Sunday, July 29, 2012

Solar Not Oil

From the blog Informed Consent this hopeful essay suggesting solar energy could be the way we maintain our lifestyle of middle class comfort. I am not convinced as we seem to forget how much oil we need to produce the infrastructure to create electrons from solar energy. It takes energy and oil to produce solar panels. However in the interests of not being a total wet blanket...

Proponents of natural gas fracturing and oil drilling are delirious with joy over the ability to recover shale gas, which has brought down world gas prices and made the US a major player again. Likewise, North Dakota wells are set to produce up to 800,000 barrels of oil a day soon. (Although, since the world uses roughly 89 million barrels a day, and the US uses a fifth of that, and demand in Asia will likely spike in coming years, the ND addition is just not that much).

Fracking is dangerous to ground water purity, and both oil and gas, as hydrocarbons, contribute to global climate change, which is a dire threat to human well-being in coming decades and centuries.

But oil and gas triumphalists have another think coming. It is that the cost of generating electricity by wind and solar is falling rapidly. However hard they try to suppress government funding and tax breaks for renewables, Big Oil and Big Gas are doomed to lose, and in only about 4 years. At that point where it is just cheaper to generate electricity with renewables, no one is going to invest in hydrocarbons. Even with a price advantage it will take decades for renewables to displace hydrocarbons (the electricity grid, transportation, batteries, all have to be redone). But it isn’t a matter of “if.”It is a matter of when. All the anti-climate-warming propaganda and pro-hydrocarbon advertising is intended to slow this process; even Big Oil and Big Gas are not so stupid as not to see the writing on the wall. But if their delaying tactics can make them billions in the meantime, they have every reason to go for it, especially if they are moral cretins who don’t care about the health of the planet.

Here is some of the writing on the wall in today’s news:

1. Scientists have found that solar photovoltaic cells could be producing electricity at less 50 cents a watt by 2016, four years earlier than other projections. At that point, it would be crazy to use hydrocarbons to generate electricity. As for those solar panel companies that keep going under after getting Federal support? Some go under, others thrive. The industry is changing with breakneck velocity, leaving some competitors in the dust. The same people that wax lyrical about how the market creates efficiencies by creating winners and losers seem to just about have a fainting spell at the idea that a solar company failed. The industry is highly dynamic and has the momentum of rapid technological breakthroughs and rapidly falling prices.

2. Germany is on the verge of producing more solar energy than wind energy, the first major industrialized country to reach that milestone. Germany wants to produce 35 percent of its electricity from renewables by 2020, only 8 years from now.

3. Researchers at UCLA have created a solar-power-generating window. If all those glass box skyscrapers in southern California could be put to work generating electricity, it would probably power the whole state.

4. The British government has given the go-ahead for two huge offshore wind farms off the coast of Norfolk (the eastern coast). Together, they will have the capacity to produce over a gigawatt of power (roughly one nuclear power plant’s worth). Britain is the leader in offshore wind energy generation.

5. With Japan’s nuclear energy plants being phased out because of public fury over the Fukushima disaster, the country is trying to move quickly to renewables. It is placing a big bet on offshore floating wind platforms. Japan has been in the doldrums in many ways since the bubble burst in the 1990s. But its scientists and engineers are among the best in the world, and I wonder whether research on wind and solar energy might have the potential to revivify not only the economy but also the national spirit.

6. Scientists have concluded that it is perfectly practical to provide 2/3s of US electricity from solar over the next decades. The main problem is not electricity generation or having enough land to put the cells on, it is the poor electrical grid of the US, which will have to be redone.

7. Algeria wants to go solar, aiming for 650 megawatts of solar energy by 2015 and a massive 22 gigawatts by 2030. The Desertec Foundation has big projects in Egypt and Morocco, and Algeria, an oil producer, has decided to join in. Theoretically, a small portion of the Saharan desert could power the entire world. Desertec plans to turn North Africa into a clean electricity-producing zone that could meet nearly a fifth of Europe’s energy needs. Algeria is eager to turn to renewables because its rapidly growing population is using more an more of its petroleum production, which is declining.

8. Some 750,000 Australian homes have solar panels on the roof, heading toward 10% of the 8 million households in the sun-drenched country. The present rooftop panels generate about two nuclear power plants worth of electricity.

9. China is going to make a major push for solar energy after 2015, aiming for a mind-bogging 50 gigawatts worth by 2020.

10. The Egyptian gas pipeline through the Sinai to Jordan and Israel has been blown up 15 times since the Jan. 25 revolution. Egyptians are angry that the government of deposed dictator Hosni Mubarak had sold the gas at substantially below-market prices to Israel. Because of the interruptions, Jordan’s government is more eager than ever to move to solar and wind power. A sign of increased international interest in the nascent Jordanian renewables sector is that a Chinese company wants to invest $200 million in a solar project. Jordan has a goal of getting 10% of its electricity from renewables by 2020, though that may be an ambitious timeline. If its government were smart, it would go all out and double that goal, and try to meet it.

Friday, July 27, 2012

Gun Violence

This editorial from Michael Bloomberg Mayor of New York City in the Huffington Post considering ways to curb gun crimes in the US, home to the rabid national Rifle Association. After a crime like that in the Colorado theater it is too easy to call fro banning guns, a political and social impossibility, yet it is possible to reflect on the possibility be it ever so slender of more rational gun laws.

It has been a week since the massacre in Aurora, Colorado. The two major U.S. presidential candidates spent the past week avoiding the subject of whether anything should be done to prevent such shootings from recurring.

Mitt Romney, the presumptive Republican nominee, declared Wednesday that “changing the heart of the American people” is our best hope to stop the carnage. President Barack Obama offered little more than support for his past positions, such as banning assault weapons. Very likely, both candidates will spend the next few months avoiding the issue altogether.

The wise men of Washington tell us that candidates are silent on guns because to speak out is to incur the wrath of the National Rifle Association. But polls consistently show that gun owners, including NRA members, overwhelmingly support the common sense measures that mayors across the country have been trying to get Washington to pass for years.

More than 700 mayors, from both political parties, have joined together to stop the flow of illegal guns into our communities. Mayors know all too well that the debate on the Second Amendment is over. The Supreme Court recognized that the Second Amendment grants citizens the right to bear arms, subject to reasonable restrictions. The question is: What should those restrictions look like?

Mayors and the NRA strongly agree that the federal government should enforce the laws already on the books. Federal law prohibits all felons -- and those with a history of mental illness or drug abuse -- from possessing guns.

The NRA believes -- rightly -- that enforcing the law means prosecuting criminals to the fullest extent. In New York state, we have increased the mandatory minimum prison sentence for illegal possession of a loaded gun to 3 1/2 years, one of the toughest penalties in the country.

But whether fighting illegal guns or drugs, we should seek not merely to make arrests, but to prevent the crime from occurring in the first place.

That is why the federal government requires licensed firearm dealers to conduct background checks to determine whether an individual is eligible to purchase a gun.

Nonlicensed sellers, however, are not required to perform federal background checks, and as much as 40 percent of gun sales slip through this loophole. Criminals and the deranged can buy guns simply by logging on to the Internet or visiting a gun show -- and they do, every day. Stopping them requires background checks for every gun sale, a change strongly supported by major law enforcement organizations, as well as gun owners and NRA members. But not the NRA’s leadership.

The NRA is a $200 million-plus-a-year lobbying juggernaut, with much of its funding coming from gun manufacturers and merchandising. More than anything, the NRA is a marketing organization, and its flagship product is fear. Gun sales jumped after Obama was elected president, based on the absurd -- and now demonstrably false -- fear that he would seek to ban guns.

There is one particular fear the NRA manufactures with great success: fear of electoral defeat. Romney has walked away from the assault-weapons ban he once supported, and in nearly four years, Obama has offered no legislation to rein in illegal guns. In Congress, the NRA threatens lawmakers who fail to do its ideological bidding, although its record in defeating candidates is much more myth than reality.

What can be done?

One of the U.S. Senate’s most pro-gun members has paradoxically shown how the battle might begin. Republican Senator Tom Coburn of Oklahoma, also the chamber’s most sincere fiscal conservative, has made it his mission to diminish the influence of another ideological group that has exercised unwarranted sway over public policy: the anti-tax absolutists led by Grover Norquist and Americans for Tax Reform.

To confront Norquist, Coburn identified an indefensible tax -- the ethanol subsidy -- isolated it and forced a vote on it. His colleagues, many of whom had signed Norquist’s pledge never to raise taxes, were forced to choose between opposing what Coburn decried as an obvious “special interest giveaway” or looking like spineless shills for Norquist. By heightening attention on the vote, the tactic worked. The $5.4 billion ethanol subsidy was voted down.

The Coburn approach could be applied to guns. Elected officials who profess to be tough on crime but who also oppose tougher measures to stop illegal guns can’t be in two places at once -- particularly when many law enforcement organizations support basic gun measures that simply don’t exist today. In the same way Coburn pointed out the ethanol-corporate welfare contradiction, a pro-gun senator can point out the obvious: It’s impossible to support police officers and law enforcement agencies and also oppose giving them the tools they need to keep guns out of the hands of dangerous people.

Some Americans view smarter, tougher gun measures as a hopeless crusade. But political environments change, especially when strong leaders build coalitions and carve new paths through seemingly settled territory. There are conservative, pro-gun rights members of Congress who understand that more can be done to keep guns away from dangerous people.

We know the special interests’ grip can be shaken; the most egregious gaps in gun regulation can be filled. The Coburn approach is proven. Who has the guts to follow it?

Tuesday, July 24, 2012

Alexander Cockburn

Alexander Cockburn, born in Britain in 1941 was 71 years old when he died last Friday. By Matthew Rothschild, brilliant editor of The Progressive Magazine, this obituary of one of my favorite writers:

The great leftwing polemicist Alexander Cockburn died Friday night after a two-year bout with cancer.

His voice was one of the most eloquent, his pen among the most piercing, of any leftwing writer of the last 35 years.

He wrote first for the Village Voice and then The Nation, a ride that was not without turbulence. He didn’t mind the turbulence; he liked to create it, especially on issues of principle.

He also wrote an op-ed column for several years in the Wall Street Journal, pre-Murdoch.

And for the past 16 years, he was the co-editor with Jeffrey St. Clair of the newsletter Counterpunch.

“He taught at least two generations how to think, how to look at the world, how to live a life of resistance,” St. Clair wrote in a loving farewell at

Cockburn did nine books with St. Clair, including “Whiteout: The CIA, Drugs, and the Press,” “Imperial Crusades,” “Dime’s Worth of Difference,” and “End Times: Death of the Fourth Estate.”

And we at The Progressive magazine were fortunate enough to publish him several times.

I first started reading the British-born Cockburn in 1980. Until then, I didn’t know that it was kosher to write with such verve and venom. For a young, aspiring political writer, it was a real rabbit trick. And I wanted to learn how.

Throughout the 1980s, Cockburn, more than any other writer in America, exposed the blatant lies and murderous frauds that the Reagan Administration was issuing. He highlighted Reagan’s shameful support for the death squads in El Salvador and his illegal war against the Sandinista government of Nicaragua.

Cockburn had no use for Democratic Presidents, either. He criticized Jimmy Carter for his policies in El Salvador and East Timor.

And he excoriated Bill Clinton for destroying welfare and for pushing through his punitive crime bill.

“If ever there was a false populist, it was Clinton,” he said in a talk in Chicago in 1998.

Cockburn also saw through Obama before almost anyone else.

“I’ve never heard a politician so desperate not to offend conventional elite opinion while pretending to be fearless and forthright,” he wrote in December 2006 at counterpunch.

He said Obama sent an early “signal to the corporate powers and Party donors that here was no boat-rocker from Chicago, but a safe pair of hands and an obedient pair of heels.”

I didn’t always agree with him—he had his head in the sand on global warming—but I admired his style.

Like many progressives, I’ll miss Alexander Cockburn’s clarity, his fearlessness, his disdain for the Dems, his indictment of the corporate media, and his deft phrase-turning.

He also had a left-libertarian streak that was appealing. He seemed to enjoy life. I met him a couple of times, and he was terrific company: witty, perceptive, and a wonderful storyteller, at ease talking about politics, literature, sex.

If he didn’t take himself too seriously, he took his job seriously: to strip the clothes off of emperors everywhere.

And progressives around the country—and around the world—are in his debt for that.

Saturday, July 14, 2012

J H Kunstler on Hope

A fluffy Rolling Stone interview with J H Kunstler whose weekly blog I enjoy, after a fashion.

James Howard Kunstler is a novelist and critic who made his name trashing suburbia. The Geography of Nowhere, published in 1994, is a wildly entertaining rant against strip malls, fast food, and America’s "happy motoring utopia." A decade later, he followed up with The Long Emergency, in which he argued persuasively that the decline of cheap oil will bring an end to civilized life as we know it.

In his latest book, Too Much Magic: Wishful Thinking, Technology, and the Fate of the Nation, Kunstler zeroes in on the central narrative of our time: that we are a highly evolved and technologically sophisticated civilization that will use our ingenuity and engineering expertise to come up with a solution to all the problems we face, from the end of cheap oil to the arrival of extreme climate change. In other words, we're not going to collapse into the dust bin of history like the Mayans or the Easter Islanders, because we have iPads and antibiotics.

In Kunstler's view, this is a childish fantasy. "I’m serenely convinced that we are heading into what will amount to a 'time out' from technological progress as we know it," Kunstler, who is 63, told me from his home in upstate New York. "A lot of these intoxications and deliriums and beliefs about technology are going to run into a wall of serious disappointment." In short, Kunstler believes we are living on borrowed time – our banking and political systems are corrupt, our fossil fuel reserves are dwindling, the seas are rising – but we’re still partying like it's 1959. "Reality itself is very uncomfortable with fraud and untruths. Sooner or later, accounts really do have to be settled."

Why Is your book called Too Much Magic?
It's part of the ongoing story of what's turning out to be a crisis of civilization. I tried to describe the first part of the crisis in The Long Emergency. Since that time, it has become self-evident that we have a range of very difficult problems facing us, and we are taking refuge in wishful thinking, telling ourselves a story that we can continue to live the way that we’re living now. We desperately want reassurance that we can keep this hyper-complex engine of an advanced American Dream economy going – despite all the signs that are telling us that we probably have to make new and different arrangements for everyday life.

What, specifically, are those problems?
Peak oil and the exhaustion of material resources, climate change, the failure of the banking system, and political turmoil.

That’s quite a list! In The Long Emergency, you argued that the end of cheap oil basically meant the end of modern life as we know it. And yet, paradoxically, in the last few years there has been a boom in unconventional oil and gas. How has that changed your views about the consequences of peak oil?
There is a stupendous volume of propaganda, and wishful thinking, that we can replace cheap oil from the Middle East with unconventional oil and unconventional gas – namely shale gas and shale oil. I think the whole game really founders on money issues and capital issues, and this is very poorly understood by the public – including by people who ought to know better, like the mainstream media. We’ve been seeing headlines lately suggesting that America will soon be energy independent. Or that somehow America has magically become a net oil exporter. This is nonsense. The bottom line is, once you are trying to replace a shortage of easy-to-get conventional oil with unconventional, expensive oil, you’re stuck in a trap. There is a paradox there: you really need a cheap oil economy to support an expensive oil economy. Without that underlying cheap oil economy, we’re probably not going to get much of that expensive oil that’s in difficult to get places, or that requires some extreme and complex production method for getting it out of the ground.

People in the oil and gas industry argue that technological innovations like horizontal drilling are opening up new reserves all the time.
We’re not paying attention to the what is turning out to be the biggest shortage of all, which is the shortage of capital, based on the impairments of capital that are now underway in our disabled banking system. What this all boils down to is that the money is not going to be there to do the things we’d hoped we’d be able to do. There is only so far that wishing, and a strong will, will get you. Ultimately, you do need to have some kind of accumulated wealth to accomplish these things, and that’s what capital is. For several hundred years, we’ve had a pretty good system of accumulating it, accounting for it, storing it, and allocating it for useful purposes. That’s what capitalism is about. Capitalism – contrary to a lot of bullshit – is not a belief system. It is not a religion. It is simply a set of laws governing the behavior of surplus wealth. What we have done in the last 25 years is introduce so many layers of untruth and accounting fraud that it’s no longer possible for money to truly represent the reality of accumulated wealth. These lies are so deeply impairing the banking system, and all of the mechanisms that go with it, that we’re going to end up in a crisis of capital, even before we end up in a crisis of energy.

You write about visiting the Google campus in Silicon Valley, and how nobody there understood the difference between energy and technology.
They are not substitutable. If you run out of energy, you can’t plug in technology. In this extremely delusional society right now, one of the reigning delusions is that if you run out of energy, you can just turn to technology. We completely don’t understand that. And the tragic thing is, the people who ought to understand it don’t get it. And if the people at Google don’t know the difference between energy and technology – well, then who does?

Steve Jobs famously argued that, at it’s best, technology is a tool to empower individuals. I get the feeling you’d argue that technology has made us stupider – is that right?
Well – yeah! When more people are paying attention to Khloe Kardashian’s vagina than to the great issues of whether we can carry on our civilization in a dangerous time, I’d say that is a pretty misguided, distracted culture. Not that I have anything against Khloe Kardashian’s vagina.

Aren’t you ignoring the many upsides to technological progress, from medicine to the political power of Twitter?
I think it’s very deceptive. First of all, technology never stops biting us in the ass. It never stops demonstrating unintended consequences. My favorite example is, we spent 30 years computerizing the phone system in order to enhance communication – and now the net result is, it’s impossible to get a live human being on the phone anywhere in America. Another case in point is what I’m going through right now. I have a wonderful, innovative hip implant that was designed about 10 years ago. I got one of the early models, which is now giving me a case of cobalt poisoning, and forcing me to have another operation to remove it. This was introduced as "better technology than was there before."

What’s going to happen to the billions of iPads that are drifting around now – are we going to use them as roofing tiles?
People always ask me about the Internet, saying, "Isn’t that where all the activity will migrate to?" That seems like an absurd supposition to me, largely because there is no question we’re going to have trouble with the electric grid. It is already decrepit and in a lot of trouble. If the Internet exists at all in the future, it will be on a much-reduced scale from what we enjoy today, and all the activities of everyday life are not going to reside on it. It’s just another moment of intoxication. We simply can’t imagine an end to the kind of technological progress we’ve enjoyed for over 100 years. We can’t imagine any other reality.

You write a lot about the failure of political leadership. In particular, you go after President Obama for not appointing tough regulators to oversee Wall Street.
Obama has turned out to be fairly clueless. He seems like a decent chap (and by the way, I voted for him). I think that Obama’s failure to reestablish the rule of law in money matters is the most damaging thing that he’s done – and perhaps the most damaging thing that has happened in American politics in my lifetime. Because once the rule of law is absent in money matters, then anything really goes in politics. Any untruth is admissible. Any distortion of reality is OK. It is a profoundly dangerous place for a culture to go. And there is no sign, as we enter the election of 2012, that he has any plans to rectify that. We’re in a situation now where the rule of law is simply AWOL in American economic matters.

Do you have a solution to our troubles?
I don’t like talking about "solutions." I prefer talking about intelligent responses. My beef with the whole "solutions" thing comes from my travels around the country, talking on college campuses and such; there is this whole clamor for "solutions." The idea is, if you’re not optimistic enough, you should shut up. But there are subtexts to all these things. And the subtext to that particular meme is, "Give us the solutions that will allow us to keep running our stuff the same way we’re running it now, except by other means." They don’t really want to hear about other arrangements. They want to keep on running all the cars, only differently. You know, like hybrid electric cars, or electric cars, or cars that run on algae secretions. But they don’t get that we’re done with that way of life. The mandates of reality are telling us something very different. They are telling us we have to inhabit the landscape and move around in it very differently in the future.

You end the book talking about the importance of facing future with hope. What gives you hope?

That reality will compel us to change our behavior, whether we want to or not. We’ll probably be dragged kicking and screaming into a new arrangement of everyday life. We will probably adjust to it once we get there. But there are liable to be a lot of losses along the way. I think the key to getting through this is to understand that that our main political task for the next few decades will be to manage contraction in a way that minimizes human suffering. All the magical thinking that is going on now is just an attempt to evade that mission.

For more about James Howard Kunstler, visit his website:

Thursday, July 12, 2012

Dark Economic Future

From the ironically named American Dream website this collection of dire predictions:
Global leaders have tried just about everything that they can think of, but the coming global financial catastrophe continues to march steadily toward us. We have seen "stimulus packages", quantitative easing, bond buying, interest rate cuts, emergency economic summits, bailout packages for banks, bailout packages for entire nations, "Operation Twist", unprecedented government intervention in business and massive amounts of new government debt and yet nothing seems to revive the global economy. In fact, it looks like we are rapidly heading into the second dip of a "double dip recession". Unfortunately, many believe that this next dip will be more like a full-blown depression. All over the world, top economic experts are warning that we are facing an unprecedented crisis of debt and insolvency that will result in a global financial catastrophe. The eurozone is drowning in debt, the U.S. government is drowning in debt and major banks all over the globe are drowning in debt. Global authorities have been trying to patch the system together and keep it going, but the incredible damage that all of this debt has done is now becoming apparent to everyone. The global debt bubble that has fueled prosperity in the western world for the last several decades is getting ready to burst, and when that happens the chaos that will result will be absolutely horrifying.

The following are 19 warnings about a coming global financial catastrophe....

1. "Dr. Doom" Nouriel Roubini says that the rapidly approaching financial crisis will be even worse than 2008....

"Worse because like 2008 you will have an economic and financial crisis but unlike 2008, you are running out of policy bullets. In 2008, you could cut rates; do QE1, QE2; you could do fiscal stimulus; you could backstop/ringfence/guarantee banks and everybody else. Today, more QEs are becoming less and less effective because the problems are of solvency not liquidity. Fiscal deficits are already so large and you cannot bail out the banks because 1) there is a political opposition to it; and 2) governments are near-insolvent - they cannot bailout themselves let alone their banks. The problem is that we are running out of policy rabbits to pull out of the hat!"
2. John Embry....

"This situation is unprecedented. The world has never, ever been in a condition like this. As a result, anyone that is complacent here and says, ‘This is just business as usual,’ they are dead wrong and will be shocked at the chaos that is heading our way."
3. Jim Rogers....

"Just because now you have a way to get them (the banks) to borrow even more money, this is not solving the problem, this is making the problem worse"
4. Prominent Spanish politician Felipe Gonzalez....

"We’re in a situation of total emergency, the worst crisis we have ever lived through"
5. Leader of the UK Independence Party Nigel Farage....

You know, this deal makes things worse not better. A hundred billion [euro] is put up for the Spanish banking system, and 20 per cent of that money has to come from Italy. And under the deal the Italians have to lend to the Spanish banks at 3 per cent but to get that money they have to borrow on the markets at 7 per cent. It‘s genius isn’t it. It really is brilliant.

So what we are doing with this package is we are actually driving countries like Italy towards needing to be bailed out themselves.

In addition to that, we put a further 10 per cent on Spanish national debt and I tell you, any banking analyst will tell you, 100 billion does not solve the Spanish banking problem, it would need to be more like 400 billion.

And with Greece teetering on the edge of Euro withdrawal, the real elephant in the room is that once Greece leaves, the ECB, the European Central Bank is bust. It’s gone.

It has 444 billion euros worth of exposure to the bailed-out countries and to rectify that you’ll need to have a cash call from Ireland, Spain, Portugal, Greece and Italy. You couldn’t make it up could you!
6. Peter Praet, chief economist at the European Central Bank....

"The eurozone crisis is now much more profound and fundamental than at the time of Lehman"
7. Graham Summers....

Angela Merkel is up for re-election next year. There is no way on earth she'll opt to let Germany get dragged down by the EU. She's even said she will not allow Eurobonds for "as long as [she] lives."

This is not empty rhetoric. This is fact. Germany has expressed its intentions dozens of times in the last month: NO Eurobonds and NO guarantee of EU banking deposits.

The reasons for this are simple: EITHER option renders Germany insolvent. It's already teetering on insolvency to begin with. But to allow Eurobonds or some kind of guarantee of the EU banking system to occur on top of the money Germany has already spent propping up the EU will take Germany down.

The German economy is already slowing. Most Germans are fed up with the Euro. Merkel would rather die than let her country become like Greece (which the creation of Eurobonds or EU deposit guarantees would most assuredly result in).

So Germany is tapped out as well. This leaves... NOBODY.

Again, Europe is out of money. End of story. This is the truth and investing based on the idea of some magical bailout occurring is like investing on Hank Paulson's Bazooka policy for Fannie and Freddie (three months later the markets imploded).
8. Peter Schiff....

"I think we’re still in a depression. I think it’s going to be with us for years and years. It could be five or ten years; it could be longer, depending on how long it takes us to recognize our mistakes so that we can begin to reverse them"
9. New York Times columnist Paul Krugman....

"There are a lot of ugly forces being unleashed in our societies on both sides of the Atlantic because our economic policy has been such a dismal failure, because we are refusing to listen to the lessons of history. We may look back at this thirty years from now and say, ‘That is when it all fell apart.’ And by all, I don’t just mean the economy."10. IMF Managing Director Christine Lagarde....

"In the last few months, the global outlook has been more worrying for Europe, the United States and large emerging markets"
11. Andrew Kenningham, senior global economist at Capital Economics....

"With euro break-up risk likely to rise in the second half of the year and monetary policy looking increasingly impotent, things could get much worse before they get better."
12. Zero Hedge....

"We now have 80% of the world posting a contraction in industrial activity."
13. Lakshman Achuthan, the co-founder of the Economic Cycle Research Institute....

"What we said back in December was that we thought the most likely start date for the recession would be in Q1, and if not then, by the middle of 2012. I'm here to reaffirm that.

In other words, I think we're in recession already. As I said back there, it's very rare that you know you're going into recession when you're going into recession. It often takes some big hit on the top of the head. In the last recession it took Lehman to wake people up. In the recession before it took 9/11.

When you look at the data today, you see industrial production is off of its April high. Manufacturing and trade sales – much broader than retail sales – is off of its December high.

Real personal income growth, which doesn't always go negative during a recession, has been negative for several months."
14. Priya Misra, head of U.S. rates strategy at Bank of America Merrill Lynch....

"The global economy is in the midst of a synchronized slowdown, as reinforced by the recent spate of weak economic data"
15. Chris Williamson, the chief economist at Markit....

"Companies are clearly preparing for worse to come, cutting back on both staff numbers and stocks of raw materials at the fastest rates for two-and-a-half years"
16. Howard Archer, chief European economist at IHS Global Insight....

"With the eurozone likely having suffered appreciable GDP contraction in the second quarter and in grave danger of contracting again in the third, and with eurozone business confidence generally low and fragile, the likelihood is that the eurozone unemployment rate will move significantly higher over the coming months"
17. Karl Denninger....

If we keep deficit spending we are simply debasing the purchasing power of the common man in a puerile attempt to pacify the people and avoid holding the financiers who were responsible for this debacle, including Bernanke, Greenspan, Paulson and Geithner along with both Obama and George W Bush to account. This attempt is mathematically doomed to fail as median family income has not moved which means that we're shifting an ever-greater part of the population to social programs like food stamps and other handouts while the taxpaying productive population continues to shrink.

This is exactly how Greece and Spain went down the bowl and we're right behind them unless we stop this crap right now.

We cannot "bend the curve" or look toward the "intermediate term"; that was exactly the siren song in Europe and it has led to catastrophe as "tomorrow" never comes! The "intermediate term" is usually defined as three to five years out -- we heard of the "intermediate term" in 2008 but now it's 2012 and none of the retractions in that spending have occurred -- the claim that they would be undertaken was a lie.

We must stop the stupid right now!

Arithmetic is a bitch. It's politically agnostic and cold-hearted. Exponential growth, as I have repeatedly pointed out, is utterly unsustainable over the long term. It doesn't matter if you want these sorts of schemes to work or not; the longer you continue to pretend that there is some path forward that achieves these goals the worse the outcome is when you discover that you're wrong.
18. LEAP/E2020....

"LEAP/E2020 has never seen the chronological convergence of such a series of explosive and so fundamental factors (economy, finances, geopolitical…) since 2006, the start of its work on the global systemic crisis. Logically, in our modest attempt to regularly publish a “crisis weather forecast”, we must therefore give our readers a “Red Alert” because the upcoming events which are readying themselves to shake the world system next September/ October belong to this category."
19. Steve Quayle's anonymous international banking source....

"The Bond market is finished, We all knew that there is a bubble in the bond market, This is the coup de grace that will not pop the bubble, but make it explode with the force of a thousand suns. America will be broke and barren in a blink of an eye! These are two events that I have been warning about are ones that will end your life on this planet as you know it. Your cash will be worthless, your country at a standstill, No money, No food, no essential services, AND WHEN IT ALL STOPS..... YOU STOP."

Tuesday, July 10, 2012

Not A Level Playing Field

The Great Capitalist Heist: How Paris Hilton’s Dogs Ended Up Better Off Than You

By Gerald Friedman, who teaches economics at the University of Massachusetts, Amherst. He is the author, most recently, of “Reigniting the Labor Movement” (Routledge, 2007). Edited by Lynn Parramore and produced in partnership with author Douglas Smith and Econ4 on Alternet.

Summer 2009. Unemployment is soaring. Across America, millions of terrified people are facing foreclosure and getting kicked to the curb. Meanwhile in sunny California, the hotel-heiress Paris Hilton is investing $350,000 of her $100 million fortune in a two-story house for her dogs. A Pepto Bismol-colored replica of Paris’ own Beverly Hills home, the backyard doghouse provides her precious pooches with two floors of luxury living, complete with abundant closet space and central air.

By the standards of America’s rich these days, Paris’ dogs are roughing it. In a 2006 article, Vanity Fair’s Nina Munk described the luxe residences of America’s new financial elite. Compared with the 2,405 square feet of the average new American home, the abodes of Greenwich Connecticut hedge-fund managers clock in at 15,000 square feet, about the size of a typical industrial warehouse. Many come with pool houses of over 3,000 square feet.

Steven Cohen of SAC Capital is a typical product of the New Gilded Age. He paid $14.8 million for his Greenwich home, which he stuffed with a personal art collection that boasts Van Gogh's Peasant Woman Against a Background of Wheat (priced at $100 million); Gauguin's Bathers ($50 million); a Jackson Pollock drip painting (also $50 million); and Andy Warhol's Superman ($75 million). Not satisfied, Cohen spent millions renovating and expanding, adding a massage room, exercise and media rooms, a full-size indoor basketball court, an enclosed swimming pool, a hairdressing salon, and a 6,734-square-foot ice-skating rink. The rink, of course, needs a Zamboni ice-resurfacer which Cohen houses in a 720-square-foot shingle cottage. Munk quotes a visitor to the estate who assured her, “You'd be happy to live in the Zamboni house.”

So would some of the over 650,000 Americans sleeping in shelters or under highway overpasses.

By the time it was finished, Cohen's house had swelled to 32,000 square feet, the size of the Taj Mahal. Even at Taj prices, cost mattered little to a man whose net worth is estimated by the Wall Street Journal at $8 billion — with an income in 2010 of over $1 billion. Cohen’s payday is impressive, but by no means unique. In 2005, the 25 hedge-fund managers averaged $363 million. In cash. Paul Krugman observes that these 25 were paid three times as much as New York City’s 80,000 public school teachers combined. And because their pay is taxed as capital gains rather than salary, the teachers paid a higher tax rate!

Back in the 18th century, Alexis de Tocqueville called America the “best poor man’s country." He believed that "equality of conditions" was the basic fact of life for Americans. How far we've come! Since then, the main benefits of economic growth have gone to the wealthy, including the Robber Barons of the Gilded Age whom Theodore Roosevelt condemned as “malefactors of great wealth” living at the expense of working people. By the 1920s, a fifth of American income and wealth went to the richest 1 percenters whose Newport mansions were that period’s Greenwich homes. President Franklin Roosevelt blamed these “economic royalists” for the crash of '29. Their recklessness had undermined the stability of banks and other financial institutions, and the gross misdistribution of income reduced effective demand for products and employment by limiting the purchasing power for the great bulk of the population.

Roosevelt’s New Deal sought to address these concerns with measures to restrain financial speculation and to redistribute wealth down the economic ladder. The Glass-Steagall Act and the Securities Act restricted the activities of banks and securities traders. The National Labor Relations Act (the “Wagner Act”) helped prevent business depression by strengthening unions to raise wages and increase purchasing power. Other measures sought to spread the wealth in order to promote purchasing power, including the Social Security Act, with retirement pensions, aid to families with dependent children, and unemployment insurance; the Fair Labor Standards Act, setting a national minimum wage and maximum hours; and tax reforms that lowered taxes on workers while raising them on estates, corporations and the wealthy. And the kicker: Through pronouncement and Employment Act (1946), the New Deal committed the U.S. to maintain full employment.

The New Deal reversed the flow of income and wealth to the rich. For 25 years after World War II, strong labor unions and government policy committed to raising the income of the great majority ensured that all Americans benefited from our country’s rising productivity and increasing income.

Advocates of laissez faire economics warned that we would pay for egalitarian policies with slower economic growth because we need inequality to encourage the rich to invest and the creative to invent. But the high costs of inequality in reduced social cooperation and wasted human capital point to the giant flaws in this view. A more egalitarian income distribution provides better incentives for investment, and our economy functions much better when people can afford to buy goods and services.

The New Deal ushered in a period of unusually rapid and steady economic growth with the greatest gains going to the poor and the middle-class. Strong unions ensured that wages rose with productivity, government tax and spending policies helped to share the benefits of growth with the poor, the retired and the disabled. From 1947-'73, the bottom 90 percent received over two-thirds of economic growth.

Then, the political coalition behind the New Deal fragmented in the 1960s. Opponents seized the moment and reversed its policies. They began to funnel income toward the rich. With a policy agenda loosely characterized as “neoliberalism,” conservatives (including much of the economics profession) have swept away the New Deal’s focus on employment and economic equity to concentrate economic policy on fighting inflation by strengthening capital against labor. That has worked out very badly for most of America.

The GOP has led the attack on Roosevelt’s legacy, but there has been surprising bipartisan support. President Carter got the ball rolling with his endorsement of supply-side taxation and his commitment to fight inflation by promoting labor market competition and raising unemployment. Carter's policies worked to reverse the New Deal’s tilt toward labor and higher wages. Under his watch, transportation and telecommunications were deregulated, which undermined unions and the practice of industry-wide solidarity bargaining. Carter also campaigned to lower trade barriers and to open our markets to foreign trade. These policies were presented as curbs on monopolistic behavior, but the effect was to weaken labor unions and drive down wages by allowing business to relocate production to employ lower-wage foreign workers while still selling in the American market.

Carter also began a fatal reversal of economic policy by refusing to support the Humphey-Hawkins Full Employment Act. Instead of pushing for full employment, Carter appointed Paul Volcker to chair the Federal Reserve with the charge to use monetary policy to restrain inflation without regard for the effect on unemployment. Since then, inflation rates have been brought down dramatically, but unemployment has been higher and the growth rate in national income and in wages has slowed dramatically compared with the New Deal era.

Already in the 1970s, a rising tide of anti-union activities by employers led Douglas Fraser, the head of the United Auto Workers to accuse employers of waging a “one-sided class war against working people, the unemployed, the poor, the minorities, the very young and the very old, and even many in the middle class of our society.” Organized labor’s attempt to fight with labor reform legislation amending the Wagner Act found little support in the Carter White House and went down to defeat in the Democratic-controlled Senate.

Any residual commitment toward collective bargaining under the Wagner Act was abandoned during the Reagan administration, ironically the only union president ever elected to the White House. Reagan, of course, is known as the president who fired striking air traffic controllers in 1981. He is also known for the devastating regulatory changes during his presidency and those of his Republican successors (the two Presidents Bush). Their appointments to the National Labor Relations Board helped to turn this agency from one charged with promoting union organization and collective bargaining to one charged with ensuring that employers were free to avoid unions. Under this new regime, private sector unionism, the unions covered by the Wagner Act, has almost disappeared.

The 1970s also saw a shift in tax policy away from the principles of ability-to-pay and income redistribution toward those associated with supply-side economists who argued for lower taxes on the rich to provide incentives to accumulate wealth. After campaigning for tax reform, Carter signed the Revenue Act of 1978, which gave small tax benefits for working people and dramatic cuts in capital gains and corporate taxes and on the top marginal rates. Since then, major reductions on taxes paid by the rich enacted under Presidents Reagan and George W. Bush have dramatically reduced the tax burden on the richest Americans.

Government spending policies have also turned away from ordinary Americans. In 1996, under President Bill Clinton, a vital piece of the New Deal safety net was repealed with the “Personal Responsibility and Work Opportunity Reconciliation Act.” Abolishing the provisions of the Social Security Act that established the program of Aid to Families with Dependent Children, the 1996 law ended the national right to relief. Along with restrictions on unemployment insurance, the abolition of programs of public jobs for the unemployed and gradual reductions in the real value of Social Security benefits, this act was another blow for working people.

The New Deal showed us how to combine economic growth and lower levels of unemployment. But the widening gap between rich and poor since the 1970s has been associated with higher levels of unemployment and a slowing of economic growth. Had economic growth rates continued after 1978 at the same rate as during the decades before, average income would have been more than $14,000 higher than it actually was in 2008.

The slowdown in growth since the abandonment of egalitarian New Deal policies has cost Americans about 30 percent of their income. And the massive redistribution of income away from average Americans and toward the rich has destroyed the sense that America is a land of opportunity for all. Quality of life has plunged because the shredding of social protections has exposed average Americans to much higher levels of risk. The substitution of defined contribution pensions, such as Individual Retirement Accounts or 401K plans, for defined benefit pensions has reduced retirement security for individuals while reducing the risk borne by employers or other social institutions. Just as important as declining income for many Americans, the stress and anxiety associated with the risk shift has contributed to rising levels of depression and morbidity and a decline in life expectancy for Americans compared with residents of other countries.

Workers’ security has been abandoned. But the government has let financial markets run wild. In 1982, Congress deregulated the thrift industry, freeing thrifts to engage in reckless and fraudulent behavior. In 1994, it removed restrictions on interstate banking. In 1998 it allowed Citigroup to merge with Travelers’ Insurance to create the world’s largest financial services company. And in the Gramm-Leach-Bliley Act of 1999, it repealed the remaining Glass-Steagall barriers between commercial and investment banking. Acting with the virtual consent of Congress and the president, in 2004, the Securities and Exchange Commission established a system of voluntary regulation that in essence allowed investment banks to set their own capital and leverage standards.

By then our financial regulatory system had largely returned to the pre-New Deal situation in which we trusted financial institutions to self-police. Advocates of deregulation, like Federal Reserve chair Alan Greenspan, were unconcerned because they expected banks and other financial firms to limit their risk for fear of failure. Either they misunderstood the incentives facing company managers, or they did not care. In practice, financiers are playing with other people’s money (ours). When they do well, their compensation is tied to profits and they can earn huge sums. But when their investments fail, they are protected because monetary authorities and the United States Treasury cannot allow "too big to fail" financial companies to go bust. So long as risky investments would have periods of high returns, the managers of deregulated financial firms have an incentive to increase their risk, profiting from success while passing the costs of failure to the public. We have all been suffering from the consequences of their failures since the financial crisis of 2007-'08.

The share of income going to the top 1 percent has doubled since the 1970s, returning to the levels of the 1920s. The greatest gains have gone to the very wealthiest and to executives and managers, especially of financial firms. From 1973 to 2008, the average income of the bottom 90 percent of American households fell even while the rich gained. The wealthiest 1 percent gained 144 percent or over $600,000 per household; and the richest 1 percent of the 1 percent, barely 30,000 people, gained over 455 percent or over $19,000,000.

That's enough to buy a nice doghouse. Or a mansion in Greenwich.

Saturday, July 7, 2012

How Obamacare Helps People

By Ethan Rome.Executive Director, Health Care for America Now

During the two years Health Care for America Now (HCAN) campaigned to win health care reform, and in the two years since, we've never organized a "mandate" rally. Political opponents of the law insist that the mandate is the "heart" of the law, but it's not. The heart of the Affordable Care Act (ACA) is the expansion of coverage to more than 30 million people and the elimination of the worst insurance company abuses.

Proponents of the law have said a lot about the mandate, and there are good reasons for that. The law will work best if everyone has insurance, and the mandate is one of the best ways to ensure everyone is covered. If more people have insurance, insurance becomes cheaper and better for everyone.

But the mandate is not the only way to achieve affordable coverage with strong consumer protections (for example, see here). The mandate is a tool, a mechanism, a means to an end - not the end itself. The extreme things that have been said about the mandate have been overblown. Groups like the Koch Brothers-backed Americans for Prosperity mislead the American people and use the mandate as a ruse to obscure the dozens of ways the law helps millions of Americans.

The court to upheld the entire law because the ACA is constitutional, and to do otherwise would have imposed a massive judicial intervention that would harm millions of individuals and businesses benefiting from the law.

The justices have upheld every single consumer protection, benefit and coverage expansion, including the ban on discrimination against the sick. That's a big deal - the biggest domestic policy change since Medicare and Medicaid.

Congressional Republicans - those who never supported President Obama or his effort to fix our broken health care systemand groups like lobbyist-funded FreedomWorks still want to roll back the clock to the days when insurance companies could jack up our rates and deny our care at will. They want to put consumers at the mercy of insurance companies. These are the big corporate special interests that fuel the campaigns of the GOP. They're also the people who lie about the law everyday to seek political advantage in the 2012 election.

Why won't the sky fall? For starters, the mandate is not scheduled to take effect until 2014. So the next Congress has plenty of time to enact an alternative that would encourage broad participation in the insurance market. There is a long list of options, from tax credits to enrollment periods and more.

But changes to the law may not be necessary. The ACA has lots of built-in incentives that can help achieve the goals of the mandate. The most important are the premium subsidies, which allow millions of working and middle-class families to purchase affordable insurance. People don't go without insurance because they don't want it but because they can't afford it. The ACA's subsidies will change that.

We already have 3.1 million adult children getting coverage by staying on a parent's plan. When young adults turn 26, most will have coverage through an employer. For those who do not, the subsidies will make coverage affordable. After enjoying coverage in their parents' plans, they're not likely to suddenly feel reckless and invincible. Instead they'll be inclined to remain insured on their own.

Another rule, known as modified community rating, also helps to stabilize premiums by spreading the risk more broadly. Coupled with the subsidies, this will keep young, healthy people in the insurance market.

The health insurance industry has threatened double-digit rate increases if the mandate is removed. Several recent reports dispute that such increases would be justified. Thankfully, rates in the employer-sponsored group market, which includes 90% of privately insured Americans, shouldn't be affected.

The mandate makes good sense, and losing it would certainly have an impact.

However, because the Supreme Court struck down the prohibition on discrimination against people with pre-existing conditions like diabetes, high blood pressure and cancer starting in 2014, the law will stop 129 million people with chronic conditions from being overcharged or denied coverage. It will guarantee that no one will be denied health care for being sick.

We already know what the GOP will do next. The fight over the ACA is central to the Republican assault on the health and financial security of seniors, small businesses and hard-working families. The assault includes the GOP's non-stop campaign to end Medicare as we know it and dismantle Medicaid, which cares for children, people with disabilities and seniors in nursing homes.

Medicare, Medicaid and Social Security have always been key to the survival and expansion of America's middle class. Obamacare is bridging the gaps in the protections those programs provide.