Saturday, July 30, 2011

Ratings Agency Agenda

From Yves Smith's naked capitalism this discussion of ratings agency Standard and Poor's. We tend to simply accept the fact that these agencies are in our economic lives and should by right be overseeing credit ratings but it appears that there is the foul smell of lobbying at work here too. This fascinating discussion opens a totally unexpected, to me, can of worms about why S and P is suddenly in the limelight during this debt ceiling fiasco.


The Politico headline says it all: U.S. credit downgrade worries Obama, Congress more than default

It’s not the default that strikes the most fear in the White House and Congress these days. It’s the downgrade

As Robert Reich notes, Standard and Poors is the “biggest driver in the deficit battle.” Why would anyone care what the corrupt and disgraced organizations who quite nearly brought down the world economy think about anything at this point? And yet, that is where elite opinion is focused right now:

What really haunts the administration is the very real prospect, stoked two weeks ago by Standard & Poor’s, that Barack Obama could go down in history as the president who presided over his country’s loss of its gold-plated, triple-A bond rating.

Financial analysts say such a move would hit Americans with more than $100 billion a year in higher borrowing costs, but it’s not just that. It would be a psychic blow to a nation that already looks over its shoulder at rising economic powers like China and wonders, what’s gone wrong? And it would give the president’s Republican rivals a ready-made line of attack that he’s dragging the country in the wrong direction.

This rumbling has been coming from Capitol Hill for a while, which made us start asking questions about what was really going on with Standard and Poors. It felt like there’s a story-behind-the-story driving S&P’s actions in the debt ceiling debate, which appear inexplicable at face value and go way beyond what Moody’s or Fitch have done. And the more we looked at the timeline of events, the more we wondered how the intertwining dramas of a) S&P downgrade threats, b) the liability that the ratings agencies may have for their role in the 2008 financial meltdown, and c) the GOP’s attempts to insulate the ratings agencies from b) are all impacting each other.

Timeline of Events

On July 21, 2010 President Obama signs Dodd-Frank into law. Prior to Dodd-Frank, the courts found that credit ratings are expressions of opinion that were protected under the first amendment, subject to a demonstration of actual malice:

The Dodd-Frank Financial Reform Act stripped away those protections, so that CRA’s were now subject to the same expert liability as an auditor or securities analyst, and required only a “knowing” or “reckless” state of mind for liability, rather than proof of scienter. It also repealed Section 436 of the Securities Act of 1933, which granted “safe harbor” for ratings, which were part of a prospectus.

Which, for obvious reasons, made the ratings agencies extremely nervous.

In October 2010 S&P issued its first threat to downgrade US debt: “If the U.S. government maintains its current policies for the next 40 years in the face of rising health care and pension spending pressure, it is unlikely that Standard & Poor’s Ratings Services would maintain its ‘AAA’ rating on the U.S.” The report paints a target on the back of Social Security and Medicare, says nothing about the wars, the Bush tax cuts, private health care costs or the absurdity of 40 year projections.

Ratings agencies are supposed to be reactive and analyze only what they see. They are not supposed to explicitly or implicitly give ”assurance or guarantee of a particular rating prior to a rating assessment.” By prescribing not only an austerity package for the United States, but stating that “in the long term, the U.S. AAA rating relies on reforms” of Social Security and Medicare, they most assuredly broke that rule.

S&P put forth no legitimate basis for their downgrade threat. As every reputable economist keeps reminding us (James K. Galbraith, Joe Stiglitz, FT’s Martin Wolf, Peter Radford, Bruce Bartlett, Krugman), the US is not Greece and does not face its risk of default. Unlike Greece, the US has its own currency, and unlike Greece, its debt is denominated and would be paid in its own currency. It can create that currency at will. So the only way the US can be forced into default is if Congress and the President do something that would be insane, like refuse to raise the debt limit, and the President then refuse to use the Executive authority of the Constitution to prevent a default.

But S&P was clearly determined to set itself up as arbiter of the US debt ceiling debate. They said nothing in December when the Bush tax cuts were extended, which dramatically exacerbated the deficit problem they warned of in October. But on February 14 President Obama releases his budget, which cut the deficit by $1.1 trillion over 10 years. The Standard and Poors committee found Obama proposal “disappointing.”

Sign our petition to the SEC: Revoke S&P’s authority as a credit ratings agency for their use of ratings as a political weapon and their attempt to avoid responsibility for their role in the financial crisis of 2008.

The White House clearly began to worry about the political implications of what S&P might do. Emails from both Treasury and S&P were provided to the House Financial Services committee earlier this week, showing that in March S&P and Treasury officials began coordinating discussions of the administration’s budget strategy before the S&P committee met to discuss the US credit rating.

But White House officials weren’t the only ones trying to work the refs. On March 14 Congressional Republicans stage their first challenge to 2010′s Dodd-Frank financial regulation reforms — an attempt to repeal the provision exposing credit rating agencies to the legal liability they were chafing to escape from.

And on April 5 Paul Ryan announced his alternative budget plan. Ryan’s budget was claimed (it was mostly a fraud) to produce over $4 trillion in reductions, while reducing tax rates. It also did so by slashing Medicare and making hundreds of billions in unspecified cuts to unnamed domestic programs. S&P were conspicuously silent.

April 13 was a big day

President Obama gave a speech in which he vowed to cut $4 trillion in cumulative deficits within 12 years through a combination of spending cuts and tax increases. Why was he suddenly pursuing $4 trillion in cuts, up from $1.1 trillion in January? Clearly Ryan had upped the ante. But what was he competing for?

Also on April 13 , Timothy Geithner along with Deputy Secretary Wolin, OMB Director Lew and a representative of the vice president’s office met with S&P personnel, per Geithner’s June 13 letter to the House Financial Services subcommittee. ABC reported that Geithner asked S&P’s David Beers to hold off on issuing any report until after the President Obama and Congress had completed negotiating over the rest of the FY2011 budget.

But perhaps the biggest thing that happened on April 13: A bipartisan study on the financial crisis from the Coburn-Levin Senate Permanent Subcommittee on Investigations released a report saying the credit ratings agencies were a “key cause” of the financial crisis. They issued a 650 page report, which included the following recommendation (p. 16):

The SEC should use its regulatory authority to facilitate the ability of investors to hold credit ratings agencies accountable in civil lawsuits for inflated credit ratings, when a credit rating agency knowingly or recklessly fails to conduct a reasonable investigation of the rated security.

Two days later, David Beers reached out to Undersecretary Goldstein to let Treasury know that the Standard and Poors committee has changed its outlook to “negative.” On April 18: Standard and Poors issued press release downgrading the outlook for US sovereign debt from stable to negative and giving a 30% chance of a ratings downgrade from AAA to AA.

“U.S.’s fiscal profile has deteriorated steadily during the past decade and two years after the financial crisis” they say — with no mention of their own role in that crisis. And whereas the October threat had been based on concerns over Social Security and Medicare, the latest press release contained no mention of either. Now they were worried that “Republicans and Democrats are deeply divided on a plan to reduce debt” and that political squabbling will prevent the debt ceiling from being raised.

On April 19 Geithner was dispatched to do an exhaustive round of talk shows, saying he disagrees with Standard and Poors and that there is “no risk” of a credit ratings downgrade.

But Geithner isn’t the only one. On April 20 Mitt Romney begins using the S&P threat of a downgrade for political advantage. In a radio interview he says that S&P “just downgraded their view for the future of America” and called for the President to “sit down and personally meet with S&P” as he said he did as governor of Massachusetts.

SEC takes the gloves off

In the midst of all of this, the SEC was moving to implement Dodd-Frank in ways that would negatively impact all the ratings agencies, and looking into S&P’s role in the 2008 mortgage crisis:

May 18: the SEC commissioners “voted unanimously to propose new, tougher regulations for credit rating agencies,” which would “implement certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act and enhance the SEC’s existing rules governing credit ratings.”
June 9: Bloomberg reports the SEC may recommend recommend that ratings agencies be prohibited from advising investment banks on how to earn top rankings for asset- backed securities
June 14: Reports emerge that the SEC is considering civil fraud charges against S&P and Moody’s in the run up to the financial crisis.

But Standard and Poors was not cowed by the SEC’s sudden rash of action. On July 14 they raised the threat of a downgrade to 50% within the next 90 days.

And now they were very explicit about what they were looking for in exchange for a AAA rating. They wanted a number….which just happened to be the magic $4 trillion number:

If Congress and the Administration reach an agreement of about $4 trillion, and if we to conclude that such an agreement would be enacted and maintained throughout the decade, we could, other things unchanged, affirm the ‘AAA’ long-term rating and A-1+ short-term ratings on the U.S.

Incredibly, S&P’s Devan Sharma told Congress this week that that S&P had been “misquoted” regarding the $4 trillion figure and that it had been “inaccurately stated that the company was calling for that specific threshold.” I really don’t know any other way you could read it. He also accused the administration of “meddling in the ratings process,” a charge quickly trumpeted by Republicans on the committee.

Politico reported that administration officials were “shocked by the move,” suggesting that it did not seem to square with prior S&P reports (duh).

But S&P wasn’t done. On July 21: David Beers met with Congressional Republicans in a closed door meeting to brief them on a potential downgrade of US debt.

And on that same day, the House Financial Services Committee approved the bill to remove the Dodd-Frank provisions that subject credit ratings agencies to expert liability. It passed 31-19 “over the opposition of the senior Democrat on the panel,” devolving into a clear partisan effort.

Then on Tuesday of this week, the SEC unanimously approved a plan to erase references to credit ratings from certain rulebooks. They also adopted alternatives to the credit ratings — a blow to the CRA’s entire business model.

Conclusion

It’s becoming more and more obvious that Standard and Poor’s has a political agenda riding on the notion that the US is at risk of default on its debt based on some arbitrary limit to the debt-to-GDP ratio. There is no sound basis for that limit, or for S&P’s insistence on at least a $4 trillion down payment on debt reduction, any more than there is for the crackpot notion that a non-crazy US can be forced to default on its debt.

Whatever S&P’s agenda, it has nothing to do with avoiding default risks or putting the US on sound fiscal footing. It appears to be intertwined with their attempts to absolve themselves from responsibility for their role in the 2008 financial crisis, and they are willing to manipulate not only the 2012 election but the world economy to escape the SEC’s attempts to regulate them.

It’s time the media and Congress started asking Standard and Poors what their political agenda is and whom it serves.

Wednesday, July 27, 2011

The Euro Is Doomed

This discussion reported by Joe Wisenthal could become one of those moments in retrospect when we learned ahead of time what was actually coming down the pike. I always thought European unification was a good idea, less chance for war, more chance for unity and peace. Simple no? Well I guess not. It's obvious Germany can't and won't carry the poor nations and they aren't getting up to Germany's level any time soon. We in the US would do well to understand we need to work together to stay together or else our own union could end up falling apart. It's happened before.


Charles Gave is the French economist whose research firm GaveKal is fairly well known, and read in some hedge fund circles.

In his latest note, John Mauldin reports on a dinner he attended with several investors and experts, of which Gave was one. At the dinner, he predicted the Euro's imminent demise.

The section of the note is below.

--------

Will the Euro Survive?
We had dinner on Monday night at the home of Hervig von Hove of Notz-Stucki Bank, where I was speaking the next morning. There were 16 of us at the table, and these people represented a great deal of money as managers and investors. All very well-informed. We sat outside in perfect weather in the Swiss countryside. Charles Gave sat across from me at the middle of the table, and we talked and debated as the rest asked questions and offered opinions for 3-4 hours. The wine was flowing, and it was a most interesting evening. Now, with that set-up…

I was asked if I still thought the euro was going to parity with the dollar, and I said I did, although I was not sure what the euro would look like in three years, or who would be in it. There was some pushback from people who thought the dollar would be the weaker currency. So I asked for a show of hands as to how many people thought the euro would be higher in one year’s time. There were 6 hands raised, but one gentleman said he was actually abstaining. So I asked how many thought the euro would fall, and we got 12 hands. Yes, that is 19 votes for 16 people. Clearly there were at least three economists in the group who voted both ways!


Then someone asked Charles about the issue. Now, for those who have never had the extreme pleasure of time with Charles, he is a powerful, white-haired French patrician, and one of the better economists I know. Quite a brilliant thinker and not afraid to express his mind forcefully with a voice that sounds like God talking, with about the same assurance (note to self: never again follow Charles on a speaking stage).

“The question is entirely irrelevant” – punctuating the air for added emphasis. “The euro will not exist in a year. The whole thing was dysfunctional from the beginning.”

I suggested that was a tad bearish.

“Not at all. I think it is extremely bullish. The demise of the euro and the return of national currencies will allow for proper allocation of investments and resources. It is the best thing that could happen for the markets.”

I could not get him to commit to exactly how that process of dissolution would look.

“I didn’t create the euro so it is not my responsibility to solve the problem for them.”

But I cannot help but think that any exit by anyone from the euro will be disorderly, giving rise to Bernanke’s “significant effects.” Many European banks are simply not solvent if there are major sovereign defaults. The US banks have sold some $90 billion in credit default swaps on Greek, Irish, and Portuguese debt to European banks. That is supposedly balanced with other purchases of CDS, but my sources say that much of that insurance is from German Landesbanks. Yes, the same ones I mentioned above that are basically insolvent. We are joined at the hip to Europe. A European recession would certainly be felt here. And a credit event could cause the same problem as in 2008, as banks start to refuse to lend to each other again. Ugh.

The potential for a real crisis is far too high for comfort. It would mean another recession for sure, with the US already close to stall speed and global growth slowing. I hate to sound alarmist, but I am worried. Absent a problem in Europe, the US should be fine, if slow. And maybe European leaders can stall the crisis off longer, buying time for banks to move their debt to the ECB and raise capital. We have to really keep our eyes on this.

At some point, Europe needs to realize that the problem with Greece, Portugal, et al. is not illiquidity, but that they are insolvent and have few prospects for economic growth anywhere close to what is needed to solve their problems.

Europe would be better off just taking the money they are giving to Greece and using it to recapitalize their banks. Let Greece go. Give it up. Let them enter a 12-step program or whatever it is that insolvent nations do. That is harsh, but it is also the truth.

But there are very sad things going on. It is not just banks that are losers here. Pharmaceutical companies are starting to refuse to deliver to Greek hospitals, as they are up to two years behind on their payments. It turns out that Greece owes some €6 billion to private businesses like hospitals and simply cannot pay. Those costs are rising, and much of it is to hospitals for medical care supported by the government. They are issuing bonds (shades of California) for the debt in some cases, which sell for a discount of 50%, if they can be sold. And we thought finding €12 billion was a hard thing.

This is not just a Greek problem, it is a concern in many countries that are having financial difficulties.

By Joe Weisenthal on Money Game.

Monday, July 25, 2011

Be Rich; Live Longer

Here's anothe reason to have money and education: you live longer. This startling conclusion from a man who sits on the board at Citigroup and is a member of the Council on Foreign Relations, which makes him likely to live six years longer than you or me statistically. Peter Orsag used to be in a position when he was in President Obama's cabinet to influence the debate in favor of better and more inclusive health care. That was just one of many balls droped by our Democrat leader. It turns out being hi tech savvy is good for you. Or you could be born in Cuba instead of the US where infant mortality rates are lower than ours...

I now have more health information on my wrist than my doctor had about me 10 years ago, and I’m hopeful that it’s going to help keep me healthier.

But it’s worrisome, too, because the same technological change that allows any of us to walk around with all this personal data at a glance may wind up exacerbating the growing gap in life expectancy between people with high levels of income and education and those without.

New technologies allow us to collect our own health data and store it in an online record. When combined with information from doctors and other providers, it can present a picture of someone’s well-being more nuanced than anything available before.

I know from experience, for example, that if I weigh myself most days, I am more likely to eat nutritious foods and maintain my weight. But I’ve never succeeded in recording the results consistently, which is unfortunate because doing so would provide a useful history for my doctor, signaling potential health risks.

The admittedly minor hassle of looking down at the scale and then walking over to a computer to type in the numbers was apparently so onerous that I would do so for only a couple days and then stop.

Technology has overcome that obstacle. My wife and I now have a new Withings Wi-Fi scale: When I step on, it transmits my weight and body-fat readings to the computer over our home Wi-Fi network. The information is then automatically linked to my personal online health record. A similar wireless blood-pressure monitor has just become commercially available.

High-Tech Pedometer
The striking part comes when that information is combined with other data sources. Enter new devices like the Garmin Forerunner 610 watch and the Fitbit pedometer, both of which I use. The watch records my daily runs, including distance and pace, along with pulse and calories burned. The pedometer measures how many steps I take each day, and if I wear it on my wrist at night it can also measure the length and quality of my sleep. Both devices transmit their results wirelessly to my computer whenever I walk by it, and that information, too, is automatically deposited into my health record.

My online record thus contains an extraordinarily rich array of information about how much I exercise, how well I sleep, my blood pressure and my body mass. It also pulls data on my prescriptions and other more traditional health metrics, such as blood-test results.

Emergency Bracelet
And much of this information can be accessed by yet another new wristband device. As I write this, I’m wearing something called a VITAband, which is an emergency ID bracelet that is linked to online information about who I am, my allergies, my blood type, whom to contact in case of an emergency and so on. Importantly, with appropriate permission, it can also tap into my increasingly detailed online health record. (A particularly clever feature that isn’t directly connected to better health, except in the psychological sense, is the VITAband’s built-in debit card, which lets me make purchases or, if something goes terribly wrong when I’m out for a run, pay for a cab ride home.)

As you might be able to tell, I’m quite enthusiastic about these innovations. But I’m also aware of their risks, which may only increase as the technology advances.

Privacy Concern
One of these is a potential loss of privacy. Imagine, for example, if someone’s personal health record is hacked. I wouldn’t care if anyone found out how many calories I burned yesterday. But since the multiple sources of information about my health are now linked, anyone who could inappropriately obtain access to one bit of data may have a better chance of getting into the entire record, unless the system is explicitly designed to minimize that risk. Presumably, all of this new information should be private, not available even to my doctor or health- insurance company without my permission.

A longer-term worry is that the new technologies may widen gaps in life expectancy. Americans are living longer than ever -- but, as documented in a recent National Academy of Sciences report (“Explaining Divergent Levels of Longevity in High-Income Countries”), people with more education and income are enjoying much more rapid increases in longevity than others are.

Life-Span Gap
Among 50-year-old men, for example, those in the highest education group are now projected to live almost six years longer on average than those in the lowest education group -- and this differential has been rising sharply. The widening gap in life expectancy is also evident geographically. In 2007, men living in the American counties with the greatest average longevity could expect to live more than 15 years longer than men in the lowest- ranked ones. In 1987, that gap was less than 12 years. Sadly, life expectancy in some counties actually declined over that period.

The leading explanations for this involve health behavior -- including diet, exercise and smoking. For example, men 50 and older without a high-school education are more than twice as likely to smoke as those with a college degree. Exercise behavior also varies substantially. Among 45- to 54-year-olds in one study, only 16 percent of those without a high-school degree exercised vigorously at least once a week, whereas 56 percent of college graduates did.

Need for Technology
If the new personalized health technologies wind up being used disproportionately by people with more education and income, driving that group toward even better health, they will probably cause the gap in life expectancy to widen still further.

The true health-improving potential of devices such as the VITAband and the Fitbit will be realized only if they are used by those who most need to change their health behavior -- the same people who have been lagging in life expectancy. If not, just as technology has helped expand income inequality over the past four decades, it may likewise play a major role in expanding life-span inequality.

Peter Orszag is a Bloomberg View columnist where this essay originated.

Saturday, July 23, 2011

Clarence Thomas

From http://www.truth-out.org this essay byWilliam Rivers Pitt on why the silent justice needs to retire.


Ethics is knowing the difference between what you have a right to do and what is right to do.

- Supreme Court Justice Potter Stewart

For the sake of full disclosure, I will tell you that I do not like Supreme Court Justice Clarence Thomas. In my opinion, he has no business sitting on the high court after the reprehensible treatment he forced Anita Hill to endure, and has been a disgrace to the bench lo these last twenty years. Anthony Weiner, one of Clarence Thomas' most ardent critics, was just run out of Washington DC on a rail for behavior far less offensive; Mr. Thomas is lucky there was no such thing as Twitter when he was sexually harassing Hill, or he'd be chasing ambulances outside of muni court like the hack he is. He sits up there like a lump, never speaking or offering questions to petitioners, and has not had an original thought since his shameful Senate approval.

But his vapid intellectual presence on the bench is only a small part of the story. Mr. Thomas has, by all appearances, turned his position on the court into a license to print money for himself, his family, and a few choice friends.

Conservative corruption is nothing new in Washington, but Mr. Thomas has taken the practice to bold new heights, and finally, people are beginning to sit up and take notice. Thomas has been playing fast and loose with judicial ethics for a long time now, and though Supreme Court Justices are not technically beholden to judicial rules of ethics, his behavior has become so egregious as to warrant deep attention, and in my opinion, removal from the high court.

Justice Thomas is in possession of a gorgeous bust of Abraham Lincoln, which was cast in 1914 by the noted sculptor Adolph Alexander Weinman. The bust was given as a gift to Thomas in 2001 by Christopher DeMuth, president of the notoriously right-wing American Enterprise Institute. The value of the bust was $15,000. In the intervening years, AEI has filed briefs on three separate occasions regarding cases before the high court, and on each occasion, Thomas has ruled in their favor, often going beyond the scope they were seeking.

Thomas has attended fundraisers sponsored by the Koch Brothers in support of far-right media outlets, think tanks and groups. His habit of openly supporting right-wing causes has earned him an enormous amount of financial largesse from heavy-hitting right-wing donors, most notoriously Mr. Harlan Crow, who helped finance the "swift-boating" of John Kerry in the 2004 presidential election. Crow financed a library project dedicated to Thomas, and gave Thomas' wife $500,000 to create a Tea Party group that has since been throwing its weight all around the country. Crow, it should be noted, is a trustee of AEI, which gave Thomas that bust of Lincoln.

The list of his brazen improprieties runs long, but the real show centers around his wife, Ginni. Harlan Crow's massive donation allowed her to create Liberty Central (and later Liberty Consulting), an advocacy group dedicated to the overthrow of President Obama's health care reform legislation. The conflict of interest inherent in this - given that Mr. Obama's health care legislation will certainly appear in some form before the Supreme Court - is manifest. The high court's decision in Citizens United, which Thomas voted in favor of, has opened the financial floodgates for groups like Liberty Central, so Thomas' family appears to be reaping wonderful monetary gains from that decision. And there is the fact that Thomas failed to disclose nearly a million dollars of income earned by his wife, and brushed off that failure to disclose with an "Oops, didn't understand the paperwork" excuse.


As has been stated, Supreme Court Justices are exempt from following the judicial code of conduct, but Mr. Thomas' behavior has been so egregious as to create a groundswell towards changing that. Nan Aron of the Alliance for Justice recently penned an editorial for the Washington Post which argued:

The behavior of Supreme Court justices has come under increasing scrutiny. Questions have been raised, for instance, about the propriety of Justices Antonin Scalia and Clarence Thomas appearing at political strategy conferences hosted by the conservative Koch brothers. Other justices' activities have also prompted concerns that the line between justice and politics is increasingly blurred.

Regardless of whether one shares fears of politicization, disputes are inevitable so long as the nation's highest court operates with almost no compulsory ethics rules to guide - or constrain - behavior. The Supreme Court, whose members are shielded with lifetime appointments, is the only entity in our government that is not subject to mandatory ethics requirements. That is why reformers are calling for the Code of Conduct that governs all other federal judges to apply to the justices. Surely it makes no sense to have lesser standards for the highest court than those in place for lower courts.

The Code of Conduct doesn't frown on ideological activity but does prohibit political activity, and that's where Scalia and Thomas crossed the line. The fact that they did so with seeming impunity demonstrates that voluntary adherence to ethical standards doesn't always work. How to enforce such a code would be the hardest question, but there are options - possibilities include adjudication by other sitting justices, retired justices, lower court judges, the judicial conference or some combination of these. Exact methods could be explored in congressional hearings.

The bottom line is that if the judicial Code of Conduct becomes mandatory the number of events that would be placed off-limits is small. Meanwhile, the effect on the integrity of the court would be large. Some suspect this is an effort by progressives to tweak justices they don't like. But the Supreme Court itself effectively answered that charge in 2009. In Caperton v. A.T. Massey Coal Co., a case that dealt with a West Virginia Supreme Court justice who ruled in favor of a corporation that had made large contributions to his campaign, the high court said that "codes of conduct serve to maintain the integrity of the judiciary and the rule of law."

The lifetime appointment for a Supreme Court Justice is not set in stone, as Justice Abe Fortas found out to his woe forty years ago. Fortas, who was appointed to the bench by President Lyndon Johnson in 1968, was found to have taken large sums of money from litigants who appeared before the high court, including Phillip Morris. After a second pay-for-play arrangement benefiting Fortas was discovered, he was forced to resign in disgrace. As Ian Millhiser of ThinkProgress argues:

It is difficult to distinguish Fortas' scandal from Thomas'. Like Fortas, Thomas accepted several very valuable gifts from parties who are frequently interested in the outcome of federal court cases. One of Thomas' benefactors has even filed briefs in his Court since giving Thomas a $15,000 gift, and Thomas has not recused himself from each of these cases.

Of course, Thomas is also the least likely Justice to actually follow the command of precedent. Thomas embraces a discredited theory of the Constitution which would return America to a time when federal child labor laws were considered unconstitutional. His fellow justices criticize him for showing "utter disregard for our precedent and Congress' intent." Even ultra-conservative Justice Antonin Scalia finds Thomas' approach to the law too extreme - in Scalia's words, "I am a textualist. I am an originalist. I am not a nut."

But Thomas' disregard for what has come before him changes nothing about the precedent he faces. If Abe Fortas had to resign his seat, so too should Clarence Thomas.

Given the simple, unavoidable fact that Mr. Thomas is bereft of both shame and a code of personal ethics, it is highly unlikely he will resign, especially if his wife is raking in the cash thanks to his decisions. In that event, the final remedy of impeachment must be deployed. The Supreme Court must not be a place for partisan political fundraising or friendly-donor back-slapping. It is the place of last recourse in our system of laws, and must be as far above reproof as can be humanly managed. Clarence Thomas is an embarrassment to the ideals of our system of government, and must go. He can choose to leave, or be removed by Constitutional remedy, but his time on the bench must be concluded.

He and Ginni will just have to go find honest work like everyone else.

Thursday, July 21, 2011

Union Demolition

By Robert Reich, on what appears to be a hopeless struggle to maintian union rights in our world gone mad. It's as though reducing public sector wages will somehow increase private sector wages. Instead it's just another way the elites set worker upon worker, cutting wages and benefits and jobs in the private sector and thus hoping to reduce us all to the level of globalized laborers. Thats how we compete with the Indonesian labor rates. In a country where a knowledge of history is a joke this sort of destruction of centuries old gains is not at all funny.

The battle has resumed in Wisconsin. The state supreme court has allowed Governor Scott Walker to strip bargaining rights from state workers.

Meanwhile, legislators in New Hampshire and officials in Missouri are attacking private unions, seeking to make the states so-called “open shop” where workers can get all the benefits of being union members without paying union dues. Needless to say this ploy undermines the capacity of unions to do much of anything. Other Republican governors and legislatures are following suit.

Republicans in Congress are taking aim at the National Labor Relations Board, which is likely to consider a relatively minor rule change allowing workers to vote on whether to unionize soon after a union has been proposed, rather than allowing employers to delay the vote for years. Many employers have used the delaying tactics to retaliate against workers who try to organize, and intimidate others into rejecting a union.

This war on workers’ rights is an assault on the middle class, and it is undermining the American economy.

The American economy can’t get out of neutral until American workers have more money in their pockets to buy what they produce. And unions are the best way to give them the bargaining power to get better pay.

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For three decades after World War II – I call it the “Great Prosperity” – wages rose in tandem with productivity. Americans shared the gains of growth, and had enough money to buy what they produced.

That’s largely due to the role of labor unions. In 1955, over a third of American workers in the private sector were unionized. Today, fewer than 7 percent are.

With the decline of unions has come the stagnation of American wages. More and more of the total income and wealth of America has gone to the very top. The middle class’s purchasing power has depended on mothers going into paid work, everyone working longer hours, and, finally, the middle class going deep into debt, using their homes as collateral.

But now all these coping mechanisms are exhausted — and we’re living with the consequence.

Some say the Great Prosperity was an anomaly. America’s major competitors lay in ruins. We had the world to ourselves. According to this view, there’s no going back.

But this view is wrong. If you want to see the same basic bargain we had then, take a look at Germany now.

Germany is growing much faster than the United States. Its unemployment rate is now only 6.1 percent (we’re now at 9.1 percent).

What’s Germany’s secret? In sharp contrast to the decades of stagnant wages in America, real average hourly pay has risen almost 30 percent there since 1985. Germany has been investing substantially in education and infrastructure.

How did German workers do it? A big part of the story is German labor unions are still powerful enough to insist that German workers get their fair share of the economy’s gains.

That’s why pay at the top in Germany hasn’t risen any faster than pay in the middle. As David Leonhardt reported in the New York Times recently, the top 1 percent of German households earns about 11 percent of all income – a percent that hasn’t changed in four decades.

Contrast this with the United States, where the top 1 percent went from getting 9 percent of total income in the late 1970s to more than 20 percent today.

The only way back toward sustained growth and prosperity in the United States is to remake the basic bargain linking pay to productivity. This would give the American middle class the purchasing power they need to keep the economy going.

Part of the answer is, as in Germany, stronger labor unions — unions strong enough to demand a fair share of the gains from productivity growth.

The current Republican assault on workers’ rights continues a thirty-year war on American workers’ wages. That long-term war has finally taken its toll on the American economy.

It’s time to fight back.

Tuesday, July 19, 2011

Fukushima

How odd it is that discussion of Japana's multiple nuclear melt downs have vanished from the mainstream press. Yet we know radiation has leaked in vast quantities and has had negative impacts on the west coast of the United States. From Steven Jones this reminder of the status quo:

By way of comparison, the Chernobyl nuclear disaster that occured in 1986 in the Ukraine, Russia- heretofore the worst nuclear disaster on record- burned for 10 days and cumulatively killed an estimated 1 million people worldwide. The Fukushima, Japan nuclear disaster has 5 nuclear reactors burning, 2 in partial meltdown and 3 in full meltdown- and they've ALL been uncontrollably burning since March 11th. Its been over 3 months and this nuclear disaster remains completely out of control. In fact, some industry estimates cite the possibility that these meltdowns will be contained (optimistically) in 1-3 years, at the very earliest.

The amount and intensity of the radioactive fallout from this particular nuclear disaster will assuredly kill hundreds of millions of people worldwide over time. Japan itself is, of course, the epicenter of this radioactive contamination that has spread out from these reactors.

However, the Korean peninsula, China and nations immediately surrounding the Japanese archipelago will also bear the brunt of a significant amount of radioactive fallout from this disaster. Immediately downwind of this radioactive release, though, is the United States of America and the entire northern hemisphere, comprising the majority of the world's industrialized nations on Earth. Significant amounts of plutonium, strontium, cesium, uranium and a whole plethora of other highly radioactive particles have already fallen on the continental land mass of the USA and have already entered the food chains and water tables of the nation.

To give one an example of how lethal radiation is, one pound of plutonium evenly distributed into everyone's lungs would kill every man, woman and child on Earth. There are literally "tons" of radioactive plutonium (among other radioactive elements) that have been released into the air and ocean environments since March 11th. Another critical fact to remember is that radioactive plutonium, for example, remains lethal (killing life) for thousands years as it has a half-life of 24,000 years. Some other radioactive elements such as uranium have a half-life of 4.47 billion years.

In a nutshell, Fukushima represents a literal catastrophe for the human species, plain and simple, there's no other way to put it. As a past anti-nuclear activist (I participated in a dozen or so civil resistance actions at nuclear facilities all across the nation years ago) my credentials span from being a personal friend of Dr Robert Oppenheimer's son- himself an anti-nuclear activist- to having met and talked with the late Dr Edward Teller (father of the hydrogen bomb), to collaborating with a former Trident II missile designer helping to warn humanity about the dangers of nuclear war. In this journey, I learned ALOT about radiation and its harmful effects on human health.

Radiation kills, and thanks to the recent Fukushima disaster in Japan, the REAL story is that a literal nuclear holocaust is unfolding right before us in America and throughout the world. The EPA (Environmental Protection Agency), the federal environmental safety agency arm of the US government has shut down nearly all of its radiation detection monitors in the USA for fear that the American people will learn the TRUTH that a lethal dose of radioactive fallout has now descended upon the nation.

There's really no way to protect yourself and your family from this new threat, although a few precautions should be noted. First, it has been known for years that miso soup has a way of "chelating" radiation out of the human body. The only one's who survived after the bombs that were dropped on Hiroshima and Nagasaki, Japan (of all places!) years ago, are those who ingested miso soup. Second, radioactivity bioaccumulates its toxicity higher up the food chain, so its probably prudent to stay away from milk, dairy products and meat. And thirdly, efforts to bolster the body's immune system with vitamens, purified water and plenty of exercise is sure to help as well. Other than that, pray that you're not the now 1 in 2 people who will contract cancer in their lifetimes...

Sunday, July 17, 2011

Life Expectancy

From Global Research this essay discussing another step back in our overall quality of life in these United States. It's not really surprising I suppose, considering the lack of affordable preventative care, the indifference of our leaders and the accumulation of wealth at one end of the human scale. Unpleasant for all that it is to be expected among the poor and minorities.






Average life expectancy is falling in many parts of the United States and for many demographic groups, most notably women, according to a study being published Wednesday in the journal Population Health Metrics, and conducted by the Institute of Health Metrics and Evaluation (IHME) at the University of Washington in Seattle.


The results of the study are particularly striking in terms of women’s health. One quarter of all US counties saw an actual reduction in life expectancy for women between 1997 and 2007, meaning that girls born today are expected to live shorter lives than their mothers. As the Los Angeles Times wrote, “For life expectancy to decline in a developed nation is rare. Setbacks on this scale have not been seen in the U.S. since the Spanish influenza epidemic of 1918, according to demographers.”


This trend has accelerated over the past two decades. From 1987 to 1997, there were 314 counties out of more than 3,000 with either a loss of female life expectancy or no growth in it. From 1997 to 2007, there were 860 counties in which that was the case, compared to only 84 counties where male life expectancy decreased or stagnated.


These 860 counties form a broad swath across Appalachia (parts of Pennsylvania, West Virginia, Virginia, Kentucky, North Carolina) and the entire rural South, from the Carolinas to north Texas, as well as portions of the border states, including 82 percent of all counties in Oklahoma, 66 percent in Tennessee, and 59 percent in Kentucky.


In Mississippi, long the poorest and most unhealthy state, there are five counties where life expectancy for women is the same as that in Honduras, El Salvador and Peru, among the most impoverished countries in Latin America. Madison County, Mississippi, just north of Jackson, saw a staggering drop of two and a half years of life expectancy for women in just the past decade.


For one county in Mississippi, male life expectancy, for whites and blacks combined, was lower than the average male life expectancy in sub-Saharan Africa. For five Mississippi counties, male life expectancy was the equivalent of the Philippines and Brazil.


The report, entitled “Falling behind: life expectancy in US counties from 2000 to 2007 in an international context,” compared life expectancy data for 3,138 U.S. counties and 10 cities with a previous survey from 1987 to 1997.


US life expectancy over a 20-year period, 1987-2007, continued to rise in absolute terms, up 4.3 years for men and 2.4 years for women, in large part because of declining rates of smoking and improvements in medical technology. But the United States lagged behind other industrialized countries, falling from 20th in the world in terms of life expectancy in 1987 to 37th in 2007.


The “falling behind” spoken of in the title of the study is particularly pronounced when data on the United States is compared with equivalent data from the 10 nations with the highest life expectancy. The 10 countries, 7 in western Europe, include Iceland, Switzerland, Sweden, Japan, Australia, Norway, Canada, Spain, France and the Netherlands.


The study calculated historical averages for life expectancy, year by year, for the top 10 countries, and then rated each US county against that scale—in other words, how many years behind (or in a few cases, ahead) each county was, compared to what the study called the health “frontier,” i.e., the average of the top 10 countries.


Some of the Mississippi counties, for example, had life expectancies equal to those achieved in the top 10 countries as far back as 1957, giving them a rating of 50 years “behind” the frontier. A few wealthy areas, such as Fairfax County, Virginia, were actually better than the average of the top 10 countries today, and received a rating of 16 years “ahead” of the frontier.


The overall trend was a wider and wider gap between the US performance and the top 10 countries. In 2007, only 78 US counties had improved their ranking for male life expectancy on this international scale, while 1,406 counties fell further behind and 1,663 counties were essentially unchanged. For female life expectancy, the figures were even worse: only 45 counties improved, 2,054 fell further behind, and 1,048 counties stayed the same.


Another striking feature of the report was the scale of inequality in health outcomes. A relative handful of affluent suburban counties, mainly in the Northeast and West Coast, have life expectancies better than or equal to those in Japan and western Europe. But overall, some 80 percent of US counties were behind the average for the top 10 countries, and this proportion has increased dramatically over the last decade.


One part of the study looked at local variations in Britain and Canada, and found that the United States had much greater internal disparities. While 17 percent of US counties were 30 years or more behind the world’s best countries, only 2 percent of Canadian localities were that far behind—mostly among the Inuit population in the far north—and in Britain, with its National Health Service, only two tenths of 1 percent of local jurisdictions were more than 30 years behind.


There were some positive findings in the study:


*Despite high poverty rates, Southern California and other parts of the Southwest have relatively better life expectancy because the Hispanic immigrant population is much healthier than the US average.


*Twelve states, including the whole of New England, Pennsylvania, and the Upper Midwest, have not a single county where life expectancy has declined.


*Life expectancy increased sharply in New York City, in large measure because of better treatment of AIDS patients, which drastically cut the mortality rate.


Overall, the report on life expectancy underscores the catastrophic effects of economic slump and growing social inequality on the physical survival of large portions of the working class population in the United States. Capitalism is not only inflicting unemployment, poverty, homelessness and hunger, it is literally killing young people, the elderly and people of working age.


Press accounts of the IHME study claimed that the authors discounted the impact of poverty and lack of education and emphasized the significance of behavioral factors such as smoking and obesity. This reporting demonstrates more the bias of the corporate-controlled media than a fair reading of the actual outlook of the scientists involved.


They write in the report summary: “Strong relationships have been documented between race/ethnicity, individual or community income, income inequality, and mortality in the US.” Later, they add, “Any analysis of causes of disparities will draw substantial attention to poverty, inequality, race, and ethnicity, but some of the poor performance and falling performance must be related to other factors.”


Dr. Ali Mokdad, an IHME official who is researching causal factors affecting life expectancy, listed four reasons for the trends found in the report: poverty and lack of education, access to health care, quality of medical care, and preventable risk factors.


The preventable conditions like obesity, untreated high blood pressure and smoking, are also correlated indirectly with poverty and lack of education, as well as lack of access to health care, which is particularly pronounced in isolated rural areas.


The tobacco companies cultivated the women’s market in the United States with heavy advertising in the decades after World War II. Despite the overall decline in smoking from 1965 on, after the Surgeon General’s report identified smoking as a major cause of cancer and lung disease, American women have ever since had a higher rate of smoking than women in other countries, which has had long-term consequences for their health.


Even more dangerous is the enormous increase in obesity, which has doubled in the past 30 years, from 17 percent to 34 percent of the population. Obesity is linked to low incomes, lack of access to healthy food choices, particularly fresh fruit and vegetables, and the dominance of fast-food outlets in poorer areas.


Patrick Martin is a frequent contributor to Global Research.

Friday, July 15, 2011

MacDonald's UK

This article was first published in The Ecologist and republished by Global Research.

In the first of a major new series following on from the ground breaking Behind the Label, Peter Salisbury takes a look at one of the biggest brands in the world – McDonald’s – and asks: has the burger giant done enough to clean-up its act?

Chances are that you have had a McDonald’s meal in the past or if not, you certainly know a lot of people who have. It’s the biggest fast food chain in the world, with 32,000 outlets in 117 countries. The clown-fronted burger outfit employs a staggering 1.7 million people, and in the first three months of 2011 alone it made $1.2bn in profits on the back of revenues of $6.1bn. The company has come in for huge amounts of criticism over the past 20 years, for the impact it has on the diets of people worldwide, its labour practices and the impact its business has had on the environment. From Fast Food Nation to Supersize Me by the way of the McLibel trials of the 1990s, plenty has been written and broadcast to tarnish the golden arches’ shine.

Declining sales in the early 2000s, which saw franchises being shut for the first time in the company’s history, caused a major rethink of the way McDonald’s operates, and its recent rhetoric has been that of a firm with a newly discovered zeal for ethical end eco-friendly practices, garnering praise from champions as unlikely as Greenpeace and the Carbon Trust. But is this just marketing hype or has McDonald’s had a genuine change of heart?

The answer is yes and no. First of all, because of the way the company is run, it's hard to generalise. Around 80 per cent of McDonald’s outlets are run by franchisees who have to meet standards set by the company, but who can - and do - go above and beyond them. Further, McDonald’s branches are run by country and regional offices, each of which are subject to domestic standards. The production of much of the raw products which go into McDonald’s meals, from burger patties to sauces, is subcontracted to different suppliers, making it impossible to assess the company in terms of a single golden standard. Its sole global supplier (for soft drinks) is Coca-Cola.

The UK branch of the company has certainly made great strides since the 1990s, when it became embroiled in the 1997 McLibel court case, in which McDonald’s Corporation and McDonald’s Restaurants Limited sued Helen Steel and Dave Morris, a former gardener and a postman, for libel after they published a series of leaflets denouncing the company.

Exploitation

The judge overseeing the case decided that, although the pair could not prove some of their accusations - that McDonald’s destroyed rainforests, caused starvation in the third world or disease and cancer in developed countries - it could be agreed that the company exploited children, falsely advertised their food as nutritious, indirectly sponsored cruelty to animals and paid their workers low wages: a major blow to the brand in an age of increasing consumer-consciousness.

Since then, the UK branch has committed to a number of initiatives to improve its image, running an aggressive marketing campaign at the same time to portray itself as an ethical employer which is both farmer and eco-friendly. It has also moved to become more transparent, putting ingredients lists for all of its products on its website and setting up another website, Make Up Your Own Mind, inviting customers to voice concerns and publishing accounts of critics’ visits to its production sites.

All of this should be taken with a grain of salt however. It’s not surprising that a multibillion-dollar corporation, which has been hurt in the past by concerns over its practices, will do its utmost to sell itself as a reformed character. And it's suspicious that any web search of the company brings up a hit list of sites almost exclusively maintained by the company.

Yet research conducted by the Ecologist shows that in many areas the company has improved its record of ethical and environmental awareness over the last decade. The company’s burgers, for example, are now 100 per cent beef, and contain no preservatives or added flavours whatsoever. All of McDonald’s UK’s burgers are provided by Germany’s Esca Food Solutions, which claims to maintain rigorous standards at its abattoirs and production plants, and which works closely with 16,000 independent farmers in the UK and Ireland to maintain high standards.
'No GM'

Since the early 2000s, McDonald’s UK has maintained that none of its beef, bacon or chicken is fed genetically modified grain. Farmers working for McDonald’s have independently confirmed to the Ecologist and Esca that they have a ‘decent’ working relationship with the company.

In 2007, Esca won the UK Food Manufacturing Excellence Awards for its burgers, and in 2010 McDonald’s announced that it was launching a three-year study into reducing the carbon emissions caused by the cattle used in its burgers (cattle account for four per cent of the UK’s emissions). Meanwhile, all of the fish used in Filet-O-Fish and Fish Finger meals in Europe are sourced from sustainable fisheries certified by the Marine Stewardship Council. Fries are largely sourced from McCain’s, the world’s biggest potato supplier, and McDonald’s claims that the vast majority are produced in the UK, again by independent farmers. The fries are prepared in-store and are cooked in vegetable oil containing no hydrogenated fats. At the beginning of the potato-growing season, dextrose - a form of glucose - is added as a sweetener, and salt is added after cooking (the company claims to have reduced the amount of salt used by 23 per cent since 2008).

The bread for McDonald’s buns and muffins is sourced from a single unnamed supplier based in Heywood, Manchester, and Banbury, Oxfordshire. McDonald’s would not comment on where it sources the grain for the bakeries but says once more that it does not buy genetically modified crops. Meanwhile, the company has been working with its suppliers and franchise-holders to make sure that they are as energy efficient as possible. In 2010, The Carbon Trust awarded McDonald’s its Carbon Trust Standard for reducing its overall carbon emissions by 4.5 per cent between 2007 and 2009. The company is currently experimenting with a series of energy initiatives based around turning its waste, from packaging - which is 80 per cent recycled - to vegetable oil into energy.

Certification

Since 2007, the company - which is one of the world’s biggest coffee retailers - has committed to selling only Rainforest Alliance certified coffee. Although the certification body has certainly been responsible for improving conditions and practices in many farming operations worldwide, it has been the subject of controversy - most recently after an undercover investigation by the Ecologist revealed allegations of sexual harassment and poor conditions for some workers at its certified Kericho tea plantation in Kenya which supplies the PG Tips brand.

Certification issues aside, McDonald’s has undoubtedly become considerably better at taking criticism. In 2006, Greenpeace activists stormed McDonald’s restaurants across the world dressed in chicken suits in protest at the destruction of the Amazon rainforest, which they attributed to greedy soy producers - who in turn were selling their produce to chicken farms, of whom McDonald’s was a major customer. They subsequently praised the fast food chain for leading a unified response among soy buyers, pressuring producers to adopt a ‘zero destruction’ approach to growing their crops. Despite praise from Greenpeace, the Carbon Trust and personalities such as Jamie Oliver who have praised the company for its ethical stance on meat and buying its produce locally, the firm is by no means perfect.

One of the biggest incongruencies in its newly discovered zeal for ethical practices comes from its seemingly differing approaches to the conditions chickens live in depending on whether they produce eggs or are used as meat in Chicken McNuggets and similar meals. The firm proudly trumpets that its UK branch only buys eggs from Lion-certified free-range producers, a laudable effort from a huge buyer of eggs, and that the meat in each nugget is 100 per cent chicken breast (the final product is around 65:35 meat and batter).

Factory farming

Yet by the same token, the company buys most of its chicken from two suppliers, Sun Valley in the UK and Moy Park in Northern Ireland, who are in turn owned by the controversial American firm, Cargill, and Brazil’s Marfrig. Sun Valley has been accused of using intensive chicken farming methods to produce their meat, which campaigners say can typically involve birds being cooped up in giant warehouses for much of their natural lives with barely any space to move. Sun Valley was embroiled in a scandal in 2008 when the activist group Compassion in World Farming secretly filmed poor conditions at its supplier Uphampton Farm near Leominster.

Furthermore, although McDonald’s is happy to advertise the provenance of its beef, dairy products and eggs, it is more circumspect about chicken meat. This may be because up to 90 per cent of the meat it uses in the UK is sourced from Cargill and Marfrag facilities in Thailand and Brazil, where regulations in the farming sector are perhaps less stringent than in the UK.

Meanwhile, the fact remains that despite attempts in recent years to cultivate a more healthy image, McDonald’s primary sales come from fast food in a time when there is increasing recognition that obesity has reached epidemic proportions in the UK and the US. Although the European, and in particular the UK arm of the company, have become increasingly ethically aware, the same cannot be said for the US arm, which uses livestock farmed using intensive methods and fed in some cases on GM crops. And by buying McDonald’s in the UK, you are still buying from the same clown.

Wednesday, July 13, 2011

Another View of Capitalism

From Global Research this other view of that system which we are taught to believe is the be all and end all for human evolution. Hoel Hirschhorn argues the concept of capitalism has been perverted and propagandized out of all recognition from its roots.



With a kind of religious fervor, American conservatives love to talk about their love of capitalism, as if it has a singular definition and can always be counted on to serve public and national interests. The intelligent way to think about capitalism is that it can be of two kinds. The good kind is patriotic and stakeholder oriented, the bad kind is selfish and shareholder obsessed. The global economic downturn is strong evidence of the dominant second form of capitalism that has caused so much human suffering while it has served the rich and powerful.



When those with power take actions purely to serve corporate financial interests even though it greatly harms employees, the middle class and the national economy then the bad kind of capitalism is being pursued. Think of the mass export of good jobs, especially in manufacturing, the preference for imported goods, and the investment of capital to build new manufacturing and research facilities in other countries. Maximizing financial returns to reward corporate bigwigs and stockholders even though the actions greatly harm the US economy and society results from US companies practicing bad, immoral capitalism. Think of this development as the conquest of Wall Street over Main Street , of those who make money over those who create and make products, of those who promote economic inequality over those who value the middle class.



The power elites that have succeeded in perverting capitalism have also succeeded in making much of the American public so dumb and distracted that they no longer function as informed and effective citizens, which has allowed the government to be hijacked by the rich and powerful through a two-party plutocracy.



Selfish capitalism was exemplified by the role of Fannie Mae in creating the economic disaster by perverting the housing market, as conservative David Brooks correctly concluded; he noted the “leadership class is fundamentally self-dealing;” it practiced “shameless self-enrichment” which produced disastrous results.



To be clear, the conflict is not between capitalism and socialism, the way right wing ideologues talk, but between the good and bad kinds of capitalism, which those on the left need to learn how to talk about. Bad, greed-driven, too-big-to-fail capitalism has ruined the US for all but the rich which have sucked off much of the nation’s wealth.



A fine analysis by Harold Meyerson on the difference between the highly successful German economy and the dismal US one drives home the crucial differences between the two forms of capitalism. The need is for the US to learn from the more successful German, good form of capitalism and develop policy reforms that could rejuvenate the US economy by curbing the bad form of capitalism. The ideas that Republicans keep advocating are all wrong because all they want to do is promote bad capitalism, which only serves the interests of the rich and powerful, not ordinary Americans, not the middle class, and not workers. Peter Coy has also assembled great information on what can be learned from other nations.



The German economy makes the US one look like it is on its deathbed. The German tripartite system has business, labor and government working together. Faced with the same competition from low wage developing countries and the entire globalization condition, Germany has a booming manufacturing sector that constitutes almost twice the share of the economy than that in the US . And even in the current global economic recession German unemployment is 7 percent. The tripartite system has kept German labor unions strong and, therefore, protects the middle class whose pay has risen at roughly the same rate as top incomes. This is in stark contrast to the rich-getting-richer and union–busting situation in the US . Indeed, the top 1 percent in the US are seeing their proportion of total income rise dramatically, even as their German counterparts are seeing their share of total income shrink. German corporate boards are required by law to have an equal number of management and employee representatives. By law!



Germany ’s stakeholder capitalism benefits the many unlike the US where selfish capitalism benefits the upper class and brutalizes everyone else. Corporate power has not captured the German government the way it has hijacked the US government.



One powerful and highly successful public policy used by several democracies with strong capitalistic systems in the current economic downturn is providing companies with funds to keep workers on the payroll until demand improves. This directly fights unemployment and puts government dollars directly in the pockets of workers, in stark contrast to the many billions of dollars the US has spent which have not helped fight unemployment nor helped ordinary Americans, because the billions have flowed to corporate and financial interests. This more sensible approach that boosts consumer demand and spending has been used by Singapore , Germany and Japan , for example.



Steven Pearlstein recently examined the history of IBM and noted its “outmoded ethos – namely that the company exists not simply to maximize profit for shareholders but to maximize the benefits it can offer to customers, employees and the society as a whole.” Exactly right.



If President Obama was as smart as he and so many others think he is, and if he was a genuine leader and seeker of deep reforms, he would learn, respect and work like a dog to apply the best practices other nations are using to get better and fairer economic results. But as the Center for Public Integrity found, Obama has showered benefits on big time funders of his presidential campaign. Will he be a forceful advocate for capitalism with a human face?



Don’t hold your breath.



If Republican presidential hopefuls and crony capitalists cared as much about serving the public interest as serving corporate desires, than they would stop their nonsensical free market claptrap embracing selfish capitalism and seek a more patriotic form that puts the nation first. Time to stop talking about cutting taxes. Pursue new and better ideas. Face reality, a free market that provides freedom for corporate and financial interests to victimize the public must be changed. Admit that!



Don’t hold your breath.



Contact Joel S. Hirschhorn through http://www.delusionaldemocracy.com/ .

Monday, July 11, 2011

Economic Energy

From the Archdruid Reports John Michael Greer discussed in one of his recent weekly essays the value of alternative energy in a world of declining economies and limited supplies of cheap oil. His idea is that we should be considering how to provide energy for ourselves in a future where giant technologies will be too huge to sustain. It makes sense but it also requires a leap of imagination to think of a world where the national grid no longer functions. He makes it sound very reasonable and very likely.








If mythology can be defined as the set of stories that people in a given society use to make sense of the universe and themselves, contemporary beliefs about the future of technology in the cultural mainstream of the industrial world fill that role, doubled, tripled, and in spades. Those of my readers who have come to take the challenge of peak oil seriously, and tried to discuss it with family members, coworkers, and friends who haven’t yet grappled with the issues themselves, can testify just how forcefully most of these latter cling to the belief that some technological gimmick or other will bail us out.

Technology, for a great people nowadays, is their source of meaning and their hope of salvation. Most liberals, conservatives, atheists, and plenty of people who think they belong to some other religion all put their trust in the great god Progress and wait prayerfully for him to bring a future that, they insist, must be better than the present. However poorly founded that faith may be, it plays an immensely important role in today’s industrial cultures, and the death of Progress in our time thus bids fair to deal the same shattering blow to our present certainties that the death of God announced by Nietzsche measured out to the equally comfortably certainties of the nineteenth century.

If anything, the approaching experience may be the harsher of the two. What Nietzche was saying, stripped of his ornate imagery, was that the people of Europe in his time no longer believed in the Christian myths and doctrines they claimed to accept, and needed to own up to the anthropocentric cult of power that had become their actual religion. That may have been true; still, it’s one thing to realize that you no longer believe things you were raised to think were good and right and true; it’s quite another, and far more devastating, to believe in something with all your heart and have it disproved right in front of your eyes. The religion of progress claims to be justified by works, not faith; during the three centuries or so of technological expansion, the apparent confirmation of the myth gave it immense strength; as the age of progress ends and we enter on three centuries or more of technological regress, the resulting body blow to our culture’s fondest beliefs and hopes will dominate the cultural psychology of an age.

It’s the effort to avoid that profoundly unwelcome experience that drives current attempts to insist that we can maintain our contemporary lifestyles, and even provide them to the population of the world’s nonindustrialized (and never to be industrialized) countries, using renewable energy sources. That same effort drives plenty of other exercises in futility, to be sure, and many of them are a good deal more dysfunctional than the dream of a world of middle class comforts powered by wind turbines and solar panels. Still, if we’re going to get beyond the mythology of a dying religion and talk about the future in more useful terms, it’s crucial to start by owning up to the fact that renewable sources are not going to allow anyone to maintain the kind of extravagant energy-wasting lifestyle that most people in the industrial world think of as normal.

What they can do instead is rather more valuable. There are certain technologies that are either dependent on electricity, or are easiest to provide using electricity, that contribute mightily to human welfare. (Long range radio communication is an example of the first kind; refrigeration for food storage is an example of the second.) If these technologies can get through the present crisis in a sustainable form, they will contribute to human welfare as far into the future as you care to look. Renewable energy sources that provide a modest amount of electricity on a local scale can keep a good many of these technologies going, and if enough people here and now either learn how to build and maintain renewable systems on that scale, on the one hand, or learn how to build and maintain the technologies themselves on the same modest and local scale, on the other, our civilization may actually accomplish the surprisingly rare feat of adding something worthwhile to the long-term toolkit of our species.

The modest amount and the local scale are vital to any such project. Right now, anyone with a fairly good set of hand tools and a good general knowledge of electricity, carpentry, and metalworking can build a wind turbine for a few hundred dollars. I can say this with some confidence because I helped do exactly that, for a good deal less, while at college in the early 1980s. The turbine itself was basically a two-blade propeller cut, shaped, and sanded from a block of fir; the conversion of rotary motion to electricity was done by an alternator salvaged from an old truck; the tail that kept it facing into the wind, the safety shutoff that swung it out of the path of the wind when the wind velocity got too high, and the tricky doodad that allowed it to turn freely while still getting electricity down to the batteries in the little shed at the base, were all fabricated out of scrap parts and sheet metal. We used a disused power pole to put the turbine up where the wind blew freely, but if that hadn’t been there, an octet truss tower – one of Bucky Fuller’s better designs – could easily have been put together out of readily available hardware and bolted onto a hand-poured concrete foundation.

The design wasn’t original, not by a long shot; half a dozen old appropriate tech books from the Seventies have the same design or its kissing cousin, and it’s one of a half dozen or so standard designs that came out of the ferment of those years. The most important difference was between horizontal axis from vertical axis models. A horizontal axis wind turbine is the kind most people think of, with blades like a propeller facing into the wind and a tail or some other gimmick to pivot it around in the right direction. A vertical axis wind turbine is less familiar these days, though you used to see examples all over the place back in the day; the business end looked either like one side of an eggbeater – the Darreius turbine – or an oil drum cut in half lengthwise, and the two sides staggered around the vertical shaft – the Savonius turbine. Some of the standard designs yielded high speed and low torque, which is what you want for generating electricity; some of them produced high torque and low speed, which is what you want for pumping water or most other uses of mechanical power.

All the information needed to design and build one or more of the standard models is easy to come by nowadays – literally dozens of books from the time cover the basic concepts, and it’s far from hard to find detailed plans for building your own. It’s also not too difficult for those who lack the basic technical skills to find small wind turbines of quite respectable quality for sale, though the price is going to be a good deal more than you’d shell out for an old truck alternator, a chunk of fir six feet by eight inches by four inches, and the rest of the hardware we used to cobble together our turbine. Either way, if you live in an area with average winds and your home isn’t surrounded by tall trees, steep hills, or skyscrapers, your odds of being able to run a respectable 12 volt system are pretty good.

Still, it will come as no surprise to regular readers of this blog that very little of this wealth of practical information receives much in the way of attention nowadays. Instead, the concept of wind power has been monopolized by a recently minted industry devoted to building, servicing, and promoting giant wind turbines that provide electricity to the grid. The giant turbines have their virtues, no question; compared to most other energy production technologies, certainly, they’re safe and clean, and their net energy yield is a respectable 8 or 9 to 1, which beats the stuffing out of most other alternative energy sources. Still, the idea that serried ranks of giant wind turbines will enable us all to keep on using energy at today’s extravagant rates runs headlong into at least two difficulties.

The first difficulty is intermittency. A wind turbine, obviously enough, produces power only when the wind is blowing, and it’s a safe bet that no matter where you put turbines, the wind won’t always be blowing. That wouldn’t be a problem at all if Americans were used to using electricity when it happens to be available, and doing something else with their time when it’s not, but that’s not the way Americans do things any more. Just now, intermittency isn’t much of a problem, since modern gas-fired power plants can be cycled up and down promptly to respond to any shortage of power from the turbines, but if your plan is to replace the gas-fired plants (and the coal-fired ones, which can’t be cycled up and down so quickly) with wind turbines, you’ve got a problem. You have an even bigger problem if you want to rely on solar as well as wind, since then you’re dependent on two intermittent energy sources, and when they both go down at the same time – as, by Murphy’s law, they inevitably will – you’re left with no power going into the grid at all.

The second difficulty, as discussed in previous posts here, is complexity. Those giant turbines, it bears remembering, are not made out of spare truck alternators, blocks of fir, and other readily accessible and easily managed parts. They are triumphs of modern engineering, which means in practice that they depend on baroque supply chains, high-tech manufacturing processes, and massive investment, not to mention plenty of fossil fuels and, more generally, a society that has plenty of cheap energy to spare for projects on a gargantuan scale. Nor is a giant wind turbine sitting all by itself on a hilltop particularly useful to much of anyone; it gains its economic viability through connection to the electrical grid, which is itself an immense technostructure with its own even more sprawling supply, manufacturing, and investment requirements. If industrial society finds itself unable to maintain any one of the factors that make the grid and the giant turbines possible, then it doesn’t matter how useful they might be; they won’t be around.

Homescale windpower systems suffer from the intermittency issue, but then so does nearly every other option for providing electricity on that scale, and we’ve already discussed at some length the solution to it: get used to using electricity when it’s available, or to storing up modest amounts of it in inexpensive storage batteries and using that supply sparingly. The challenge of complexity, on the other hand, is not something a homescale windpower system has to deal with at all. Even in the absence of salvageable alternators, and there are quite literally hundreds of millions of them lying unused in junkyards across the United States, a generator that will turn rotary motion into direct current is not a challenging project. I built a simple one in elementary school, for example, and although it wasn’t really suited to wind turbine use – most of the structural elements were made from paperclips, with a toy horseshoe magnet to provide the field, and the amount of current it produced was just about enough to get a decent glow out of a very small light bulb – the principle can readily be scaled up.

In the kind of future we can realistically expect, in other words, homescale windpower will almost certainly be a viable technology, while giant wind turbines of the modern sort almost certainly won’t. Now of course it’s a safe bet that the windpower industry as it now exists will keep on building, servicing, and promoting giant wind turbines as long as it’s possible to do so, so the small chance that the giant turbines might actually be viable is covered. What isn’t covered yet is the very large chance that small wind turbines of the sort that can be built and maintained in a basement workshop could provide a real benefit during the difficult decades ahead of us.

In order to respond to that range of possibilities, homescale windpower units need to find their way back into the conversation of our time and, more importantly, up above the rooftops of homes across the modern world. Professionally manufactured wind turbines of the right scale are a good start, and those green wizards in training who have the money and lack the fairly modest technical skills to build their own could do worse than to buy and install one. Still, there’s also a huge role here for the homebuilt turbine, and for those individuals whose willingness to get to work shaping turbine blades and bolting together octet truss towers might, as things unfold, lead to a future career.

Promoters of giant wind turbines, and for that matter of centralized power generation schemes of all kinds, tend to talk quite a bit about economies of scale. In an expanding economy with a stable or growing resource base, that sort of talk often makes sense, though the extent to which those economies of scale are a product of direct and indirect government subsidies to transportation, financing, and large businesses generally is not something economists like to talk about. Still, in a world facing economic contraction, resource depletion, and a loss of complexity potentially capable of rendering a great deal of today’s infrastructure useless or worse, the balance swings the other way. In the face of a future where small, cheap, localized approaches that are sparing in their use of resources, relying on massive, expensive, centralized, resource-intensive power plants of any kind is not an economy but a profligacy of scale, and one that we very probably will not be able to afford for much longer.

Saturday, July 9, 2011

Federal Oversight

This essay discusses issues that don't surprise me but it seems like a salutary reminder that our federal government has taken on powers that did not seem to be intended under the rules of governance we used to take for granted. From the Global Research website:






While the Justice Department is criminally inept, or worse, when it comes to prosecuting corporate thieves who looted, and continue to loot, trillions of dollars as capitalism's economic crisis accelerates, they are extremely adept at waging war on dissent.

Last week, The New York Times disclosed that the FBI "is giving significant new powers to its roughly 14,000 agents, allowing them more leeway to search databases, go through household trash or use surveillance teams to scrutinize the lives of people who have attracted their attention."

Under "constitutional scholar" Barack Obama's regime, the Bureau will revise its "Domestic Investigations and Operations Guide." The "new rules," Charlie Savage writes, will give agents "more latitude" to investigate citizens even when there is no evidence they have exhibited "signs of criminal or terrorist activity."

As the Bill of Rights Defense Committee (BORDC) recently pointed out, "When presented with opportunities to protect constitutional rights, our federal government has consistently failed us, with Congress repeatedly rubber-stamping the executive authority to violate civil liberties long protected by the Constitution."

While true as far it goes, it should be apparent by this late date that no branch of the federal government, certainly not Congress or the Judiciary, has any interest in limiting Executive Branch power to operate lawlessly, in secret, and without any oversight or accountability whatsoever.

Just last week, The New York Times revealed that the Bush White House used the CIA "to get" academic critic Juan Cole, whose Informed Comment blog was highly critical of U.S. imperial adventures in Iraq and Afghanistan.

The former CIA officer and counterterrorism official who blew the whistle and exposed the existence of a Bush White House "enemies list,", Glenn L. Carle, told the Times, "I couldn't believe this was happening. People were accepting it, like you had to be part of the team."

Ironically enough, the journalist who broke that story, James Risen, is himself a target of an Obama administration witchhunt against whistleblowers. Last month, Risen was issued a grand jury subpoena that would force him to reveal the sources of his 2006 book, State of War.

These latest "revisions" will expand the already formidable investigative powers granted the Bureau by former Attorney General Michael B. Mukasey.

Three years ago, The Washington Post informed us that the FBI's new "road map" permits agents "to recruit informants, employ physical surveillance and conduct interviews in which agents disguise their identities" and can pursue "each of those steps without any single fact indicating a person has ties to a terrorist organization."

Accordingly, FBI "assessments" (the precursor to a full-blown investigation) already lowered by the previous administration will, under Obama, be lowered still further in a bid to "keep us safe"--from our constitutional rights.

The Mukasey guidelines, which created the "assessment" fishing license handed agents the power to probe people and organizations "proactively" without a shred of evidence that an individual or group engaged in unlawful activity.

In fact, rather than relying on a reasonable suspicion or allegations that a person is engaged in criminal activity, racial, religious or political profiling based on who one is or on one's views, are the basis for secretive "assessments."

Needless to say, the presumption of innocence, the bedrock of a republican system of governance based on the rule of law, like the right to privacy, becomes one more "quaint" notion in a National Security State. In its infinite wisdom, the Executive Branch has cobbled together an investigative regime that transforms anyone, and everyone, into a suspect; a Kafkaesque system from which there is no hope of escape.

Under Bushist rules, snoops were required to open an inquiry "before they can search for information about a person in a commercial or law enforcement database," the Times reported. In other words, somewhere in the dank, dark bowels of the surveillance bureaucracy a paper trail exists that just might allow you to find out your rights had been trampled.

But our "transparency" regime intends to set the bar even lower. Securocrats will now be allowed to rummage through commercial databases "without making a record about their decision."

The ACLU's Michael German, a former FBI whistleblower, told the Times that "claiming additional authorities to investigate people only further raises the potential for abuse."

Such abuses are already widespread. In 2009 for example, the ACLU pointed out that "Anti-terrorism training materials currently being used by the Department of Defense (DoD) teach its personnel that free expression in the form of public protests should be regarded as 'low level terrorism'."

As I reported in 2009, citing a report by the Electronic Frontier Foundation (EFF), the Bureau's massive Investigative Data Warehouse (IDW), is a data-mining Frankenstein that contains more "searchable records" than the Library of Congress.

EFF researchers discovered that "In addition to storing vast quantities of data, the IDW provides a content management and data mining system that is designed to permit a wide range of FBI personnel (investigative, analytical, administrative, and intelligence) to access and analyze aggregated data from over fifty previously separate datasets included in the warehouse."

Accordingly, "the FBI intends to increase its use of the IDW for 'link analysis' (looking for links between suspects and other people--i.e. the Kevin Bacon game) and to start 'pattern analysis' (defining a 'predictive pattern of behavior' and searching for that pattern in the IDW's datasets before any criminal offence is committed--i.e. pre-crime)."

Once new FBI guidelines are in place, and congressional grifters have little stomach to challenge government snoops as last month's disgraceful "debate" over renewing three repressive provisions of the USA Patriot Act attest, "low-level" inquiries will be all but impossible to track, let alone contest.

Despite a dearth of evidence that dissident groups or religious minorities, e.g., Muslim-Americans have organized violent attacks in the heimat, the new guidelines will permit the unlimited deployment of "surveillance squads" that "surreptitiously follow targets."

In keeping with the Bureau's long-standing history of employing paid informants and agents provocateurs such as Brandon Darby and a host of others, to infiltrate and disrupt organizations and foment violence, rules governing "'undisclosed participation' in an organization by an F.B.I. agent or informant" will also be loosened.

The Times reports that the revised manual "clarifies a description of what qualifies as a "sensitive investigative matter"--investigations, at any level, that require greater oversight from supervisors because they involve public officials, members of the news media or academic scholars."

According to the Times, the manual "clarifies the definition of who qualifies for extra protection as a legitimate member of the news media in the Internet era: prominent bloggers would count, but not people who have low-profile blogs."

In other words, if you don't have the deep pockets of a corporate media organization to defend you from a government attack, you're low-hanging fruit and fair game, which of course, makes a mockery of guarantees provided by the First Amendment.

As I reported last month, with requests for "National Security Letters" and other opaque administrative tools on the rise, the Obama administration has greatly expanded already-repressive spy programs put in place by the previous government.

Will data extracted by the Bureau's Investigative Data Warehouse or its new Data Integration and Visualization System retain a wealth of private information gleaned from commercial and government databases on politically "suspect" individuals for future reference? Without a paper trail linking a person to a specific inquiry you'd have no way of knowing.

Even should an individual file a Freedom of Information Act request demanding the government turn over information and records pertaining to suspected wrongdoing by federal agents, as Austin anarchist Scott Crow did, since the FBI will not retain a record of preliminary inquiries, FOIA will be hollowed-out and become, yet another, futile and meaningless exercise.

And with the FBI relying on secret legal memos issued by the White House Office of Legal Counsel justifying everything from unchecked access to internet and telephone records to the deployment of government-sanctioned malware on private computers during "national security" investigations, political and privacy rights are slowly being strangled.




Tom Burghardt is a researcher and activist based in the San Francisco Bay Area. In addition to publishing in Covert Action Quarterly and Global Research, an independent research and media group of writers, scholars, journalists and activists based in Montreal, he is a Contributing Editor with Cyrano's Journal Today.

Thursday, July 7, 2011

A Santa Cruz Graduation

This essay by Bill Blum at http://www.truthdig.com/ is all about a subject of which I have no personal knowledge, being that I am child-free, but a subject that bothers me nonetheless. As our retirement and retirement benefits are being taken away from us, I ask myself, what will the next generation do for jobs? Not much says the author:

More than 1.7 million students graduated from four-year colleges across the country over the past two months. Along with their parents, all have a story about what they took from their commencement ceremonies, and all have a story about what they expect once they enter our sorry excuse for a job market.

My parental story unfolded as the morning fog rolled away and sunlight streamed across the blue-gray expanse of Monterey Bay. I sat down for breakfast with my wife, oldest son Max and youngest offspring Sam, who would be donning the cap and gown that afternoon at the University of California Santa Cruz.

Our waiter, a young man about Sam’s age, attentively refilled our coffee cups and carefully recorded our orders. I breached the normal customer-server barrier and asked if he, too, was connected with the University of California. “I graduated last year,” he answered. “Philosophy major. Berkeley.” He gave us a knowing smile, wished us a great day and moved on to another table. I opened my wallet and left him an oversized tip. Despite our having taking out a personal loan and having scrimped on everything from cable TV to wintertime heating to help finance Sam’s education, this was no time to get frugal.

For a moment I flashed back to my own undergraduate career and Sartre’s parable of the cafe waiter who had invested so much of his essence in being a waiter that he had lost his authenticity and the capacity to transcend the circumstances of his job. And then it hit me just how much times had changed since I was a fresh face coming out of university. There was nothing inauthentic about our earnest young server. In fact, he was fortunate to have a job, much like Sam’s friend Joe, who had left Santa Cruz last year with honors in English literature only to find himself pouring lattes for customers at the Coffee Bean back home.

According to a study conducted by Northeastern University labor economist Andrew Sum, a mere 74.4 percent of college graduates under the age of 25 had jobs from October 2010 to March 2011. Of this same demographic, only 45.9 percent held positions that required a college degree, down from 80 percent a decade ago.


The country my generation is passing on to Sam and his peers is a mean-spirited place of global warming, class warfare and diminishing expectations, where the top 1 percent of households own nearly 35 percent of all privately held wealth and the “bottom” 80 percent lays claim to less than half that. It’s a place where that same top 1 percent receives 23 percent of the nation’s income, three-quarters of which stems from thinly taxed capital gains, and giant corporations such as General Electric and Exxon receive billions in federal tax subsidies. It’s a place where unions are disappearing and the public sector is dying, where good-paying entry-level jobs with health insurance and defined-benefit pensions are being replaced by unpaid internships, which nearly all colleges advertise at their career centers and on their websites. It’s a place where Republicans, emboldened by the tea party, clamor for ever more spending cuts, and Democrats, bereft of leadership and resolve, object only to the degree of retrenchment.

It is a place where it would be easy for students to fall into cynicism, despair and anger at their elders. But, to my surprise, there was little of that on display at the commencement. Maybe it was just Santa Cruz—the home to radical academics like the late Norman O. Brown, Angela Davis and G. William Domhoff (the author of the 1967 classic “Who Rules America?” from whose updated online work some of the depressing economic statistics cited above are taken). I found there a sense of continuity, a passing of the baton of social commitment from the old to the young.

Feminist-studies professor Bettina Aptheker delivered the commencement address. Exiles from the late ’60s and the ’70s like me remember Aptheker not only as an intellectual in her own right but as the daughter of Marxist historian Herbert Aptheker, a member of the American Communist Party and, though Jewish and white, a pioneer in the study of black history. Bettina Aptheker took the assembled throng on a 15-minute tour of the world’s major ills, from famine and rape in Darfur to climate change and corporate greed. She congratulated the science majors for their choice of career paths most likely to lead to immediate financial security and reminded the philosophy and history scholars that they had received an education enabling them to think critically and creatively. But most of all she exhorted everyone to understand that while none of us alone can repair the world, together we have a chance.

By the time she had finished, the coastal clouds had returned and the wind on the grassy field where the commencement took place had picked up. In a scene replayed at colleges across the nation, graduation caps were flung into the air, backs were slapped, fists were pumped, hugs were shared, dinner plans confirmed.

Still for me it was, and remains, hard to imagine exactly how the new crop of grads could come together in a divided nation for the common good, as Aptheker had urged, especially in view of their parents’ abject failures and the obstacles posed by the destructive top 1 percent whom Domhoff monitors. As I trundled off to the rental car, I reminded myself that Sam is more fortunate than many other young people in this crumbling nation: A family of two on welfare in California is expected to survive starting this July on a monthly stipend of only $516. In any case, there will plenty of time to answer the important questions this summer when Sam, like thousands of others among this country’s best and brightest, moves back in with his parents, struggles to repay his student loans (the latest figures show a national default rate of 8.9 percent, up nearly two ticks since 2009) and begins to chart a most uncertain future.