Category: Economics

Who is kidding who, conclusion.

A frank and honest assessment of the reality of the present economic situation, Part Two.

Yesterday, I wrote about publishing, in two parts, a recent article from the Blogsite, Washington’s Blog.  If you missed the first part that was here.  As I wrote yesterday, it is detailed and comprehensive, which is why I think it will be more easily digested as two parts presented on Learning from Dogs over this week-end.

So on to Part Two.

The particular post that appeared on Washington’s Blog on the 28th April was entitled Gallup Poll Shows that More Americans Believe the U.S. is in a Depression than is Growing … Are They Right? You can link to it here.

Blytic calculates that the current average duration of unemployment is some 32 weeks, the median duration is around 20 weeks, and there are approximately 6 million people unemployed for 27 weeks or longer.

Moreover, employers are discriminating against job applicants who are currently unemployed, which will almost certainly prolong the duration of joblessness.

As I noted in January 2009:

In 1930, there were 123 million Americans.

At the height of the Depression in 1933, 24.9% of the total work force or 11,385,000 people, were unemployed.

Will unemployment reach 25% during this current crisis?

I don’t know. But the number of people unemployed will be higher than during the Depression.

Specifically, there are currently some 300 million Americans,154.4 million of whom are in the work force.

Unemployment is expected to exceed 10% by many economists, and Obama “has warned that the unemployment rate will explode to at least 10% in 2009”.

10 percent of 154 million is 15 million people out of work – more than during the Great Depression.

Given that the broader U-6 measure of unemployment is currently around 17% (ShadowStats.com puts the figure at 22%, and some put iteven higher), the current numbers are that much worse.

But it is important to look at some details.

For example, official Bureau of Labor Statistics numbers put U-6 above 20% in several states:

  • California: 21.9
  • Nevada: 21.5
  • Michigan 21.6
  • Oregon 20.1

In the past year, unemployment has grown the fastest in the mountain West.

And certain races and age groups have gotten hit hard.

According to Congress’ Joint Economic Committee:

By February 2010, the U-6 rate for African Americans rose to 24.9 percent.

34.5% of young African American men were unemployed in October 2009.As the Center for Immigration Studies noted last December:

Unemployment rates for less-educated and younger workers:

  • As of the third quarter of 2009, the overall unemployment rate for native-born Americans is 9.5 percent; the U-6 measure shows it as 15.9 percent.
  • The unemployment rate for natives with a high school degree or less is 13.1 percent. Their U-6 measure is 21.9 percent.
  • The unemployment rate for natives with less than a high school education is 20.5 percent. Their U-6 measure is 32.4 percent.
  • The unemployment rate for young native-born Americans (18-29) who have only a high school education is 19 percent. Their U-6 measure is 31.2 percent.
  • The unemployment rate for native-born blacks with less than a high school education is 28.8 percent. Their U-6 measure is 42.2 percent.
  • The unemployment rate for young native-born blacks (18-29) with only a high school education is 27.1 percent. Their U-6 measure is 39.8 percent.
  • The unemployment rate for native-born Hispanics with less than a high school education is 23.2 percent. Their U-6 measure is 35.6 percent.
  • The unemployment rate for young native-born Hispanics (18-29) with only a high school degree is 20.9 percent. Their U-6 measure is 33.9 percent.

No wonder Chris Tilly – director of the Institute for Research on Labor and Employment at UCLA – says that African-Americans and high school dropouts are experiencing depression-level unemployment.

And as I have previously noted, unemployment for those who earn $150,000 or more is only 3%, while unemployment for the poor is 31%.

The bottom line is that it is difficult to compare current unemployment with what occurred during the Great Depression. In some ways things seem better now. In other ways, they don’t.

Factors like where you live, race, income and age greatly effect one’s experience of the severity of unemployment in America.

In addition, wages have plummeted for those who are employed. As Pulitzer Prize-winning tax reporter David Cay Johnston notes:

Every 34th wage earner in America in 2008 went all of 2009 without earning a single dollar, new data from the Social Security Administration show. Total wages, median wages, and average wages all declined ….

And see this, this, and this.

Food Stamps Replace Soup Kitchens

1 out of every 7 Americans now rely on food stamps.

While we don’t see soup kitchens, it may only be because so many Americans are receiving food stamps.

Indeed, despite the dramatic photographs we’ve all seen of the 1930s, the 43 million Americans relying on food stamps to get by may actually be much greater than the number who relied on soup kitchens during the Great Depression.

In addition, according to Chaz Valenza (a small business owner in New Jersey who earned his MBA from New York University’s Stern School of Business)millions of Americans are heading to foodbanks for the first time in their lives.

***

The War Isn’t Working

Given the above facts, it would seem that the government hasn’t been doingmuch. But the scary thing is that the government has done more than during the Great Depression, but the economy is still stuck a pit.

***

The amount spent in emergency bailouts, loans and subsidies during this financial crisis arguably dwarfs the amount which the government spent during the New Deal.

For example, Casey Research wrote in 2008:

Paulson and Bernanke have embarked on the largest bailout program ever conceived …. a program which so far will cost taxpayers $8.5 trillion.

[The updated, exact number can be disputed. But as shown below, the exact number of trillions of dollars is not that important.]

So how does $8.5 trillion dollars compare with the cost of some of the major conflicts and programs initiated by the US government since its inception? To try and grasp the enormity of this figure, let’s look at some other financial commitments undertaken by our government in the past:

As illustrated above, one can see that in today’s dollar, we have already committed to spending levels that surpass the cumulative cost of all of the major wars and government initiatives since the American Revolution.

Recently, the Congressional Research Service estimated the cost of all of the major wars our country has fought in 2008 dollars. The chart above shows that the entire cost of WWII over four to five years was less than half the current pledges made by Paulson and Bernanke in the last three months!

In spite of years of conflict, the Vietnam and the Iraq wars have each cost less than the bailout package that was approved by Congress in two weeks. The Civil War that devastated our country had a total price tag (for both the Union and Confederacy) of $60.4 billion, while the Revolutionary War was fought for a mere $1.8 billion.

In its fifty or so years of existence, NASA has only managed to spend $885 billion – a figure which got us to the moon and beyond.

The New Deal had a price tag of only $500 billion. The Marshall Plan that enabled the reconstruction of Europe following WWII for $13 billion, comes out to approximately $125 billion in 2008 dollars. The cost of fixing the S&L crisis was $235 billion.

CNBC confirms that the New Deal cost about $500 billion (and the S&L crisis cost around $256 billion) in inflation adjusted dollars.

So even though the government’s spending on the “war” on the economic crisis dwarfs the amount spent on the New Deal, our economy is still stuck in the mud.

Why Haven’t Things Gotten Better for the Little Guy?

Government leaders make happy talk about how things are improving, but happy talk cannot fix the economy.

Two fundamental causes of the Great Depression, and of our current economic problems, are fraud and inequality:

There are, of course, other reasons the economy is still stuck in a ditch for most Americans, such as encouraging too much leverage, bailing out the big speculators, failing to break up the mammoth banks, and failing to spend wisely, where it will do some good. See this and this. But fraud and inequality were core causes of the Depression, and our failure to address them will only prolong our misery.

Who is kidding who?

A frank and honest assessment of the reality of the present economic situation.

The next two days see me publishing, in two parts, a recent article from the Blogsite, Washington’s Blog.  Perhaps one can’t blame the efforts of so many of the western governments’ leaders to talk up the economy but at street level the vast majority of people feel pain about their circumstances.

The particular post that appeared on Washington’s Blog on the 28th April was entitled Gallup Poll Shows that More Americans Believe the U.S. is in a Depression than is Growing … Are They Right? You can link to it here. It is detailed and comprehensive, which is why I think it will be more easily digested as two parts presented on Learning from Dogs over this week-end.

Here’s the first part.

Consumer confidence is, well … in somewhat of a depression.

Reuters reports today:

The April 20-23 Gallup survey of 1,013 U.S. adults found that only 27 percent said the economy is growing. Twenty-nine percent said the economy is in a depression and 26 percent said it is in a recession, with another 16 percent saying it is “slowing down,” Gallup said.

Tyler Durden notes:

That means that more Americans think the country is in a Depression, let alone recession, than growing.

How can so many Americans believe that we’re in a depression, when the stock market and commodity prices have been booming?

As I noted last week:

Instead of directly helping the American people, the government threwtrillions at the giant banks (including foreign banks; and see this) . The big banks have – in turn – used a lot of that money to speculate in commodities, including food and other items which are now driving up the price of consumer necessities [as well as stocks]. Instead of using the money to hire Americans, they’re hiring abroad (and getting tax refunds from the government).

But don’t rising stock prices help create wealth?

Not really. As I pointed out in January:

A rising stock market doesn’t help the average American as much as you might assume.

For example, Robert Shiller noted in 2001:

We have examined the wealth effect with a cross-sectional time-series data sets that are more comprehensive than any applied to the wealth effect before and with a number of different econometric specifications. The statistical results are variable depending on econometric specification, and so any conclusion must be tentative. Nevertheless, the evidence of a stock market wealth effect is weak; the common presumption that there is strong evidence for the wealth effect is not supported in our results. However, we do find strong evidence that variations in housing market wealth have important effects upon consumption. This evidence arises consistently using panels of U.S. states and individual countries and is robust to differences in model specification. The housing market appears to be more important than the stock market in influencing consumption in developed countries.

I pointed out in March:

Even Alan Greenspan recently called the recovery “extremely unbalanced,” driven largely by high earners benefiting from recovering stock markets and large corporations.

***

As economics professor and former Secretary of Labor Robert Reichwrites today in an outstanding piece:

Some cheerleaders say rising stock prices make consumers feel wealthier and therefore readier to spend. But to the extent most Americans have any assets at all their net worth is mostly in their homes, and those homes are still worth less than they were in 2007. The “wealth effect” is relevant mainly to the richest 10 percent of Americans, most of whose net worth is in stocks and bonds.

I noted in May:

As of 2007, the bottom 50% of the U.S. population owned only one-half of one percent of all stocks, bonds and mutual funds in the U.S. On the other hand, the top 1% owned owned 50.9%.

***

(Of course, the divergence between the wealthiest and the rest has only increased since 2007.)

And last month Professor G. William Domhoff updated his “Who Rules America” study, showing that the richest 10% own 98.5% of all financial securities, and that:

The top 10% have 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate. Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America.

Indeed, most stocks are held for only a couple of moments – and aren’t held by mom and pop investors.

How Bad?

How bad are things for the little guy?

Well, as I noted in January, the housing slump is worse than during the Great Depression.

As CNN Money points out today:

Wal-Mart’s core shoppers are running out of money much faster than a year ago due to rising gasoline prices, and the retail giant is worried, CEO Mike Duke said Wednesday.

“We’re seeing core consumers under a lot of pressure,” Duke said at an event in New York. “There’s no doubt that rising fuel prices are having an impact.”

Wal-Mart shoppers, many of whom live paycheck to paycheck, typically shop in bulk at the beginning of the month when their paychecks come in.

Lately, they’re “running out of money” at a faster clip, he said.

“Purchases are really dropping off by the end of the month even more than last year,” Duke said. “This end-of-month [purchases] cycle is growing to be a concern.

And – in case you still think that the 29% of Americans who think we’re in a depression are unduly pessimistic – take a look at what I wrote last December:

The following experts have – at some point during the last 2 years – said that the economic crisis could be worse than the Great Depression:

***

States and Cities In Worst Shape Since the Great Depression

States and cities are in dire financial straits, and many may default in 2011.

California is issuing IOUs for only the second time since the Great Depression.

Things haven’t been this bad for state and local governments since the 30s.

Loan Loss Rate Higher than During the Great Depression

In October 2009, I reported:

In May, analyst Mike Mayo predicted that the bank loan loss rate would be higher than during the Great Depression.

In a new report, Moody’s has just confirmed (as summarized by Zero Hedge):

The most recent rate of bank charge offs, which hit $45 billion in the past quarter, and have now reached a total of $116 billion, is at 3.4%, which is substantially higher than the 2.25% hit in 1932, before peaking at at 3.4% rate by 1934.

And see this.

Here’s a chart summarizing the findings:

(click here for full chart).

Indeed, top economists such as Anna Schwartz, James Galbraith, Nouriel Roubini and others have pointed out that while banks faced a liquidity crisis during the Great Depression, today they are wholly insolvent. See this, this,this and this. Insolvency is much more severe than a shortage of liquidity.
Unemployment at or Near Depression Levels

USA Today reports today:

So many Americans have been jobless for so long that the government is changing how it records long-term unemployment.

Citing what it calls “an unprecedented rise” in long-term unemployment, the federal Bureau of Labor Statistics (BLS), beginning Saturday, will raise from two years to five years the upper limit on how long someone can be listed as having been jobless.

***

The change is a sign that bureau officials “are afraid that a cap of two years may be ‘understating the true average duration’ — but they won’t know by how much until they raise the upper limit,” says Linda Barrington, an economist who directs the Institute for Compensation Studies at Cornell University’s School of Industrial and Labor Relations.

***

“The BLS doesn’t make such changes lightly,” Barrington says. Stacey Standish, a bureau assistant press officer, says the two-year limit has been used for 33 years.

***

Although “this feels like something we’ve not experienced” since the Great Depression, she says, economists need more information to be sure.

The following chart from Calculated Risk shows that this is not a normal spike in unemployment:

As does this chart from Clusterstock:


As I noted in October:

It is difficult to compare current unemployment with that during the Great Depression. In the Depression, unemployment numbers weren’t tracked very consistently, and the U-3 and U-6 statistics we use today weren’t used back then. And statistical “adjustments” such as the “birth-death model” are being used today that weren’t used in the 1930s.

But let’s discuss the facts we do know.

The Wall Street Journal noted in July 2009:

The average length of unemployment is higher than it’s been since government began tracking the data in 1948.

***

The job losses are also now equal to the net job gains over the previous nine years, making this the only recession since the Great Depression to wipe out all job growth from the previous expansion.

The Christian Science Monitor wrote an article in June entitled, “Length of unemployment reaches Great Depression levels“.

60 Minutes – in a must-watch segment – notes that our current situation tops the Great Depression in one respect: never have we had a recession this deep with a recovery this flat. 60 Minutes points out that unemployment has been at 9.5% or above for 14 months:

Pulitzer Prize-winning historian David M. Kennedy notes in Freedom From Fear: The American People in Depression and War, 1929-1945(Oxford, 1999) that – during Herbert Hoover’s presidency, more than 13 million Americans lost their jobs. Of those, 62% found themselves out of work for longer than a year; 44% longer than two years; 24%longer than three years; and 11% longer than four years.

Part Two tomorrow.

Think you understand money?

This documentary may, probably WILL,  enlighten you.

On the 30th March I wrote about the film Inside Job.  Then a few days ago James Kwak of Baseline Scenario, a blog that I have been reading for some time now, also wrote a piece about the film, opening his Post thus,

I finally saw Inside Job at a friend’s house tonight. I don’t have anything original to say about it. I thought it was a very, very good movie. There were lots of little things that weren’t quite right (many of which were probably conscious decisions to simplify details for the sake of comprehension), but I don’t think any of them were substantively misleading.

As always with Baseline Scenario, the comments are as interesting and educational as the article, and that was just as valid in this case.  One of the comments was from Carla who wrote,

I think Inside Job is no longer available to view for free now that the DVD is for sale at Amazon (well worth the purchase, BTW).

But at the same site I found “The Money Fix,” which you can watch for free: http://topdocumentaryfilms.com/money-fix/

Also, there’s another site with some good free docs:http://www.freedocumentaries.org.

Anyway, we watched the film on Tuesday evening and, boy oh boy, was it an eye-opener.

I promise you, the full film is so well worth watching.   (And do read to the end of this Post!)

The film also makes reference to the website The Money Fix which has a great number of resources for those that wish to explore further this fascinating subject.  Thanks Carla.

 

The day after April 1st!

When it all gets real close and personal.

I have been a great fan of the BBC’s business editor, Robert Peston, and read his Blog as often as I can.  Recently, the focus has been on Ireland.

A few days ago, before the announcement by the Irish premier and finance minister as to their vision for the future of Ireland’s banks, Robert penned a post that started as follows:

The unbelievable truth about Ireland and its banks
Ireland’s central bank and new government will confirm on Thursday that the hole in the country’s banks is even wider, deeper and darker than seemed to be the case last November, when those bust banks forced the country to go with a begging bowl to the eurozone’s rescue funds and the International Monetary Fund (IMF) for 67.5bn euros (£59bn) of rescue loans.

That article then led me to Paul Mason, BBC Newsnight’s economics editor, who also writes a Blog.  He wrote on the 30th March,

A short summary of the Euro snafu that’s about to happen:

1) Tomorrow Ireland publishes the results of bank stress tests. It has to find – or the EU has to find – another E18-25bn to shore up its failing banks.

etc., etc.

Again, while the article is interesting, the whole point of this Post was one comment made to that Paul Mason piece.  Here it is,

At 00:47am on 31st Mar 2011, tawse57 wrote:

I am bored with all these posts about the economy now. Can we go back to cheese and crackers and the mysterious case of Paul Mason’s mobo contacts?

I was just talking with a 35 year old young man who is married and has a young child.

His wife, quite rightly, does not wish to move away from the place where she was born and brought up – Cornwall.

But he tells me that, despite almost saving £100,000 by putting in every hour they could in working and saving, that they stand no chance of ever owning their own home.

He says the house that he rents have asking prices of about £450,000 despite most of them just sitting on the market for years because no one, no one local anyhow, can afford them. What does sell goes to rich Londoners.

He is destined to pay out most of his wages in private landlord rents. He can’t get into a Council house or a Housing Association property because they either no longer exist or the waiting lists are measured in decades.

He is not prepared to have such a millstone of stress, worry and financial drain around his neck. It would kill him. I don’t blame him.

His story is one of hundreds of thousands, perhaps millions, of people in the UK today.

I mention this as the bank stress tests are directly connected with the massive credit bubble, much of it a housing bubble of liar loans, that brought the global economy to its knees, bankrupted banks and still threatens to bankrupt nations.

All of us on here know this. We are an enlightened bunch.

But I think it is worth remembering that the affects of the global credit binge are still directly affecting so many in this country.

The UK is almost alone in the World in not yet seeing a massive housing crash. The Government and the Bank of England have gone out of their way stop it happening in order to protect the banks who so stupidly, but also so greedily, loaned so many liar loans on bricks and mortar not in other countries but here in the UK.

Those UK banks that keep threatening to leave our shores are up to their eyeballs in global liar loans. You name a country in trouble and you can bet your bottom dollar, which might be the only thing most of us have left soon, that British banks are at the heart of it all.

It is long overdue that this giant house of cards came crashing down. It is long over-due that, as a Society, we cut out the cancer of dirty banks and dirty bankers from our lives and from these shores.

They are leeches on the souls of Men. Gosh, I am getting poetic in my anger. It must be that teaspoon of Jack Daniels I put in my midnight cocoa.

So what if the banks fail their stress tests today, next week or next year. It won’t make a squat of difference to that couple in Cornwall. It won’t make a squat of difference to most of us.

The worst thing that can happen is, as Alistair Darling so panicked, that the ATM machines run empty. Well, what would happen then? Would the sky fall in? Would us polite British all sit at home and do nothing.

Or would we take our cue from the Egyptians, the Tunisians and all the rest?

Perhaps what this country needs most of all is for another even bigger banking crisis? If it happens I think I would feel safer being one of the masses instead of one of the banking elite.

I do hope the banks fail the stress tests. I do hope it brings about another crisis. I do hope that, this time, the People say enough is enough and that this rotting cancer within Humanity is lanced with a fiery lancie thingy.

I could murder a bit of cheese on a nice cracker now.

Whoever you are tawse57, I like your style.  Very powerful words.

“It is error alone which needs the support of government.  Truth can stand by itself.”

~Thomas Jefferson (third President of the United States from 1801 to 1809)

April Fool!

If only it was all a giant spoof, a huge joke played on us all!

I was intrigued by a quick look-up on WikiPedia to see that the history of April 1st, as a day for foolish ideas, goes back a very long way.  Here’s a small extract from the relevant page on WikiPedia,

In Chaucer’s Canterbury Tales (1392), the “Nun’s Priest’s Tale” is set Syn March bigan thritty dayes and two<. Chaucer probably meant 32 days after March, i.e. May 2, the anniversary of the engagement of King Richard II of England to Anne of Bohemia, which took place in 1381. However, readers apparently misunderstood this line to mean “32nd of March,” i.e. 1st April. In Chaucer’s tale, the vain cock Chauntecleer is tricked by a fox.

I mean wouldn’t it be wonderful if there was a press release today from, say, Goldman Sachs, sort of along the following lines,

At Goldman Sachs, success without integrity is failure.

Goldman Sachs’ culture reflects more than a structure. It is a statement of values. Our commitment to integrity, teamwork, excellence, meritocracy and innovation enables us to build our relationships, with clients and with colleagues, on honesty and trust. It drives our ability to deliver extraordinary client service and to generate superior long-term financial performance for our shareholders. Our values inspire us to give back to the community through volunteerism, philanthropy, scholarships and outreach. Each of us in the firm takes pride in our role as a steward of the Goldman Sachs legacy. We understand that our assets are our people, capital and reputation. If any of these is ever diminished, the last is the most difficult to restore.

The above part is taken from the Goldman Sachs website.  Great stuff.  Let me see if I can add to that, in recognition of the date.

Since the publication in the Financial Times in August 2009 of an article referring to our reputation, from which is quoted, “In a survey of 17,000 Americans, Brand Asset Consulting found that Goldman’s stature – as measured by several gauges of brand strength – had suffered in 2008 and 2009.” the Board of Directors have this day resolved:

  • to ensure that no person in the company is paid more than 25 times the annual pay of the lowest worker
  • that the company shall end the practise of claiming tax favours for any form of executive compensation, including stock options
  • that the money saved from the previous two resolutions shall be paid into an industry-wide fund to support all those citizens that are homeless and destitute as a direct result of the global financial crisis of recent times.

There, isn’t that nice!

 

Time for a laugh!

 

 

Inside job

The shocking documentary film about the global financial crisis.

I’m sure many have already see the film Inside Job but we only watched it a few nights ago.  Here’s the trailer.

The film is also available to watch on Top Documentary Films and is summarised on that website thus:

As he did with the occupation of Iraq in No End in Sight, Charles Ferguson shines a light on the global financial crisis in Inside Job.

Accompanied by narration from Matt Damon, Ferguson begins and ends in Iceland, a flourishing country that gave American-style banking a try – and paid the price.

Then he looks at the spectacular rise and cataclysmic fall of deregulation in the United States. Unlike Alex Gibney’s fiscal films,Enron: The Smartest Guys in the Room and Casino Jack, Ferguson builds his narrative around dozens of players, interviewing authors, bank managers, government ministers, and even a psychotherapist, who speaks to a culture that encourages Gordon Gekko-like behavior, but the number of those who declined to comment, like Alan Greenspan, is even larger.

Though the director isn’t as combative as Michael Moore, he asks tough questions and elicits squirms from several participants, notably former Treasury secretary David McCormick and Columbia dean Glenn Hubbard, George W. Bush’s economic adviser.

Their reactions are understandable, since the borders between Wall Street, Washington, and the Ivy League dissolved years ago; it’s hard to know who to trust when conflicts of interest run rampant.

If Ferguson takes Reagan and Bush to task for tax cuts that benefit the wealthy, he criticizes Clinton for encouraging derivatives and Obama for failing to deliver on the promise of reform. And in the category of unlikely heroes: former governor Eliot Spitzer, who fought against fraud as New York’s attorney general (he’s the subject of Gibney’s documentary Client 9).

Sony have available on their website a useful study guide.  It appears to be written with students in mind but there is much valuable background information there for all.  The guide, in pdf, may be seen here.

It would all have been worthwhile, if that’s the correct term, if we had seen effective regulatory responses from strong governments but, as the film points out, the millions of people on the receiving end of harsh, downward adjustment of personal wealth are still waiting.

Meanwhile, Europe continues to bleed, American housing is still trending downwards and the real effect of the Japanese earthquake is far from clear.

We are living in interesting times!

“Oh my ears and whiskers, how late it’s getting”

The quote that forms the title of this article is from Alice in Wonderland and is spoken by the Rabbit.

It's getting late!

At first, that quote seems quite mundane. However, most find ‘Alice’ quotes are rich in truisms and life’s great philosophies.  How about this?

Alice: “It would be so nice if something made sense for a change.”

So what drew me to these two illustrations from Lewis Carroll’s magical pen?  Just this sample of a few days of stuff coming into my email box!

1. Our environment.

From a recent piece on the BBC website.

Ice loss from Antarctica and Greenland has accelerated over the last 20 years, research shows, and will soon become the biggest driver of sea level rise.

From satellite data and climate models, scientists calculate that the two polar ice sheets are losing enough ice to raise sea levels by 1.3mm each year.

Overall, sea levels are rising by about 3mm (0.12 inches) per year.

2. Running on Oil

A recent email in my in-box from John Maudlin was all about Japan and oil.  But there were some stark messages about our use of oil across the planet.  Try this:

There are multiple sources for many of the metals Japan imports, so that if supplies stop flowing from one place it can get them from other places. The geography of oil is more limited. In order to access the amount of oil Japan needs, the only place to get it is the Persian Gulf. There are other places to get some of what Japan needs, but it cannot do without the Persian Gulf for its oil.

This past week, we saw that this was a potentially vulnerable source. The unrest that swept the western littoral of the Arabian Peninsula and the ongoing tension between the Saudis and Iranians, as well as the tension between Iran and the United States, raised the possibility of disruptions. The geography of the Persian Gulf is extraordinary. It is a narrow body of water opening into a narrow channel through the Strait of Hormuz. Any diminution of the flow from any source in the region, let alone the complete closure of the Strait of Hormuz, would have profound implications for the global economy. [My italics.]

3. Energy rethink

From Rob Dietz of CASSE, Centre for the Advancement of the Steady State Economy.

As if we really required more prompting, the unfolding nuclear accidents in Japan are confirming what we must do.  When a disaster strikes, the most urgent response is to help those who are suffering, prevent further calamities, and clean up the messes—it’s a time to get busy.  But the next critical step is to figure out what we might do differently—it’s a time to take a step back and contemplate how we got where we are and where we might go from here.  With each passing day, it is becoming increasingly clear that we need to rethink where and how we get our energy supplies.

And later in this article:

A New York Times article provides an astonishing description of what happened at the Fukushima nuclear power plant where the backup generators failed to cool the overheating reactor:

The central problem arises from a series of failures that began after the tsunami. It easily overcame the sea walls surrounding the Fukushima plant. It swamped the diesel generators, which were placed in a low-lying area, apparently because of misplaced confidence that the sea walls would protect them.

The key phrase in that description is “misplaced confidence.”  Misplaced confidence sums up how we got to this point in history when it comes to selecting sources of energy to power our ever-expanding economy.  Regardless of what smooth-talking P.R. professionals say, a nuclear power facility has been the site of a serious accident about every 10 years: witness Three Mile Island in the U.S. in 1979, Chernobyl in Ukraine in 1986, Tokaimura in Japan in 1999, and now Fukushima in 2011.  “Safe nuclear power” is an offensive oxymoron.

Misplaced confidence also describes our failure to take big strides on phasing out fossil fuels.  We have misplaced confidence that we’ll find a technological solution to climate destabilization, that the market will take care of the problem, and that Mother Nature will continue to warehouse the emissions from our economy with no consequences.

Maybe millions of us should be adopting the same query as Alice; “It would be so nice if something made sense for a change.”  Because continuing as we are without understanding the urgent need to make ‘sense’, to take heed, of the living, conscious planet that is our only home is utter nonsense!

Back to Mr Rabbit, “Oh my ears and whiskers, how late it’s getting!”

Yes, Mr Rabbit, how late it’s getting!

Plan B for Planet Earth

Going for a sustainable future is not ‘pie in the sky’.

I have been attempting to write on Learning from Dogs about my experience reading the Lester Brown book, World on the Edge. In

Lester Brown's book

fact, there have been four articles written all with the title Total, Utter Madness (Pts 1 to 4.)  If you read the early chapters of Lester’s book you will have no issue with the notion of summarising the propositions that he presents as ‘total, utter madness’.

There was another article published on the 3rd March that I called, ‘Where are we off to?‘ that presented more information about the fragility of mankind on this Planet if we don’t change our ways, and soon. (There are links to all my articles from this 3rd March piece.)

But much of the second half of Lester Brown’s book is about the relative ease with which we can change the way we all live and offer the generations ahead of us a real alternative to the selfish, greedy way in which we treat Planet Earth at present.  That alternative is called Plan B.

Plan B offers the real hope of developing a sustainable relationship with our planet.  So this post is to reproduce in full a recent release by the Earth Policy Institute about wind power.

Wind: The Center of the Plan B Economy

Lester R. Brown

For many years, a small handful of countries dominated growth in wind power, but this is changing as the industry goes global, with more than 70 countries now developing wind resources. Between 2000 and 2010, world wind electric generating capacity increased at a frenetic pace from 17,000 megawatts to nearly 200,000 megawatts.

Measured by share of electricity supplied by wind, Denmark is the leading nation at 21 percent. Three north German states now get 40 percent or more of their electricity from wind. For Germany as a whole, the figure is 8 percent—and climbing. And in the state of Iowa, enough wind turbines came online in the last few years to produce up to 20 percent of that state’s electricity.

In terms of sheer volume, the United States leads the world with 35,000 megawatts of wind generating capacity, followed by China and Germany with 26,000 megawatts each. Texas, long the leading U.S. oil-producing state, is now also the nation’s leading generator of electricity from wind. It has 9,700 megawatts of wind generating capacity online, 370 megawatts more under construction, and a huge amount under development. If all of the wind farms projected for 2025 are completed, Texas will have 38,000 megawatts of wind generating capacity—the equivalent of 38 coal-fired power plants. This would satisfy roughly 90 percent of the current residential electricity needs of the state’s 25 million people.

In July 2010, ground was broken for the Alta Wind Energy Center (AWEC) in the Tehachapi Pass, some 75 miles north of Los Angeles, California. At 1,550 megawatts, it will be the largest U.S. wind farm. The AWEC is part of what will eventually be 4,500 megawatts of renewable power generation, enough to supply electricity to some 3 million homes.

Since wind turbines occupy only 1 percent of the land covered by a wind farm, farmers and ranchers can continue to grow grain and graze cattle on land devoted to wind farms. In effect, they double-crop their land, simultaneously harvesting electricity and wheat, corn, or cattle. With no investment on their part, farmers and ranchers typically receive $3,000–10,000 a year in royalties for each wind turbine on their land. For thousands of ranchers in the U.S. Great Plains, wind royalties will dwarf their net earnings from cattle sales.

In considering the energy productivity of land, wind turbines are in a class by themselves. For example, an acre of land in northern Iowa planted in corn can yield $1,000 worth of ethanol per year. That same acre used to site a wind turbine can produce $300,000 worth of electricity per year. This helps explain why investors find wind farms so attractive.

Impressive though U.S. wind energy growth is, the expansion now under way in China is even more so. China has enough onshore harnessable wind energy to raise its current electricity consumption 16-fold. Today, most of China’s 26,000 megawatts of wind generating capacity come from 50- to 100-megawatt wind farms. Beyond the many other wind farms of that size that are on the way, China’s new Wind Base program is creating seven wind mega-complexes of 10 to 38 gigawatts each in six provinces (1 gigawatt equals 1,000 megawatts). When completed, these complexes will have a generating capacity of more than 130 gigawatts. This is equivalent to building one new coal plant per week for two and a half years.

Of these 130 gigawatts, 7 gigawatts will be in the coastal waters of Jiangsu Province, one of China’s most highly industrialized provinces. China is planning a total of 23 gigawatts of offshore wind generating capacity. The country’s first major offshore project, the 102-megawatt Donghai Bridge Wind Farm near Shanghai, is already in operation.

In Europe, which now has 2,400 megawatts of offshore wind online, wind developers are planning 140 gigawatts of offshore wind generating capacity, mostly in the North Sea. There is enough harnessable wind energy in offshore Europe to satisfy the continent’s needs seven times over.

In September 2010, the Scottish government announced that it was replacing its goal of 50 percent renewable electricity by 2020 with a new goal of 80 percent. By 2025, Scotland expects renewables to meet all of its electricity needs. Much of the new capacity will be provided by offshore wind.

Denmark is looking to push the wind share of its electricity to 50 percent by 2025, with most of the additional power coming from offshore. In contemplating this prospect, Danish planners have turned conventional energy policy upside down. They plan to use wind as the mainstay of their electrical generating system and to use fossil-fuel-generated power to fill in when the wind dies down.

Spain, which has 19,000 megawatts of wind-generating capacity for its 45 million people, got 14 percent of its electricity from wind in 2009. On November 8th of that year, strong winds across Spain enabled wind turbines to supply 53 percent of the country’s electricity over a five-hour stretch. London Times reporter Graham Keeley wrote from Barcelona that “the towering white wind turbines which loom over Castilla-La Mancha—home of Cervantes’s hero, Don Quixote—and which dominate other parts of Spain, set a new record in wind energy production.”

In 2007, when Turkey issued a request for proposals to build wind farms, it received bids to build a staggering 78,000 megawatts of wind generating capacity, far beyond its 41,000 megawatts of total electrical generating capacity. Having selected 7,000 megawatts of the most promising proposals, the government is issuing construction permits.

In wind-rich Canada, Ontario, Quebec, and Alberta are the leaders in installed capacity. Ontario, Canada’s most populous province, has received applications for offshore wind development rights on its side of the Great Lakes that could result in some 21,000 megawatts of generating capacity. The provincial goal is to back out all coal-fired power by 2014.

On the U.S. side of Lake Ontario, New York State is also requesting proposals. Several of the seven other states that border the Great Lakes are planning to harness lake winds.

Earth Policy Institute’s Plan B to save civilization has four components: stabilizing climate, restoring earth’s natural support systems, stabilizing population, and eradicating poverty. At the heart of the plan is a crash program to develop 4,000 gigawatts (4 million megawatts) of wind generating capacity by 2020, enough to cover over half of world electricity consumptionin the Plan B economy. This will require a near doubling of capacity every two years, up from a doubling every three years over the last decade.

This climate-stabilizing initiative would mean the installation of 2 million wind turbines of 2 megawatts each. Manufacturing 2 million wind turbines over the next 10 years sounds intimidating—until it is compared with the 70 million automobiles the world produces each year.

At $3 million per installed turbine, the 2 million turbines would mean spending $600 billion per year worldwide between now and 2020. This compares with world oil and gas capital expenditures that are projected to double from $800 billion in 2010 to $1.6 trillion in 2015.

Adapted from Chapter 9, “Harnessing Wind, Solar, and Geothermal Energy” in Lester R. Brown, World on the Edge: How to Prevent Environmental and Economic Collapse (New York: W.W. Norton & Company, 2011), available online at www.earth-policy.org/books/wote.

Food prices are up, up and up!

Interesting release from the Earth Policy Institute.

On the 3rd February I wrote a piece about the above Institute of which I had recently become aware.  That was in conjunction with the book World on the Edge that I had started reading.  Since then I have been summarising chapters on Learning from Dogs under the general heading of Total, Utter Madness.

So with food prices continuing to reach record levels around the world, with all the implications this carries for millions of families, I was interested to read the following which was emailed to me on the 15th from the EPI.

World One Poor Harvest Away From Chaos

www.earth-policy.org/plan_b_updates/2011/update91

By Lester R. Brown
Earth Policy Release
Plan B Update
February 15, 2011

Today there are three sources of growing demand for food: population growth; rising affluence and the associated jump in meat, milk, and egg consumption; and the use of grain to produce fuel for cars.

In early January, the U.N. Food and Agriculture Organization (FAO) reported that its Food Price Index had reached an all-time high in December, exceeding the previous record set during the 2007-08 price surge. Even more alarming, on February 3rd, the FAO announced that the December record had been broken in January as prices climbed an additional 3 percent.

Will this rise in food prices continue in the months ahead? In all likelihood we will see further rises that will take the world into uncharted territory in the relationship between food prices and political stability.

Everything now depends on this year’s harvest. Lowering food prices to a more comfortable level will require a bumper grain harvest, one much larger than the record harvest of 2008 that combined with the economic recession to end the 2007-08 grain price climb.

If the world has a poor harvest this year, food prices will rise to previously unimaginable levels. Food riots will multiply, political unrest will spread and governments will fall. The world is now one poor harvest away from chaos in world grain markets.

Over the longer term, expanding food production rapidly is becoming more difficult as food bubbles based on the overpumping of underground water burst, shrinking grain harvests in many countries. Meanwhile, increasing climate volatility, including more frequent, more extreme weather events, will make the expansion of production more erratic.

Some 18 countries have inflated their food production in recent decades by overpumping aquifers to irrigate their crops. Among these are China, India, and the United States, the big three grain producers.

When water-based food bubbles burst in some countries, they will dramatically reduce production. In others, they may only slow production growth. In Saudi Arabia, which was wheat self-sufficient for more than 20 years, the wheat harvest is collapsing and will likely disappear entirely within a year or so as the country’s fossil (nonreplenishable) aquifer, is depleted.

In Syria and Iraq, grain harvests are slowly shrinking as irrigation wells dry up. Yemen is a hydrological basket case, where water tables are falling throughout the country and wells are going dry. These bursting food bubbles make the Arab Middle East the first geographic region where aquifer depletion is shrinking the grain harvest.

While these Middle East declines are dramatic, the largest water-based food bubbles are in India and China. A World Bank study indicates that 175 million people in India are being fed with grain produced by overpumping. In China, overpumping is feeding 130 million people. Spreading water shortages in both of these population giants are making it more difficult to expand their food supplies.

Beyond irrigation wells going dry, farmers must contend with climate change. Crop ecologists have a rule of thumb that for each 1-degree-Celsius rise in temperature during the growing season, grain yields drop 10 percent. Thus it was no surprise that searing temperatures in western Russia last summer shrank the grain harvest by 40 percent.

On the demand side of the food equation, there are now three sources of growth. First is population growth. There will be 219,000 people at the dinner table tonight who were not there last night, many of them with empty plates. Second is rising affluence. Some three billion people are now trying to move up the food chain, consuming more grain-intensive meat, milk, and eggs. And third, massive amounts of grain are being converted into oil, i.e. ethanol, to fuel cars. Roughly 120 million tons of the 400-million-ton 2010 U.S. grain harvest are going to ethanol distilleries.

Encouragingly, President Sarkozy of France vowed to use his term as president of the G-20 in 2011 to stabilize world food prices. Thus far the talk has been about such measures as regulating export restrictions and speculation, but if the G-20 ends up treating the symptoms and not the causes of rising food prices, the effort will be of little avail.

What is needed now is a worldwide effort to raise water productivity, similar to the one launched by the international community a half century ago to raise cropland productivity. This earlier effort tripled the world grain yield per acre between 1950 and 2010.

On the climate front, the goal of cutting carbon emissions 80 percent by 2050—the widely accepted goal by governments—is not sufficient. The challenge now is to cut carbon emissions 80 percent by 2020 with a World War II-type mobilization to raise energy efficiency and to shift from fossil fuels to wind, solar, and geothermal energy.

On the demand side, we need to accelerate the shift to smaller families. There are 215 million women in the world who want to plan their families, but who lack access to family planning services. They and their families represent over a billion of the world’s poorest people. While filling the family planning gap, we need to simultaneously launch an all-out effort to eradicate poverty. Once under way, these two trends reinforce each other.

And in an increasingly hungry world, converting grain into fuel for cars is not the way to go. It is time to remove subsidies for converting grain and other crops into automotive fuel. If President Sarkozy can get the G-20 to focus on the causes of rising food prices, and not just the symptoms, then food prices can be stabilized at a more comfortable level.

Lester R. Brown is President of the Earth Policy Institute and author of 
World on the Edge: How to Prevent Environmental and Economic Collapse.

Additional data and information sources at www.earth-policy.org

Feel free to pass this information along to friends, family members, and colleagues!

*This piece was originally published through Global Viewpoint, LA Times Syndicate, on Monday, February 9, 2011.

Small update. Some few hours after writing the above piece, the BBC News Website had an item on soaring food prices.  Here’s a taste (pardon the pun!).

The World Bank says food prices are at “dangerous levels” and have pushed 44 million more people into poverty since last June.

According to the latest edition of its Food Price Watch, prices rose by 15% in the four months between October 2010 and January this year.

Food price inflation is felt disproportionately by the poor, who spend over half their income on food.

If you want to read the February Food Price Watch report published by the World Bank, then that link is here. http://www.worldbank.org/foodcrisis/food_price_watch_report_feb2011.html

Flowers for your Valentine

This opened my eyes; thought I would share it with you.

I know that many of the several hundred readers of Learning from Dogs are not in the USA.  But many are.  Hence me deciding, after mulling it over, to publish in full the contents of an email that came in a short while ago from the organisation Change.

Here’s that email.

Dear Paul,

Valentine’s Day, which accounts for 40% of fresh flower sales annually, is fast approaching.

Not always a sweet smell.

 

If you’re planning to order a bouquet from 1-800-Flowers — the world’s largest florist — you should know where most of those flowers really come from.

At flower farms in Ecuador and Colombia — the countries that export the most to the U.S. — two-thirds of the workers are women. These women are routinely subjected to harassment and even rape from their male supervisors. They suffer eye infections and miscarriages from consistent contact with dangerous pesticides.

In the weeks leading up to Valentine’s Day and Mother’s Day, they’re routinely forced to work 80-hour weeks with no overtime pay. Attempts to form a union are met with opposition by police and armed forces.

Many retailers — such as Whole Foods and Stop & Shop — have taken the important first step of offering Fair Trade flowers to consumers who want no part of these abuses. Fair Trade certified farms must adhere to strict standards for workers’ rights, which prevents the abuses described above.

1-800-Flowers is the largest florist in the world. Yet they offer no Fair Trade flowers at all.

Tell 1-800-Flowers to join other major retailers in offering Fair Trade flowers.

1-800-Flowers uses a certifying agency called Florverde, which ensures that its flower farms measure up to certain environmental standards — this is a good thing. But Florverde has almost no labor standards: A farm can be certified even if it uses forced labor.Indeed, Florverde is owned by the Association of Colombian Flower Exporters, so it has a financial incentive to keep wages low and suppress workers’ rights.

This is the week before Valentine’s Day — more people will purchase flowers during the next seven days than any other week this year. This is our best opportunity to demand a promise from 1-800-Flowers to join its competitors in offering Fair Trade flowers. So after you sign the petition, please share this email widely and post on Facebook — do everything you can to pressure 1-800-Flowers to show a little respect for the women who toil in unbearable circumstances. The women without whom they’d have no flowers to sell.

Click the link below to tell 1-800-Flowers to make a promise this Valentine’s Day to sell Fair Trade flowers:

http://www.change.org/petitions/ask-1-800-flowers-to-offer-fair-trade-flowers-that-arent-picked-by-exploited-workers?alert_id=IiStMzHsCg_LCLOlfFAhl&me=aa

Since this campaign began, the company has emailed to tell us that it will post more information on its website about the farms that supply their flowers. But this is a far cry from selling fair trade products — and we have much more to do to make sure workers are protected. This is the week to do it.

Thanks for taking action,

Patrick and the Change.org team

If you feel so minded to sign the petition, which can be done by people outside the USA, then that may be done here.

Thanks.