Is the Recovery in the Dow Jones an Illusion?

It has been reported that the Dow Jones Industrial Average (DJIA) last week reached a four year high not seen since before the onset of the financial crisis. Just one look at this graph shows that this is true, and that the DJIA is within striking distance of reaching its all time daily high of 14,164 which it hit on October 7, 2007.

This chart seems to be saying that anyone who invested in the Dow during this 50 year run has much to celebrate, especially given the fact that this chart shows levels of the Dow and does not try to calculate holding period returns which would be even better once you include dividends paid each year. It also suggests that people who bought and held during the crisis were rewarded as the Dow rebounded from its crisis low of 6,627 on March 6, 2009. But does this graph tell the whole story?

Here is the same graph of the DJIA, but now adjusted for historical consumer price inflation. Suddenly, the recent trend line is not so obvious.
I would argue that adjusting the DJIA solely for historical consumer price inflation does not tell the whole story. The Consumer Price Index, by definition, can only tell you about historical inflation. Other assets that can act as long stores of wealth move in price not only to reflect historical inflation, but investors' best estimate of future inflation as well. We see that these long maturity assets move up in nominal price reflecting expected future inflation long before consumer prices ever start to move up.
So, it only seems fair to compare the DJIA as a store of wealth to other long assets to see how it did in preserving its purchasing power relative to these assets. Maybe the Dow's recent run-up in nominal price is just reflecting greater expected inflation in the future similar to what is driving gold and other commodity prices higher.
Here is a picture that shows how the DJIA has done if priced in gold ounces instead of US dollars.

Where did the big rebound go from the crisis's depths in 2009? Where is this new high that everyone is talking about? And what has happened to our country's stock market wealth since 2000? READ MORE

Argentina's Oil Grab is Timely Retort to Rampaging Capitalism

Cristina Fernández's actions, however clumsy, are part of a worldwide reaction to exploitation by business and the rich.

April 22, 2012

Suppose the British government knew that a key shareholder in Centrica, our last great British energy company and owner of British Gas, was to sell its stake to Gazprom, so making Russian state ownership inevitable. I hope that, in this scenario, the government would expand the provision of the Enterprise Act that allows Britain to block takeovers that are against the national interest to include gas and nuclear power. (The act is currently confined to defence, financial services and the media.) I'm pretty certain that Centrica chairman Sir Roger Carr, also president of the CBI, shares the same view. No country can be indifferent to the ownership of strategic assets and thus the use to which they might be put. Its first obligation is to the well-being of its citizens.

The Argentinian government was faced with just this dilemma last week. YPF is its national oil and gas company, which it sold to the Spanish oil company Repsol for $15bn in 1999 as part of its privatisation drive. It has not been a great deal for either party. Argentinian oil and gas production has slumped, exploration for new reserves has been run down and this oil-rich country is now an oil importer, with Repsol accused of looting the company and betraying its obligations.   READ MORE

Why Do We Pay Energy Giants to Wreck Earth?

We must stop subsidizing the fossil-fuel industry.

April 5, 2012

To stay on top of important articles like these, sign up to receive the latest updates from TomDispatch.com here.  

Along with “fivedollaragallongas,” the energy watchword for the next few months is: “subsidies.” Last week, for instance, New Jersey Senator Robert Menendez proposed ending some of the billions of dollars in handouts enjoyed by the fossil-fuel industry with a “Repeal Big Oil Tax Subsidies Act.”  It was, in truth, nothing to write home about -- a curiously skimpy bill that only targeted oil companies, and just the five richest of them at that. Left out were coal and natural gas, and you won’t be surprised to learn that even then it didn’t pass.   READ MORE

Insist the Koch brothers testify in Congress

Billionaire oil tycoons Charles and David Koch continue shunning transparency. What are they hiding?

The Koch brothers have refused to answer fundamental questions about how they stand to gain financially from the Keystone XL oil pipeline, a 1,700-mile long boondoggle that will make the Kochs richer. 

Rep. Henry Waxman has invited the Koch brothers to testify before Congress, but the Kochs' allies in Congress are dragging out the process.

See our latest video, including the outburst from an acrimonious Congressional hearing, then take action and insist the Koch brothers testify in Congress.

The Koch brothers have entrenched allies on Capitol Hill who're doing everything they can to stonewall oversight. On the key committee with jurisdiction over energy issues, the Kochs and their employees were the largest oil and gas donor, giving a total of $282,700 to committee members.

Join me in fighting back. Take action to insist the Koch brothers testify in Congress.

Yours,
Robert Greenwald
and the Brave New Foundation team

P.S. I invite you to join our Koch Brothers Exposed conversation on Facebook and engage with me on Twitter.

Oil is more toxic than previously thought, study finds

Photos from a UC Davis / NOAA study show the effects of phototoxicity in Pacific herring embryos. Embryos on the left are unexposed to oil; those on the right have been in oil and then exposed to sunlight and show cells destroyed. (Dr. Carol Vines, UC Davis Bodega Marine Laboratory)

 

 

By Dean Kuipers

December 27, 2011, 12:00 p.m.

Bad news for the Gulf of Mexico: a study released this week sheds new light on the toxicity of oil in aquatic environments, and shows that environmental impact studies currently in use may be inadequate. The report is to be published this week in the Proceedings of the National Academy of Sciences.
The study, spearheaded by the UC Davis Bodega Marine Laboratory in collaboration with NOAA, looked into the aftermath of the 2007 Cusco Busan spill, when that tanker hit the San Francisco-Oakland Bay Bridge and spilled 54,000 gallons of bunker fuel into the bay.

The key finding involved the embryos of Pacific herring that spawn in the bay. The fish embryos absorbed the oil and then, when exposed to UV rays in sunlight, physically disintegrated. This is called phototoxicity, and has not previously been taken into account when talking about oil spills.
READ MORE

RELATED:
US fights EU on airline carbon emissions
EPA issues strong limits on mercury emissions from smokestacks
Lawsuit challenges animal enterprise terror law as unconstitutional
-- Dean Kuipers

Copyright © 2011, Los Angeles Times

How Did Our Oil Get Under Their Sand?

A rebel militiaman guards a Libyan oil refinery in rebel-held territory, 02/27/11. (photo: John Moore/Getty Images)

By Dylan Ratigan, Reader Supported News

24 October 11

It's somewhat rare to hear a Senator tell the truth about American foreign policy, but we did get a glimpse of reality last week when Senator Lindsey Graham lustily talked about the death of Gadhafi. He said, "There's a lot of money to be made in the future in Libya. There's a lot of oil to be produced. Let's get on the ground and help the Libya people establish a democracy and a functioning economy based on free market principles."

Though rare, this is not the first time a high profile American politician has accidentally told the truth about our foreign policy. In March, 2003, Secretary of Defense Donald Rumsfeld told a Senate appropriations committee that the war with Iraq would be paid for by Iraqi "frozen assets" and "oil revenues." This was not completely crazy - the first Gulf War had largely been financed by foreign countries who saw value in the oil supply lines we were protecting.

At the same time last week, the American solar industry filed a trade complaint against Chinese solar makers, who produce 55% of the world's solar panels. They allege that China is selling its solar panels below cost, which would be consistent with the Chinese industrial policy of preparing for a post-oil world. According to Stephen Leeb's new book "Red Alert," China spends over $350 billion a year on renewable energy infrastructure, locking up critical supplies of zinc, silver, gold, copper, and rare earth minerals. Meanwhile, America spends its money keeping sea lanes open for dwindling oil supplies.

READ MORE

Why the US Should Withdraw From the Entire Persian Gulf

The final US convoy prepares to leave Iraq, 12/18/11. (photo: AP)

By Toby C. Jones, The Atlantic

26 December 11

Our experiment in militarizing the region has made it more volatile, less free, and more costly to American interests and values

The U.S. is finally drawing down its military presence from Iraq, but why stop there? Why not reduce or outright remove our military presence from the entire Persian Gulf? The U.S. has been waging war in the Gulf for more than two and a half decades, since it took up arms against Iran in the closing stages of the Iran-Iraq war. The human and environmental costs have been catastrophic. The presumptive gains of what has amounted to one long war have proven elusive at best. More often that not, the justifications for war have been either ill-conceived or manufactured. The Persian Gulf today is hardly stable or secure. But permanent war, and our militarization of the Gulf, isn't so much a reflection of regional instability as it is the cause.

Today, it's still not clear what the United States' strategic priorities are in the Gulf. Are we there to secure access to oil? Protect friendly regimes from unfriendly ones? American policymaking is muddled, a combination of concern about energy security, Iranian aggression, and terrorism. This uncertainty is perilous. And the reality is that none of these challenges really require a significant military presence. Indeed, if recent history is any guide, a large military footprint in the Gulf will generate more rather than less risk.

Historically, oil and "energy security" have been at the heart of American strategy in the Gulf. It is home to the richest oil and natural gas deposits on the planet. It was President Jimmy Carter who most clearly made protecting the flow of oil to global markets a national priority. Carter declared oil a "vital interest" and that any assault on it would "be repelled by any means necessary, including military force." Protecting oil meant protecting its producers. Indeed, much of the war-fighting of the last two decades has been rationalized as necessary to defend Kuwait and Saudi Arabia, and their oil, from neighborhood threats. The economic logic that has underpinned all this is based mostly on an assumption that oil is a scarce resource, that there is a tight gap between supply and demand, that ensuring supply is essential to stabilize prices and to protect the global economy from potentially devastating disruptions.

None of that is really true.  READ MORE