Moon and Venus - February 27, 2009, 1:30pm PST

For once, Venus in the daytime is actually brighter than the moon! Go and check it out for yourself!

Right this minute they're both pretty much right overhead. They'll be a couple of hours behind the sun today, whenever you look. If you look. (Behind the sun in this case means lagging a couple of hours behind it, meaning to the east of it.)

In case you were getting too optimistic. . .

The weather is beautiful, I'm playing more music with more people and learning more tunes than ever, I'm preparing to do some paintings, and everything seems quite superb.

...but wait... what's this...?

Mike Morgan Behind Enemy Lines:

Thursday, February 26, 2009

Chaos, Catastrophe, Crime and Consequences

Last week and early this week we took trading profits on our short positions. I thought we would see a move higher over the next week or two, but with what has unraveled during the past 48 hours, I now believe we are headed lower before any rally can take place. I don’t know when the rally starts, but right now the news is grim and getting much darker.

My biggest warning to everyone has been the destruction of fiduciary money – pension funds, endowments, trusts, charities, etc. The boys on Wall Street have raped these funds and filled them with junk. Junk in the form of bogus joint ventures, overpriced assets and derivatives that generated huge commissions. As this unfolds, we will enter something akin to anarchy. In fact, we are at the precipice of anarchy right now. Our politicians have joined the Economic Royalists in providing them with the means to rob us blind and leave the world in financial collapse. Moreover, since we are allowing them to keep the money, the same criminals will be the ones to profit from the global financial collapse.

With that said, we reversed course yesterday and today, and put on additional shorts in banking, builders, REITs, restaurants and even oil. I know my oil call was totally against the grain, but despite what the experts say about a technical bottom in oil and upcoming cuts by Opec . . . we are driving less, trucking less and the ships at sea are the lightest they have been in decades. In fact, we have more ships sitting at anchor than ever before. Moreover, Opec is NOT going to cut. They may say they are going to cut, but the next Opec conference will leave a bunch of greedy pikers pumping more oil to make up for the fall in prices.

For clients, we will expand on these issues on the Friday morning call.

We are seeing a meltdown on a global scale. There are seven “C” words that deserve attention.

1 – Catastrophe – Obama uses this word on a regular basis to describe what is going to happen if we don’t keep throwing more money at the problem. Little does he realize the word is reality.

2 – Confidence – Obama had the confidence of the US and the world. In Europe he had a 77% - 90% approval rating last month. That has dropped, but we have not seen a new poll. In the US, just talk to your neighbors and you will see that very few people have confidence in Obama. In fact, he loses more of our confidence every time he talks . . . and that’s a lot. His daily ObamaRamaLamas on TV have become painful. Newsweek ran a cover – The Confidence Game – How Obama Can TALK Us Out of a Depression.

I have news for you, you can’t talk your way out of this. This is not Hollywood where they can write the ending. Obama has great speech writers and he is smooth on his feet, but he lack any substance. And I will repeat . . . he has surrounded himself with huge egos that don’t play well with others . . . and they are running around the White House with scissors.

3 – Consequences – This is the key word to solving the global financial crisis. Go after the crooks like Hank Paulson that stole billions. Make them pay the consequences. I suggest we line up Paulson, Thain, Mozilla, Lewis, Sandler, Dodd, Frank and a few others. We ask them to return the money and to create laws that will be enforced. If they so no, we shoot one. I can guarantee the rest of them will run to return what these guys stole, and Dodd and Frank will crap in their pants. That’s another favorite “C” word. I know this sounds off the wall and harsh, but what thousands of men like this did is to destroy the lives of millions of people. Obama likes to compare himself to Lincoln. Well, Lincoln called men like this traitors. We shot traitors in Lincoln’s day.

4 – Crapola – This one has double significance. First, the only thing we are hearing from the talking heads on TV and the baboons in charge in Washington is . . . crapola. Second, that is what we are going to be eating while guys like Paulson will be dining on the other “Cs” . . . caviar, cake, croissants, crawfish, cheese and cognac.

5 – Collusion: secret agreement or cooperation especially for an illegal or deceitful purpose. That, my friends, sums up what we have just witnessed over the past 10 years between guys like Chris Dodd, Barney Frank, Chris Cox, Angelo Mozilla, Dick Cheney, Robert Rubin, Hank Paulson and hundreds of others. I did not include George Bush, because he was simply so out of touch with reality, that he had no clue what was going on, and he left it all to Cheney and his Buddies.

6 – Crime – With what I see and hear, I believe we will see unbelievable spikes in crime throughout the world. For the US and beyond, as the weather warms into Spring and Summer, the masses will not sit back and do nothing. To the contrary, as we are seeing in warmer climates like Madagascar, Guadalupe and Martinique, the masses are already rioting. If you think the 1969 riots were horrible, I believe this year will make that look like a kiddie parade. We now have organized gangs on top of millions of angry people. We now have millions of unemployed that have no jobs and their 401k plans have been destroyed. We now have millions of people that don’t know if they can put food on the table much longer. If Obama wants to talk about Lincoln, let him go back and consider what happened during the Civil War. And if you think we cannot fall into anarchy like that again, you are only fooling yourself.

7 – Chaos: a state of utter confusion. I think that sums up where we are at today.

Unless we go after the economic terrorist and claw the money back, we will see violence on an unprecedented scale this year. We didn’t have huge shopping malls in 1969, but the downtown shops were all looted and burned. I saw it first hand in Asbury Park, New Jersey. That was 40 years ago . . . one Biblical generation. The malls will be looted and destroyed. Grocery stores the same. I do not see anyway to avoid this . . . IF we stay on the same course we are on.

Dillon Radigan on Fast Money this evening was bold enough to say we need to go after the crooks like Paulson, Mozilla, etc. He didn’t mention them by name, but he analogized them to terrorists.

I leave you with the only “C” word we should be concentrating on . . . Consequences. If we fail to force the thieves to pay the consequences for creating a world of financial crisis, we must pay the horrible consequences of financial ruin and chaos.

And if we don’t take control of our destiny, in the end, guys like Paulson, Mozilla, Dodd and Frank still have to report to the Boss.

Romans 14:11-12 It is written: " 'As surely as I live,' says the Lord, 'every knee will bow before me; every tongue will confess to God.' So then, each of us will give an account of himself to God.

Posted by Mike Morgan, J.D., RIA at 8:12 PM

Wonder why it seems we have less disposable money?

Surely bankruptcies rates are high because of all that stuff we buy, right? Now that we have two income families, Americans have more money to buy stuff than ever, even adjusted for inflation, don't they?

Things have gotten much worse since this interview was made.

Frontline interview conducted with Elizabeth Warren, professor of law at Harvard University and bankruptcy expert, on Sept. 20, 2004:

Isn't it really simplistic to say that credit cards, ... if you will, ... [are] pushing the bankruptcy rate higher and higher? Isn't it America's lifestyle? Isn't it in the ... consumer culture that we want all these things?

I wish it were. I went into this research with my finger out and sharpened, ready to say to American families, "Bankruptcies are up because you're spending too much on stuff." ... The problem is, when you look at the data, you really actually look at the numbers ... what were a mom, dad and two kids in the early 1970s spending on clothing compared with what a mom, dad and two kids are spending on clothing today? You know what I found? Adjusted for inflation, today's family is spending 22 percent less than the family a generation ago.

How about food, eating out? Surely families are spending much more today than they did a generation ago. No. What the numbers actually show is that they're spending about 21 percent less than they spent a generation ago. Appliances -- today they're buying microwave ovens and espresso machines. ... Turns out, families today are spending 44 percent less on appliances than they spent a generation ago. We could go through the whole list -- furniture, ... floor coverings, tobacco. ... We spend a little more on alcohol, but all those other things are down, down, down. ...

In other words, families aren't going broke because of ordinary consumption. It's just not what the numbers show. Where are families going broke? The mortgage, that's up about 70 times faster than a man's wages over the last 30 years. Health insurance, also up about 70 times faster. A second car, because now Mom and Dad are both in the workforce, and they're more likely to live in a more distant suburb. Child care ... and after-school care, college tuitions. ... Today's family has put two people into the workforce, but for the medium-earning family, they've got 75 percent more money than their parents had a generation ago. But by the time they make those four basic purchases -- the mortgage, their health insurance, their cars and their child care -- they have less money to spend on everything else than their parents had a generation ago. American families are under the gun financially, but they're under the gun because of big purchases, mortgages, health insurance ... two cars, child care. ... They're not under the gun because they spent too much when they went to the mall. Families are just trying to make it in the heart of the middle class, and expenses have just shot out of the reach of the medium-earning family.

Mike Morgan is Not Pleased with Obama and Biden So Far

Mike is a little shrill.

Mike Morgan: Behind Enemy Lines:

Where Did The Bailout Money Go? - The first installment of $350B went directly to the economic royalists. We gave $250B to banks in exchange for stock worth less than $200B. And we gave $40B to AIG for what will become a total zero. And there is $60B is some kind of limbo fund. By the way, even the media keeps talking about the lack of transparency for the money we have spent . . . that is hogwash. If Obama wanted to “do the right thing” he could re-write the terms of the first installment of TARP money and demand the recipients either return the money or give us full transparency. In fact, Obama can re-write ALL of the terms of the first installment. He can demand more stock. He can limit bonuses, compensation, perks and anything else he wants.

Why? How? Well there is one thing King Henry did right. The terms of the TARP provide that the next administration can re-write anything and everything.

So what is Obama waiting for?

Why is Obama ranting about the first installment, but not doing anything?

And why doesn’t the media bring this to light?

Easy answer. The economic royalists would not like that. The media is also owned and run by the economic royalists. So once again, here is a fact that support my position that Obama is either a hypocrite or a pathological liar. There is a third option.

“If stupidity got us into this mess, then why can’t it get us out?” - Will Rogers

In all due respect to Will, I want to put a spin on this one . . .

“If stupid, lying, cheating bankers got us into this mess then why can’t stupid, lying cheating bankers get us out of this mess?” - Mike Morgan

Bailout II - I can’t simply leave it at that, because we have Tim “the tax cheat” Geithner getting ready for Bailout II, the sequel. Before he puts his tax cheating feet in his mouth, maybe he should unravel Bailout I. He could start with the missing $78B representing the disparity the Congressional Oversight Panel came up with between what we got for what we gave. Hey, that $78B represents more than 20% of what he’s going to spend this week. Why not clean up Bailout I before screwing up Bailout II?

Where Is the Bailout and StimUseless Money Coming From? - I’m glad you asked that question. It’s a complicated answer. You see the Tooth Fairy (hereinafter TF) hooked up with the Easter Bunny (hereinafter EB). TF and EB came up with a plan to monetize the faith millions of kids have in them. To do this they created nothing out of thin air and sold it to Goldman Sachs. Goldman Sachs then went to the pension fund managers, that wanted to make new, creative, innovative and hard to understand deals, so they could continue to suck up their bonuses. Voila, so now you know the secret.

Hypocrites or Pathological Liars - Obama has referred to Wall Street bonuses as “shameful” and “the height of irresponsibility.” Biden joins the fray with “I’d like to throw these guys in the brig..” Go ahead. But start with Chris Dodd and Tim Geithner . . . and half the US Senate and Congress.

If these two hypocrites wanted to really do something, they can. As I noted above, they can re-write the rules governing the money they handed out. That would be a good start. If they don’t, they have nothing to complain about when more bonuses are handed out. But if either one of these pathological liars wants to demonstrate that I am wrong . . . do something about it, or shut your lying trap.

[. . .]

Anyway, back to the Treasury Avalanche. Plugging the budget deficit is not going to be easy. This fact has not gone unnoticed. How could it? The Treasury is bringing back the seven-year note after a 16 year hiatus. Not only that, but they are going to sell them every month. Not only that, but they are going to start selling the 30-year bond every month. And not only that, but China and Japan are not going to be buying like it’s 1999, because we’re not buying their chatchkas anymore.

So what? Well . . . I’m no economist, but this can’t be good. If we can’t borrow the money we are spending, are we really spending it? Yes, but that means we just have to print it. And isn’t that what happened in the Weimar Republic and what is going on in Zimbabwe?

Rates will go up to attract more money into Treasuries. That sucks more money out of the economy and private capital and liquidity. Why would people buy stocks or invest in unproven businesses, when they can buy US Government guaranteed debt? So until we accept the consequences of what we’ve done, there is no hope that continuing to borrow will get us out of this mess. As you can see, the folks we borrow from are not happy with us, and we’ve kinda, sorta destroyed our credit rating as a country by acting like an Orange County Housewife with a stash of credit cards in Saks.

[. . .]

Waiting for the Messiah - That is not my headline. It was a headline in The Economist last week. I wasn’t going to use it, but it is very fitting. 92% of French citizens polled think Obama will have a positive impact on international events. European governments are operating in an environment of fear. They don’t want to do anything remotely possible that would upset the Messiah, for fear of enraging their own citizens who are waiting for Obama’s every word. In fact, the lowest rating Obama received was 77% in Britain. I want to point out one thing. Can you imagine the displeasure these people will feel when Obama either lets the down outwardly or lets the world down . . . as he continues to push money to the economic royalists?

How we got into this mess

a little video of Congressman Paul Kanjorski telling us what he was told happened one day in September, one Thursday when "in a matter of an hour or two" $550 billion was drawn out of the
Money Market accounts. After pumping $105 billion into the bottomless pit, they closed the accounts. Estimates were that had they not closed down, by 2pm $5.5 trillion would have been pulled out of the system, collapsing the US economy. The next day the world's economy would have failed. He says.

Publish Post

Denninger is not pleased with Obama's Economic Strategy thusfar...

Get the feeling that all the bluster over the economy, all the "remedies" and "bailouts" are missing the point and failing to address the core issues? So does Mr. Denninger...

Obama: The Market Is Issuing You A WARNING

Tuesday, February 10. 2009

Posted by Karl Denninger at 06:56

in The Market Ticker:

[. . .]

Treasury is sitting on several trillion in backstops and financing of loans to cover "assets" that are in fact worth zero. It winds up eating the entire face value, while the Hedge Funds have made off with all of the coupon money in the meantime!

The risk here is that Treasury is backed into a corner due to ramping yields and perhaps even inability to roll over this debt at all and we find ourselves forced into immediate cash accounting as a nation. This in turn causes the instantaneous cessation of Social Security and Medicare payments, as that is the only bucket big enough to cover the shortfall.

Do you really want to go down that road Mr. President, because that is precisely what's at the end of it, and it may be only a year or two out!

If you think nobody beyond your vaunted administration has figured it out YOU ARE WRONG.

If you think Americans will pay taxes to an institution that intends to knowingly allow Hedge Funds to make hundreds of billions of dollars in profit while sticking the taxpayer with upwards of $2 trillion in losses and destroying all entitlements in a few years' time I suggest you have a mental examination and get your lithium dose adjusted.

Your approval rating and in fact American's tolerance of this blatant fraud, theft and chicanery is about to go straight down the toilet.

If you have an interest in having a successful Presidency (not to mention any chance of a second term or even a stable, sound America to be President of) you must immediately do all of the following:

• Revoke ALL of the so-called "23A Exemptions." Bernanke issued them, you need to direct him to revoke them. Safety and soundness of the banking system must come before any one firm or group of firms. There are literally hundreds of banks that are perfectly sound. There are also a bunch of big campaign contributing banks that are bankrupt and have been for the last eighteen months. Americans know this - the secret is out and its time to quit LYING.
• Send in the examiners. Yeah, I know, you're talking about "stress tests". Uh huh. Let's have those examinations now and forevermore in the future be public information. If a bank wants to operate under our laws and have the privilege of fractional reserve banking, they can open their books and examinations at all times to the public. Period.
• No more conduits, no more SIVs, no more games. If your "assets" are worth 20 cents on the dollar today that is their price. If that makes you insolvent then you are - period. We have an FDIC and we have the authority to "cram down" failed institutions for a reason. Use it.
• Send in the cops. The actions of major institutions up and down the line since this crisis began in mid 2007 and in the years leading up to it is at best grossly negligent and at worst felonious. We the people are done with being the patsies of a handful of thieves and frauds enabled by the 535 crooks in our Capitol. STOP IT NOW and start jailing the crooks or be judged as one of the felons. Your choice.

We are approaching yet another market implosion just like the one in September and October.

While it may come today or tomorrow, I wouldn't take that bet. In fact I expect that people will "rejoice" that you didn't wipe every common stockholder's equity stake in firms like Citibank, Bank America and Goldman Sachs - even though you should. Because I expected you to do the wrong thing, I actually bought some Citibank stock a short while ago. Were you to do the right thing my position would be worthless. It should be worthless. I'll bet its not - at least not immediately (and that I'll make a profit as a consequence of your idiocy.)

When and if this dislocation comes, however, it will destroy what is left of the American Banking System, it will expose that Bernanke has over one trillion dollars of garbage on The Fed's Balance Sheet, and that in turn will destroy the international market for United States Treasury Debt.

In the best case we wind up like Japan and have a bunch of zombies sucking up capital and doing nothing of value for our economy. In the worst case we get much higher yields in the bond market and the near-immediate bankruptcy of hundreds of midsize and larger firms, including virtually all financial firms in the S&P 500 and DOW, along with all major multinationals that have a captive financing function.

The Government cannot backstop it all. If you try the government fails outright. The market is bigger than you, it is bigger than The Fed, it is bigger than Treasury. You are subservient to The Market, not the other way around. Go ask Bill Clinton about The Bond Market when he tried to ramrod his Hillarycare plan through and what the reaction was. That's 1/100th of what you're about to experience.

If Bernanke tries to "cap" yields into such a dislocation (he has threatened to) he will cause everyone who owns Treasury debt to tender it to him with the consequence that he will be forced to print five trillion dollars in "new money". This will result in an eighty percent devaluation of the dollar almost instantaneously; gasoline will go to $10/gallon, Milk to $15/gallon, a loaf of bread to $10 and a hamburger at McDonalds will likewise be $10. Due to global wage arbitrage wages will not increase; this will as a consequence immediately render 50% or more of Americans homeless, hungry and jobless. What do you think happens next Mr. President?

The disease in our financial system is lying, too much leverage, outright fraud and hidden bankruptcy - all of it perpetrated through and with the explicit permission of government agencies including Congress, The Executive and The Fed. We have lived beyond our means through fraud for nearly 20 years and this is no longer possible. As a direct consequence trust has been destroyed and private capital has fled our credit markets and will not return so long as these diseases remain in the system.

Hiding the facts cannot cure the disease; the excessive debt must be defaulted; you cannot fix it by transferring where the leverage goes, such as to Treasury or The Fed. The liars and frauds must be exposed, charged and locked up, not protected and bailed out. Standards of living will contract and people must learn to live within their ability to earn, including the government, irrespective of politicians that think they can promise to borrow ever-increasing sums forever.

President Obama, this next crash in the markets, if it occurs, is your sole responsibility.

It will come as a consequence of your policies where you intend to try to shift the BANKRUPT institutions' losses to The Taxpayer - a debt that America cannot finance and which foreign governments and investors WILL NOT cover.

I'm well-aware of the Washington DC policy called "kick the can" but the can is now full of cement and if you think you'll get through your term before this all comes home to roost you are, to be polite, nuts.

You must stop the stupidity and you must stop it NOW.

The game of obfuscation and literally violating investors both foreign and domestic as a consequence of fraud countenanced by our government is over.

Both Americans and foreigners know about the lying and fraud; it is pointless to continue to dissemble and obfuscate as you are merely making a fool of yourself.

If you do not understand this and are being led by your "advisers", many of whom are the very people who advocated the changes in policy over the last 20 years that brought us here, you need new advisers, and you need them today.

By tomorrow it may not matter, and it will certainly be your fault.

Panetta ignorance about Iran not inspiring

I've heard every progressive talking head tell what a wonderful guy Leon Panetta is. . .

from Charles Davis via A Tiny Revolution:

Thursday, February 05, 2009

Who needs intelligence in Washington?

In his confirmation hearing before thee Senate Intelligence Committee, President Obama's pick to head the CIA, Leon Panetta, said he believed Iran was pursuing nuclear weapons -- contrary to the opinion of the intelligence community he is about to lead -- in this exchange with Senator Evan Bayh (D-IN), who had his own problems with the facts (and the views of international inspectors and the U.S. intelligence community):

SEN. BAYH: There was a -- and this involves the National Intelligence Estimates. We had an unfortunate case -- I'm sure you're aware of -- with regard to Iran, where the way in which the National Intelligence Estimate was written highlighted the fact that apparently they suspended the weaponization aspect of their program. Then, in the footnote, it noted that they continued to pace with their attempts to develop fissile material and delivery capabilities and those kind of things, and in fact may have restarted their weaponization efforts. We just don't know.

So I would encourage you -- just a comment -- to look very carefully how these things are written, because that really undermined our diplomatic efforts to gather our allies to put pressure on Iran to stop those kind of activities. So my comment, my question, is, is it your belief that Iran is seeking a nuclear military capability? Or are their interests solely limited to the civilian sphere?

MR. PANETTA: From all the information that I've seen, I think there is no question that they are seeking that capability.

There’s of course several problems with this exchange, but let’s begin with Bayh’s patently false assertion that the 2007 National Intelligence Estimate on Iran (NIE) declared in a footnote that Iran “may have restarted their weaponization efforts. We just don’t know.”

Since Bayh, a member of the Intelligence Committee, can’t recall the actual findings of the NIE, perhaps we should recap for the confused senators that might be reading this: it declares on behalf of all 16 U.S. intelligence agencies that “We judge with high confidence that in fall 2003, Tehran halted its nuclear weapons program.” The footnote to that statement declares:

For the purposes of this Estimate, by “nuclear weapons program” we mean Iran’s nuclear weapon design and weaponization work and covert uranium conversion-related and uranium enrichment-related work; we do not mean Iran’s declared civil work related to uranium conversion and enrichment.

So, in fact, the ‘07 NIE (pdf) explicitly states with “high confidence” that Iran has ended its “nuclear weapons program”, defined as its “nuclear weapons design and weaponization work” -- decidedly not, as Bayh asserts, “that they may have restarted their weaponization efforts. We just don't know.” Those findings have been a thorn in the side of hawkish, fear-mongering politicians since it came out -- "an unfortunate case" in Bayh's words -- but it seems to have largely been forgotten or dismissed by America's elite politicians and journalists.

As for Panetta, it would be interesting to hear what information he has seen that the Bush administration’s Director of National Intelligence Mike McConnell hasn’t (and why he didn't correct Bayh's distortion of the NIE). Speaking last month with PBS’s Charlie Rose, McConnell declared his belief that “Iran wants to build a nuclear weapon”, but added, “I cannot prove that.”

Meanwhile, in March of last year Bush administration Deputy Director of National Intelligence and Chairman of the National Intelligence Council Thomas Fingar stood by the findings of the ’07 NIE in an interview with the Council on Foreign Relations. “The judgments would be the same,” he said. “[Y]ou don’t have a bomb unless you can produce a device and weaponize it. That’s what’s stopped.”

In its most recent report (pdf), the International Atomic Energy Agency (IAEA) also declared that “The Agency has been able to continue to verify the non-diversion of declared nuclear material in Iran.”

Nothing in the reports issued by the IAEA or the U.S. intelligence community back the Cheney/Obama/Panetta claim that Iran is actively pursuing nuclear weapons. Nevertheless, there is a clear pattern of Obama administration officials ignoring these findings, while offering no evidence to justify their claims.

Posted by Charles Davis at 10:55 PM

$100 laptop? Try $20

Physorg is hot today...

Physorg.com:

India's $10 Laptop to be revealed Feb. 3

January 30th, 2009 by Lisa Zyga in Electronic Devices / Consumer & Gadgets

(PhysOrg.com) -- On February 3, the Indian government will display a prototype of the Rs 500, a $10 laptop that will hopefully give more young people the opportunity to learn and help increase the country's school enrollment.

The $10 laptop project is the product of a collaboration among institutions including the Vellore Institute of Technology, the Indian Institute of Science, and IIT-Madras. The project began about three years ago in response to the proposed $100 laptop (the "One Laptop Per Child" project), an idea from MIT's Nicholas Negroponte, which was going to cost $200. Currently, the $10 laptop is projected to cost $20, but India's secretary of higher education R. P. Agarwal hopes that price will come down with mass production.

The $10 laptop will be equipped with 2 GB of memory, WiFi, fixed Ethernet, expandable memory, and consume just 2 watts of power.

Huge Breakthrough in LEDs

Physorg.com:

A new way of making LEDs could see household lighting bills reduced by up to 75% within five years.

Gallium Nitride (GaN), a man-made semiconductor used to make LEDs (light emitting diodes), emits brilliant light but uses very little electricity. Until now high production costs have made GaN lighting too expensive for wide spread use in homes and offices.

However, with funding from the Engineering and Physical Sciences Research Council (EPSRC), the Cambridge University based Centre for Gallium Nitride has developed a new way of making GaN which could produce LEDs for a tenth of current prices.

GaN, grown in labs on expensive sapphire wafers since the 1990s, can now be grown on silicon wafers. This lower cost method could mean cheap mass produced LEDs become widely available for lighting homes and offices in the next five years.

Based on current results, GaN LED lights in every home and office could cut the proportion of UK electricity used for lights from 20% to 5%. That means we could close or not need to replace eight power stations.

A GaN LED can burn for 100,000 hours so, on average, it only needs replacing after 60 years. And, unlike currently available energy-saving bulbs GaN LEDs do not contain mercury so disposal is less damaging to the environment. GaN LEDs also have the advantage of turning on instantly and being dimmable.

Professor Colin Humphreys, lead scientist on the project said: "This could well be the holy grail in terms of providing our lighting needs for the future. We are very close to achieving highly efficient, low cost white LEDs that can take the place of both traditional and currently available low energy light bulbs. That won't just be good news for the environment. It will also benefit consumers by cutting their electricity bills."

GaN LEDs, used to illuminate landmarks like Buckingham Palace and the Severn Bridge, are also appearing in camera flashes, mobile phones, torches, bicycle lights and interior bus, train and plane lighting.

Parallel research is also being carried out into how GaN lights could mimic sunlight to help 3m people in the UK with Seasonal Affective Disorder (SAD).

Ultraviolet rays made from GaN lighting could also aid water purification and disease control in developing countries, identify the spread of cancer tumours and help fight hospital 'super bugs'.

Source: Engineering and Physical Sciences Research Council