Tuesday, September 18, 2007

Northern Rock and Bio-Bullshit

From Dr Keith Anderson, lecturer in finance at Durham University:

I hope you are being entertained as I am by the current turbulence around Northern Rock. I went up to photograph the queue outside their branch in Durham yesterday. It is the first physical sign that as a Doctor of Finance I might be able to afford to buy a modest house in Durham in a couple of years’ time, once house prices have dropped by 30%… It was reported that £1bn had been withdrawn on Friday, amounting to 4% of Northern Rock’s deposits. The amazing thing to me is that 96% of people DIDN’T withdraw their money on Friday. If I had had any savings with them, I would have been in the queue at 9.00 on Friday morning. Figures in authority say that there is nothing to be afraid of...

From Engineeringnews.co.za: CEO Madi Ramsamy said that Siyanda had secured a supply of soya bean seed from New Crop Seed, and was planning to plant the first crop in October, near Newcastle in KwaZulu-Natal.

The project includes the development of a proposed 100 000 t/y soya bean-based biodiesel plant valued at between R1,2-billion and R1,3-billion. It includes the construction of the soya bean processing plant, an oil cake manufacturing facility, an oil extraction facility and a biodiesel refinery.

The project, should it go ahead, will be a joint venture (JV) between petrochemicals giant Sasol, the State-owned Central Energy Fund and Siyanda.Siyanda has also secured contracts for the supply of fuel and fertiliser for the farms.

However, Ramsamy said that JV partner Sasol wanted to delay the project until a policy was in place. Sasol's widely reported standpoint is that a biodiesel plant in South Africa is not economically viable without government support.

NVDL: The Northern Rock thing just shows the extent to which the stock markets, money markets are operating in a grand delusion. This is just the beginning of the Housing Bubble/Credit Crunch. It's not 'entertainment'; it's in fact something to be very afraid of. Why? Because it spells a global recession, which will make 1927 look like a Fairground Attraction.

The Biofuels Brou ha ha is almost as laughable as the Northern Rock delusion. What happened at Bothaville? The enthusiasm to make money seems to cloud the perception completely. The math is simple: add up all the inputs (not just of harvesting, but preparing the land, planting and irrigation) and then compare these to the outputs. If you get a marginal profit (in terms of total energy output) congrats, you score. Unfortunately, this reality remains incontrovertible (to quote Jim Kunstler):

We cannot run the world's highway systems the way we are running them now on any combination (including all combinations) of alternative technologies. Thus, we have to look at alternative transport infrastructure (rail for example), and not keep forcing the issue of cheap and easy motoring. It's simply not going to happen.

If the USA dedicated all of its arable landmass to bio-fuel development, it might have the energy to run its vehicle fleets. But then there would be nothing left for food. See the dilemma?

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