000,000 with over 14 investors. The SEC stated that it was adopting a “risk-based approach” to monitoring hedge funds as part of its evolving regulatory regimen for the burgeoning industry.[26] The new rule was controversial, with two commissioners dissenting.[27] The rule change was challenged in court by a hedge fund manager, and, in June 2006, the U.S. Court of Appeals for the District of Columbia overturned it and sent it back to the agency to be reviewed. See Goldstein v. SEC. In response to the court decision, in 2007 the SEC adopted Rule 206(4)-8. Rule 206(4)-8, unlike the earlier challenged rule, “does not impose additional filing, reporting or disclosure obligations” but does potentially increase “the risk of enforcement action” for negligent or fraudulent activity.[28]

In February 2007, the President’s Working Group on Financial Markets rejected further regulation of hedge funds and said that the industry should instead follow voluntary guidelines.[29][30][31] In November 2009 the House Financial Services Committee passed a bill that would allow states to oversee hedge funds and other investment advisors with $100m or less in assets under management, leaving larger investment managers up to the Securities and Exchange Commission. Because the SEC currently regulates advisers with $25m or more under management, the bill would shift 43% of these companies, or roughly 710, back over to state oversight[32]

Comparison to private equity funds

Hedge funds are similar to private equity funds in many respects. Both are lightly regulated, private pools of capital that invest in securities and compensate their managers with a share of the fund’s profits. Most hedge funds invest in relatively liquid assets, and permit investors to enter or leave the fund, perhaps requiring some months notice. Private equity funds invest primarily in very illiquid assets such as early-stage companies and so investors are “locked in” for the entire term of the fund. Hedge funds often invest in private equity companies’ acquisition funds.

Between 2004 and February 2006, some hedge funds adopted 25-month lock-up rules expressly to exempt themselves from the SEC’s new registration requirements and cause them to fall under the registration exemption that had been intended to exempt private equity funds.

(from wikipedia hedge funds entry)

***

Systemic risk

Hedge funds came under heightened scrutiny as a result of the failure of Long-Term Capital Management (LTCM) in 1998, which necessitated a bailout coordinated (but not financed) by the U.S. Federal Reserve. Critics have charged that hedge funds pose systemic risks highlighted by the LTCM disaster. The excessive leverage (through derivatives) that can be used by hedge funds to achieve their return[36] is outlined as one of the main factors of the hedge funds’ contribution to systemic risk.

The ECB (European Central Bank) issued a warning in June 2006 on hedge fund risk for financial stability and systemic risk: “… the increasingly similar positioning of individual hedge funds within broad hedge fund investment strategies is another major risk for financial stability, which warrants close monitoring despite the essential lack of any possible remedies. Some believe that broad hedge fund investment strategies have also become increasingly correlated, thereby further increasing the potential adverse effects of disorderly exits from crowded trades.”[37][38] However the ECB statement has been disputed by parts of the financial industry.[39]

The potential for systemic risk was highlighted by the near-collapse of two Bear Stearns hedge funds in June 2007.[40] The funds invested in mortgage-backed securities. The funds’ financial problems necessitated an infusion of cash into one of the funds from Bear Stearns but no outside assistance. It was the largest fund bailout since Long Term Capital Management’s collapse in 1998. The U.S. Securities and Exchange commission is investigating.[41]

However, hedge funds played almost no role in the vastly greater 2008 banking crisis. (interesting opinion statement in the wikipedia entry but not true – check the news from the hearings in the Congress and in the media at the time, my note)

http://en.wikipedia.org/wiki/Hedge_fund

***

Paulson, the founder and president of the hedge fund Paulson & Company, made $3.7 billion in 2007, according to an annual listing of the 50 most highly paid hedge fund managers.

The list compiled by Institutional Investor’s Alpha Magazine was previewed on the magazine’s website yesterday.

Paulson acquired his money by betting against the subprime mortgage market, using a complicated system that increased his earnings as the value of financial instruments bundling the mortgages dropped.

In other words, as the world got poorer, Paulson got richer.

He was by no means alone.

The list of top managers shows four other billion-dollar earners.

George Soros, of Soros Fund Management, made $2.9 billion last year, followed closely by the 2006 leader, James H. Simons of Renaissance Technologies at $2.8 billion.

Philip Falcone of Harbinger Capital Partners earned $1.7 billion and Kenneth Griffin of Citadel Investment Group came away with $1.5 billion.

(etc.)

The Wall Street Journal wrote in January that Paulson had told friends he was going to increase his charitable giving to help those in need.

In October 2007, he donated $15 million to the Center for Responsible Lending. That money was to help families about to lose their mortgages.

( . . . )

By the end of last year (2007), the firm had $28 billion in assets, an increase in $22 billion from the previous year, the Times reported.

In 1994, Paulson started Paulson & Co. with $2 million.

http://news.muckety.com/2008/04/17/mortgage-crisis-helped-john-paulson-reap-37-billion/2212?rLink

Mortgage crisis helped John Paulson reap $3.7 billion

By A. James Memmott

April 17, 2008 at 9:48am
(the article above – check the date – 2008 and then listen to the Senate hearings that were held today)
***

This Goldman Wall Street game isn’t a game – it is racketeering – every credit default swap on a failed portfolio paid out to every investor 100% of the portfolio’s established total value – many, many times over in real money – Hmmm…..

If 10,000 investors, companies or investment groups / hedge funds bought credit default swaps – (credit insurance) on those portfolios of worthless junk made up of hundreds of defaulting loans – they would have each and every one been paid out 100 cents on the dollar for the full value of the portfolio, whether that was $300 million dollars, or billions of dollars or whatever total value of the portfolio that was insured.

Like a company, bank, pension fund, investment pool, insurance company, corporation, association, state budget or group of individuals in an investment investing group portfolio being  paid  $7 million dollars for the credit default insurance – and then in a matter of weeks having to pay out $840 million dollars to cover that total payout to each of the investors and companies who participated in taking out the credit default swap (on a package of loans worth only 1/1000 of the stated value in the first place and that weren’t expected to be mostly paid off as healthy loans and mortgages in the first place – almost guaranteed to default) – and how many other places paid out the total amount of the portfolio value to satisfy credit default insurance on the same package? How many times over throughout the hedge funds and others that Goldman Sachs told or sold and each other firm on Wall Street was selling for and against at the same time, as well?

Hmmmm. . . .

Now I see how they were doing it and why the investors’ appetites for more and more of these likely to default loan packages was insatiable -

Every package / portfolio of these loans which were “shorted” – literally paid out for the full value to every investor or company like Goldman Sachs that was holding credit default swaps / credit insurance on it. So, for a $300 million dollar package or a $1 Billion dollar portfolio of mortgage backed securities that went into default – they were assured that 100% of the value would be paid out to them with absolutely no risk and no skin in the game (and in a very short order of time.) That’s how they did it and how they managed to rob every school budget, state budget, county budget, pension fund, educational endowment, retirement fund, and investment portfolio, bank and insurance company throughout the US and across the world.

It probably includes robbing revenues from our treasuries and every sovereign wealth fund in the world in the same way.

Every credit default swap paid out 100% many times over. If there were 10,000 investors and hedge funds playing “short” by buying the credit default swaps on the portfolios, these same pension funds and state revenue funds, etc. would’ve had to pay out 100% of the value to each and every one of them.

I think that’s it and why the institutional investment professionals had an insatiable appetite for these fraudulently valued and likely to fail instruments and portfolios based on loans very apt to default.

- cricketdiane, 04-27-10

***

How did these get paid out this way legally?  Isn”t that illegal?

Talk about free money.

They also had intimate knowledge of the fact that the loans were intended to be in that package of mortgages because they were the most likely to fail and go into default before making their plays against them using credit default swaps that would pay out 100 cents on the dollar for the full package of the portfolio value when it failed.

***

So each every time they did this – the money which went into their profits, covered their lifestyles, covered their expenses to operate, covered their helicopters and corporate jets, covered their $20,000 per hour salaries and bonuses and perks and corporate taxes and corporate benefits and corporate continuing plays in the marketplace along with offering further leverage opportunities – that money came from the pockets of every hard working, hard earned dollar that was put into savings, investments, and pension funds by Americans and individual citizens throughout the world.

They (Goldman Sachs and other Wall Street investment firms) accessed and used the state budget revenues in our state budgets, our school budgets in our school funds, our tax dollars in our federal Treasury, our school endowments and trusts, our charitable donations that were put into huge pools and used in the same games, our pension and retirement funds, our banks’ assets and pools of funds which belonged to us and every other pool of moneys that people had worked for and placed in a position to be used as an investment tool in order to acquire interest and gain on the money.

Unbelievable. There ought to be a clawback of those funds to put them back where they belong because that game was not only rigged – it was criminal.

- cricketdiane

***

The financial crisis puts a real crimp on what creativity is and what can be invented – plus what I’ve been working with here and there while studying on the financial crisis stuff – (and expressing my populist opinion on this blog) –

Populism, defined either as an ideology[1][2][3][4] (more rarely and uncommonly), a political philosophy[5][6][7] or a type of discourse[8][9], is a type of political-social thought that juxtaposes “the people” against “the elites”, and urges social and political system changes. It can also be defined as a rhetorical style employed by members of political or social movements. It is defined by the Cambridge dictionary as “political ideas and activities that are intended to represent ordinary people’s needs and wishes”. [10]

http://en.wikipedia.org/wiki/Populism

**

It is defined by the Cambridge dictionary as “political ideas and activities that are intended to represent ordinary people’s needs and wishes”. [10]

My Note -

I’m sick of hearing the word “populism” and “populist” as if it is a bad word. What the hell do they think a government “of the people, by the people and for the people” means?

Believe it or not, since my last three or four posts have been about the financial disaster zone that is the United States and world economies, I have actually been working on some other things (and looking up some other things) throughout these several days.

Among them, I found a scanning tunneling microscope that can be made DIY and a nifty new energy producing mechanism called a “windbelt” which is very exciting. I also found the show “America, The Story of Us” on the history channel worth great praise and all sorts of things online about experimental physics breakthroughs that have been rich and rewarding reading. However, the most disgraceful things have taken way too much attention away from those more rewarding pursuits, namely the economy and the continuing propaganda-like manipulations in the media concerning it.

I would love to be more interested in the pursuit of and the sharing of the other types of information, but without this mess in the economic and financial spheres being resolved or changed or sorted out equitably and brought to fairness and measures of fairness – the rest won’t ever amount to much. And, that is the shame of it – whether it is from where I sit or anywhere across the planet where others who would make inventions, insights, breakthroughs, innovations and creations of great public benefit happen to sit.

The fact is, we are all influenced and stymied by the process of what is occurring in the financial arenas from what we pay for things, to how much we get to be involved with building financial foundations for what we are creating and producing, to what happens with what we create and invent (in some bigger sense than having it sit in the closet off from our living rooms or in the garage, basement or attic.)

It also influences our access to education, to resources, to community resources in a greater sense than our direct and immediate physical community, and influences our access to participation. And, I say “our” because it isn’t just my little participation that might be thwarted or costs that I personally bear as a result of these things, – but truly, that it does affect all of us – every citizen, every community, every child, every adult, every group, every church, every organization, every educational institution and resource, every academic specialty of research and development, every business, every dime and every dollar and every resource available to us all.

That is exactly why populist ideas are the founding principles of our country and also exactly why the colonists in America didn’t “have to believe” in the necessity of freedom and the participation in the decision making of government – they knew that necessity by virtue of having lived with both inclusion in it and having suffered by the exclusion from it. They knew the difference by living it and underwrote the Constitution with the principles of “populism” because it is self-evident that without the people, there is no purpose in government, except to feed upon the lives, the souls, the livelihoods and the futures of the people it was intended to serve.

And, unfortunately, the same thing has become true for the financial services and huge corporate conglomerates in our economy. They have been breeding upon and feeding upon the people across the country and then, throughout the world that they claimed to be there to serve. That has impacted more lives in a negative way than many wars that have been fought and will have far-reaching implications in real terms for many, many years to come with the lives of real people, real opportunities, real resources, real futures and real incomes of real families and real communities on the chopping block.

That tea was thrown into the harbor, not because they didn’t like paying a tax on it for the English crown – it was thrown into the harbor because the idea of not being a free people allowed to choose for themselves without a voice in the decisions of the government that was designed beyond their borders to enslave them was untenable. That is to say, “free men once, free men always. – Don’t tread on me.” That is true whether it is the government doing it or some powerful guild or industry cartel or some financial industries group of bigots and bankers – or who the ever hell else.

- cricketdiane, 04-25-10

***

Just as an aside – some of the nifty other stuff I’ve seen lately -

http://www.physics.org/featuredetail.asp?id=47

Windbelt – Reinventing wind power

‘Typically aeroelastic flutter is a destructive effect. But what the Windbelt does is try to capture it for the purposes of electricity production,’ explains Frayne, the brains behind the Windbelt and the founder of Humdinger Wind Energy.

The Windbelt’s key component is a taut membrane of mylar-coated taffeta, which vibrates as wind flows over it – this movement, triggered by airflow, is what is known as aeroelastic flutter (see the windbelt in action in the video below).

‘That oscillation moves a set of permanet magnets that are on the membrane itself at one of the ends,’ Frayne continues. The motion of these magnets between two copper coil induces an electrical current.

***

http://www.physics.org/article-questions.asp?id=58

Upside down rainbows, or ‘circumzenithal arcs’, to give them the proper name, are not caused by rain.

Upside down rainbows, or ‘circumzenithal arcs’, to give them the proper name, are not caused by rain.

***

And this from – this nifty new journal in experimental physics that has an issue available through May 31, 2010 that is publicly viewable for free -

Elastic scattering of electrons on Ne atoms at intermediate energies

Author
Jorge L S Lino 1

Affiliations
Departamento de Matemática-Física e Informática, Universidade de Taubaté—UNITAU, Avenida Marechal Deodoro, 605/Taubaté, SP, Brazil
1 Permanent address: Universidade Braz Cubas-UBC, Campus I, 08773-380, Mogi das Cruzes, São Paulo, Brazil.

E-mail
jorgelino@icavp.com.br

Journal
Physica Scripta Create an alert RSS this journal

Issue
Volume 81, Number 3

Citation
Jorge L S Lino 2010 Phys. Scr. 81 035301

doi: 10.1088/0031-8949/81/03/035301

Tag this article Full text PDF (310 KB)
Abstract
In this work, we present a theoretical study on electron scattering by Ne in the intermediate- and high-energy range. More specifically, we report calculated differential cross sections for electron scattering by Ne in the 20–500 eV range by the Schwinger multichannel method using plane waves as a trial basis set. To include exchange plus polarization effects, we used the Born–Ochkur model and the Buckingham potential, respectively. The comparison of our calculated results with experimental data and recent theoretical studies (Jablonski et al 2004 J. Phys. Chem. Ref. Data 33 409) is encouraging.
PACS
34.80.Bm Elastic scattering 31.15.-p Calculations and mathematical techniques in atomic and molecular physics

Subjects
Atomic and molecular physics Computational physics

Dates
Issue 3 (March 2010)Received 5 June 2009 , accepted for publication 11 January 2010

Published 10 February 2010

http://iopscience.iop.org/1402-4896/81/3/035301
Whistler instability in non-Maxwellian plasmas
Integrable (2+1)-dimensional and (3+1)-dimensional breaking soliton equations
(and some others)
from here –

IOPscience::.. Physica Scripta, Volume 81, Number 3, March 2010

***
I read through a number of articles found there and printed off some to better understand the equations they presented. Also this stuff which is really great –
The Scanning Tunneling Microscope [IAP/TU Wien]
The IAP/TU Wien STM Gallery [IAP/TU Wien]
and the how to pages found here for building a scanning tunneling microscope –
Tunneling Current Preamplifier
Schematic_print
STM_operation
STM Mechanical Design
***
and also – nifty pictures from the IBM labs using single atoms to manipulate into “art” stuff just because they can -
IBM Almaden Research Center Visualization Lab
STM Image Gallery – Atomilism
STM Image Gallery
IBM’s 35 atoms and the rise of nanotech | Deep Tech – CNET News
Adsorption and Adsorbates [IAP/TU Wien]
(and I also looked up a few other things over the last few days – )
***
[and - gravity maps]

Science Friday Newsbriefs: Gravity Anomaly Solved

**
This one extensively explains the gravity maps, how they are constructed and what they mean – with pictures and maps and geoids -

http://rst.gsfc.nasa.gov/Intro/Part2_1b.html

Google Image Result for http://rst.gsfc.nasa.gov/Intro/pia04652-browse.jpg

**
And this one which I found on a search for information about rainbows on physics.org – but it is a NASA page for kids about visible light and very nifty -

http://science.hq.nasa.gov/kids/imagers/ems/visible.html

Visible Light Region of the Electromagnetic Spectrum - NASA page

Visible Light Region of the Electromagnetic Spectrum - NASA page - Visible light waves are the only electromagnetic waves we can see. We see these waves as the colors of the rainbow. Each color has a different wavelength.

***
And this -
Quantum Man is a modern sculpture created by Julian Voss-Andreae, which is located in the City of Moses Lake, Washington

Quantum Man is a modern sculpture created by Julian Voss-Andreae, which is located in the City of Moses Lake, Washington

http://en.wikipedia.org/wiki/Quantum_Man

***

Probe launches to map Earth’s gravity in best detail yet – space

Mar 17, 2009 Europe’s sleek GOCE satellite blasted off on Tuesday – the ion engine-propelled probe will map the planet’s gravity field in unprecedented
www.newscientist.com/…/dn16784-probe-launches-to-map-earths-gravity-in-best-detail-yet.html

BBC News | SCI/TECH | New gravity map released

If you want to lose weight you should go to India, where the pull of gravity is slightly less than it is elsewhere on the planet.
news.bbc.co.uk/2/hi/science/nature/1668872.stm

Gravity map Credit: The University of Texas Center for Space Research,

Gravity map Credit: The University of Texas Center for Space Research, - Geoid showing gravitational anomalies

www.sciencefriday.com/newsbriefs/read/118

***

First flying car goes under the hammer

Mar 25, 2010 The oldest known flying car by Frank Skroback’s went on auction in Atlanta, Antiques; » Aviation; » Flying Car; » World’s First. User Comments (1). very interesting F-35 Lightning II nails first vertical landing
www.gizmag.com/oldest-known-flying-car-auctioned/14567/

Frank Skroback's Flying Car, which recently went to auction in Atlanta, Georgia.

Frank Skroback's Flying Car, which recently went to auction in Atlanta, Georgia.

and this one – the flying boat -

Flying Boat up for auction: Curtiss MF Seagull

By Tannith Cattermole

23:19 March 25, 2010

One of the last known Curtiss MF Seagull Flying Boats is to be sold at auction on Tuesday April 13 at Bonhams in New York

One of the last known Curtiss MF Seagull Flying Boats is to be sold at auction on Tuesday April 13 at Bonhams in New York

The Curtiss MF Seagull - Credit: Courtesy of Bonhams

The earliest examples were built and sold by Curtiss in 1912 and became known as Model F in 1913; later Model MF (Modernized-F) after revisions to improve handling in water. In 1921 eighty-seven MFs were in service with the Navy - In 1909 he created the first US aircraft company, the Herring-Curtiss Company which was renamed the Curtiss Aeroplane Company in 1910

http://www.gizmag.com/curtiss-mf-seagull-flying-boat-auctioned/14622/

***

Nine-Year-Old Fossil Hunter Finds New Species of Human Ancestor – Bloomberg.com

World’s Strongest Beer: BrewDog’s Alcohol Heads to U.S. – TIME

(among other things – stuff you just never knew you needed to know – )

***

Einsteinian politics of capital – meaning you would have to use Einstein’s thinking to figure it out – way beyond my ability but here is a note or two about this extraordinary financial / economic crisis –

question  and response on blog comments – 04-25-10

jthomaswhite
2010/04/25 at 6:06 pm

In looking over the findings of the committee …. where is the fundamental flaw of having the issuer pay for the ratings rather than the buyer? it used to be so.
why has this topic been dropped … as it stands it’s exactly like illegal bookmaking.
it would do more or equal to stabilize the derivatives game than proposed taxation or increased capital requirements.
it isn’t even in the reform package!

My Response -

It looks like the institutional investors like pension funds, endowments (such as university endowments), probably state and local government / school system treasuries investment account executives, and maybe even, non-profits’ pools used for investments require only certain grades or ratings for purchase. Inversely, it looks like they are required to get rid of those investments that fall below a certain grade or value. It would be like having a constructed menu from which to choose – AAA, maybe BBB rated securities or derivatives filling the menu.

So, therefore, packages were made to fulfill those standards by “cushioning” the bad loan products or poorly performing stocks with something to make it meet some arbitrary standard set into the model used for the rating. If they expected 77% losses in a package, they could make it look like and call it triple-A rated regardless. Then, those losses would be distributed through the many pools of funds who had purchased them. Which, I think is why our budget revenues in school endowments, school and state budgets, the totals in pension funds and others are suffering extreme shortfalls in the millions and sometimes, billions of dollars.

Something covered those losses to pay them off and that insurance taken against them failing – which was also paid off. Those monies came from the funds that were supposed to be enhanced by their involvement with these financial tools. And, consequently was taken from the pockets of those people and missions the funds were intended to serve and from those whose hard-earned money was put into them.

So, two things happened – one part happened when the ratings were given which didn’t satisfy any measure of good sense and were rated by companies who stood to gain profits, market share and volume by assigning AAA ratings where they were not deserved nor appropriate. And the other part happened when the massive downgrades were made all at once by the same ratings agencies that kicked in the credit derivatives / credit default swaps / credit insurance to be required to pay out 100 cents on the dollar to cover the full value of the losses. Like in the case of the Abacus group for example, where $7 million was paid for the play, $840 million was paid out to satisfy the losses. That would be true across the board in every case where the losses were paid out of pension funds and other institutional investment pools.

The game isn’t complicated. It is a shell game and a con. The ratings agencies were as much a part of the game as the rest of the industries they were aligned with serving. All of them took the profits from it and none have suffered the kinds of losses that are being born by investment pools using other people’s money to play in it.

Yes, there is a fundamental flaw of having anyone intimately involved or profiting from the game create the standards by which ratings are given and then assigning those ratings to the products in play. There are no checks and balances. There continue to be the same elements today as there were when the entire economies of the world were shattered including the US economy. The losses are still being born by those whose money was used in the game, but whose best interests were not considered. And, the values of all these products are still being assigned by those involved in the game who have no incentive to be honest or forthright about what is in the products or what their true values might be.

I would say that ultimately, they have gotten away with it and are untouchable – just as they believe. There is no evidence to the contrary. The harms born by every child in America whose school system budgets were cut severely, won’t be experienced by any of those who caused it in Wall Street or Moody’s or Standard & Poor’s or in the boardrooms of banks and investment houses.

I just read an article yesterday that describes the number of repossessions / foreclosures right now is higher than it was even a year ago despite all the programs intended to fix it or help with it. That is because the people wrapped up in the game of re-packaging and selling those loans (RBS – residential backed securities, etc.) and those engaged in selling, trading, and manipulating the credit default swaps on them who stand to gain only if the homes go into foreclosure – aren’t interested in the homeowners, citizens, families and communities in America.

There was a real estate roundtable and several on-air interviews with people involved in those financial industries tied to residential real estate – and their comments were that they hope foreign investors with money can be found to come and buy all those homes across America so they can be resold into the hands of someone for ownership who can pay for it.

That means, there is no intention for families and communities in America to use those homes to live in, grow their communities, be a family, conduct their lives in, or for those residential properties to provide home ownership for the Americans who actually live here. That is only so that their game continues – and their profits are made, despite each of us literally having paid off their losses while they took their profits.

Sorry to be so wordy but the point is, there are so many fundamental flaws in the system as it stands now that it isn’t rocket science to understand any of it. The only real thing that keeps them from being utterly well-known as fraudulent, corrupt and manipulative criminal practices is the degree to which the American people don’t believe it could be that way, even though it is.

- cricketdiane, 04-26-10

***

Do you know what that means?

1. If I said to you, the US Treasury was accessible to you as a private checking account? And that if you lost money gambling and making bets that caused you to lose money, the revenues of the US government would let you dip your hand into the Treasury and give you more money to use and do with as you see fit – would you believe me?

But, that is what has happened. It just wasn’t any of us, that got to do it.

2. If I said to you, that with every $5.00 you put on the table and prove that you might have in some form – which may or may not really be $5.00 – that you could gamble with, borrow, use and have as your own to use for your business activities – any amount of money that you need up to 96 times that amount, would you believe me?

But, that is also what has happened for the bankers, Wall Street investment firms, corporations, hedge funds, financial services companies, loan originators, mortgage traders, and commercial real estate investment groups and traders. It just wasn’t available for any of us that way.

3. If I said to you, that 300% profits were not only to be expected but demanded and an acceptable standard for any business idea as “normal,” would you believe that is a reasonable standard even when your ideas or mine, your business plans and business models or mine, are considered unreasonable if profits are expected to be 5% or 25% even over the course of ten years?

But, that is what has been happening that has shaped the unemployment levels, maintained higher prices for everything than the scale of wages to support it, and created unprecedented damages to our economy. It simply isn’t profits and profit levels to be reasonably expected when we go and do something.

4. If I said to you, that if a business or group of business products fail, then you will get paid more than if any of them succeed because there are funds which will be paid to you many times over what the products or businesses are worth, would you believe me?

But, that is the way it is. And, other businesses have been developed whose sole profits rely exclusively on this fact and are making hundreds of millions of dollars a year doing it. That isn’t what any of us would be allowed to consider as a business model, or as a socially acceptable practice, or a basis of corporate sustenance, or as a way and manner of doing business.

5. If I said to you, that every package you create would be rated as top level regardless of how shoddy, how risky, how likely to fail, how likely to be worthless, and no matter how likely to be hundreds of times more costly in real dollars than any amount of money it generates, would you believe me?

But, that is what the ratings agencies, investment houses and banks have done for themselves to take from our pockets to cover their profits and lifestyles. It simply would be called fraud if we did it and when caught doing it, any of us would go to jail for a long, long time and lose all the proceeds from it to the government who would take them.

6. If I said to you, that you could create the products to sell, have a department in your company write about them, sell them, trade them, invest other people’s money in buying them, form mergers of them and then sell others on the information about the product’s companies being “mergered” and then trade knowing those facts intimately without recourse against you, would you believe me?

But, that is also what has happened. And that insider knowledge would be something for us to spend the next twenty years in prison and lose everything we’ve built in our lives and families, if we were using it the way they are and have been using it to profit.

7. If I said to you, that if you invent something, innovate, create or generate some great thing for mankind, the chances are you will die penniless, spend more time in mental institutions than at home, lose your children, never get to buy a house or a vacation house or a boat or a car, never have any money and never get to see success from it, would you believe me?

But, that is what happened to the inventor of the television, to the creator of the alternating current turbines we use today and to countless other inventors from the windshield wipers used on every car and truck in the world to the inventors of the cd player and many, many others. And, that is what happens to us when we do it as well. Tremendous  resources, money and wealth generally are being created not by the invention of some great breakthrough or innovation, but rather by the manipulation of money in these shell games of Wall Street and bankers whose sole purpose is not to create anything of value, but rather to do the opposite and give as little for as little as possible with the least amount of effort for the most amount of return and the greatest degree of profits from the exchange (not possible or plausible or likely, but rather as far as it can be pushed.)

8. If I said to you, that fair business practices, decent conscience about humanity and reasonable consideration of ethics and trustworthiness, would not make a business profitable nor competitive, would you believe me?

But, that is evidently the way it is. Whether we choose to believe it or not, the profits and profitability of these companies in America has not been based on fair business practices, nor on decent reasonable conscience nor socially acceptable ethics and certainly not on measuring up to that trust given by the public, the employees, the customers, the media and the government.

And, conversely – those who engaged in the above practices were all the more likely to fail than to succeed. If the corporate entities who have chosen to use their legal representatives to find them as “individual citizens” under the law with all the rights, privileges and discretion of the individual citizen, were subjected to the applications of guidelines judging narcissistic, psychotic, anti-social and dangerous behaviors, they would not fair so well. There is every evidence that these corporate entities are pathological liars, pathologically incapable of applying conscientious choices and decisions, are dangerous to the communities they were intended to serve, twisted and delusional in their concepts about reality and generally, incapable of accepting feedback to correct their thinking about anything.

That, in a nutshell, is the problem. If they are going to be considered “individual citizens,” then they need to abide by the same rules as the general population of individual citizens both enjoys and endures, or change it so the rest of us get to use the rules they are playing by. Something has to be done differently because the ones now on the endangered species list are America’s families, her children, her real individual citizens, her communities, and her future in the world.

We are not a grist mill for their profits.

- cricketdiane, 04-26-10

***
“It is a curious fact that, while political economists recognize that for the proper action of the law of supply and demand there must be fluctuations, it has not generally been recognized by mechanicians in this matter of the steam engine governor. The aim of the mechanical economist, as is that of the political economist, should be not to do away with these fluctuations all together (for then he does away with the principles of self-regulation), but to diminish them as much as possible, still leaving them large enough to have sufficient regulating power.”

- The second key idea is clearly illustrated by the following sentence by H.R. Hall in [17] in 1907 and that we have taken from [2]: (see above)

(from – Control Theory)

http://docs.google.com/viewer?a=v&q=cache:nt7BNb-whUkJ:me.wpi.edu/IEEETC_DPS/ARTICLES/DivSEMA.pdf+hyperphysics+non-linear+dynamic+partial+differential+equations+time+dependent&hl=en&gl=us&pid=bl&srcid=ADGEESgJh97IcEH1jWaz-voAncTzPcmGTkX2QFwtyiyw1duHFAZCsIh_AWKNo4U8aKvT1PvyLdauuTHzftLIHsria5dBy5J8Idlr3CEyeBEvKeZgp-Z4dUsXA4GUUhY71KXgbqkt8SUB&sig=AHIEtbRtKwpuK3OOEq45V8ZF_HesEtfVNQ

***

WHICH – came from here -

[PDF]
Control Theory: History, Mathematical Achievements and …
File Format: PDF/Adobe Acrobat – Quick View
by E Fernández-Cara – Cited by 12 – Related articles
dynamical systems, Pontryaguin’s maximum principle and the principle ….. Indeed, by that time it was clear that true systems are often nonlinear and …… Frequently, we have to consider models involving time-dependent partial ….. partial differential equations and are solved by finite difference methods. The …
me.wpi.edu/IEEETC_DPS/ARTICLES/DivSEMA.pdf

(found by google search with these terms together – hyperphysics non-linear dynamic partial differential equations time dependent)

***

My Note -

Please note the year when that was written – 1907. This shit didn’t start sometime yesterday and there have been many guidelines, intelligent thought, and perceptive reasoning applied to the science of economics to have gotten it right long before today.

If I went to the Small Business Administration, a banker, or a group of venture capitalists and said, I expect my salary for running this business as its CEO, to be ten million dollars a year plus a helicopter and a per diem and a corporate jet and a $300,000 membership in my golf activities, and sports arena airbox fees, a retirement and severance package of over a million dollars a month forever, and stock packages worth in excess of thirty million dollars (which in the corporate world is all on the minimum side currently) – they would be offended and not put any money in my business at all.

There would not be one dime added to my business if that were my stated expectations from that business during any course of its life because it would be evident that I was intending to do nothing more than to milk it of its assets and revenues (and unreasonably so.)

- cricketdiane

*** In case you didn’t see it -

NEW YORK (Reuters) – The Swiss bank UBS AG and the accounting firm Ernst & Young LLP have agreed to $250.5 million of settlements to resolve investor lawsuits over a fraud that nearly destroyed the hospital operator HealthSouth Corp.

UBS insurers will pay $117 million to HealthSouth shareholders and $100 million to bondholders, and Ernst & Young will pay $33.5 million to the bondholders, documents filed on Thursday with the federal court in Birmingham, Alabama show.

( . . . )

The litigation stemmed from an estimated $2.7 billion accounting fraud at HealthSouth, a Birmingham-based operator of rehabilitation hospitals and surgical centers.

Fifteen former HealthSouth executives have pleaded guilty over a scheme to artificially inflate earnings and the company’s share price.

Richard Scrushy, HealthSouth’s longtime chief executive, was acquitted on criminal charges in 2005, but an Alabama state judge last June ordered him to pay $2.9 billion in a related civil case.

(etc.)

UBS, Ernst settle HealthSouth cases for $250.5 million
NEW YORK
Sat Apr 24, 2010 2:12pm EDT

The case is In re: HealthSouth Corp Securities Litigation, U.S. District Court, Northern District of Alabama, No. 03-1500.

(Reporting by Jonathan Stempel; Editing by Will Dunham)

http://www.reuters.com/article/idUSTRE63N1IP20100424

***

from Reuters – 04-25-10

Goldman emails lauded profits as economy tanked

According to emails released by the Senate, in 2007 Goldman Sachs officials boasted about making “serious money” off the subprime mortgage crisis.  Full Article

* Abacus might have had other benefits for Goldman
* Goldman execs sold shares after fraud notice
* Felix Salmon: The Abacus prospectus

Greece races for rescue, some fear not enough

WASHINGTON (Reuters) – Finance leaders scrambled to secure aid for debt-stricken Greece on Saturday and Canada cautioned that some European countries feared the 45 billion euros ($60 billion) under consideration was not enough. | Video

http://www.reuters.com/article/idUSTRE63N18020100425

***
This back-and-forth typified exchanges at the firm over whether to continue to neutralize its exposure to subprime mortgages or expand investment in them well into 2007. By Nov. 30, 2007, Goldman had largely canceled out its exposure to subprime mortgages by increasing its bets that the market would continue to slide, according to the document.

http://www.washingtonpost.com/wp-dyn/content/article/2010/04/24/AR2010042401049.html

***

In another e-mail, Goldman executives discussed how the securities of one subprime mortgage lender the company worked with were facing “wipeout” and another collapse was “imminent.” Goldman helped this lender bundle and sell its loans to investors. But one executive, Deeb Salem, wrote that the “good news” was that Goldman would profit $5 million from a bet against the very same bundles of loans it had helped create.

In a November 2007 e-mail, Blankfein wrote that the firm “lost money” on the housing market, “then made more than we lost because of shorts.”

The e-mails portray a different narrative than the one Goldman conveys in an internal document summarizing the company’s experience in the mortgage crisis.

On Dec. 14, 2006, Viniar called Goldman’s mortgage traders and risk managers to a meeting and concluded they would reduce overall exposure to the subprime mortgage market. This was largely done by making bets against the market to cancel out bets it had placed that the market would rebound. The company’s document acknowledges that Goldman at times shorted the overall market but describes those periods as temporary while the firm was rebalancing its portfolio.

(etc.)

“Investment banks such as Goldman Sachs . . . were self-interested promoters of risky and complicated financial schemes that helped trigger the crisis,” said Carl M. Levin (D-Mich.), chairman of the Senate panel. “They bundled toxic mortgages into complex financial instruments, got the credit rating agencies to label them as AAA securities and sold them to investors, magnifying and spreading risk throughout the financial system and all too often betting against the instruments they sold and profiting at the expense of their clients.”

The documents show that the firm’s executives were celebrating earlier investments calculated to benefit if housing prices fell, a Senate investigative committee found. In an e-mail sent in the fall of 2007, for example, Goldman executive Donald Mullen predicted a windfall because credit-rating companies had downgraded mortgage-related investments, which caused losses for investors.

“Sounds like we will make some serious money,” Mullen wrote.

(etc.)

- from same article above -

http://www.washingtonpost.com/wp-dyn/content/article/2010/04/24/AR2010042401049.html

Goldman executives cheered housing market’s decline, newly released e-mails show

By Zachary A. Goldfarb
Washington Post Staff Writer
Sunday, April 25, 2010

***

On another occasion in February 2007, Goldman President Gary Cohn noted there was a big trade brewing that would “get us out of our short risk,” suggesting the firm didn’t want to make a big bet on the mortgage market in either direction.

By late 2007, the meltdown was in full swing, heading toward the peak in September 2008 when Lehman Brothers Holdings collapsed.

Goldman executives made a presentation to the board in September 2007 on the residential-mortgage market. The presentation gave bullet points on the firm’s response to the downturn including “shut down residential mortgage warehouses,” and “increased protection for disaster scenarios.” It said in the third quarter of that year Goldman “actively managed risk exposure to hedge funds.”

For the first time Goldman disclosed the gross revenue it made from its mortgage business in 2007. For the year the division posted revenue of $1.02 billion, with much of that, $735 million, coming in the fiscal third quarter alone. In the second quarter, it had negative revenue of $86 million.

(etc.)

At another point in July 2007, Goldman executives appear to discuss how their mortgage investment numbers were up, despite big losses on securities known as collateralized debt obligations and residential mortgages.

http://online.wsj.com/article/SB10001424052748704627704575203882067718088.html?mod=rss_Today%27s_Most_Popular

***

2009_09_Restoring_Liquidity_in_CRE.pdf

http://www.rer.org/uploadedFiles/RER/Policy_Issues/Credit_Crisis/2009_09_Restoring_Liquidity_in_CRE.pdf?n=8270

from Real Estate Roundtable -

During the past few years, banks and the commercial mortgage backed securities (CMBS) market provided about 83% of the growth in commercial real estate debt. Today, both of these (traditionally) large sources of commercial real estate credit remain virtually shut down.
The CMBS market is illustrative of the problem. CMBS issuance peaked in 2007 with $230 billion of bonds issued. This plunged to $12 billion in 2008, a decline of nearly 95%. Thus far in 2009, there has been no new CMBS issuance.

For millions of Americans whose pension funds invest directly or indirectly in approximately $160 billion of commercial real estate equity, increased loan defaults and lower property values will cause further erosion of their retirement savings.

(My Note – So, guess who is covering those losses – and that is probably only one piece of it because the pension funds, state budgets, school budgets, endowments and other investment pools also bought default swaps that pay out on the failures and defaults of the loans – cricketdiane)

Commercial real estate represents $6.7 trillion of value supported by $3.5 trillion in debt. The health of this vast sector is vital to the economy (estimates show commercial real estate constitutes 13% of GDP by revenue) and to our nation’s financial system.

The current credit system in America simply does not have the capacity to meet the ongoing demand for commercial real estate debt. With an average of $300 billion in commercial real estate loans maturing each year for the next decade — and still virtually no way to refinance these loans — stress to the financial services system, individual financial institutions, and those who have invested in real estate directly or indirectly will increase.

· With very limited capacity to meet this ongoing demand for credit, a potential wave of defaults from maturing loans could jeopardize economic recovery and, potentially, undo much of the progress made to date in healing the banking system and credit markets.

http://www.rer.org/ContentDetails.aspx?id=3045

http://www.rer.org/uploadedFiles/RER/Policy_Issues/Credit_Crisis/2009_09_Restoring_Liquidity_in_CRE.pdf?n=8270

My Note – what they did was to borrow to pay off a loan that was maturing and apparently, that was standard acceptable practice.

It was and probably still is, a never ending loan / credit line  / US banking system and US government , regionally – locally – state and federal level checking account system whereby loans were paid off with loans -

that were made to pay off loans –

which were paid in the first place with commercial paper type loans in order to make the payments on the loans, etc., etc., etc., –

in a big loop that continued to get loans to pay off the loans and never investing any real money in the system to pay any of it.

Hmmm….

Wish I could do that, don’t you?

- cricketdiane

***

And, now they’re upset because they actually might have to put some of the real revenues their for-profit enterprises have been generating into covering the costs of the loans they took out to pay for it – but, more likely, they will simply take the profits and let the losses be absorbed by the public through bankruptcy or default and then, start the whole process over again.

**

(and from – RealtyTrac®’s U.S. Foreclosure Market Report™ for Q1 2010.)

Bank Repossessions Hit All-time High
Published: April 15, 2010
Bank repossessions of homes (REOs) hit a record high in the first quarter, with a total of 257,944 properties repossessed by lenders— an increase of 9 percent from the previous quarter and an increase of 35 percent from the first quarter of 2009, according to RealtyTrac®’s U.S. Foreclosure Market Report™ for Q1 2010.
The record number of repossessions were part of overall 7 percent increase of all foreclosure filings reported on 932,234 properties in the first quarter. Foreclosure filings increased 16 percent from the first quarter of 2009. One in every 138 U.S. housing units received a foreclosure filing during the quarter.

Illinois documented the fourth highest foreclosure activity total, with 45,780 properties receiving a foreclosure filing — still a 17 percent increase from the first quarter of 2009.

A total of 45,732 Michigan properties received a foreclosure filing during the quarter, the fifth highest state total. Michigan foreclosure activity increased nearly 11 percent from the previous quarter and was up nearly 38 percent from the first quarter of 2009.

Other states with foreclosure activity totals among the nation’s 10 highest were Georgia (39,911), Texas (37,354), Nevada (34,557), Ohio (33,221) and Colorado (16,023).

http://www.upi.com/Real-Estate/2010/04/15/Bank-Repossessions-Hit-All-time-High/6501271355525/

California alone accounted for 23 percent of the nation’s total foreclosure activity in the first quarter, with 216,263 properties receiving a foreclosure notice — the nation’s highest foreclosure activity total.

Florida’s total was second highest, with 153,540 properties receiving a foreclosure filing during the quarter, and Arizona’s total was third highest, with 55,686 properties receiving a foreclosure filing during the quarter.

(etc.)

***

Indeed, in the past week and half, banks have tried to estimate their proprietary trading, with most banks suggesting that it is a minuscule part of their business. JPMorgan Chase, Morgan Stanley and others estimated it at less than 2 percent of their business; Goldman Sachs said it was under 10 percent.

But as the chief executive of a global bank said to me, knocking back a shot of vodka, “The numbers you’ve heard about don’t include all the investments we make that are related to our clients. Nobody’s talking about that. That’s a much bigger number.”

http://www.nytimes.com/2010/02/02/business/02sorkin.html

My Note -

That means they get to make insider trades for their own portfolios of their business and their own profits with the intimate inside information they have using their client’s trades which they made for them.

Along with the fact that most of the mergers, acquisitions, hostile takeovers and other shady deals are being managed (for pay) by the same companies who are making those investments listed above.

If that isn’t criminal – I don’t know what is. It gives a legal? right to trade on insider knowledge acquired through the normal course of doing business but not available to everyone else in the marketplace?

- cricketdiane

***

Bob Diamond, president of Barclays, argued in favour of large universal banks because they were liked and needed by big business, by governments and by large institutional investors, such as pension funds. “I’ve seen no evidence … that suggests that shrinking banks to make them smaller and narrower is effective,” he said.

Yesterday, George Soros, the billionaire investor, attacked bankers, accusing them of being “tone deaf” to public opinion, as some of the world’s most senior industry figures used the platform of Davos to launch a fightback against President Obama’s proposed crackdown. Mr Soros defended Mr Obama’s plans to stop banks growing too big and to prevent them undertaking riskier activities such as proprietary trading and said that he had been unimpressed by the bankers’ response to it. “I think the banking community . . . is tone deaf. I think it is a very unfortunate reaction.”

The bankers will also press the point that any perception that there could be an extension of this year’s tax on bonuses could damage London’s status as a financial capital. However, it is also believed that Mr Darling — who faces a wave of hostile anti-banker sentiment in the run-up to the general election — is also trying to achieve a consensus between London-based bankers before presenting the UK’s position in an increasingly globalised debate.

(etc. – from January 2010, Davos meeting, World Economic Forum)
January 28, 2010
Davos: Top bankers to hold secret talks with Darling in bid to avert tough sanctions
Patrick Hosking, Helen Power and Suzy Jagger

http://business.timesonline.co.uk/tol/business/economics/wef/article7005340.ece

***

Lack of new CRE loans: Banks are not lending on new transactions but, rather, temporarily extending existing loans at maturity (rather than foreclosing) and categorizing them as “new loans.” Scarcity of credit is making it very difficult to find new loans at institutionally sized proceeds and terms, even those that should normally qualify under new, tighter underwriting standards.


Mountain of debt maturities: There is a total of $3.5 trillion of CRE debt outstanding (excluding government-sponsored and agency loans).

Ø CMBS represents $700 billion (or 25%) of total CRE debt outstanding. At its peak in 2005-2007, CMBS saw $600 billion in total issuance (three-quarters was interest-only and on average 87% was rated AAA at securitization) and now constitutes nearly 70% of total delinquent CMBS. $236 billion of total CMBS matures between now and 2013.
Ø Banks and life insurance companies, which make up 50% and 10% of total CRE debt outstanding, respectively, are potentially an even bigger problem. Banks have $1.5 trillion in CRE loans on their books that look even more vulnerable than CMBS, especially smaller regional and community banks that have very high exposures to troubled construction and land development loans. According to the FDIC, this includes $1 trillion of core CRE loans and $532 billion of highly volatile construction and land development loans.

http://www.rer.org/uploadedFiles/RER/Policy_Issues/Credit_Crisis/2009_09_Restoring_Liquidity_in_CRE.pdf?n=8270

***

Life insurance companies have approximately $222 billion of direct loans maturing through 2018 according to the Mortgage Bankers Association.
Ø The total rolling maturities from these three sources (CMBS, insurance companies and Banks/Thrifts) is $1.3 trillion maturing through 2013 and $2.4 trillion maturing through 2018.

(from link above – real estate roundtable white paper information)

***

Modern competition law begins with the United States legislation of the Sherman Act of 1890 and the Clayton Act of 1914. While other, particularly European, countries also had some form of regulation on monopolies and cartels, the US codification of the common law position on restraint of trade had a widespread effect on subsequent competition law development. Both after World War II and after the fall of the Berlin wall competition law has gone through phases of renewed attention and legislative updates around the world.

The two largest and most influential systems of competition regulation are United States antitrust law and European Community competition law. National and regional competition authorities across the world have formed international support and enforcement networks.
[edit] United States antitrust
Main article: United States antitrust law

The American term antitrust arose not because the US statutes had anything to do with ordinary trust law, but because the large American corporations used trusts to conceal the nature of their business arrangements. Big trusts became synonymous with big monopolies, the perceived threat to democracy and the free market these trusts represented led to the Sherman and Clayton Acts. These laws, in part, codified past American and English common law of restraints of trade. Senator Hoar, an author of the Sherman Act said in a debate,  We have affirmed the old doctrine of the common law in regard to all inter-state and international commercial transactions and have clothed the United States courts with authority to enforce that doctrine by injunction.  Evidence of the common law basis of the Sherman and Clayton acts is found in the Standard Oil case,[31] where Chief Justice White explicitly linked the Sherman Act with the common law and sixteenth century English statutes on engrossing.[32] The Act’s wording also reflects common law. The first two sections read as follows,
Modern competition law is modeled on the United States’ Sherman Act, which aimed to  bust the trusts .

Section 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine….

Section 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine….

(etc.) – out of its original order)

The English law of restraint of trade is the direct predecessor to modern competition law.[23] Its current use is small, given modern and economically oriented statutes in most common law countries. Its approach was based on the two concepts of prohibiting agreements that ran counter to public policy, unless the reasonableness of an agreement could be shown. A restraint of trade is simply some kind of agreed provision that is designed to restrain another’s trade.

( . . . )

The Sherman Act did not have the immediate effects its authors intended, though Republican President Theodore Roosevelt’s federal government sued 45 companies, and William Taft used it against 75. The Clayton Act of 1914 was passed to supplement the Sherman Act. Specific categories of abusive conduct were listed, including price discrimination(section 2), exclusive dealings (section 3) and mergers which substantially lessen competition (section 7). Section 6 exempted trade unions from the law’s operation. Both the Sherman and Clayton acts are now codified under Title 15 of the United States Code.

The first provision is Article 81 EC, which deals with cartels and restrictive vertical agreements. Prohibited are:

(1) …all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market…

Article 81 EC’s goals are unclear. There are two main schools of thought. The predominant view is that only consumer welfare considerations are relevant there.[36] However, a recent book argues that this position is erroneous and that other Member State and European Union public policy goals (such as public health and the environment) should also be considered there.[37] If this argument is correct then it could have a profound effect on the outcome of cases[38] as well as the Modernisation process as a whole.

Article 81(1) EC then gives examples of  hard core  restrictive practices such as price fixing or market sharing and 81(2) EC confirms that any agreements are automatically void. However, just like the Statute of Monopolies 1623, Article 81(3) EC creates exemptions, if the collusion is for distributional or technological innovation, gives consumers a  fair share  of the benefit and does not include unreasonable restraints (or disproportionate, in ECJ terminology) that risk eliminating competition anywhere.

Article 82 EC deals with monopolies, or more precisely firms who have a dominant market share and abuse that position. Unlike U.S. Antitrust, EC law has never been used to punish the existence of dominant firms, but merely imposes a special responsibility to conduct oneself appropriately.[39] Specific categories of abuse listed in Article 82 EC include price discrimination and exclusive dealing, much the same as sections 2 and 3 of the U.S. Clayton Act.

Also under Article 82 EC, the European Council was empowered to enact a regulation to control mergers between firms, currently the latest known by the abbreviation of Regulation 139/2004/EC. The general test is whether a concentration (i.e. merger or acquisition) with a community dimension (i.e. affects a number of EU member states) might significantly impede effective competition. Again, the similarity to the Clayton Act’s substantial lessening of competition.

Finally, Articles 86 and 87 EC regulate the state’s role in the market. Article 86(2) EC states clearly that nothing in the rules can be used to obstruct a member state’s right to deliver public services, but that otherwise public enterprises must play by the same rules on collusion and abuse of dominance as everyone else. Article 87 EC, similar to Article 81 EC, lays down a general rule that the state may not aid or subsidise private parties in distortion of free competition, but then grants exceptions for things like charities, natural disasters or regional development.

(etc.)

Competition law has already been substantially internationalised along the lines of the US model by nation states themselves, however the involvement of international organisations has been growing. Increasingly active at all international conferences are the United Nations Conference on Trade and Development (UNCTAD) and the Organisation for Economic Co-operation and Development (OECD), which is prone to making neo-liberal recommendations about the total application of competition law for public and private industries.[41] Chapter 5 of the post war Havana Charter contained an Antitrust code[42] but this was never incorporated into the WTO’s forerunner, the General Agreement on Tariffs and Trade 1947. Office of Fair Trading Director and Professor Richard Whish wrote sceptically that it  seems unlikely at the current stage of its development that the WTO will metamorphose into a global competition authority. [43] Despite that, at the ongoing Doha round of trade talks for the World Trade Organisation, discussion includes the prospect of competition law enforcement moving up to a global level. While it is incapable of enforcement itself, the newly established International Competition Network[44] (ICN) is a way for national authorities to coordinate their own enforcement activities.

The bigger problem is however poor governance – in societies with widespread corruption, inadequate public finances,[45] and weak judiciary (and fiduciary, my note) and oversight institutions, competition policy may become another tool for capture by vested interests – becoming in itself a barrier to entry.

“A monopoly granted either to an individual or to a trading company has the same effect as a secret in trade or manufactures. The monopolists, by keeping the market constantly under-stocked, by never fully supplying the effectual demand, sell their commodities much above the natural price, and raise their emoluments, whether they consist in wages or profit, greatly above their natural rate. [47]” – Adam Smith, Wealth of Nations author – excerpt from ^ Smith (1776) Book I, Chapter 7, para 26, (according to wikipedia entry footnotes.)

Contrasting with the allocatively, productively and dynamically efficient market model are monopolies, oligopolies, and cartels. When only one or a few firms exist in the market, and there is no credible threat of the entry of competing firms, prices rise above the competitive level, to either a monopolistic or oligopolistic equilibrium price. Production is also decreased, further decreasing social welfare by creating a deadweight loss.

http://en.wikipedia.org/wiki/Competition_policy

***

* Monopoly
o Coercive monopoly
o Natural monopoly
* Barriers to entry

***

Treasury Financial Manual
Volume IV: Treasury Tax and Loan Depositaries

Volume IV Table of Contents

Part 1 Table of Contents

Chapter 2300 Treasury Investment Program (T/L 6)
Web File HTML File PDF FilePDF File

http://fms.treas.gov/tfm/vol4/index.html

My Note – but this is why this is interesting -

http://fms.treas.gov/tip/ipt/index.html

Treasury Investment Program
Overview

Treasury’s operating cash balance is maintained in a portfolio of four separate investment vehicles under investment authority codified at Title 31 U.S.C. Section 323. Currently, only financial institutions that are designated as Treasury Tax and Loan (TT&L) depositaries are eligible to participate in Treasury’s investment program.

Treasury’s Federal Reserve Account:
Represents Treasury’s checking account. The vast majority of payments and collections are paid out of and received into this account maintained at the Federal Reserve Bank of New York. Treasury does not earn explicit interest earnings on the account although it does receive implicit interest on the balances in the form of Federal Reserve earnings. Treasury generally targets a $5 billion end-of-day balance in its Federal Reserve Account.

TT&L Balances:
Represents funds invested with commercial depositaries that agree to pay Treasury interest at the rate determined by the Secretary of the Treasury. Treasury has the ability to call TT&L funds on a same-day basis and place funds on a same-day or one-day basis depending upon each depositary’s designation (almost 90% of Treasury’s TT&L capacity is available on a same-day basis). TT&L investments may be placed as direct investments, dynamic investments, or special direct investments.

(etc.)

Today, the CFTC assures the economic utility of the futures markets by encouraging their competitiveness and efficiency, protecting market participants against fraud, manipulation, and abusive trading practices, and by ensuring the financial integrity of the clearing process. Through effective oversight, the CFTC enables the futures markets to serve the important function of providing a means for price discovery and offsetting price risk.

The CFTC’s mission is to protect market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to foster open, competitive, and financially sound futures and option markets.

http://www.cftc.gov/About/MissionResponsibilities/index.htm

The next time you complain about the high price of gas, think of Mr. Ma. The owner of small logistics firm in Beijing, Ma was forced to shut it down temporarily earlier this week after he simply couldn’t find enough diesel to fuel his company’s 20 trucks.  Gas stations even serving diesel have been difficult to come across,  says Ma, who didn’t wish to give his first name.  I’m losing 100,000 renminbi [$12,500] a day.

With crude oil closing in on $100 a barrel, the pinch of higher prices is being felt worldwide. In China, however, the impact of the hikes has been shortages at the pump, and tempers are running hot. Last weekend, a man was fatally stabbed in Shandong province after he jumped the queue at a local gas station. A second man in Henan province was killed in a similar incident Tuesday.

2006. In that same period of time, international oil prices have risen about 30%, sticking refineries with spiraling costs for the crude they buy and shrinking profits for the gasoline they sell. Some smaller refineries stopped production altogether to avoid losses, while others begun hoarding their crude supplies, leading to gas shortages around the country.

Read more: http://www.time.com/time/business/article/0,8599,1678731,00.html#ixzz0lyeYinq3

(from)
China Feels the Fuel Pinch
By  Kathleen Kingsbury   Thursday, Nov. 01, 2007

http://www.time.com/time/business/article/0,8599,1678731,00.html

**

My Note -

But this was the result of the Goldman Sachs analysts coming out with a projection that there was a scarcity to be expected and his ideas about it along with a parade of the “experts” on every media outlet saying there would not be enough crude oil to meet the demand, and on and on and on.

That sent speculators to drive the price of the oil futures into the stratosphere along with the prices for gasoline at the retail consumer level which raised or gained in price every half hour that the markets were open anywhere in the world – which is effectively twenty-four hours a day.

The game made money for everyone except the businesses and consumers in the real world who are still paying for it today, but nothing in the Commodities oversight group alerted them that any manipulation of the markets were occurring in oil or anything else. So, were they blind, deaf and dumb or were they intentionally looking the other way at the expense of us all?

They destroyed people’s livelihoods, they literally made people go hungry as a result of this “trading strategy” and by manipulating public information, they literally stood to gain . . .

- my note, cricketdiane

***

Gas Prices Soar: Markets or manipulation? | Jerry Taylor and Peter …
by J Taylor – 2010
Apr 30, 2006 – Goldman Sachs reports that return on investment capital in the oil business … The net result is that gasoline supplies are tighter this spring than would … the economic pipeline will increase world crude oil production by 25 percent …
www.cato.org/pub_display.php?pub_id=6375

***

[PDF]
Microsoft PowerPoint – BNAC Conference
File Format: PDF/Adobe Acrobat – Quick View
Oct 15, 2006 – U.S. Motor Gasoline Plunge. ? In early August, Goldman. Sachs Commodity Index tossed out MOGAS. …. Is Oil And Gas Supply Peaking? ? High prices created intense Peak Oil debate: … December 2005 crude oil record off >1 million barrels … Post-Peak Oil and Gas world: Prices rise significantly. …
www.simmonsco-intl.com/files/BNAC%20Conference%20BW.pdf

***

So, in this scenario that Wall Street has set up – I get to tell you what to think of world supplies in oil and then sell you products that invest on those assumptions and profit by it while making trades with my backhand that serve my own interests based on the knowledge that you’re doing what I told you to do and that I took your money to invest it for you that way -

damn, what a game .

- cricketdiane

Oh Yeah, I almost forgot the other part of the game which bets against those same things at the same time, so that any losses which might be realized are covered for me but not for my customers who pay them out of their own pockets . . .

***

In addition, Goldman Sachs announced that, in calculating the trading volumes of the NYMEX Henry Hub natural gas contract and WTI crude oil contract for purposes of determining the 2007 GSCI weights, Goldman Sachs took into account the volumes of the related contracts traded on IntercontinentalExchange and its ICE Futures subsidiary, but will not include these related contracts in the GSCI at this time.  Goldman Sachs, in consultation with the Policy Committee, will also consider whether changes should be made to the GSCI Manual to take volumes of related contracts into account on an ongoing basis.  In calculating the volumes of the ICE Futures WTI crude oil contract, as well as the NYMEX Reformulated Gasoline Blendstock for Oxygen Blending ( RBOB ) contract, Goldman Sachs annualized the data from the three-month period of June, July and August 2006.

Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of services worldwide to a substantial and diversified client base that includes corporations, financial institutions, governments and high net worth individuals. Founded in 1869, it is one of the oldest and largest investment banking firms. The firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centers around the world.

2007 GSCI Contract Production Weights

(etc.)

http://www2.goldmansachs.com/gsci/articles/gsci_061106125458.html

**

The GSCI is a world production-weighted commodity index which in 2007 will be composed of 24 liquid exchange-traded futures contracts.  The GSCI includes energy, industrial metals, precious metals, agricultural and livestock products.  The 2007 GSCI will include all of the futures contracts in the 2006 GSCI.  No new commodities will enter the index and no existing commodities will be removed from the Index.  The weights of the 2007 GSCI are listed below.

Goldman Sachs also announced that the Investment Support Level (ISL), which is the estimated level of investment in the GSCI and other commodity indices, will be increased from the current level of $70 billion to $110 billion, effective, January, 2007.  The increase in the ISL reflects an increase in the general level of investment in the GSCI and other commodity indices.

Press Release
Monday, November 6, 2006

***

Alrighty then, what makes me think that entry into this arena as a competitor or competing agency is barred to me? Hmmm . . . let me think . . .

Does it look like Moody’s and Standard & Poor’s are the only ones in the market whose products are being used for ratings?

Yep, looks that way.

Does it look like Goldman Sachs is telling the customers what to do and providing the intellectual information sources that analyze the information and bias that information to suit their own advantages?

Yep, but they have good company doing that and often they are accepting the handshake from Harvard and other prestigious business schools and scholarly research sources which props up their views of it regardless of how “off” they might be . . . how could I compete with that?

Does it look like there is no entry point into that marketplace which could compete with them?

Yep, looks like quite a private little club. They golf together, they meet in boardrooms of other companies where they sit on the board of directors together. They go to the same gyms and spas, to the same world-class hotels, eateries and social clubs – along with all attending the same industry representing meetings, organizations, conventions, conferences and info-rich gatherings made to suit them and to specifically appeal to them. And, some of the same lobbying companies are working for all of them to suit whatever needs of the moment they have – but it is the same group of lobbying companies serving all of the same businesses that are supposed to be competitors.

How would anyone compete with that?

And, does it look like they have the private phone numbers and email addresses of the people that are supposed to be serving the interests of the public, from ratings agencies and government regulators, to Senators, Congressmen, bankers, competitors, media news producers and writers, international banking supervisors, accounting standards setting firms and just about anybody else who could sway opinion or determine the outcome in their favor and for their own profits? And, don’t all those sources take their calls and treat them with deference and respect, hanging on every word they say as if it is gospel fact? (and extraordinarily so.)

And, don’t all these firms agree with one another? How is that possible unless they are forming together to produce united fronts about their products and the values of their products?

Would I get to call the ratings agencies and scream at them over the phone and cuss them and threaten them and behave like a bestial master of them (and get away with it)?

Would I get away with manipulating data and then simply calling it a matter of “rhetoric” in interpreting the results in some fashion that is at best, far obtuse from reality and at worst, a pathologically created lie or set of lies?

Would I get to do business as they do? Would I get to borrow all the money to do it despite having little or none to start with and use as collateral, things that I ascertained the value of with no bearing in reality?

What kind of shit is that?

No, I have no entry into the marketplace, but then neither does any one else that could compete with them. And, all the tangible resources from currency values to assets of real property and businesses are tied up into what they are doing, so they have effectively canceled out anyone competing with them to make those values in any other way along with barring any competition that would re-establish those values in line with reality anywhere in the world.

And, that is a problem.

- cricketdiane

***

If the truth had been told to investors whose money was sitting in pension funds, 401k’s, endowments, investment portfolios and pools of funds – would’ve been this -

“You give us access to all the money you’ve sacrificed to earn and save then we will gamble with it and give you back 20 cents for every dollar you gave us.” Because that is what they did. And, then they charged them a fee for “brokering” in the deal . . . some people ended up owing fees for the abuse of their money along with losing it and absorbing any other losses that were in the overall market.

But that would’ve been closer to the truth.

It is like playing the board game Monopoly with a banker that is cheating and stealing as the game goes along. Nobody likes playing with a player who is doing that because it cheats the value of the game and the experiences that might otherwise be enjoyable being involved with playing the game. And, that is only in a board game where the stakes aren’t really going to impact the players permanently and substantially in the real world lives after the fact.

(my note)

***

an online analyst’s notes from 2006 publication -

But the nature of the hedge is that you were also supposed to sell an oil futures contract at the same time. On May 22, the June 2011 crude futures contract sold for $68.75 per barrel, which you could have closed out yesterday by buying at $63.29, a gain of about $5.50 per barrel, or $5,500 on a standard 1,000 barrel contract. So on balance, the hedging strategy– simultaneously buy natural gas and sell crude– would have put you ahead $3,500.

Well, that’s a relief– whatever Amaranth did to lose $6 billion, it wasn’t by incorporating Econbrowser advice into standard hedge fund strategy. But what was it doing instead?

Let’s say you didn’t hedge at all, but just bought the natural gas futures, and moreover managed to pick the worst possible day to do so, namely September 20 at $7.07 per 1000 cubic feet. Then you’re just plain out $6,000 per contract. However, note that the bottom line on the above graph, labeled  open interest , indicates that the total number of June 2011 contracts currently outstanding is less than 1,000. Even if Amaranth had been the buyer of every single one of these, they still couldn’t have lost more than $6 million, or 3 orders of magnitude less than what they did.

(etc.)

Does this suggest some policies we ought to be taking to regulate hedge funds? From a legal perspective, these are often construed simply as partnerships. How in the world would the government presume to dictate whether a small group of investors can buy or sell futures contracts with their own money? Furthermore, if we agree that the basic problem is that the destabilizing funds are going to end up like Amaranth, you’d think losing $6 billion ought to be a pretty strong incentive all by itself.

But then I saw this detail, which brings the story closer to home. It seems that $175 million of the cash that Amaranth had to play with came from the San Diego Employees Retirement Association, which may have lost $87 million on their Amaranth investment.

It seems outrageous to me that a public pension fund would be investing its money in this sort of scheme. However, I could well imagine that the incentives for the pension fund manager are for exactly what a risky hedge fund delivers– a short-run historical track record of unusually good returns, as long as nobody pays too close attention to exactly how you got it.

So here’s a regulatory proposal that I could support– no more than 10% of any pension fund’s holdings can be invested in institutions whose balance sheets have not been subjected to an arms-length audit.

Technorati Tags: Amaranth, natural gas, hedge funds, commodity prices

Posted by James Hamilton at September 29, 2006 10:00 AM

http://www.econbrowser.com/archives/2006/09/amaranth_hedge.html

**
The smoking gun for Amaranth’s near fatal wound was first pointed out by Russ Winter who noted how Goldman Sachs Gamed the Gas futures-

http://www.xanga.com/russwinter/532194209/goldman-sachs-games-gasoline-futures.html

Goldman Sachs elected in July to arbitrarily game their widely followed commodity index. Illustrating how this can be done, and with no questions asked, they suddenly changed the unleaded gasoline component of the index from 8.45% to 2.30%, right at a point in time when speculative funds were heavily long. In addition GS blew up the arbs with this jewel,

On July 12, 2006 Goldman, Sachs & Co. announced that, for the roll occurring in September 2006 (the September Roll) in relation to the Goldman Sachs Commodity Index (GSCI) futures contract expiring in October 2006, it would roll the existing portion of the GSCI that is attributable to the Reformulated Gasoline Blendstock for Oxygen Blending (RB) futures contract on the New York Mercantile Exchange but would not roll any portion of the GSCI that is attributable to the New York Harbor Unleaded Gasoline contract (HU) contract into the RB contract.

Goldman Sachs made a tidy profit at the expense of your pension funds, and lowered gas prices right in time for the elections, sweet

Posted by: Alan Greenspend at September 30, 2006 04:47 AM

http://www.econbrowser.com/archives/2006/09/amaranth_hedge.html

**

Hedge funds play major role in gas price hikes

Ken Alltucker
The Arizona Republic
May. 15, 2006 12:00 AM

(excerpts)

Meanwhile, price signs at gas stations in the Valley spin like slot-machine reels, forcing residents to dig deeper in their pockets to fill up vehicles with gasoline that costs more than $3 a gallon.

Try the likes of investors who fashion themselves after Gordon Gekko, the fictional character in the 1987 Oscar-winning film Wall Street, which portrayed the wheeling, dealing nature of the financial capital and its impact on ordinary Americans.

While politicians and pundits point to outsized oil-company profits as a reason for rising prices, these companies have little control over setting oil’s daily price, which is established on trading exchanges around the globe.

Sophisticated investors increasingly buy and sell oil contracts, not to fuel cars or run factories, but to profit from these paper instruments.

They see crude oil as a lucrative investment because of tight supplies, political turmoil in oil-producing nations, strong worldwide economic growth and disruptions at pipelines, oil rigs and refineries.

A barrel of light sweet crude oil, the type that is easiest to convert into gasoline, has spiked more than $20 this year to nearly $72 a barrel on Friday. That’s about double the price of early 2005, when oil cost just more than $35 a barrel.

( . . . )

Sophisticated investors are drawn to the price swings of oil, natural gas and other commodities because they see a daily chance to make money.

Oil and other energy bets attract such venerable Wall Street firms as Goldman Sachs and Morgan Stanley, which have beefed up energy-trading divisions.

But increasingly, others also see the allure of oil. Once reserved for oil companies, airlines or banks, new investors are jumping into oil futures.

Hedge funds, which are private vehicles that invest money mainly for the wealthy, see a golden opportunity in oil and other commodities. Even smaller speculators have joined the game.

There is money to be made,  said Howard Lindzon, a Phoenix hedge-fund manager with $10 million under management.  Speculators generally go where there is motion, and right now there is motion in energy.

Of the 500 hedge funds tracked by New York-based Energy Hedge Fund Center, an estimated 140 to 200 funds trade heavily in oil, gas or other types of energy.

That’s a significant change from just a few years ago when just a handful of such funds traded in energy.

What you’ve got is a lot of speculators coming in and playing the market,  said Peter Fusaro, principal of the Energy Hedge Fund Center.  Traders like volatility. They don’t like flat markets.

Investors can rapidly buy or sell futures contracts over such exchanges as the New York Mercantile Exchange or upstarts like Intercontinental Exchange, an Atlanta-based energy exchange.
According to Intercontinental Exchange, hedge funds and other speculators account for 28 percent of the exchange’s North American oil and gas market participants, up from 5 percent just a few years ago.

The influx of players has triggered more activity, more trades and more price swings.

Last month, Intercontinental Exchange logged average daily trades of 240 million barrels a day, up from 100 million five years ago.

All acknowledge that hedge funds have played a key role in daily price changes. These traders seize on the news of the day, such as last week’s news that an oil worker was shot and a report that suggested oil consumption will be lower than expected. Then the traders make daily trades to profit.

(reminder – this is from 2006)

With oil prices well above $70 a barrel, the concerns about the commodity’s price have alarmed politicians, consumers and even oil industry executives, who claim the price is beyond their control.

Phoenix residents see the results daily. The price of gasoline rose to a record $3.14 a gallon in September, up from $2.22 just after Christmas. Prices are hovering near September’s record again.

http://www.azcentral.com/arizonarepublic/news/articles/0515biz-oil0515.html

***

My Question is this -

Why, since oil futures contracts in 2006 were being sold for 2011 at less than the media was suggesting at the time -

“On May 22, (2006), the June 2011 crude futures contract sold for $68.75 per barrel, which you could have closed out yesterday by buying at $63.29, a gain of about $5.50 per barrel, or $5,500 on a standard 1,000 barrel contract.”

Why, since airlines bought huge contracts when it was low – (less than $30 per barrel) and gasoline refiners bought it at somewhere less than the going market rate in huge contracts, – why did gasoline prices ever get over $4.00 a gallon and diesel fuel get over $5.00 a gallon throughout the US?

How is that possible?

- cricketdiane

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Small but Significant and Non-transitory Increase in Price

In competition law, before deciding whether companies have significant market power which would justify government intervention, the test of Small but Significant and Non-transitory Increase in Price is used to define the relevant market in a consistent way. It is an alternative to ad hoc determination of the relevant market by arguments about product similarity.

The SSNIP test is crucial in competition law cases accusing abuse of dominance and in approving or blocking mergers. Competition regulating authorities and other actuators of anti-trust law intend to prevent market failure caused by cartel, oligopoly, monopoly, or other forms of market dominance.

http://en.wikipedia.org/wiki/Small_but_Significant_and_Non-transitory_Increase_in_Price

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Anti-competitive practices

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Establish a federally-backed credit facility, possibly created from the Public-Private Investment Fund (PPIF) structure under the Legacy Loans Program, or through a privately funded guarantee program, for originating new commercial real estate loans.

Encourage non-U.S. debt and equity investment in U.S. real estate by amending or repealing the outdated Foreign Investment in Real Property Tax Act (FIRPTA) which applies to equity investments and by clarifying the effectively connected income tax application to debt investment.

Extend the Term Asset-Backed Securities Loan Facility (TALF) beyond its current June 30, 2010 sunset date, through the end of 2010, and ensure that the program is accessible to investment grade securities beyond solely AAA.

http://www.rer.org/Policy_Issues/Credit_Crisis/The_Liquidity_Crisis_and_Commercial_Real_Estate.aspx

(And that’s what the real estate roundtable and chamber of commerce is trying to get done for their own interests and profits to keep the game going.)

***

And from the hearings about the ratings agencies this last week -

The carrot for the ratings agencies was a big reward, $1 million or more, for providing an investment grade to a complex deal.

Both involve pools of loans, most often mortgages, which were packaged into bonds that were sold to investors. Institutional investors such as pension funds and endowments are often restricted to purchasing only investment-grade securities, so Wall Street worked feverishly to win investment grades from Moody’s or its competitors, Standard & Poor’s and Fitch.

Moody’s dominated the rating of  structured-finance products,  the general term for complex financial instruments concocted by Wall Street. Chief among these were collateralized debt obligations and mortgage-backed securities.

(and also included commercial real estate loans packaged in the same ways, my note)

http://www.mcclatchydc.com/2010/04/20/92540/senate-to-ask-moodys-chief-why.html

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Yale to Cut Capital Spending by 60% After Endowment Losses

February 08, 2010, 1:23 PM EST

Feb. 8 (Bloomberg) — Yale University, the second-richest institution of higher learning in the U.S., will cut its capital program by 60 percent to $250 million next year after endowment losses, according to bond offering documents.

http://www.businessweek.com/news/2010-02-08/yale-to-cut-capital-spending-by-60-after-endowment-losses.html

(also)

Yale Makes $50 Million Budget Cut, Seeks More Savings (Update1)

(from the same article – )

School endowments lost on average 18.7 percent in the year ended June 30, according to the National Association of College and University Business Officers. The losses are forcing schools to rein in capital programs after boosting long-term debt by 54 percent in fiscal 2009, according to the survey of 842 of the institutions released on Jan. 28.

Harvard suspended work early this year on a $1 billion science center after the value of its endowment fell to about $26 billion in the year ended June 30, from a peak of $36.9 billion in 2008. The university in Cambridge, Massachusetts may cut its capital spending in half to $500 million a year, according to a report last year from Moody’s Investors Service.

(etc.)

http://www.businessweek.com/news/2010-02-08/yale-to-cut-capital-spending-by-60-after-endowment-losses.html

It’s ridiculous, there is real money and real lives being profoundly affected by this – but all the while real estate roundtable leaders, bankers, mortgage packagers and Wall Street firms continue to say there are no victims in their crimes or profits at the expense of very shady practices that in all measure should be criminal – because they would be criminal if I did them or you did it that way.

If I took Harvard’s endowment and gambled away $10.9 billion dollars, would anyone find that okay? or would I be in trouble for it somehow – yeah, I’d probably be in jail while they figured out what to charge me with – - -

However, the other thing I wanted to note about the absurdity of these vastly different sets of rules for big Wall Street players and me ( or you or anybody else) – is that none of us get to call the head of the US Treasury Department on Saturday and get a loan for $145 billions dollars by Monday.

Oh, if I could do that when I wanted, needed or had a whim for some money – or needed to pay my bills that got behind, or when someone was threatening to take away my business if I didn’t pay off their credit default swaps right this very minute – or my car payment needed to be made or I wanted to pay for my friends to go on a junket to Las Vegas or to a spa weekend for an extended weekend at $500,000 per person or what the f – k ever.

And yes, that was “what the f — k ever.” which is exactly the excuses they’re using for it – but the truth is that AIG did do that and Bear Stearns did do that and America’s great Bank of America and Merrill Lynch did do that and got away with using our money to do it. Just write me a check – and they did get that money and much more besides to use as they saw fit for as long as they felt like it with no accountability and then everything that they had in their business which wasn’t worth a damn, the Treasury used our money to buy from them so it wouldn’t hurt their business any.

Well, I’ve got some things I bought that I don’t like very much either and some that have been pretty costly that I don’t want any more, including some products that I created that didn’t do anything but lose money too – but the US Treasury isn’t available to me to take it off my hands so that my life and livelihood is financially solvent – and neither would they do that for you . . .

- cricketdiane

***

And, there has yet to be a weekend in my life when I could call up the US Treasury and ask for, or be given – a loan of $145 Billion dollars that I never had to pay back if I didn’t have the means to do it and could get another $100 billion dollars here or there, if I needed even after that.

- surprisingly enough, when I haven’t had the money to pay off my bills, that was NOT the time when I was considered a good risk in the way that AIG was given that money as if they had everything going for them even though they were up to their eyeballs in stupid.

That money was given to Goldman Sachs and other Wall Street firms straight out of the pockets of the American taxpayers’ / the American citizens’ revenues in the US Treasury through the AIG bailout which never even went in front of Congress for a considered decision about it. That is disgusting whether it is “populist” to think so or not.

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