Ineqality Chart of the Day

From Jared Bernstein:

Another Farm Merger

Bloomberg:

Bayer AG’s possible takeover of Monsanto Co. isn’t likely to raise significant antitrust hurdles by itself, but it could intensify global scrutiny of the handful of companies striking megadeals that would consolidate the crop-chemicals industry.
Even if Bayer could win approval to purchase Monsanto, regulators may slow down all the deals as they assess how they would affect the overall market. Competition authorities are already investigating the proposed $130 billion merger between Dow Chemical Co. and DuPont Co., while national security officials in the U.S. weigh China National Chemical Corp.’s bid to acquire Syngenta AG of Switzerland for $43 billion. Lawmakers in the U.S. were quick to raise concerns about both the Dow-Dupont and ChemChina-Syngenta tie-ups....
A Bayer-Monsanto tie-up would create the world’s biggest supplier of seeds and farm chemicals. Monsanto, which has a market value of almost $40 billion, is the world’s largest seed maker and also makes Roundup, its blockbuster herbicide. Bayer, which invented aspirin, makes herbicides, insecticides and fungicides. The combined firm would control about 32 percent of the global crop-chemicals market.

As the farm economy gets tighter, we'll probably see the seed and chemical field brought down to three major players.  It won't be good for farmers, but what generally is.

Second Fish Fry Weekend Links

I fried up 110 pounds of fish this Friday.  The presidential race keeps getting weirder.  Here are some interesting stories for your enjoyment this weekend:

Welcome to the World Pond Hockey Championships, the tournament you aren’t supposed to win - VICE Sports

The Sioux Nickname Is Gone, but North Dakota Hockey Fans Haven't Move On - New York Times

Noah Syndergaard and the Very Confident New York Mets - The New Yorker.  I'd prefer the Mets to the Cubs.

Xavier basketball is no longer an underdog - SB Nation.  While I love to see Xavier doing so well, losing the underdog status just changes things a little.

With Economy Stuck In The Mud, Farmers Sink Deeper Into Debt - The Salt

God, Wall Street And the New Push to Save U.S. Catholic Schools - Bloomberg.  Save or sell out?

Ask the Aged - Aeon

What Will Become of Levittown, Pennsylvania? - CityLab

Death and Despair in China's Rustbelt - Bloomberg

Inside 'the most toxic city in America' where the earth is poisoned by lead and zinc - Business Insider.  The region that gave us Mickey Mantle.

Dead End - Indianapolis Monthly.  I am a firm believer in science and math, but I must admit that several cancer cases amongst people you know make it very hard to believe that it is just a fluke.

The Bidding War - The New Yorker

Who is behind one of the biggest scams in history? - CNN Money.  Part 1 of 5.

Battered by drop in oil prices and Jindal's fiscal policies, Louisiana falls into budget crisis - Wonkblog

This Stunning 3D Map Shows U.S. Economic Contribution by City - Visual Capitalist, via Ritholtz

Second Weekend of Lent Reads

Beautiful weather to start the weekend, and here are some good stories to make it better:

The Sweetest Stroke of All - Wall Street Journal

Keeping Up With The Country's Youngest Female Monster-Truck Driver - The New Yorker

Oh, Nuts! U.S. Pistachio Growers Worry About Competition From Iran - The Salt

Obama's New Budget: Bad For Farmers? - Modern Farmer.  It amazes me that farmers think they alone deserve government handouts.  Well, maybe them and veterans.

6 Things I Would Ask the Presidential Candidates About Food and Farming - Mother Jones

Evidence Mounts for Interbreeding Bonanza in Ancient Human Species - Scientific American

The Man in the White Hat - Texas Monthly.  On the guy who found Antonin Scalia dead. Also, Sometimes, Scalia Surprised the Living Sh*t Out of Me - Charles Pierce

Financial turmoil half a world away is melting Minnesota's iron country - Washington Post.  Expect similar stories on midwestern agriculture in the next couple of years.

Who Invented Stealth? Court Revives 1996 Suit Against Pentagon - Bloomberg.  If my grandfather were alive, he could probably shed light on this case.

A Country Breaking Down - NY Review of Books and The Long and Crumbling Road - The New Republic.  Due to sprawl, we probably have too much infrastructure to maintain, and we keep building more.  We have infrastructure requiring urban density trying to serve less dense suburbs and rural towns, and urban infrastructure rotting away in depopulated areas.

Three Days Behind the Counter at a Vegas Gun Shop - Bloomberg.  The owner knows irrational fear sells guns.  Approximately 20:1 handgun to long gun sales ratio.

At least 14 Supreme Court justices have been confirmed during election years - Vox.  Science, economics, history.  Why would you expect Republicans to deal in a fact-based way on this?

Trump speaks for those Bush betrayed - USA Today, and Trump: Fishtown's Champion Against Belmont - Rod Dreher

How a Basket on Wheels Revolutionized Grocery Shopping  - Priceonomics

Presidents' Day Weekend Links

If you work at a bank, a school or a government office, you've got a three day weekend.  For the rest of us, there are two days to take in these stories:

The Gyms of Holmes County - SB Nation.  Even though this story generally follows girls basketball, Perry Reese, Jr. gets a shout out.  If you've never read the remembrance of Reese in Sports Illustrated, I highly recommend it.

The Wow Factor - ESPN the Magazine

Buy Crop Insurance, Double Your Money and The Shocking Truth About America's Ethanol Law: It Doesn't Matter (For Now) - A government subsidy for farmers twofer from The Salt.  And yes, the crop insurance article is pretty accurate.  We seem to get about 7 to 10 years' premiums back most times we have a major claim on crop insurance.

For $100 and Some Beer, This Student Spent Three Months Camping on a Dairy Farm - Modern Farmer

Organic honey is a sweet success for Cuba as other bee populations struggle - The Guardian

What Americans Used To Eat - Priceonomics

The Tragedy of the Woolly Mammoth: Does An Economic Problem Explain Their Extinction - Pacific Standard 

The chips are down for Moore's Law - Nature

In Aftermath of Terror Attacks, Tensions Rise in Idaho Over Refugee Workers - Wall Street Journal

Watch 1,400 Workers Lose Their Jobs At Once-Because Their Jobs Are Going To Mexico - Fast Company


Poverty in Charlotte: 'It Was Never OK' - Charlotte Magazine

How America Is Putting Itself Back Together - James Fallows.  Fallows is one of my favorites, and the American Futures series has been excellent.  This is the summary article.

New Hampshire is a fraud - Washington Post

Why Today's GOP Crackup Is the Final Unraveling of Nixon's 'Southern Strategy' - The Nation.  America would be a better place if it was.

Trump questions Cruz's faith - The Hill.  If Ted Cruz is an exemplary Christian: A. I don't want to be a Christian, and B. I may be a black man.

Don't Worry, the Porn Star Ted Cruz Used in an Ad Only Did Softcore Stuff - Esquire

The Facebook Primary - FiveThirtyEight. If Carson is #1, it is kind of meaningless, but interesting nonetheless.

Some People Just Have Too Much Money

Three professional sports teams AND an 800 square mile ranch?  Yes:

Stan Kroenke, the billionaire owner of the NFL’s Rams, has agreed to purchase the historic W.T. Waggoner Estate Ranch in Texas, representatives of the ranch said on Tuesday. Terms for the purchase of the more than 520,000-acre estate were not disclosed. The ranch had been listed with an asking price of $725 million.
District Judge Dan Mike Bird in Vernon, Texas, allowed the family owners of the Waggoner Ranch to proceed in a private transaction with Kroenke, one of the wealthiest owners in professional sports and the owner of 11 ranches in Montana, Wyoming, Arizona, and British Columbia. The Waggoner went on the market in 2014 after Judge Bird ordered a sale to end more than 20 years of family litigation...
Kroenke recently decided to move his National Football League team from St. Louis to a privately financed $1.8 billion stadium in Inglewood, Calif. Along with the Rams, he also owns the National Basketball Association’s Denver Nuggets, the National Hockey League’s Colorado Avalanche, Major League Soccer’s Colorado Rapids, and two-thirds of the English Premier League’s Arsenal soccer club. Kroenke’s fortune is worth about $6.2 billion, according to Bloomberg estimates.
The Waggoner is the largest U.S. ranch within one fence, marketed as measuring 520,527 acres (210,650 hectares), or 800 square miles (2,072 square kilometers). The sale to Kroenke will include additional acreage that brings the total to about 535,000. The King Ranch, based in South Texas, has more acreage spread over several parcels....With 6,800 head of cattle, the Waggoner is one of the 20 largest cattle ranches in the U.S. and is known worldwide for its quarter horses, which number 500. The ranch also has 1,000 oil wells, 30,000 acres of cropland, and an abundance of deer, quail, feral hogs, waterfowl, and other wildlife.

Well, at least he can't move this to LA.

Global Wheat Stocks

From the Wall Street Journal, and included in the weekend links:

Moving the World's Commodities

Here is an interesting story about one of the world's largest commodity trading firms, Vitol:

Simply put, Vitol is one of the biggest trading companies on the planet. It is the ninth largest corporation in the world by revenue, behind only Shell and BP from the FTSE 100, and comfortably ahead of Volkswagen, Apple and Chevron. Last year Vitol’s sprawling empire raked in $270bn in sales.
The firm is among handful of mega-trading houses, that have been quietly operating in the shadows at the heart of global trade and commodity markets, keeping the world economy running with a constant supply of fuels, base metals, chemicals and foodstuffs.
The rise of these companies has coincided with the commodities super-boom of the past 15 years and the seismic shift in world trade from west to east. As China, India and Brazil have become the new international powerhouses, Vitol, and its rivals Glencore, Trafigura, Gunvor, and Mercuria, have emerged as the powerbrokers pulling the levers of the global economy.
Yet despite its size and reach, very little is known about Vitol or what it really does. This has fuelled accusations of secrecy, reports of dodgy deals with corrupt regimes, criticism of its tax affairs, and growing questions of whether its grip on world markets is too great....
The scale of Vitol’s operations is mind-boggling. Last year, it made more than 6,000 journeys and traded 128 million of tonnes of crude oil. On a good day, it can move 5 million barrels, more than China’s total daily output. It also shipped 26 billion cubic meters of natural gas; 8.9 million tonnes of LPG; a million tonnes of naphtha; 34 million tonnes of coal; and 600,000 barrels of physical gasoline a day. At any one time, it can have more than 200 ships on the world’s oceans, roughly the size of the US navy’s battle fleet.
Profit margins in commodities trading are ultra-slim, often less than 1pc on each trade. But thanks to Vitol’s sheer size and scale, it does not take long for the profits to rack up. That means bumper pay days at the employee-owned firm.
In 2014, pre-tax profits doubled to $1.67bn, $1.2bn of which was shared between the company’s 300 or so employee shareholders. While much of the oil industry, including the majors, has been laid low by the slump in oil prices, last year was one of the best in Vitol’s history.

Wow.  Those guys have done a ton of work in Kurdish Iraq, Libya and other unstable warzones and hellholes.  Considering my small amount of experience with the logistics of a small manufacturing firm in a stable nation, I can't imagine all the hassles and headaches moving all those commodities through some of those disaster areas.  While it is clear they are able to get more than their share of the pie, I have to give them credit: they are doing much more actual work and productive activity than most folks on Wall Street.  

States Hurt Worst By Commodities Bust

Bloomberg:

The Bloomberg Commodity Index last week reached a 13-year low and has plunged 61 percent since its peak in 2008. That matters a lot in, say, Wyoming, Louisiana, Texas and Nebraska. Not so much in New Jersey or Massachusetts, for example. The map below shows the top 10 states with the greatest exposure as measured by mining and agriculture's share of the economy in 2014. The darker the color, the more the state's economy is at risk.

And things could still get ugly in the Corn Belt.

Meanwhile, On the West Coast

Via Calculated Risk:

A cool map of ships anchored in the Long Beach area from Ron Schweitzer, of Long Beach, CA.

Ron captured this yesterday, on a return trip from Catalina, using the iPhone app Boat Beacon. This app shows all the big commercial vessels on your phone, and Ron wrote that he had to “thread the needle” to get back to the marina!

More on the port shutdown, and the resulting cargo backup here.

Is This The Year For a China Meltdown?

Bank of America thinks it might be:

China is at mounting risk of a financial crisis this year as growth sputters and deflationary pressures trigger a wave of defaults, Bank of America has warned.

The US lender told clients that a confluence of forces are coming together that threaten to chill the speculative mania on the Shanghai stock exchange and to expose the underlying fragility of China’s $26 trillion edifice of debt.

“A credit crunch is highly probable,” said the bank in a report entitled “Deflation, Devaluation, and Default”, written by David Cui and Tracy Tian.

They said the country’s highly-leveraged companies cannot safely withstand President Xi Jinping’s drive to stamp out moral hazard and wean the country off excess credit, warning that the mix of slower growth and excess debt “could prove lethal for the financial system”.

The report warned that it is rare for countries to escape either a financial crisis, or major bank failures, a currency upset, a sovereign crisis – or a mix of these – after letting credit grow at such vertiginous rates.
“The most likely scenario is a bad debt surge as growth slows, followed by a credit crunch in the shadow banking system, followed by a major recapitalisation of the banks,” said Mr Cui.
The report said China spent 15pc of GDP to rescue lenders in the late 1990s but the scale of the problem is much greater today, and this time the government cannot resort to fresh stimulus so easily.
Loans have jumped by roughly 100pc of GDP in the past five years under most estimates. This is twice the pace of growth in Japan over a comparable period before the Nikkei bubble burst in 1990, or in the US before the Lehman crisis in 2008. 
Standard Chartered said total credit has surpassed 250pc of GDP once shadow banking and offshore lending are included, an extremely high level for an emerging economy without mature markets or layers of accumulated wealth.
Mr Cui said the explosive rise on the Shanghai stock market - up 50pc in barely three months - is being driven by “blue-sky talk” and $180bn of margin lending from brokers. It is happening at a time of deteriorating earnings. “When the sell-off happens, we suspect that it will not be orderly,” he said. The Shanghai composite index may fall back from 3,300 to 2,400 before it settles in a trading range.
He advised investors to stick to defence stocks or equities linked to the nuclear industry given that both are shielded from Mr Xi’s efforts to shake out excessive capacity in Chinese industry.
Bank or America said China has been in factory gate deflation for 33 months and the downward slide appears to be deepening.

That is terrible news for commodities.  Just a guess, but I doubt a Communist government will be able to weather a capitalist meltdown very effectively. But, then again, capitalist countries suck at handling deflation, too.

A Post-Panamax Cruise

As part of her dissertation project Charmaine Chua is paying a sizable sum to be a passenger on a container ship voyage for 36 days, traveling from Los Angeles to Taipei with numerous ports-of-call in between:

There is uncanny beauty in the monstrous. This, at least, is the feeling that seizes me as I stand under the colossal Ever Cthulu[1] berthed in the Port of Los Angeles. The ship’s hull alone rises eight stories into the air; even from a distance, I am unable to capture its full length or height within a single camera frame. In describing the ship to my friends and my family, I have sought to make adequate comparisons between its size and more familiar objects: The Ever Cthulu is 333 meters (1,100 ft) long, 43 meters (141 ft) across, and 70 meters (230 ft) high. It is taller than an eighteen-story building, the Arc De Triomphe, or Niagara Falls. It as long as a line of seventy cars, the Eiffel Tower tipped on its side, two Roman Colosseums, four New York City blocks, or six and half White Houses. I’ve had a lot of practice picturing this ship. Even so, when I am finally at the foot of its immense mass, I can scarcely believe that this monstrosity will be my home for the next 36 days....
With a carrying capacity of 8,100 TEUs (or twenty-foot equivalent units – the length of a standard container – although today 40-footers are the norm) that can shoulder a total weight of 101,000 tons, the Ever Cthulu would require a 40-mile line of trucks to transport all its cargo. When it was built in 2006, it was the largest ship in the world. Less than a year later, Maersk introduced a new ship class with a capacity almost double that volume, and today, owns the world’s largest ships at carrying capacities of 18,000 TEUs each. Post-Panamax carriers such as the Ever Cthulu – ships that exceed the maximum dimension that can fit in the Panama canal – comprise 16% of the world’s fleet, but carry more than 45% of seaborne goods...
The captain tells me that the Ever Cthulu, like all other ships, never stops for a break. It continues traversing the globe’s surface in 45-day rotations, reaching one end of its route and turning around almost immediately. Container ships are monuments that move, and 100, 000 of them ply the oceans at any given moment. In 2014, the Ever Cthulu traveled a total of 103,000 sea miles — halfway to the moon. All that distance, all that steel, all that power. Yet, even ships as large as these require very little human labor: a few seamen to navigate, engineers to monitor the ship’s internal workings, others to keep watch, clean, fit, change the oil. The Ever Cthulu itself has a crew of 22 men – four German, one Polish, seventeen Filipino, and one passenger: myself. Across the world’s ocean, 1.5 million invisible seafarers toil on three to nine month contracts to bind the world together through trade, though they remain, for the most part, isolated in their cabins and mess rooms, retained on precarious short-term contracts, and kept away from their families – indeed, from most of the world.

The numbers are unfathomable to me.  Overall, it is a well-written and informative post.  Hopefully, I'll remember to check back for later installments.

Timelapse: Drilling and Fracking a Well

Damn, that looks expensive.

What'd You Say The Breakeven Price on Shale Oil Was?

This month's Director's Cut from the North Dakota Industrial Commission:

Sep Sweet Crude Price = $74.85/barrel
Oct Sweet Crude Price = $68.94/barrel
Nov Sweet Crude Price = $60.61/barrel
Today Sweet Crude Price = $41.75/barrel (lowest since March 2009)
(all-time high was $136.29 7/3/2008)....
Rig count in the Williston Basin is set to fall rapidly during the first quarter of 2015.

Production was level from last month to this month.  The next few months might be very interesting.

Life at the Top

Some people have way too much money:

Activist Investors Vs. The Timkens

The New York Times has an interesting profile of the division of Timken into separate bearing and steel businesses:

Crunching reams of data in search of undervalued stocks, analysts at Relational Investors, a firm that manages $6 billion mostly on behalf of pension funds, happened upon a Canton company called Timken, which was in the unglamorous business of making steel and bearings. Controlled by the Timken family for more than a century, the company looked cheap compared with its industrial peers, at least according to Relational’s analysis. A few more calculations suggested that Timken’s shares might fetch more if the company were split in two....

The heart of the Calstrs/Relational argument was that the two companies should trade as pure plays, with investors deciding for themselves whether to bet on the faster-growing but more volatile steel business or the more mature but highly profitable bearing business.

Timken executives fought back, making the case for keeping bearings and steel under one roof. Bearings require specialized steel that can, for example, withstand enormous pressure deep underwater in an offshore oil well. The metallurgical expertise the steel unit acquired in creating these advanced materials, they said, translated into products for other customers like medical device makers and drillers.

There were other structural reasons for the two companies to stay together. Because the steel business can be very profitable but is much more volatile, the bearings division served as ballast for the combined company. Excess cash from the bearing side smoothed out those peaks and valleys and helped pay for big investments like the huge caster.

But Mr. Larrieu and Relational maintained that if the money couldn’t be invested in the business now or in the foreseeable future, it should be returned to shareholders, who are, after all, the owners of the company...

Although Mr. Timken is on the board of the new bearing company, its chief executive is not a family member. And the new management seems to be hewing more closely to the activists’ playbook.

Buried in a November Timken investor presentation is a chart bound to please Wall Street. Titled “Yesterday and Tomorrow,” it sketches how capital was allocated before the split, and how it will be used now. Pension fund contributions drop from nearly a third of cash flow to near zero, while capital spending is roughly halved. And instead of using 12 percent of cash flow to buy back stock, share repurchases will consume nearly half of cash flow over the next 18 months. In other words, less cash is being invested in the business or earmarked for benefits to employees, and more money is going to investors. While TimkenSteel’s board has authorized a three million share buyback by the end of 2016, Timken has plans to repurchase 10 million shares by the end of next year.

Even if TimkenSteel and Timken manage to avoid a takeover for the time being, the separation is likely to make both firms more vulnerable over time, said Suzanne Berger, a professor of political science at M.I.T. who researches globalization, innovation and production.

Not only will they both be less financially nimble than before, she said, the steel maker in particular will lack the scale to invest and innovate the way it could under the old corporate structure. Foreign steel makers in Asia and Europe are vastly larger, and face much less pressure for short-term results, enabling them to pour more money back into their businesses.

“In the microcosm of Timken, you can see the larger forces playing out in manufacturing in America,” said Ms. Berger, who studied the company for a 2013 book she wrote, “Making in America.” “It’s not classic greed, like ‘Barbarians at the Gate.’ But we’ve set up financial markets in a way that’s injurious to long-term investment and industrial companies.”

“We’ve got a financial system in the U.S.,” she said, “where California teachers have to protect their pension funds by hurting manufacturing in Ohio.”

Goddamned MBAs and the "world's dumbest idea," the belief that corporations' only goal should be to maximize shareholder value, have ruined our country's economy.  The Timkens have run their business the right way, and a bunch of outsiders looking for an easy score have come in and fucked everything up.  Just reading about the plans for the bearing company lead me to believe that it will be a shell of itself in the not-too-distant future.  It's also telling that Ward Timken decided to stay on the steel side of the business.  The fact that the outside investors didn't understand the obvious connection between the steel business and the bearing business makes me think they don't know their asses from a hole in the ground.  If you want to know why our manufacturing economy has been dismantled in the past 40 years, you don't have to look beyond this story.  As much as I wish that more American workers had pensions to rely on, it is the financial decisions made by giant pension funds that are at the heart of the rise of the belief in maximizing shareholder value.  That has been terrible.

30 Years After Bhopal

The Atlantic features a photo series reminding us of the largest industrial disaster ever:

Thirty years ago, on the night of December 2, 1984, an accident at the Union Carbide pesticide plant in Bhopal, India, released at least 30 tons of a highly toxic gas called methyl isocyanate, as well as a number of other poisonous gases. The pesticide plant was surrounded by shanty towns, leading to more than 600,000 people being exposed to the deadly gas cloud that night. The gases stayed low to the ground, causing victims throats and eyes to burn, inducing nausea, and many deaths. Estimates of the death toll vary from as few as 3,800 to as many as 16,000, but government figures now refer to an estimate of 15,000 killed over the years. Toxic material remains, and 30 years later, many of those who were exposed to the gas have given birth to physically and mentally disabled children. For decades, survivors have been fighting to have the site cleaned up, but they say the efforts were slowed when Michigan-based Dow Chemical took over Union Carbide in 2001. Human rights groups say that thousands of tons of hazardous waste remain buried underground, and the government has conceded the area is contaminated. There has, however, been no long-term epidemiological research which conclusively proves that birth defects are directly related to the drinking of the contaminated water.

 A worker cleans dust as he displays a panel of photographs of some of the thousands of people who died in the 1984 Bhopal gas disaster at the forensic department of Gandhi Medical college in Bhopal on June 8, 2010. (AP Photo/Prakash Hatvalne) #

To me, the pictures of the children born with birth defects are the most troubling, and that applies even if the birth defects can't be tied to the disaster.

Commodity Bloodbath

MoneyBeat, via Ritholtz:

Sure, few have been hit quite as hard as oil, crude prices are down 39% on the year’s highs. Nonetheless pain is being felt across the asset class. The Dow Jones-UBS soft commodities–coffee, cocoa, wheat and fruit–sub-index is down 25%, other agriculturals have lost 24%, the precious metals sub-index is down 18% and the industrial metals index is down 15%.
But even that’s only part of the story. Losses on this year’s highs are marginal compared with the drop most of these classes of commodities have suffered from their peaks, generally hit in the spring of 2011.
Oil prices are down 42% from then–and down 53% from its all-time high in 2008. Softs are down 58% from the spring of 2011. Precious metals are down 47%. Industrials have lost 40%. Agriculturals are down 35%. Overall, non-energy commodities have tumbled a third from their April 2011 highs....What is a worry, however, is the degree to which firms in these commodity-producing countries borrowed in dollars to fund new investment to ramp up output. These investments tend to be massive sunk costs in expensive capital goods–think mines, earth movers the size of houses, railway spurs and port facilities.
Which raises another question: how willing will producers be to mothball expensive investments to reduce supply now that the money’s been spent and needs to generate a revenue to cover the financing costs?
Over the near and medium term, supply is fairly inelastic, which will keep downward pressure on prices. But at the same time, demand doesn’t look likely to ramp up. Not only is the global economy subdued–leading forecasters have been ratcheting down their expectations for growth in the coming year–but, crucially for commodities, China’s investment boom is sputtering.
Indeed, Chinese stockpiling seems to have been the primary driver of some classes of commodities, particularly the industrial metals. If falling prices force Chinese investors into selling off their holdings, the carnage might only just be starting.

Yeah, I probably should have stuck with my gut and not invested in iron ore, steel and coal stocks earlier in the year.  Even more amazing, after considering shorting Continental Resources and other Bakken plays late in the summer, I decided not to.  But after watching CLR get whacked over the holiday weekend, I decided to jump into it yesterday.  I'm up a few percent, but I may get shellacked on that, too.  Oh well, if I did too well in the stock market, I'd want to retire.  Getting my ass kicked keeps me working.

China Admits Massive Soil Pollution

China reports that 19% of its arable lands are contaminated with heavy metals:

The report, based on a seven-year survey covering 2.4 million square miles, found that about 16% of the country's soil and 19% of its arable land was polluted to one degree or another. The vast majority of the pollution came from inorganic sources such as heavy metals, it said. China's total land area is 3.7 million square miles.
The most common inorganic pollutants found in China's soil were the heavy metals cadmium, nickel and arsenic, according to Thursday's report. Cadmium and arsenic, both known to cause chronic health problems, are byproducts of mining.
Nearly 3% of arable land in China was found to be either moderately or seriously polluted, the report said, without defining what those levels of contamination mean. Pollution was particularly severe in eastern China's Yangtze River Delta, the Pearl River Delta in the south and old industrial zones in the northeast, it said.
Pollution of farmland is of particular concern in China because of how little of it has. According to the most recent national land survey, China had 334 million acres of arable land at the end of 2012, roughly 37 million acres above the government's "red line" for the amount of farmland necessary to feed the country's population.
Already, some 8.24 million acres of arable land has become unfit for farming, China's Ministry of Land and Resources disclosed in December. Environmentalists say the majority of the remaining land is of poor or moderate quality, having been stripped of its productivity by decades of heavy fertilizer and pesticide use.
So much polluted soil means China will likely have to begin importing more food. "China will need to ease pressure on its natural resource base and import more of its food over the long-term," said Fred Gale, an economist with the U.S. Department of Agriculture's Economic Research Service. "Agriculture is impacted by industrial pollution but also creates a lot of pollution itself," he said, citing waste and ecological damage caused by China's growing taste for meat.
In April 2013, the discovery of unusually high quantities of cadmium in batches of rice grown in Hunan—the country's top rice-producing region, as well as a top-five producer of nonferrous metals like copper and lead—set off worries about farmland and sent prices for Hunan rice tumbling by as much as 14%. 

I've covered this subject here before. Deborah Blum has covered how rice absorbs heavy metals, and while I think I've posted on that, I can't find it.  The important thing is that massive industrialization without environmental protection is royally screwing China.  Keep that in mind next time you hear Republicans talking about how EPA destroys American jobs.  I like to eat, and from what I can tell of all the other obese people in the U.S., apparently a lot of other people do, too.  I also like to farm, and poisoned soil really, really makes me sad.  What a disaster.

Brazilian Megaprojects See Megaproblems

One example, a massive rail project:

The Transnordestina, a railroad begun in 2006 here in northeast Brazil, illustrates some of the pitfalls plaguing projects big and small. Scheduled to be finished in 2010 at a cost of about $1.8 billion, the railroad, designed to stretch more than 1,000 miles, is now expected to cost at least $3.2 billion, with most financing from state banks. Officials say it should be completed around 2016.
But with work sites abandoned because of audits and other setbacks months ago in and around Paulistana, a town in Piauí, one of Brazil’s poorest states, even that timeline seems optimistic. Long stretches where freight trains were already supposed to be running stand deserted. Wiry vaqueiros, or cowboys, herd cattle in the shadow of ghostly railroad bridges that tower 150 feet above parched valleys.“Thieves are pillaging metal from the work sites,” said Adailton Vieira da Silva, 42, an electrician who labored with thousands of others before work halted last year. “Now there are just these bridges left in the middle of nowhere.”
Brazil’s transportation minister, César Borges, expressed exasperation with the delays in finishing the railroad, which is needed to transport soybean harvests to port. He listed the bureaucracies that delay projects like the Transnordestina: the Federal Court of Accounts; the Office of the Comptroller General; an environmental protection agency; an institute protecting archaeological patrimony; agencies protecting the rights of indigenous peoples and descendants of escaped slaves; and the Public Ministry, a body of independent prosecutors.
Still, Mr. Borges insisted, “Projects get delayed in countries around the world, not just Brazil.”
Mr. da Silva, who oversaw the start of work on the Transnordestina eight years ago, was frank about the role of his Workers Party, once the opposition in Brazil’s National Congress, in creating such delays. “We created a machinery, an oversight machinery, that is the biggest oversight machinery in the world,” he said, explaining how his party helped create a labyrinthine system of audits and environmental controls before he and Ms. Rousseff were elected.
“When you’re in the opposition, you want to create difficulties for those that are in the administration,” Mr. da Silva said. “But we forget that maybe one day we’ll take office.”

Another example, wind farms that are constructed, but their transmission lines are not.  The hot money flows into China, India and Brazil during the recent developing market boom hit countries ill-prepared to deal with such projects.  It is hard to overestimate the massive amounts of wasteful spending.  I think we'll be looking at a long slowdown in these markets, and that should puncture most commodity markets.