http://www.alternet.org/story/95126/the_delusion_revolution:_we're_on_the_road_to_extinction_and_in_denial_/?page=entire
THE DELUSION REVOLUTION: WE'RE ON THE ROAD TO EXTINCTION AND IN DENIAL
......The Revolutions of the Past
To think about a new future, we need to understand the present. To do that, I want to suggest a way of thinking about the past that highlights the three major revolutions in human history -- the agricultural, industrial and delusional revolutions.
The agricultural revolution started about 10,000 years ago when a gathering-hunting species discovered how to cultivate plants for food. Two crucial things resulted from that, one ecological and one political. Ecologically, the invention of agriculture kicked off an intensive human assault on natural systems. By that I don't mean that gathering-hunting humans never did damage to a local ecosystem, but only that the large-scale destruction we cope with today has its origins in agriculture, in the way humans have exhausted the energy-rich carbon of the soil, what Jackson would call the first step in the entrenchment of an extractive economy. Human agricultural practices vary from place to place but have never been sustainable over the long term. Politically, the ability to stockpile food made possible concentrations of power and resulting hierarchies that were foreign to gathering-hunting societies. Again, this is not to say that humans were not capable of doing bad things to each other prior to agriculture, but only that what we understand as large-scale institutionalized oppression has its roots in agriculture. We need not romanticize pre-agricultural life to recognize the ways in which agriculture made possible dramatically different levels of unsustainability and injustice.
The industrial revolution that began in the last half of the 18th century in Great Britain intensified the magnitude of the human assault on ecosystems and on each other. Unleashing the concentrated energy of coal, oil and natural gas to run a machine-based world has produced unparalleled material comfort for some. Whatever one thinks of the effect of such comforts on human psychology (and, in my view, the effect has been mixed), the processes that produce the comfort are destroying the capacity of the ecosystem to sustain human life as we know it into the future, and in the present those comforts are not distributed in a fashion that is consistent with any meaningful conception of justice. In short, the way we live is in direct conflict with common sense and the ethical principles on which we claim to base our lives. How is that possible?
The delusional revolution is my term for the development of sophisticated propaganda techniques in the 20th century (especially a highly emotive, image-based advertising system) that have produced in the bulk of the population (especially in First World societies) a distinctly delusional state of being. Even those of us who try to resist it often can't help but be drawn into parts of the delusion. As a culture, we collectively end up acting as if unsustainable systems can be sustained because we want them to be. Much of the culture's storytelling -- particularly through the dominant storytelling institution, the mass media -- remains committed to maintaining this delusional state. In such a culture, it becomes hard to extract oneself from that story.
So, in summary: The agricultural revolution set us on a road to destruction. The industrial revolution ramped up our speed. The delusional revolution has prevented us from coming to terms with the reality of where we are and where we are heading. That's the bad news. The worse news is that there's still overwhelming resistance in the dominant culture to acknowledging that these kinds of discussions are necessary. This should not be surprising because, to quote Wes Jackson, we are living as "a species out of context." Jackson likes to remind audiences that the modern human -- animals like us, with our brain capacity -- have been on the planet about 200,000 years, which means these revolutions constitute only about 5 percent of human history. We are living today trapped by systems in which we did not evolve as a species over the long term and to which we are still struggling to adapt in the short term.
Realistically, we need to get on a new road if we want there to be a future. The old future, the road we imagined we could travel, is gone -- it is part of the delusion. Unless one accepts an irrational technological fundamentalism (the idea that we will always be able to find high-energy/advanced-technology fixes for problems), there are no easy solutions to these ecological and human problems. The solutions, if there are to be any, will come through a significant shift in how we live and a dramatic downscaling of the level at which we live. I say "if" because there is no guarantee that there are solutions. History does not owe us a chance to correct our mistakes just because we may want such a chance.
I think this argues for a joyful embrace of the truly awful place we find ourselves. That may seem counterintuitive, perhaps even a bit psychotic. Invoking joy in response to awful circumstances? For me, this is simply to recognize who I am and where I live. I am part of that species out of context, saddled with the mistakes of human history and no small number of my own tragic errors, but still alive in the world. I am aware of my limits but eager to test them. I try to retain an intellectual humility, the awareness that I may be wrong, while knowing I must act in the world even though I can't be certain. Whatever the case and whatever is possible, I want to be as fully alive as possible, which means struggling joyfully as part of movements that search for the road to a more just and sustainable world.
In this quest, I am often tired and afraid. To borrow a phrase from my friend Jim Koplin, I live daily with "a profound sense of grief." And yet every day that I can remember in recent years -- in the period during which I have come to this analysis -- I have experienced some kind of joy. Often that joy comes with the awareness that I live in a creation that I can never comprehend, that the complexity of the world dwarfs me. That does not lead me to fear my insignificance, but sends me off in an endlessly fascinating search for the significant........
Thursday, August 27, 2009
Wednesday, August 26, 2009
SC95-12
http://thearchdruidreport.blogspot.com/
Entropy gets no respect
........On the one hand, the relationship between the industrial nations and their Third World client states is very little more equitable than that between the British, say, and the quarter or so of the Earth’s land surface that was occupied by British troops and exploited by British economic interests in the 19th century. Claims of racial superiority having fallen out of fashion, the industrial nations nowadays justify their position by claiming that their political and economic institutions are superior, and the rest of the world’s nations can share exactly the same lifestyles of abundance if they only adopt these.
Today’s industrial societies treat this claim as a self-evident truth. Of course the colonial powers of the 19th century treated the claim of European racial superiority as a self-evident truth, too, and the two claims are equally bogus. The abundance enjoyed by the world’s industrial nations just now, after all, is the result of the fact that those same industrial nations use the great majority of the world’s fossil fuel production. Given that the current industrial nations have burnt around half the planet’s fossil fuel resources themselves, leaving the remaining half to fuel themselves and the rest of the world in the future, dangling the carrot of industrial prosperity in the faces of Third World countries at this point in the historical process is dishonest at best.
Of course it does seem to be true that representative governments and corporate-capitalist economies are more efficient than the competition at turning abundant fossil fuels into suburban lifestyles. This does not make representative governments and corporate-capitalist economies the cause of the prosperity of today’s industrial nations, any more than the skin color of people from Europe was the cause of Europe’s ascendancy during its age of empire. Still, just as the unmentionable realities behind European imperialism made it inevitable that there would be attempts to justify it via bad science, the equally awkward realities behind the ascendancy of today’s industrial powers provide the push behind well-meaning attempts to package the industrial world’s institutions for export to the Third World.
The same sort of logic, on an even deeper level, governs the relationship between the nations of the modern industrial world and the foundation of those nations’ present prosperity – the Earth’s fossil fuel reserves themselves. The hard reality is that the minority of us who happened to have been born in a few powerful countries squandered half a billion years of stored photosynthesis to give ourselves a brief period of spectacular economic abundance, and by doing so, foreclosed the chance that anybody else would enjoy that same abundance in the future. Fossil fuels are not renewable resources in any time frame accessible to our species. Every barrel and ton and cubic foot of fossil fuel we use now is subtracted from the total available to our descendants; despite an orgy of handwaving, no other resource can provide anything approaching the glut of cheap abundant energy on which our lifestyles of relative privilege depend.
Yet this point of view is at least as unmentionable in polite society just now as were the gritty realities of European colonialism in its time, or the equally gritty facts underlying the ascendancy of the world’s industrial nations over the Third World today. The strenuous efforts to find a racial basis for European supremacy a century ago, and the equally vigorous efforts to hold up contemporary Western institutions as the key to prosperity and peace in the Third World today, thus have precise equivalents in the enthusiasm with which every imaginable alternative energy resource gets treated by government officials and media pundits throughout the industrial world.
None of these resources can actually provide the cheap abundant energy needed to maintain the kind of society we have today. I know that this is a controversial statement just now. Still, it’s worth noting that every alternative energy resource that’s actually been brought into production has turned out, at best, to provide a modest increment to existing energy supplies, and that only if you don’t keep track of the energy subsidy the new resource gets from fossil fuels. Of course technologies that haven’t been put into production look more promising, and the further they are from implementation, the more impressive they look; hype, often geared to the very practical goal of selling shares in IPOs, is at least as abundant in the energy field as anywhere else.
And this, dear reader, is where the gap between our society’s official respect for science and its real attitudes toward the world shows up with remarkable clarity.
Once again, the role of the B-movie heavy in this drama is played by the second law of thermodynamics, better known as the law of entropy. As mentioned in a previous post, this is the gold standard of physics, the law you can’t break without, as Sir Arthur Eddington put it, collapsing in deepest humiliation. Everybody in the industrial world with the least smattering of a scientific education knows about it, or at least was introduced to it, and yet next to nobody wants to talk about how it affects the emerging energy crisis of our time.
The crucial implication of the law of entropy, for our purposes, is that it’s not energy as such, but a difference in energy potential, that allows work to be done. Imagine two smooth round boulders of equal weight, one of them sitting on a flat plateau and the other sitting on the slope of a steep hill. If the two are at the same distance from the center of the Earth, gravitation gives them exactly the same amount of potential energy. Still, if you give the one on the plateau a push, you aren’t likely to do anything but strain your muscles, while if you give an equal push to the one on the slope, you may send it rolling down the hill, squashing everything in its path.
The difference is that every part of the plateau has the same energy potential due to gravity, while every part of the slope does not have the same potential, and the boulder rolling down the slope can cash in some of the difference in potential to keep itself moving. The greater the difference in potential, the greater the payoff in terms of energy released. Notice, though, what happens when the boulder on the slope finally lurches to a stop at the bottom of the valley below: it stops, and another push won’t get it going again. It still has a lot of potential energy in that position – it has, in theory, 4500 miles to fall until it reaches the center of the earth – but there’s nowhere it can go to release any of that energy. Without a difference in potential, how much energy you’ve got is a meaningless statistic. (This is, incidentally, why the quest for zero point energy is an exercise in absurdity; by definition, zero point energy is at the lowest possible potential state, and therefore cannot be made to do any work at all.)
The same rule applies to every energy resource: there has to be a difference in potential that allows energy to be released, and the bigger the difference, the bigger the benefit. With petroleum, the difference is in chemical energy. Those long chains of carbon and hydrogen atoms have a lot of energy to release when they come apart and combine with highly reactive oxygen instead; the short chains that form natural gas have less, and the carbon in coal has less still, though it’s still a lot by the standards of other energy sources. All the extraordinary things our species has done with fossil fuels over the last three hundred years are functions, in effect, of the difference in chemical potential energy between a barrel of oil and a cloud of smoke.
Why are these reflections as welcome in the collective conversation of our time as a slug in a fresh green salad? Because they point up the profoundly shortsighted nature of the decisions that made the world in which all of us now live. The immense potential energy locked up in fossil fuels was put there by millions of years of photosynthesis. It’s as though, to return to our metaphor, living things down through the ages rolled boulders uphill and perched them high above the valley floor. After a half billion years or so, our species came along, and figured out how to roll those boulders downhill. As long as there are still plenty of boulders in place, we can continue using them, but when the rate at which we want to send boulders rolling downhill outstrips the boulder supply, it’s a waste of breath to insist that we can get the same results by bouncing pebbles across the valley floor.
This is basically what the more enthusiastic proponents of alternative energy are saying. By the time sunlight gets to us, after traversing 93 million miles of empty space, it’s simply not that concentrated an energy source; that’s why it took the Earth’s photosynthetic organisms so many millions of years to build up the energy reserves we now squander so freely. Wind and hydroelectric power are both secondhand sunlight, the product of natural cycles driven by the sun; the same is true of every kind of biofuel, of course. Nuclear energy is the one nonsolar energy resource we’ve got, but it has severe problems and limitations of its own, not least the fact that the fossil fuel inputs needed to build, run, and decommission a nuclear reactor are so vast that there’s a real question whether nuclear power is a net energy source at all. (Of course the further a nuclear technology is from actual implementation, the better it looks, and the ones that are still vaporware look best of all.)
Does this mean alternative energy is a waste of time? Of course not. Modest as the energy outputs from alternative sources are, they’re what we’ll have to work with when the fossil fuel is gone. What it means, rather, is that the particular kind of civilization we’ve built in the last three centuries will not survive the end of cheap abundant fossil fuels. A society that is used to getting things done by rolling huge boulders down steep slopes is going to have to learn to make do on the much less lavish results of bouncing pebbles across the flat.
The problem here is that very few people want to deal with that reality. The great majority will make themselves believe in zero point energy and evil space lizards and any other absurdity you care to name, rather than gulp and take a deep breath and admit that the prosperity we’ve enjoyed for the last three centuries was bought at our grandchildren’s expense. I sometimes suspect that one of the reasons so many people like to imagine an apocalyptic end to the industrial age is that sudden extinction is easier to contemplate than the experience of slowly waking up to the full extent of our own collective stupidity.
And that, dear reader, is why entropy has become the Rodney Dangerfield of the contemporary energy debate. It may be the gold standard of physics, but in the collective conversation about our future, it don’t get no respect.
Entropy gets no respect
........On the one hand, the relationship between the industrial nations and their Third World client states is very little more equitable than that between the British, say, and the quarter or so of the Earth’s land surface that was occupied by British troops and exploited by British economic interests in the 19th century. Claims of racial superiority having fallen out of fashion, the industrial nations nowadays justify their position by claiming that their political and economic institutions are superior, and the rest of the world’s nations can share exactly the same lifestyles of abundance if they only adopt these.
Today’s industrial societies treat this claim as a self-evident truth. Of course the colonial powers of the 19th century treated the claim of European racial superiority as a self-evident truth, too, and the two claims are equally bogus. The abundance enjoyed by the world’s industrial nations just now, after all, is the result of the fact that those same industrial nations use the great majority of the world’s fossil fuel production. Given that the current industrial nations have burnt around half the planet’s fossil fuel resources themselves, leaving the remaining half to fuel themselves and the rest of the world in the future, dangling the carrot of industrial prosperity in the faces of Third World countries at this point in the historical process is dishonest at best.
Of course it does seem to be true that representative governments and corporate-capitalist economies are more efficient than the competition at turning abundant fossil fuels into suburban lifestyles. This does not make representative governments and corporate-capitalist economies the cause of the prosperity of today’s industrial nations, any more than the skin color of people from Europe was the cause of Europe’s ascendancy during its age of empire. Still, just as the unmentionable realities behind European imperialism made it inevitable that there would be attempts to justify it via bad science, the equally awkward realities behind the ascendancy of today’s industrial powers provide the push behind well-meaning attempts to package the industrial world’s institutions for export to the Third World.
The same sort of logic, on an even deeper level, governs the relationship between the nations of the modern industrial world and the foundation of those nations’ present prosperity – the Earth’s fossil fuel reserves themselves. The hard reality is that the minority of us who happened to have been born in a few powerful countries squandered half a billion years of stored photosynthesis to give ourselves a brief period of spectacular economic abundance, and by doing so, foreclosed the chance that anybody else would enjoy that same abundance in the future. Fossil fuels are not renewable resources in any time frame accessible to our species. Every barrel and ton and cubic foot of fossil fuel we use now is subtracted from the total available to our descendants; despite an orgy of handwaving, no other resource can provide anything approaching the glut of cheap abundant energy on which our lifestyles of relative privilege depend.
Yet this point of view is at least as unmentionable in polite society just now as were the gritty realities of European colonialism in its time, or the equally gritty facts underlying the ascendancy of the world’s industrial nations over the Third World today. The strenuous efforts to find a racial basis for European supremacy a century ago, and the equally vigorous efforts to hold up contemporary Western institutions as the key to prosperity and peace in the Third World today, thus have precise equivalents in the enthusiasm with which every imaginable alternative energy resource gets treated by government officials and media pundits throughout the industrial world.
None of these resources can actually provide the cheap abundant energy needed to maintain the kind of society we have today. I know that this is a controversial statement just now. Still, it’s worth noting that every alternative energy resource that’s actually been brought into production has turned out, at best, to provide a modest increment to existing energy supplies, and that only if you don’t keep track of the energy subsidy the new resource gets from fossil fuels. Of course technologies that haven’t been put into production look more promising, and the further they are from implementation, the more impressive they look; hype, often geared to the very practical goal of selling shares in IPOs, is at least as abundant in the energy field as anywhere else.
And this, dear reader, is where the gap between our society’s official respect for science and its real attitudes toward the world shows up with remarkable clarity.
Once again, the role of the B-movie heavy in this drama is played by the second law of thermodynamics, better known as the law of entropy. As mentioned in a previous post, this is the gold standard of physics, the law you can’t break without, as Sir Arthur Eddington put it, collapsing in deepest humiliation. Everybody in the industrial world with the least smattering of a scientific education knows about it, or at least was introduced to it, and yet next to nobody wants to talk about how it affects the emerging energy crisis of our time.
The crucial implication of the law of entropy, for our purposes, is that it’s not energy as such, but a difference in energy potential, that allows work to be done. Imagine two smooth round boulders of equal weight, one of them sitting on a flat plateau and the other sitting on the slope of a steep hill. If the two are at the same distance from the center of the Earth, gravitation gives them exactly the same amount of potential energy. Still, if you give the one on the plateau a push, you aren’t likely to do anything but strain your muscles, while if you give an equal push to the one on the slope, you may send it rolling down the hill, squashing everything in its path.
The difference is that every part of the plateau has the same energy potential due to gravity, while every part of the slope does not have the same potential, and the boulder rolling down the slope can cash in some of the difference in potential to keep itself moving. The greater the difference in potential, the greater the payoff in terms of energy released. Notice, though, what happens when the boulder on the slope finally lurches to a stop at the bottom of the valley below: it stops, and another push won’t get it going again. It still has a lot of potential energy in that position – it has, in theory, 4500 miles to fall until it reaches the center of the earth – but there’s nowhere it can go to release any of that energy. Without a difference in potential, how much energy you’ve got is a meaningless statistic. (This is, incidentally, why the quest for zero point energy is an exercise in absurdity; by definition, zero point energy is at the lowest possible potential state, and therefore cannot be made to do any work at all.)
The same rule applies to every energy resource: there has to be a difference in potential that allows energy to be released, and the bigger the difference, the bigger the benefit. With petroleum, the difference is in chemical energy. Those long chains of carbon and hydrogen atoms have a lot of energy to release when they come apart and combine with highly reactive oxygen instead; the short chains that form natural gas have less, and the carbon in coal has less still, though it’s still a lot by the standards of other energy sources. All the extraordinary things our species has done with fossil fuels over the last three hundred years are functions, in effect, of the difference in chemical potential energy between a barrel of oil and a cloud of smoke.
Why are these reflections as welcome in the collective conversation of our time as a slug in a fresh green salad? Because they point up the profoundly shortsighted nature of the decisions that made the world in which all of us now live. The immense potential energy locked up in fossil fuels was put there by millions of years of photosynthesis. It’s as though, to return to our metaphor, living things down through the ages rolled boulders uphill and perched them high above the valley floor. After a half billion years or so, our species came along, and figured out how to roll those boulders downhill. As long as there are still plenty of boulders in place, we can continue using them, but when the rate at which we want to send boulders rolling downhill outstrips the boulder supply, it’s a waste of breath to insist that we can get the same results by bouncing pebbles across the valley floor.
This is basically what the more enthusiastic proponents of alternative energy are saying. By the time sunlight gets to us, after traversing 93 million miles of empty space, it’s simply not that concentrated an energy source; that’s why it took the Earth’s photosynthetic organisms so many millions of years to build up the energy reserves we now squander so freely. Wind and hydroelectric power are both secondhand sunlight, the product of natural cycles driven by the sun; the same is true of every kind of biofuel, of course. Nuclear energy is the one nonsolar energy resource we’ve got, but it has severe problems and limitations of its own, not least the fact that the fossil fuel inputs needed to build, run, and decommission a nuclear reactor are so vast that there’s a real question whether nuclear power is a net energy source at all. (Of course the further a nuclear technology is from actual implementation, the better it looks, and the ones that are still vaporware look best of all.)
Does this mean alternative energy is a waste of time? Of course not. Modest as the energy outputs from alternative sources are, they’re what we’ll have to work with when the fossil fuel is gone. What it means, rather, is that the particular kind of civilization we’ve built in the last three centuries will not survive the end of cheap abundant fossil fuels. A society that is used to getting things done by rolling huge boulders down steep slopes is going to have to learn to make do on the much less lavish results of bouncing pebbles across the flat.
The problem here is that very few people want to deal with that reality. The great majority will make themselves believe in zero point energy and evil space lizards and any other absurdity you care to name, rather than gulp and take a deep breath and admit that the prosperity we’ve enjoyed for the last three centuries was bought at our grandchildren’s expense. I sometimes suspect that one of the reasons so many people like to imagine an apocalyptic end to the industrial age is that sudden extinction is easier to contemplate than the experience of slowly waking up to the full extent of our own collective stupidity.
And that, dear reader, is why entropy has become the Rodney Dangerfield of the contemporary energy debate. It may be the gold standard of physics, but in the collective conversation about our future, it don’t get no respect.
SC95-11
http://www.huffingtonpost.com/larry-flynt/common-sense-2009_b_264706.html
“In America, corporations do not control the government. In America, corporations are the government.”
The American government -- which we once called our government -- has been taken over by Wall Street, the mega-corporations and the super-rich. They are the ones who decide our fate. It is this group of powerful elites, the people President Franklin D. Roosevelt called "economic royalists," who choose our elected officials -- indeed, our very form of government. Both Democrats and Republicans dance to the tune of their corporate masters. In America, corporations do not control the government. In America, corporations are the government.
This was never more obvious than with the Wall Street bailout, whereby the very corporations that caused the collapse of our economy were rewarded with taxpayer dollars. So arrogant, so smug were they that, without a moment's hesitation, they took our money -- yours and mine -- to pay their executives multimillion-dollar bonuses, something they continue doing to this very day. They have no shame. They don't care what you and I think about them. Henry Kissinger refers to us as "useless eaters."
But, you say, we have elected a candidate of change. To which I respond: Do these words of President Obama sound like change?
"A culture of irresponsibility took root, from Wall Street to Washington to Main Street." There it is. Right there. We are Main Street. We must, according to our president, share the blame. He went on to say: "And a regulatory regime basically crafted in the wake of a 20th-century economic crisis -- the Great Depression -- was overwhelmed by the speed, scope and sophistication of a 21st-century global economy."
This is nonsense.
The reason Wall Street was able to game the system the way it did -- knowing that they would become rich at the expense of the American people (oh, yes, they most certainly knew that) -- was because the financial elite had bribed our legislators to roll back the protections enacted after the Stock Market Crash of 1929.
Congress gutted the Glass-Steagall Act, which separated commercial lending banks from investment banks, and passed the Commodity Futures Modernization Act, which allowed for self-regulation with no oversight. The Securities and Exchange Commission subsequently revised its rules to allow for even less oversight -- and we've all seen how well that worked out. To date, no serious legislation has been offered by the Obama administration to correct these problems.
Instead, Obama wants to increase the oversight power of the Federal Reserve. Never mind that it already had significant oversight power before our most recent economic meltdown, yet failed to take action. Never mind that the Fed is not a government agency but a cartel of private bankers that cannot be held accountable by Washington. Whatever the Fed does with these supposed new oversight powers will be behind closed doors.
Obama's failure to act sends one message loud and clear: He cannot stand up to the powerful Wall Street interests that supplied the bulk of his campaign money for the 2008 election. Nor, for that matter, can Congress, for much the same reason.
Consider what multibillionaire banker David Rockefeller wrote in his 2002 memoirs:
"Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as 'internationalists' and of conspiring with others around the world to build a more integrated global political and economic structure -- one world, if you will. If that's the charge, I stand guilty, and I am proud of it."Read Rockefeller's words again. He actually admits to working against the "best interests of the United States."
Need more? Here's what Rockefeller said in 1994 at a U.N. dinner: "We are on the verge of a global transformation. All we need is the right major crisis, and the nations will accept the New World Order." They're gaming us. Our country has been stolen from us.
Journalist Matt Taibbi, writing in Rolling Stone, notes that esteemed economist John Kenneth Galbraith laid the 1929 crash at the feet of banking giant Goldman Sachs. Taibbi goes on to say that Goldman Sachs has been behind every other economic downturn as well, including the most recent one. As if that wasn't enough, Goldman Sachs even had a hand in pushing gas prices up to $4 a gallon.
The problem with bankers is longstanding. Here's what one of our Founding Fathers, Thomas Jefferson, had to say about them:
"If the American people ever allow private banks to control the issuance of their currency, first by inflation, and then by deflation, the banks and the corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their father's conquered."We all know that the first American Revolution officially began in 1776, with the Declaration of Independence. Less well known is that the single strongest motivating factor for revolution was the colonists' attempt to free themselves from the Bank of England. But how many of you know about the second revolution, referred to by historians as Shays' Rebellion? It took place in 1786-87, and once again the banks were the cause. This time they were putting the screws to America's farmers.
Daniel Shays was a farmer in western Massachusetts. Like many other farmers of the day, he was being driven into bankruptcy by the banks' predatory lending practices. (Sound familiar?) Rallying other farmers to his side, Shays led his rebels in an attack on the courts and the local armory. The rebellion itself failed, but a message had been sent: The bankers (and the politicians who supported them) ultimately backed off. As Thomas Jefferson famously quipped in regard to the insurrection: "A little rebellion now and then is a good thing. The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants."
Perhaps it's time to consider that option once again.
I'm calling for a national strike, one designed to close the country down for a day. The intent? Real campaign-finance reform and strong restrictions on lobbying. Because nothing will change until we take corporate money out of politics. Nothing will improve until our politicians are once again answerable to their constituents, not the rich and powerful.
Let's set a date. No one goes to work. No one buys anything. And if that isn't effective -- if the politicians ignore us -- we do it again. And again. And again.
The real war is not between the left and the right. It is between the average American and the ruling class. If we come together on this single issue, everything else will resolve itself. It's time we took back our government from those who would make us their slaves.
“In America, corporations do not control the government. In America, corporations are the government.”
The American government -- which we once called our government -- has been taken over by Wall Street, the mega-corporations and the super-rich. They are the ones who decide our fate. It is this group of powerful elites, the people President Franklin D. Roosevelt called "economic royalists," who choose our elected officials -- indeed, our very form of government. Both Democrats and Republicans dance to the tune of their corporate masters. In America, corporations do not control the government. In America, corporations are the government.
This was never more obvious than with the Wall Street bailout, whereby the very corporations that caused the collapse of our economy were rewarded with taxpayer dollars. So arrogant, so smug were they that, without a moment's hesitation, they took our money -- yours and mine -- to pay their executives multimillion-dollar bonuses, something they continue doing to this very day. They have no shame. They don't care what you and I think about them. Henry Kissinger refers to us as "useless eaters."
But, you say, we have elected a candidate of change. To which I respond: Do these words of President Obama sound like change?
"A culture of irresponsibility took root, from Wall Street to Washington to Main Street." There it is. Right there. We are Main Street. We must, according to our president, share the blame. He went on to say: "And a regulatory regime basically crafted in the wake of a 20th-century economic crisis -- the Great Depression -- was overwhelmed by the speed, scope and sophistication of a 21st-century global economy."
This is nonsense.
The reason Wall Street was able to game the system the way it did -- knowing that they would become rich at the expense of the American people (oh, yes, they most certainly knew that) -- was because the financial elite had bribed our legislators to roll back the protections enacted after the Stock Market Crash of 1929.
Congress gutted the Glass-Steagall Act, which separated commercial lending banks from investment banks, and passed the Commodity Futures Modernization Act, which allowed for self-regulation with no oversight. The Securities and Exchange Commission subsequently revised its rules to allow for even less oversight -- and we've all seen how well that worked out. To date, no serious legislation has been offered by the Obama administration to correct these problems.
Instead, Obama wants to increase the oversight power of the Federal Reserve. Never mind that it already had significant oversight power before our most recent economic meltdown, yet failed to take action. Never mind that the Fed is not a government agency but a cartel of private bankers that cannot be held accountable by Washington. Whatever the Fed does with these supposed new oversight powers will be behind closed doors.
Obama's failure to act sends one message loud and clear: He cannot stand up to the powerful Wall Street interests that supplied the bulk of his campaign money for the 2008 election. Nor, for that matter, can Congress, for much the same reason.
Consider what multibillionaire banker David Rockefeller wrote in his 2002 memoirs:
"Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as 'internationalists' and of conspiring with others around the world to build a more integrated global political and economic structure -- one world, if you will. If that's the charge, I stand guilty, and I am proud of it."Read Rockefeller's words again. He actually admits to working against the "best interests of the United States."
Need more? Here's what Rockefeller said in 1994 at a U.N. dinner: "We are on the verge of a global transformation. All we need is the right major crisis, and the nations will accept the New World Order." They're gaming us. Our country has been stolen from us.
Journalist Matt Taibbi, writing in Rolling Stone, notes that esteemed economist John Kenneth Galbraith laid the 1929 crash at the feet of banking giant Goldman Sachs. Taibbi goes on to say that Goldman Sachs has been behind every other economic downturn as well, including the most recent one. As if that wasn't enough, Goldman Sachs even had a hand in pushing gas prices up to $4 a gallon.
The problem with bankers is longstanding. Here's what one of our Founding Fathers, Thomas Jefferson, had to say about them:
"If the American people ever allow private banks to control the issuance of their currency, first by inflation, and then by deflation, the banks and the corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their father's conquered."We all know that the first American Revolution officially began in 1776, with the Declaration of Independence. Less well known is that the single strongest motivating factor for revolution was the colonists' attempt to free themselves from the Bank of England. But how many of you know about the second revolution, referred to by historians as Shays' Rebellion? It took place in 1786-87, and once again the banks were the cause. This time they were putting the screws to America's farmers.
Daniel Shays was a farmer in western Massachusetts. Like many other farmers of the day, he was being driven into bankruptcy by the banks' predatory lending practices. (Sound familiar?) Rallying other farmers to his side, Shays led his rebels in an attack on the courts and the local armory. The rebellion itself failed, but a message had been sent: The bankers (and the politicians who supported them) ultimately backed off. As Thomas Jefferson famously quipped in regard to the insurrection: "A little rebellion now and then is a good thing. The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants."
Perhaps it's time to consider that option once again.
I'm calling for a national strike, one designed to close the country down for a day. The intent? Real campaign-finance reform and strong restrictions on lobbying. Because nothing will change until we take corporate money out of politics. Nothing will improve until our politicians are once again answerable to their constituents, not the rich and powerful.
Let's set a date. No one goes to work. No one buys anything. And if that isn't effective -- if the politicians ignore us -- we do it again. And again. And again.
The real war is not between the left and the right. It is between the average American and the ruling class. If we come together on this single issue, everything else will resolve itself. It's time we took back our government from those who would make us their slaves.
SC95-10
http://kunstler.com/blog/2009/08/financial-crisis-called-off.html
Strangewalk August 24, 2009 7:15 PM
As usual I agree with JHK's interpretation of trends, except in his (and many other's) expectation that the masses will revolt. Stop the flow of food and gasoline and play the nationalism card, and Americans will become compliant puppy dogs. I also spend a lot of time reading about the problems faced by other areas of the world, and it's clear they're facing even more dire eventualities than we are! Japan and Europe have even larger, unservicable and unmanagable debt loads, and China is now blowing a credit bubble of epic proportions to maintain an illusion of growth until after the CCP anniversary in October. Anyone can see that we're facing a black hole, a dead end.
Surely the Masters of the Universe know this too. War has always been the way out, the solution, when has it not? The only way out this time is world war. All indications are pointing to Iran as the opening salvo. The US is now transferring massive amounts of armaments and personel into Iran's neighbor Afghanistan, equipment that has little use in Afghanistan's sparsely populated, rugged terrain. Then, the recent US acquisition of an unsinkable aircraft carrier in nearby Kirgistan over intense Russian oppositon, and was the recent social upheaval in Iran purely a coincidence?
Netanyahu has plegded to take out Iran's nuclear capability with or without US support, so war would happen anyway. Plus, if the US can neutralize Iran, they will control the flow of the world's oil, by far the most important source of power and wealth on earth. This is going to get ugly though--no holds will be barred and surely bio-weapons will come into play. It possibly explains why the US is now organizing a nation-wide system of rapid inoculation involving the military, ostensibly in reaction to the relatively mild Swine Flu. I'd say we really are staring down the barrel of Armageddon. Don't plan for this one--you can run but you can't hide. There's no way out this time, except as Solzhenitsyn used to say, "but upward".
Strangewalk August 24, 2009 7:15 PM
As usual I agree with JHK's interpretation of trends, except in his (and many other's) expectation that the masses will revolt. Stop the flow of food and gasoline and play the nationalism card, and Americans will become compliant puppy dogs. I also spend a lot of time reading about the problems faced by other areas of the world, and it's clear they're facing even more dire eventualities than we are! Japan and Europe have even larger, unservicable and unmanagable debt loads, and China is now blowing a credit bubble of epic proportions to maintain an illusion of growth until after the CCP anniversary in October. Anyone can see that we're facing a black hole, a dead end.
Surely the Masters of the Universe know this too. War has always been the way out, the solution, when has it not? The only way out this time is world war. All indications are pointing to Iran as the opening salvo. The US is now transferring massive amounts of armaments and personel into Iran's neighbor Afghanistan, equipment that has little use in Afghanistan's sparsely populated, rugged terrain. Then, the recent US acquisition of an unsinkable aircraft carrier in nearby Kirgistan over intense Russian oppositon, and was the recent social upheaval in Iran purely a coincidence?
Netanyahu has plegded to take out Iran's nuclear capability with or without US support, so war would happen anyway. Plus, if the US can neutralize Iran, they will control the flow of the world's oil, by far the most important source of power and wealth on earth. This is going to get ugly though--no holds will be barred and surely bio-weapons will come into play. It possibly explains why the US is now organizing a nation-wide system of rapid inoculation involving the military, ostensibly in reaction to the relatively mild Swine Flu. I'd say we really are staring down the barrel of Armageddon. Don't plan for this one--you can run but you can't hide. There's no way out this time, except as Solzhenitsyn used to say, "but upward".
Tuesday, August 25, 2009
SC95-9
http://kunstler.com/blog/2009/08/financial-crisis-called-off.html
cuddletuffy August 24, 2009 7:15 PM
I remember once getting tricked by some people at work into going to a party that turned out to be a bible study. I also had a similar thing happen where I ended up at a meeting of Trotsky-ites. In both cases, I had to get out fast as everyone had stars in their eyes. "How do I get the f*** out of here with another cupcake and no pamphlets or 30 minute sermons" - read my panicked thought bubble.
Whether it was Jesus or the State/Central Planners who were going to save me or take a bunch of stuff from everyone else to make us all equal, the mentality was the same. Namely - an infantile need to feel protected by putting all faith and hope in someone or something else, and an arrogance that said that they knew what was best for everyone else.
Every time I read Asoka's posts, I am reminded of the people I met at those, "parties."
The quip about Obama bringing back manufacturing is hilarious. First of all, we don't want one man who is so powerful that he can bring back manufacturing to the United States. Second of all, he can't anyways. You see there is a problem with Asoka's theory, and it is grounded in what his/her posts make very obvious - that there is a fundamental lack of understanding of how economics and markets work.
What would have to happen for manufacturing to come back to the United States? Here are a few of them:
1. Asset prices would have to finish their collapse so that real-estate, transportation, and above-all LABOR prices could be competitive with those in China and the other mostly Asian countries.
2. Environmental regulations would have to be eliminated or severely curtailed to be competitive with China and every other smoldering cesspool of industrialism on the planet.
3. Taxes and regulations would have to be eliminated or significantly reduced to encourage investment in the finishing industries and the vast web of feeder businesses, again, in order to be cost competitive with China.
Obama is doing the exact opposite of all of that. You see, his boys at Goldman, Citi, JP Morgan ... you know, the ones who gave him so much money to become president, that can't have asset price collapses yet - they still have too much exposure to the commercial and residential derivative risk.
The government can't have them blow up on their books either - if they do, who is going to lend them money to keep the empire occupying and building nations with their bombs, tanks and guns?
He can't deregulate. How else would Goldman Sachs make more money off of the government by running the carbon trading exchanges?
I could go on and on about the auto industry bailout preventing wages being competitive w/ china ... ... ... and similar LBJ/Nixon/Reagan/Bush/Clinton/Bush/Obama imperial/fascist government boondoggles.
As for the Green jobs crap. It is just that crap. There is no way around conservation. Growth and energy consumption as being synonymous are, as JHK points out, a dead system. It can't be revived. Not in the United States of Debt Serfdom.
It is a fantasy to believe that it is all the Republican's fault, and that if we just had Democrats everything would be okay. It is one big festering imperial cabal.
You see, MLK, Ghandhi, Krishnamurti, Siddartha, Christ, Mohammed were always loathed and/or killed by the heads of state, and never sought to be the head of state. They would not harm you and they did not seek power. Why you follow Obama and the Democrats with googly eyes, (or blog fingers), is a mystery. Perhaps it is because, unlike the avatars I mentioned before, Obama will never tell you - "Go away. Don't look to me for the answers. Have the courage to look to yourself." No. He'll keep saying Hope and Change like a broken record, while the machine that spins and catapults the propaganda from his mouth as the megaphone, grinds away.
He is the head of state. He'll be the first to kill, (via extraoridnary rendition), the next MLK or Ghandhi if they threaten his or his backing cabal's grip on power. Somehow you must know this. Perhaps that is why you are so prostrate before him.
I've never met a Moonie. Or maybe, Asoka, in the virtual world of the Internets I have.
cuddletuffy August 24, 2009 7:15 PM
I remember once getting tricked by some people at work into going to a party that turned out to be a bible study. I also had a similar thing happen where I ended up at a meeting of Trotsky-ites. In both cases, I had to get out fast as everyone had stars in their eyes. "How do I get the f*** out of here with another cupcake and no pamphlets or 30 minute sermons" - read my panicked thought bubble.
Whether it was Jesus or the State/Central Planners who were going to save me or take a bunch of stuff from everyone else to make us all equal, the mentality was the same. Namely - an infantile need to feel protected by putting all faith and hope in someone or something else, and an arrogance that said that they knew what was best for everyone else.
Every time I read Asoka's posts, I am reminded of the people I met at those, "parties."
The quip about Obama bringing back manufacturing is hilarious. First of all, we don't want one man who is so powerful that he can bring back manufacturing to the United States. Second of all, he can't anyways. You see there is a problem with Asoka's theory, and it is grounded in what his/her posts make very obvious - that there is a fundamental lack of understanding of how economics and markets work.
What would have to happen for manufacturing to come back to the United States? Here are a few of them:
1. Asset prices would have to finish their collapse so that real-estate, transportation, and above-all LABOR prices could be competitive with those in China and the other mostly Asian countries.
2. Environmental regulations would have to be eliminated or severely curtailed to be competitive with China and every other smoldering cesspool of industrialism on the planet.
3. Taxes and regulations would have to be eliminated or significantly reduced to encourage investment in the finishing industries and the vast web of feeder businesses, again, in order to be cost competitive with China.
Obama is doing the exact opposite of all of that. You see, his boys at Goldman, Citi, JP Morgan ... you know, the ones who gave him so much money to become president, that can't have asset price collapses yet - they still have too much exposure to the commercial and residential derivative risk.
The government can't have them blow up on their books either - if they do, who is going to lend them money to keep the empire occupying and building nations with their bombs, tanks and guns?
He can't deregulate. How else would Goldman Sachs make more money off of the government by running the carbon trading exchanges?
I could go on and on about the auto industry bailout preventing wages being competitive w/ china ... ... ... and similar LBJ/Nixon/Reagan/Bush/Clinton/Bush/Obama imperial/fascist government boondoggles.
As for the Green jobs crap. It is just that crap. There is no way around conservation. Growth and energy consumption as being synonymous are, as JHK points out, a dead system. It can't be revived. Not in the United States of Debt Serfdom.
It is a fantasy to believe that it is all the Republican's fault, and that if we just had Democrats everything would be okay. It is one big festering imperial cabal.
You see, MLK, Ghandhi, Krishnamurti, Siddartha, Christ, Mohammed were always loathed and/or killed by the heads of state, and never sought to be the head of state. They would not harm you and they did not seek power. Why you follow Obama and the Democrats with googly eyes, (or blog fingers), is a mystery. Perhaps it is because, unlike the avatars I mentioned before, Obama will never tell you - "Go away. Don't look to me for the answers. Have the courage to look to yourself." No. He'll keep saying Hope and Change like a broken record, while the machine that spins and catapults the propaganda from his mouth as the megaphone, grinds away.
He is the head of state. He'll be the first to kill, (via extraoridnary rendition), the next MLK or Ghandhi if they threaten his or his backing cabal's grip on power. Somehow you must know this. Perhaps that is why you are so prostrate before him.
I've never met a Moonie. Or maybe, Asoka, in the virtual world of the Internets I have.
Monday, August 24, 2009
SC95-8
http://www.ricefarmer.blogspot.com/
Brave New World of Chaos
The other day I ran across a highly interesting essay over at World Politics Review titled “Risk and Resilience in a Globalized Age: Containing Chaos.” What caught my eye was “chaos” in the title, which is because I see chaos playing an ever bigger role in the world as the competition over a dwindling pie intensifies, and traditional structures start coming apart at the seams. The article makes some very good observations, and raises some questions in my mind that may not be the questions the author intended to raise. Following are a few comments. If you find this interesting, definitely read the article and draw your own conclusions.
First, globalization is seen to be a threat, which is an admission you will certainly not get from mainstream politicians, who relentlessly bombard us with propaganda about how globalization will make everyone affluent and happy. But the author correctly observes that the unintended consequence of globalization is a “supernetwork” that engulfs everything and threatens us because it’s quite literally out of our control. As such, the world system lurches from one crisis to another, dragging whole populations and countries around like a runaway bulldozer dragging a man who is helplessly digging in his heels in a futile effort to stop the machine.
Another interesting feature of this piece is the author’s identification of what he calls “parasites” of the global supernetwork. Let me quote the author’s description.
The third and final threat posed by globalization will be the emergence of super-empowered groups of individuals that compete with the nation-state for money and power. These groups, typically small, leverage easily accessed functions of the supernetwork for their personal benefit at great expense to the collective good. These small networks span the gamut from “trusted insiders” in financial industry to guerrilla/terrorist groups.The author goes on to illustrate how these small groups pull the levers of this hyper-interconnected system to generate fantastically huge results and secure wealth and power incommensurate with the number of people actually involved.
As a prescription to deal with instability and lack of systemic control, the author recommends “the development of self-sufficient, decentralized systems at the local level — from economics to politics to food to energy to communications — that can operate successfully even when the larger system breaks down.” This is sage advice, of course. Note that the author does not see the global supernetwork breaking down, but rather growing more complex and stronger. Of course among those in the know, you will find little disagreement with the idea of decentralization and local self-sufficiency.
The next section discusses how to deal with “parasites,” and seems generally on the mark in the sense that it recommends against the use of large-scale, heavy-duty solutions such as launching military strikes. A recommended course of action is sowing discord among actors and co-opting them. One statement gives me pause for thought: “In some few cases, it will be impossible to leave the actors involved intact. In those cases, tightly targeted efforts (i.e., special operations) to eliminate these malicious groups will be required.” And what kind of actors would those be? Probably so-called “terrorists.” Of course, terrorism is abhorrent for the destruction and death it causes. But what about the other kinds of parasites, such as those who prey mercilessly on the rest of us to make themselves rich? Such parasites cause nationwide, or even global-scale financial and social disruption, and bring untold suffering and misery to millions of people throughout the world, which in my view is just as bad, or maybe even worse, than a terrorist who kills a few people in a bombing. Would it be all right to “eliminate” such evil and greedy people? Perhaps in the author’s worldview it’s all right to “eliminate” an olive-skinned Arab/Muslim “terrorist” (who likely believes he is getting back at gross injustice), while it’s not all right to “eliminate” a white Western financier who stole the wealth of uncountable people, while having no illusions about righting wrongs. Maybe that’s the reason that white Western Ponzi-scheme scam artists might go to prison, but they won’t be shot down on the street like dogs or murdered in their beds by “special operations” personnel, or bombed by drones. Food for thought, isn’t it? “Neutralization” isn’t always so neutral. And what should we do with the rogue US government/military elements who were behind 9/11?
For that matter, how would the author propose we deal with groups such as Bilderberg, those unelected elites who discuss our futures behind closed doors?
Finally, the piece ends with a section titled “Delivering Benefits and Improving Fairness.” If you subscribe to the “business as usual” worldview, the prescription set forth here sounds good. Enfranchisement, more-or-less equal pieces of pie, blah blah blah. Right on! But this is flawed by the underlying assumption that we’ll have plenty of resources and energy to work with. There is no acknowledgment — indeed there seems to be no awareness — of peak oil, and how expensive energy will be the primary driving force in global dynamics from now on. Surely the author, who obviously has some good analytical skills, has not overlooked the worldwide jockeying for position to lock down supplies of energy (especially oil) and other resources. Then there is the potential effect on the global supernetwork. Since globalization is the child of cheap energy, it is bound to undergo some kind of radical restructuring and simplification as energy gets more expensive. What will happen to global shipping? To the internet? In that sense, expensive energy will work to undermine the global supernetwork at least to some extent.
But I guarantee you that there will be plenty of chaos to go around.
Brave New World of Chaos
The other day I ran across a highly interesting essay over at World Politics Review titled “Risk and Resilience in a Globalized Age: Containing Chaos.” What caught my eye was “chaos” in the title, which is because I see chaos playing an ever bigger role in the world as the competition over a dwindling pie intensifies, and traditional structures start coming apart at the seams. The article makes some very good observations, and raises some questions in my mind that may not be the questions the author intended to raise. Following are a few comments. If you find this interesting, definitely read the article and draw your own conclusions.
First, globalization is seen to be a threat, which is an admission you will certainly not get from mainstream politicians, who relentlessly bombard us with propaganda about how globalization will make everyone affluent and happy. But the author correctly observes that the unintended consequence of globalization is a “supernetwork” that engulfs everything and threatens us because it’s quite literally out of our control. As such, the world system lurches from one crisis to another, dragging whole populations and countries around like a runaway bulldozer dragging a man who is helplessly digging in his heels in a futile effort to stop the machine.
Another interesting feature of this piece is the author’s identification of what he calls “parasites” of the global supernetwork. Let me quote the author’s description.
The third and final threat posed by globalization will be the emergence of super-empowered groups of individuals that compete with the nation-state for money and power. These groups, typically small, leverage easily accessed functions of the supernetwork for their personal benefit at great expense to the collective good. These small networks span the gamut from “trusted insiders” in financial industry to guerrilla/terrorist groups.The author goes on to illustrate how these small groups pull the levers of this hyper-interconnected system to generate fantastically huge results and secure wealth and power incommensurate with the number of people actually involved.
As a prescription to deal with instability and lack of systemic control, the author recommends “the development of self-sufficient, decentralized systems at the local level — from economics to politics to food to energy to communications — that can operate successfully even when the larger system breaks down.” This is sage advice, of course. Note that the author does not see the global supernetwork breaking down, but rather growing more complex and stronger. Of course among those in the know, you will find little disagreement with the idea of decentralization and local self-sufficiency.
The next section discusses how to deal with “parasites,” and seems generally on the mark in the sense that it recommends against the use of large-scale, heavy-duty solutions such as launching military strikes. A recommended course of action is sowing discord among actors and co-opting them. One statement gives me pause for thought: “In some few cases, it will be impossible to leave the actors involved intact. In those cases, tightly targeted efforts (i.e., special operations) to eliminate these malicious groups will be required.” And what kind of actors would those be? Probably so-called “terrorists.” Of course, terrorism is abhorrent for the destruction and death it causes. But what about the other kinds of parasites, such as those who prey mercilessly on the rest of us to make themselves rich? Such parasites cause nationwide, or even global-scale financial and social disruption, and bring untold suffering and misery to millions of people throughout the world, which in my view is just as bad, or maybe even worse, than a terrorist who kills a few people in a bombing. Would it be all right to “eliminate” such evil and greedy people? Perhaps in the author’s worldview it’s all right to “eliminate” an olive-skinned Arab/Muslim “terrorist” (who likely believes he is getting back at gross injustice), while it’s not all right to “eliminate” a white Western financier who stole the wealth of uncountable people, while having no illusions about righting wrongs. Maybe that’s the reason that white Western Ponzi-scheme scam artists might go to prison, but they won’t be shot down on the street like dogs or murdered in their beds by “special operations” personnel, or bombed by drones. Food for thought, isn’t it? “Neutralization” isn’t always so neutral. And what should we do with the rogue US government/military elements who were behind 9/11?
For that matter, how would the author propose we deal with groups such as Bilderberg, those unelected elites who discuss our futures behind closed doors?
Finally, the piece ends with a section titled “Delivering Benefits and Improving Fairness.” If you subscribe to the “business as usual” worldview, the prescription set forth here sounds good. Enfranchisement, more-or-less equal pieces of pie, blah blah blah. Right on! But this is flawed by the underlying assumption that we’ll have plenty of resources and energy to work with. There is no acknowledgment — indeed there seems to be no awareness — of peak oil, and how expensive energy will be the primary driving force in global dynamics from now on. Surely the author, who obviously has some good analytical skills, has not overlooked the worldwide jockeying for position to lock down supplies of energy (especially oil) and other resources. Then there is the potential effect on the global supernetwork. Since globalization is the child of cheap energy, it is bound to undergo some kind of radical restructuring and simplification as energy gets more expensive. What will happen to global shipping? To the internet? In that sense, expensive energy will work to undermine the global supernetwork at least to some extent.
But I guarantee you that there will be plenty of chaos to go around.
SC95-7
http://kunstler.com/blog/2009/08/financial-crisis-called-off.html
Financial Crisis Called Off
Whew, what a relief! Everybody from Ben Bernanke and a Who's Who of banking poobahs schmoozing it up in the heady vapors of Jackson Hole, Wyoming, to the dull scribes at The New York Times, toiling in their MC Escher hall of mirrors, to poor dim James Surowiecki over at The New Yorker, to - wonder of wonders! - the Green Shoots claque at the cable networks, to the assorted quants, grinds, nerds, pimps, factotums, catamites, and cretins in every office from the Bureau of Labor Statistics to the International Monetary Fund - every man-Jack and woman-Jill around the levers of power and opinion weighed in last week with glad tidings that the world's capital finance system survived what turned out to be a mere protracted bout of heartburn and has been reborn as the Miracle Bull economy. Our worries over. If you believe their bullshit. Which I don't.
All this goes to show is how completely the people in charge of things in the USA have lost their minds. They seem to think this mass exercise in pretend will resurrect the great march to the WalMarts, to the new car showrooms, and the cul-de-sac model houses, reignite another round of furious sprawl-building, salad-shooter importing, and no-doc liar-lending, not to mention the pawning off of innovative, securitized stinking-carp debt paper onto credulous pension funds in foreign lands where due diligence has never been heard of, renew the leveraged buying-out of zippy-looking businesses by smoothies who have no idea how to run them (and no real intention of doing it, anyway), resuscitate the construction of additional strip malls, new office park "capacity" and Big Box "power centers," restart the trade in granite countertops and home theaters, and pack the turnstiles of Walt Disney world - all this while turning Afghanistan into a neighborhood that Beaver Cleaver would be proud to call home.
By the way - and please pardon the rather sharp digression - but does anybody know if they buried Michael Jackson yet? It's only been a couple of months. And, if not, is that the stench now wafting across the purple mountains' majesty from sea-to-shining sea? Isn't it a little indecent to keep the poor fellow waiting? Or is a really surprising comeback secretly planned, with product tie-ins and all?
America loves the word "recovery" as only a catastrophically sick society can. "In recovery" is the new universal mantra of loser individuals and loser nations. Everybody in the USA is in recovery. Even Michael Jackson (he may have given up on somatic activity but, on the plus side, as the Rotarians love to say, he's quit using drugs for once and for all, and the magazines have stopped publishing photos of him taken after 1990, when he turned himself into something out of the Hammer Films catalog).
To sum it all up, the US economy is in recovery. Paul Krugman says that we'll soon realize that Gross Domestic Product (GDP) is growing. He actually said that on the Sunday TV chat circuit. Not to put too fine a point on it, but I would really like to know what you mean by that Paul, you fatuous wanker. Do you mean that the Atlanta homebuilders are going to open up a new suburban frontier down in Twiggs County so that commuters can enjoy driving Chrysler Crossfires a hundred and sixty miles a day to new jobs as flash traders in the Peachtree Plaza? Do you mean that the Home Equity Fairy is going to wade into the sea of foreclosure and save twenty million mortgage holders currently sojourning in the fathomless depths with the anglerfish? Do you mean that all the bales of deliquescing, toxic "assets" hidden in the vaults of Citibank, JP Morgan, Bank of America, et al, (not to mention on the books of every pension fund in the USA, and not a few elsewhere) will magically turn into Little Debbie Snack Cakes on Labor Day weekend? Do you mean that American Express and Master Card are about to declare a Jubilee on accounts in default everywhere? Do you mean that General Motors will produce a car that a.) anyone really wants to buy and b.) that the company can sell at a profit? Are you saying we get a do-over, going back to, say, 1981? Did we win some cosmic lottery that hasn't been announced yet? What's growing in this country besides unemployment, bankruptcy, repossession, liquidation, gun ownership, and suicidal despair? In short, are you out of your mind, Paul Krugman?
The key to the current madness, of course, is this expectation, this wish, really, that all the rackets, games, dodges, scams, and workarounds that American banking, business, and government devised over the past thirty years - to cover up the dismal fact that we produce so little of real value these days - will just magically return to full throttle, like a machine that has spent a few weeks in the repair shop. This is not going to happen, of course. It is permanently and irredeemably broken - this Rube Goldberg contraption of swindles all based on the idea that it's possible to get something for nothing. And more to the point, we're really doing nothing to reconstruct our economy along lines that are consistent with the realities of energy, geopolitics, or resource scarcity. So far, our notions about a "green" economy amount to little more than blowing green smoke up our collective ass. We think we're going to build "green" skyscrapers! We're too dumb to see what a contradiction in terms this is. The architects are completely uninterested in the one thing that really is "green" - traditional urban design - and most particularly the walkable neighborhood. That's just too conventional, not special enough, lacking in star power, not enough of a statement, boring, tedious, so not cutting edge! We blather about high speed rail, but you can't even get from Cleveland to Cincinnati on a regular train - and what's more amazing, nobody is really interested in making this happen. All we really care about is finding some miracle method to keep all the cars running.
What we've been seeing is nothing more than a massive pump-and-dump operation in the stock markets, most of it executed by programmed robot traders, with the trading nut provided by taxpayers current and future. These shenanigans add up to new risks and fragilities so extreme that the next time a grain of sand catches in the exquisite machinery they will sink the USA as a viable enterprise. We will end up discrediting not just capitalism, but also the idea of capital per se, that is, of deployable acquired wealth. As this occurs, of course, events on-the-ground will give new meaning to the term "reality television."
Financial Crisis Called Off
Whew, what a relief! Everybody from Ben Bernanke and a Who's Who of banking poobahs schmoozing it up in the heady vapors of Jackson Hole, Wyoming, to the dull scribes at The New York Times, toiling in their MC Escher hall of mirrors, to poor dim James Surowiecki over at The New Yorker, to - wonder of wonders! - the Green Shoots claque at the cable networks, to the assorted quants, grinds, nerds, pimps, factotums, catamites, and cretins in every office from the Bureau of Labor Statistics to the International Monetary Fund - every man-Jack and woman-Jill around the levers of power and opinion weighed in last week with glad tidings that the world's capital finance system survived what turned out to be a mere protracted bout of heartburn and has been reborn as the Miracle Bull economy. Our worries over. If you believe their bullshit. Which I don't.
All this goes to show is how completely the people in charge of things in the USA have lost their minds. They seem to think this mass exercise in pretend will resurrect the great march to the WalMarts, to the new car showrooms, and the cul-de-sac model houses, reignite another round of furious sprawl-building, salad-shooter importing, and no-doc liar-lending, not to mention the pawning off of innovative, securitized stinking-carp debt paper onto credulous pension funds in foreign lands where due diligence has never been heard of, renew the leveraged buying-out of zippy-looking businesses by smoothies who have no idea how to run them (and no real intention of doing it, anyway), resuscitate the construction of additional strip malls, new office park "capacity" and Big Box "power centers," restart the trade in granite countertops and home theaters, and pack the turnstiles of Walt Disney world - all this while turning Afghanistan into a neighborhood that Beaver Cleaver would be proud to call home.
By the way - and please pardon the rather sharp digression - but does anybody know if they buried Michael Jackson yet? It's only been a couple of months. And, if not, is that the stench now wafting across the purple mountains' majesty from sea-to-shining sea? Isn't it a little indecent to keep the poor fellow waiting? Or is a really surprising comeback secretly planned, with product tie-ins and all?
America loves the word "recovery" as only a catastrophically sick society can. "In recovery" is the new universal mantra of loser individuals and loser nations. Everybody in the USA is in recovery. Even Michael Jackson (he may have given up on somatic activity but, on the plus side, as the Rotarians love to say, he's quit using drugs for once and for all, and the magazines have stopped publishing photos of him taken after 1990, when he turned himself into something out of the Hammer Films catalog).
To sum it all up, the US economy is in recovery. Paul Krugman says that we'll soon realize that Gross Domestic Product (GDP) is growing. He actually said that on the Sunday TV chat circuit. Not to put too fine a point on it, but I would really like to know what you mean by that Paul, you fatuous wanker. Do you mean that the Atlanta homebuilders are going to open up a new suburban frontier down in Twiggs County so that commuters can enjoy driving Chrysler Crossfires a hundred and sixty miles a day to new jobs as flash traders in the Peachtree Plaza? Do you mean that the Home Equity Fairy is going to wade into the sea of foreclosure and save twenty million mortgage holders currently sojourning in the fathomless depths with the anglerfish? Do you mean that all the bales of deliquescing, toxic "assets" hidden in the vaults of Citibank, JP Morgan, Bank of America, et al, (not to mention on the books of every pension fund in the USA, and not a few elsewhere) will magically turn into Little Debbie Snack Cakes on Labor Day weekend? Do you mean that American Express and Master Card are about to declare a Jubilee on accounts in default everywhere? Do you mean that General Motors will produce a car that a.) anyone really wants to buy and b.) that the company can sell at a profit? Are you saying we get a do-over, going back to, say, 1981? Did we win some cosmic lottery that hasn't been announced yet? What's growing in this country besides unemployment, bankruptcy, repossession, liquidation, gun ownership, and suicidal despair? In short, are you out of your mind, Paul Krugman?
The key to the current madness, of course, is this expectation, this wish, really, that all the rackets, games, dodges, scams, and workarounds that American banking, business, and government devised over the past thirty years - to cover up the dismal fact that we produce so little of real value these days - will just magically return to full throttle, like a machine that has spent a few weeks in the repair shop. This is not going to happen, of course. It is permanently and irredeemably broken - this Rube Goldberg contraption of swindles all based on the idea that it's possible to get something for nothing. And more to the point, we're really doing nothing to reconstruct our economy along lines that are consistent with the realities of energy, geopolitics, or resource scarcity. So far, our notions about a "green" economy amount to little more than blowing green smoke up our collective ass. We think we're going to build "green" skyscrapers! We're too dumb to see what a contradiction in terms this is. The architects are completely uninterested in the one thing that really is "green" - traditional urban design - and most particularly the walkable neighborhood. That's just too conventional, not special enough, lacking in star power, not enough of a statement, boring, tedious, so not cutting edge! We blather about high speed rail, but you can't even get from Cleveland to Cincinnati on a regular train - and what's more amazing, nobody is really interested in making this happen. All we really care about is finding some miracle method to keep all the cars running.
What we've been seeing is nothing more than a massive pump-and-dump operation in the stock markets, most of it executed by programmed robot traders, with the trading nut provided by taxpayers current and future. These shenanigans add up to new risks and fragilities so extreme that the next time a grain of sand catches in the exquisite machinery they will sink the USA as a viable enterprise. We will end up discrediting not just capitalism, but also the idea of capital per se, that is, of deployable acquired wealth. As this occurs, of course, events on-the-ground will give new meaning to the term "reality television."
Wednesday, August 19, 2009
SC95-6
http://survivalacres.com/wordpress/
This Blog Is Closed
I’ll update this page a bit later as to why.
Here it is: Americans ….have chosen the path of “strong” denial. The United States is the leading cause behind many, many wrong-doings throughout the world. This blog had focused on a wide variety of these issues, including war, terrorism, torture, pollution, environmental destruction, economic collapse, climate change, peak oil, tyranny, oppression, “big brother”, privacy, capitalism, imperialism, domination, genocide, materialism, consumerism, evaporating freedoms and lost liberties.
My goal was to awaken the sleeping sheep of America to their common predicament, and to the root causes of many of these issues. Many different bloggers are also still focused on the same issues. And yet despite the billions of words now broadly played across the Internet extolling and exhorting our views, news and opinions of these facts and events, we have singularily failed to actually change what I have come to call the final outcome.
Stephen Lendman has done a masterful job of documenting many of these issues as a gifted writer. I highly recommend you read his blog daily. There are many other sites that could also be recommended. A good review for denialist on global climate change can be found here.
Our downfall as a nation is no accident. We know how this happened and why. Yet despite this knowledge and awareness, the downward trajectory of this country remains the same. The growing grassroot movements and widespread discontent and unrest we are now witnessing is not going to stop it. All they want is what everyone seems to still want, which is a return to a “business as usual” model of preminence, privilege and excess and material consumption.
This cannot happen, if for no other reason then resource limits have now been reached. What you don’t see yet is a demand to change this country into a truly ethical and sustainable civilization. This is because the people still fail to understand that this is the only possible future worth fighting for, if there is even going to be any future.
Our backs are up against a immutable wall of growing tyranny and oppression. The changes we desperately seek are now outrageously being labled as “terrorism” by a out-of-control goverment and unethical politicians and trigger happy thugs. We’re fighting against bad press, bad media, bad science, bad faith and whole lot of bad people who are seemingly hell-bent on destroying all that is beautiful, true, worthy and just.
The sheep are confused, and tend to side with the strongest force, either out of fear or ignorance, but the result is the same. A strong theme of rank denial is running absolutely rampant through the rank and file of our largely ignorant populace.
I’ve flat-out had enough of this. I am absolutely sick to death of the embellishment of ignorance. Americans have learned to triumph the mundane, inane and absolutely ridiculous. The grotesque fawning over pop stars, dead or alive is always a current example. Ignored are the real issues of genocide, oppression, destruction, manipulation and distortion of truth and justice.
The Internet and all that it contains is a fantasy world, where you can be or do anything that you want. You can deceive yourself into believing that you’re “making a difference” by sending a form letter, writing a check or staying “informed” through a myriad of websites full of infotainment and information. Missing from this equation is the entire real world of life and death, the suffering and struggling that goes on each and every single day to simply retain the most basic right of all, applied to all things on planet Earth — the right to exist. This is a basic right to all things, the right to exist without coercion or exploitation. But it is not a right that is recognized, honored or respected — or even acknowledged.
Americans simply do not care enough to stop any of the genocide going on all around them and throughout the world, which they are in fact largely responsible for through their standard of living and expectations of wealth. Denial and disbelief is far, far easier living then truth, knowledge, facts, or the real science that shows the folly of our ways.
Americans, by and large are quite content to literally do nothing at all about any of these issues, foolishly afraid for their own privileged and pampered positions, jealously guarded by a global empire of military domination and exploitation. The oppressed and exploited are not even factored in, because they are considered irrelevant and unimportant. We do not even recognize them to be worthy of life unless they model themselves after us.
This American apathy to truth, knowledge and awareness has reached a critical crisis level in this country. Throughout the world as ecosystems are rapidly destroyed and we have consumed our way completely down the food chain, rampant raging denial remains the true course of business within America politics, industry, religion and the people themselves.
The danger we are now in is very clear. The United States of America is a leading destroyer of the Earth and all of the beings of the Earth all over the world, and it is Americans themselves who remain arrogant and apathetic towards these results.
It is here within this country that must be changed the most if any change anywhere is going to have any true and lasting effect for the planet and its people. Efforts to embrace real change here however, have failed widely. This blog had been focused on these issues for several years, and received scant attention. It is very clear now that blogging cannot possibly change these outcomes. Advocacy of a much stronger sort is required. But this will not be found online or in the written word. Expecting Americans to undergo the dramatic and drastic lifestyle changes that are now required cannot be confined to just mere words and the implied “hope for the best” that this usually entails.
I have written before that suffering must come. Without this, we will not know the true depths of our own depravity and inaction’s that have caused the destruction of our planet. The great tragedy is that we will have brought down all of the other nations and peoples of the Earth with us. We alone are not totally responsible, but we do bear the lions share of responsibility. Therefore, we should have been the world’s leader in preservation and conservation and the adaption of a truly sustainable lifestyle, but instead we were met with denial, refusal, ignorance, bad science, religiousity and widespread stupidity.
This seems to be a uniquely American trait. This may be because we are actually a young nation, or because we are so easily manipulate and led by a lying government and deceitful media. Whatever the case may be, as a so-called “civilization” goes, we are very poor replacements for the former inhabitants of America who were truly wiser then we; understanding that living in cooperation with the Earth and the environment was a truly ethical manner of living and the only possible sustainable lifestyle there ever was.
We may yet destroy ourselves and all life on Earth, but I am unable to stand in silence behind a keyboard and continue to watch this happen. We cannot replace mere words written on a computer screen as a substitute for true lifestyle changes. This is our own fault and folly, to believe that we can actually make a difference with just words. If that were true, it would have happened already all over the worldm, as billions upon billions of words were written, shared and consumed. To continue to believe that we need even “more words” and then change will happen (somehow) is absolute folly. I will not stand for this a moment longer.
It is quite odd that we wage this war online, when in the real world it is happening right outside our doors. For us to continue to believe that we can make a difference here, on the Internet, is truly absurd beyond belief. Many will argue that education and information (here) will make the change, but I beg to differ. There are reams and reams, entire mountain chains of facts, figures, evidence, pictures, videos and information regarding these issues from highly credible sources, and it has NOT made the change. And it never, ever will.
Therefore to continue to blog about these issues is in fact a total waste of our time. The battle is outside of your door, it is most definitely NOT online. Your life and that of your family hangs precariously in the balance and the life of all future generations to come. And unless you get off your ass and do what it takes to put a stop to this growing insanity, it will continue and it will doom all future generations to a controvertible hell on Earth. This IS the path we as a nation are on, and it will happen unless YOU stop it.
This Blog Is Closed
I’ll update this page a bit later as to why.
Here it is: Americans ….have chosen the path of “strong” denial. The United States is the leading cause behind many, many wrong-doings throughout the world. This blog had focused on a wide variety of these issues, including war, terrorism, torture, pollution, environmental destruction, economic collapse, climate change, peak oil, tyranny, oppression, “big brother”, privacy, capitalism, imperialism, domination, genocide, materialism, consumerism, evaporating freedoms and lost liberties.
My goal was to awaken the sleeping sheep of America to their common predicament, and to the root causes of many of these issues. Many different bloggers are also still focused on the same issues. And yet despite the billions of words now broadly played across the Internet extolling and exhorting our views, news and opinions of these facts and events, we have singularily failed to actually change what I have come to call the final outcome.
Stephen Lendman has done a masterful job of documenting many of these issues as a gifted writer. I highly recommend you read his blog daily. There are many other sites that could also be recommended. A good review for denialist on global climate change can be found here.
Our downfall as a nation is no accident. We know how this happened and why. Yet despite this knowledge and awareness, the downward trajectory of this country remains the same. The growing grassroot movements and widespread discontent and unrest we are now witnessing is not going to stop it. All they want is what everyone seems to still want, which is a return to a “business as usual” model of preminence, privilege and excess and material consumption.
This cannot happen, if for no other reason then resource limits have now been reached. What you don’t see yet is a demand to change this country into a truly ethical and sustainable civilization. This is because the people still fail to understand that this is the only possible future worth fighting for, if there is even going to be any future.
Our backs are up against a immutable wall of growing tyranny and oppression. The changes we desperately seek are now outrageously being labled as “terrorism” by a out-of-control goverment and unethical politicians and trigger happy thugs. We’re fighting against bad press, bad media, bad science, bad faith and whole lot of bad people who are seemingly hell-bent on destroying all that is beautiful, true, worthy and just.
The sheep are confused, and tend to side with the strongest force, either out of fear or ignorance, but the result is the same. A strong theme of rank denial is running absolutely rampant through the rank and file of our largely ignorant populace.
I’ve flat-out had enough of this. I am absolutely sick to death of the embellishment of ignorance. Americans have learned to triumph the mundane, inane and absolutely ridiculous. The grotesque fawning over pop stars, dead or alive is always a current example. Ignored are the real issues of genocide, oppression, destruction, manipulation and distortion of truth and justice.
The Internet and all that it contains is a fantasy world, where you can be or do anything that you want. You can deceive yourself into believing that you’re “making a difference” by sending a form letter, writing a check or staying “informed” through a myriad of websites full of infotainment and information. Missing from this equation is the entire real world of life and death, the suffering and struggling that goes on each and every single day to simply retain the most basic right of all, applied to all things on planet Earth — the right to exist. This is a basic right to all things, the right to exist without coercion or exploitation. But it is not a right that is recognized, honored or respected — or even acknowledged.
Americans simply do not care enough to stop any of the genocide going on all around them and throughout the world, which they are in fact largely responsible for through their standard of living and expectations of wealth. Denial and disbelief is far, far easier living then truth, knowledge, facts, or the real science that shows the folly of our ways.
Americans, by and large are quite content to literally do nothing at all about any of these issues, foolishly afraid for their own privileged and pampered positions, jealously guarded by a global empire of military domination and exploitation. The oppressed and exploited are not even factored in, because they are considered irrelevant and unimportant. We do not even recognize them to be worthy of life unless they model themselves after us.
This American apathy to truth, knowledge and awareness has reached a critical crisis level in this country. Throughout the world as ecosystems are rapidly destroyed and we have consumed our way completely down the food chain, rampant raging denial remains the true course of business within America politics, industry, religion and the people themselves.
The danger we are now in is very clear. The United States of America is a leading destroyer of the Earth and all of the beings of the Earth all over the world, and it is Americans themselves who remain arrogant and apathetic towards these results.
It is here within this country that must be changed the most if any change anywhere is going to have any true and lasting effect for the planet and its people. Efforts to embrace real change here however, have failed widely. This blog had been focused on these issues for several years, and received scant attention. It is very clear now that blogging cannot possibly change these outcomes. Advocacy of a much stronger sort is required. But this will not be found online or in the written word. Expecting Americans to undergo the dramatic and drastic lifestyle changes that are now required cannot be confined to just mere words and the implied “hope for the best” that this usually entails.
I have written before that suffering must come. Without this, we will not know the true depths of our own depravity and inaction’s that have caused the destruction of our planet. The great tragedy is that we will have brought down all of the other nations and peoples of the Earth with us. We alone are not totally responsible, but we do bear the lions share of responsibility. Therefore, we should have been the world’s leader in preservation and conservation and the adaption of a truly sustainable lifestyle, but instead we were met with denial, refusal, ignorance, bad science, religiousity and widespread stupidity.
This seems to be a uniquely American trait. This may be because we are actually a young nation, or because we are so easily manipulate and led by a lying government and deceitful media. Whatever the case may be, as a so-called “civilization” goes, we are very poor replacements for the former inhabitants of America who were truly wiser then we; understanding that living in cooperation with the Earth and the environment was a truly ethical manner of living and the only possible sustainable lifestyle there ever was.
We may yet destroy ourselves and all life on Earth, but I am unable to stand in silence behind a keyboard and continue to watch this happen. We cannot replace mere words written on a computer screen as a substitute for true lifestyle changes. This is our own fault and folly, to believe that we can actually make a difference with just words. If that were true, it would have happened already all over the worldm, as billions upon billions of words were written, shared and consumed. To continue to believe that we need even “more words” and then change will happen (somehow) is absolute folly. I will not stand for this a moment longer.
It is quite odd that we wage this war online, when in the real world it is happening right outside our doors. For us to continue to believe that we can make a difference here, on the Internet, is truly absurd beyond belief. Many will argue that education and information (here) will make the change, but I beg to differ. There are reams and reams, entire mountain chains of facts, figures, evidence, pictures, videos and information regarding these issues from highly credible sources, and it has NOT made the change. And it never, ever will.
Therefore to continue to blog about these issues is in fact a total waste of our time. The battle is outside of your door, it is most definitely NOT online. Your life and that of your family hangs precariously in the balance and the life of all future generations to come. And unless you get off your ass and do what it takes to put a stop to this growing insanity, it will continue and it will doom all future generations to a controvertible hell on Earth. This IS the path we as a nation are on, and it will happen unless YOU stop it.
Monday, August 17, 2009
SC95-5
http://kunstler.com/blog/2009/08/the-first-die-off.html
The First Die-off
Sunday, I got a taste of the oldest established permanent traffic fiasco in America known as Escape From Cape Cod. This is not a regular thing for me. I have no family there and never did. Friends invited us out to an idyllic hidden corner of the place far from the clam bars filled with shrieking babies and other more typical attractions. We arrived in good order at mid-week and had a fine time. Once installed, we didn't get in a car for four days.
Our strategy was to leave for home in upstate New York at 11 o'clock Sunday morning -- a bright, hot day, as chance would have it -- thinking that the masses would elect to remain a few more hours at Vacation Central pointlessly towing the little ones around in circles on plastic inflatables behind motorboats before returning to the real world with all its foreclosure notices, canceled credit cards, re-po men hiding in the foundation plantings, and other woes of the day. The masses must be more massive these days than I ever imagined. Apparently, you can fill Massachusetts Bay from end-to-end with watercraft and still have enough vacationers left to completely overwhelm the main highway off-Cape, Route 6, where we crawled in first gear all the way from Yarmouth to the Sagamore Bridge.
One couldn't help thinking, of course, how nice it would be if there was a choo-choo train that ran from Boston down the length of the Cape, but alas there is no more. If any public official had entertained vagrant thoughts of re-starting it in recent decades, the idea was apparently dismissed as a species of heartburn. Clam rolls, in excess, will do that to you. Then again, the rail service from Boston to Albany no longer exists, amazing as it seems, so the whole thought exercise was a waste of time. But it explains why we drove there in the first place.
Anyway, we broke loose from traffic for a while on the mainland, but the little tie-up on Route 6 proved a mere hors d'oeuvre to the main course where I-495 joined up with the Mass Pike (I-90), and we ramped onto the peristaltic nightmare of a giant throbbing automotive fistula that pulsed 27 miles to I-84 west of Worcester, which drains the entire New England vacation-shed down to the great Moloch of New York City and its teeming outlands. We, fortunately, were well-fueled-up and air cooled in my Toyota Tacoma pickup. But one couldn't help imagining the horrors of those unlucky others who found themselves creeping on empty, in 91-degree heat, riding the clutch the whole way, with bladders expanded to the size of crenshaw melons.
Once we busted through that monumental clusterfuck, it was a straight run home -- except for a strange interlude at a Mass Pike rest stop, where people who looked like Thanksgiving Day parade balloons clutched armfuls of snack bags in their never-ending quest for fulfillment. I began to think of them -- prompted, I'm sure, by some malicious meme on the Web -- as "the yeast people," enormous one-celled creatures multiplying at an astronomical rate, soon to engulf the planet in a tragic reeking foam of yeast, and dooming the Earth to a fate worse than climate change....
All this frightful hyperbole is really mere précis to my real point here, for those of you already acquainted with some of the classic "doomer" themes, which is that the first "die-off" of The Long Emergency will not be one of human beings but of our beloved automobiles. Personally, I think the car die-off will come on with stunning rapidity as a combination of factors merge to make these colossal traffic jams staples of nostalgia in decades to come. As usual, the public is clueless about this, gulled by a cretinous news media into the earnest expectation of endless techno-miracles.
The funniest of these lately are the glad tidings from ("The New" ) General Motors. They came out last week with a laughable hype-fest for their proposed electric car, the "Volt," scheduled to arrive in the showrooms around 2011 (about the same time that all the mortgage-backed-securities sitting in Wall Street's vaults melt into a monumental puddle of radioactive goo). We're told the Volt will get the equivalent of over 200 miles-per-gallon, at less than 25 cents a charge from the plug on your garage wall, blah blah. They estimate that it'll cost about $40,000. Do we detect a little problem right there? Like, the whole adult US population is going to rush out and buy new cars priced the same as today's Mercedes Benz? Good luck with that, GM, especially when money for car loans will be about as easy to get as a royal flush in online poker. And good luck with changing out the battery for ten grand a couple of years down the road, so to speak. And good luck also with your expectation that the roads and bridges will remain drivable in the years ahead, as every municipality, and county, and state slides into bankruptcy and the paving machines sit rusting in the DOT marshaling yards.
What is wrong with our brains? Are they turning to yeast? And even if it were possible to continue torturing ourselves in three-hour traffic jams, is that something we would want to do? I'm serenely confident that we're in the twilight of Happy Motoring now. Without debt service there is no auto industry, and we're toast where debt service is concerned. All we can do now is give cars away, or give US citizens free money to buy them -- which we are obviously already doing with "Cash for Clunkers" -- which is additionally hilarious in the same nation that is deeply paranoid about the government giving anybody free health care. What a nation of morons we have become.
Then, of course, there is the political problem that nobody is thinking about, namely, what happens when a substantial portion of the public is permanently foreclosed from motoring because they've lost jobs and incomes and positions and vocations that they will never get back -- ? Do you think they'll just hike down the breakdown lanes with colorful bundles on their heads like the impoverished folk in other lands? Or will they put all those home arsenals to work? I can't wait to find out.
The First Die-off
Sunday, I got a taste of the oldest established permanent traffic fiasco in America known as Escape From Cape Cod. This is not a regular thing for me. I have no family there and never did. Friends invited us out to an idyllic hidden corner of the place far from the clam bars filled with shrieking babies and other more typical attractions. We arrived in good order at mid-week and had a fine time. Once installed, we didn't get in a car for four days.
Our strategy was to leave for home in upstate New York at 11 o'clock Sunday morning -- a bright, hot day, as chance would have it -- thinking that the masses would elect to remain a few more hours at Vacation Central pointlessly towing the little ones around in circles on plastic inflatables behind motorboats before returning to the real world with all its foreclosure notices, canceled credit cards, re-po men hiding in the foundation plantings, and other woes of the day. The masses must be more massive these days than I ever imagined. Apparently, you can fill Massachusetts Bay from end-to-end with watercraft and still have enough vacationers left to completely overwhelm the main highway off-Cape, Route 6, where we crawled in first gear all the way from Yarmouth to the Sagamore Bridge.
One couldn't help thinking, of course, how nice it would be if there was a choo-choo train that ran from Boston down the length of the Cape, but alas there is no more. If any public official had entertained vagrant thoughts of re-starting it in recent decades, the idea was apparently dismissed as a species of heartburn. Clam rolls, in excess, will do that to you. Then again, the rail service from Boston to Albany no longer exists, amazing as it seems, so the whole thought exercise was a waste of time. But it explains why we drove there in the first place.
Anyway, we broke loose from traffic for a while on the mainland, but the little tie-up on Route 6 proved a mere hors d'oeuvre to the main course where I-495 joined up with the Mass Pike (I-90), and we ramped onto the peristaltic nightmare of a giant throbbing automotive fistula that pulsed 27 miles to I-84 west of Worcester, which drains the entire New England vacation-shed down to the great Moloch of New York City and its teeming outlands. We, fortunately, were well-fueled-up and air cooled in my Toyota Tacoma pickup. But one couldn't help imagining the horrors of those unlucky others who found themselves creeping on empty, in 91-degree heat, riding the clutch the whole way, with bladders expanded to the size of crenshaw melons.
Once we busted through that monumental clusterfuck, it was a straight run home -- except for a strange interlude at a Mass Pike rest stop, where people who looked like Thanksgiving Day parade balloons clutched armfuls of snack bags in their never-ending quest for fulfillment. I began to think of them -- prompted, I'm sure, by some malicious meme on the Web -- as "the yeast people," enormous one-celled creatures multiplying at an astronomical rate, soon to engulf the planet in a tragic reeking foam of yeast, and dooming the Earth to a fate worse than climate change....
All this frightful hyperbole is really mere précis to my real point here, for those of you already acquainted with some of the classic "doomer" themes, which is that the first "die-off" of The Long Emergency will not be one of human beings but of our beloved automobiles. Personally, I think the car die-off will come on with stunning rapidity as a combination of factors merge to make these colossal traffic jams staples of nostalgia in decades to come. As usual, the public is clueless about this, gulled by a cretinous news media into the earnest expectation of endless techno-miracles.
The funniest of these lately are the glad tidings from ("The New" ) General Motors. They came out last week with a laughable hype-fest for their proposed electric car, the "Volt," scheduled to arrive in the showrooms around 2011 (about the same time that all the mortgage-backed-securities sitting in Wall Street's vaults melt into a monumental puddle of radioactive goo). We're told the Volt will get the equivalent of over 200 miles-per-gallon, at less than 25 cents a charge from the plug on your garage wall, blah blah. They estimate that it'll cost about $40,000. Do we detect a little problem right there? Like, the whole adult US population is going to rush out and buy new cars priced the same as today's Mercedes Benz? Good luck with that, GM, especially when money for car loans will be about as easy to get as a royal flush in online poker. And good luck with changing out the battery for ten grand a couple of years down the road, so to speak. And good luck also with your expectation that the roads and bridges will remain drivable in the years ahead, as every municipality, and county, and state slides into bankruptcy and the paving machines sit rusting in the DOT marshaling yards.
What is wrong with our brains? Are they turning to yeast? And even if it were possible to continue torturing ourselves in three-hour traffic jams, is that something we would want to do? I'm serenely confident that we're in the twilight of Happy Motoring now. Without debt service there is no auto industry, and we're toast where debt service is concerned. All we can do now is give cars away, or give US citizens free money to buy them -- which we are obviously already doing with "Cash for Clunkers" -- which is additionally hilarious in the same nation that is deeply paranoid about the government giving anybody free health care. What a nation of morons we have become.
Then, of course, there is the political problem that nobody is thinking about, namely, what happens when a substantial portion of the public is permanently foreclosed from motoring because they've lost jobs and incomes and positions and vocations that they will never get back -- ? Do you think they'll just hike down the breakdown lanes with colorful bundles on their heads like the impoverished folk in other lands? Or will they put all those home arsenals to work? I can't wait to find out.
Wednesday, August 12, 2009
SC95-4
http://informationclearinghouse.info/article23257.htm
Question for Bernanke:
"Do You Have The Cojones To Raise Rates?"
Booyah. It's morning in America. The jobless numbers are stabilizing, the stock market is sizzling, quarterly earnings came in better than expected, traders have turned bullish, housing is showing signs of life, and clunker-swaps have given Detroit a well-needed boost of adrenalin. Even Cassandra economists --like Paul Krugman and Nouriel Roubini--have been uncharacteristically optimistic. Is is true; did we avoid a Second Great Depression? Is the worst really behind us?
Maybe. But there is only one way to find out for sure. Raise rates.
Bernanke should welcome the opportunity to show everyone how he's pulled the world's biggest economy back from the brink of disaster. All he needs to do is stop giving away free money, shut down a few of his so-called lending facilities, and stop manipulating interest rates by purchasing mortgage-backed securities (MBS) from Fannie and Freddie. How hard is that?
The S&P 500 has skyrocketed 48 percent since March 9. What's Bernanke waiting for; a 75 percent increase; a 100 percent increase??? How high do stocks have to go to convince Bernanke that the economy can stand on its own two feet without the torrent of cheap liquidity issuing from the Fed?
Bernanke can prove to his critics that the US economy doesn't need the Fed's monetization programs and price fixing; that it doesn't need the liquidity injections and the buying up of junk mortgages. ($80 billion last month alone) After all, as Bernanke opines, "The fundamentals of our economy are strong!"
Right. Now prove it.
All Bernanke has to do is boost rates by a point or two and demonstrate that he's willing to mop up some of the $13 trillion he's pumped into the financial markets. With just one announcement, the Fed chair could show our biggest creditor--China--that he's serious about defending the dollar and the trillion dollars of US Treasuries China purchased believing that the US was a responsible trading partner who would never write checks on an account that was overdrawn by $12 trillion. (The National Debt)
So, go ahead, Ben. Raise rates, shut down the printing presses, roll up the corporate welfare programs. Be a He-man. Make your critics eat their words.
This is from Bloomberg News 8-12-09:
"The Fed’s policy-setting Open Market Committee will today keep the target rate at zero to 0.25 percent and retain plans to buy as much as $1.45 trillion of housing debt by year-end to help secure a recovery, analysts said. The FOMC’s statement is expected at about 2:15 p.m. in Washington."
Hmmmmmm. So all the "green shoots" happy talk is pure gibberish, right? There is no recovery. Bernanke plans to continue flooding the financial system with cheap liquidity. It's all a fraud. Things aren't better; they're worse. Look at the facts.
There were 1.9 million foreclosures in 2009 in the first six months, and there will be another 1.5 before the end of the year. Is that better?
According to Bloomberg: "A glut of unsold homes is also pushing down prices. The 3.8 million homes for sale in June would take 9.4 months to sell at the current pace of transactions, according to the National Association of Realtors. The inventory turnover rate averaged 4.5 months in the six years from 2000 to 2005.....More than 18.7 million homes, including foreclosures, residences for sale and vacation homes, stood vacant in the U.S. during the second quarter. That compared with 18.6 million a year earlier, the U.S. Census Bureau said July 24
Total home sales fell 23.7 percent in June versus a year earlier." Bloomberg)
Massive supply, falling prices, record foreclosures, flagging demand--and according to Deutsche Bank--48 percent of all mortgages will be underwater by 2011. It's all bad.
Here's another clip from Bloomberg today 8-12-09:
"Home price declines in the U.S. ACCELERATED in the second quarter, dropping by a record 15.6 percent from a year earlier, as foreclosures weighed on values.
The median price of an existing single-family home dropped to $174,100, THE MOST IN RECORDS dating to 1979, the National Association of Realtors said today.
“I don’t think we’re at a bottom yet in home prices,” said Scott Anderson, a senior economist at Wells Fargo & Co. in Minneapolis. “There’s also a pretty big shadow supply of houses. People are kind of waiting for the bottom but there’s a pent up supply out there.”...Home prices are tumbling even as mortgage rates remain near all-time lows. The average U.S. rate for a 30-year fixed home loan was to 5.22 percent last week, down from 5.25 percent the prior week." (Bloomberg)
The decline in housing prices is ACCELERATING, not slowing down. The historic collapse in real estate is ongoing and it is wiping out trillions in homeowner equity making it increasingly difficult for consumers to borrow on the diminishing value of their collateral. This is why foreclosures, defaults and personal bankruptcies are soaring. (According to the American Bankruptcy Institute: consumer bankruptcy filings reached 126,434 in July, a 34.3% increase year over year, and a 8.7% increase sequentially (116,365 in June). July's number is the highest monthly total since the October 2005 bankruptcy reform aka the Bankruptcy Abuse Prevention and Consumer Protection Act.)
This is why households and consumers can no longer spend as much as they had before the crisis. Credit lines are being pared back; personal savings are rising, and GDP (excluding fiscal stimulus) is shrinking.Every one of the 3.5 million foreclosures represents hundreds of thousands of dollars the banks will never recoup. NEVER. That's why the rate of bank failures will be much greater than current estimates. The banks are facing a triple-whammy; soaring foreclosures, plummeting asset prices, and a meltdown in commercial real estate. The combo has created a gigantic capital-hole which is forcing the banks to slow lending even to applicants with flawless credit. The Fed has built up excess bank reserves by $800 billion, but it hasn't made a bit of difference. They banks are still not able to lend.
The uptick in housing last month reflects seasonal changes and a shifting of pain from the low end of the market to higher priced homes; nothing more. Homes that are priced over $1 million are now sitting on the market for 20 months; a lifetime in real estate parlance. High-end neighborhoods have turned into leper colonies. Zero interest; zero traffic. Expect a crash this year.
Now take a look at this from CNBC's Diana Olick:
"The number of homes listed officially on the market, while still at historically high levels, might be only the tip of the iceberg," said Stan Humphries, chief economist at real estate website Zillow.com in Seattle, Washington.According to Zillow's latest Homeowner Confidence Survey, 12 percent of homeowners said they would be "very likely" to put their home on the market in the next 12 months if they saw signs of a real estate market turnaround, 8 percent said "likely," while 12 percent said "somewhat likely."
Survey results could translate into around 20 million homeowners trying to sell their homes, a startling number given that the Census bureau indicates there are 93 million U.S. houses, condos and co-ops, Humphries said.According to the National Association of Realtors, the market is currently on track to sell 4.89 million homes annually.
"At this pace, it would take about four years to run through this amount of backlogged inventory," he said.
"Shadow inventory has the potential to give us another leg down on home prices during the second half of the year," said Steven Wood, chief economist at Insight Economics in Danville, California. (Diana Olick, "Shadow inventory lurks over US housing recovery" CNBC)
The banks are using all types of accounting tricks to hide the real losses or the true value of downgraded assets. The only difference between a common crook and a commercial banker is a well-paid accountant.The banking system is broken and its only going to get worse as the hammer comes down on the commercial real estate market. The Fed and Treasury are already working out the details for another stealth bailout that they'll initiate without Congress's approval. It's all very "hush-hush". The plan will involve more mega-leveraging of government liabilities. Bernanke has appointed himself the de facto Czar of Hedge Fund Nation, Clunkerville USA. An article in this week's Financial Times further illustrates how the Fed has transformed the economy into a riverboat casino:
"The Federal Reserve Bank of New York is aggressively hiring traders as its seeks to manage its burgeoning securities holdings, making the central bank one of Wall Street's most active recruiters of financial talent.The New York Fed - the arm of the US central bank that implements its monetary policy - plans to increase the staff in its markets group to 400 by the end of the year - up from 240 at the end of 2007.
The Fed, which says that most of its new recruits come from private sector financial firms, is hiring employees as many banks, rating agencies, hedge funds and private equity groups shed staff. New York city officials recently estimated that the sector's woes would lead to a loss of up to 140,000 jobs.
The Fed's need for more traders is a direct consequence of the central bank's efforts to keep credit flowing through the US economy. The Fed has been buying fixed-income securities at such a rate that its assets have more than doubled to $2,000bn in the past year, leading the central bank to conclude that it needs more people to monitor the markets and to manage its credit risks." (Financial Times, "NY Fed in hiring spree as assets soar", Aline van Duyn)
Nice, eh? So now the Fed needs to enlist a gaggle of professional speculators just to keep all the balls in the air. What a joke. This isn't a rebound; it's just more hype. Here's Warren Buffett summing it up on CNBC:"I get figures on 70-odd businesses, a lot of them daily. Everything that I see about the economy is that we've had no bounce. The financial system was really where the crisis was last September and October, and that's been surmounted and that's enormously important. But in terms of the economy coming back, it takes a while.... I said the economy would be in a shambles this year and probably well beyond. I'm afraid that's true.""The economy is in a shambles". That's from the horse's mouth. Inventories are down 11 percent year-over-year, durable goods are down 10.4 percent y-o-y, industrial capacity is at record lows, manufacturing is still contracting, housing is in the tank, shipping and rail freight are scraping the bottom, retail is in a long-term funk, and--according to Krugman--the slight dip in unemployment was a statistical anomaly. Here's Bob Herbert's great summary of the unemployment data:
"Some 247,000 jobs were lost in July, a number that under ordinary circumstances would send a shudder through the country. It was the smallest monthly loss of jobs since last summer. And for that reason, it was seen as a hopeful sign. The official monthly unemployment rate ticked down from 9.5 percent to 9.4 percent....The country has lost a crippling 6.7 million jobs since the Great Recession began in December 2007...The percentage of young American men who are actually working is the lowest it has been in the 61 years of record-keeping, according to the Center for Labor Market Studies at Northeastern University in Boston. Only 65 of every 100 men aged 20 through 24 years old were working on any given day in the first six months of this year. In the age group 25 through 34 years old, traditionally a prime age range for getting married and starting a family, just 81 of 100 men were employed.... The numbers are beyond scary; they’re catastrophic.
This should be the biggest story in the United States. When joblessness reaches these kinds of extremes, it doesn’t just damage individual families; it corrodes entire communities, fosters a sense of hopelessness and leads to disorder....
A truer picture of the employment crisis emerges when you combine the number of people who are officially counted as jobless with those who are working part time because they can’t find full-time work and those in the so-called labor market reserve — people who are not actively looking for work (because they have become discouraged, for example) but would take a job if one became available.
The tally from those three categories is a mind-boggling 30 million Americans — 19 percent of the overall work force.
This is, by far, the nation’s biggest problem and should be its No. 1 priority.("A Scary Reality" Bob Herbert, New York Times)
Sorry, Bob, the media has no time for unemployment news. It tends to undermine the positive vibes from green shoots stories.
The stock market rally has made it harder for people to see the truth. But the facts haven't changed. Deflation is setting in across all sectors and the economy has reset at a lower rate of economic activity. Housing prices are falling, consumer spending is slowing, layoffs are rising, and demand is getting weaker. That means growth will be sub-par for the foreseeable future. Here's an excerpt from a speech given by San Francisco Fed Janet Yellen drawing the same conclusion:
"I don’t like taking the wind out of the sails of our economic expansion, but a few cautionary points should be considered... a massive shift in consumer behavior is under way.. American households entered this recession stretched to the limit with mortgage and other debt. The personal saving rate fell from around 8 percent of disposable income two decades ago to almost zero. Households financed their lifestyles by drawing on increasing stock market and housing wealth, and taking on higher levels of debt. But falling house and stock prices have destroyed trillions of dollars in wealth, cutting off those ready sources of cash. What’s more, the stark realities of this recession have scared many households straight, convincing them that they need to save larger fractions of their incomes.... a rediscovery of thrift means fewer sales at the mall, and fewer jobs on assembly lines and store counters....
This very weak economy is, if anything, putting downward pressure on wages and prices. We have already seen a noticeable slowdown in wage growth and reports of wage cuts have become increasingly prevalent—a sign of the sacrifices that some workers are making to keep their employers afloat and preserve their jobs. Businesses are also cutting prices and profit margins to boost sales..... With unemployment already substantial and likely to rise further, the downward pressure on wages and prices should continue and could intensify....
If the economy fails to recover soon, it is conceivable that this very low inflation could turn into outright deflation. Worse still, if deflation were to intensify, we could find ourselves in a devastating spiral in which prices fall at an ever-faster pace and economic activity sinks more and more."
"Falling prices." "Deflation." "Devastating spiral." That's not the kind of honesty that one expects from a Fed chief. Yellen must not be drinking the lemonade.
And don't forget the banking system is still broken. Not a dime from the $700 billion TARP bailout was used to purchase toxic assets. The banks are still drowning in red ink. . Bernanke has known since last September when Lehman Bros. defaulted, that the bad assets would have to be removed before the economy could recover. An underwater banking system is a constant drain on public resources and a drag on growth. Bernanke knows this, but rather than remove the assets by nationalizing the banks or restructuring their debt (as he should have done) he expanded the Fed's balance sheet by $1.2 trillion which provided the liquidity that financial institutions pumped into the stock market. "Bernanke's Rally" has generated the capital the banks needed to keep them from writing-down their debts or filing for Chapter 11, but the problems still persist right below the surface. Just this week, Elizabeth Warren's Congressional Oversight Panel released a damning report which stressed the need to address the issue of toxic assets. According to the COP's report:
"Financial stability remains at risk if the underlying problem of toxic assets remains unresolved....
If the economy worsens, especially if unemployment remains elevated or if the commercial real estate market collapses, then defaults will rise and the troubled assets will continue to deteriorate in value. Banks will incur further losses on their troubled assets. The financial system will remain vulnerable to the crisis conditions that TARP was meant to fix....
Changing accounting standards helped the banks temporarily by allowing them greater leeway in describing their assets, but it did not change the underlying problem. In order to advance a full recovery in the economy, there must be greater transparency, accountability, and clarity, from both the government and banks, about the scope of the troubled asset problem.
The problem of troubled assets is especially serious for the balance sheets of small banks. Small banks‘ troubled assets are generally whole loans, but Treasury‘s main program for removing troubled assets from banks‘ balance sheets, the PPIP will at present address only troubled mortgage securities and not whole loans.
Given the ongoing uncertainty, vigilance is essential. If conditions exceed those in the worst case scenario of the recent stress tests, then stress-testing of the nation‘s largest banks should be repeated to evaluate what would happen if troubled assets suffered additional losses."
To sum up: There will be NO real recovery until the toxic assets problem is resolved. Unfortunately, the Treasury and Fed have shown that they intend to sweep this issue under the rug for as long as possible.
Toxic assets, falling home prices, widespread malaise in the credit markets are just part of the problem. The deeper issue is the dismal condition of the US consumer who has seen his home equity dissipate, his retirement funds sawed in half,his access to credit curtailed, and his job put at risk. Ordinary working class Americans now face what David Rosenberg calls, "the era of consumer frugality---new paradigm of savings, asset liquidation and debt repayment ." Life styles will have to be toned-down and living standards lowered to meet the new deflationary reality. More and more people will be forced to jettison their credit cards and live within their means. It's not the end of the world, but it does foreshadow a protracted period of negative growth, social unrest and persistent high unemployment. Here's how the Wall Street journal sums it up:
"A surprisingly large number of money managers and economists are warning that, despite the hopeful signs, the economy is still deep in the woods, not strong enough to support a long-running stock and bond recovery....Even after the recession ends, economists expect the gradual reduction of the nation's massive consumer debt to take years.
The debt data are striking. According to the Federal Reserve, total household indebtedness peaked at the end of 2007 at 132% of disposable income. That was by far the highest level since at least the end of World War II, nearly quadruple the 36% of 1952. By the end of March, with families boosting savings, repaying debt and defaulting, the ratio had fallen to 124%, a tad lower but still miles from the level of, say, 69% in the middle of 1985.Consumer spending today accounts for two-thirds or more of economic output. But as they boost savings and cut borrowing, consumers can't be the drivers of economic growth that they were at the end of other recent recessions.
Consumer borrowing fell in June for the fifth consecutive month....
"Consumers are under significant financial pressure," Goldman notes in its report. "The weakness in household income -- partly resulting from the sharp slowdown in hourly wage growth -- will make it harder to raise saving without significant constraints on consumption."
As for home building and capital spending, two other possible growth motors, "we do not expect a 'traditional' rebound in these sectors, largely because the overhang of unused capacity in both the housing and business sectors remains enormous," Goldman said." ("Debt Burden to Weigh on Stocks", E.S. Browning and Annelena Lobb, Wall Street Journal)
Stock market euphoria can last a long time, but the laws of gravity still apply. The economy is in deep, deep trouble and Bernanke knows it or he'd be raising rates right now. The patient is still hemorrhaging my friends, and no amount of happy talk is going to stop the bleeding.
Question for Bernanke:
"Do You Have The Cojones To Raise Rates?"
Booyah. It's morning in America. The jobless numbers are stabilizing, the stock market is sizzling, quarterly earnings came in better than expected, traders have turned bullish, housing is showing signs of life, and clunker-swaps have given Detroit a well-needed boost of adrenalin. Even Cassandra economists --like Paul Krugman and Nouriel Roubini--have been uncharacteristically optimistic. Is is true; did we avoid a Second Great Depression? Is the worst really behind us?
Maybe. But there is only one way to find out for sure. Raise rates.
Bernanke should welcome the opportunity to show everyone how he's pulled the world's biggest economy back from the brink of disaster. All he needs to do is stop giving away free money, shut down a few of his so-called lending facilities, and stop manipulating interest rates by purchasing mortgage-backed securities (MBS) from Fannie and Freddie. How hard is that?
The S&P 500 has skyrocketed 48 percent since March 9. What's Bernanke waiting for; a 75 percent increase; a 100 percent increase??? How high do stocks have to go to convince Bernanke that the economy can stand on its own two feet without the torrent of cheap liquidity issuing from the Fed?
Bernanke can prove to his critics that the US economy doesn't need the Fed's monetization programs and price fixing; that it doesn't need the liquidity injections and the buying up of junk mortgages. ($80 billion last month alone) After all, as Bernanke opines, "The fundamentals of our economy are strong!"
Right. Now prove it.
All Bernanke has to do is boost rates by a point or two and demonstrate that he's willing to mop up some of the $13 trillion he's pumped into the financial markets. With just one announcement, the Fed chair could show our biggest creditor--China--that he's serious about defending the dollar and the trillion dollars of US Treasuries China purchased believing that the US was a responsible trading partner who would never write checks on an account that was overdrawn by $12 trillion. (The National Debt)
So, go ahead, Ben. Raise rates, shut down the printing presses, roll up the corporate welfare programs. Be a He-man. Make your critics eat their words.
This is from Bloomberg News 8-12-09:
"The Fed’s policy-setting Open Market Committee will today keep the target rate at zero to 0.25 percent and retain plans to buy as much as $1.45 trillion of housing debt by year-end to help secure a recovery, analysts said. The FOMC’s statement is expected at about 2:15 p.m. in Washington."
Hmmmmmm. So all the "green shoots" happy talk is pure gibberish, right? There is no recovery. Bernanke plans to continue flooding the financial system with cheap liquidity. It's all a fraud. Things aren't better; they're worse. Look at the facts.
There were 1.9 million foreclosures in 2009 in the first six months, and there will be another 1.5 before the end of the year. Is that better?
According to Bloomberg: "A glut of unsold homes is also pushing down prices. The 3.8 million homes for sale in June would take 9.4 months to sell at the current pace of transactions, according to the National Association of Realtors. The inventory turnover rate averaged 4.5 months in the six years from 2000 to 2005.....More than 18.7 million homes, including foreclosures, residences for sale and vacation homes, stood vacant in the U.S. during the second quarter. That compared with 18.6 million a year earlier, the U.S. Census Bureau said July 24
Total home sales fell 23.7 percent in June versus a year earlier." Bloomberg)
Massive supply, falling prices, record foreclosures, flagging demand--and according to Deutsche Bank--48 percent of all mortgages will be underwater by 2011. It's all bad.
Here's another clip from Bloomberg today 8-12-09:
"Home price declines in the U.S. ACCELERATED in the second quarter, dropping by a record 15.6 percent from a year earlier, as foreclosures weighed on values.
The median price of an existing single-family home dropped to $174,100, THE MOST IN RECORDS dating to 1979, the National Association of Realtors said today.
“I don’t think we’re at a bottom yet in home prices,” said Scott Anderson, a senior economist at Wells Fargo & Co. in Minneapolis. “There’s also a pretty big shadow supply of houses. People are kind of waiting for the bottom but there’s a pent up supply out there.”...Home prices are tumbling even as mortgage rates remain near all-time lows. The average U.S. rate for a 30-year fixed home loan was to 5.22 percent last week, down from 5.25 percent the prior week." (Bloomberg)
The decline in housing prices is ACCELERATING, not slowing down. The historic collapse in real estate is ongoing and it is wiping out trillions in homeowner equity making it increasingly difficult for consumers to borrow on the diminishing value of their collateral. This is why foreclosures, defaults and personal bankruptcies are soaring. (According to the American Bankruptcy Institute: consumer bankruptcy filings reached 126,434 in July, a 34.3% increase year over year, and a 8.7% increase sequentially (116,365 in June). July's number is the highest monthly total since the October 2005 bankruptcy reform aka the Bankruptcy Abuse Prevention and Consumer Protection Act.)
This is why households and consumers can no longer spend as much as they had before the crisis. Credit lines are being pared back; personal savings are rising, and GDP (excluding fiscal stimulus) is shrinking.Every one of the 3.5 million foreclosures represents hundreds of thousands of dollars the banks will never recoup. NEVER. That's why the rate of bank failures will be much greater than current estimates. The banks are facing a triple-whammy; soaring foreclosures, plummeting asset prices, and a meltdown in commercial real estate. The combo has created a gigantic capital-hole which is forcing the banks to slow lending even to applicants with flawless credit. The Fed has built up excess bank reserves by $800 billion, but it hasn't made a bit of difference. They banks are still not able to lend.
The uptick in housing last month reflects seasonal changes and a shifting of pain from the low end of the market to higher priced homes; nothing more. Homes that are priced over $1 million are now sitting on the market for 20 months; a lifetime in real estate parlance. High-end neighborhoods have turned into leper colonies. Zero interest; zero traffic. Expect a crash this year.
Now take a look at this from CNBC's Diana Olick:
"The number of homes listed officially on the market, while still at historically high levels, might be only the tip of the iceberg," said Stan Humphries, chief economist at real estate website Zillow.com in Seattle, Washington.According to Zillow's latest Homeowner Confidence Survey, 12 percent of homeowners said they would be "very likely" to put their home on the market in the next 12 months if they saw signs of a real estate market turnaround, 8 percent said "likely," while 12 percent said "somewhat likely."
Survey results could translate into around 20 million homeowners trying to sell their homes, a startling number given that the Census bureau indicates there are 93 million U.S. houses, condos and co-ops, Humphries said.According to the National Association of Realtors, the market is currently on track to sell 4.89 million homes annually.
"At this pace, it would take about four years to run through this amount of backlogged inventory," he said.
"Shadow inventory has the potential to give us another leg down on home prices during the second half of the year," said Steven Wood, chief economist at Insight Economics in Danville, California. (Diana Olick, "Shadow inventory lurks over US housing recovery" CNBC)
The banks are using all types of accounting tricks to hide the real losses or the true value of downgraded assets. The only difference between a common crook and a commercial banker is a well-paid accountant.The banking system is broken and its only going to get worse as the hammer comes down on the commercial real estate market. The Fed and Treasury are already working out the details for another stealth bailout that they'll initiate without Congress's approval. It's all very "hush-hush". The plan will involve more mega-leveraging of government liabilities. Bernanke has appointed himself the de facto Czar of Hedge Fund Nation, Clunkerville USA. An article in this week's Financial Times further illustrates how the Fed has transformed the economy into a riverboat casino:
"The Federal Reserve Bank of New York is aggressively hiring traders as its seeks to manage its burgeoning securities holdings, making the central bank one of Wall Street's most active recruiters of financial talent.The New York Fed - the arm of the US central bank that implements its monetary policy - plans to increase the staff in its markets group to 400 by the end of the year - up from 240 at the end of 2007.
The Fed, which says that most of its new recruits come from private sector financial firms, is hiring employees as many banks, rating agencies, hedge funds and private equity groups shed staff. New York city officials recently estimated that the sector's woes would lead to a loss of up to 140,000 jobs.
The Fed's need for more traders is a direct consequence of the central bank's efforts to keep credit flowing through the US economy. The Fed has been buying fixed-income securities at such a rate that its assets have more than doubled to $2,000bn in the past year, leading the central bank to conclude that it needs more people to monitor the markets and to manage its credit risks." (Financial Times, "NY Fed in hiring spree as assets soar", Aline van Duyn)
Nice, eh? So now the Fed needs to enlist a gaggle of professional speculators just to keep all the balls in the air. What a joke. This isn't a rebound; it's just more hype. Here's Warren Buffett summing it up on CNBC:"I get figures on 70-odd businesses, a lot of them daily. Everything that I see about the economy is that we've had no bounce. The financial system was really where the crisis was last September and October, and that's been surmounted and that's enormously important. But in terms of the economy coming back, it takes a while.... I said the economy would be in a shambles this year and probably well beyond. I'm afraid that's true.""The economy is in a shambles". That's from the horse's mouth. Inventories are down 11 percent year-over-year, durable goods are down 10.4 percent y-o-y, industrial capacity is at record lows, manufacturing is still contracting, housing is in the tank, shipping and rail freight are scraping the bottom, retail is in a long-term funk, and--according to Krugman--the slight dip in unemployment was a statistical anomaly. Here's Bob Herbert's great summary of the unemployment data:
"Some 247,000 jobs were lost in July, a number that under ordinary circumstances would send a shudder through the country. It was the smallest monthly loss of jobs since last summer. And for that reason, it was seen as a hopeful sign. The official monthly unemployment rate ticked down from 9.5 percent to 9.4 percent....The country has lost a crippling 6.7 million jobs since the Great Recession began in December 2007...The percentage of young American men who are actually working is the lowest it has been in the 61 years of record-keeping, according to the Center for Labor Market Studies at Northeastern University in Boston. Only 65 of every 100 men aged 20 through 24 years old were working on any given day in the first six months of this year. In the age group 25 through 34 years old, traditionally a prime age range for getting married and starting a family, just 81 of 100 men were employed.... The numbers are beyond scary; they’re catastrophic.
This should be the biggest story in the United States. When joblessness reaches these kinds of extremes, it doesn’t just damage individual families; it corrodes entire communities, fosters a sense of hopelessness and leads to disorder....
A truer picture of the employment crisis emerges when you combine the number of people who are officially counted as jobless with those who are working part time because they can’t find full-time work and those in the so-called labor market reserve — people who are not actively looking for work (because they have become discouraged, for example) but would take a job if one became available.
The tally from those three categories is a mind-boggling 30 million Americans — 19 percent of the overall work force.
This is, by far, the nation’s biggest problem and should be its No. 1 priority.("A Scary Reality" Bob Herbert, New York Times)
Sorry, Bob, the media has no time for unemployment news. It tends to undermine the positive vibes from green shoots stories.
The stock market rally has made it harder for people to see the truth. But the facts haven't changed. Deflation is setting in across all sectors and the economy has reset at a lower rate of economic activity. Housing prices are falling, consumer spending is slowing, layoffs are rising, and demand is getting weaker. That means growth will be sub-par for the foreseeable future. Here's an excerpt from a speech given by San Francisco Fed Janet Yellen drawing the same conclusion:
"I don’t like taking the wind out of the sails of our economic expansion, but a few cautionary points should be considered... a massive shift in consumer behavior is under way.. American households entered this recession stretched to the limit with mortgage and other debt. The personal saving rate fell from around 8 percent of disposable income two decades ago to almost zero. Households financed their lifestyles by drawing on increasing stock market and housing wealth, and taking on higher levels of debt. But falling house and stock prices have destroyed trillions of dollars in wealth, cutting off those ready sources of cash. What’s more, the stark realities of this recession have scared many households straight, convincing them that they need to save larger fractions of their incomes.... a rediscovery of thrift means fewer sales at the mall, and fewer jobs on assembly lines and store counters....
This very weak economy is, if anything, putting downward pressure on wages and prices. We have already seen a noticeable slowdown in wage growth and reports of wage cuts have become increasingly prevalent—a sign of the sacrifices that some workers are making to keep their employers afloat and preserve their jobs. Businesses are also cutting prices and profit margins to boost sales..... With unemployment already substantial and likely to rise further, the downward pressure on wages and prices should continue and could intensify....
If the economy fails to recover soon, it is conceivable that this very low inflation could turn into outright deflation. Worse still, if deflation were to intensify, we could find ourselves in a devastating spiral in which prices fall at an ever-faster pace and economic activity sinks more and more."
"Falling prices." "Deflation." "Devastating spiral." That's not the kind of honesty that one expects from a Fed chief. Yellen must not be drinking the lemonade.
And don't forget the banking system is still broken. Not a dime from the $700 billion TARP bailout was used to purchase toxic assets. The banks are still drowning in red ink. . Bernanke has known since last September when Lehman Bros. defaulted, that the bad assets would have to be removed before the economy could recover. An underwater banking system is a constant drain on public resources and a drag on growth. Bernanke knows this, but rather than remove the assets by nationalizing the banks or restructuring their debt (as he should have done) he expanded the Fed's balance sheet by $1.2 trillion which provided the liquidity that financial institutions pumped into the stock market. "Bernanke's Rally" has generated the capital the banks needed to keep them from writing-down their debts or filing for Chapter 11, but the problems still persist right below the surface. Just this week, Elizabeth Warren's Congressional Oversight Panel released a damning report which stressed the need to address the issue of toxic assets. According to the COP's report:
"Financial stability remains at risk if the underlying problem of toxic assets remains unresolved....
If the economy worsens, especially if unemployment remains elevated or if the commercial real estate market collapses, then defaults will rise and the troubled assets will continue to deteriorate in value. Banks will incur further losses on their troubled assets. The financial system will remain vulnerable to the crisis conditions that TARP was meant to fix....
Changing accounting standards helped the banks temporarily by allowing them greater leeway in describing their assets, but it did not change the underlying problem. In order to advance a full recovery in the economy, there must be greater transparency, accountability, and clarity, from both the government and banks, about the scope of the troubled asset problem.
The problem of troubled assets is especially serious for the balance sheets of small banks. Small banks‘ troubled assets are generally whole loans, but Treasury‘s main program for removing troubled assets from banks‘ balance sheets, the PPIP will at present address only troubled mortgage securities and not whole loans.
Given the ongoing uncertainty, vigilance is essential. If conditions exceed those in the worst case scenario of the recent stress tests, then stress-testing of the nation‘s largest banks should be repeated to evaluate what would happen if troubled assets suffered additional losses."
To sum up: There will be NO real recovery until the toxic assets problem is resolved. Unfortunately, the Treasury and Fed have shown that they intend to sweep this issue under the rug for as long as possible.
Toxic assets, falling home prices, widespread malaise in the credit markets are just part of the problem. The deeper issue is the dismal condition of the US consumer who has seen his home equity dissipate, his retirement funds sawed in half,his access to credit curtailed, and his job put at risk. Ordinary working class Americans now face what David Rosenberg calls, "the era of consumer frugality---new paradigm of savings, asset liquidation and debt repayment ." Life styles will have to be toned-down and living standards lowered to meet the new deflationary reality. More and more people will be forced to jettison their credit cards and live within their means. It's not the end of the world, but it does foreshadow a protracted period of negative growth, social unrest and persistent high unemployment. Here's how the Wall Street journal sums it up:
"A surprisingly large number of money managers and economists are warning that, despite the hopeful signs, the economy is still deep in the woods, not strong enough to support a long-running stock and bond recovery....Even after the recession ends, economists expect the gradual reduction of the nation's massive consumer debt to take years.
The debt data are striking. According to the Federal Reserve, total household indebtedness peaked at the end of 2007 at 132% of disposable income. That was by far the highest level since at least the end of World War II, nearly quadruple the 36% of 1952. By the end of March, with families boosting savings, repaying debt and defaulting, the ratio had fallen to 124%, a tad lower but still miles from the level of, say, 69% in the middle of 1985.Consumer spending today accounts for two-thirds or more of economic output. But as they boost savings and cut borrowing, consumers can't be the drivers of economic growth that they were at the end of other recent recessions.
Consumer borrowing fell in June for the fifth consecutive month....
"Consumers are under significant financial pressure," Goldman notes in its report. "The weakness in household income -- partly resulting from the sharp slowdown in hourly wage growth -- will make it harder to raise saving without significant constraints on consumption."
As for home building and capital spending, two other possible growth motors, "we do not expect a 'traditional' rebound in these sectors, largely because the overhang of unused capacity in both the housing and business sectors remains enormous," Goldman said." ("Debt Burden to Weigh on Stocks", E.S. Browning and Annelena Lobb, Wall Street Journal)
Stock market euphoria can last a long time, but the laws of gravity still apply. The economy is in deep, deep trouble and Bernanke knows it or he'd be raising rates right now. The patient is still hemorrhaging my friends, and no amount of happy talk is going to stop the bleeding.
SC95-3
http://informationclearinghouse.info/article23253.htm
The Truth About Unemployment
The mainstream news is citing the decline in unemployment from 9.5% to 9.4% in July as proof that the economy is stabilizing.
But is that true?
Distortions in the Numbers
Well, as the New York Times pointed out in July:
Include [those who have given up looking for a job and those part-time workers who want to be working full time] — as the Labor Department does when calculating its broadest measure of the job market — and the rate reached 23.5 percent in Oregon this spring, according to a New York Times analysis of state-by-state data. It was 21.5 percent in both Michigan and Rhode Island and 20.3 percent in California. In Tennessee, Nevada and several other states that have relied heavily on manufacturing or housing, the rate was just under 20 percent this spring and may have since surpassed it. And see this.
The Times wrote a second article on August 7th pointing out that the unemployment rate had only declined because 400,000 people gave up their search for work and left the labor force. And see this.
Indeed, as the Times notes in a third article, Americans are going to China to look for work.
In addition, economists and financial analysts point out that auto workers who would normally be laid off this time of year have been retained because of changes to the auto industry from the auto bailouts.
For example, PhD economist John Williams wrote on August 7th:
July usually sees a regular pattern of planned automobile production line shutdowns to accommodate retooling for the new model year, but recent disruptions to the auto industry have changed pattern this year. Without the usual pattern of shutdowns, the government’s computers nonetheless responded by creating the usual offsetting boost in jobs, not only in the auto industry, but in supporting industries as well. The auto industry itself was alone among durable goods manufacturing industries in showing a reported, seasonally-adjusted monthly gain in July, up by 28,000 jobs.
Williams also said that certain distortions in unemployment figures are being caused by the severity of the financial crisis itself, but that - when these distortions subside in the months ahead - unemployment will increase. He also notes that official unemployment models tend to underestimate unemployment during recessions.
Indeed, if the aforementioned distortions are removed, Williams says that July unemployment figures would have actually increased slightly from June. Indeed, Williams says that accurate unemployment figures rose from 17.5% in December to 20.6% in July.
And Dave Rosenberg of Gluskin Sheff notes that tens of thousands of the new jobs in July were created by the government itself:
There have been large fluctuations in the federal government payroll too. After hiring a slew of Census workers in the spring, there were 57,000 layoffs in May-June and then we saw in today’s report that 12,000 federal workers were “hired” in July. Again, mathematically, this contributed about 20,000 to today’s headline number. In other words, and we have no intent on raining on anyone’s parade, there was about 100,000 non-recurring payrolls in that top-line figure. It may be dangerous to extrapolate today’s report into a view that we are about to fully turn the corner on the job market front.Financial commentator Max Keiser says that unemployment is actually increasing and wages are falling. Keiser also says that the only sector in the U.S. which is actually strengthening is the military-industrial complex because of wars abroad. And see this.
And many economists point out that the length of time people are remaining unemployed is skyrocketing. As the Washington Post notes:
Another disturbing development was that the number of people out of work for 27 weeks or longer reached a record 5 million, accounting for a third of the unemployed. That suggests to some economists that those job losses were caused by structural changes in the economy and that many of those people won't be called back to work once the economy picks up. The longer people are out of work, the harder it becomes for them to find jobs and the more likely they are to exhaust savings or lose their homes to foreclosure. No wonder even Paul Krugman writes:
That slight dip in the measured unemployment rate last month was probably a statistical fluke. Where Is Unemployment Going From Here?
Unemployment is a "lagging" indicator. In other words, if the economy crashes in one month, unemployment will not peak until several months or years later.
So we have to ask 2 questions:
1) How bad were conditions in 2008 and early 2009?
and
2) What will conditions be in the future?
A look back at how bad conditions were shows that they were probably worse than those at the beginning of the Great Depression.
Says who?
Fed Chairman Bernanke and many other top economists (and see this).
Indeed, former Secretary of Labor Robert Reich wrote in April that the unemployment figures show that we are already in a depression.
And Chris Tilly - director of the Institute for Research on Labor and Employment at UCLA - points out that some populations, such as high school dropouts and African-Americans, are hit much harder than other populations. In other words, regardless of the population at large, these people are already experiencing depression-level unemployment. And see this and this.Europe’s largest bank - RBS - warns:
Even if the economy starts to turn up the headwinds will be formidable,” [the company's CEO] warned. “The green shoots are short in duration and you need to be cautious about interpreting them. Even if growth returns, unemployment will rise for some time afterwards ...What Will Future Conditions Look Like?
When he was presented with the July unemployment numbers, even President Obama tempered his enthusiasm by saying that the official unemployment numbers will rise to 10% later this year.And the Federal Reserve predicted in July that high unemployment will cause the eventual economic recovery to be drawn out and weak for years to come. In other words, the Fed is worried that we're trapped in a vicious cycle, where a poor economy will lead to high unemployment numbers, and unemployment will lead to less consumer spending which will worsen the economy.
And former chief IMF economist Simon Johnson notes that a vicious cycle also exists between unemployment and property foreclosures:Unemployment is always a lagging indicator, and given the record low number of average hours worked, it will turn around especially slowly this time. Until then, people will continue to lose their jobs and wages will remain flat, and any small rebound in housing prices is unlikely to help more than a few people refinance their way out of unaffordable mortgages. So unless the other part of the equation – monthly payments – changes, the number of foreclosures should just continue to rise.And see this.
Moreover, a crash in commercial real estate is now picking up speed. Unlike the subprime mortgage meltdown - which affected mainly the biggest banks - the commercial meltdown will apparently affect a huge number of small to medium-sized banks.
Today, the Congressional Oversight Panel on the bailouts issued a report saying that small and medium sized banks are especially vulnerable, the report will say, in part they hold greater numbers of commercial real estate loans, "which pose a potential threat of high defaults."
Since those banks make many loans to small businesses, since credit is essential for many small businesses, commercial real estate is crashing even faster than residential, and industry experts forecast that the commercial real estate market won't bottom out for three more years, that could spell real trouble for employment by small businesses.
Indeed, largely because of the commercial real estate crash, the FDIC expects 500 banks to fail in coming months.The Congressional Oversight Panel report also says that banks remain threatened by billions of dollars of bad loans on their balance sheets, more could fail if the economy worsens, and that - if unemployment rises sharply or the commercial real estate market collapses – the banking system could again crash:
The financial system [still remains] vulnerable to the crisis conditions that [the bailout] was meant to fix...
Financial stability remains at risk if the underlying problem of toxic assets remains unresolved.While the panel focuses on toxic loans, this holds true with toxic derivatives as well. As I have written in previous essays, the CDOs, CDS and other derivative side bets on the subprime and alt-a and commercial mortgages still haven't been reigned in, and they still have a high risk of bringing down the entire financial system unless they are either banned or brought to heel. The derivatives market is many times bigger than the world's real economy, and if that market crashes again, things could be bad, indeed.
Indeed:In an interview on Reuters Television, the chairman of the congressional oversight panel, Elizabeth Warren, said no one even knows the value of the toxic assets still on banks' books.
VALUE OF TOXIC ASSETS UNKNOWN
"No one has a good handle how much is out there," Warren said. "Here we are 10 months into this crisis...and we can't tell you what the dollar value is."
Estimates are that "somewhere between $600 billion and $1.5 trillion in toxic assets (is) spread across the balance sheets of the small and the large banks," Warren said, adding: "That's a lot."
The government's entire strategy in dealing with the economic crisis was to try to artificially prop up the asset price of these toxic assets. Unfortunately, that strategy has failed miserably. Another trend arguing for higher unemployment is the fact that consumers have undergone a generational shift in spending habits, and will be frugal for a long time to come. Indeed, even if the financial crisis hadn't occured, long-term demographic trends would have pushed for frugality for many years to come. Likewise, corporations are still hoarding cash.
Finally, there is excess capacity in many sectors. As the Washington Post notes :
With fewer people and businesses willing to buy things, it will take longer for the economy to work off all the excess capacity that was built up during boom times.
Think of thousands of idled factories, acres of empty strip malls and ports packed with unsold automobiles ...
So what does it all mean?
I passionately hope, of course, that economic conditions improve and that unemployment declines.
I hope that my assessments are proven overly pessimistic, and the economy recovers quickly.
But people forget that there was a huge rally after the initial 1929 crash, before the bigger second wave down of the Great Depression hit.
People forget that unemployment did not hit 25% until the fourth year of the Great Depression.
Former International Monetary Fund Chief Economist and Harvard University Economics Professor Kenneth Rogoff and University of Maryland Economics Professor Carmen Reinhart forecast in February that unemployment could reach 22% within 4 years.
So while I hope and pray that unemployment numbers get better, they could get much worse....
And none of the above even factors in the economic carnage that Peak Oil and the consequent decline in energy supplies will precipitate.
The Truth About Unemployment
The mainstream news is citing the decline in unemployment from 9.5% to 9.4% in July as proof that the economy is stabilizing.
But is that true?
Distortions in the Numbers
Well, as the New York Times pointed out in July:
Include [those who have given up looking for a job and those part-time workers who want to be working full time] — as the Labor Department does when calculating its broadest measure of the job market — and the rate reached 23.5 percent in Oregon this spring, according to a New York Times analysis of state-by-state data. It was 21.5 percent in both Michigan and Rhode Island and 20.3 percent in California. In Tennessee, Nevada and several other states that have relied heavily on manufacturing or housing, the rate was just under 20 percent this spring and may have since surpassed it. And see this.
The Times wrote a second article on August 7th pointing out that the unemployment rate had only declined because 400,000 people gave up their search for work and left the labor force. And see this.
Indeed, as the Times notes in a third article, Americans are going to China to look for work.
In addition, economists and financial analysts point out that auto workers who would normally be laid off this time of year have been retained because of changes to the auto industry from the auto bailouts.
For example, PhD economist John Williams wrote on August 7th:
July usually sees a regular pattern of planned automobile production line shutdowns to accommodate retooling for the new model year, but recent disruptions to the auto industry have changed pattern this year. Without the usual pattern of shutdowns, the government’s computers nonetheless responded by creating the usual offsetting boost in jobs, not only in the auto industry, but in supporting industries as well. The auto industry itself was alone among durable goods manufacturing industries in showing a reported, seasonally-adjusted monthly gain in July, up by 28,000 jobs.
Williams also said that certain distortions in unemployment figures are being caused by the severity of the financial crisis itself, but that - when these distortions subside in the months ahead - unemployment will increase. He also notes that official unemployment models tend to underestimate unemployment during recessions.
Indeed, if the aforementioned distortions are removed, Williams says that July unemployment figures would have actually increased slightly from June. Indeed, Williams says that accurate unemployment figures rose from 17.5% in December to 20.6% in July.
And Dave Rosenberg of Gluskin Sheff notes that tens of thousands of the new jobs in July were created by the government itself:
There have been large fluctuations in the federal government payroll too. After hiring a slew of Census workers in the spring, there were 57,000 layoffs in May-June and then we saw in today’s report that 12,000 federal workers were “hired” in July. Again, mathematically, this contributed about 20,000 to today’s headline number. In other words, and we have no intent on raining on anyone’s parade, there was about 100,000 non-recurring payrolls in that top-line figure. It may be dangerous to extrapolate today’s report into a view that we are about to fully turn the corner on the job market front.Financial commentator Max Keiser says that unemployment is actually increasing and wages are falling. Keiser also says that the only sector in the U.S. which is actually strengthening is the military-industrial complex because of wars abroad. And see this.
And many economists point out that the length of time people are remaining unemployed is skyrocketing. As the Washington Post notes:
Another disturbing development was that the number of people out of work for 27 weeks or longer reached a record 5 million, accounting for a third of the unemployed. That suggests to some economists that those job losses were caused by structural changes in the economy and that many of those people won't be called back to work once the economy picks up. The longer people are out of work, the harder it becomes for them to find jobs and the more likely they are to exhaust savings or lose their homes to foreclosure. No wonder even Paul Krugman writes:
That slight dip in the measured unemployment rate last month was probably a statistical fluke. Where Is Unemployment Going From Here?
Unemployment is a "lagging" indicator. In other words, if the economy crashes in one month, unemployment will not peak until several months or years later.
So we have to ask 2 questions:
1) How bad were conditions in 2008 and early 2009?
and
2) What will conditions be in the future?
A look back at how bad conditions were shows that they were probably worse than those at the beginning of the Great Depression.
Says who?
Fed Chairman Bernanke and many other top economists (and see this).
Indeed, former Secretary of Labor Robert Reich wrote in April that the unemployment figures show that we are already in a depression.
And Chris Tilly - director of the Institute for Research on Labor and Employment at UCLA - points out that some populations, such as high school dropouts and African-Americans, are hit much harder than other populations. In other words, regardless of the population at large, these people are already experiencing depression-level unemployment. And see this and this.Europe’s largest bank - RBS - warns:
Even if the economy starts to turn up the headwinds will be formidable,” [the company's CEO] warned. “The green shoots are short in duration and you need to be cautious about interpreting them. Even if growth returns, unemployment will rise for some time afterwards ...What Will Future Conditions Look Like?
When he was presented with the July unemployment numbers, even President Obama tempered his enthusiasm by saying that the official unemployment numbers will rise to 10% later this year.And the Federal Reserve predicted in July that high unemployment will cause the eventual economic recovery to be drawn out and weak for years to come. In other words, the Fed is worried that we're trapped in a vicious cycle, where a poor economy will lead to high unemployment numbers, and unemployment will lead to less consumer spending which will worsen the economy.
And former chief IMF economist Simon Johnson notes that a vicious cycle also exists between unemployment and property foreclosures:Unemployment is always a lagging indicator, and given the record low number of average hours worked, it will turn around especially slowly this time. Until then, people will continue to lose their jobs and wages will remain flat, and any small rebound in housing prices is unlikely to help more than a few people refinance their way out of unaffordable mortgages. So unless the other part of the equation – monthly payments – changes, the number of foreclosures should just continue to rise.And see this.
Moreover, a crash in commercial real estate is now picking up speed. Unlike the subprime mortgage meltdown - which affected mainly the biggest banks - the commercial meltdown will apparently affect a huge number of small to medium-sized banks.
Today, the Congressional Oversight Panel on the bailouts issued a report saying that small and medium sized banks are especially vulnerable, the report will say, in part they hold greater numbers of commercial real estate loans, "which pose a potential threat of high defaults."
Since those banks make many loans to small businesses, since credit is essential for many small businesses, commercial real estate is crashing even faster than residential, and industry experts forecast that the commercial real estate market won't bottom out for three more years, that could spell real trouble for employment by small businesses.
Indeed, largely because of the commercial real estate crash, the FDIC expects 500 banks to fail in coming months.The Congressional Oversight Panel report also says that banks remain threatened by billions of dollars of bad loans on their balance sheets, more could fail if the economy worsens, and that - if unemployment rises sharply or the commercial real estate market collapses – the banking system could again crash:
The financial system [still remains] vulnerable to the crisis conditions that [the bailout] was meant to fix...
Financial stability remains at risk if the underlying problem of toxic assets remains unresolved.While the panel focuses on toxic loans, this holds true with toxic derivatives as well. As I have written in previous essays, the CDOs, CDS and other derivative side bets on the subprime and alt-a and commercial mortgages still haven't been reigned in, and they still have a high risk of bringing down the entire financial system unless they are either banned or brought to heel. The derivatives market is many times bigger than the world's real economy, and if that market crashes again, things could be bad, indeed.
Indeed:In an interview on Reuters Television, the chairman of the congressional oversight panel, Elizabeth Warren, said no one even knows the value of the toxic assets still on banks' books.
VALUE OF TOXIC ASSETS UNKNOWN
"No one has a good handle how much is out there," Warren said. "Here we are 10 months into this crisis...and we can't tell you what the dollar value is."
Estimates are that "somewhere between $600 billion and $1.5 trillion in toxic assets (is) spread across the balance sheets of the small and the large banks," Warren said, adding: "That's a lot."
The government's entire strategy in dealing with the economic crisis was to try to artificially prop up the asset price of these toxic assets. Unfortunately, that strategy has failed miserably. Another trend arguing for higher unemployment is the fact that consumers have undergone a generational shift in spending habits, and will be frugal for a long time to come. Indeed, even if the financial crisis hadn't occured, long-term demographic trends would have pushed for frugality for many years to come. Likewise, corporations are still hoarding cash.
Finally, there is excess capacity in many sectors. As the Washington Post notes :
With fewer people and businesses willing to buy things, it will take longer for the economy to work off all the excess capacity that was built up during boom times.
Think of thousands of idled factories, acres of empty strip malls and ports packed with unsold automobiles ...
So what does it all mean?
I passionately hope, of course, that economic conditions improve and that unemployment declines.
I hope that my assessments are proven overly pessimistic, and the economy recovers quickly.
But people forget that there was a huge rally after the initial 1929 crash, before the bigger second wave down of the Great Depression hit.
People forget that unemployment did not hit 25% until the fourth year of the Great Depression.
Former International Monetary Fund Chief Economist and Harvard University Economics Professor Kenneth Rogoff and University of Maryland Economics Professor Carmen Reinhart forecast in February that unemployment could reach 22% within 4 years.
So while I hope and pray that unemployment numbers get better, they could get much worse....
And none of the above even factors in the economic carnage that Peak Oil and the consequent decline in energy supplies will precipitate.
SC95-2
http://www.globalresearch.ca/index.php?context=va&aid=14746
Obamageddon: War as the "Solution" to Economic Depression
An American president is launching the most ambitious, the most expensive, and certainly the most dangerous military campaign since the Vietnam War – and the antiwar movement, such as it is, is missing in action. After a long and bloody campaign in Iraq and the election of a U.S. president pledged to get us out, our government is once again revving up its war machine and taking aim at yet another "terrorist" stronghold, this time in Afghanistan. Yet the antiwar movement’s motor seems stuck in the wrong gear, making no motions toward mounting anything like an effective protest. What gives?
We shouldn’t doubt the scope of the present war effort. Make no mistake: the Obama administration is radically ramping up the stakes in the "war on terrorism," which, though renamed, has not been revised downward, as the Washington Post reports:
"As the Obama administration expands U.S. involvement in Afghanistan, military experts are warning that the United States is taking on security and political commitments that will last at least a decade and a cost that will probably eclipse that of the Iraq war."
There are always "warnings" in the beginning, aren’t there? For some reason, however, they are never heeded. Instead, we just barrel ahead, undaunted, into the tall grass where ambush awaits us. War opponents predicted the Iraq invasion would prove unsustainable – and we were right. We said that, far from greeting us with cheers and showers of roses, the Iraqis would soon be shooting at us and demanding our ouster – and we were right. We said the rationale for war was based on a series of carefully manufactured and marketed lies – and that was the truth, now wasn’t it? Yet it seems we are caught in an endlessly repetitive nightmare, where the same prophetic voices are being drowned out by a chorus of "responsible" voices – to be followed by an all-too-familiar disaster.
The problem, however, is that the scale of these disasters seems to be increasing exponentially. As Gerald Celente, one of the few economic forecasters who predicted the ‘08 crash, put it the other day, "Governments seem to be emboldened by their failures." What the late Gen. William E. Odom trenchantly described as "the worst strategic disaster in American military history" – the invasion of Iraq – is being followed up by a far larger military operation, one that will burden us for many years to come. This certainly seems like evidence in support of the Celente thesis, and the man who predicted the 1987 stock market crash, the fall of the Soviet Union, the dot-com bust, the gold bull market, the 2001 recession, the real estate bubble, the “Panic of ‘08,” and now is talking about the inevitable popping of the "bailout bubble," has more bad news:
"Given the pattern of governments to parlay egregious failures into mega-failures, the classic trend they follow, when all else fails, is to take their nation to war."
As the economic crisis escalates and the debt-based central banking system shows it can no longer re-inflate the bubble by creating assets out of thin air, an economic and political rationale for war is easy to come by; for if the Keynesian doctrine that government spending is the only way to lift us out of an economic depression is true, then surely military expenditures are the quickest way to inject "life" into a failing system. This doesn’t work, economically, since the crisis is only masked by the wartime atmosphere of emergency and "temporary" privation. Politically, however, it is a lifesaver for our ruling elite, which is at pains to deflect blame away from itself and on to some "foreign" target.
It’s the oldest trick in the book, and it’s being played out right before our eyes, as the U.S. prepares to send even more troops to the Afghan front and is threatening Iran with draconian economic sanctions, a step or two away from outright war.
A looming economic depression and the horrific prospect of another major war – the worst-case scenario seems to be unfolding, like a recurring nightmare, and there doesn’t seem to be any way to stop it. Are we caught, then, helpless in the web of destiny, to be preyed upon by those spiders in Washington?
I have to admit that, at times, I’m inclined to believe it: the early years of the Bush era, particularly the dark days right after 9/11, were hard times for advocates of liberty and peace. For us here at Antiwar.com, they were days of nearly unrelieved gloom. As the Bush era drew to a close, however, there were many signs that we were in for a turnaround, that the dark ages were over and a new day was dawning. The Iraq war was discredited, along with its cheerleaders, and the collapse of the War Party’s political fortunes seemed all but assured with the rise of an insurgent movement within the Democratic Party, a movement that happened to coalesce around Barack Obama but could have rallied to any charismatic or even remotely appealing figure, so desperate were people for any sign of hope.
In the beginning, I was enamored of the possibilities of this electoral insurgency against the presumed nominee, Hillary Clinton. By stubbornly sticking to her pro-war position and refusing to second-guess her decision to support the invasion of Iraq, Hillary turned the primary campaign into a tug-of-war between the interventionist faction of the Democratic Party – centered in the leadership – and the antiwar rank-and-file, many of whom were beginning to develop a comprehensive critique of interventionist foreign policy and were well on their way to becoming principled opponents of imperialism.
Then Obama stepped into the picture.
I am not among those who are currently whining that Obama has somehow "betrayed" his antiwar supporters – prominent among them the organizers of the principal peace coalition, United for Peace and Justice. After all, he’s just doing what he said all along he’d do, and that is fight the "right war," which, he averred, we ought to be waging in Afghanistan rather than Iraq. At the end of this month, his generals will report to him on how many more troops they need to "do the job," and you can bet they won’t be calling for any reductions.
History has shown that Afghanistan is practically unconquerable, and we could send an army of a million or more and still fail miserably. But think how the endless expenditures will "stimulate" our economy!
Forecaster Celente has identified several bubbles, the latest being the "bailout bubble," slated to pop at any time, yet there may be another bubble to follow what Celente calls "the mother of all bubbles," one that will implode with a resounding crash heard ’round the world – the bubble of empire.
Our current foreign policy of global hegemonism and unbridled aggression is simply not sustainable, not when we are on the verge of becoming what we used to call a Third World country, one that is bankrupt and faces the prospect of a radical lowering of living standards. Unless, of course, the "crisis" atmosphere can be sustained almost indefinitely.
George W. Bush had 9/11 to fall back on, but that song is getting older every time they play it. Our new president needs to come up with an equivalent, one that will divert our attention away from Goldman Sachs and toward some overseas enemy who is somehow to be held responsible for our present predicament.
It is said that FDR’s New Deal didn’t get us out of the Great Depression, but World War II did. The truth is that, in wartime, when people are expected to sacrifice for the duration of the "emergency," economic problems are anesthetized out of existence by liberal doses of nationalist chest-beating and moral righteousness. Shortages and plunging living standards were masked by a wartime rationing system and greatly lowered expectations. And just as World War II inured us to the economic ravages wrought by our thieving elites, so World War III will provide plenty of cover for a virtual takeover of all industry by the government and the demonization of all political opposition as "terrorist."
An impossible science-fictional scenario? Or a reasonable projection of present trends? Celente, whose record of predictions is impressive, to say the least, sees war with Iran as the equivalent of World War III, with economic, social, and political consequences that will send what is left of our empire into a tailspin. This is the popping of the "hyperpower" bubble, the conceit that we – the last superpower left standing – will somehow defy history and common sense and avoid the fate of all empires: decline and fall..........
Obamageddon: War as the "Solution" to Economic Depression
An American president is launching the most ambitious, the most expensive, and certainly the most dangerous military campaign since the Vietnam War – and the antiwar movement, such as it is, is missing in action. After a long and bloody campaign in Iraq and the election of a U.S. president pledged to get us out, our government is once again revving up its war machine and taking aim at yet another "terrorist" stronghold, this time in Afghanistan. Yet the antiwar movement’s motor seems stuck in the wrong gear, making no motions toward mounting anything like an effective protest. What gives?
We shouldn’t doubt the scope of the present war effort. Make no mistake: the Obama administration is radically ramping up the stakes in the "war on terrorism," which, though renamed, has not been revised downward, as the Washington Post reports:
"As the Obama administration expands U.S. involvement in Afghanistan, military experts are warning that the United States is taking on security and political commitments that will last at least a decade and a cost that will probably eclipse that of the Iraq war."
There are always "warnings" in the beginning, aren’t there? For some reason, however, they are never heeded. Instead, we just barrel ahead, undaunted, into the tall grass where ambush awaits us. War opponents predicted the Iraq invasion would prove unsustainable – and we were right. We said that, far from greeting us with cheers and showers of roses, the Iraqis would soon be shooting at us and demanding our ouster – and we were right. We said the rationale for war was based on a series of carefully manufactured and marketed lies – and that was the truth, now wasn’t it? Yet it seems we are caught in an endlessly repetitive nightmare, where the same prophetic voices are being drowned out by a chorus of "responsible" voices – to be followed by an all-too-familiar disaster.
The problem, however, is that the scale of these disasters seems to be increasing exponentially. As Gerald Celente, one of the few economic forecasters who predicted the ‘08 crash, put it the other day, "Governments seem to be emboldened by their failures." What the late Gen. William E. Odom trenchantly described as "the worst strategic disaster in American military history" – the invasion of Iraq – is being followed up by a far larger military operation, one that will burden us for many years to come. This certainly seems like evidence in support of the Celente thesis, and the man who predicted the 1987 stock market crash, the fall of the Soviet Union, the dot-com bust, the gold bull market, the 2001 recession, the real estate bubble, the “Panic of ‘08,” and now is talking about the inevitable popping of the "bailout bubble," has more bad news:
"Given the pattern of governments to parlay egregious failures into mega-failures, the classic trend they follow, when all else fails, is to take their nation to war."
As the economic crisis escalates and the debt-based central banking system shows it can no longer re-inflate the bubble by creating assets out of thin air, an economic and political rationale for war is easy to come by; for if the Keynesian doctrine that government spending is the only way to lift us out of an economic depression is true, then surely military expenditures are the quickest way to inject "life" into a failing system. This doesn’t work, economically, since the crisis is only masked by the wartime atmosphere of emergency and "temporary" privation. Politically, however, it is a lifesaver for our ruling elite, which is at pains to deflect blame away from itself and on to some "foreign" target.
It’s the oldest trick in the book, and it’s being played out right before our eyes, as the U.S. prepares to send even more troops to the Afghan front and is threatening Iran with draconian economic sanctions, a step or two away from outright war.
A looming economic depression and the horrific prospect of another major war – the worst-case scenario seems to be unfolding, like a recurring nightmare, and there doesn’t seem to be any way to stop it. Are we caught, then, helpless in the web of destiny, to be preyed upon by those spiders in Washington?
I have to admit that, at times, I’m inclined to believe it: the early years of the Bush era, particularly the dark days right after 9/11, were hard times for advocates of liberty and peace. For us here at Antiwar.com, they were days of nearly unrelieved gloom. As the Bush era drew to a close, however, there were many signs that we were in for a turnaround, that the dark ages were over and a new day was dawning. The Iraq war was discredited, along with its cheerleaders, and the collapse of the War Party’s political fortunes seemed all but assured with the rise of an insurgent movement within the Democratic Party, a movement that happened to coalesce around Barack Obama but could have rallied to any charismatic or even remotely appealing figure, so desperate were people for any sign of hope.
In the beginning, I was enamored of the possibilities of this electoral insurgency against the presumed nominee, Hillary Clinton. By stubbornly sticking to her pro-war position and refusing to second-guess her decision to support the invasion of Iraq, Hillary turned the primary campaign into a tug-of-war between the interventionist faction of the Democratic Party – centered in the leadership – and the antiwar rank-and-file, many of whom were beginning to develop a comprehensive critique of interventionist foreign policy and were well on their way to becoming principled opponents of imperialism.
Then Obama stepped into the picture.
I am not among those who are currently whining that Obama has somehow "betrayed" his antiwar supporters – prominent among them the organizers of the principal peace coalition, United for Peace and Justice. After all, he’s just doing what he said all along he’d do, and that is fight the "right war," which, he averred, we ought to be waging in Afghanistan rather than Iraq. At the end of this month, his generals will report to him on how many more troops they need to "do the job," and you can bet they won’t be calling for any reductions.
History has shown that Afghanistan is practically unconquerable, and we could send an army of a million or more and still fail miserably. But think how the endless expenditures will "stimulate" our economy!
Forecaster Celente has identified several bubbles, the latest being the "bailout bubble," slated to pop at any time, yet there may be another bubble to follow what Celente calls "the mother of all bubbles," one that will implode with a resounding crash heard ’round the world – the bubble of empire.
Our current foreign policy of global hegemonism and unbridled aggression is simply not sustainable, not when we are on the verge of becoming what we used to call a Third World country, one that is bankrupt and faces the prospect of a radical lowering of living standards. Unless, of course, the "crisis" atmosphere can be sustained almost indefinitely.
George W. Bush had 9/11 to fall back on, but that song is getting older every time they play it. Our new president needs to come up with an equivalent, one that will divert our attention away from Goldman Sachs and toward some overseas enemy who is somehow to be held responsible for our present predicament.
It is said that FDR’s New Deal didn’t get us out of the Great Depression, but World War II did. The truth is that, in wartime, when people are expected to sacrifice for the duration of the "emergency," economic problems are anesthetized out of existence by liberal doses of nationalist chest-beating and moral righteousness. Shortages and plunging living standards were masked by a wartime rationing system and greatly lowered expectations. And just as World War II inured us to the economic ravages wrought by our thieving elites, so World War III will provide plenty of cover for a virtual takeover of all industry by the government and the demonization of all political opposition as "terrorist."
An impossible science-fictional scenario? Or a reasonable projection of present trends? Celente, whose record of predictions is impressive, to say the least, sees war with Iran as the equivalent of World War III, with economic, social, and political consequences that will send what is left of our empire into a tailspin. This is the popping of the "hyperpower" bubble, the conceit that we – the last superpower left standing – will somehow defy history and common sense and avoid the fate of all empires: decline and fall..........
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