Friday, December 28, 2007

Journalism With a Sense of Humor

It would be hard to beat the Twin Falls (ID) Times-News this evening.

The ball is back
In some ways, News Year's Eve in Twin Falls is much like the event in New York City.

New York's famed New Year's Eve ball is priceless Waterford Crystal hand-crafted by Irish artisans.

Twin Falls has a ball of its own, a pumpkin-size copper orb of unknown origin bought at auction by bar owner Dave Woodhead for 14 bucks....
Warning: Don't eat that roadkill
It's a question that, surprisingly, comes up every year.

"If I hit a deer with my truck," someone inevitably asks the Idaho Department of Fish and Game, "can I take it home with me?"...

Go long where China is short

From the Financial Post:

...Dennis Gartman is recommending that investors consider the following principle when making decisions in 2008: “We wish to be long of that which China is short of, and short of that which China is long of.”

This means be long grains, energy and water, and short labour, he told clients in Thursday’s edition of The Gartman Letter.

Sector Snap: Drybulk Shippers Rise

Sexy, huh?
That AP headline was written one week ago. Here's the chart for Dryships since the story hit the wire (via Yahoo):

DryShips, Inc. (DRYS)

Energy Bill, Oil Spike Push Up 'Clean' ETFs

From IBD via CNN Money:

Keeping it clean recently has translated to keeping the profits rolling in for many investors.

Those who put their money behind "clean" energy companies, which focus on renewable resources, saw the happy results all week.

Several factors were behind the rise. Last week, President Bush signed the Energy Independence and Security Act of 2007 into law. The bill mandates lowered fossil fuel use and quadrupled alternative biofuel use over the next 15 years.

Exchange traded funds that track clean energy (NASDAQ:CLNE) began to rise immediately after the bill became law. The largest and oldest, PowerShares WilderHill Clean Energy PBW, jumped nearly 10% during that time. Almost half the fund, which has an IBD Relative Strength Rating of 94, is invested in alternative energy sources....MORE
(including an amazing chart of one of the funds)

Climateer's "Line of the Day"

I know it's early but what's going to beat this WSJ gem from last month.
By Karen Richardson.
From the Wall Street Journal:
Predictions of the demise of bond insurers could be premature, particularly if they succeed in securing lifelines from a deep-pocketed insurance salesman in Omaha, Neb....
Here's our post from November 12.

Warren Buffett: A Deep-pocketed Insurance Salesman from Omaha (ABK, MBI)

I laughed out loud when I read that. Perfect.
Here's a stub from the Wall Street Journal:

Predictions of the demise of bond insurers could be premature, particularly if they succeed in securing lifelines from a deep-pocketed insurance salesman in Omaha, Neb....More
We've got quite a bit on Mr. Buffett. Use the "Search Blog" box, upper left.

Bond Insurers Fall on Buffet News BRK.A, MBI, ABK, SCA, ING)

The man is astounding.

From the Wall Street Journal:

Shares of the largest bond insurers fell early Friday amid news that billionaire investor Warren Buffett's Berkshire Hathaway Inc. is starting a bond insurer.

Shares of MBIA Inc., the nation's biggest bond insurer, fell 10% to $19.98 while Ambac Financial Group Inc., the second-largest, was down 8.2% to $26.76.

Security Capital Assurance Ltd., the fifth-largest triple-A rated bond insurer in net outstanding insurance, saw its shares rise 1.8% to $3.93.

Credit default swaps for the bond insurers also widened from 0.1 to 0.3 percentage point on the Buffett news, said Sid Bakst, managing director and portfolio manager at Robeco Weiss Peck & Greer. "It's a very real and formidable competitor for those guys," he added.

Financial Guaranty Insurance Co.'s credit default swaps widened by 0.25 percentage point to 6.25 points. This means the annual cost of protecting a notional $10 million of its bonds against default for five years is now $625,000, versus $600,000 earlier....MORE

Here's the story from MarketWatch:
Berkshire Hathaway to buy reinsurer from ING

Thursday, December 27, 2007

The End of Cheap Food- What was Old is New Again AND: Profiting from Politics

This story from The Economist got me thinking
(I know, alert the media).

Rising food prices are a threat to many;
they also present the world with an enormous opportunity

FOR as long as most people can remember, food has been getting cheaper and farming has been in decline. In 1974-2005 food prices on world markets fell by three-quarters in real terms. Food today is so cheap that the West is battling gluttony even as it scrapes piles of half-eaten leftovers into the bin.

That is why this year's price rise has been so extraordinary. Since the spring, wheat prices have doubled and almost every crop under the sun—maize, milk, oilseeds, you name it—is at or near a peak in nominal terms. The Economist's food-price index is higher today than at any time since it was created in 1845 (see chart). Even in real terms, prices have jumped by 75% since 2005. No doubt farmers will meet higher prices with investment and more production, but dearer food is likely to persist for years (see article). That is because “agflation” is underpinned by long-running changes in diet that accompany the growing wealth of emerging economies—the Chinese consumer who ate 20kg (44lb) of meat in 1985 will scoff over 50kg of the stuff this year. That in turn pushes up demand for grain: it takes 8kg of grain to produce one of beef....

And what was I thinking about?
Farm implements!

The Economist's food-price index was created in 1845.
In 1846 The British Parliament voted to repeal the Corn (grain) Laws, reducing the tariff on imported grain, effectively opening the British market to American wheat.

Our post "Global Warming, Politics, Laws and Opportunity" had this list of annual sales of Mr. McCormick's reaper:

1840------- 2
1843------ 29
1844------ 50
1845------ 58
1846------ 75

As can be seen, the politics had quite an effect on the McCormick family fortunes.

In Global Warming, Politics, Laws and Opportunity--Part II:

As reported by The Economist May 16, 1846, the British House of Commons had repealed the "Corn Laws", eliminating the tariff on imported wheat, the day before. Corn in this usage is not maize but rather is generic for grain. Prime Minister Peel won the battle but lost his premiership, the quote of the day was "Peel and repeal."

Click that Economist link. I'll wait.

May 16, 1846 "Corn Laws Repealed by the House of Commons"
The bill was ushered through the Lords by the Duke of Wellington, Peel lost his job and the era of cheap food began. It lasted 160 years.

The Economist reported both ends of the story.
Not many publications can say that.

Wikipedia has this last bit:
The Economist
was founded in September 1843 by James Wilson with help from the Anti-Corn Law League; his son-in-law Walter Bagehot later became the editor of this newspaper.

Kuwait slashes corporate tax. AND Jordanian Inflation

Two from ArabianBusiness:
Kuwait's parliament approved on Wednesday a much-delayed government plan to slash tax on foreign firms to a flat 15% from up to 55%, removing a five-decade old obstacle to foreign investment.

The taxation bill would also exempt profits made by foreign companies from trading in stocks listed on the Kuwait bourse, the second largest in the Arab world, to help to turn the Opec oil producer into a regional financial centre like Dubai or Bahrain....

Jordan-MPs to hold crunch session on inflation

Top Global Stocks of 2007

How the heck did I miss Mongolia Energy Co. Ltd.?
From Bespoke:

Below we highlight the 25 best performing stocks of the Bloomberg World index in 2007. The Bloomberg World index contains 5,175 global stocks from 85 countries. As shown, Romanian company CMCM is up the most this year at 8,965%. CMCM is followed by Mongolia Energy and Nority International. One US company was able to crack the top 25. First Solar (FSLR) is up 811% on the year.


Hog wild for China: Jim Rogers

Last week Tom Konrad at AltEnergyStocks had a couple posts* referencing Jim Rogers in Fortune but I couldn't find a link. Here it is.
(And here are our posts on Mr. Rogers)

From Fortune:
Legendary investor Jim Rogers made a bundle by anticipating a boom in commodities. Now he's focusing on the People's Republic.

This is the China century," says Jim Rogers, standing amid moving boxes in his opulent Manhattan townhouse. "It's time for them to rule the roost." In fact, the 65-year-old former investment partner of George Soros and globe-circling author of Investment Biker is such a believer in the capitalist momentum of the People's Republic that he recently agreed to sell his beloved home and relocate full-time to Singapore - not quite Shanghai, but close enough to the action. It's something he's been considering at least since 2004, when Fortune last wrote about his remarkable prescience in championing a China-driven, worldwide commodities boom. His new book, A Bull in China: Investing Profitably in the World's Greatest Market (Random House, $26.95), is a how-to guide for investors interested in following him to the Far East. Fortune interrupted his packing for a chat about China, commodities, and the teetering U.S. economy.

You invested in China some time ago. But the market is up 300% over the past three years - why should other investors jump in now?

In the book I specifically make the point two or three times that people need to be careful because there may be a bubble developing in China. Obviously if a bubble develops you don't want to buy anything. But you need to understand that there are gigantic opportunities in China and gigantic changes taking place there. So the book is designed to help people understand in simple language what's happening and where there may be opportunities for one who does his homework. It's not a catalog of hot tips. I'm not yet convinced that there is a bubble, by the way. The Chinese government is doing its best to prevent a bubble. They've raised interest rates five or six times in the past year. But even if a bubble develops and it pops, it's not the end of the Chinese story. China is still going to continue to develop.

Why has the Chinese stock market taken off?

The Chinese have done a very good job [with the economy] over the past 20 years. But the one mistake they've made is they have continued to block the currency and made it nonconvertible. That's causing huge liquidity to develop in the country, and that's causing trouble. It has really intensified in the past two or three years. They've got all this money sloshing around that's been flowing into China and can't get out. It's going into the mainland stock market and driving up prices. It's going into commodities. And it's going into real estate.

How are you investing in China now? Are you buying shares of companies? Indexes? Real estate?>>>MORE

*In "Jim Rogers: What Peak Oil Will Do for Cotton" Tom makes this point:

Cotton is a good way to buy oil-- hear me out. Much apparel has been made from synthetics. Synthetics come from oil. So many textile makers are converting back to natural fibers because oil is at an all-time high. So if you want to buy oil, buy sugar [because it is easy to turn into ethanol], or buy cotton. What I'm buying right now is agriculture.

I hadn't thought of this cotton-oil connection before, and it's drawing these connections before others do that makes a great investor. Incidentally, cotton and oil are also connected more directly via the use of oil to make pesticides and fertilizer, and indirectly when land formerly used to grow cotton is shifted to grain production because of rising ethanol prices, but I think the substitution effect Jim talks about is likely to be strongest....

What Up? Ecosecurities (ECO.L)

From Yahoo Finance:
Last Trade:160.00
Trade Time:7:17AM ET
Change:Up 15.00 (10.34%)
On no news, very light volume.

Timely Tips From the Wall Street Journal, Currency Plays and Why this Doesn't Feel Like a Bear Market

This article is, er, wide-ranging. Here's one of the tips everyone should know about, not for this second, but a few months down the road.

From the WSJ:

Our Reporters Offer
Strategies for Saving
Time and Money

...The Problem: The anemic dollar is eroding the value of your investments and income.

The Fix: Open a foreign-currency account. Cathay General Bancorp, in Los Angeles, and Jacksonville, Fla.-based are two of a limited number of U.S. banks offering savings accounts in roughly a score of primary and secondary currencies, such as the British pound and the Czech koruna. Interest rates can range as high as 11.6% for a CD denominated in Icelandic krona at Everbank. Or consider a bet on the Chinese yuan's continuing its march higher against the dollar. Both Cathay and Everbank offer savings accounts tied to the movement of the yuan, since you can't own the currency directly yet. The accounts are FDIC-protected in the event of bank insolvency, though you can lose money if the dollar strengthens against your currency of choice.

For a minimum of $20,000, Everbank also provides access to high-quality foreign government bonds from countries as varied as Australia and Iceland. Yields range from 3.5% for a two-year euro note to nearly 7% for a two-year New Zealand bond.

Meanwhile, Entrust Group in Reno, Nev., is set to launch in the second quarter of 2008 a unique Individual Retirement Account that will allow savers to denominate their retirement savings in one of four major currencies, including the euro and the Danish kroner.

--Jeff D. Opdyke

Speaking of currencies, on Nov. 23 The WSJ's MarketBeat blog brought the BondDad blog to my attention with this Blogroll:
Blog Roll: Bear Market?

Hale Stewart, who writes the Bonddad column, lays out his argument that stocks are headed into a bear market. “The Russell 2000 and Transportation average are cause for serious concern. So is the lack of market breadth during the NASDAQ’s latest rally and the Treasury market rally,” he writes. “If only one of the preceding facts was occurring we could dismiss it. However, with all four occurring at the same time, it’s important to take a close look at the market to see if a rally can continue.”...
That link reminded me of my myopia (the only alliteration I'll use today, promise.) in 1987 when I quit paying attention to currencies- it was a rollicking bull market in equities- and almost missed a wonderful heads up into the events of Aug. 25-Oct. 19 of that year. Fool me once...

On Nov. 23, 2007 the USD/EUR was around $1.495. The DJIA around 12,980. The purpose of the comment was not to slam Bonddad, I've become a fan, but rather to use his post as a hook to get this thought out there:

I read Bonddad, not sure what he’s waffling on about.
Here’s something a bit more direct:
Five-six months after the intermediate bottom for the dollar, 1.51-1.53 USD/EUR; just after Ma & Pa decide to call that broker feller and my sophisticated European friends are comfy with the currency bonus on their equity trades, look out below.
At least that was the lesson of the Louvre Accords.
If correct, “Sell in May and go Away” might be too late

Comment by Climateer - November 23, 2007 at 1:02 pm
Yesterday the Euro cost $1.4491 and the DJIA closed at 13,551.
Where do we go from here?

I'm betting higher.

Until the complacency seduces us, the Buck makes a 3-4 month high and the Q1 numbers start being reported and the reality of how big a mess the financial world has made sinks in and tips Mr. Market into the depths of despond. That $1.495 print looks like it was the low for the dollar. Who knew?
Unfortunately, for our visually oriented fans, I don't have any charts- with nicely drawn trendlines- to back this babble up with. You've been caveated.

Wednesday, December 26, 2007

WITNESS-Money falls from the sky in Germany (Solar incentives)

From Reuters:

My father warned me "money doesn't grow on trees" and he was right, of course.

But I have discovered that money can fall out of the sky -- if you have the equipment to catch it.

In an age of global warming, rising fossil fuel prices and dwindling natural resources, I've learned that in Germany and a growing number of countries, solar power can give you more than just a feeling of "doing something" for the environment.

It can also give you a steady stream of income.

My roof has been turned into a cash machine, thanks to a state-mandated "feed-in tariff" that requires utilities to pay anyone who installs a photovoltaic system more than double the market rates for the electricity produced for the grid.

The 34 sleek black panels, measuring about 1 metre by 1.5 metres (yards) each, lie inconspicuously on the slopes of the roof as they quietly harvest enough power for two households -- and generate annual revenues of some 3,600 euros ($5,300).

In other words: Every day about 10 euros ($15) worth of energy from the sun (or even daylight) lands on the roof and is converted into electricity through the wonders of photovoltaic.

The local utility is required, by law, to buy it off me at a fixed rate of 49 cents per kilowatt -- guaranteed for 20 years....MUCH MORE

Warren Buffett: The Awe of His Schucks

The Deal Journal blog captures the spirit of Mr. Buffett's recent purchase.
(See our amateur attempt a few posts below)

77-year-old business collector in search of new opportunities. Guaranteed confidentiality, quick closing and fair pricing.
...Just in case you missed it, he went on to tell CNBC’s Joe Kernen: “Yeah, people know our phone number.”
Go read the stuff in between those bookends.

How Long Will Siberia's Gas Last?

This is an interesting question for Mr. ($40 Bil.) Putin.
Oh, and for Europe, too.

From Der Spiegel:

Europe depends on Russia for its natural gas, but, as Gazprom begins production at the last major field, it is unclear how much gas is left in Siberia. Developed fields are almost exhausted, and tapping new reserves involves huge technical difficulties.

The Russian gas industry was celebrating on Tuesday. At a ceremony in Moscow, Gazprom board chairman Dmitry Medvedev, who is widely expected to be the next president of Russia (more...) and the German foreign minister, Frank-Walter Steinmeier, pressed a ceremonial button and the last major natural gas field in the world's most productive region went on line. A live video link showed footage from northwestern Siberia where the actual event was taking place, namely valves being opened....MUCH MORE

Elect me and oil prices instantly drop, says Hillary Clinton in Iowa

The prediction markets* don't have anything up.
No action at Ladbrokes either.

From the New York Daily News:

Hillary Clinton predicted Saturday that just electing her President will cut the price of oil.

When the world hears her commitment at her inauguration about ending American dependence on foreign fuel, Clinton says, oil-pumping countries will lower prices to stifle America's incentive to develop alternative energy.

"I predict to you, the oil-producing countries will drop the price of oil," Clinton said, speaking at the Manchester YWCA. "They will once again assume, once the cost pressure is off, Americans and our political process will recede."...MORE


*Iowa Electronic Markets

Takes one to know one (A Fraud on Fraud)

From Fortune:

Sam Antar, the felonious former CFO of Crazy Eddie, is now teaching students and prosecutors how to spot fraud in public companies.

Sam E. Antar is a convicted felon, and he will not let anyone forget it for a minute. Whenever you find yourself starting to think of him as merely a fast-talking yet charming New York character, he'll come out with something like: "I had no remorse whatsoever as a criminal. I had no concern about any other human being. I enjoyed being a criminal."

Antar is a cousin of "Crazy Eddie" Antar, the eponymous founder of the notorious New York City-area consumer electronics chain of the '70s and '80s. The business was a forerunner of Best Buy and famous for TV spots featuring a manic, turtleneck-wearing pitchman promising that Crazy Eddie's "prices are insaaaane!"

...As a result, Sam E.'s disdain for financial pros runs deep. Most Wall Street analysts are in his estimation wimps: "They don't ask the right questions." Accountants: "Most of these people don't even get any training in fraud." Corporate audit committees: "They're less qualified than the inadequately trained auditors." And the financial press: "You guys are easily intimidated." As for antifraud laws, Antar says that Sarbanes-Oxley is good as far as it goes, but he doubts that it does much to intimidate dedicated fraudsters....MORE
And from Division of Labor:

Christmas scams c. 1907

From the Dec. 23, 1907 NYT:

Residents of Newark, N.J. have been made the victims of a Christmas swindle in the last few days. The trick consists of collecting charges on worthless packages. Men appear at houses with bundles addressed to persons living at the addresses, and state that there is a special delivery charge of 50 cents of $1. The amount is nearly always paid without question, in the belief that the package contains a Christmas gift. When opened the box or pacel contains only old papers....

World's next outsourcing hub: Kenya?

From The Christian Science Monitor:

The Kenyan government is pumping millions of dollars into improving the nation's outdated telecom industry.

The six clocks on the wall track time zones from the US Pacific seaboard, through the Midwest and across the Atlantic to Britain. Twenty or so computers sit idle, headsets resting on mouse pads waiting for the next shift of call center workers.

It could be a phone bank anywhere in the world but for the clock on the far right labeled "Kenya."

"People say to me, 'Wow, this is happening in Kenya? We only think of you for athletics and wildlife,' " says Gilda Odera, managing director of Skyweb-Evans in the heart of the capital, Nairobi. "But people are getting really interested in us."

Her call center and a dozen others are seeds of an industry that the government hopes will put the East African country on equal terms with India as an outsourcing destination.

The government is pumping millions of dollars into improving the country's outdated telecom system in an effort to capitalize on Kenya's large pool of English-speaking graduates....MORE

2007 a bit off for Kleiner Perkins' green-tech portfolio

From cnet:

The superheroes of venture capital haven't exactly had a completely smooth year in green tech.

Kleiner Perkins Caufield & Byers wasn't the first VC firm to get into green tech. Nth Power, NGEN Partners, Draper Fisher Jurvetson and Mohr Davidow Ventures got there first, but Kleiner brought a lot of attention and prestige into the field, and helped push green tech toward the top of the VC agenda in the second half of 2004....MORE

HT: the NYT's DealBook blog

Government and alternative fuel subsidies c. 1907

From the New York Times via Division of Labor:

The argument for government being involved with the development of alternatives to petroleum based energy seems novel but it turns out the government has been mucking around with energy policy for quite some time.

Early in the development of the automobile, gasoline engines competed with engines that burned alcohol and even electric cars. The alcohol-burning engines were actually more efficient than the gas burning engines (in the early 1900s) and alcohol was a lot cheaper than gasoline. However, pre-income tax the U.S. government was funded on excise taxes and tariff revenue, and one of the excise taxes was on alcohol.

The distillers and the fledgling auto industry lobbied the government to reduce the tax on denatured alcohol to make it affordable as an alternative to gasoline. However, the government chose not to reduce the taxes on denatured alcohol, which, in turn, made gasoline cheaper (by about 15 cents per gallon or $3.32 in 2006 dollars) and the automobile industry went with gasoline rather than the "renewable" fuel. What is only slightly ironic is that one hundred years later the U.S. government and activisits proclaim that consumers, who do not understand negative externalities of gasoline, make it so that the government (which one?) should, once again, decide the winner in a new new-energy game.

The December 24, 1907 NYT reports another twist in the early battle between gasoline and alcohol:

Representative Cary has introduced a bill awarding a bounty [subsidy], extending over five years, of 15 cents upon each gallon of proof alcohol produced by farm distilleries with a daily capacity of not over 100 gallons...only ten stills, the Commissioner of Internal Revenue reports, have been set up to produce denatured alcohol from farm waste at a cost, thus far, far greater than was promised.">>>MORE

Buffett Makes $4.5 Billion Deal With Pritzkers* (BRK.A) AND: How Buffett Made a Killing in Chocolate

From the Wall Street Journal:

Warren Buffett agreed to pay $4.5 billion to buy the majority of an industrial conglomerate from Chicago's Pritzker family, choosing to invest in products like plumbing pipes and railroad tank cars as Asian investors pour billions into U.S. financial institutions.

Mr. Buffett's Berkshire Hathaway Inc. is buying 60% of Marmon Holdings Inc., which has about $7 billion in annual revenue. Berkshire will purchase the rest of the company in stages by 2014, with the final price determined by Marmon's future performance.

According to Mr. Buffett, the deal is Berkshire's largest-ever acquisition outside of the insurance industry. It reflects his fondness for unflashy businesses that deliver steady and strong cash flow, and feature high barriers to entry. Berkshire Hathaway already owns a host of industrial businesses including Johns Manville, a building-products company, and Iscar Metalworking Cos., an Israeli tool maker in which Berkshire took an 80% stake last year for $4 billion....MORE

*Here's one of Mr. Buffett's earliest experiences with the Pritzkers:
How Buffett Made a Killing in Chocolate, And Warren's Letters to Shareholders

...Warren on arbitrage:
Some offbeat opportunities occasionally arise in the arbitrage field. I participated in one of these when I was 24 and working in New York for Graham-Newman Corp.

Rockwood & Co., a Brooklyn based chocolate products company of limited profitability, had adopted LIFO inventory valuation in 1941 when cocoa was selling for 50 cents per pound....MORE

Monday, December 24, 2007

Santa's Carbon Footprint


Ho Ho Ho!
Santa may have one of the biggest carbon footprints of an individual, anywhere in the world, even greater than that of Al Gore,

Santa in recent years has seen his workload increase as Christmas is seen as holiday by not just Christians but by people of all faiths around the world. Whilst no exact figures are available, and Santa has not published any to date, according to UNICEF there are 2.2 billion children in the world. For this we will assume Santa will deliver to all children, since none have made it on to the naughty list this year.

Using UK National Statistics, the average household in the UK has 1.8 children, unfortunately we do not have an international average. So Santa would need to visit roughly 1.22 billion homes. Assuming Santa travels east to west, which would be the most logical route thanks to the different time zones and the rotation of the Earth, he has 48 hours to work with. Anders Larsson of the engineering consultancy Sweco, estimated that the average people per sq km on Earth is 48, and 20m between each home. Using these figures, Santa would need to travel a total distance of 24.4m km, or 141.46km per second, not including the fact he has stop the sleigh, get out, go down the chimney and deliver the presents, avoiding fires and chimney balloons, that may obstruct his path, then return to the sleigh and continue delivering presents. And visit 7073 homes a second, or 1.4 millisecond per visit.

In terms of Co2 emissions these will be greatly increased by the continued starting and stopping of the sleigh in addition to that with the extraordinary speeds at which the sleigh will be travelling. If we were to consider that the sleigh was being powered by a jet engine as touted in the film "Elf", namely a cringle 3000, whilst no vehicle can travel at that speed we will try to calculate the equivalent jet engine requirements. Before we do this we need to calculate the weight of Santa's sleigh load, all those toys in the sleigh. If each child was given only a Sony PS3 for Christmas, since not even Santa can get hold of Nintendo Wii's, at 7kg each, Santa would be pulling an average load during the journey of 4.3m tonnes. This is of course assuming that people all live evenly around the world with 20m between homes, and of course Santa hasn't died from exertion, or even slowed down, even a little.

Assuming Santa's sleigh fuel consumption was similar to that of a 747-400, taking the payload into consideration (9772 times more than a 747), the fuel consumption per km would be 116 000 litres per km. Note we have not taken into account that Santa is carrying the fuel in these assumptions, adding further weight to the sleigh, unless of course he stops off at some mega huge filling station, which he would need to do, or else he would need to carry over 2.8 billion litres of fuel, just for the presents alone, adding to his payload. So Santa now stops off at a filling station each km. To ensure he makes each km, he would need at least 60% extra fuel due to the starting and stopping which would increase his fuel consumption, or 185 600 litres per km.

Since Santa's sleigh is using a 747-400 engine technology, he is using kerosene, which emits 2.58kg of CO2 per litre. Meaning Santa's sleigh emits at least 478t of CO2 per km, or over the entire journey 11.683 billion tonnes of CO2 (42.88% of global CO2 emissions).
Lifted from EnergySaving blog.
Here's an alternate (and much lower) count.

Carbon News: APX Announces an Agreement Regarding an Investment by Goldman Sachs (GS)

From the press release:

APX, Inc., a leading infrastructure provider for environmental and cap-and-trade markets, is pleased to announce the signing of an agreement in which Goldman Sachs will become a new investor in the company. The consummation of the transaction is subject to regulatory approvals and other conditions.

John Melby, CEO of APX, Inc., commented: "We expect the investment by Goldman Sachs will enable our continued expansion and leadership as the trusted choice for creating and managing environmental commodities, and as a platform for future cap-and-trade markets."

Mr. Melby emphasized the importance of APX's independence as a technology and service provider for environmental markets, including renewable energy, energy efficiency, and carbon emissions.

APX is policy-neutral, does not take positions in the markets, and its revenues are unrelated to the market prices for the environmental and cap-and-trade market certificates that its systems create, register, manage, track, transfer, and retire. This neutrality has made APX, Mr. Melby noted, one of the most trusted names in the environmental commodities arena with both the regulatory community and environmental market participants.

This release does not constitute an offer to sell or a solicitation of an offer to sell any securities of APX.

Hedge Funds Review- Special Report: Carbon Trading

From Hedge Funds Review,
(from page 12 of a 23 page PDF):

The carbon market is proving a complex beast for many to grasp, and more complex still to make profits from. Thomas della Casa from Man Group takes a comprehensive look at the market as it is, and how it may be in the future...

This report is intended to help investors understand the international carbon market.1
We focus on new developments in the carbon and power markets as well as longer term opportunities and scenarios to combat climate change. We also explain how hedge funds operate in the carbon space.

The carbon market was born out of the Kyoto Protocol which aims to place a cost on carbon emissions, a value on emissions reductions and to enable trade of the resulting allowances or credits. In response to Kyoto, the European Union (EU) committed to reduce greenhouse gas (GHG) emissions to 8% below 1990 levels by 2012.

The primary GHG is carbon dioxide or CO2. To meet this target at the lowest economic cost, the EU developed an Emission Trading Scheme (EU ETS).
The EU ETS is a cap-and-trade scheme that currently covers about 12,000 industrial plants across all 27 member states. Each country is given a fixed number of allowances for free. One allowance (EUA) represents the right to emit the equivalent of one tonne of CO2. Each country then distributes its allowances to the installations covered by the scheme. Currently, the EU ETS covers CO2 emissions from large, stationary installations in the following sectors: fossil-fuel power generation, ferrous metal producers, mineral processors, pulp and paper, and refineries.
It is likely that other sectors, such as transportation, will be included in the future.

The EU ETS is being implemented in two phases. Phase I (2005–2007) is something of a test model to establish the system. Phase II runs from 2008–2012, with total emissions caps tightening every year to achieve the Kyoto target. The greatest emphasis has been placed on thermal power generation, which currently accounts for almost 66% of all allowances in the system and more than 80% of total transactions.

For the purpose of this review, we will focus on this sector.
In addition to domestic GHG abatements, there are also ‘flexibility mechanisms’ that allow the import of carbon credits into the EU ETS. In theory, these mechanisms should allow the abatement of emissions in developing countries at minimal cost.

A whole industry based around carbon projects has emerged as it is cheaper and quicker to pick the ‘low hanging fruit’ before making expensive investments in new technology.
Such projects include methane capturing or HFC23 reduction. Both are very potent greenhouse gases. While compliance buyers (large emitters) make up a significant portion of the trading volume in the carbon market, financial players are becoming increasingly active. This includes commodity trading groups in investment banks, hedge funds, private equity firms and venture capitalists. The European carbon market was heavily criticised when prices collapsed in April/May 2006 after it became clear that far too many allowances had been handed out in phase I (2005–2007).

Despite this failure, the market has moved on and traders have begun to focus on the next phase (2008–2012). Chart 1 (upper left) shows the prices of EU allowances for phase I and II. The EUA price is, as in any market, set by supply and demand. Supply is determined by allocated allowances, some reserves for new entrants and issued carbon credits.

Demand drivers include the ETS participant’s actual emissions through the year, which in the short-term is driven by the weather and fuel prices. For example, many European power producers can utilise coal or gas, so when the price of coal falls relative to cleaner gas GHG emissions will rise. In the longer term, political factors and the scarcity of permits will determine the price.
Lobbying from the utility sector, for example, led to an over-generous allocation for phase I and the lack of scarcity led to the price crash. Most experts expect a much tighter regime starting next year during phase II.

In financial terms, the EU ETS volumes on exchanges and through brokers totalled x14.6bn last year. This is about three times more than the exchanged and brokered value from the previous year. Chart 2 (lower left), shows the volumes and financial values of CO2. What is the impact of carbon prices on power markets?

It is evident that European power producers gradually began to price in the full cost of carbon over the course of 2005. Going forward, CO2 prices are expected to be fully priced in. To generators, CO2 represents an opportunity cost, as they can ‘burn’ or sell their allocations.
Theoretically, generators will only produce electricity if the revenue from selling electricity exceeds the revenue that they could earn from selling their fuel and EUAs. Hence, it makes economic sense to fully incorporate the new ‘cost’.

However, the cost in phase I did not involve any cash outlay since the allowances were given out for free. This has created a debate about windfall profits as generators benefited from the carbon pass through with little to no abatement efforts. Since most utilities operate vertically integrated in an oligopolistic market environment, they face little margin pressure. This has caused much controversy, particularly in Germany, where around 70% of installed thermal capacity is coal-fired, and a number of new plants are guaranteed free certificates for many years due to successful lobbying.

The solution to this lies in the auctioning of permits, which is designated in phase II, but only up to 10% of the total. While some countries are set to auction a proportion of their allowances, the overall level of auctioning will remain modest.

The problem with auctioning is that other energy-intensive industries, such as steel makers, may not find it so easy to pass through their higher costs as they compete with other companies that are not part of a carbon constrained world.
Despite its weaknesses, there has also been some evidence that The way forward – the carbon market...

The 10 worst-performing letters of 2007

From MarketWatch:
By Peter Brimelow

I said humbly last year, it wasn't my idea to out the 10 worst-performing investment letters every year. A cruel editor suggested it. Readers seem to like it, though. Sadists.

The lower end of Hulbert Financial Digest's league table for the year to date through November appears below. A few observations:
In the past, I've noted an odd tendency for letters to bounce between the top 10 and bottom 10 (and vice-versa) in succeeding years, and not just because they take risks. This didn't happen in 2007. But one of 2006's top 10, The Dines Letter, comes in 12 from the bottom, down 11.4% vs. 7.51% for the dividend-reinvested Dow Jones Wilshire 5000.

Dines has had a long, strong run in the past few years, partly by latching on to the uranium play. In fact, we named him Letter of the Year in 2006. (Read archived column.)
But nothing last forever -- although Dines can't be written off. (See Nov. 5 column)., down 31.3% in 2007, was in the bottom 10 in 2006 and 2005 too. But FredHager has been in the top 10 in earlier years: it was up an astounding 150.3% in 2004....MORE

Friday, December 21, 2007

How to Cash in on a Warming Planet

From BusinessWeek:

Set aside, for now, the really complex and costly financial implications of climate change. Ignore the tricky abstractions of carbon trading. Forget the worries over flooded cities and the ins and outs of renewable energy.

Instead, consider just a few everyday money-making ideas created by the warming of our planet. For example, oenophiles could short the stocks of vintners in drought-prone areas such as Australia or California and bet on upstarts in Canada and England, where new wineries are sprouting as temperatures rise. Or, since ski resorts are seeing less and less snow, it might make sense to buy and hold manufacturers of snowmakers.

Of course, the potential of climate-change investing goes far beyond mere curiosities. A growing number of advisers to big institutional investors and high-net-worth types are sizing up companies based on how likely they are to benefit from rising energy prices, stricter regulations, and changes to the natural world ranging from freshwater shortages to new disease patterns and more chaotic weather.

Since public opinion is increasingly driving U.S. policymakers to act, analysts' climate predictions need not be perfectly prescient to pay off. "Perception drives valuations," says Edward M. Kerschner, chief investment strategist for Citi Global Wealth Management (C), who recently made public a list of some 90 "climate consequences companies" he believes could excel as the climate changes and limits on carbon emissions multiply.

If there's a whiff of familiarity to investing in climate change, that's because some of its key elements have already attracted attention. Pure-play renewable energy stocks, for example, make up a big slice of the new climate change offerings and have seen meteoric gains over the past year. The difference is that climate change strategists make their picks from a larger pool, including everything from small-cap alternative energy startups to globe-spanning conglomerates, as well as a few decidedly nongreen plays. Given the breadth of companies in this space, "there's significant opportunity for actively managed funds," says Michael Herbst, a mutual fund analyst at Morningstar (MORN).


Consider HSBC's (HBC) Global Climate Change Benchmark Index, which tracks 300 equities, spans 34 countries (11 of which are emerging markets), and includes small, medium, and big companies. Simulations of the 45 months prior to its September debut show the index would have beaten the Morgan Stanley (MS) Capital International (MSCI) global index by 70%. In November, HSBC launched a fund in Europe that focuses on a subset of about 60 companies from the index. A U.S. version, the GIF Climate Change Fund, is due by April....MORE

Another Anniversary Already? And How Much is it Going to Cost?

It was 120 years ago that Sherlock Holmes came to the world's attention in Beetons Christmas Annual of 1887.
Here's the most expensive magazine in the world:

"Sotheby's held the sale in New York City on 21 June 2007.
The owner, a lady, put up two Sherlockian lots for sale."

Lot 105, Beeton's Christmas Annual for 1887, set a new auction record for that magazine and sold for $156,000. The hammer price was $130,000 and the 20% buyer's premium brought the total to $156,000. That beat the previous record of $153,600 set in an auction at Sotheby's in December 2004. The 2004 record was said to make Beeton's the most expensive magazine in the world, and this new sale reinforces that position.

Energy stocks ready for another upleg?

That's what Humble Student of the Markets asks.
He has a formula:

LT Uptrend + Breakout + Neutral Sentiment = Bullish

And charts:

Energy stocks may be ready for another upleg for three reasons....MORE

Climateer Quote and Headline of the Day Morgan Stanley Loses $9.4 Bil; Mack Gets Knifed

I must confess, I am a junkie for Weimar Berlin*. Well, the 1923 hyperinflation**, not so much.
New York Magazine gets credit for the headline and a tip for delivering the highlighted quote from the Wall Street Journal.
...And after Mack's announcement yesterday that Morgan Stanley would be taking a $9.4 billion write-down, the people are clamoring for a new sacrifice, and the writing is on the wall for John Mack. Also, it's in the papers.

"He's a chronic destroyer of value," Kevin Murphy, a retired Morgan Stanley airline analyst who recently sold his stock, told the Wall Street Journal today.
Here's Bobby Darin in 1959.
*Christopher Isherwood didn't meet Jean Ross, the inspiration for Sally Bowles, until 1931 and didn't get around to writing "Goodbye to Berlin" until 1939, by which time the Berlin scene had changed.
Here's Louis Armstrong and His All-Stars doing Cabaret
at Antibes, 1967.
**One of these days I'll post the best investments during a hyperinflation.

Droughts and inflation

From China Financial markets:

A few weeks ago I saw a report that China had suffered its worst drought in recent times. The dates and details were a little vague, so I tabled the article and decided at some point I wanted to find out a little more about it. Today both Bloomberg and the South China Morning Post have articles about the drought.

Bloomberg stares its piece by saying: “China's most severe drought in a decade is expanding throughout the country, threatening the normally humid areas along the southern coast.” I searched for more news on China Daily and found a whole slew of articles. Parts of China are suffering their worst drought since the early 1950s, about 400,000 hectares of crops have already been damaged this year, and the State Flood Control and Drought Relief Headquarters reports that 37.4 million tons of grain will be lost. China Daily adds: “In recent times, drought has been striking more areas of the country with greater frequency. It had extended from the north and western regions to the south and eastern areas, worsening water supply conditions for both agriculture and industry.”>>>MORE

HT: Naked Capitalism

Private equity's carbon play

From Business Spectator (Australia):

Private equity and hedge funds have found a new plaything – trade in carbon credits and the targeting of companies that could generate them in large quantities.

Plays within the clean energy sector are estimated to have attracted some $15 billion in venture capital and private equity investments in the past year, double that of 2006, and are forecast to reach some $100 billion by 2010.

But the big development in 2008 could be a further evolution of the carbon investment market that will see mainstream buyout funds targeting established companies with hidden carbon credit assets.

In the past few years, private equity and hedge funds have been the early movers into the carbon credit market established under the auspices of the United Nations-sponsored CDM (clean development mechanism) scheme, particularly in China and India.

Here, the funds agree to invest in a project – such as energy efficiency or burning of methane – that allows an asset such as a power generator or coal mine to reduce its carbon emissions. The fund takes the carbon credits and sells them into a recognized carbon market.

This market will expand quickly. And soon those funds will be moving beyond India and China to assets in developed countries such as Australia that offer a similar leverage when Australia's own emissions trading scheme comes in effect.

Targeted companies might be those with technology or services that can help an industry reduce emissions, or highly inefficient emitters that offer huge potential for abatements and the generation of carbon credits. Buyout funds might be tempted to package these assets together and sell them at a later date.

The future price of carbon has already proved influential in two significant transactions in the past year: the $45 billion buyout of TXU by TPG and KKR, and with the $42 billion purchase of Alcan by Rio Tinto....MORE

Merrill Lynch launches carbon certificate

From Energy Risk:

Investment bank Merrill Lynch today launched an index-based investment certificate that offers protected exposure to the stocks of carbon efficient European companies.

The underlying index to the Capital Protected Carbon Leaders Europe Index Certificate is the first of its kind to provide exposure to carbon efficient stocks within various sectors, according to Merrill Lynch. It includes 60 equally-weighted stocks, which represent the top 10% of low carbon and low price-to-earnings ratio from combined scores.

The stock selection in the index is reviewed twice a year by a Merrill Lynch research committee.

“We believe that investing in Carbon Leaders is likely to be a win-win decision in the next few years,” says Zoe Knight, senior director of socially responsible investing, Merrill Lynch Research. “Investors will benefit from increasing money flows going into carbon-efficient companies while contributing to a cleaner environment at the same time.”

Sweden's OMX buys parts of Norway's Nord Pool for US$412 million

From the International Herald Tribune:

Nordic stock exchange operator OMX AB, subject of a takeover deal by Nasdaq Stock Market Inc. and Borse Dubai, said Friday it is buying parts of Norwegian power derivatives exchange Nord Pool ASA for about 2.3 billion kroner (€287 million; US$412 million).

Under the deal, OMX will buy Nord Pool's clearing and consulting operations as well as its international derivatives products.

It will also establish a business unit for international energy derivatives.

The deal "creates a foundation for a geographical expansion within Nord Pool's core area of power, and for enhancing the existing offering, with a clear ambition to build a leading European market for CO2 products," OMX said.

OMX Chief Executive Magnus Bocker said the combination would be well-positioned "to benefit from the development of a global market for carbon dioxide emissions allowances in the wake of the Kyoto protocol."...MORE


Ecosecurities says completed structured CER sale of over 5 mln tonnes (ECO.L)

Via Forbes:

Ecosecurities Group PLC said it, along with Credit Suisse, has completed the structured sale of over 5 mln Certified Emission Reduction credits (CERs).

The company, which markets carbon credits from greenhouse gas emission reduction projects, said the structure holds the rights to credits from a pool of Clean Development Mechanism (CDM) projects and meets demand from market participants for exposure to different levels of CER delivery risk....Continued

I do not like them, Broker Joe. I do not like your CDO!

From FT Alphaville:

Possibly it’s the combination of alcohol and flu drugs, but something unhinges people at this time of year. ‘Tis the season to send global emails to your whole workforce.

Below then - unexpurgated - via the WSJ Economics blog (Hat tip Felix Salmon) is a truly inspired and surreal email that’s been doing the rounds. (Fav bit: The agencies have been asleep/ Their ratings are just like ‘Bo Peep/ That is, they’re from a fairy tale/ As fiction goes, they’re off the scale)

To be recited to the meter of Green Eggs and Ham, by Dr Seuss

Broker Joe!
Show me some flow
I need the dough!
I’m Broker Joe!

That Broker Joe!
That Broker Joe!
I do not like
That Broker Joe!

Would you buy my CDO?

I do not like them, Broker Joe
I do not like your CDO!

Would you like it here or there?

I would not like it here or there
I would not like it anywhere
I do not like your CDO
I do not like it, Broker Joe

Would you like to sell some yen?

I do not want to sell the yen
The big fat tail just kills my zen

If you don’t sell now, then when?

I will not sell it here or there
I will not sell it anywhere
I do not like your CDO
I do not like it, Broker Joe

Our SIV has had a few rough knocks
Get in now, you sly old fox!

I am slyer than a fox
And I don’t think you have the docs
That you must have if you foreclose
And so a judge will thumb his nose
At you, your SIV, and CDO
Who owns the mortgage?
I don’t know
And you don’t either, Broker Joe
I would not know it here or there
I would not know it anywhere
I will not buy your CDO
I will not buy it, Broker Joe!

We have some hedge funds who are long
Those guys are smart! They can’t be wrong!

Some funds are long and some are not
The ones who are, are feeling caught
The short ones make a lot of sense
And they are up lots of percents
No SIV, no yen
Not now, not then
Not here, not there
I would not touch it anywhere
I will not buy your CDO
I will not buy it, Broker Joe!

But you can trust the agencies
They’ve rated this stuff Triple-B!
This tranche is still investment grade
You buy it here, your year is made!

Go to FT Alphaville for the big finish

Thursday, December 20, 2007

The Economics of Global Warming From a Couple Pros

Checking your email can be so wonderful. Today, exploding toilets. Yesterday, two of my favorite topics, China and Climate Econ.
From a nice person at Bloomberg:

On December 17th on Bloomberg Radio®, "Bloomberg on the Economy" host Tom Keene focused on the economics of global warming with John Llewellyn and Elizabeth Economy. Dr. Llewellyn, senior economic policy adviser for Europe at Lehman Brothers Holdings, spoke from London about the search for global warming solutions that don't dampen worldwide economic growth and elaborated on his own climate strategy involving a combination of greenhouse-gas emissions regulations and expansion of carbon-trading markets. Dr. Economy, senior fellow at Council on Foreign Relations, continued speaking on the carbon-credit industry and pollution in the 2008 Beijing Olympics, as well as discussed her award-winning book, "The River Runs Black: The Environmental Challenges to China's Future." We thought you might find the interviews of interest. Please feel free to follow the link below to listen to their conversations:

"Bloomberg on the Economy" is podcasted at and also on iTunes under Business News.

Hope you enjoy listening.


LDK Solar (LDK) Chart Action and More

MarketBeat tips us to VIX and More's LDK post:
Gap City

I’m reasonably sure that whatever I write here will be obsolete in the ten minutes that it takes me to post it, but I feel compelled to comment about LDK Solar (LDK) anyway.

...While the story is interesting, the chart may raise even more eyebrows, as it is littered with gaps and the tombstones of overzealous traders. If you are thinking about playing solar roulette, consider that directional plays are extremely dangerous. One way to make to potentially make some money off of the faddish momentum and wild gyrations is to sell volatility below support and above resistance, so you can get paid while you watch the fun. Even if you don’t play this stock, the entertainment value alone makes it worth keeping an eye on..
Go for the chart, stay for the art.

Top tech flops

Sometimes when human cupidity/stupidity (see Planktos) starts getting you down, good things come into your life, like this emailed link.

From Fortune via CNN Money:
Exploding toilets and a startup that actually called itself VaporTech. When 400 surfers are dumb enough to click on an ad offering to infect their PCs, what's left for us to do?

High-tech toilets
High-tech toilets

Too bad nobody gave one of these to Chuck Prince
Japanese manufacturer Toto apologizes to customers and offers free repairs for 180,000 high-tech toilets - thrones that feature heated seats, air purifiers, blow dryers, and water sprayers - after at least three catch fire. "Fortunately nobody was using the toilets when the fire broke out," says a company spokesman. "The fire would have been just under your buttocks."

Seventeen More

From Those Wonderful Folks Who Brought You Subprime CDO's, CMO's and other Structured Products: "Emissions trading hits record high"

The headline is a riff on Jerry Della Femina's book "From Those Wonderful Folks Who Brought You Pearl Harbor:..."*

Here's David Gaffen trying to convey just how putrid some of this structured crap is.
(he invokes Yosemite Sam)

The WSJ's Energy Roundup tips us to this story from Financial News (powered by Dow Jones):

...Celent predicts increased interest from retail investors could tip the market towards the €40bn level by 2012.

The Kyoto protocol agreements, which help reduce emissions by introducing carbon-emission allowances and credits, has given rise to a growing carbon-emission derivatives market.

Future and forwards contracts are the most actively traded products, accounting for 90% of the transactions on the carbon-emission market this year, according to Celent.

Abyd Karmali, global head of carbon emissions at Merrill Lynch, said: “There has been a robust forward-contract market for EU allowances this year, as well as key developments in carbon-emission structured products. The maturity in the options market has catalyzed the developments in carbon-emission structured products.”

Investment banks are also teaming up with large traditional exchanges, as well as the specialist carbon-emission exchanges, to expand the range of carbon-emission structured products and derivatives.

Merrill Lynch, one of the many banks developing products, has provided a level of principal protection to its emission structured products using a combination of options and positions on the underlying asset, as well as arbitrage swaps and inter-market spread contracts.

Some of the world’s largest traditional exchanges, investment banks and broker-dealers are keen to tap into this market.

Barclays Capital has bought a stake in Enhance Energy, a Canadian company that reduces greenhouse-gas emissions, while the Chicago Climate Futures Exchange, the US environmental derivatives market, increased access to its products in anticipation of greater volumes.

*New York Times on Mr. D's 1992 resignation from his eponymous firm:
...Mr. Della Femina, 56 years old, is the creator of the name Meow Mix; wrote "From Those Wonderful Folks Who Brought You Pearl Harbor," with Charles Sopkin, and created the advertising for WABC-TV's Eyewitness News that highlighted a report on the Willowbrook hospital for the mentally ill.
Mr. Della Femina also created Joe Isuzu, the smarmy character who made it into both Democratic and Republican rhetoric....
Here's his five paragraph auto-bio. in New York Magazine.

Did Planktos Commit a Fraud Upon the Market? (PLKT.PK)

Better Get The Leg Irons Boys.
These Ain't Regular Criminals,
These is Stockbrokers.
-One of Climateer's favorite Barron's headlines.

To answer the question posed in the headline, "Hell, who knows?" Either the press release below was true, or it wasn't.
On September 12, 2007 Planktos announced a Private Placement:
Planktos Corp. (OTCBB:PLKT) is pleased to announce that it has secured private placement funding of up to $2,000,000. The Company has recently received $1,100,000 in funding and anticipates receiving the remainder of the $2,000,000 shortly.

The financing is in the form of a direct private placement at $1.00 per share.

Of the $2M, $1.4M is slated to begin the first voyage of the RV Weatherbird II and $600,000 to complete the first-stage planting in Hungary by Planktos subsidiary KlimaFa.

This was a new one on me as the stock was apparently issued at a premium (!) to market. If memory serves, the stock was trading around $0.56 at the time.
I waited patiently for the required SEC filing.
The SEC description of Form 8K and the types of events that trigger a report is straightforward:

"...Form 8-K is the “current report” companies must file with the SEC to announce major events that shareholders should know about."

"..Section 3--Securities and Trading Markets"

"...Item 3.02 Unregistered Sale of Equity Securities"

"...Companies have four days to file a Form 8-K for the events specified in the items in Sections 1-5 and 9 above. However, if the issuer is furnishing a Form 8-K solely to satisfy its obligations under Regulation FD, then the due date might be earlier."

Planktos never filed the required Form 8K.

This failure is itself a violation, but it is also a huge red flag. It screams "Pay attention" because smart securities scammers have long ago learned that it is better to make late or no filing than to file inaccurate or misleading ones. Al Capone found out about secondary/tertiary liabilities.

If the press release was true the filing was required. If it wasn't...

Planktos' quarterly report on form 10Q, for the quarter ended June 30, 2007 showed, under current assets, an "advance receivable" of $797,194. There no explanation of why a company with no revenues would show a receivable, advanced or not.

The quarterly report for the quarter ended September 30 (i.e. encompassing the period of the news release) showed cash had increased from $14K to $586K the advance receivable had decreased to $76K and operating expenses of $554K including "R&D" of exactly $100K.

In the footnotes is this item:

On June 26, 2007, the Company issued 600,000 common shares on the exercise of 600,000 purchase warrants at $0.1667 share for cash proceeds of $100,000.
It might be innocent but I'm always suspicious when even numbers match up in different parts of a report.

An apparent discrepancy in the issue date of the private placement shares:

Page 12:
During the three months period ended September 30, 2007, the Company issued a total of 1,078,000 common shares at $1.00 per share for the cash proceeds of $1,078,000.
Page 25:
On November 14, 2007, the Company authorized the issuance of 1,078,000 shares of common stock for cash consideration of $1.00 per share for the cash proceeds of $1,078,000 received within the three months ended September 30, 2007
All in all an odd situation, especially considering that the third quarter filing was delayed
until the company's only tangible asset was moved out of U.S. jurisdiction.

The ship subsequently moved on to the island of Madeira in Portuguese waters where it is now safely in port.

As a result of the unanticipated events in the Canary Islands as well as the fact that the Company is presently in need of funds to support its ocean and forest-based projects, the decision has been made to remain in Madeira until the Company can better assess its priorities and funding needs.


Wednesday, December 19, 2007

Dear SEC, Planktos "Winding Down Operations" (PLKT.PK)

From the press release:

"...Planktos further wishes to announce that its wholly-owned research vessel Weatherbird II, reached the Canary Islands in the southern-Atlantic ocean earlier this month. It was invited to Las Palmas by the University of Las Palmas to begin joint research activities in the near-by ocean and had been told all required permissions to enter the port were in order. Upon reaching its destination, the Weatherbird was refused entry to the port of Las Palmas where it had planned to take on scientific equipment and personnel from its university partners and re-provision prior to commencing preliminary scientific studies related to the companys ocean fertilization project.

The ship subsequently moved on to the island of Madeira in Portuguese waters where it is now safely in port.

As a result of the unanticipated events in the Canary Islands as well as the fact that the Company is presently in need of funds to support its ocean and forest-based projects, the decision has been made to remain in Madeira until the Company can better assess its priorities and funding needs.

In the meantime, Company representatives are in discussions with the appropriate authorities in Spain in an effort to secure the necessary permits.

The unanticipated turn of events in the Canary Islands and Planktos current inability to secure sufficient funding for the continued operation of its business plan, has forced management to consider a general winding down of its business operations until such time as it can better assess its priorities in relation to the availability of capital...."

How the world will change (part two)

Part I is here.
From ChinaDialogue:

Does humanity’s future lie in a “semi-global” north? Arctic and sub-Arctic regions will become a magnet for migration, argues Trausti Valsson in the second excerpt from his book How the World Will Change With Global Warming.

The current warming of the globe means that various weather patterns will change in the next few decades, but past changes can inform us about the possibilities of what this will mean.

Changes in weather patterns lead to changes in the patterns of the natural world, as well as changes in the patterns of human habitation – on a local as well as on a global scale. […]

The form and the topology of the space in which people live greatly influence physical functions and activities as well as social systems and people’s perceptions, not only of the space in which they operate but also of themselves. As we start to study the centre line of the ribbon of habitation, we discover that its central location has many advantages in terms of physical functions, for instance in terms of transportation, because it is located at the heart of the settlement area. The outer borders of the ribbon, the periphery, on the other hand, are obviously spatially disadvantaged.

The form of the ribbon also translates into something similar in terms of social functions and human perception; the areas at the centre of the ribbon are of greatest social importance, in terms of the global community, with people out on the periphery perceived by the people in the middle as inferior and uninteresting. […]

Before we start to review the characteristics of the spatial system of a global world – which has already started to evolve with the activation of the Arctic – it is important to examine the characteristics of these two contrastive systems, the ribbon world and the global world, in such a way that their nature and their consequences, in terms of how areas and people operate here on Earth, can be compared and understood in the best possible way.

In addition to the present studies of geometric characteristics of world views, the shift from today’s world of two “islands” -- the Americas and Eurasia -- and the future world that is characterised by a circular form of a landmass that surrounds the future “Middle-of-the-World Ocean”, the Arctic Ocean, should be mentioned. […]

A profound understanding of the two spatial global systems is absolutely essential for being able to understand what consequences the gradual shift from a ribbon world to a global world is going to mean in terms of how the world society is going to function within the emerging new spatial system of a global world....MORE

Very Deep Insight on Solar Energy Investments: "10 Questions for Nanosolar CEO Martin Roscheisen"

From earth2tech:

Martin Roscheisen, CEO of thin film solar company Nanosolar, founded the startup five years ago when solar was nowhere near the hot topic it is today. He managed to fund the company with at least $100 million from venture firms like Benchmark Capital and Mohr Davidow and individual investors like Google founders Larry Page and Sergey Brin, and entrepreneur Jeff Skoll.

The Austrian citizen born in Munich is also a long time Internet entrepreneur who already founded three startups with a combined value of more than $1.2 billion. In an email interview he answers 10 questions for us:

Q). You were one of the first Valley entrepreneurs to focus seriously on green tech - If you had to start a clean tech company in 2007, and not 2002, what would you do differently?

A). I know very little about anything in greentech other than solar. If I had to start a solar company in 2007, I would take a pass. This industry is in a very different stage now. This is going to be like the DRAM business much more quickly than many may realize. I have a hard time seeing how anyone can be successful in solar who isn’t truly in volume in 2008 with a very mature, very cost-efficient technology.

Q). Before Nanosolar you were an Internet entrepreneur - what are the lessons that you’ve learned in that industry that have helped you most when you moved into clean tech?

A). Hiring for “raw talent” (and sense of urgency and drive to win) over “experience”. Being disciplined about not overhiring. Focusing on business not busyness. Quickly ignoring all sorts of miscreants. Accelerating momentum without spending a dollar on marketing. A few other things.

Q). In the thin film industry there are several players like Miasole or SoloPower that are looking to build the next CIGS thin film technology. What will make the difference in which technologies win the deals?

A).An IEC-certified panel product available in near-term 100MW volume at a fully-loaded cost point in the sixties [cents/Watt] or less so that one can profitably sell at a $.99/Watt wholesale price point. There’s no chance a process technology based on a high-vacuum deposition technique is going to make this. The window of opportunity for that more conventional approach to CIGS existed perhaps two years ago in the form of the chance of getting to market earlier with such more incremental technology.

But by now, the industry has moved on generally and Nanosolar is there with far better third-generation process technology that took a $150-million deep-dive into very science-intense research and development to develop, and that momentum gap that will continue to broaden fast.

Q). The thin film industry has seemed to undergo delays in general - has the time to production taken longer than you expected, or are critics being unreasonable?

A). It is correct that there’s at least one journalist/blogger running the danger of being remembered in history as the one who scolded Carl Benz for being a month late with the first automobile. Thin film solar cells are an amazingly advanced and complex technology that even the brightest groups of people in the world can find unusually challenging. Furthermore, developing materials processes and building manufacturing tooling and operations simply does not happen on software or consumer electronics development cycles.

Especially not for a profoundly transformative new technology such as Nanosolar’s. So not even our own investors care really all that much about whether we’re a bit late or not; it’s more all about getting there safely. That said, it turns out that we have executed very well and are very close within our internal timeline originally proposed to our investors in 2005.

Q). A report from the Information Network said that delays in thin film have “soured venture capital firms and other equity investors who had hoped for faster returns on investments.” Thoughts?>>>MORE