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Germany's Merkel to Cut Social Security
MESEBERG, Germany -- Chancellor Angela Merkel says she wants to trim Germany's generous social welfare benefits in order to save money.
Merkel said Saturday, one day before her cabinet convenes to decide on budget cuts or higher taxes, there is a need to "make the structures of our social systems more efficient." Germany faces a budget deficit of more than 86 billion euros ($103 billion) this year and has said it needs to cut at least 10 billion euros a year through 2016 to meet a constitutional balanced budget requirement.
http://www.thestreet.com/story/10775530/1/germanys-merkel-to-cut-social-security.html
Merkel just hit the ball into the court of the big deficit spending nations. Ugly Monday?
An Oil Pro explains what is going on with the "Top Hat"
It is obvious that most people do not understand the basics of how the top hat is supposed to operate. And BP, per usual, has not thought it necessary to explain anything.
The Top Hat Seal
For a number of reasons the top hat seal is NOT a pressure seal. It is designed to try to keep seawater out, not to keep oil in.
Let me repeat - The top hat seal is NOT a pressure seal. It is designed to try to keep seawater out, not to keep oil in.
Any water that can get in at the bottom of the top hat will form methane hydrates and probably block up the pipe. If that happens as they are beginning to start a slow flow it just means another setback.
But it is much more likely to happen when there is substantial flow going up the line and they are starting to “pull suction”. At that point there is a high flow rate and the “water hammer” effect of suddenly stopping a mile long slug of oil and gas could easily start tearing the equipment apart, probably at the top hat or onboard the ship so it becomes a safety issue not just another failure.
The top hat is not designed to take any significant pressure, certainly not the pressure that could result from sealing to the BOP so that pressure must be able to escape - through the seal area. Even 1,000 psi would blow the top hat apart and there is potentially about 9,000 to 13,000 psi at the BOP
And at this point I think they are scared enough of the integrity of the well head and BOP connection that they don’t want to have any pressure build up which would happen if you sealed the top hat to the flange.
There are other safety issues that are solved by not having a solid seal.
1. The rig must be able to shut off the flow on deck at any time and the resultant flow has to go somewhere - which is out the top hat seal
2. The rig must be able to pull away from the well at any time in an emergency and just raising the top hat off the BOP solves this problem.
Flow to the Surface
The flow to the surface is through a drill pipe from the top of the top hat. The drill pipe should be able to flow between 20,000 to 30,000 bpd or more if it was 100% oil – NO PUMPS NEEDED. With gas in the flow the amount of potential flow is even greater. In any case the processing system on the ship cannot handle as much as the pipe can transport.
The oil is about 0.85 specific gravity. If the drill pipe was filled just with oil the buoyancy of the oil will raise the pressure at the surface to close to 400 psi. If filled with gas the pressure would be about 2,000 psi.
The problem won’t be to get the oil to flow but to keep it from flowing too fast. They will throttle (choke) the flow back to get the volume they are comfortable with and then pipe the oil and gas, still under some pressure, into a separator vessel where the pressure will be reduced and the gas will go to the flare to be burned and the oil will go into a storage tank.
The product flowing from the bottom will be a mixture of oil (with dissolved gas), NGLs and super-critical methane gas. Hopefully there will be no water as that can really mess things up. During its journey to the surface, and through the processing system there will be a number of changes as gas dissolves out of the oil, the methane goes from super-critical to gas, some of the NGL will turn to gas and all the gas will eventually expands about 150 times before it hits the flare.
The optimum flow at any time will have to be determined by trial and error on the rig. If they were to open it up quickly they might get lucky and obtain a stable flow quickly. The downside of trying to do it quickly is that you could suck in water setting back the whole process for hours or days or worst case end up with an uncontrolled flow on the ship resulting explosion and fire with fatalities and another disaster.
So the fact that it could take a period of days to reach maximum flow is no surprise.
The oil gas ratio in the flow from the well will probably keep varying all the time and coupled with the phase changes and gas expansion will be a continuing problem for the processing crew on the rig. I expect that is the reason we saw daily changes in the amount of oil recovered by the RITT.
http://www.theoildrum.com/node/6560
Looks like we can expect half-a$$ one more time. Within a week the pressure going to blow out this effort? Remember the pressure took down a humongous platform.
Lowering my hopes, again.
STD gave up 9, could be a bad close
Euro Financials look sick
Looking for an investment based on Census workers?
zab, also injoying the fat cash position you have been touting. When do you put your toe back in the water?
The Euro close should be interesting
Turns out Hungary is proof that a lot of bad news is going to be uncovered, over there.
"PANIC" is probably the technical term
The news out of Hungary has me spooked. Not sure what the technical term is for spooked.
Got out of OII & KKD with profits and got out with a small loss for the day.
Puked my longs
A big black cloud over Europe this AM.
OII - play for "Top Hat" rally
Deep water robots are being used in Gulf.
Got the idea from this site:
http://www.theoildrum.com/node/6554
BOLT, another oil play. Sub 10 P/E and half the market cap is cash.
You picked the low fruit
But, pulled it out with a save:
"Bail-outs" are like condoms: simply encourage risky behavior.
Watching GS and STD for tells
Both are looking weak.
European banks starting to act like a Lehmans repeat
June 3 (Bloomberg) -- Overnight deposits with the European Central Bank rose to a record yesterday as the sovereign debt crisis made banks wary of lending to each other.
Banks lodged 320.4 billion euros ($394 billion) in the ECB’s overnight deposit facility at 0.25 percent, compared with 316.4 billion euros the previous day, the Frankfurt-based central bank said in a market notice today. That’s the most since the start of the euro currency in 1999. Deposits have exceeded 300 billion euros for the past five days.
Banks are parking cash with the ECB amid investor concern that a 750 billion-euro European rescue package may not be enough to stop the crisis from spreading and spilling into the banking industry. The ECB said on May 31 that banks will have to write off more loans this year than in 2009 and their ability to sell bonds may be hampered as governments seek to finance fiscal deficits.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aBG71WMVDAV4
Selling some core holdings in the jobs bounce. Cash is a good thing.
ADP numbers don't include birth/death number
Add another 180,000 for the Friday number.
Japan just did a 180 and is down hard
Late nights watching this new surreal world we are in. Japan's PM quit after approval ratings imploded after he allowed the US to maintain a base in Japan.
Now the yen is starting to take a dive.
Surreal, one of the options in leaving Japan is to establish a base in Vietnam.
http://www.globalsecurity.org/military/facility/okinawa.htm
The Russians nuked their out of control well and filmed it
Here comes the pension battle
Feeling tapped out after stimulus, ObamaCare and everything else? Senator Bob Casey has one more deal for you. If the Pennsylvania Democrat gets his way, U.S. taxpayers will also pick up the astonishing tab for poorly managed union pension plans.
Mr. Casey is gathering support for his curiously named "Create Jobs and Save Benefits Act," a bailout for union-run retirement plans. Similar to House legislation from North Dakota Democrat Earl Pomeroy and Ohio Republican Patrick Tiberi, the bill would transfer tens of billions of dollars worth of retiree liabilities to the Pension Benefit Guaranty Corporation
http://online.wsj.com/article/SB10001424052702303491304575188263180553530.html?mod=igoogle_wsj_gadgv1
"Create Jobs and Save Benefits Act", not.
It's an addictive site
BP is covering up the scale with dispersant. Massive oil plumes doing the damage out of sight.
It is criminal. If they had huge debt they could have fallen back on the too big to fail line.
The Oil Drum - good site to follow the BP disaster
The decision to cut the riser and drill pipe (DP) from the top of the Blow-Out Preventer (BOP) as a first step in putting the Lower Marine Riser Package (LMRP) over the leaking oil well in the Gulf of Mexico is not quite as easy as it might sound to a layman. This post is going to talk a little about a couple of the problems, as well as an alternate way of doing it, and should end with a possibly slightly amusing anecdote.
The current plan is to carry out the operation in two parts, first the main body of the riser and contained DP will be cut using a large shearing machine, and then a precision cut will be made with a diamond wire cutter to prepare the surface to act as a support and seal for the LMRP. (Illustrations are below the fold). There are a couple of reasons why this is going to be done this way, and one or two concerns that will need to be watched as the operation continues. (UPDATES At 8:45 am I see that the riser in in the shearing machine, at 9:30 am it appears that they are using a diamond circular saw to cut the choke and kill lines - h/t gel. By 11 am they had the wire saw at the riser, and had started to shear the riser beyond the bend. At 12:50 pm after what may be two attempts to shear through the riser and associated piping the shearing machine has been removed from the riser, and appears to have been taken back to the surface ).
http://www.theoildrum.com/
Re:gave up setting a "top-cap" on the severed pipe ?
Looked also and couldn't find it.
Re: decided not to attach 2nd blowout preventer
Wondering what kind of flow pressure they are seeing and will not tell? The pipe they were about to cut had a nice kink in it.
Attaching the second blowout preventer in the face of even higher flow pressure would have been difficult?
Criminal charges, surprised the stock is still trading.
The PIIGS are all trade deficit countries like the US
From Mike Pettis:
If you add up the trade deficits of all the trade-deficit countries in Europe, the sum amounts to just over 26% of total trade deficits.
(Wow, as they hit austerity that means the "Exporters" are about to have a much smaller export market)
Mike:
A very reluctant US?
So that leaves the US. Most policymakers around the world – while publicly excoriating the US for its spendthrift habits – are intentionally or unintentionally putting into place polices that require even greater US trade deficits.
This cannot be expected to happen without a great deal of anger and resistance in the US. The idea that suffering countries should regain growth by exporting more to the world, and that rapidly growing surplus countries should not absorb much of this burden, will only force the US into even greater deficits as US unemployment rises to reduce unemployment pressure in Europe, China, Japan and elsewhere.
I would be surprised if the US accepted this with equanimity. On the contrary, I expect it will only exacerbate trade tensions and ensure that next year the dispute will become nastier than ever.
http://mpettis.com/2010/05/don%e2%80%99t-misread-the-trade-implications-of-the-euro-crisis-for-china/
A lot of food for thought in what Mike Pettis lays out. I can assure the exporters November will ensure the US will not be the dumping ground.
Interesting blog as always.
2011 - are we moving towards a huge trading problem?
Percentage of world surplus in trade
China 296,200,000,000 26.6%
Japan 131,200,000,000 11.8%
Germany 109,700,000,000 9.9%
((Add Europes top exporters and they have a 28% surplus, larger than China's)
Top deficit traders, percentage is world deficit in trading
United States 380,100,000,000 34.2%
Spain 69,460,000,000 6.2%
Italy 55,440,000,000 5.0%
China had a recent series of currency revaluatinon of the yuan that was 20% as of 2008. Via the dollar peg the Chinese currency is now 19% higher from that point via the Euro.
What Mike Pettis sees as possible may help the US:
By the way is there anything that China can do to head off conflict? Yes. It can buy euros. The more the better – and just lift every offer out there. By strengthening the euro, or at least limiting its weakness, this strategy will force the brunt of the adjustment back onto European surplus countries rather than onto the US and, via the US, back onto China. Sarkozy and other European leaders might not be very happy, of course, but they will be at least partially mollified by the net capital inflows and the reduced humiliation of a collapsing euro.
http://mpettis.com/2010/05/don%e2%80%99t-misread-the-trade-implications-of-the-euro-crisis-for-china/
NOAA's closely following the oil leak
Having lived on the cost in the past I had to wonder why no mass fish kills have been perproted?
NOAA is closely following the disaster and how the wildlife has fared. Looks like we have been very lucky or the dilution factor along with cotinment efforts are doing a good job:
I found it a good unemotional read
http://response.restoration.noaa.gov/topic_subtopic_entry.php?RECORD_KEY(entry_subtopic_topic)=entry_id,subtopic_id,topic_id&entry_id(entry_subtopic_topic)=809&subtopic_id(entry_subtopic_topic)=2&topic_id(entry_subtopic_topic)=1
A site worth following. Looking at RIG myself for a long term play.
Anyone got a hurricane recovery play that it may be time to start looking at. A possible very active season ahead. Short insurers? HD & Lowes long?
I thought these guys were a little nuts, maybe not
The facts are coming in about the second plume and it may be a black heavy oil that is coming from a second leak that may turn out to be the big story.
BREAKING - Scientists believe there is a second outlet gushing oil into the Gulf
http://current.com/news/92454707_breaking-scientists-believe-there-is-a-second-outlet-gushing-oil-into-the-gulf.htm
This could turn out to be the Saudi Arabia type oil find I've also seen mentioned a few times?
lee, your posting sounds much more mechanical
I thought you were a strict chartist/technical reader. Guess there is no escaping the emotion side.
My best trading is to find a stock position I wouldn't mind being married to, thus more emotion. Then trade around a core position. In the new world of political stock markets I'm much quicker to totally abandon anything.
Thought the e-minis were a great trade for technicals. You've helped me many times on trading positions by posting the turns in the futures.
Has anyone tried the "Wall Street Journal Pro" subcription?
Will probably give it a try soon. If anyone has a history with it I might save a few dollars by not trying it.
Controlling one's emotions
Agree. Probably my number one opponent in the market. How could anyone trade e-minis with emotion? I tend to get attached to stocks I research for hours and days.
I find ending the day with at least a third of my trading account in cash works well.
Speaking of a Mess
May's Big Selloff Could Be Just the Beginning
By BRETT ARENDS
Are you ready for a lot more turmoil?
You had better be -- because there's a good chance that's what you're going to get.
Nobody knows for certain, of course. All stock-market predictions need to be taken with a little salt. But there are reasons to suspect that the sudden plunges of the past few weeks may be unhappy omens of what's to come.
Like last week, with stocks lurching wildly with the headlines -- up by triple digits one day, down the next. For the month, the Dow Jones Industrial Average dropped 7.9% and is negative for the year. The Nasdaq Composite and the Standard & Poor's 500-stock index also are in the red for the year.
Some pretty smart people are cautious. Seth Klarman at Baupost Group is worried. John Hussman of the Hussman Funds says all sorts of warning lights have lit up across his screen. Even Ron Muhlenkamp of the Muhlenkamp Fund, who usually takes a sunnier view of things, says he has moved a big chunk of his mutual fund into cash in case there's a plunge.
http://online.wsj.com/article/SB127517060464598905.html?mod=WSJ_latestheadlines
The PIGS are a mess and nobody believes Euroland has the tools to hide the mess, roll over massive debt in 2010. No Federal Reserve to hide a mark to market implosion that needs a slow death like we did in the US. Speaking of the market focusing on sovereign debt roll overs, 2011's should soon be a focus, again not pretty.
A second recession and the US deficit becomes worrisome? A couple of hard austerity years may be coming our way. Got my IRA in cash and trading with a short preference in case we get a whiff of deflation. Just a whiff and I think the printing press will find a new gear. How do you trade hyperinflation?
Is BP about to go down the asbestos road?
I don't think it's 100% on the second hole being the answer. Some speculation about the pressure being a sign that BP may have just tapped a monster oil find.
Long term the math will work. BP is going to be booking billions in profits from the Gulf. Long term expensive resolution to problems created can be financed.
Short to medium term a historical litigation nightmare if the second hole doesn't turn things around. Feels like everyone should now start focusing on how the drilling is going.
BP probably needs to put a lot of focus and money on containment of the slick. Also work on high probability backup solutions that will be ready in time if the second hole isn't the solution.
What a mess.
BP abandons 'top kill' attempt
Just out on WSJ. Looks like Tuesday is going to be a real downer for the market.
GL to the Gulf. Dispersion may still be the solution, from the Wunder site. The same site reviewed some of the many oil spills in Louisian Marshes and everything recovered in short time. The Hurricanes even offer hope of dispersion and the cleaning of spoiled beaches.
The site does offer some scientific hope from past history of cleanup of on shore and marsh problems.
Wunder Blog, oil spill and next weeks weather
Oil spill update
Light offshore northwesterly winds are expected to blow over the northern Gulf of Mexico today through Saturday, resulting decreased threats of oil to the Louisiana shore, according to the latest trajectory forecasts from NOAA. These offshore winds may be able to transport oil southwards into the Loop Current Eddy that just formed; a streamer of oil moving southeastward into the Loop Current Eddy is visible in yesterday's NASA MODIS imagery (Figure 2). Winds will shift to onshore out of the south on Saturday night, then shift to southwesterly by Tuesday. The long-range forecast from the GFS model indicates continued southwesterly winds all of next week. If this forecast verifies, we will see our greatest chances yet of significant amounts of oil reaching the beaches of Mississippi, Alabama, and the Florida Panhandle.
A hurricane in the Gulf before the second hole is drilled?
Looks likely with the new forcast of a very active season. A good blog site to follow. They are also contributing info on the oil threat.
http://www.wunderground.com/blog/JeffMasters/show.html
I thought this was new news
"I don't think the amount of oil coming out has changed," Mr. Suttles said.
I had heard earlier reports saying the oil was no longer flowing while the mud injection was ongoing? Guess the color change is just a mixture of oil and mud.
One thing that has changed is the amount we now know is gushing out. It's far more than the intial 1000 barrels and even the updated 5000 barrel estimate. I'm not going to be surprised if we find out it is more than the upper 19,000 now mentioned. Hydrocarbons, anyone know if the methane is a problem? I've read about the plumes being a result of an oil/methane mix. Regardless, add in methane and it looks like the environmental impact already goes beyond the "19,000 barrels" of oil.
Dispersents used in the depths may be reacting with oil and methane to create the new plume problem. Wonder what that math adds up to in hydrocarbon burden for the Gulf Eco?
Darn stats continue to try to paint a best picture scenario. Probably needed as the whole situation is too emotional for current consumption.
lee, a question about trading the futures
Would a trading tax that is being talked about be a serious blow to your method? I'm not for a trading tax. If one is considered I would prefer it be added to the fee brokers charge to execute each trade.
Sovereign interventions are playing havoc with a lot of traders. With your quick in and out trades I would guess it creates volatility that has actually helped trading futures with your style.
Never traded the e-mini futures. With the changing landscape I may need new tools.
News on the junk shots
The company suspended pumping operations at 2:30 a.m. Friday after two junk shot attempts, said the technician, who spoke on the condition of anonymity because he was not authorized to speak publicly about the efforts. They resumed the procedure at about 3:45 local time, after the nearly 12-hour interruption.
The suspension of the effort was not announced, and appeared to again contradict statements by company and government officials that suggested the top kill procedure was progressing Friday. Andrew Gowers, a BP spokesman, said he would not give “blow-by-blow commentaries.” He added: “The operation is by definition a series of phases of pumping mud and shooting bridging materials and junk and reading pressure gauges. It is going to keep going, perhaps 48 more hours.”
http://www.nytimes.com/2010/05/29/us/29spill.html?pagewanted=1&hp
One positive, I've read rumors the oil find may be in a class only topped by the big one in Saudi Arabia.
Hope nobody is long BP
Today, the Washington Post is reporting that a third giant underwater plume has been discovered:
A Louisiana scientist said his crew had located another vast plume of oily globs, miles in the opposite direction.
James H. Cowan Jr., a professor at Louisiana State University, said his crew on Wednesday found a plume of oil in a section of the gulf 75 miles west of the source of the leak.
Cowan said that his crew sent a remotely controlled submarine into the water, and found it full of oily globules, from the size of a thumbnail to the size of a golf ball.... Cowan said the oil at this site was so thick that it covered the lights on the submarine.
"It almost looks like big wet snowflakes, but they're brown and black and oily," Cowan said. The submarine returned to the surface entirely black, he said.
Cowan said that the submarine traveled about 400 feet down, close to the sea floor, and found oil all the way down. Trying to find the edges of the plume, he said the submarine traveled miles from side to side.
"We really never found either end of it," he said. He said he did not know how wide the plume actually was, or how far it stretched away to the west.
http://www.washingtonsblog.com/2010/05/third-giant-underwater-oil-plume.html
November should be a real treat
Goldman was a bipartisan effort that worked well for a few. Wonder how history will look back at this era?
Guess that means Greece wasn't contained
Spain has a lot of downside as the state can't nationalize the bad debt of it's banks. 20% unemployment and a housing sector that was considered as bad as in the US.
Only 2 banks have gone under since the subprime meltdown. Probably about to reveal a lot of bad news that can't be hidden with mark to fantasy.
Re: the blip a few weeks ago was no blip
zab, I think you speak the truth.
CajarSur is only second Spanish bank to fail since financial crises began,
CajaSur posted a net loss of EUR 596 million in 2009. CajaSur was the second Spanish bank to fail since the start of the global financial crisis. The central bank seized control of Caja Castilla-La Mancha in March 2009.
http://rttnews.com/ArticleView.aspx?Id=1313615
With 20% unemployment I'm thinking that should be impossible. Euro looks like it is about to be overwhelmed as things are only starting to hit the fan.
Re: 32 cents a barrel to be passed on to consumers
BP's loss will come out of bonus checks and dividends. Shareholders will price in risk of deep water drilling. The special tax is a new way of passing risk to taxpayers, again.