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Posts Tagged ‘Paul Krugman

Our broken ways.

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Our many broken ways!

Introspection warning! Long rant from me!

On the 21st., I published a post Be in peace this day! It was noting this year’s International Peace Day.  One of the comments left by Patrice Ayme, in response to an earlier comment from Alex Jones, was this:

Alex: I read your message, and I approve it. Very well put. As Lord Keynes said: ”In the end, we are all dead.” Death seems pretty violent to me. Yet, one can live with it, and embrace it, because, as there is no choice, we may as well.

War is not anymore a problem than peace is. What matters most is the harmony of the society with the environment, not strife within. Plutocrats have unbalanced the environment, so they should be reduced, and that means war, because peace certainly will not reduce them.

Force is the truth of man. Everything else is delusion, even the vegetarian style.

To which I replied:

Patrice, as much as I deeply respect your intellect, I fundamentally am at odds with the sentiments you express. But rather than hide behind a short reply that few will read and even fewer take notice of, I’m going to write a post exploring my reactions in detail. As always, your comments are welcomed.

This, then, is that post.

But where oh where to start?  Perhaps by me setting out this general premise.

Wherever one looks, it seems there are examples of madness bordering on the criminally insane.

In so many ways and at so many levels we are running the very real risk that by 2050 the end of this present era of human civilisation by the end of the century will be unavoidable.  Ergo: Born after 1980? Then brace yourself for the end times.

The only solution is to adopt the core values of humanity.  Very soon!

So on to a few examples of the present madness (and I would be the first to admit that I am, perhaps prejudicially, inclined to see the darkness of our present times).

First: Climate Change

The recent IPCC report made it clear that climate change is most likely a result of man’s activities on this planet.  As the summary for policy makers says (selected extracts):

Warming of the climate system is unequivocal, and since the 1950s, many of the observed changes are unprecedented over decades to millennia. The atmosphere and ocean have warmed, the amounts of snow and ice have diminished, sea level has risen, and the concentrations of greenhouse gases have increased.


Human influence on the climate system is clear. This is evident from the increasing greenhouse gas concentrations in the atmosphere, positive radiative forcing, observed warming, and understanding of the climate system.

and [my emboldening]

Human influence has been detected in warming of the atmosphere and the ocean, in changes in the global water cycle, in reductions in snow and ice, in global mean sea level rise, and in changes in some climate extremes (Figure SPM.6 and Table SPM.1). This evidence for human influence has grown since AR4. It is extremely likely that human influence has been the dominant cause of the observed warming since the mid-20th century.

George Monbiot in his blog on The Guardian newspaper, wrote:

Former Irish President, Mary Robinson.

Former Irish President, Mary Robinson.

But denial is only part of the problem. More significant is the behaviour of powerful people who claim to accept the evidence. This week the former Irish president Mary Robinson added her voice to a call that some of us have been making for years: the only effective means of preventing climate breakdown is to leave fossil fuels in the ground. Press any minister on this matter in private and, in one way or another, they will concede the point. Yet no government will act on it.

As if to mark the publication of the new report, the Department for Business, Innovation and Skills has now plastered a giant poster across its ground-floor windows: “UK oil and gas: Energising Britain. £13.5bn is being invested in recovering UK oil and gas this year, more than any other industrial sector.”

The message couldn’t have been clearer if it had said “up yours”. It is an example of the way in which all governments collaborate in the disaster they publicly bemoan. They sagely agree with the need to do something to avert the catastrophe the panel foresees, while promoting the industries that cause it.

It doesn’t matter how many windmills or solar panels or nuclear plants you build if you are not simultaneously retiring fossil fuel production. We need a global programme whose purpose is to leave most coal and oil and gas reserves in the ground, while developing new sources of power and reducing the amazing amount of energy we waste.

But, far from doing so, governments everywhere are still seeking to squeeze every drop out of their own reserves, while trying to secure access to other people’s. As more accessible reservoirs are emptied, energy companies exploit the remotest parts of the planet, bribing and bullying governments to allow them to break open unexploited places: from the deep ocean to the melting Arctic.

And the governments who let them do it weep sticky black tears over the state of the planet.

The BBC News website published some reactions from notable people.  Take this one:

Kevin Anderson, professor of energy and climate change at the University of Manchester

What has changed significantly since the last report is that we have pumped an additional 200 billion tonnes of CO2 into the atmosphere. Annual emissions are now 60% higher than at the time of the first report in 1990 and atmospheric CO2 levels are the highest they have been for over two million years.

So what are we doing in the UK to help reverse this reckless growth in emissions? Record levels of investment in North Sea oil, tax breaks for shale gas, investment in oil from tar sands and companies preparing to drill beneath the Arctic.

Against this backdrop, the UK Treasury is pushing for over 30 new gas power stations, whilst the government supports further airport expansion and has dropped its 2030 decarbonisation target – all this alongside beleaguered plans for a few wind farms and weak energy efficiency measures. Governments, businesses and high-emitting individuals around the world now face a stark choice: to reduce emissions in line with the clear message of the IPCC report, or continue with their carbon-profligate behaviour at the expense of both climate-vulnerable communities and future generations.

OK, let’s move to another example of our collective madness.

Second: The way we treat the natural wildlife.

Last Thursday, the New York Times published an item about a recent report confirming the terrible cost to our wildlife of fragmenting their habitat.  Here are the opening paragraphs, including the leading photograph in that NYT piece.

In Fragmented Forests, Rapid Mammal Extinctions


An isolated forest in the Chiew Larn reservoir. A Thai government project to supply hydroelectric power to the area transformed 150 forested hilltops into islands. ANTONY LYNAM

September 26, 2013

In 1987, the government of Thailand launched a huge, unplanned experiment. They built a dam across the Khlong Saeng river, creating a 60-square-mile reservoir. As the Chiew Larn reservoir rose, it drowned the river valley, transforming 150 forested hilltops into islands, each with its own isolated menagerie of wildlife.

Conservation biologists have long known that fragmenting wilderness can put species at risk of extinction. But it’s been hard to gauge how long it takes for those species to disappear. Chiew Larn has given biologists the opportunity to measure the speed of mammal extinctions. “It’s a rare thing to come by in ecological studies,” said Luke Gibson, a biologist at the National University of Singapore.

Over two decades, Dr. Gibson and his colleagues have tracked the diversity of mammals on the islands. In Friday’s issue of the journal Science, they report that the extinctions have turned out to be distressingly fast.

“Our results should be a warning,” said Dr. Gibson. “This is the trend that the world is going in.”

On a similar theme, many will recall my post back on the 19th, Pity the bees; pity us when I drew attention to the drastic reduction in the numbers of wild bees, including the quote  “the vanishing honeybee could be the herald of a permanently diminished planet.

Guard their future - and ours!

Guard their future – and ours!

Third: Money and power.

Again from The New York Times but this time an essay by Paul Krugman.


Plutocrats Feeling Persecuted


Published: September 26, 2013

Robert Benmosche, the chief executive of the American International Group, said something stupid the other day. And we should be glad, because his comments help highlight an important but rarely discussed cost of extreme income inequality — namely, the rise of a small but powerful group of what can only be called sociopaths.

For those who don’t recall, A.I.G. is a giant insurance company that played a crucial role in creating the global economic crisis, exploiting loopholes in financial regulation to sell vast numbers of debt guarantees that it had no way to honor. Five years ago, U.S. authorities, fearing that A.I.G.’s collapse might destabilize the whole financial system, stepped in with a huge bailout. But even the policy makers felt ill used — for example, Ben Bernanke, the chairman of the Federal Reserve, later testified that no other episode in the crisis made him so angry.

And it got worse. For a time, A.I.G. was essentially a ward of the federal government, which owned the bulk of its stock, yet it continued paying large executive bonuses. There was, understandably, much public furor.

So here’s what Mr. Benmosche did in an interview with The Wall Street Journal: He compared the uproar over bonuses to lynchings in the Deep South — the real kind, involving murder — and declared that the bonus backlash was “just as bad and just as wrong.”

OK, that’s enough ‘copying’ from me so please go and read more about the plight of those poor billionaires.  But if the NYT and Paul Krugman will forgive me, here’s the paragraph towards the end of the Krugman essay that makes me sick [my emboldening]:

The thing is, by and large, the wealthy have gotten their wish. Wall Street was bailed out, while workers and homeowners weren’t. Our so-called recovery has done nothing much for ordinary workers, but incomes at the top have soared, with almost all the gains from 2009 to 2012 going to the top 1 percent, and almost a third going to the top 0.01 percent — that is, people with incomes over $10 million.

(Patrice Ayme has a parallel essay over at his blog.)

Staying with the struggles of our billionaires for a moment longer, try the recent report on Bloomberg about the recent Monaco Yacht Show that included this:

As the yacht size has stretched — this year saw the launch of a record-holding 590-footer called the Azzam — so has the list of distractions onboard. Soaking in a jacuzzi, shooting hoops on a floating court or playing a baby grand Steinway piano no longer cut it.

“There is a change in attitude of super-yacht owners,” said Bert Houtman, founder and chairman of the Netherlands-based U-Boat Worx, surveying two of his submarine models on display quai-side in Monaco. “They’re fed up with drinking white wine and riding jet skis so they’re looking for another thrill.”

later including:

“A lot of guys who are billionaires have profound financial accomplishments and are now concerned about their legacy,” said Deppe. (Marc Deppe, Triton Subs vice-president of sales and marketing.)

It’s enough to make one weep!

Fourth: Politicians and governments not serving their peoples.

Making this my last example.  Simply because a recent item published on Naked Capitalism had so much detail on what is wrong with our leaders; in this particular case regarding the American Affordable Care Act (ACA).  This is how the article opens:

ObamaCare’s shameful and lethal three-year history — and future

Many people, and especially Obama supporters, characterize the ACA (ObamaCare) as “just starting” or a “work in progress” and then go on to urge that the program will have “glitches,” needs to be “tweaked,” isn’t yet “fully implemented,” and so forth. We think it’s a mistake to see the ACA as just starting. We also think it’s a mistake not to weigh the costs of ObamaCare’s stately three-year progress toward partial coverage for the the American people, and just as important to weigh the opportunity costs.

The ACA was passed in March 2010, incorporating many features designed to meet Republican objections to the Bill. Yet, in the end, Democrats never put Medicare for All on the table, abandoned the public option and many other features, and did not get a single Republican vote in either chamber.

The Democrats even saw to it that the bill was fiscally neutral over a 10 year projection at a time when the tanked economy needed more deficit spending and the jobs that would have brought. And to do that, they postponed implementation of most of the bill for more than three years, until now, allowing people to go without care, to die, to divorce, and to lose their homes or go bankrupt due to medical bills, just so they could argue that the bill was fiscally neutral. In gauging the record of the bill, these 3 to 3.5 years of waiting for its implementation and their real costs to the people of the United States must be taken into account.

It also must be taken into account that in the year before the ACA was passed there were some 45 million Americans uninsured, and they were dying at the rate of 1,000 more for every million than in the general population. That is, lack of insurance was causing more than 45,000 fatalities per year. (The cost of those deaths in money terms: $1.38 trillion).

This is how the article closes [my emphasis]:

That’s what we’ve lost by not trying to pass HR 676 and by trying instead to take a bipartisan insurance company conciliation approach to passing the ACA. This post, gives the total for the anticipated opportunity cost by comparing Romney’s 2012 alternative to the ACA, the baseline of no reform at all, the ACA, and Medicare for All over the period 2010 – 2022. Bottom line: the ACA is projected to cost 286,500 lives through 2022, assuming no change. That’s a lot better than the baseline and a lot better than Romney’s 2012 alternative. But it’s still terrible compared to what we might have had if we had a President who really represented people rather than Wall Street.

What if an effort to pass HR 676 had failed in 2009 because too many Democrats in the Senate defected to pass it? Well, I think this would have been very unlikely with the very large Democratic majority and the popularity of the president at its height, but even if it would have failed, then the Democrats could still have compromised with members of their party to pass enhanced Medicare for All for everyone under 26 and over 45, or under 26 and over 50, or whatever compromise would have moved those wayward Democrats up to the 50 vote mark. Such a compromise bill would still have lowered the fatalities substantially by providing insurance for those who needed it most and by enhancing the Medicare program for seniors (full coverage and no co-pays). It would also have been something Democrats could have run on and built upon in each successive election year, rather than having to defend the sorry ACA with its package of inadequate goodies, silly mandate, IRS enforcement, high cost for lousy coverage, and Rube Goldberg eligibility determination. Again there would have been no Tea Party, because Tea Partiers like Medicare, and there would have been no Republican nationwide sweep in 2010, no gerrymandering, no voter suppression, no anti-woman bills, and none of all the rest of the nonsense we’ve seen because the Democrats did what they did.

Earlier in the post I offered a general premise that included, “Wherever one seems to look there are examples of madness bordering on the criminally insane.

To my mind, these examples support that premise. Trust me, there are countless more examples.

So what to do?  Because I am fundamentally at odds with the sentiment expressed by Patrice Ayme; “Force is the truth of man. Everything else is delusion, even the vegetarian style.

The answer takes us to tomorrow’s post, A return to integrity.

And, yes, it does mention dogs!  Rather a lot as it happens!

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Questions are never stupid!

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A powerful guest post from Patrice Ayme on where next for American energy.


I must have spent an age musing over what to call this Post.  Patrice called it simply ‘Energy Question For The USA’ and it’s a highly appropriate question.  But in the end I chose the title ‘Questions are never stupid’ because I was mindful of the well-known saying, “There is no such thing as a stupid question, only a stupid answer!

So the smart question raised by Patrice is not only very highly appropriate for 2012, it’s also a question that just has to have a smart answer.  Because we are on the brink of it being too late to be flirting with stupid answers.  What many scientists are saying, in one form or another, is that if we don’t embrace the journey of moving away from carbon-based sources of energy for society now and find those alternate sustainable sources by the end of this decade then the laws of unintended consequences will kick in with a vengeance.  The end of the decade is eight years away!

Here’s a picture of my grandson who was one-year-old just a week ago.

Trusting his elders!

That picture reminds me of the comment early on in James Hansen’s book, Storms of my Grandchildren, where he writes ‘I did not want my grandchildren, someday in the future, to look back and say, “Opa understood what was happening, but he did not make it clear.

So on to the Guest post from Patrice.  It’s not an easy, quick read but I’ll tell you what it is!  It’s the sort of ‘wake-up’ call this fine Nation and this even finer Planet should be getting from countless politicians and leaders.  So do read it and, even better, add your comments, and wonder why we seem so content on fiddling while Rome burns!


Energy Question For The USA


No Vision, No Mission, No Energy


Another editorial of Paul Krugman firing volleys at republican “paranoia” for accusing Obama of driving up oil prices. As he observes in “Paranoia Strikes Deeper“: …“the president of the United States doesn’t control gasoline prices, or even have much influence over those prices. Oil prices are set in a world market, and America, which accounts for only about a tenth of world production, can’t move those prices much. Indeed, the recent rise in gas prices has taken place despite rising U.S. oil production and falling imports.”

American households tend to borrow as much as they can. Thus, when oil prices increase markedly, Americans have to cut in crucial budgets, such as house payments. I said at the time that it would lead to a peak in housing prices, and it did.

Why such a drastic influence of oil prices on the economy of the USA? Because Americans, except in a few places such as New York, commute by private car to work. So Americans have to feed the car, if they want to feed themselves.

It was not this way a century ago, or so. At the time public transportation systems using electric tramways and trains were found all over, even in Los Angeles. Car companies put an end to that outrage in the late fifties by buying, and then destroying, all the public transportation system they could put their greedy hands on.  Fossil fuel plutocrats were delighted.

But let’s set aside Krugman’s fake indignation. He is smart enough to know that Romney will do what Romney needs to do to win the Obama, I mean, the election. Waxing lyrical about Romney doing as Obama, does not beat going lyrical about sunrise.

Gasoline prices in the USA are way down in real dollars to what they used to be, decades ago. And so is the gas tax. This means that, far from adapting to the gathering multiply-pronged world ecological and energy crisis, the USA has gone the other way, denying there is any crisis. “What? Me worry?” That’s got to be anti-American indeed.  No, real blooded Americans are all into strip searches and the death panel at the White House.

In Europe, gas prices are more than twice that of the USA, thanks to heavy taxes (stations in France have sported two euros a liter, that is 8 euros per gallon, or more than $10.50). [UK unleaded petrol price, as of today, is the equivalent of $8.70 per gallon, Ed.]

This means that far from being down and out, Europe is efficient enough to operate at that high price level. It also means that Europe is much more motivated than the USA to get much more efficient. In other words, high gasoline prices in Europe are a safety margin. The high prices force the European free market to adapt to a situation that the free market of the USA will encounter someday. Adaptation takes decades: new energies take on the average, historically speaking, 50 years to become dominant. Same, one would guess, for energy efficiencies.

Basically, if oil prices doubled from here, gasoline prices would double in the USA. Whereas, even if the Europeans decided to keep the same high taxes, gasoline prices would only augment by 50%. And, in the much more efficient European economy, with plenty of public electric transportation available, the noxious effects on the European economy would be much less than one would expect from a 50% oil price rise.

The world gets 55 × 1018 joules of useful energy from 475 × 1018 joules of primary energy produced by fossil fuels, biomass and nuclear power plants. That tremendous inefficiency (less than 13%!)  needs to be corrected. It will be, if, and only if, prices are kept high. Thus energy taxes are necessary to adapt to the looming penury.

Why looming penury? Because the reserves of other fossil fuels may have been vastly overestimated (by a factor of 5 in the case of coal). Various fossil fuel lobbies have an interest to over-estimate the reserves (because it keeps the world addicted, as they present their industry as a long range solution, which it is not).

Looking at the raw production numbers, as exhibited below in the graphs, paints a completely different story: production from existing fields is going down dramatically (at 5% rate, per year).  In other words we are in the treachorous waters between the catastrophe of CO2 poisoning and the disaster of running out of energy to burn.

The unavoidable rise of fuel prices will be less grave in Europe than in the USA, because many Europeans would opt for the available electric-based public transportation system (the combination of much more efficient electric motors and central generation is much more efficient than distributing oil to put in SUVs all over, as done in the USA; SUVs, because there are too many holes in the asphalt. A problem partly related to high oil prices!).

Yet, the increase of the cost of imported oil corresponds exactly to the Italian deficit ($55 billion). Although that deficit increase had many causes, oil price increase was by far the most important. And the same for other Southern European countries. So the rise of oil prices was the barrel that broke the back of European debt.

In the USA, ten out of 11 post WWII recessions were followed by oil price spikes. Why are American minds so closed up to the looming strangulation of their economy by oil? Because the fossil fuel plutocracy is on a rampage in the USA. It uses a red hot propaganda to persuade the vast American public of undifferentiated sheep that there is no CO2 ecological crisis, and no energy crisis. (Although the latest polls indicate that two thirds of the public, in a splendid turn-around, believe that there is indeed a man-made climate change crisis; never mind that the New York Times had the latest tornado rampage, with 40 dead, presented as discreetly as possible.)

Why are the fossil plutocrats hysterical? Well we are past Peak Cheap Oil. Moreover, the “majors“, the world’s largest oil companies, have been pushed out of more and more countries, and replaced by national oil companies. Desperate, the majors have gone for riskier and riskier drilling in the deep ocean. Now Chevron, and Transocean, after a 4-day leak off Brazil, see prosecutors asking for lengthy prison sentences and enormous fines.

Most of these oil companies are American, so they have pushed forfracking (destroying the underground with poisons to extract fossil fuels). Superficially, it works: USA imports of fossil fuels went quickly from 60% down to 40%.

However, that did not make a dent in the world price situation, because the demand keeps rising, but the world, overall, is PAST PEAK OIL (as I have long argued and the Nature article alluded to below confirmed, using the obvious argument found in the graphs).

So, basically, American fracking finances Chinese oil consumption. Here are some graphs extracted from Nature and the USA government:

When the horrid sun of diminishing resources rises over the parched American oil desert, while fracking reveals itself to be an unfathomable catastrophe, the howling is going to be very great, and one more reason for a depression will blossom.

Much of the USA’s superiority, in the last 150 years, has come from abundant and cheap oil. First in the North-East, then down to Oklahoma, Texas, Colorado, California. Compare with Western Europe, which had basically no oil.

Oil was not just a question of cheap, convenient energy. Oil has, short of nuclear energy, the highest energy density of any material (OK, nuclear energy is millions of time more energy dense).

Oil gave the USA enormous diplomatic and conspiratorial leverage. American oil plutocrats helped Lenin and Stalin develop their colossal fields in the Caucasus and Caspian. One of those plutocrats, Harriman, son of a railroad magnate, and brother of another Harriman, was one of the main operators of the democratic party. Let alone banker to Hitler. He was decorated both by Stalin, and by Hitler. He then went on as U.S. ambassador to major European capitals, and stayed one the main operators of the government of the USA for decades. “Democrats” have long been impure.

Interestingly, I searched the Internet for a document mentioning Harriman’s Stalino-Hitlerian decorations, but could not find it (I have seen the pictures in the past). All I could read is how much Harriman resisted Stalin each time they met, and that was all the time (a total lie that Harriman resisted Hitler, or Stalin: Harriman was an accomplice of Stalin, and helped give him half of Europe, in exchange for manganese and other stuff. But now Internet agents are obviously paid to reconstruct a truth where American plutocrats look good,  knights in shining armor, fighting Stalin or Hitler, each time they met for tea, dinner, lunch, breakfast, and interminable conferences, for years on end, decade after decade).

A famous example of the clout oil provided the USA with: Texaco fueled Hitler’s conquest of the Spanish republic (this one is hard to hide, because the U.S. Congress slapped Texaco with a symbolic fine, well after the deed was done). That used to amuse Hitler a lot (Hitler gave elaborated reasons to his worried supporters for being in bed with American plutocrats; as the Nazi Party was officially socialist, and anti-plutocratic, that awkward situation may have led him to declare war to the USA on December 11, 1941, to ward off the German generals’ argument that he was just a little corporal in above his head).

Another example: Mussolini was hanged from an American gas station in Milan. Italian communists hanged him from his sponsors’ works.

The fueling of the fascists by American fossil fuel companies helped bring the American Century to the world in general, and Europe in particular. Without Stalin and American plutocratic oil, Hitler’s Panzers could not have moved in 1939 or 1940.

The dignified Elie Wiesel, instead of crying crocodiles tears, wondering how such a thing as Auschwitz was possible, should ask how and why the Nazi extermination machine was fuelled by American plutocrats, and how come he, himself, never talks about that.

Wiesel got the Nobel Peace Prize, just as Jimmy Carter (who launched the American attack on Afghanistan). Was it for disinformation? (And how come waging war in Afghanistan is a big plus for the Peace Prize? Is it related to the same mood which made Sweden help Hitler before and during WWII, and never having a serious look at that, ever since? I know the prize is ostensibly given by Norwegians.)

Wikipedia is big on the notion of “weasel words“, and rightly so. Deeper than that is what I would call weasel logic. And ever deeper, weasel worlds. To talk about Hitler without ever wondering who his sponsors were, and what they were after, is to live in a weasel world.

I like Elie Wiesel personally. Yet, just as I like Krugman, Obama, and countless others, such as the infamous Jean-Paul Sartre, he likes power even more than truth. OK, It is unfair to put Sartre, who really espoused the most abject terrorism, with the others… As long as individuals prefer power to truth, the spontaneous generation of infamy is insured.

Total oil sales, per day are about 100 million barrels (in truth the cap is lower, see graph above), at, say $100, so ten billion dollars a day, 3.6 trillion a year. The USA uses about 25% of that. Some have incorporated the price of the part of the gigantic American war machine and (what are truly) bribes to feudal warlords insuring Western access to the oil fields, and found a much higher cost up to $11 a gallon.

Ultimately, and pretty soon, in 2016, specialists expect oil prices to explode up, from the exhaustion of the existing oil fields. Then what?

Moreover, in 2016, the dependence upon OPEC, or, more exactly Arab regimes, is going to become much greater than now. What’s the plan of the USA? Extend ever more the security state, and go occupy the Middle East with a one million men army? To occupy, or not to occupy, that is the question.

Is it time for a better plan? And yes, any better plan will require consumers to pay higher energy prices. As consumers apparently want the army to procure the oil, they ought to pay for it.


Patrice Ayme


Note 1: Flying cost at least ten times more in CO2 creation than taking a train. And jet fuel is not taxed, at least until the carbon plan of the European Union starts charging next year, in 2013. In spite of the screaming from the USA and its proxies: it’s funny how attached to subsidies American society can be.

Note 2: Refusing to pay for necessary military expenses through taxation and mobilization, was a big factor in the downfall of the Roman Principate.

The Principate then tried to accomplish defense on the cheap, by using more and more mercenaries. Many of these mercenaries or their children and descendants were poorly integrated in Roman republican culture (say emperors Diocletian or Constantine, let alone Stilicho the Vandal, a century later), so they established theDominate, itself a negation of the Roman republic. Amusingly the Western Franks, those salt water (“Salian“) Franks remembered the Roman republic better than all these imports from the savage East… who could not remember it, they, and their ancestors, having never known it.

Guess what? The USA’s army presently employs 300,000 “private contractors” (aka, mercenaries). Curiously, in that case, it’s not so much to save money, than to extract more money from the system (but that’s another story). Still, it will have the same effect.


Just a reflection on nearly 900 posts!!

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Prompted by a recent comment from a reader.

This Blog started on July 15th, 2009.  At first there were a group of authors all committed to the vision but for various reasons they all were unable to maintain the very real challenges of writing a daily article and they amended the relationship to that of occasional guest author. My fellow founding author, Jon Lavin, has just completed a very demanding Master’s Degree which, for very valid reasons, has kept his nose to a different grinding wheel for the last 3 years.  My greatest wish is that Jon can return to writing for this Blog simply because the original idea about dogs having much to teach us came from Jon.

The vision of why so many hours are spent managing and writing on Learning from Dogs is encapsulated here.  One of the ideas expressed there is, “Our children require a world that understands the importance of faith, integrity and honesty“.  This aspect has become more and more important in my mind.  Within less than a month of this Post, I will have my first grandchild (the gender is a closely guarded secret!)  When I look at some of the scenarios that could face that grandchild over the next four decades, it’s easy to feel pretty nervous. So being able to use the power of this electronically connected world to ramble on is my way to trying to do something!

This is leading me to the point of this Post.  If it wasn’t for the growing number of readers, now several hundred a day, and the graciousness of those readers to find the time to comment, I think this Blog would have rolled over and gone back to sleep in front of the fire as Pharaoh is wont to do!

The comments have been fabulous and even selecting a couple seems unfair on the rest.  But nonetheless that is what this article is going to include.

Just a few days ago, there was an article about the internet and control.  Dogkisses wrote:

I feel quite positive about technology, including the Internet, but I also wish we could keep things like public libraries and continue to learn skills such as handwriting.

My nephew, an A student in college, recently had to take a handwriting course. My sis was embarrassed ’til she arrived finding many Mothers she knew there for the same reason. Many college students didn’t know how to write.

I volunteered once at a “Center for Independent Living.” One of the main services they offered was free Internet access to people with disabilities. I have since learned how important this is for people who are either bed-ridden or as with Chronic Fatigue Syndrome, stay home much of the time. It is a connection to the world. People can have a sense of community. This is a good thing.

I also love how quickly I can learn little things, such as words and how that might take me somewhere else to learn about something different. Pretty cool.

Maybe some people who have control in certain arenas are afraid that The People who are being controlled will, via the Internet, be heard and all too clearly.

Then last Friday, another reader, Steven Law, added an insightful comment to a Guest Post written by Patrice Ayme last December 10th., the Essence of the Civilizational Crisis, a very profound piece.  This is what Steven wrote:

“To create public money, the money everybody uses (be it cash, electronic transfers, swaps, whatever) we use a private system, with proprietary money creating devices inside (say subprime, or derivatives). Civilization has never worked this way before, as the state previously was careful to stay the one and only money creator.”
What Patrice ignores here is that the State “creates” nothing. And I do not support “private” monopoly of money either.What I would like to entertain is the ability for a true free market (one in which we do not have) to explore competitive money, and yes, privately issued by competing banks. But that these banks would not operate on fractional reserve. They would largely operate their monies on a commodities basket reserve system. Not just precious metals, but multiple commodities as well.
At any rate you can learn more on this by reading F.A. Hayek’s “Good Money”pts. 1 & 2. Also I recommend spending some time at The Von Mises Institute online, great insights and education from an Austrian perspective on these matters.

I like your post, but find a few flaws in the argument. My main point here is that civilization has failed throughout history to keep the State under control and not allow state controlled money monopoly. Fiat currencies have failed miserably throughout history and are doing so again. We have some serious learning lessons coming our way…again.

Just want to expand on what I said about the State not creating anything. How can they create when the monies the receive are largely from coercion as well as monopoly? Therefore any “creation” by the State is at the expense of industry and freedom. Hence the need for a limited government.
I also recommend watching “Corporation Nation” on youtube. It’s pretty long and supports with verifiable evidence the depths our government has reached into fascism.

So there we are! Writing this Blog is a labour of love and having both readers and readers willing to comment keeps the love affair going!  Thank you all, every one of you.

Finally, Steven mentions that YouTube video Corporation Nation.  The whole series of videos is long but if you fancy starting in at the beginning, here it is.

Power of social networks in the area of finance

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The nature and reach of social conversations in the investment arena.

The above sub-heading is from a recent Post on Naked Capitalism that rather spookily comes hot on the heels of one of my recent musings.  Here’s what I published on the 12th January although I wrote it on the 9th.

In the past opinion and commentary has been in the hands, more or less, of the giant media moguls.  But technology has changed that.  Now more than ever a huge people have access to the Internet.  Indeed, a quick Google search reveals that of a world population of 6.85 billion people, just under 2 billion (29%) have internet access.  In North America that percentage is 77.4% (226 million) and in Europe the percentage is 58.4% (475 million).  I.e. nearly a billion people in just North America and Europe!

My point is that, in a manner never before experienced in human history, the vast majority of us have the ability to read, learn and muse about the critically important issues facing us today, coming to conclusions that carry political weight.  We have almost infinite choice as to where and how we form opinions.

Thus having access, via the internet, to the scribblings of so many wise people may end up giving democracy the boost it really needs in the face of overwhelming powerful plutocratic forces.

Coincidentally, also on the 12th Yves Smith of Naked Capitalism published an article entitled, The 20 most influential blogs in financial media.  You can find that article here.  Here’s a flavour of what was written.

Thanks to Minyanville for publicizing this study by MindfulMoney on the nature and reach of social conversations in the investment arena. But even bigger thanks go to loyal readers and contributors for their frequent comments, leads, and critiques. The success of a blog depends on its community and I am very grateful for all the input so many of you have generously provided.

Perhaps the most interesting finding (boldface ours):

The research confirms the existence of a network of investment super-connectors with extraordinary media influence and reach. These super-connected new influentials are, for the most part, not well established voices in the media but individual bloggers who fiercely champion their independence….In the US, the network functions as the unofficial voice of Wall Street & the US federal bank with no mainstream media players at the centre of the network.

Given how many of these top blogs are critical of the status quo, this map may be hopeful sign that the blogosphere is beginning to become a important channel of discourse outside the reach of the PR machinery of major corporations and government entities.

And rather than publish all the top 20 names, you can see that list here, the top 10 are as follows:

1. Naked Capitalism
2. Infectious Greed
3. The Big Picture
4. Jesse’s Cross Roads Cafe
5. Zerohedge
6. Mish’s Global Economic Analysis
7. Calculated Risk
8. Paul Krugman’s Blog
9. FT Alphaville
10. Ludwig von Mises Institute

Anyone interested in downloading the original report as published on the MindfulMoney website can go to the article here; the link to the pdf, requiring prior registration, is towards the end of the article.  The article opens thus:

Most investors would acknowledge that social media is playing an increasing role in their investment decisions. Yet no-one has mapped the emerging network of influence likely to be playing a crucial part in those decisions.

Until now that is.  MindfulMoney’s ‘Social Finance: The New Influentials” report is aiming to better understand what this network looks like and to see if a number of super connections, so beloved of writers like Malcolm Gladwell, exist.

The research indicates that they do.

As I said, to download the article you need to register first – that link is here.

It’s a very interesting new world that we are living in and one, I pray, that is returning real power to the electorates.





Essence Of The Civilizational Crisis.

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A guest Post from Patrice Ayme.

(Well I say ‘guest’ in the sense that Patrice has very kindly allowed me to publish a post he recently published on his own Blog. It’s very much appreciated. I should add that the minor changes that I have made, in my editorial role, are gently to improve the clarity of this fine piece of work, not in any way to amend meaning. Ed.)


To understand the present financial and economic crisis, we need the clarity of deep philosophy.

The situation is actually simple, in its grossest outline. To create public money, the money everybody uses (be it cash, electronic transfers, swaps, whatever) we use a private system, with proprietary money creating devices inside (say subprime, or derivatives). Civilization has never worked this way before, as the state previously was careful to stay the one and only money creator.

Now society, worldwide, uses a privately-managed public-money ‘system’ creating what is known as a fractional reserve system. [Wikipedia explanation of fractional reserve system, Ed]

That puts huge power in the hands of underground private individuals we don’t even know the names of. Those cloaked powers in turn corrupt the visible political socio-economy, from below. The whole metastasis is not even described, because intellectuals would have to do so, but most are paid by institutions subservient to the present global corruption.

We saw a similar situation in the Roman empire, when the intellectual class was at its richest, but its critical ability had been corrupted.

The modern banking system is a Faustian bargain (as in a deal with the Devil) with the bankers; in exchange for the immense powers the private bankers were given with money creation, they were supposed to loan it back to society for its development.

This worked reasonably well in the Nineteenth Century. But in the Twentieth Century, bankers observed they could support fascism regimes, and get away with it (only Dr. Schacht, one of the “Lords of Finance”, sat in Nuremberg tribunal, and he was exonerated). Now bankers think they can engineer a depression, and get even richer from it: just keep the profits, and make taxpayers pay for the losses.

By Patrice Ayme

Note 1: Paul Krugman observes, with many others, that the crisis of the West needs “intellectual clarity” to be resolved, and, meanwhile we are “overmatched“. I made preceding comment in answer to Krugman’s cogent remarks. (The New York Times had the kindness to publish what I wrote within two minutes! )


China just established another train speed record for “unmodified’ train sets (481 km/h). OK, some will claim China stole a lot of Japanese and European technology. And some French engineers have sneered that the very high speed system in China is not as high performing as it looks (France has much higher average speeds, the highest in the world). However, this is not the point. The point is that China is trying very hard to progress and improve. Meanwhile some of the colossal technological edge of the West is eroding away quickly. The result will be world war, or global plutocratic peace (as plutocracy furthers its deal with China).

How does China improve so much and so fast? Because Chinese banks, the largest in the world, operate according to the fiduciary duty, the Faustian bargain, that the fractional reserve system ought to impose, and used to impose in the West.

Top Chinese bankers know all too well that if they cheated, they may end up with a bullet in their skull. China is led by scientists and engineers who turned to politics, but know that they cannot make mistakes in their calculations. Mao made many mistakes, and dozens of millions died.

The history of China, in the 26 centuries before that, was spoiled by a well meaning, but meek philosophy, which left too small a place to deliver progress of the material, and intellectual kinds.

Civilization is not about “leaving it at that”, the way Confucius mostly had it. Civilization is also about the dream, and implementing it. Indeed, civilization cannot stand still, anymore than a biker can stand still, because resources run out always (as Rome and the Mayas found out). Thus moving on is the price of sustainability. Progress is the price of sustainability.

Note 3: It may seem a curious thing that Karl Marx did not make a strident version of the preceding critique (instead he modestly accused tangentially bankers of “monopoly” powers).

But this Marxist discretion proves the point I alluded to above, namely that bankers were better behaved in the 19C. So Marx talked about other things.

Ironically, early American presidents had perfectly well seen the danger bankers posed, and worried more about them than Marx himself! And let no one call Andrew Jackson a communist: that would be serious mistake…

In the 21st Century, by capturing the states (USA, EU), and various institutions above them (IMF, World Bank, BIS), the bankers have established a monopoly of power early American presidents rightly feared (and Jackson, wounded at 13 by an English sword, later a proud carrier of several bullets, and a general in the field, feared very little). The wise know what to fear. The mentally simple just smile, thinking only about themselves, as they can’t think much further than that.


From the Ed.

Dear Readers, I really hope that you read Patrice’s post in full and in a quiet place where you could reflect on the meaning and underlying implications of what Patrice is saying.  Those in the UK may have been able to watch a typically fabulous BBC Television series, Ancient Worlds.  It’s still available on BBC iPlayer.

What comes out from the message of mankind over the centuries is that wonderful French expression plus ça change, plus c’est la même chose – the more that changes, the more it stays the same thing.  But where we are as we approach the New Year of 2011 A.D. is possibly at a cross-roads – and I intend to write a little more on this idea over the coming days.

More on Them and Us

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Will Hutton’s book continues to impress me; greatly.

On 28tTh October, I wrote an article about Will Hutton‘s impressive book, Them and Us.  I had got to page 120 or thereabouts and could resist no longer the urge of reading the book to the end before commenting on Learning from Dogs.

Now I am reading through page 260 and, again, find myself incapable of waiting until the book is completed before offering further thoughts!

Despite being very optimistic about the long-term future, I sense that the period that we have been in since 2008 may turn out to be one of the darkest in recent history – I touched on this aspect in a recent post called Faith in a (new) future.

One of the things that strikes me is the complete lack of openness from the British Government about the likely growth scenarios over the next decade.  Here was how the latest ‘growth’ figures were presented a couple of weeks ago, “The economy grew by 0.8% in the three months to September – double the rate that had been predicted by analysts.

UK output increases by 0.8 per cent 4Q 2010

But here’s Will Hutton,

Britain is going to be much poorer than it anticipated just a few years ago.

and a couple of sentences later talking about economists Carmen Reinhart and Ken Rogoff,

They paint a sober picture of prolonged loss of output, high unemployment and depressed asset prices, and warn that there is no precedent for what happens after the kind of global crisis through which we have just lived. (My italics)

Hutton says that growth would need to accelerate to 3.25 per cent in order for output to reach its predicted level if the recession had not taken place.

He then says that a more plausible scenario if growth remains at 2.75 per cent (average level in recent years leading up to the credit crunch) “then it might never recover sufficiently to converge with the old trajectory.”

Hutton continues,

However, even that may be optimistic.  The reality is that between the economic growth troughs of 1991 and 2009, growth in Britain actually averaged just over 2 per cent.

That would lead to a cumulative loss of output of more than £5 trillion!

It could be even worse.  The economics team at Barclays believe that is it perfectly plausible for growth to average just 1.75 per cent for the first half of the current decade.

And all of this before the huge budget cuts announced by the UK Coalition Government start to bite!

So the reality is that we are a long way away from any form of real recovery, despite what the politicians are saying!

What is so impressive about the book is that Will Hutton is meticulous in his research (there are 23 pages of referenced notes at the end of the book) and from Chapter 9 starts setting out how Britain “has the opportunity to put things right fast.”  So this is a book from a well-respected author that sets out carefully and logically the cause of the recession and then presents some powerful options for change.

The bottom line is that Britain has to be a much more fairer society. Not just Britain.  Here’s an extract from a recent posting on Tom Engelhardt’s Blog. Tom is the author of the book, The American Way of War.

I’m no expert on elections, but sometimes all you need is a little common sense.  So let’s start with a simple principle: what goes up must come down.

For at least 30 years now, what’s gone up is income disparity in this country.  Paul Krugman called this period “the Great Divergence.” After all, between 1980 and 2005, “more than 80% of total increase in Americans’ income went to the top 1%” of Americans in terms of wealth, and today that 1% controls 24% of the nation’s income.  Or put another way, after three decades of ”trickle-down” economics, what’s gone up are the bank accounts of the rich.

In 2009, for instance, as Americans generally scrambled and suffered, lost jobs, watched pensions, IRAs, or savings shrink and houses go into foreclosure, millionaires actually increased.  According to the latest figures, the combined wealth of the 400 richest Americans (all billionaires) has risen by 8% this year, even as, in the second quarter of 2010, the net worth of American households plunged 2.8%

Change is definitely overdue.

By Paul Handover

Written by Paul Handover

November 9, 2010 at 00:00

A reflection from Patrice Ayme

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Intelligence at the core of humanism – Patrice Ayme

This is a full copy of a recent post from Patrice Ayme published on Learning from Dogs with Patrice’s written permission.

I am bound to say that many of the arguments set forth in much of Patrice’s writings stretch my brain cells but that is not the point.  The point is that all right-minded (not in a political sense, you will grant me!) citizens of the free world need the expressions of thoughtful people in order to make the best decisions they can; for themselves, their families and the wider community.  For me that is why Patrice should be read.

Here is the article from Patrice Ayme published on his Blog on the 22nd October. (It’s long – but it’s a Sunday so think of it as your Sunday newspaper, settle down in an easy chair and get stuck in!)

Krugman, or Crudeman?

By Patrice Ayme


Abstract: President Obama has been getting atrocious economic and financial advice, all across the spectrum, from Summers to Krugman.

This abominable advice reinforced the plutocracy, with tax cuts, and a giant spigot of money creation directed at giant banks and their demons. While the banks are getting nearly all the money, the rest of the economy has been weltering. The government is obsessed with throwing money at bank holding companies to save its friends, while accusing everybody else.

The main architect of this quiet coup, Summers, and his demoncrats and democrats, is supposedly on his way out (see Note1). That may be just a ruse to escape the sword of justice and positive change.

Another Reagan adviser posing as a democrat, and a progressive, Paul Krugman, has been more in evidence recently, as some of his advice has obviously gained traction.

Krugman’s advice: accusing China, with GUSTO (while sparing the American plutocracy of much blame), and augmenting government spending, BLINDLY. It does not matter if said spending is on foolish things: just spend. Keynes, the Jesus Christ of Krugman’s religion, said so, so it ought to be right. A detail: said augmented spending goes through… the friendly giant banks. Friendly to them oligarchs (see Rahm Emanuel’s 17 millions from one bank).

After accusing China, whatever China does, Krugman has also targeted European austerity programs, from Ireland to Lithuania, blaming them for the difficulties of the USA.

Krugman’s latest attacks are against the British government austerity program (some of which was started by Labor before the election in Spring, so there is real tripartisan support for it).

China and Europe are trying hard, in many ways, to change their economies and societies for the best, though, whilst the USA is just forking more money to its greedy plutocrats, calling thatdismal masquerade “recovery and reinvestment (a lot of these huge transfers of money go through hermetic notions such as “Quantitative Easing”, or buying toxic garbage from the banks, as if it were worth anything: it’s done through the banks… the private banks).

Let me repeat slowly. The advice of Krugman is dressed in leftist garb, but it is nothing of the sort. It’s like getting currency advice from Soros: dangerous at any speed.

The policies Krugman promotes, such as Quantitative Easing 2 (flushing the biggest banks with money), and xenophobia, are deeply pro-plutocratic (unsurprisingly Soros advises QE2 too).

This essay will rectify some of Krugman’s massive disinformation. Whether he is fully conscious of it, or not, is irrelevant: Krugman gives bad advice to the government of the USA. The USA needs to engage in Colbertism, as Europe and China are doing, and the defense department of the USA does.

Sending more money on the ravenous world manipulating financiers, as Krugman suggests to do even more of, in practice, amounts to feeding more poison to the victim, throwing more gasoline on the fire, breeding more black mambas inside the house, while screaming that more insanity will bring strength. And lying about other countries, from China to Great Britain, does not help. It’s internationalism at its worst.




According to Krugman, China is bad, Europe is bad, whilst the hard working USA is good, as it tries single handedly to pull the entire world economy out of the slump it itself created. But the USA’s goodness is not quite enough to master the foreign devils. So sad. This is apparently Krugman’s latest New Trade Theory: USA sinks, because big bad aliens did it.

Nothing to do with reaganomics, Obama’s admiration for Reagan, Clinton’s dismal selling of democracy and the future to plutocracy, and Krugman’s work for Reagan, hand in hand with Summers. This is all the past, we don’t need to ruminate it. Krugman would rather talk about…1937. (Not to tell us about American plutocracy supporting Hitler, while undermining democracy, as what was going on then, but to talk about FDR overenthusiastic support of… interest rates!)

One has to know that Krugman is viewed as one of the authors of“New Trade Theory”, NTT, a sophistry which basically boiled down to claiming that trade is good, no matter what. NTT did not work for the common folk, thus apparently Paul Krugman is now down to trading insults with reality, in the apparent hope that this will distract enough simple common folks. Thus New Trade Theory has revealed its true nature: adding insult to injury.

New Trade Theory faltered by ignoring the enormous leverage American plutocracy would get by going global, while no legal strings were attached, and conspiring with local dictators (the later a good source of Bill Clinton’s prodigious income). Plutocracy could drive at any speed, carry whatever cargo it wanted, including the most precious good: people’s employment.

The result is the unfolding economic and social disaster in the USA (and a lot of the world). Krugman may be trying to change his spots to cleanse his soul. And Krugman liberally attacks all foreigners, all over, most of the time, thus diverting attention to the root cause of the problem, already clear with his old boss, Reagan.

Last week Krugman was furious because China had lifted its short term interest rates up to 2.5%. That should lift the Chinese currency, which is one of the obsession of Krugman. So Krugman gets what he wanted, but that makes him even angrier (because, as expected, it changes nothing).

Meanwhile the dollar of the USA is returning a colossal .18% on short term maturities (Fed Funds rate). Yes that is about zero percent. Yes, that is about 13 times LESS than the return on the Chinese currency! In other words the USA is trying to lower the dollar as much as possible (Obama said he wanted to double USA exports in the next five years. But he forgot the slight detail that the USA is becoming a banana republic. I cannot believe he will find so many bananas to sell, even if they come super cheap, not everybody wants to splurge and become obese on American bananas).

So Krugman accuses China to debase its currency, but the USA is debasing the US dollar thirteen times more (this, what I just uttered, is a parody of what plutocratic economists call a model, full of sophisticated mathematics, the sort of things Krugman claims he does. but it’s little more than smoke and mirrors, and silly graphs which mean nothing, except that plutocracy is hiding behind them).

In truth China has something like four giant infrastructure projects running concurrently, in education, trains, biology, clean energy, etc. China builds universities, and China builds Airbuses (yes, from the company headquartered in Toulouse). Just the Chinese High Speed Rail infrastructure project amounts to 500 billion dollars or so (it uses basic European HSR technology).

China has even offered to finance and build the High Speed Rail in California. That is because all the American money goes to American plutocrats, and none is left for mundane activities. As Stiglitz pointed out a few days ago:

The US Federal Reserve may make funds available to banks at close to zero interest rates, but if the banks make those funds available to small and medium-sized enterprises at all, it is at a much higher rate.”

The banks keep the money, making risk free profits, feeding their bonuses, and their power.

And don’t worry: Silicon Valley plutocrats use private planes, and do not want to see 250 mph trains in their backyards, for many reasons, so it will not happen, for a long time (except if American sheep wake up and turn into combative Europeans, which is unlikely, because they have been brainwashed into believe that it is cool to be as cool and politically minded as barnacles).



Krugman, Stiglitz, and also myself, would be viewed, by many as critics from the left. As the last British election unfolded, I was more in support of Mr. Brown, who had long aggravated me, but changed his spots, once he became Prime Minister. However, I hold that the truth is the truth. It is not because one overall disapproves of the general drift of the new PM, Cameron, that one should then support invented data inimical to Cameron. But that is what Krugman has been doing.

When the sheep invents data to support its cause, it invites the wolf to do the same, and the wolf will do it better, with more drastic consequences for the sheep.

In a remarkably misleading editorial, Krugman says the following (see full quotes in the notes):

1) “Fiscal austerity is the fad of 2010. That fad is fading, but the damage is done.” (False: successful Europeans nations, such as Sweden and Germany, have been at austerity for arguably 20 years. Let alone France in the 1930s…)

2) Krugman asserts that austerity does not rest on careful analysis(False: not only it rests on careful analysis, all the way from the High Middle Ages, but austerity rests on careful experience: Europe is made of more than 30 nations, and some went austere, and came out ahead, while the profligate ones are down in the dumps.)

3) Krugman claims that austerity has been justified by the hope of gaining confidence. (False: Europeans and Chinese don’t give primacy to market and business confidence, due to the fact that there, in China and Europe, the state rules, rather than the plutocracy. In the EU around half of the economy is state.)

4) Krugman claims that The sensible thing, then, is to devise a plan for putting the nation’s fiscal house in order, while waiting until a solid economic recovery is under way before wielding the ax. But trendy fashion, almost by definition, isn’t sensible — and the British government seems determined to ignore the lessons of history.

(False: the sensible thing to do is to do what has worked several times in Europe, let alone China: re-establish fiscal, economic and social order, FIRST. Don’t wait for plutocracy to toll for thee. There is no evidence that the other way around ever worked.)

-So what history is Krugman alluding to? Just the relevant, but specious case of the 1937 USA, when FDR squeezed “liquidity” (that is, money creation by private banks, in financial jargon) too early, reverting a nascent recovery of the PRIVATE economy.- This a special case, irrelevant to the present Europe and China. And, of course, irrelevant to the present USA where short term interest rates have long been put at zero by the government (and other rates have been made very low, by same government, to HUGE opportunity cost for the rest of society)-

5) Krugman compare incomparables by claiming that Both the new British budget announced on Wednesday and the rhetoric that accompanied the announcement might have come straight from the desk of Andrew Mellon, the Treasury secretary who told President Herbert Hoover to fight the Depression by liquidating the farmers, liquidating the workers, and driving down wages.”Krugman confuses here the private sector in the USA in 1931, with the public sector in Great Britain in 2011. So many words, so many ideas, so many concepts, so many years! It can all go zoom zoom in one’s head!

6) Krugman then observes that Great Britain’s debt is below “historical average”. He disingenuously forgets to say that historically average debt, contracted in World War One was what the boom of the 1920s was engineered to fix (causing Great depression II). And that historically average debt, furthered by World War Two, and the USA financially perfidious behavior, ruined Great Britain durably thereafter. As a good American patriot, Krugman wants Great Britain to be historically indebted, so it can keep on being the USA’s poodle. Fortunately the present British government has no docile canine temperament, and has figured out American perfidy.

7) Sanctimoniously, Krugman gives the usual preaching about learning from history. But the preceding shows that as he threatens Great Britain with Japan’s fate, he forgets that Japan has a total state debt above 200% of GDP, nearly double that of Greece (itself much larger than Britain’s). Among dozens of other important facts he conveniently forgets to mention as true.

Paul Krugman forgets to say that, overall, the British government spending will keep on augmenting. UK government spending is planned to be UP by 6% in nominal terms by 2014. (Down 3% in real terms with inflation taken into account.) So much for the gloom and doom. Oh, wait…

Why so many spectacular cuts while spending increases? Because the payment of the interest on the British government debt is exploding, and the government has to budget it. It is pretty telling that Krugman does not mention the rotting elephant in the bathroom: what a jolly sight, what a happy surprise!

The problem of exploding interest is not exclusive to Great Britain. In France the entire national income tax is used to pay for the interest on the national debt. French national debt is still augmenting as more debt is piled up to pay for retirees, some retiring at 54 (as in the railways, as if we were still in the age of steam and coal). 10% of the French retirement is paid through more national debt.



I reacted to Krugman’s “British Fashion Victims” with the following reply that the honorable Krugman and his New York Times had the kindness to publish:

In truth, Europe knows what it is doing, and Krugman, with all due respect, does not know enough about what he is talking about, to be cogent, as we will presently demonstrate by deconstructing most of his remarkably erroneous essay.

An example: Prime Minister Cameron program will reduce government employees by 490,000 (much of them through attrition, as employees retire with their expensive pensions). Krugman says that’s terrible, and it will depress the British economy.

However, Great Britain has six million civil servants in 2010. Proportionally to the population, it is as if the USA had 30 millioncivil servants (the UK has a bit more than 60.5 million citizens, the USA a bit more than 310 millions).

But how many civil servants do the USA have? Krugman forgot to point that number out. The USA has 18 millions employed in government, three times as much as in Great Britain. Three times as much, for five times as big a population. Thus, to have the same relative number of civil servants as the USA, PM Cameron would need to fire more than two million British civil servants.

Thus the situation is much different from what Krugman depicts it to be. Different times, different countries, different situations.

Krugman compares Prime Minister Cameron in 2011 to Hoover in 1931. In truth, by letting banks close, Hoover was destroying the private economy. Cameron and his government are cutting what they view as government fat. Education and defense are basically untouched. Nationalized health care is left completely untouched (as promised in the campaign).

Cameron’s and Clegg’s idea is to increase high technology plus innovation. Tories and Liberals are singing the praises of Airbus (a major employer in the UK, as it builds there Airbus’ wings). This is very far from what the Americans expected, as it behooves them that Britain would be anti-European, that is, against itself. The British government wants to make economies by sharing aircraft carriers with France. What is there not to like in this no non sense approach to the real European economy?

Indeed, the analysis in Britain is that the UK has fallen behind France and Germany in high technology industry (after centuries of leading, or being equal), and that this is the root of Great Britain’s doom, should it be not fixed immediately. The aim is to do whatever it takes to catch up in industrial high technology. This is a major insight of Tories and Liberals. It is of course a major rapprochement with the main line of France, first, and Germany, second.

This line of progress was the line of the Franks: instead of enslaving men, let technology do the work… And let’s keep the government small. After five hard centuries of using that method to pull out of the Dark Ages imposed by the Christian obscurantism and fascist theocracy, by the year 1000 CE, the Franks (basically the present Eurozone) had achieved the world’s highest GDP per head.

So it is not surprising that Europe is going back to the tried and true. All of Europe is reigning in state spending. Even Norway (which is more than twice richer, per head, than the USA). Even Sweden, the temple of social democracy, richer per capita than France, or Germany.

Even in Germany, the world number one exporter (even beating sneaky China, most of the time).

In France, more than 10% of the present retirement spending is paid by further borrowing by the state. This is unsustainable, thus unacceptable. Most of the French population (more than 60%) believe that it is unacceptable (while, paradoxically a majority supports the strikers according to the sacred French principle that loud protests are the only religion worth having… as long as it does not interfere with the All Saints vacation).

And the stingy Europeans are right. Those who have borrowed money are owned by those who lent it to them. The last time there was really major borrowing in Europe, it came to be called serfdom. This is indeed what happened in the High Middle Ages.

The debt had to be piled up, then, because the Imperium Francorum was invaded from all directions. First Charles Martel nationalized the church, to pay for the army. But that was not enough.

The terrible Muslim invasions were very expensive to fight as the attacking fascists had harnessed the resources of more than half, and the richest half, of the Roman empire to feed and equip their jihadist armies.

Thus, although the Franks had outlawed slavery, overspending, caused in great part by the necessity of rising the greatest armies since the heydays of imperial Rome, and the cost of reconstruction once the ravaging Muslim armies had been pushed out, brought them right back down into a system where the average person was indebted… And being indebted means being indebted to the rich.

The first European Prime Minister who came to understand that government spending had to be cut down was the Swedish PM, and he was a Social-Democrat. Social democrats had put in place the all controlling Swedish nanny state. That Swedish PM, as progressive a liberal as they come, embarked on a savage austerity program who made him very hated.

At the time, the Swedish economy was collapsing, so there was no choice. The PM started very crafty changes, replacing a lot of costly central state functions by cheaper local citizen initiatives, for example in health care ( midwives and other non MD medical personnel were allowed to make a lot of medical procedures, and lots of health care is conducted on the phone, making Sweden the best health care system, even ahead of the 2% of GDP costlier French health care, which is more gold plated).

Now, but for oil rich Norway, Sweden is doing better economically and socially than all other European countries. And Sweden is in the EU, and it has no oil. The Swedes are proselytizing, and the rest of the 26 EU countries are inspired by it.

In general, Scandinavia has long cracked down on the imperial state. Scandinavian politicians pay for all their private expenses, and do not fly business on flights less than 3.5 hours. One is far from the Imperial Roman state based in Washington, with a First Man (“Princeps”) and a “First Lady” who make Nero and Caligula look like misers, relatively speaking.



Why does this all mean? Trying to boost the economy through throwing money at the people was done during the worst centuries of Rome. It led to success only in the sense that the fascist imperial degeneracy kept on going.

Of course, some will say that those days are back. Imperial Rome was at its most grotesque when the Praetorian Guard put the imperial throne for auction. Yesterday, Barack Obama came to the San Francisco Bay Area. Plutocrats paid $30,400 per person to come to events where the president was acting up. Two months old plutocratic babies paid their $30,400. Then, to have your photograph taken with the president, it would cost you another $6,500.

Yes, $30,400 is more than half the average family income in the USA. And yes, Barack Obama visited several plutocratic homes. Meanwhile the Praetorian Guard is building bases as if it were going to stay a century in Afghanistan. Never mind what Obama says, he will do as the plutocrats say. As long as they pay. A Silicon Valley plutocrat spent more than 100 million dollars of her money to be elected governor.



I am as progressive as they come. I am for central state spending in health, education, etc. I believe in Colbertism, the invention, earlier, by King Henri IV, of the high technology, legislated advancing economy to provide every family with a hen in the pot, at least once a week, as he put it.

However, this government investing in a valuable future works better when the spending is similar to what is done with money creation through private banks (the fractional reserve money creation system). The state brings in 10%, of the money, the privates do the rest. So the privates leverage on public money. For example in Europe, 250 mph, High Speed Rail is financed and built by private companies, leveraging governmental input. The USA used to do this, for example when railroads were built in the USA in the 19C. But for that government has to have available money to spend. This is highly relevant: 1.2 million construction workers are idle, and they could be put to work on conventional railroads, making them faster, safer, more efficient. But of course that cannot happen as long as the money goes to the corruptocrats and other plutocrats.

To borrow for current spending is unacceptable, in a family, but even more in a country: a family can die, and escape debt that way, but not a country…without great mayhem. Actually this is exactly how debt leads to war.

Cautious spending, investment spending, is the way to go. Unfortunately, Obama’s spending, deluded by Reagan advisers, and their plutocratic masters, has been neither. What British PM Cameron is doing is risky, but it may well work. What has been done under Obama, so far, cannot work.


Patrice Ayme


Note 1: STIMULATING PLUTOCRACY, NOT JOBS: First there was Larry Summers, who used to be a Reagan economic adviser, at the inception of the plan to put the plutocracy in power much more than it already was (“trickle-down economics”). Summers advised to write as many big checks to the banks as needed, to save their owners and managers.

TARP was put in evidence, but was only a small part of the (on-going) support to the giant banks and their giant owners. A grandly called “stimulus” was also put in evidence. But it was nothing of the sort. More than half of it was made of tax cuts (yes, a la Reagan!), and most of the rest compensated for the states’ financial collapse. A tiny proportion went to creating jobs (mostly of the menial, non multiplying type, such as improving trails in the middle of national lands).

This meant that money creation was mostly directed at Wall Street. Money was created, to serve Wall Street, not industry. In 2 years Obama stimulated jobs for 50 billion dollars (the trails above, and a few potholes), while Wall Street, in bonuses alone, distributed to itself 300 billion dollars. The source of the money is the same: taxpayers. To create these 300 billion dollars of bonuses, about four trillion dollars were spent.

How? Through Quantitative Easing. Basically the government lent short at zero interest to the giant banks, which were then allowed to reinvest with the government on so called longer maturities, at much higher interest. Many other tricks were used, such as having nationalized companies (FHA, Fannie Mae, Freddie Mac) buy at outrageous prices worthless mish mash of over-valued mortgages. said nationalized companies are broke.

The other of ex-twenty something Reagan adviser, Summers’ alter ego, at least in the Reagan White House, was Paul Krugman. He seems to be listened to recently (considering the USA’s aggressive dollar devaluation, and all azimuths attacks against other countries).


Note 2: HOW THE QUR’AN CREATED MIDDLE AGE SERFDOM: One way the Franks beat the Muslim armies, aside from sheer intelligence, was with very heavy cavalry, and its giant armored horses. The cost was tremendous, but a cavalry charge by European knights would go through Muslim horse like a hot knife into butter. More generally a highly specialized military aristocracy, training itself from early childhood was created (under Charles Martel). But it put all of Western Europe in debt. On the positive side, the savages from the north (Vikings), from the east (various types of Huns), and the south (Muslims), were thereafter domesticated, once their armies had been defeated and chased out (which took more than 12 centuries in the case of Europe itself, and various Muslim theocracies).

Note 3: American ignorance is an astounding marvel: The other day, Fox News’ Neal Cavuto, one of Fox’s stars, who thinks he is a business genius, was interviewing a BRITISH European Member of Parliament in Strasbourg, France (the Euro parliament sits in Strasbourg, part time).

As he interviewed the British European MP, Cavuto idiotically insisted, again and again, that “Great Britain had to be happy not being part of that club“. Meaning that Great Britain had to be happy not being in the European UNION. First, the EU is not a club, but an Union.

Secondly Cavuto was interviewing a British Euro MP, knowing very well that the gentleman was British, and a Euro MP, but apparently, Cavuto was congenitally incapable of drawing the conclusion that this meant that Great Britain was part of the European Union.

This is the degree of ignorance of Americans about Europe, in full evidence. And it’s not just Fox’s Cavuto: Krugman and Stiglitz, and smart, for American economists, are both deeply ignorant of European politics, history and economics, to the point that the advice they give about Europe reminds of the advice of Huns about Ukraine.

(Stiglitz, as Krugman has long been anti-European; in the last few days, Stiglitz wrote an essay in the Financial Times along the lines I have long held, of doing what one could call an investment stimulus… by opposition to a current account debt pile up, advocated before. So some are learning… Hopefully such knowledge can reach Obama…)


Written by Paul Handover

October 31, 2010 at 00:00


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