Linkfest: Early Reaction to Warren Buffet's Chairman's Letter to the Shareholders of Berkshire Hathaway 2009, Part I

UPDATE: part III, blog reactions, is here.
Original post:
I'll be commenting on the letter on Monday (I know, "Alert the media"*), in the meantime, here's a roundup of initial stories from the major news outlets. See also our post from yesterday "Warren Buffett's Letter to the Shareholders of Berkshire Hathaway 2009 (BRK.A)", there's a treat for those who follow the links.
We'll be back later with blog reaction.

From the Wall Street Journal, an in-depth look:
Berkshire Hathaway Reports Worst Year Ever
Insurance, Stock Holdings Are Hit; Buffett Warns of Bubble in Treasurys

From the Journal's Real Time Economics blog:
Warren Buffett on the Economy

From Bloomberg:
Berkshire Results May Be Worst Ever, by Buffett Gauge

From Mr. Buffett's own Washington Post, Economy Watch blog:
Buffett: 'I Did Some Dumb Things' in 2008
(speaking of dumb, the WaPo gated a half dozen Warren stories)

From the New York Times:
In Letter, Buffett Is Frank but Optimistic

From their The Lede blog:
As Warren Buffett Goes, So Goes …

and from their DealBook blog:
Ask Warren Buffett a Question

From the Omaha World-Herald, first a home grown story, then their AP coverage (which are the same headlines as the NYT's):
Good calls, bad calls: Buffett's past predictions
Buffett says derivative values can be misleading
Buffett says economy to remain in shambles in 2009

From Reuters:

Berkshire net sinks; Buffett says economy in shambles

NEW YORK - Berkshire Hathaway Inc, Warren Buffett's insurance and investment company, barely broke even in the fourth quarter because of losses on derivatives ...

Feb 28, 2009

Buffett defends using derivatives at Berkshire

NEW YORK - Saying "derivatives are dangerous," Warren Buffett defended his use of them after they played the main role in driving Berkshire Hathaway Inc annual ...

Feb 28, 2009

FACTBOX: Highlights of Warren Buffett's annual investors' letter

- Berkshire Hathaway Inc, Warren Buffett's insurance and investment company, barely broke even in the fourth quarter because of losses on derivatives contracts ...

*That's a quote from the 1981's double Oscar winner "Arthur"
The set-up, Arthur (Dudley Moore, nominated Best Actor) and his butler Hobson (Sir John Gielgud, winner Best Supporting Actor):

Arthur: Do you know what I'm going to do? I'm going to take a bath.
Hobson: I'll alert the media.
Arthur: Do you want to run my bath for me?
Hobson: It's what I live for.
[Arthur exits]
Hobson: Perhaps you would like me to wash your dick for you, too, you little shit.

That's a Wrap: The Market has Given Back One-half of ALL the Gains in the DJIA Since the 1932 Market Bottom

The Dow Jones Industrial Average closed today at 7062.93.
It seems like it was only yesterday [it was -ed] that I was talking about this rather astounding occurance.
I'm not sure what it means but a 17 month 50% retracement of a 75 year bull run seems noteworthy.

Warren Buffett's Letter to the Shareholders of Berkshire Hathaway 2009 (BRK.A)

UPDATE below.
Regular readers know that we are fans of Warren. I've got most of the annual reports, going back to the BKHT days. Whether it's the insurance operations, MidAmerican Energy and their largest utility-owned wind operations or just the wit and wisdom of Warren (and Charlie), I've found a lot of reasons to post on Mr. Buffett. Some of our links are below.
From MarketBeat:

Waiting for Warren

Berkshire Hathaway’s annual report, slated for release at 8 a.m. Eastern time Saturday, is expected to detail one of the worst years on record for the widely watched company, led by legendary investor Warren Buffett. The market tsunami wreaked havoc on Berkshire holdings such as Coca-Cola, US Bancorp, Wells Fargo, Moody’s and Washington Post, among others.

It was also a challenging year for Berkshire’s insurance outfits. Two major hurricanes, Ike and Gustav, caused significant damage to the Gulf Coast. It was the second costliest hurricane season on record, with damage estimated at $54 billion, according to the National Climatic Data Center. In 2005, massive storms such as Hurricanes Katrina and Rita caused $128 billion in damage, resulting in a loss of more than $3 billion for Berkshire....MORE

If you are impatient, here's one of my favorite Warren posts:

Warren Buffett, Mr. Market and the Buffett Partnership Letters, 1959-1969 (BRK.A)

You might also be interested in (talk about an "If you're like me [and I know I am]" moment):

SEC Pressed on Climate-Change Disclosures and When will Warren Buffett get on Board the Love Train?*
Warren Buffett and the Chocolate Wars
How Buffett Made a Killing in Chocolate, And Warren's Letters to Shareholders

or use the 'Search Blog' box, keyword Warren.
UPDATE: Here is the major media coverage, I'll have the blog coverage later and my comment on Monday.

U.S. Oil Trust Investigated by CFTC (USO)

Remember the pitch from last year, speculators have nothing to do with oil prices? Here's a stub from the Wall Street Journal:

Regulators are investigating the giant U.S. Oil Fund LP exchange-traded fund and others in the market over price moves that coincided with its trades in and out of crude-oil contracts earlier this month.

The Commodity Futures Trading Commission confirmed late Thursday that its enforcement staff is investigating USO ...

FT Alphaville has been all over the story for the last couple weeks:

Feb 18: A ‘cancer’ in the oil markets?

Olivier Jakob at Petromatrix has commendably taken a strong stance against the USO ETF fund over the last few weeks, or rather, exposed to what degree the fund’s market inexperience is causing all sorts of mayhem for the WTI contract. All of this, he says, is because the fund has now achieved ‘’critical mass’.

Unsurprisingly, his Wednesday note shows a similarly strong view:

Despite the flat price weakness on crude oil, the contango on the expiring spread continues to narrow, in a pattern very similar to the previous expiry. The convergence of the expiring contract is now being done pre-expiry on a narrowing of the spread rather than post-expiry on a flat price basis. This re-enforces our view that the extreme contango on the WTI contract is primarily due to market distortions created by the USO WTI ETF. This cancer to the oil markets is however not yet over as positions in the USO were increased further yesterday and now reach 93′000 WTI April Futures contract....MUCH MORE

Feb 20: Is WTI becoming an ETF derivative?

It’s rollover day for the March WTI contract on Friday. And the WTI disparity continues to hold, something analyst Olivier Jakob at Petromatrix increasingly thinks has more to do with the United States Oil Fund (USO) than any real fundamentals. As can be seen below, the divergence between the WTI and Brent contracts, which usually track each other quite efficiently, has really intensified in the last few months.

On Friday, the Nymex WTI contract was trading around $37.38 per barrel, while the ICE Brent contract was at $40.55.

What’s really worrying Jakob, however, is the soaring size of the USO in particular - even despite relatively dismal returns since the start of the year. The fund’s NAV is down 33 per cent year to date.

At the current rate of expansion, Jakob expects the fund — operated out of California by former (unsuccessful) US Republican candidate for congress Nicholas Gerber — to hit 100,000 WTI futures contracts by Monday.

Just to compare, this time last year the fund held only 2,855 WTI futures....MUCH MORE

Feb 24: The United States Oil Fund mystery

Olivier Jakob at Petromatrix continues his crusade against the United States Oil Fund in his Tuesday note, an issue increasingly being picked up across the commodities and investment spectrum.

Jakob’s specific case is with the distortions being caused in the WTI market on account of the ETF’s size and predictability. He notes people are already rolling positions from the front-month April contract and into May just to avoid the distortions. This is making the front-month contract somewhat of a farce, with a number of oil traders telling FT Alphaville the contract’s viability as a hedging instrument is truly in question. The volatility, meanwhile, is also immense relative to any other contracts further down the curve.
Consequently, Jakob calls it a USO free-lunch:

Open Interest data for Friday is confirming that positions are already being rolled into May. This is unusual to have positions being rolled so early before the next expiry but the USO has created a different crude oil market. The front timespread on WTI (Apr/May) is logically starting to weaken as length is taken out of April WTI and as traders start to position themselves for the USO free lunch. This in turn is making for a wider Brent premium to WTI and an improvement of the product crack. If Petrologistics is right on the level of compliance then given that WTI will remain for a while distorted on the USO rolls, this could make for an even wider prompt premium of Brent versus WTI and a strong rebound of US Gulf cash physical values during the roll of indices.

To make the point Jakob produces this rather nifty chart. He seems to have a point:...MUCH MORE

Feb 25: A self-propelled pyramid?

Stephen Schork of the Schork report jumps on the United States Oil Fund issue on Wednesday. He too is blaming the size of the ETF for current distortions in front-month Nymex WTI contracts.

He refers specifically to the March/April roll when spreads moved from $3.26 to $8.18 and expired at $1.09. Quite a volatile move. He explains (our emphasis):

As we outlined at the time, this volatility was largely attributable to “the roll” by long-only commodity index funds, particularly the United States Oil Fund ETF (USO). Open interest in the March contract was 363,757 on February 05th. Per the fund’s website, the USO rolled 85,057 contracts the next day. In other words, the USO held sway over the market, i.e. these funds (USO, S&P GSCI et al) are artificially skewing the front of the NYMEX curve; putting downward pressure as they sell a massive percentage of open interest in the spot over the course of a few sessions....MUCH MORE

Feb 26: Whatever happened to speculator limits on Nymex?

Stephen Schork of the Schork report highlights a response, as received from a reader, to his Wednesday point on the USO ETF:

A response to our USO observation from a client…

re: USO - they are NOT a hedger - why they are allowed to exceed the spec levels is beyond me - oh wait yeah NYMEX [now CME] and ICE love the volume and fees it gets from the USO trading… The CFTC should classify USO as a spec and require the NYMEX/ICE to impose spec. levels to USO - and if they try to roll out a USO II or USO III they should be treated as one entity and their position combined for the purposes of position totals .

They certainly have a point.

The “speculator limits”, says Nymex are there to “effectively restrict the size of a position that market participants can carry at one time and are set at a level that greatly restricts the opportunity to engage in possible manipulative activity on NYMEX.”
The position limit during the last three days of the expiring delivery month on Nymex WTI is 3,000 contracts....MORE

Wage and Price Controls in the Ancient World

From the Mises Economics blog:

Excerpt from Forty Centuries of Wage and Price Controls, by Robert Scheuttinger and Eamonn F. Butler:

For the past forty-six centuries (at least) governments all over the world have tried to fix wages and prices from time to time. When their efforts failed, as they usually did, governments then put the blame on the wickedness and dishonesty of their subjects, rather than upon the ineffectiveness of the official policy. The same tendencies remain today. FULL ARTICLE

Abe Vigoda Watch

Update below.
I have no idea why this is in the bookmarks or why someone has a single page website devoted to Mr. Vigoda's mortal state. From Abe Vigoda.com:

Abe Vigoda is alive

Page loaded Friday February 27 2009 8:44:54 AM PT

Reload page for update

Abe Vigoda's Dead (Premortem Mix)

music • bauhaus vocals • spinn lyrics • agent orange and spinn

Update: It was brought to my attention that the link is probably related to this post from April '08
"Buy Tin":

That was the cryptic message from a reformed metals trader this afternoon. No rationale, no investment thesis, just "buy tin".

I couldn't help thinking of the Barney Miller episode "Child Stealers".
Time traveler "Adam Boyer" comes back from 2057 and is hounded by Harris for stock tips:

[Harris, acting on a tip from a "twinkie" claiming to be a Sociology Professor from Columbia University who's traveled back in time from the year 2057 (played by the great character actor Richard Libertini), calls his broker to transfer his assets from gold bullion to the financial standard of the future--Zinc!!]:

"...no, no blue chips, either...I was thinking about Zinc! (pause) Yeah, Zinc! What's it goin for these days? (writing the figure on a notepad)...Thirty seven and a half cents---a POUND?? (The "Professor" gives Harris an encouraging nod)...Yeah, well, I might be willin' to spring for a coupla TONS!"

Source

Since the episode aired in January 1980 and zinc today is $1.075, zinc didn't do so hot (but much better than gold, which hit $850 that same month). Here's Kitco's zinc chart.

Here's Platt's on tin:

...Tin was once again a stand-out feature, although down $325 in premarket trade the metal still traded above $20,000/mt, at $20,175. As such, Indonesian tin major PT Timah posted net profit of Rupiah 1.78 trillion ($191.86 billion), up 757% from 2006. Timah attributed the higher net profit to better performance and higher global tin prices that were supported by a more favorable situation in the national tin industry. The trader said: "Tin still looks good, but it is a funny market. If you have a big position you need a good entry/exit strategy."

I might be willin' to spring for a coupla tons.

Here's the chart from Kitco Base Metals:

ANALYSTS VIEW - Market reaction to Obama budget report

From Reuters:

...COMMENTS:

TOM SCHRADER, MANAGING DIRECTOR, U.S. EQUITY TRADING, STIFEL NICOLAUS CAPITAL MARKETS, BALTIMORE:

"I think the budget is probably already built into the market, considering how much Obama told us he has to spend. Wall Street and investors will think the budget is too big, but I think it will be pared down by April.

"The deficit is huge, but it's a necessary evil, and I think it's already built into the market.

"There's a fear and a certainty that taxes will have to go up in order for Obama to do everything he wants to do -- including halve the deficit by the end of his first term. But taxes are also already built into the market, and that could be why we've been seeing the levels we've been at in the market."

GEOFFREY YU, CURRENCY STRATEGIST, UBS, LONDON:

"These numbers are to be expected -- 12.3 percent of GDP is pretty hefty -- but I think we're assuming that the stimulus is expected to be front-loaded. Continued...

More deals to come in fertilizer space

Following up on "Fertilizer Deal Becomes Bizarre Love Triangle (AGU, CF, TRA)" we have the Financial Post's Trading Desk blog looking for more action:

Prices are heating up in the fertilizer industry and so are the deals. Recently, it was revealed that a hedge fund under George Soros has been taking big stakes in Potash Corporation, and Wednesday Agrium Inc. announced an unsolicited bid for competitor CF Industries Holdings. More offers are sure to come because valuations are good and the market for nitrogen is very tight.

Agrium, a leading global producer of crop nutrients made an unsolicited offer for CF Industries Holdings Inc. in a mix of cash and stock valued at $3.6-billion. The proposed deal triples Agrium's phosphate and UAN capacity according to Agrium CEO Mike Wilson, and the combined entity would make Agrium the biggest producer of nitrogen, a key component of fertilizer.

There are good reasons why action is picking up sharply in the fertilizer space after a brutal end to last year. Firstly, nitrogen producers are extremely profitable at these levels. Margins are "extremely lucrative" with natural gas prices below $4 says Prakash Hariharan, associate portfolio manager at Front Street Capital and co-manager of Ceres Global Ag Corp. The Agrium bid for CF Industries comes on the heels of an all stock deal by CF Industries for competitor Terra Industries, the only pure nitrogen player in the space....MORE

President Obama's Budget: Science

From the Wall Street Journal:

Climate-Change Research Gets Big Boost in Budget

Climate-change research would get a boost in funding under the budget as a result of a refocusing of resources at several agencies.

The Commerce Department's National Oceanic and Atmospheric Administration would receive $1.3 billion for new weather satellites and climate sensors, as well as research into climate and ocean research.

The National Aeronautics and Space Administration would refocus its efforts on global climate research, a major change from the Bush years, when next-generation space flight programs were a priority. NASA's budget calls for a $1.5 billion increase over the next two years, with its fiscal 2010 budget totaling $18.7 billion, and it will be charged with developing new space-based sensors to "deploy a global climate research and monitoring system.">>>MORE

HT: Environmental Capital

That last bit is important. There are enough problems with the Goddard Institute for Space Studies datasets and the adjustments that have to be made to the raw data that it is just ridiculous in the twenty-first century not to have sensors and monitors dumping not just peta- and tera-bytes of data but exa-, zetta- and yotta-bytes. Lay it on us and let's see what's really going on.

A related story:

From NewScientist: Obama backs Moon return in NASA budget

...Under the proposed budget, the agency would receive $18.7 billion in 2010. Combined with $1 billion in funding provided in an economic stimulus package signed into law last week, NASA would get $2.4 billion more than it did in 2008.

Climate change

"It's a nice number," Logsdon told New Scientist. "Between the proposed increase and the stimulus package, NASA's $2.4 billion [would leave it] better off than it was last year."

The budget would also likely be a boost over 2009 funding levels. The agency's 2009 budget has not yet been settled. NASA has been operating at 2008 funding levels under a continuing resolution since October 2008.

But on Wednesday, the US House of Representatives passed an omnibus bill to fund NASA for 2009. It calls for a $360 million increase in the agency's human exploration budget, which includes $2.9 billion for the Constellation programme. NASA's science budget would decline $200 million from 2008 levels. The US Senate is now considering the bill.

Climate change research and monitoring tops the list of funding highlights in the overview of NASA's budget request, but the budget for specific agency programmes is not included. A detailed budget request is not expected before April.

Obama Budget Hits Oil, Gas Companies With New Fees, Taxes

From the Wall Street Journal:

The Obama administration Thursday proposed raising at least $31.5 billion over 10 years from oil and gas companies, reflecting a repeal of tax breaks for domestic production and new charges on oil and gas production in the Gulf of Mexico.

The plans, outlined as part of a fiscal 2010 budget proposal, revive long-standing Democratic efforts to turn to the oil and gas industry as a source of funding for other priorities. Among other things, the Obama budget plan calls for about $13 billion over 10 years in new charges on oil and gas companies from the repeal of a tax deduction for domestic production.

"It's a concerning area, of course, because as you put more royalty and tax burdens on the industry, particularly a cyclical industry, you just have to be cognizant of the potential impact it has on investments," said Marvin Odum, the president of Royal Dutch Shell's U.S. operations, after meetings with various lawmakers about energy policy. "That's not something you can put real definition to, but I think it's a concern."

Oil companies have been fighting to maintain the tax treatment, which they say keeps jobs in the U.S. by encouraging domestic production. Congress scaled back the tax deduction last year to help pay for an extension of tax breaks for the solar and wind industries, but stopped short of eliminating it entirely.

The Obama administration also proposed a new excise tax on oil and gas production in the Gulf of Mexico, saying it would raise about $5 billion over the next 10 years. The White House said that the new tax, along with plans to charge user fees to oil companies for processing oil and gas drilling permits on federal lands, would "ensure that federal taxpayers receive their fair share" and "close loopholes that have given oil companies excessive royalty relief." The tax "will begin in 2011, after the economy has had time to recover," the White House said....MORE

Factoid of the Day: We are Now 80 Points Away from Erasing One-half of ALL the Gains in the DJIA Since the 1932 Market Bottom

Between the July 8, 1932 closing low of 41.22 and the October 9, 2007 closing high of 14,164.41, the Dow Jones Industrial Average gained 14,123.19 points.

At DJIA 7102.81 we will have given back half of all the gains in the 75 year bull market.
The index closed today at 7182.08.

From Those Wonderful Folks Who Brought You the Enron Loophole: Obama's CFTC nominee supports carbon market oversight

From ClimateWire via the New York Times:

The Commodity Futures Trading Commission has the "best experience" and the regulatory authority to oversee any carbon futures market, President Obama's nominee to head the agency told the Senate Agriculture Committee yesterday.

"CFTC does have that authority," Gary Gensler said at his confirmation hearing. "But I will work with Congress to put that into statute" if it needs to be stronger, he said.

Sens. Saxby Chambliss (R-Ga.), Richard Lugar (R-Ind.) and Debbie Stabenow (D-Mich.) all voiced concerns during the hearing about oversight of the future carbon market that could be worth billions of dollars if Congress passes cap-and-trade legislation for greenhouse gas emissions....MORE

The loophole was originally an informal decision by the CFTC not to regulate electronic trading of energy derivatives by CFTC, Wendy Graham, Chair, under Bush I.
It was later codified in one of the last bills signed into law by the the Clinton administration.
Between the two Bush's and Bill Clinton the Enron saga forshadowed what is to come in the carbon markets.

Here's the Congressional Research Service's six page history of the Enron loophole.

We Must Save GS; MS; JPM: U.S. May Backstop AIG CDS

Those banks are counterparties to a slug of the paper that AIG wrote. They did not do their due diligence on AIG. They were only in it for the money, to the tune of billions in profits.
Now the American taxpayer is going to go on the hook for another $300 Billion (notional).
This is getting old.
From Bloomberg via Calculated Risk:

AIG Rescue May Include Credit-Default Swap Backstop

American International Group Inc. may get a backstop from the U.S. to protect against further losses on credit-default swaps, according to a person familiar with the matter.

The federal guarantees may be included in New York-based AIG’s restructured bailout ...

There you have it.

Crash! Sallie Mae and the President's Budget

Here's a great example of the wisdom of Our Hero:

...Finally for investors in rent-seeking organizations there is the real risk that the politicians will change the rules. Heed the words of Sen. Simon Cameron (R&D!-Pa.):

"The honest politician is one who when he is bought,
will stay bought."

The stock was recently down 34% at $5.53 after trading as low as $4.72.
From the Washington Business Journal:

SLM CORP. lost more than 40 percent of its market value Thursday on concern the government would end subsidies to student loan providers.

Reston-based Sallie Mae, a private student loan provider, issues loans that are currently guaranteed by the federal government. President Barack Obama’s budget plan would end those guarantees and instead shift federally backed student loans directly to the government....MORE

Carbon Trading Assumptions in President Obama's 2010 Budget

From Tne New Republic's The Vine blog:

...First, the basics: The White House is assuming we'll have a cap-and-trade system up and functioning by 2012, which might be feasible if Congress finalized legislation this year or early next, though we're talking breakneck speed. ("It's an optimistic calendar," one official admitted.) The proposed cap would aim to slash U.S. greenhouse-gas emissions 14 percent below 2005 levels by 2020, with an 83 percent cut by 2050. Officials were quick to note that the conversation on this "was just beginning," but that may not entirely placate green critics, because those targets are actually fairly timid. Indeed, recent climate science suggests we should shoot for a 20 percent cut below 1990 levels by 2020—a far steeper reduction than Obama's contemplating.

On a related note, the White House is expecting the price of carbon will settle at around $20 per ton. That's actually cheaper than the price under Europe's emissions-trading regime (before the financial crisis hit), and it's cheaper than the $28 per ton predicted under last year's Boxer-Lieberman-Warner cap-and-trade bill, which was lambasted by many environmentalists as far too flimsy. Administration officials did, again, caution that this figure was just a "placeholder" and a "fairly conservative number" at that.

...The White House is also assuming that all of the carbon permits issued under the cap would be auctioned off, with zero free giveaways for select industries. For a quick primer on why auctioning is a good idea, see this old op-ed by Peter Orszag, the guy who... now runs the White House budget office. Orszag's key point is that handing out free permits to utilities and manufacturers actually does nothing to shield consumers from energy price hikes, since companies wouldn't actually pass on the savings. So, if we want to mitigate any pain from a carbon cap (and we do), it's better for the government to auction off the pollution permits and use that revenue to cut taxes or offer rebates. And that's exactly what Obama's proposal does: Of the revenue that's raised, the vast bulk (about $60 billion per year) will go toward making the existing "Making Work Pay" tax credit for working families permanent, while $15 billion per year gets spent on various clean-energy technologies, energy efficiency, green vehicle technology, and so forth....

Budget of the United States Government: Fiscal Year 2010

I'm going to use this post as a bookmark for the various documents. From the Office of Management and Budget:

The Budget Documents

Some of the documents on this page were created as PDFs

Click here for PDF assistance

A New Era of Responsibility

To download a document, put your cursor on the document, click the right mouse button, and choose "Save target as" or "Save link as."

To download "A New Era of Responsibility" as a single PDF click here (140 pages, 1.8 MB)

• President’s Message (4 pages, 73 KB)
  
• Inheriting a Legacy of Misplaced Priorities (12 pages, 163 KB)
• Jumpstarting the Economy and Investing for the Future (26 pages, 239 KB)
• Conclusion (2 pages, 45 KB)
  
• Department of Agriculture (6 pages, 174 KB)
• Department of Commerce (2 pages, 99 KB)
• Department of Defense (4 pages, 86 KB)
• National Intelligence Program (2 pages, 75 KB)
• Department of Education (4 pages, 109 KB)
• Department of Energy (4 pages, 80 KB)
• Department of Health and Human Services (4 pages, 108 KB)
• Department of Homeland Security (2 pages, 78 KB)
• Department of Housing and Urban Development (4 pages, 89 KB)
• Department of the Interior (4 pages, 96 KB)
• Department of Justice (2 pages, 210 KB)
• Department of Labor (4 pages, 98 KB)
• Department of State and Other International Programs (4 pages, 134 KB)
• Department of Transportation (2 pages, 87 KB)
• Department of the Treasury (2 pages, 72 KB)
• Department of Veterans Affairs (2 pages, 111 KB)
• Corps of Engineers – Civil Works (2 pages, 98 KB)
• Environmental Protection Agency (4 pages, 91 KB)
• National Aeronautics and Space Administration (2 pages, 88 KB)
• National Science Foundation (2 pages, 80 KB)
• Small Business Administration (2 pages, 92 KB)
• Social Security Administration (2 pages, 72 KB)
• Corporation for National Community Service (2 pages, 78 KB)
  
• Summary Tables (22 pages, 138 KB)

Solar Firms Pray for a Stimulus Bump

From MIT's Technology Review:

After months of gloom, the U.S. stimulus package could kick-start some projects.

The solar industry, overcast in recent months by the credit crunch and the wider economic downturn, is hoping for a few rays of sunshine after the passage of the U.S. stimulus package last week.

The months since October have been challenging for the industry, and recent news has reinforced a sense of gloom.

Yesterday, First Solar, a leading maker of solar-power modules, reduced its revenue projections for 2009 to around $1.8 billion, a drop of about $300 million. It also said that it would start to invest in some of its customers' projects, perceived as a move to keep those projects going. In January, Ausra, a California company that had plans to build several large-scale solar-power plants, announced that it would scale back to become primarily a reseller of solar equipment, and that it would also lay off 11 percent of its staff. Earlier in the same month, OptiSolar, a startup that makes thin-film solar technology and had plans for a photovoltaic power plant, said that it would have to lay off half of its staff, citing difficulties getting funding for the project.

Even before the turn of the year, many projects had run into problems. Back in October 2008, BP Solar scrapped plans for a $97 million expansion of a major solar plant in Frederick, MD. Around the same time, Evergreen Solar, a company that manufactures photovoltaic modules and solar cells, delayed an $800 million plant in China.

"The market had pressed 'pause,'" says Ethan Zindler, head of North American Research at U.K.-based analyst firm New Energy Finance.

The market capitalization of the solar industry has dropped from $200 billion at the start of 2008 to just $60 billion now, says Michael Rogol, managing director of PHOTON Consulting, a solar-industry research firm based in Boston. Rogol estimates that, out of around 700 solar-power firms that his company monitors, 200 are facing serious cash-flow problems, while another 140 may run into problems. He believes that "a thinning of the herd" is already happening....MORE

Italy police arrest 8 in Mafia wind farms plot

It's not just Italy, in September '08 we had a post "Noble Environmental Power offers 24M shares in IPO (NEPI; WNDY)" that began:

This should be an interesting offering circular. If you recall, Nobel Environmental was one of the wind project developers mentioned in the Aug. 17, 2008 New York Times story "In Rural New York, Windmills Can Bring Whiff of Corruption":

...Last month, Mr. Cuomo subpoenaed two wind companies, Noble Environmental Power, based in Connecticut, and First Wind, based in Massachusetts, seeking a broad range of documents. Both companies say they are cooperating with the attorney general....

From the Associated Press:

Italian police on Tuesday arrested mobsters, businessmen and local politicians who allegedly used corrupt practices and bribes to gain control of a project to build wind farms in Sicily.

Operation "Aeolus," named after the ancient Greek god of winds, netted eight suspects, arrested in the Trapani area of western Sicily, as well as in Salerno on the Italian mainland and in the northern city of Trento.

Police in Trapani said the local Mafia bribed city officials in nearby Mazara del Vallo so the town would invest in wind farms to produce energy.

The project, worth hundreds of millions of euros (dollars), was first devised in 2003 and later uncovered by an investigation that included wiretaps, police said in a statement.

Investigators discovered that luxury cars and thousands of euros in bribes were given to politicians to ensure that a Mafia-backed company won the lucrative public contract....MORE

HT: MasterResource who point out-

...There is, however, a broader reason why the Mafia is more active in the renewables and other politicized businesses than in competitive segments of the market. When the state is involved, it is not just economic reasoning that determines which investments are to be made: Political decision makers do not answer to transparent economic incentives. The greater their arbitrariness, the greater is the temptation of being corrupted.

Corruption has a very high opportunity cost in the private sector—if you make economically unsound decisions, you are likely to be expelled from the market by more efficient competitors; therefore you have a long-term incentive to resist temptation. But if you are a politician, there is no such thing as the long-run: You will try to maximize your own interest as soon as possible, and, because your term will end, you will not bear any cost (except from the relatively low risk of being caught)....

Obama Budget Relies on Rosy Economic Forecasts

From the WSJ's Real Time Economics blog:

Rosy’s back.

The famed Rosy Scenario, coined in the early days of the Reagan White House when large tax cuts and higher defense spending were assumed to be paid for in part by strong economic growth, is a cornerstone of the Obama administration’s first multiyear budget.

After contracting at a 1.2% rate in 2009, a more modest drop than the Congressional Budget Office and Blue Chip Consensus forecasts assume, the White House sees growth domestic product growth snapping back by 3.2% next year and then 4% or higher the three years after that.

The last time the economy preformed that well was the New Economy heyday of the late 1990s.

The 2010-2013 forecasts are slightly more optimistic than CBO but much rosier — in some cases by well over one percentage point — than what the Blue Chip Consensus calls for. A separate private-sector gauge, the Survey of Professional Forecasts, also projects a much weaker economy this year and next.

As a result, the unemployment rate at the end of President Barack Obama’s term in 2013 will be just 5.2%, according to the White House. The rate currently sits at 7.6%, and many economists expect it to climb past 9% before the recession ends....MORE

Budget Proposal Taxes Hedge Fund Carried Interest as Ordinary Income

I've never understood taxing capital and labor at different rates and I definitely didn't see any public good in the carried interest loophole. Are hedgies going to stop trying to aggrandize their personal wealth because they are taxed like rock stars? I don't think so.
Here's a snippet from the Bloomberg story "Obama’s Budget Proposes Up to $750 Billion More for Bank Aid ":

...The budget proposes to raise taxes on hedge-fund managers by $24 billion by eliminating the so-called “carried interest” tax loophole that allows investment managers to pay 15 percent tax rates on their compensation rather than usual income tax rats [sic]....

White House sees $646 billion from 2012-19 CO2 trade

From Reuters:

President Barack Obama's budget outline projects the government will raise $646 billion in revenue from a greenhouse gas emissions trading system from 2012 through 2019....MORE

GM Expects Going Concern Opinion from Auditors

File under "Things I never imagined".
From the Financial Times:
GM future in doubt after $31bn loss

General Motors on Thursday said it expected its auditors to study whether there was “substantial doubt” it could continue as a going concern, as the US carmaker revealed a full-year net loss of $30.9bn

It said it expected the auditors to give their opinion when the GM files its annual report with the Securities and Exchange Commission next month, since the company plans to take advantage of a 15-day extension to the deadline for filing....MORE

Las Vegas Running Out of Water Means Dimming Los Angeles Lights

The Las Vegas metro population is approximately two million.
Building cities in the desert is stupid.
The extent of the arid region is even larger than this map portrays (from DesertUSA):

Here's a major story from Bloomberg:

On a cloudless December day in the Nevada desert, workers in white hard hats descend into a 30- foot-wide shaft next to Lake Mead.

As they’ve been doing since June, they’ll blast and dig straight down into the limestone surrounding the reservoir that supplies 90 percent of Las Vegas’s water. In September, when they hit 600 feet, they’ll turn and burrow for 3 miles, laying a new pipe as they go.

The crew is in a hurry. They’re battling the worst 10-year drought in recorded history along the Colorado River, which feeds the 110-mile-long reservoir. Since 1999, Lake Mead has dropped about 1 percent a year. By 2012, the lake’s surface could fall below the existing pipe that delivers 40 percent of the city’s water.

As Las Vegas’s economy worsens, the workers are also racing against a recession that threatens the ability to sell $500 million in bonds so they can complete the job....MUCH MORE

Proposed Obama Budget: $1.75 Trillion Deficit. And: Winners and Losers

First up, the Washington Post:

In President's Budget Plan, Broad Agenda and a Few Gaps
Budget Projects $1.75T Deficit This Year

President Obama will release a proposed budget today that sets aside up to $250 billion dollars to add to the existing bank bailout, which would bring the 2009 budget deficit to $1.75 trillion dollars, White House officials said. Overall, the massive spending plan is built on the assumption that lawmakers can resolve some hugely contentious issues -- and it relies on a few well-worn budget tricks.

The request Obama will deliver to Congress today proposes to provide what administration officials are calling a "down payment" on a major expansion of health care coverage for the uninsured. It identifies $634 billion in tax increases and spending cuts to cover the cost of part of the program, but does not say how the administration hopes to raise the rest of the money -- hundreds of billions of dollars more. "TBD" has been penciled into categories for cost savings and benefit reductions.

Obama's budget also would make permanent a tax cut for the middle class enacted in the recent stimulus package. But to pay for it, the president counts on a big infusion of cash from a politically controversial cap-and-trade system, which would force companies to buy allowances to exceed pollution limits. Even if that plan is approved, some lawmakers have other ideas about how to spend the money....MORE

From Reuters:

SCENARIOS-Winners and losers in Obama budget

...Here are some winners and losers in the draft submitted to Congress on Thursday, according to senior administration officials:

WINNERS

* THE BANKING INDUSTRY. The budget sets aside $250 billion as a "placeholder" if Obama decides to ask Congress for more money to help the troubled U.S. financial system. Officials said such a decision has yet to be made.

* CLIMATE CHANGE POLICY. The budget includes billions of dollars in revenues, starting in 2012 and lasting many years, from a greenhouse gas emissions trading system, one of Obama's key proposals to fight global warming.

* HEALTHCARE OVERHAUL. The budget includes a 10-year, $634-billion reserve fund to help pay for the president's proposed healthcare reforms.

* PUBLIC WORKS. Officials are trying to jolt the faltering economy in the face of 14 months of recession with public-works spending.

* MIDDLE CLASS. Tax cuts would benefit the U.S. middle class. Continued...

Committee on Ways and Means Hearing on Scientific Objectives for Climate Change Legislation Wednesday, February 25, 2009

From the U.S. house of Representatives:

Statement of Dr. James Hansen, Adjunct Professor, The Earth Institute at Columbia University, New York, New York

Testimony Before the House Committee on Ways and Means

February 25, 2009

...Carbon Tax and 100% Dividend

If we continue to subsidize fossil fuels and do not impose a carbon price, our automobile manufacturers will likely fail – they are being instructed to build fuel-efficient vehicles, which will be in limited demand as long as fossil fuels do not have to pay their true costs. Similarly, “renewable energy portfolios” for utilities will rip off the public (rate-payers), with marginal benefit for the environment. Energy-inefficient buildings will continue to be built. And so on.

The most honest effective way to achieve a carbon price capable of driving our economy and our society to the clean world of the future is “Carbon Tax with 100% Dividend”[3]. For example, a carbon price equivalent to $1/gallon of gasoline (about $115 per ton of CO₂), for 2007 rates of fossil fuel use in the United States, generates $670B. If we give one share to each legal resident age 22 and over, one half-share to college age youth (18-21), one half-share to the parents of each child up to two children per family, that yields about 224 million shares in 2007 (this could be off by ~10%; I could not find optimum census data). So the 100% Dividend for a $1/gallon tax rate ($115 per ton of CO₂) is:

Single share: $3000/year ($250 per month, deposited monthly in bank account)

Family with 2 children: $9000/year ($750 per month, deposited monthly in bank account)...

Complete prepared statement. The hearing transcript is not yet available.

Here are the statements of all three witnesses:

Witnesses
	Panel:
	Dr. James Hansen, Adjunct Professor, The Earth Institute at Columbia University, New York, New York
	Dr. Brenda Ekwurzel, Climate Scientist, Union of Concerned Scientists
	Dr. John Christy, Distinguished Professor of Atmospheric Science and Director of the Earth System Science Center, University of Alabama in Huntsville, Huntsville, Alabama

Eric Savitz , The Hardest Working Man In Show Business! And: Book-to-Bill Ratio at 0.10

As of 6:32 p.m. PST, I counted 22 posts at Tech Trader Daily timestamped "February 25, 2009..."
and I have a feeling that this time of the quarter is what Mr. Savitz lives for. "I feel good..."
One of the posts that caught my eye:
Semi Equip Book-To-Bill Hits 0.1 As Orders Evaporate

You have to wonder if any industry ever has suffered through a downturn like the one the semiconductor equipment industry is now enduring.

According to EETimes, the seers at VLSI Research now says the worldwide fab tool book-to-bill ratio in January dropped to 0.1, one of the lowest levels ever. A book-to-bill of 0.1 means that for every $10 in orders filled, just $1 of new orders are received.

The research firm expects a 49% drop in equipment sales this year....MORE

I can't recall ever seeing a book to bill that low. Ever.

So, of course we see this in TTD's headlines:

What’s Up With AMAT And The Equipment Stocks?

The large-cap semiconductor equipment stocks this afternoon have caught fire:...

Lobbyists Flock to Climate Issue

From the New York Times Dot Earth blog:

With climate now a high priority issue in Washington, there has been a huge surge in the number of Senate lobbyists working on the issue, according to an online report from the Center for Public Integrity.

The nonprofit group melds investigative reporting with a focus on ethics. Its report, “The Climate Change Lobby Explosion,” describes how hundreds of companies are trying to influence who wins and loses financially as President Obama and the new Congress try to shape federal legislation and spending on climate and related energy issues.

The lobbyists are representing both fossil fuel and renewable energy industries and everything in between. Plug a word like “coal” or “solar” into the search box on the group’s Web site to see what companies or industry groups show up. The list of lobbyists includes a host of former lawmakers and political appointees from the Bush and Clinton administrations.

The take-home summary? According to the report, “more than 770 companies and interest groups hired an estimated 2,340 lobbyists to influence federal policy on climate change in the last year, as the issue gathered momentum and came to a vote on Capitol Hill....MORE

Let's see...2340 lobbycritters divided by 535 Congresscritters = better than four per legislator!

Hundreds of Alleged Sinaloa Cartel Members and Associates Arrested in Nationwide Takedown of Mexican Drug Traffickers.

These are nasty people, see: "Cartel 'stewmaker' says he dissolved 300 bodies".

From The Federal Bureau of Investigation:

"Operation Xcellerator" Takes 23 Tons of Narcotics off America's Streets and Seizes More Than $59 Million in Drug Money

Today, Attorney General Eric H. Holder, Jr. announced the arrest of more than 750 individuals on narcotics-related charges and the seizure of more than 23 tons of narcotics as part of a 21-month multi-agency law enforcement investigation known as “Operation Xcellerator.”>>>MORE

On a different subject, from the Houston Office:

Owner Of DME Company Indicted in Adult Diaper Fraud Case

A 10-count indictment has been unsealed charging Ene Etim Hogan, the owner of a Houston area durable medical equipment company (DME), with health care fraud in an adult diaper fraud case, acting United States Attorney Tim Johnson and Texas Attorney General Greg Abbott announced today....MORE

Jail time could be tough for this guy- "What are you in for?..."

Bernanke: "We're not completely in the dark."

From MarketWatch:

Bernanke tells Congress Fed knows what it is doing

Federal Reserve Board Chairman Ben Bernanke tried to assure Congress and investors that federal regulators are not grasping at straws in the response to the financial crisis.

"We're not making it up," Bernanke told the House Financial Services panel.

"We're working along a program that has been applied in various contexts," he said.

"We're not completely in the dark.">>>MORE

Previously:

From Climateer "Quote of the Day" Federal Reserve Edition:

I have two problems but only one tool.

-Ben Bernanke
Testimony to the House Budget Committee
Jan. 16, 2008

And:

From Central Banks to "Flood" Markets with Liquidity:

I Want to Take You Higher - - Bernanke: SEC may restore uptick rule

From Dealscape:

It appears to be time to go back to the old ways.

In his congressional testimony, Federal Reserve Chairman Ben Bernanke said the Securities and Exchange Commission was looking at restoring the uptick rule -- a prohibition on short-selling while a stock is declining....MORE

Here's Sly and the Family Stone at Woodstock (10 minutes!):

CO2 rise in atmosphere accelerates in 2008, Winos Celebrate!

From Reuters:

Increases in the amount of the greenhouse gas carbon dioxide in the atmosphere accelerated last year, the U.S. National Oceanic and Atmospheric Administration (NOAA) told Reuters on Wednesday....MORE

Via CO2 Science:

Grape and Wine Responses to Atmospheric CO2 Enrichment
Bindi, M., Fibbi, L. and Miglietta, F. 2001. Free Air CO2 Enrichment (FACE) of grapevine (Vitis vinifera L.): Growth and quality of grape and wine in response to elevated CO2 concentrations. European Journal of Agronomy 14: 145-155.

...In the words of the three researchers, "elevated atmospheric CO2 levels had a significant effect on biomass components (total and fruit dry weight) with increases that ranged from 40 to 45% in the 550 ppm treatment and from 45 to 50% in the 700 ppm treatment." In addition, they report that "acid and sugar contents were also stimulated by rising CO2 levels up to a maximum increase in the middle of the ripening season (8-14%)," but they note that as the grapes reached the maturity stage, the CO2 effect on these parameters gradually disappeared. In terms of the primary pigments contained in the wine itself, however, we calculate from the bar graphs of their results that in response to the ~50% increase in atmospheric CO2 concentration experienced in going from ~363 to ~550 ppm CO2, the concentrations of total polyphenols, total flavoniods, total anthocyanins and non-anthocyanin flavoniods in the wine rose by approximately 19%, 33%, 31% and 38%, respectively.

What it means
Speaking of the future, Bindi et al. conclude that "the expected rise in CO2 concentrations may strongly stimulate grapevine production without causing negative repercussions on quality of grapes and wine." In fact, the ongoing rise in the air's CO2 content might even enhance the quality of the wine.

Quantifying the President’s Speech

Not exactly what I thought I'd see, given the headline but interesting all the same.
From the NYT's Freakonomics blog:

Our friends at speechwars.com have put together a really fun tool to help you mine their database of the full text of all past State of the Union addresses (as well inaugurals). It’s a fun way of tracking which issues have occupied the minds of our leaders. The brains behind Speech Wars, Ben Reis, just sent me his lightning analysis of last night’s speech:

– Obama is the first president in history to use the words “bailouts,” “laundry,” “drapes,” “cyber,” “messes,” and “pandemic” in a State of the Union address.

– Obama used the word “crisis” 11 times — more than twice as much as any other president. Hoover used it only four times in 1932 during the Great Depression.

– Obama said “layoffs,” “invest,” and “entrepreneurs” more than any other president.

– Obama is only the second president to use the words “ferret,” “biofuels,” and “hybrids.”

Cleantech faces bankruptcy without quick aid

A follow-up to our earlier post "President Obama on Carbon, Climate and Energy".
From Reuters:

The government must swiftly begin spending $83 billion in the stimulus law for cleantech, or recent growth in the sector will quickly turn into bankruptcies, according to a study released on Tuesday.

"Urgency surrounds numerous cleantech companies," said the report by PriceWaterhouseCoopers on the progress of venture-backed alternative energy companies.

Cleantech, or the use of technology to improve productivity while reducing costs and energy consumption, is a focus of President Barack Obama's new administration. Obama has said that stimulus money is needed for cleantech to address climate change and to create jobs.

Money must start flowing for cleantech from the $787 billion stimulus bill by July to "avert a raft of potential bankruptcies or crippling retrenchments through 2009," the report said....MORE

Gold Supply and Demand

From Mineweb:

Gold market surplus to widen in 09

The gold market surplus will widen from 60t (1.9m ounces) to 284t (9.1m ounces) this year, despite the fact that total gold supply is expected to weaken slightly to 3,770t (121m ounces), says the VM Group.

The Group said in its recent Yellow Book that although this was the largest surplus for a number of years, it was "relatively modest" given the potential for investment demand outside of ETFs and coins to absorb this metal.

"It does emphasise however, how it is investment demand that is driving this market, given the decline in support from dehedging and jewellery sales," commented the VM Group.

GOLD SUPPLY

Gold mine supply is expected to fall by 1.3% year-on-year to 2,295t or 73.7m ounces in 2009.

The Yellow Book said that lower mine supply will continue to impact world gold supply in 2009 as a further decline in South African production alone will offset higher production in China, Russia and Peru....

...GOLD DEMAND

The Group said that on the demand side adornment jewellery demand would rise slightly, but it expected sharp falls in the event of a sustained gold rally.

The "stellar performance" on the demand side will come from ETF demand, which could add another 400t by year end, though this estimate may be too conservative.

MORE, including central bank sales.

Animal Rights Activists Torch Zoo, Kill Dozens of Birds

From the Earth Times:

Dozens of birds were killed Wednesday at a private zoo in Italy in an arson attack claimed by radical animal rights activists, news reports said. Several bottles filled with petrol were used to start the fire which killed some 40 hawks, buzzards and owls in an aviary at the Zoom Zoo near the northern city of Turin.

"This is for the imprisoned animals - Animal Liberation Front" was found spray-painted in red near the scene of the early morning attack....MORE

First Solar Shares Plunge On Grim Near-Term Outlook. Analyst Reaction and Earnings Call Transcript (FSLR)

The stock was recently trading near the day's low, at $108.02 down $29.66.
In the third of last night's posts on First Solar, I said:

...Something seems odd about this frankness. We didn't see it when the stock was over $300.
I wouldn't be surprised to see insider buying should FSLR trade under a hundo....

Eric Savitz seems to be picking up a similar vibe. From Tech Trader Daily:

First Solar (FSLR) shares are taking a pounding this morning as the Street absorbs the company’s remarkably grim description of the near-term outlook for the solar sector.

While the company posted better-than-expected results for the fourth quarter, CEO Michael Ahearn told investors on the call that 10%-15% of its 2009 orders were at risk of customer default. He also said that the company had stretched out payment terms for its customers, agreed to cut prices in exchange for volume orders, and was taking the extraordinary step of taking equity stakes in some projects which otherwise were having trouble getting financed.

The revised strategy provoked some strong reaction on the Street:...MORE including analyst downgrades

Here's the transcript of the conference call, I won't get to it until this weekend.

Fertilizer Deal Becomes Bizarre Love Triangle (AGU, CF, TRA)

From Deal Journal:

When looking for hints on how a merger will turn out, never rule out the arbitragers.

Arbitragers are investors who bet on whether mergers that are announced will actually go on to completion. And, ever since fertilizer maker CF Industries announced its unsolicited $2 billion takeover offer for Terra Industries, arbs were convinced that another bidder would show up for either CF or Terra. The deal’s stakes were high — at least in the fertilizer industry — where the CF and Terra would have such high market share that some analysts were concerned it would trigger an antitrust review.

One person familiar with CF’s plans rejected the possibility of another bidder repeatedly. But, today, the arbs were vindicated as Agrium announced a $72 a share offer for CF.

The bid turned a staid fertilizer deal into a fascinating love triangle. Agrium CEO Mike Wilson urged CF to drop Terra: “We expect to achieve significant operating synergies - well in excess of those contemplated in CF’s proposal to acquire Terra Industries Inc. - and expect the combination to provide many benefits to the customers, suppliers, and employees of both Agrium and CF, as well as the communities in which both companies operate.”>>>MORE

Worst Timing of the Day: U.S. News & World Report

"Obama Speech Worked: Expect Rising Stock Market and Poll Numbers"

-Mary Kate Cary,
USNWR's Jefferson Street blog

The Dow Jones Industrial Average was recently down 151 points at 7199.

How's this for a scenario?
Mary Kate is right, just a bit early.
Later this year the stimulus adds 1-1 1/2 percent to an economy already self-recovering, setting up a year-and-a-half long bull run to, let's say DJIA 10,500 or 11,000, completing the right shoulder of the decade-plus head and shoulders formation on the Dow and expanding the Democrat majority in Congress.

Followed by realization that all we've done is blown another bubble, perhaps nuclear war between Israel and Iran or Pakistan and India, pandemic flu, and a decline to the price level of the second leg of the Big Bull, 1994's 3500 or so, a 75% haircut from the 2007 highs.

Just a little ray of sunshine aren't I?
From Tuesday's post "Are we About to See the World's Biggest Head-and-Shoulders Formation?":

The DJIA - 1956 to 2009 (Click to enlarge - without the scribblings).

President Obama on Carbon, Climate and Energy

President Obama's prepared remarks for the speech last night ran to 5900 words. Here's the WhiteHouse.gov version.
A quick search shows the following word counts:

Climate- once
Carbon- once
Energy- fourteen occurrences

This focus was easy to see coming. As long ago as the early summer of 2008 we noticed various actors attempting to frame these interrelated issues to their personal and political advantage. These observations prompted this comment at Environmental Capital in July '08:

C’mon guys, get with it!
Global warming is so last year.
Everybody, from Al Gore to the blogs you link to are reinventing themselves and talking energy.
Energy production
Energy cost.
Energy security.
It’s all about framing and re-framing.
Low impact man’s time has come and gone. The eco-soirée has moved on to erudite discussions of thorium between nibbles at the canapés.
By this winter the only references to carbon among the salon crowd might be Carbonic acid (H2CO3).
You watch.
Comment by Climateer - July 22, 2008 at 8:37 am

This stuff is all political and investors must keep an ear to the political ground or risk tremendous losses. There are only two viable approaches to rentseeking investing and politicians,
buy 'em or play 'em.

We must have the mindset of the first recipient of the prestigious Climateer Investing "Our Hero" award, the 26th Secretary of War and Democrat and Republican (!) Senator from Pennsylvania:

I'll close with my standard quote, from Simon Cameron.
From our post on biofuels, March '07:

Finally for investors in rent-seeking organizations there is the real risk that the politicians will change the rules. Heed the words of Sen. Simon Cameron (R&D!-Pa.):

"The honest politician is one who when he is bought,
will stay bought."

Our Hero

First Solar Slides; Calls Short Term Outlook “Difficult” (FSLR)

From Tech Trader Daily:

In a post-earnings conference call with analysts First Solar (FSLR) provided plenty of evidence of the current struggles in the solar industry, and provided new information on some aggressive new measures the company plans to take to address weakening demand and falling prices.

CEO Michael Ahearn told investors on the call that that the outlook for the mid-term, which he defined as three to five years out, “has never been better.” But he also said that the short-term outlook for the solar industry “has never looked more difficult.”

Ahearn said the solar industry “like most everyone else” has been impacted by the global financial crisis. He noted that bank lending “continues to be slow” in almost all markets, although “availability has marginally improved in Q1.” He also said credit remains more expensive than previous levels.

Ahearn also pointed out that equity financing for solar projects “has become less predictable and in some cases more expensive than before the crisis erupted,” and that “larger and more sophisticated investors” are taking an opportunities approach to maximizing returns, “causing them to compare solar project returns to other alternatives that provide higher yields or better liquidity.”>>>MORE

Something seems odd about this frankness. We didn't see it when the stock was over $300.
I wouldn't be surprised to see insider buying should FSLR trade under a hundo.

First Solar Claims $1-a-Watt "Industry Milestone" (Stock Spanked After-hours) FSLR

In the post immediately below I said "...I don't think it will be enough" [to beat analyst's estimates]. I didn't listen to the conference call but here's the after-hours line:

After Hours: 119.00 -18.68 (-13.57%) Feb 24 5:59pm ET

Here's the headline story from the NYT's Green Inc. blog:

The solar photovoltaic industry has plenty of supporters, but wider uptake of the technology has long been hampered by cost.

High costs have not just prevented consumers and companies plastering more homes and offices with solar cells. They also have bolstered the claim that large quantities of fossil fuels and nuclear power will be necessary in the future in part because solar panels do not provide value for money.

On Tuesday, First Solar, a global photovoltaic cell maker based in Tempe, Arizona said it had reached an “industry milestone” by reducing its production costs to the point where making solar cells that produce one watt of power costs $1.

In a statement — seen by Green Inc. on Tuesday — First Solar, which has produced modules for solar installations in several countries in Europe, said it had brought costs down to $1 from $3 over the past four years through economies of scale by increasing its production capacity by 50 times, and by passing-on those savings to customers and consumers.

First Solar’s chief executive, Mike Ahearn, tipped his hat to countries like Germany that have offered generous tariffs to producers of solar electricity.

“Without forward-looking government programs supporting solar electricity, we would not have been able to invest in the capacity expansion which gives us the scale to bring costs down,” Mr. Ahearn said in the statement....MORE

Mr. Ahearn should probably also thank those hausfraus who paid the higher electricity costs for the $1.3 Billion that he and other insiders have realized from their single-minded deluge of insider sales. That's a lot of loot.