Quarterly Review of Overproduction; A Fool's Progress

Provided as part of our ongoing commitment to the public good...

January 3, 2013 Wall Street Journal:  Potash prices down by 50% since 2009, after increasing fivefold 1999-2009.  Since 2002 global capacity has increase 30% to 64 million tons/year.  Demand in 2012 was approximately 9% below the 2007 level.

January 7, Financial Times:  "Massive softening of Basel 3" stipulations.  Full enforcement pushed back from 2015 to 2019.  Final core capital rule allows banks to count a wider variety of assets, including equities and 'high quality' mortgage-backed securities to satisfy capital/liquidity ratios.  Where have I heard this before?

January 8, WSJ: 16,000 TEU (twenty foot equivalent units) container ships coming on line; fleets practice "slow steaming" to reduce fuel costs, and effectively reduce overcapacity:  "Surely if we did not have slow steaming at all implemented on the Far East to EU trading lane, the [hire] rate would be be no  higher than a few dollars per container," analyst with Danish based shipping assurance corporation.   See Marx notes on fixed capital and circulation, Grundrisse.

January 9, US Energy Information Agency:  US oil imports at 25 year low, 6 million barrels/day compared to app 12 million/day 2004-2007.  Domestic production 5 million barrels/day 2008, estimated to reach 8 million/day by 2014.   All hail the shale!


January 10, FT:  UBS chief calls bankers "arrogant."  Arrogant?  Are you kidding me?  They're fucking criminals.  Calling them arrogant is like calling the Klan "prejudiced."

January 11, WSJ: US banks, year end, deposits at $10.6 trillion; 5.3% decline in loans outstanding since 2008.  Loan to deposit ratio, banks S&Ls 2007 equal 95%;  2012 72%.  Cash is king.  Cash is trash.  Either/or, both.

January 16, WSJ: Speaking of US banks, Bank of America has sold off $50 billion in assets since 2010 (is that notional value or market value?  makes a bit of a difference); reduced employment by 11,000; recorded 65% decline in first home owner mortgage products 2012 vs. 2011; has 4.2% share of US mortgage market share vs. 22% in 2009. About time for Bernanke to tell us how healthy the banking sector is.

January 16, FT:  "Drive," they said.  Renault to eliminate 7500 jobs in France account overcapacity; equals 17% of workforce.  Ford closes 20% of capacity in Europe.  GM knocks out 3100 jobs at Opel.  Your, and their,  tax dollars at work. 

January 17, FT:  Italy in recession.  FDI in China-- inbound down 3% in 2011 to $117.9 billion.  Outbound up 28.6% to $77.2 billion.  That sure is some deformed workers state.

January 18, New York Times:  Dell Computer-- spent more money on share repurchases than it has earned throughout its life as a public company.  Cash paid to shareholders who sold: $39.7 billion.  Cash in dividends (includes special)  $139 million.  Market value of company $22 billion.  Brilliant corporate planning.  God bless the liquidationist bourgeoisie.

January 19, FT: Speaking of liquid, US crude production grew more in 2012 than in any year in the history of the domestic industry.  Estimates are for an additional growth of 900,000 barrel/day in 2013.  I think I felt Hubbert attempt to roll over in his grave, but he couldn't get over the peak.

January 21, FT:  Global corporate default rates climbing.  2012 highest since 2009.  85 global companies have defaulted in the past 12 months.  Time for Bernanke to tell us how solid global capital markets are.

January 23, WSJ:  You know that $1.7 trillion in cash US companies have parked "overseas"?  Guess what?  It's right here in the US.  Cash owned by foreign subsidiaries is kept in US banks in US dollars or invested in US govt. securities.    You know, if I was a financial adviser I'd figure out some way to allow the mother company to access that cash without having to declare it as earnings and pay taxes.  Hmmh.....how about if the child lends the money to the parent?  Who would ever be so curmudgeonly as to doubt the wisdom, the charity, the virtue of a child lending to a parent? 

January 24, WSJ:  2012 Asia to Europe shipping volume down 5% vs. 2011.

January 25, WSJ:  Greece breaks subway strike, essentially militarizes workers.

January 25, FT: Say this 10 times, fast:  Monte dei Pasche du Siena.   Say this twice:  bailout.  Say this as many times as you like.  "Irregularities occurred at Monte while being supervised by Italy's central bank when guess who was is charge?"  No, not Belusconi, you cluck.  Draghi.

Januray 26, FT:  UK on the verge of a triple-dip recession.  Government of the twits, the posh, and the punters shrugs shoulders.  Ben and Jerry's sees opportunity for new ice-cream flavor.

January 28, FT:  "Overproduction?  No such thing."  US oil companies extracting shale oil in North Dakota are flaring off enough natural gas daily to power Chicago and DC.  Total US flare gas volume has tripled in 5 years.   The good news is that the US is only in 5th place behind Russia, Nigeria, Iran, Iraq.    Flyer taped to bus shelter in NYC: "Lost, one petroleum peak answers to the name of M. King.  If found please call the offices of the pseudo-Scientific American."

While we're on the subject:  US oil product exports 1992-2004 approximatley 1 million barrels/day.  2010= 2 million/day.  2011= 3 million/day.


January 29,  WSJ:  "Again?"  Yeah, again.  US money funds cut exposures to Eurozone banks.

January 30, FT:  The rights of nations to self-determination-- EU insists on being awarded 30% share of China's telecom market.  Defend the right of Chinese telecom corporations, funded, partially or fully owned, and jointly operated with European, Asian, and American (North or South) capitalists to defend their markets from imperialist reactionary European, Asian and American (North of South) capitalists.  Download the Chairman Mao ringtone now!

Priceless:  Greek Central Bank Governor George Provopoulos quoted:  "What is important is that although GDP continues to contract, confidence is steadily improving."  Only possible answer to that is "Fuck you, asshole." 

February 1, FT: Basel banking committee finds some global banks using models that drastically reduce capital held against assets.  No shit?  Really?  Who would have thunk that?  Wait a minute, sounds familiar-- yeah, isn't that exactly what banks have done throughout the last decade?  All those "quant" models that told all the banks that their value-at-risk, VAR, was really, really, really low, unless something really, really really unusual happened-- like the default rate on the assets securing the derivatives reduced the payments on the instruments that allowed the instruments to present "value", thus causing a general devaluation and a "herd instinct stamped for the exits"?  Something like that.  Short term memory loss is essential to capitalist reproduction.

February 2, FT: Netherlands bails out SNS bank for euro 3.7 billion.

February 7, WSJ: US coal exports, 2012, at 115.7 million tons; 2008= app 55 million.

February 9, FT:  EU hawks pursue self-deconstruction:  push strong reduction in cross-border projects.   Sounds like a plan.

February 12, WSJ: Pope resigns-- "sick of being infallible."  College of cardinals advises "You're making a big mistake."  Rank and file confused.  "How can that be?"

February 14, WSJ:  Great proletarian cultural revolution figures out primitive accumulation. From village to villa:  China seizes farmland, sells same for development of villas, etc.  Here's how it works:  village provides "compensation" to farmers of 9 yuan/sq. meter.   Village sells to developer for 640 yuan/ sq. meter.  Developer sells villas for 6900 yuan/sq. meter.  What happens to farmers? Guess.  Impoverished, marginalized, itinerant, migrant work force, or.. they die.  The important thing, as the central bank governor of Greece said, is that confidence is increasing.

February 19, WSJ: Correa reelected.  Great victory for oil and mineral deposits.

February 20, FT:  Shocker.  Hard to believe.  Alabama fucks up.  Anti-immigration laws drive immigrant labor out of state. Poultry processing  and agriculture sectors starve for labor.  "We didn't fully think through the economic effects of the law.  We shot ourselves in the foot."  U of Alabama economics professor channeling his own great-great-great grandfather.

Mining and metal companies rase $249  billion in capital in 2012, down 27% from 2011, "soft prices" as metal inventories climb.

February 21, FT:  Fed worried about the assets on its balance sheet.  Talk about being a day late and a few trillion dollars short..... .  Fed now classified as presenting systemic risk by the Fed.

February 22, WSJ: The invisible hand at work:  Continuous mining machines not equipped with sensors to shut down if human becomes entangled in machinery. 4 miners killed in West Virginia.  Rule proposed in 2011.  No action.  MSHA does not issue an emergency order requiring sensors.

February 23, WSJ:  Maersk warns on container shipping: "Unless the container shipping industry reduces capacity, there will be a continuous squeeze on freight rates."  Meanwhile, Maersk orders 20 "Triple E" container ships, largest ever constructed, with a capacity of 18,000 TEUs.  "Do as I say, not as I do."  See Marx on circulation time, overproduction of capital ("is always the overproduction of the means of production as capital), and tendency of the rate of profit to decline.  Or just wait, and let Maersk demonstrate it all.

February 25, FT: Cyprus-- center-right defeats "communist" for government.  "Better position" to obtain bail-out.  Sure thing.

February 27, FT:  Italian voter reject austerity.  Monti sent packing.  Same circus, one different clown.  Grillo wins 24% of the vote.   Center-left inspires confidence:  "We will try our best to avoid chaos in Italy."

EU bemoans legacy of Greece:  "Democracy is the Eurozone's Achilles heel," Charles Grant, director Centre for European Reform.  Note to self.  WTF is the Centre for European Reform?  Sounds like a front for the Koch Bros.

March 1, FT:  The secret of my Deutsche success:  Since labor market reform, more lowly paid workers in Germany than elsewhere-- sub-contracting to avoid labor protections; "atypical jobs;" "mini-jobs" paying less than  euro450/month.  Low paid workers now account for 22% of the labor force, 5 percentage points about EU average.  Deutschland Unter Alles.

March 4, WSJ:  Shocker, top 20% of earners in US account for 40% of consumer spending.

March 5, WSJ:  Cyprus-- things not exactly going as envisioned by the new government.  Another shocker.

March 6, FT:  Here comes, there goes:  North American truck production up 136% 2012 vs 2011, but 4Q 2012 down 23% from 4Q 2011.   Classic volatility of overproduction.

March 8, FT:  Greece GDP down 25% since 2008:  FT asks:  "What happens when an electorate decides to vote out leaders for economic policies they disagree with only to find their new leaders being forced to implement the same exact policies?"  Hmmh.........good question.  Let bring it up in front of the Athens soviet. We'll see if they can give some guidance.

March 9, WSJ: News from Japan:  Fukushima Daiichi plant manager say may take 30-40 years to remove melted fuel (think this what Keynes had in mind with his "no use/make work" schemes?).  Site generating 400 cubic meters of contaminated cooling water daily-- so let's see 30-40 years times 365 days times 400 cubic meters/day.... Hope they have adequate, impermeable water containment systems, to prevent leaks.

March 13, WSJ:  No smoking at the Vatican.  China steel output now at 2.21 million metric tonnes daily.  Capacity at 970 million tons-- output at around 717 million tons.  More than half the world's capacity. 

March 13, FT:  Don't worry, we know what we're doing at Fukushima, and we know what we are doing here:  Japan processing methylhydrate-- methane gas essentially "frozen" under such great pressure in the sea bed. 

March 15, FT:  US Senate Report on JP Morgan  "whale" trading:  JPM violated own rules, ignored warnings, misled investigators, and lied.  Sounds like banking to me.  How does it sound to you?

March 18, WSJ:  Cyprus... it gets uglier.

March 18, FT :  Uglier that Lagarde?  Uglier.  Uglier than Schauble?  Uglier.

March 19, WSJ: ...and uglier.   57% of US workers have less than $25,000 in total savings and investments (not including the "value" of their homes).   Society of Actuaries says, "rising life expectancies could add as much as $97 billion to the liabilities of pension plans."  Finally, someone has figured out the problem.  These people are just living too long.  Can't we do something about that?  Oh we are, we are, believe me. 

March 19,  FT:  Moody's estimates cash hoard of US non-financial companies doubled between 2007-2012.  Cash levels, home and abroad top $2 trillion.  Liquid resources of non-financial corporations now sufficient to cover all debt repayments due for the next 5 years.  Well, so much for  the theorists of "fictitious capital." 

March 20,  FT:  and uglier..  Power failure at Fukushima Daiichi, shuts down cooling system. 

March 21, FT:  and uglier...

March 22, WSJ:  Building for the future.  Chicago plans to close 53 elementary schools, because "children are our future..." and we don't have one.

March 29, WSJ : Somebody must have read The Wolf Report. US corporations tap into overseas cash by borrowing funds for daily operations (HP and GE practice this).  Companies not required to disclose this. Companies can set up their own internal banks in low-tax jurisdiction or set up "self" commercial paper money markets. 


Re Japan March 9:  They don't.  It is.

Next Quarter:  Uglier, still?