Daily Archives: December 9, 2011

China getting ready for war, alerts Navy

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Posted by Mohan Ramraj on December 9, 2011

Beijing, Dec 8 (TruthDive): Chinese President Hu Jintao has asked the Chinese navy to get ready for war as regional tensions over maritime disputes were on the increase in recent times. His call also came in the wake of a campaign portraying U.S as a Pacific power.

The Navy should “accelerate its transformation and modernization in a sturdy way, and make extended preparations for military combat in order to make greater contributions to safeguard national security,” he said.

In an address to the Central Military Commission, Hu said: “Our work must closely encircle the main theme of national defense and military building.”

His comments, which were posted in a statement on a government website, come as the United States and Beijing’s neighbors have expressed concerns over its naval ambitions, particularly in the South China Sea.

The whole of the fight is for the South China Sea, which accounts for one-third of the global sea-trade, also believed to have huge oil and gas reserves. Many countries accused China’s move to build tension over there.

The country’s official news agency quoted the President as saying China’s Navy should “make extended preparations for warfare.”

The U.S carefully responded acknowledging its right to develop its military and called for transparency.

“They have a right to develop military capabilities and to plan, just as we do,” said Pentagon spokesman George Little, but he added, “We have repeatedly called for transparency from the Chinese and that’s part of the relationship we’re continuing to build with the Chinese military.”

“Nobody’s looking for a scrap here,” insisted another spokesman, Admiral John Kirby. “Certainly we wouldn’t begrudge any other nation the opportunity, the right to develop naval forces to be ready.Our naval forces are ready and they’ll stay ready.”

State Department spokesman Mark Toner said: “We want to see stronger military-to-military ties with China and we want to see greater transparency. That helps answer questions we might have about Chinese intentions.”

It is very obvious that the Chinese Premier’s call came in the wake of several American top officials’ visit to Asian countries including President Barack Obama, Defense Secretary Leon Panetta and Secretary of State Hillary Clinton.

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Iran Conducting Anti-U.S. Operations from Latin America – Atlas Shrugs

Iran Twitter Flag

Obama is neither inept nor stupid; he is, in fact, dangerous. Obama’s sanction of Iran and aiding and abetting in the putdown of the freedom revolution in Iran in 2009 ranks, IMAO, as his most monstrous failure, among countless others.

A small number of us in the blogosphere (those concerned with the global jihad) have been documenting the increasing ties between Iran and Venezuela, Brazil, and Cuba. Further, the infiltration of Hezb’allah in Latin America and particularly in Mexico is well known. Hezb’allah exploits the drug cartels’ narco-transit routes in Mexico…..

Iran Conducting Anti-U.S. Operations from Latin America – Atlas Shrugs.

The Impending Economic Collapse Of 2012-2022

In Part 1 of this series, Is This The Best Stock Market Indicator Ever?, I examined the technical indicator known as $OEXA200R, that is, the percentage of S&P 100 stocks above their 200 day moving average, found on StockCharts.com.

The $OEXA200R can be thought of as a valuable early yellow light flashing ‘bears ahead’ or a confirmatory green light that we’re really back in a bull market after a bear. It is an extremely accurate market timing and short term predictive tool for any investor.

But what of the long term trends in the market? What does the future hold over the next 2 or 5 or 20 years? Is there a predictive tool for that?

I believe there is.

In this article we will analyze the long term S&P chart developed by Doug Short (Figure 1), using it as a reference to “tease out” some very specific predictions of future trends. The estimates and scenarios are based on an unbiased interpretation of data derived from this chart.

By following the cold data where it leads us, we arrive at some unnerving predictions which I will collectively refer to as The Great Repression.

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Figure 1

Figure 1 illustrates the long term trend of the S&P from 1870 to present. It is inflation-adjusted and set on a log scale for clarity. Notice the red trend line and how the market regresses from bull and bear periods back to the historical trend.

Below the S&P graphic on Figure 1 is an illustration of S&P variance from trend. That is, the percentage the S&P skewed above or below the trend line at corresponding time points. For example, at the 1929 bull peak the S&P was at 82% variance above the trend line. In 1982, the S&P had fallen to minus 55% variance below the trend line.”

An analysis of the chart (Figure 2) revels that the slopes from each bull top measured at the highest variance points in 1901, 1929 and 1965 to the beginning of the next bulls in 1920, 1949 and 1982 all measure exactly 34 degrees. Again, the start and end points for the slopes are determined by the variance tops indicated on the “Variance from trend” graphic, not the actual S&P tops.

Assuming the slopes could theoretically measure anywhere from 1 to 44 degrees (excluding the 45 degree vertical and 0 degree horizontal orientations), the probability of all three equaling 34 degrees is less than 1 in 79,000.

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Figure 2

Based on that data, one could make a reasonable statistical assumption that the slope for the current secular bear market beginning in 2000 would also follow the same 34 degree angle as the previous three bears. Overlaying that slope on the 2000 bull top would suggest that we are not yet half way through the present bear cycle.

But how much more “bear”is left?

To answer that question, we add an additional green line to the S&P chart corresponding to -50% variance from the trend (Figure 3). All three bears in 1920, 1949 and 1982 have touched that line before rebounding. In fact, all three have actually exceeded -50%: 1920 at -59%, 1949 at -57%, 1982 at -55%.

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Figure 3

If we follow the 34 degree bear slope line to the -50% green variance line, we arrive at a very conservative end point for the current bear in 2022 – 2023 with the S&P at approximately 540. That, I wish to emphasize, is the conservative scenario.

A more mathematically realistic scenario is illustrated in Figure 4. Here, a blue variance line has been added at the -65% level, below the green -50% line. This would take the end of the secular bear out to 2025 – 2026 at S&P 450.

This post originally appeared at Advisor Perspectives.

Why is that the more likely scenario? If one looks at the variance from trend graphic, we observe extreme positive variances in 1901 (84%) and 1929 (82%) followed by dramatic corresponding negative variances in 1920 (-59%) and 1932 (-67%). The relatively moderate 1965 peak (57%) was followed by a moderate 1982 dip (-55%).

Unfortunately, in this case there is no precise correlation as there was for the 34 degree bear slopes. However, the rule seems to be that the more extreme variance goes in one direction, the more extreme it corrects in the other.

In 2000, we had variance of an unprecedented 155% above trend. There is no way to forecast how deeply the upcoming negative correction will be other than to assume it will probably be severe, that -65% is a realistic estimate and that it could very possibly drop even lower.

This would result in a situation where by 2025 the S&P at 450 has lost 65% of its December 2011 value. The market downturn would be worse than the 2008 – 2009 correction, with the current recession growing more severe but not as catastrophic as the deflationary Great Depression of the 1930’s. In other words, a “Great Repression.”

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Figure 4

Why wouldn’t there be a repeat of the Great Depression? One can only assume that Mr. Bernanke (a student of that event) or his successor would run the Treasury printing presses until they spewed smoke and flame in order to prevent another major deflationary event. What of the near term?

Upon close examination of the chart, one can see that during the past three secular bears there was always a small dip below the S&P trend line immediately preceding a sharp decline. Figures 5 through 7 illustrate when this occurred in 1915, 1930 and 1972.

Following these downward ‘blips’ there was brief rise in the market followed by a precipitous drop. I believe this phenomenon was repeated by the 2008 – 2009 drop (‘blip’) and 2009 – 2011 cyclical bull (Figure 8).

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Figures 5-8

Note another striking coincidence: in each case, the S&P fell precipitously to the -40% variance level (blue line in Figure 9 above green line). If this trend repeats a fourth time, the S&P will experience another decline in 2012 – 2013 to 580, a 54% decline in its current value.

The S&P would then likely rebound to straddle the 34 degree slope line to the end of the secular bear in 2022 – 2025, as previously discussed.

Click to View
Figure 9

The charts point to various long and short term scenarios for the market, several of which have a very high probability of coming to pass. Statistically, it is extremely unlikely that the mathematical patterns discussed here are simply due to random chance.

Taken as a group it would seem to be virtually impossible. Although the patterns are mathematically driven and not dependent upon world events it is fascinating how current events seem to be aligning with the near term pattern. In particular, the S&P decline indicated for 2012 – 2013 coinciding with the very likely disintegration of the Eurozone and euro.

Is there a silver lining for investors somewhere within this dark cloud? I believe there is, an extremely lucrative one that will make itself apparent in 2012 as the market tumbles.

It will be examined at that time in part 3 of this series.

This post originally appeared at Advisor Perspectives.

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Exxon Is Incredibly Bullish On The Future Of Hybrid Vehicles

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by Andrew Shen

ExxonMobil‘s new report anticipates 50 percent of cars on the road will be hybrids by 2040.

That’s up from only 1 percent today.

It expects that cars will get 48 miles per gallon; a big improvement from the current 27 MPG.

ExxonMobil’s 2012 Outlook for Energy says that the increase of hybrids will be mainly due to government policies on fuel economy around the world.

Unfortunately for Chevy and Nissan, electric vehicles are not expected to move into the mainstream.

Some other interesting predictions from the report:

  • Oil will still be the #1 source of energy
  • Global demand for natural gas will rise 60%
  • Nuclear capacity will grow over 80% globally
  • Geothermal and solar contributions will be limited
  • China will no longer be the leader in industrial growth

DON’T MISS: Reasons Why The Electric Car Won’t Be Popular Anytime Soon >

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Gone with the Wind Subsidies

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Nicolas Loris
December 9, 2011 at 10:52 am

The year 2012 marks a monumental yet depressing milestone for the wind energy industry: 20 years of tax credits.

The federal renewable energy production tax credit, which allows wind producers to take a 30 percent investment tax credit or receive a 2.2-cents-per-kilowatt-hour production tax credit, has been around since 1992. The tax credit expires at the end of 2012, and the wind energy advocates are already ramping up their efforts to include an extension in any end-of-the-year must-pass legislation. It’s time to let this wasteful, unnecessary subsidy run out.

The Wrong Way to Promote Technology

Let’s take it back to 1992. The parents are watching Murphy Brown, the kids are watching Full House, and people are rockin’ out to Nirvana and Dr. Dre. (Some things never change.) And wind was ready to usher in a new era of energy production. In fact, Matthew Wald wrote in a 1992 New York Times article, “A New Era for Windmill Power,” that “striking improvements in technology, the commercial use of these windmills, or wind turbines as the builders call them, has shown that in addition to being pollution free, they can now compete with fossil fuels in the cost of producing electricity.”

He went on: “Kingsley E. Chatton, president of U.S. Windpower, which operates 22 new-generation windmills here, said the economics of wind power was at the point where it ‘will compete with fossil fuel.’ Others agree.”

Twenty years of subsidies later, wind still only provides a paltry 2.3 percent of America’s electricity in 2010, and it still needs subsidies.

Jim Nelson, CEO of Solar3D, argues that government subsidies are obstructing innovation in the renewable-energy sector:

Operating subsidies, or installation subsidies, helps get clean energy sources installed but the problem is that current technology is not economically competitive. Everything we do needs to be done with a view toward global competitiveness. Unfortunately, because current technology is not economical relative to alternatives, it does not promote our competitiveness.

The problem is that subsidies promote technological malaise. They take away the incentive to innovate and lower cost by promoting business models geared more toward gaining favor with politicians than on technological innovation. The result is that subsidized industries quickly become dependent on government. At that point, long-term competitiveness becomes secondary to near-term survival, which is generally conditioned on more handouts.

Thus when the government support is threatened, the propped-up industry responds with pleas for more handouts. Recognizing that their survival depends more on securing subsidies than on technological innovation, subsidized industries reject such investments to the extent that they too are not subsidized by government. Hence, the vicious cycle of subsidies inevitably result in technological stagnation.

When 2.2 Cents Adds Up

That 2.2 cents doesn’t sound like much, but it is on average 40 percent of the wholesale price of electricity. Treasury says the tax credits costs taxpayers $1.5 billion annually. This is uncalled for. Not only is the nation facing $15 trillion of debt, but it already has access to ample supplies of diverse electricity sources that are perfectly capable of meeting our energy demands so long as government gets out of the way. Not only are the subsidies not needed, but they do not work. So regardless of our debt problems, taxpayers shouldn’t be subsidizing any energy source.

Artificially Creating Politically Preferred Jobs and More Lobbying Jobs Will Not Grow Our Economy

Wind-energy advocacy groups are on their megaphones screaming that without the extension of the tax credits, thousands of jobs will be lost. This is a half true, at best.

Subsidizing uneconomical industries, as perhaps the wind-energy tax credit has done for two decades, shifts labor and capital away from other sectors of the economy. Removing the subsidy would free up these resources to be more productive elsewhere in the U.S. economy. In the process, jobs that rely on taxpayer handouts would likely go away. But the newly available resources could then go toward the likely creation of more and better jobs.

If we produce more wind energy without subsidies, all the better, but the American Wind Energy Association says that may not be the case if the tax credit expires. Spokesman Peter Kelly said, “Industrywide we are seeing a slowdown in orders for towers and turbines after 2012 that is rippling down the supply chain and the big issue is the lack of certainty around the production tax credit that gives a favorable low tax rate to renewable energy.”

President of the Cheyenne and Laramie County economic development organization Randy Bruns echoed, “A lot of these projects, the economics change without that tax credit.”

If wind energy is not economically viable without the taxpayers’ crutch, then we’re propping up a market loser. If wind energy is a market winner, the subsidy is taking money out of the taxpayers’ wallets and putting into the hands of the wind producers. Neither case makes any sense.

Removing the government’s influence in the market reduces the need for more office space on K Street in Washington, D.C., the central hub of lobbyists. Just yesterday, Occupy Wall Street shut down K Street with protests, but they should direct their message to the root cause of lobbying—government controlling decisions that are best left for the private sector. If Occupy Wall Street is sincere in its fight against crony capitalism, it would be arguing for less government intervention into the economy, not more.

These problems will continue to persist so long as politicians continue to expand subsidies for their pet projects. When it comes to energy subsidies, we need to prevent the new and repeal the old.

That’s my 2.2 cents. I’d like to keep them in my own pocket.

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Obama’s campaign for class resentment

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By Charles Krauthammer, Published: December 8

In the first month of his presidency, Barack Obama averred that if in three years he hadn’t alleviated the nation’s economic pain, he’d be a “one-term proposition.”

When three-quarters of Americans think the country is on the “wrong track” and even Bill Clinton calls the economy “lousy,” how then to run for a second term? Traveling Tuesday to Osawatomie, Kan., site of a famous 1910 Teddy Roosevelt speech, Obama laid out the case.

It seems that he and his policies have nothing to do with the current state of things. Sure, presidents are ordinarily held accountable for economic growth, unemployment, national indebtedness (see Obama, above). But not this time. Responsibility, you see, lies with the rich.

Or, as the philosophers of Zuccotti Park call them, the 1 percent. For Obama, these rich are the ones holding back the 99 percent. The “breathtaking greed of a few” is crushing the middle class. If only the rich paid their “fair share,” the middle class would have a chance. Otherwise, government won’t have enough funds to “invest” in education and innovation, the golden path to the sunny uplands of economic growth and opportunity.

Where to begin? A country spending twice as much per capita on education as it did in 1970 with zero effect on test scores is not underinvesting in education. It’s mis-investing. As for federally directed spending on innovation — like Solyndra? Ethanol? The preposterously subsidized, flammable Chevy Volt?

Our current economic distress is attributable to myriad causes: globalization, expensive high-tech medicine, a huge debt burden, a burst housing bubble largely driven by precisely the egalitarian impulse that Obama is promoting (government aggressively pushing “affordable housing” that turned out to be disastrously unaffordable), an aging population straining the social safety net. Yes, growing inequality is a problem throughout the Western world. But Obama’s pretense that it is the root cause of this sick economy is ridiculous.

As is his solution, that old perennial: selective abolition of the Bush tax cuts. As if all that ails us, all that keeps the economy from humming and the middle class from advancing, is a 4.6-point hike in marginal tax rates for the rich.

This, in a country $15 trillion in debt with out-of-control entitlements systematically starving every other national need. This obsession with a sock-it-to-the-rich tax hike that, at most, would have reduced this year’s deficit from $1.30 trillion to $1.22 trillion is the classic reflex of reactionary liberalism — anything to avoid addressing the underlying structural problems, which would require modernizing the totemic programs of the New Deal and Great Society.

As for those structural problems, Obama has spent three years on signature policies that either ignore or aggravate them:

●A massive stimulus, a gigantic payoff to Democratic interest groups (such as teachers, public-sector unions) that will add nearly $1 trillion to the national debt.

●A sweeping federally run reorganization of health care that (a) cost Congress a year, (b) created an entirely new entitlement in a nation hemorrhaging from unsustainable entitlements, (c) introduced new levels of uncertainty into an already stagnant economy.

●High-handed regulation, best exemplified by Obama’s failed cap-and-trade legislation, promptly followed by the Environmental Protection Agency trying to impose the same conventional-energy-killing agenda by administrative means.

Moreover, on the one issue that already enjoys a bipartisan consensus — the need for fundamental reform of a corrosive, corrupted tax code that misdirects capital and promotes unfairness — Obama did nothing, ignoring the recommendations of several bipartisan commissions, including his own.

In Kansas, Obama lamented that millions “are now forced to take their children to food banks.” You have to admire the audacity. That’s the kind of damning observation the opposition brings up when you’ve been in office three years. Yet Obama summoned it to make the case for his reelection!

Why? Because, you see, he bears no responsibility for the current economic distress. It’s the rich. And, like Horatius at the bridge, Obama stands with the American masses against the soulless plutocrats.

This is populism so crude that it channels not Teddy Roosevelt so much as Hugo Chavez. But with high unemployment, economic stagnation and unprecedented deficits, what else can Obama say?

He can’t run on stewardship. He can’t run on policy. His signature initiatives — the stimulus, Obamacare and the failed cap-and-trade — will go unmentioned in his campaign ads. Indeed, they will be the stuff of Republican ads.

What’s left? Class resentment. Got a better idea?

letters@charleskrauthammer.com

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Whitewashing History, Obama Style

Mike Brownfield

December 9, 2011 at 10:16 am

If U.S. history is a painting on a giant canvas, President Barack Obama’s speech this week in Osawatomie, Kansas, is a thick coat of whitewash layered all over it, and the failure of the last three years lies underneath. The President’s pretense is that, no, it’s not Obamanomics that has caused persistent unemployment, stunted growth and record deficits–it’s supply side economics!

Talk about audacity.

The President’s speech was a naked portrayal of his vision of America–one where inequality runs rampant, where the American dream is nearly dead, where the rich oppress the poor, where education is undervalued. As Charles Krauthammer observes this morning in The Washington Post, “That’s the kind of damning observation the opposition brings up when you’ve been in office three years.”

Indeed, what was glaringly absent from the President’s portrait was the fact that his economic policies have failed to put Americans back to work and his absolute inability to lead Washington toward combating rampant government spending. His solution, moreover, was more of the same stuff that has failed spectacularly for him: government as the great savior.

But in President Obama’s mind, it is others who offer ideas that don’t work, not him. He points to “a certain crowd in Washington” that argues for tax cuts and reduced regulations, calling it “a simple theory” that “fits well on a bumper sticker” but “has never worked.”

Correction, Mr. President. It has worked–time and time again throughout history. The trouble is, Mr. Obama has never tried it, and the Keynesian economic policies he enacted fell flat on their face, just as they have throughout history.

It started with a massive $787 billion stimulus bill that White House economists predicted would create (not merely save) 3.3 million net jobs by 2010. It was Keynesian economics at its finest, based on the premise that government spending would spark demand and put Americans back to work.

It didn’t. Some 13.3 million Americans remain out of work, the unemployment rate has hovered between 8 and 10 percent throughout Obama’s presidency, and economic growth has been stuck on slow. In fact, today America is witnessing the longest stretch of such high unemployment in the postwar era. Meanwhile, job creation has hit a record low, as Heritage’s James Sherk explains:

Fewer existing businesses are expanding, while fewer entrepreneurs are starting new businesses. In the first quarter of 2011, the number of workers hired in new business establishments fell to just 660,000, 27 percent fewer than when the recession began. This is the lowest number of workers hired at new businesses that the Bureau of Labor Statistics has ever recorded–lower even than the worst points of the recession.

Yet despite these numbers — and the fact that President Obama had near-free rein to enact the Keynesian economic policies he saw fit — the President is now demagoguing the one economic policy he hasn’t tried — supply-side economics — while calling for more government spending all as America’s debt is deepening. He would do better to study history and get a grasp of how cutting taxes and freeing the market has worked when employed by both Democrats and Republicans.

Lowering tax rates, thereby allowing people to keep and invest more of the money that is rightfully theirs, has proven good for the economy time and time again. In the 1920s, 1960s, and 1980s, tax rate reductions resulted in faster growth, rising incomes, and more job creation. And despite the President’s claim that cutting taxes only helps the rich, when tax rates were lowered in those decades, higher-income Americans paid an even greater share of the tax burden because they had fewer reasons to hide, shelter, and under-report income. But if taxes are increased — as President Obama continues to threaten — the price of working, saving, investing, and taking risks goes up, too.

History bears this out. Daniel Mitchell writes that in the 1920s, under Presidents Warren Harding and Calvin Coolidge, the top tax rate was reduced from 73 percent to 25 percent. The result? The economy expanded, growing by 59 percent between 1921 and 1929, with annual economic growth averaging more than 6 percent. Under President Kennedy, the top rate dropped from 91 percent in 1963 to 70 percent by 1965. The result? Between 1961 and 1968, the economy expanded by more than 42 percent, with average annual growth of more than 5 percent. Under President Reagan, the top tax rate fell from 70 percent in 1980 to 28 percent by 1988, leading to incredible economic expansion and average growth of nearly 4 percent. Finally, in the six quarters following the 2003 tax cuts, the GDP’s growth rate shot up to 4.1 percent from 1.7 percent before.

But the President doesn’t have to take The Heritage Foundation’s word for it. He can heed the words of President Kennedy in his 1962 speech to the Economic Club of New York:

Our true choice is not between tax reduction, on the one hand, and the avoidance of large federal deficits on the other. It is increasingly clear that no matter what party is in power, so long as our national security needs keep rising, an economy hampered by restrictive tax rates will never produce enough revenues to balance our budget just as it will never produce enough jobs or enough profits.

Unfortunately, President Obama does not appear open to advice, nor does he seem cognizant of history–be it that of 10, 20, 40, or 90 years ago, or even his experience of the last three years. Instead, he is damning the torpedoes and continuing to pursue a liberal, progressive agenda that has proven to be a failure. As they have for the past three years, Americans will pay the price.

Quick Hits:

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Corpus Christi, TX / Spain: Fairmount Marine Delivers Topside for Castor Project

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Fairmount Marine’s powerful tug Fairmount Expedition has safely delivered a 18,000 ton topside for process, utilities and living quarters for the Castor project offshore Spain. The topside was loaded onto Heerema’s H-541 barge and towed from Corpus Christi towards Spain.

The Castor project is a 1,3 billion cubic meters submarine gas storage project at a depth of 1,800 metres, 12 miles offshore Valencia at the east coast of Spain in the Mediterranean Sea. The topside was build in Corpus Christi, US.

Fairmount Marine was hired for the towage across the North Atlantic by Heerema Marine Contractors. Tug Fairmount Expedition had to mobilize the barge H-541 from Flushing, the Netherlands, to the US first.

Upon arrival of tug and tow in Corpus Christi, the topside was loaded onto the barge, where after the barge was prepared for towage across the North Atlantic. On the morning of October 12th, the Fairmount Expedition crew started with preparations for the towage connection. After the towage connection was established the convoy left Corpus Christi around noon the same day.

In the meanwhile Heerema Marine Contractors crane vessel Thialf was brought into position in the Castor field in order to install the topside which was being delivered by Fairmount Expedition. Fairmount Expedition maintained stand-by in the Castor field. Once the topside was taken of the barge H-541, Fairmount Expedition commenced demobilization of the barge.

The total 12,068 mile voyage (Flushing/the Netherlands – Corpus Christi/US – Tarragona/Spain) took just 50 days, with a just in time delivery of the topside by Fairmount Expedition.

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