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Triple Crunch Log                                                                                                            

down, the bears have overdone it. Solar are now priced at bargain-basement value-stock levels, in some cases their companies valued like businesses in decline rather than great growth companies of the future. A simple screen of the leading solar panel and wafer stocks trading on US exchanges shows solar stocks are trading at the lowest multiples they ever have. The price to current fiscal year earnings for the 12 leading solar stocks is 11. Right now the S&P 500 is trading at a price-to-earnings of 20. In fact, the basket of leading solar stocks is trading at a lower valuation than the utilities sector (which has a P/E of 13), conglomerates (18), basic materials (20) and every other sector of the market through financials (P/E of 99).” 607

21.7.10. Obama finally able to sign the bill overhauling Wall Street, 2 years after the Lehman Brothers debacle. Obama says the Dodd-Frank Wall Street Reform bill will deliver “the strongest consumer financial protections in history”. A new consumer protection agency will shield borrowers from abusive practices from mortgage lenders, credit card companies and others. “Reform will put a stop to a lot of the bad loans that fuelled a debt-based bubble.” FT: “The (2,300 page) bill has taken months to pass because of the opposition of Republicans and some centrist Democrats and has become a proxy for the larger issue of whether to enact new stimulus in the face of rising deficits. It finally passed on Wednesday night by 59-39. The delays underscored the bitter political climate in the build-up to congressional elections in November, in which polls predict the Democrats could lose control of the lower chamber.” The latest poll forecasts that Obama would lose against a generic Republican in the 2012 election, but beat Sarah Palin narrowly.608

Chinese rating agency condemns western rivals for causing the credit crisis, and says the world’s largest creditor nation should have a much bigger say in how governments and their debt are rated. Guan Jianzhong, head of Dagong Global Credit Rating: “The US is insolvent and faces bankruptcy as a pure debtor nation but the rating agencies still give it higher rankings. Actually, the huge military expenditure of the US is not created by themselves but comes from borrowed money, which is not sustainable.”609

Drilling moratorium forces oil rigs to head out of Gulf for new waters. A Moody’s Analytics study estimates $1.2bn - $7.4 bn in lost output and between 17,000 and up to 100,000 job losses.610

Shell, ExxonMobil, Chevron and ConocoPhillips form a $1bn oil spill response unit ….excluding BP. They will own 25% each. This is seen as a move to pressure the Obama administration to lift the moratorium.611

Google buys 114 MW of wind in a 20 years PPA. It will sell the electricity on the regional spot market and use the funds to buy RECS to offset its emissions. benefits Google claims, apart from the offsetting, are the ability to help a green power provider with funds to build more projects, and a hedge against traditional power pirce inflation.612

Insurgents bomb a Russian hydroelectric plant leaving two dead. The plant is owned by RusHydro, the world’s second largest hydroelectric power producer.

There is no difference between bribery and a dirty deal like the one done for BP in Libya, writes John Gapper in the FT. “There is no evidence that the oil company directly lobbied the British government for the release of Abdel Basset al-Megrahi, the Lockerbie bomber, but it admits to backing a prisoner transfer deal with Libya in 2007. Two years later, Mr Megrahi was home and BP had its offshore drilling rights. Crude oil indeed. Had BP bribed Libyan officials with hard cash, it would have been in trouble under the US Foreign Corrupt Practices Act, but commercial realpolitik is not illegal. This makes no moral sense. ….What difference is there between a company paying a bribe and a government striking a dirty political deal on its behalf? Surely none.”613

22.7.10. Oil shock ‘very likely’ within the decade, warns Huhne. Interview with FT:  “It will be a world where we will have very substantial oil price spikes, which have an enormous capacity to provide shocks to the domestic economy and to the world economy, exactly as they did in the 1970s and 80s.” … “What worries me ... is that we’re moving from a world where the UK is dependent on imported energy for only 27 per cent of our needs, to a world where it’s going to be anything from 46 per cent to 58 per cent within 10 years.” FT: “Mr Huhne promised to encourage take-up of energy efficiency measures and low-carbon technology through “a system of incentives, triggers and nudges”.”614

Gulf storm puts BP spill efforts on hold. Tropical Storm Bonnie is gathering strength and vessels and rigs will need to move out of the system’s path. Admiral Thad Allen says the bad weather could delay the “static kill” of the well by up to two weeks. BP will also have to wait out the storm before the task of drilling the final 100ft of the relief well.615

US lawmakers attack Macondo well partners. Senator John McCain on Anadarko Petroleum and a unit of Japan’s Mitsui: “I strongly recommend you set aside funds and you start paying some bills so people will know you are a responsible organisation. It would be in the best interest of the people of this country and your image.”616

Matt Simmons on Bloomberg: “We’ve now killed the Gulf of Mexico.” He restates his concern that while the leak has been stopped from coming out of the riser, five to ten miles away there is a more important leak caused by the explosion of the blow-out preventer. On whether the well pressure should be a concern: “No, it’s a total diversion - that’s the gas condensation that was trapped in the drilling riser which blew off the wellhead on April 20th.” …. “What we don’t know anything about is the open hole which is caused by the drill bit when it tossed the blow-out preventer way out of the hole…and 120,000 minimum of toxic poison has now covered the floor of the Gulf of Mexico. So what they’re talking about is the biggest environmental cover-up ever. And they knew that that well, that riser, would finally deplete. And then they could say it’s over. And unfortunately, we now have killed the Gulf of Mexico.” …. “Some 5-10 miles away is what the NOIA research vessels have now proved is a deep oil lake that is growing by the day and it’s very toxic oil and its gases are very lethal. Basically if we have a hurricane now, we would have to evacuate the Gulf Coast.” Mr Simmons on why he is shorting BP stock: “You bet I did. Because I thought BP was going to go under. I’ve been saying that for months and months and when I read that 20 of the 24 Wall Street analysts had a ‘buys,’ I said ‘ That’s ridiculous, I’m going to short them.’ I’ve never shorted a stock in my life before.”617

China battles its largest reported oil spill in recent memory. A 430 sq km slick, doubling in size this week. It is at Dalian refinery, one of the largest in the country, where two pipelines exploded as high-sulphur crude was being unloaded from an oil tanker. It is less than 1 per cent of the volume of oil spilt from the Deepwater Horizon well.618

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