AFTER-THOUGHTS OF 9-11

The perfidious attack on the Twin Towers and the Pentagon was a tragedy, exceeded only by the tragedy of our response. Why was the response a greater tragedy? Because it cost us 6,400 dead American soldiers and 45,000 military personal wounded--some severly and forever, and cost 6 trillion dollars. It caused civilian deaths in Iraq and Afghanistan of 300,000 known (probably twice that), and it did not clearly define who was behind and funded Al Quida nor was there an under standing of the extent of support of world Islam behind the Jihad warriors. It made George W. Bush a wartime president rather than defining the attack as a crime against humanity--against civilization. We are yet to obtain all the facts about the information known to the CIA, military intelligence and the president's briefings prior to 9-11. The final tragedy has been a destruction of clear thinking.

What's Lacking in Fracking?

I have read the revised Supplemental Generic Impact Statement [SGIS] on high volume hydraulic fracturing [HVHF] for natural gas. It is deficient
I draw attention to Ch 5.4 Fracturing Fluid. It cites 235 products from 15 chemical suppliers of 322 chemicals whose CAS [Chemical Abstract Service #] is known and at least 21 additional ones in which the CAS is not known, listed by the manufactures in what was referred to as MSDS [Medical Safety Data Sheets]. The point to be made is that this list is not complete and the list is misleading. NO ENVIRONMENTAL STATEMENT SHOULD BE ALLOWED WHICH DOES NOT INCLUDE EVERY CHEMICAL USED and no chemical should be an unknown.
In testimony before the US House of Representatives in 2011 investigative report on the chemicals used in hydraulic fracturing, which showed that over a 750 compounds are in hydrofracking products, reference was made to the MSDS as follows: The MSDS is a list of chemical components in the products of chemical manufacturers, and according to OSHA, a manufacturer may withhold information designated as “proprietary” from this sheet. When asked to reveal the proprietary components, most companies participating in the investigation were unable to do so, leading the committee to surmise these “companies are injecting fluids containing unknown chemicals about which they may have limited understanding of the potential risks posed to human health and the environment” . Refer to:
Chemicals Used in Hydraulic Fracturing. U.S. House of Representatives Committee on Energy and Commerce Minority Staff. April 2011. http://democrats.energycommerce.house.gov/sites/default/files/documents/Hydraulic%20Fracturing%20Report%204.18.11.pdf
Another study in 2011, titled “Natural Gas Operations from a Public Health Perspective” and published in Human and Ecological Risk Assessment: An International Journal identified 632 chemicals used in natural gas operations. Only 353 of these are well-described in the scientific literature; and of these, more than 75% could affect skin, eyes, respiratory and gastrointestinal systems; roughly 40-50% could affect the brain and nervous, immune and cardiovascular systems and the kidneys; 37% could affect the endocrine system; and 25% were carcinogens and mutagens. The study indicated possible long-term health effects that might not appear immediately. The study recommended full disclosure of all products used, along with extensive air and water monitoring near natural gas operations; it also recommended that fracking's exemption from regulation under the US Safe Drinking Water Act be rescinded.
You may wonder why hydraulic fracturing for the purpose of oil, natural gas, and geothermal production was exempted under the Safe Drinking Water Act. It was the result of the Energy Policy Act of 2005, also known as the Halliburton Loophole because former Halliburton CDEO Vice President Dick Cheney was involvled in the passing of this exemption.
The revised GEIS statement is further deficient by its own admisision on flowback water:
"Most fracturing fluid components are not included as analytes in standard chemical scans of flowback samples that were provided to the Department, so little information is available to document whether and at what concentrations most fracturing chemicals occur in flowback water." The statement implies that flowback water, which it estimates may be as much as 2.7 million gallons, will be contained in metal, sealed tanks and refers to Chapter 7. Chapter 7 states:
" The volume of flowback water that would require handling and containment on the site is variable and difficult to predict, and data regarding its likely composition are incomplete. Therefore, the Department proposes to require,via permit condition and/or regulation, that flowback water handled at the well pad be directed to and contained in covered watertight steel tanks or covered watertight tanks constructed of another material approved by the Department. Even without this requirement, the pit volume limitation proposed above would necessitate that tank storage be available on site. TheDepartment will also continue to encourage exploration of technologies that promote reuse offlowback water when practical." The statement then goes on to say that, " Fluids would be removed within 45 days of completing drilling and stimulationoperations", but it does not say where to. All this is vague and deficient.
Secondly, there are issues that the revised SGEIS does not address. The State of New York joined as a headwater partner to the Chesapeake Bay program in 2000. About 11% of the state drains into the Bay through the Susquehanna River and its network of tributaries. The part of upstate New York that drain into the Susquehanna River is essentially an overlay of the propopsed hydrofracking area. Yet there is no mention of our partnership obligations to the Chesapeake Bay Program in the SGEIS.
Outside of the criticism of the SGEIS itself is the political implications of the policy statement by Governor Cuomo who supports ending a moratorium on hydrofraking on private land in New York State, but has said the practice should be banned within watersheds serving New York City and Syracuse. Mayor Bloomberg concurs. I sincerely hope the Governor and the Mayor will tell us why their drinking water should be at lest risk than mine. And while we are looking for explanations, perhaps Dick Cheney could tell us where he gets his drinking water in that he has a nice spread on the Easterr Shore of Chesapeake bay.
Finally, I must be noted that in Australia, there is currently a moratorium on hydrofraking in the state of New South Wales, and that their government has banned certain chemicals as additives. In Canada, Nova Scotia is currently reviewing th practice, and that the practice has been suspended in Quebec. In France, hydraulic fracturing was banned in 2011. In South Africa, there is a moratorium in Karoo region despite the efforts of several energy companies.

January 11, 2012 will be the end of public input into the revised Supplimentalhile Generic Eivironmental Impact Statement [SGEIS] on proposed high volume hydraulic fracturing [HVHF] for natural gas in NYS, prepared by the NYS Department of Environmental Convservation [DEC]. This revised SGEIS document is available to all on the internet as a pdf file. Although larbge, 46 Mb in size , it is downloadable and searchable.
In addition, the proposed regulations are in a separage document. http://www.dec.ny.gov/regulations/77353.html. Read them. Then let your representatives know how you feel. I vote for no one who favors hydrofraking.

Debt Ceiling Proceedings

This weekend preceeds a critical week in the financial situation of the United States. It provides time to think about how the country has accumulated such massive debt and the options we have to curtail further accumulation and direct a course toward a balanced budget--all without impairing the fragile economic recovery we are experiencing following the worst recession since the Great Depression. There are a number of facts, regardless of party affiliation within the body politic, that we can agree upon.
We can all agree that the accumulation of debt has been going on for a long time. In fact, except for 1956 and 1957 during the Eisenhower years, there has not been a federal budget surplus except for the last year of the Clinton administration. We can all agree that the responsibility rests with the Congress and members of all political parties through the years. Congress adopted the debt ceiling in 1917 as a way of insuring presidential accountability. The only other country in the world that has a debt ceiling is Denmark. The debt ceiling has been raised 79 times since the first statuatory limit was raised by Congress with the passage of the Second Liberty Bond Act in 1919 to finance the US entry into WWI. The progression has been for $43 billion that year to 14.294 Trillion in February of 2010.
We can further agree that the the federal debt has been accelerating during the past 12 to 15 years and that the relationship to GDP [gross national product] is a ratio that economists deem the trend to true crisis. We can also note that there is a reason to raise the debt limit. The reason is that it must be raised to pay for spending Congress has already authorized. The President must have the limit raised in order for him to legally spend what has been authorized or face limiting the funding of the federal government, part of which is funding of treasury bond obligations. That is, if the President spend the money without raising the debt ceiling [limit], he will be violating the law.
Finally we can agree that the impending vote on raising the ceiling has brought out the worst example of dysfunctionality in government in our history and in a matter of days this coming week may demonstrate all the flaws of what could become a failed democracy. The solution if there is one? Ah yes, as usual. Follow the money! The great pirate ship of Wall Street will not allow default of the United States. There will be a vote to raise the ceiling and some nonsense language to pledge efforts toward a balanced budget.
What we need and hope we can get, is a 10 to 15 year plan to move in the direction of balance without a serious nick in our fragile economy and while we are at it a 20 year plan to rebuild our country, end our foreign wars and occupation of countries dating back to WWII. Do we have the leadership for all that?

Does the Speaker Speak the Truth?

Today the Speaker of the House of Representatives said, "We are going to do everything we can to cut spending". The truth is that it is not everything. As long as the Pentagon budget is not on the table, then the house is not going to do everything to cut spending. While we spend billions on Iraq, on an endless war in Afghanistan, buy-off Egypt with billions and funds a NASA trip to Mars, I will not allow Speaker John Boehner of Ohio to make me believe that he is doing everything. Cutting teachers income, state workers pensions, and funds for public radio is nickel-diming. The nation is facing bankruptcy and Mr. Boehner and republican allies wants to decide to avoid facing the truth. Does he tell the truth? Hell no Mr. Boehner! You are not doing everything.

The Final Result of the Wikileaks?

Private Bradley Manning is behind bars. Apparently he was the source of the information that was disseminated by WikiLeaks in three batches since July of this year, originating in military intelligence offices, including thousands of "cables" from State Department sources. The reaction to the internet disclosures has been essentially identical to the publication of the Pentigon Papers back during the Vietnam War. The author of the Pentigon Papers, Daniel Elsberg was vilified and attacked as a traitor. After the smoke cleared it became evident that there was nothing in the papers that had not appeared in the press or could be easily deduced from the facts. In other words, the truth.

The smoke is still thick and the vilification is rampant following WikiLeaks disclosures. Representative Peter King [R] of New York wants the State Department to designate WikiLeaks a terrorist organization. Senator Dianne Feinstein [D] is asking for espionage charges be brought against Julian Assange, the founder of the WikiLeaks website and Senator Joe "what's my party Lieberman" is calling for an investigation of the New York Times because the paper published part of the leaks. Hillary Clinton, Secretary of State, is in a ratsnit. It may be many months before the smoke clears and it becomes evident to anyone who reads any reasonably responsible news source that all we are reading is a hefty dose of the truth--what President Wodrow Wilson wanted to achieve in his dictum to foreign policy makers, "Open covenents, openly arrived at".

What happens to WikiLeaks and who gets prosecuted and when may be in the end the least important result of the WikiLeaks Affair. According to the New York Times [Dec. 12, 2010, Week In Review], The Defense Department is "scaling back information sharing, which its leaders believe went too far after information hoarding was blamed for the failure to detect the Sept 11 plot". What we are learning is that there will be a constricution of information sharing in the intellegence community, and that means something we all may not realize. The fact is that 80% off all US intellegence funding goes to the military meaning the Pentigon. Caarried to a undesired extreme, we might as a nation, find ourselves being provided with information from essentially only one source. If this does not approach the warnings from an Orwellian world, I do not know what does. Frankly it frightens me more than any meaning from the leaks themselves.

We will all watch with great interest what justice be provided in the case of Private Manning. As for Julian Assange who is as of today free on bail in London awaiting the outcome of charges of rape by two Swedish women. How outrageous if it turns out that secret military intellegence paid for setting up the charges in Sweden. See how paranoid you can get when information cannot be trusted? Just imagine the uproar had the leaks come from the State Department and not the Department of Defense.

Bottom Line! A United States government fed only military intellegence is the ultimate danger, not WikiLeaks.

Flash Crash--Still Without a Diagnosis

In the August 30 issue of Barron's magazine, columnist Jim McTague entitled his essay, "Was the Flash Crash Rigged?" The term "flash crash" refers to the sudden drop in stock prices in a short period of time on May 6, 2010. Mary L. Schapiro, Chairman of the U.S. Securities and Exchange Commission in testimony before Congress on May 11, 2010 gave the chronology of trading as follows:

On Thursday May 6, the stock market Dow Jones Industrial Average [DJIA] declining 161 points, or approximately 1.5.% by 2:00pm [ET]. Shortly after 2:30 pm, however, the market decline began to steepen and by 2:42 pm, the DJIA was at 10,445.84, representing a decline of approximately 3.9%. The DJIA then suddenly dropped an additional 573.27 points, representing an additional 5.49% decline in just five minutes of trading, hitting 9,872.57 at 2.47 pm, for a total drop of 9.16 percent from the previous day's close [insufficient to trigger a circuit breaker trading halt].

Similar declines were seen in the S&P index and the CBOE Volatility Index [VIX], a widely followed measure of market volatility sometimes known as the "fear index", climbed above 40, a level not reached in over a year.

As quickly as the market dropped, it suddenly and dramatically reversed itself, recovering 545 points in approximately a minute and a half to 10,415.65. By 3:00pm, the total daily decline in the DJIA had been reduced to 463.05 points [4.26%]. The DJIA ended the day at 10,520.32, down a total of 3347.80 or 3.2% from the prior day's close. This represented a significant down day for the markets, but the closing numbers belied the markets' dramatic moves down and then up during approximately 20 minutes of trading in mid-afternoon. In addition, many individual securities experienced much larger swings in their trading activity. For example, two DJIA components--Procter&Gamble and 3M--experienced declines of approximately 37 and 21% respectively. In addition, certain stocks were executed at absurdly low prices, such as one stock which opened above $40, was traded at one point at a penny, and then closed the day above $40.

In addition, a large number of Exchange Traded Funds [ETFs] traded for short periods of time with massive intraday price swings. The shares of more than 25% of all ETFs experienced temporary price declines of more than 50 % from their 2 pm market prices.

At a later point in her testimony, she said, "We believe that it is critical to understand the causes and effects of this event so that we can work to ensue that it does not occur again". Although too early to draw conclusions, the chairman pointed to a focus on:

1. Absence of professional liquidity providers.

2. Disparate exchange practices.

3. Other factors including, thinly traded stocks and ETFs, stop loss market orders in an illiquid market that triggered automated selling that resulted in executions at aberrant prices and finally so called stub orders that trigger at or near a penny.

4, The complexity of the new National Market Structure including the multiplicity of trading centers , highly automated trading systems and high-frequency trading.

In spite of circuit breakers in place, the chairman pointed out that."none of the NYSE Rule 80B thresholds was triggered on May 6, despite the severe disruption in trading in many stocks". What was worse, some erroneous trades were cancelled and others were not causing great consternation.

In summary, the SEC like all of us who trade, knows what happened and promises to find out why. In the meantime, McTague in his article suspects that high speed traders pay the exchanges hundreds of thousands of dollars a month for direct feeds to their trading floors which allow them to see information headed for the Consolidated Quote System in advance. The CQS is the modern version of the "tape" that the stock-buying public sees. It only takes a few mili-seconds and as McTague points out, you have the modern Wall Street version of The Sting.

The real bottom line is that until we have a plausable diagnosis of the cause of the flash crahs and can establish order and trust to our markets, they are not to be trusted. Progression of this situation will result in instability and possibly chaos.

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Gulf Mess a Tipping Point?

The British Petroleum [BP] oil "volcano" in the Gulf of Mexico has generated what may become one of the prominent tipping points in the history of the United States. It will be a true tipping point if it convinces the body politic to act decisively to turn our full effort to free our dependence on oil and accelerate a drive to all forms of alternate energy sources. From this day--the 51st day of the spill, the probability of this happening seems to depend upon the public reaction to the environmental devastation. The press coverage of the environmental impact has been impressively prominent with photos of the invasion of the oil into fragile wetlands along the outer Louisiana delta, the depressing death and impairment of large birds coated with crude and early shore drift of oil blobs on the beaches along the Florida panhandle. With the closing of major fishing and shrimping areas, the economic loss in these industries is coupled with speculation of the effect of the oil on the marine life itself. The adverse impact on larger sea life and the toxic effect of the oil and possibly the dispersant that is being employed is also being noted in press and TV stories. The possibility of extensive damage from oil looping out of the Gulf and into Atlantic waters is expanding the fear of more widespread environmental damage. Finally, the fact that containment is not possible until emergency side wells can seal the source in late August, makes any comprehensive environmental assessment premature.
The tipping point may be real if the economic impact becomes more acute. If further jobs are lost in the fishing, oystering and shrimp industries with an unknown time for recovery, this economic impact could build. Progressive drift of oil on vacation beaches could see a sharp drop in tourism. A moratorium on deep water drilling for six months could adversely affect employment in the drilling industry itself. Noxious plums of sub-surface oil may have lasting economic damage to all marine based industries for years to come. The cost to state and federal governments mounting the clean-up effort will a economic repercussions far into the future. Again, all economic bad news may be only a rough estimate.
Notice that in spite of the enormous environmental and economic distress, I said that the oil mess MAY become a tipping point. I sincerely hope that it does. I fervently hope that the American people get the message and quickly get behind the Obama administration's policy to direct all our efforts to abandon our fossil fuel economy. My read of our political scene, however, leads me to think otherwise. All of the economic loss in aggregate is not going to alter the public's "drill, baby, drill" mantra. Law suites will fly against BP and partners, and civil and criminal suites will pay off the vocal. The oil lobby will spend millions to keep us from changing course. As far as punitive damages against BP, forget about it. The Supreme Court excused Exxon from paying $5 Billion in such damages, some fifteen years after the Prince Edward Sound disaster. Remember, Judge Sam Alito recused himself because he owned Exxon stock. With this precedent, there will hardly be a judge from Texas to Florida that will be available to hear a case.
As far as environmental damage is concerned, this country only pays lip service to saving the planet. Even the statement that this is the largest environmental disaster in the history of the world is not likely to have much impact on the American public inured to the poisoning of our air and waters for two centuries. Chesapeake Bay was nearly destroyed in the mid-twentieth century and we still cannot find funding to do the recovery work. I cannot eat fish out of Lake Ontario, where I live. A country that does not care about the overfishing to extinction of the world's oceans is not likely to care a wit about oil in the Gulf of Mexico.
And conservation? Not once have I heard one word about any measure to conserve gas. President Nixon's 55 mile speed limit to conserve is an historical joke. So, the Gulf mess is depressing, but more depressing is my conclusion that we are not going to change course, not with the fall elections coming up and the Tea Party gathering steam. I doubt this will be any tipping point.