Category: Government

Lying is OK, that’s official! Duh!

I find this utterly unacceptable – here’s the story

Jean Claude Juncker, lying for Europe!

I was talking to someone in the UK just a couple of days ago, Martin J., about investment matters and we were generally ‘slagging’ off the quality, or rather the lack of quality, of the statements of leading political persons in many fields of government.  Martin then made the statement that Jean Claude Juncker, the Prime Minister of Luxembourg, and the head of the Eurogroup council of eurozone finance ministers had recently stated that “When it becomes serious, you have to lie,”  I was staggered to hear this and asked Martin to supply the details.  Here they are.

Mr. Juncker’s remark had been widely reported and I have chosen the Wall Street Journal’s report to quote from in Learning from Dogs.

MAY 9, 2011, 10:54 AM ET

Luxembourg Lies on Secret Meeting

By Charles Forelle

Is lying considered an appropriate mode of communication for euro-zone leaders?

We have to wonder after a strange episode on Friday evening. Here’s what happened:

Just before 6 p.m., German news magazine Spiegel Online distributed a report saying that euro-zone finance ministers were convening a secret, emergency meeting in Luxembourg that evening to discuss a Greek demand to quit the euro zone.

Calls from reporters flooded in to Guy Schuller, the spokesman for Luxembourg Prime Minister Jean-Claude Juncker, the man who is the head of the Eurogroup council of euro-zone finance ministers.

In a phone call and text messages with two reporters for Dow Jones and the Wall Street Journal, Mr. Schuller repeatedly said no meeting would be held. He apparently said the same to other news outlets; at least one more moved his denials on financial newswires.

Of course, there was a meeting–although not, apparently, to talk about Greece quitting the currency, which would be an extreme step to say the least. Mr. Juncker even said a few words to reporters who had hustled to Luxembourg to stake out the gathering.

Anyway, do read the article in full here.

In that article there is a YouTube video in which Mr. Juncker says “When it becomes serious, you have to lie.”  You can hear it yourself, about 20 seconds into the video despite the sound level being a tad low.

So that’s official then!  Politicians have to lie!  Grand job.  Talking about jobs, don’t suppose Mr. Juncker will lose his.  Or that he will show that, deep down, he is an integrous man and resign his post.

Yes, of course we all understand that what high-profile people say can affect markets and that, at times, one must be careful in terms of what is said.  But lying?  Sorry, for me that will never, ever be acceptable!

What has this to do with dogs?  Simply, dogs don’t lie.

More from Lester Brown

The president of Earth Policy Institute presents his thesis on how best to save mankind.

Before turning to the theme of this Post, just a personal message.  I arrived back home in Payson, Arizona yesterday and, as much as I love the huge number of readers that now regularly visit Learning from Dogs, I love my dear wife rather more 😉  So for the next few days, please understand why this Blog will be tending to ‘republish’ the fine works of others, to lessen the creative load on yours truly.

Here’s the Lester Brown article that was recently published on the Earth Policy Institute website.

JUNE 09, 2011
Turning Toward the Sun for Energy

Lester R. Brown

One key component of the Plan B climate stabilization strategy is solar energy. Solar is even more ubiquitous than wind energy and can be harnessed with both solar photovoltaics (PV) and solar thermal collectors.

Solar PV—both silicon-based and thin film—converts sunlight directly into electricity. The growth in solar cell production climbed from an annual expansion of 38 percent in 2006 to an off-the-chart 89 percent in 2008, before settling back to 51 percent in 2009. At the end of 2009, there were 23,000 megawatts of PV installations worldwide, which when operating at peak power could match the output of 23 nuclear power plants. Germany, with an installed PV power generating capacity of almost 10,000 megawatts, is far and away the world leader in installations.

On the manufacturing front, the early leaders—the United States, Japan, and Germany—have been overtaken by China, which produces more than twice as many solar cells annually as Japan. World PV production has roughly doubled every two years since 2001 and exceeded 20,000 megawatts in 2010.

Historically, photovoltaic installations were small-scale—mostly residential rooftop installations. Now that is changing as utility-scale PV projects are being launched in several countries. The United States, for example, has under construction and development some 77 utility-scale projects, adding up to 13,200 megawatts of generating capacity. Morocco is now planning five large solar-generating projects, either photovoltaic or solar thermal or both, each ranging from 100 to 500 megawatts.

More and more countries, states, and provinces are setting solar installation goals. Italy’s solar industry group is projecting 15,000 megawatts of installed capacity by 2020. Japan is planning 28,000 megawatts by 2020. The state of California has set a goal of 3,000 megawatts by 2017. Solar-rich Saudi Arabia recently announced that it plans to shift from oil to solar energy to power new desalination plants that supply the country’s residential water. It currently uses 1.5 million barrels of oil per day to operate some 30 desalting plants.

With installations of solar PV climbing, with costs continuing to fall, and with concerns about climate change escalating, cumulative PV installations could reach 1.5 million megawatts (1,500 gigawatts) in 2020. Although this estimate may seem overly ambitious, it could in fact be conservative, because if most of the 1.5 billion people who lack electricity today get it by 2020, it will likely be because they have installed home solar systems. In many cases, it is cheaper to install solar cells for individual homes than it is to build a grid and a central power plant.

The second, very promising way to harness solar energy on a massive scale is a large-scale solar thermal technology, often referred to as concentrating solar power (CSP), that uses reflectors to concentrate sunlight on a liquid, producing steam to drive a turbine and generate electricity. One of the attractions of utility-scale CSP plants is that heat during the day can be stored in molten salt at temperatures above 1,000 degrees Fahrenheit. The heat can then be used to keep the turbines running for eight or more hours after sunset.

CSP first came on the scene with the construction of a 350-megawatt solar thermal power plant complex in California. Completed in 1991, it was the world’s only utility-scale solar thermal generating facility until the completion of a 64-megawatt power plant in Nevada in 2007.

Although solar thermal power has been slow to get under way, utility-scale plants are being built rapidly now, led by the United States and Spain. The United States has more than 40 solar thermal power plants operating, under construction, and under development that range from 10 to 1,200 megawatts each. Spain has 60 power plants in these same stages of development, most of which are 50 megawatts each. The American Solar Energy Societynotes that solar thermal resources in the U.S. Southwest can satisfy current U.S. electricity needs nearly four times over.

In July 2009, a group of 11 leading European firms and one Algerian firm, led by Munich Re and including Deutsche Bank, Siemens, and ABB, announced that they were going to craft a strategy and funding proposal to develop solar thermal generating capacity in North Africa and the Middle East. Their proposal would meet the needs of the producer countries and supply part of Europe’s electricity via undersea cable.

This initiative, known as the Desertec Industrial Initiative, could develop 300,000 megawatts of solar thermal generating capacity—huge by any standard. Caio Koch-Weser, vice chair of Deutsche Bank, noted that “the Initiative shows in what dimensions and on what scale we must think if we are to master the challenges from climate change.”

Even before this proposal, Algeria—for decades an oil exporter—was planning to build 6,000 megawatts of solar thermal generating capacity for export to Europe via undersea cable. The Algerians note that they have enough harnessable solar energy in their vast desert to power the entire world economy. This is not a mathematical error. The German government was quick to respond to the Algerian initiative. The plan is to build a 1,900-mile high-voltage transmission line from Adrar deep in the Algerian desert to Aachen, a town on Germany’s border with the Netherlands.

At the global level, Greenpeace, the European Solar Thermal Electricity Association, and the International Energy Agency’s SolarPACES program have outlined a plan to develop 1.5 million megawatts of solar thermal power plant capacity by 2050. For Earth Policy Institute’sPlan B to save civilization, we suggest a more immediate world goal of 200,000 megawatts by 2020, a goal that may well be exceeded as the economic potential becomes clearer.

The pace of solar energy development is accelerating as the installation of rooftop solar water heaters—solar thermal collectors on a smaller scale—takes off. This technology is sweeping China like wildfire, with an estimated 1.9 billion square feet of rooftop solar thermal collectors installed, enough to supply 120 million Chinese households with hot water. Other developing countries such as India and Brazil may also soon see millions of households turning to this inexpensive water heating technology. Once the initial installment cost of rooftop solar water heaters is paid back, the hot water is essentially free.

In Europe, where energy costs are relatively high, rooftop solar water heaters are also spreading fast. Systems typically pay for themselves in electricity savings within 10 years. In Austria, 15 percent of all households now rely on them for hot water. As in China, in some Austrian villages nearly all homes have rooftop collectors. And some 2 million Germans are now living in homes where water and space are both heated by rooftop solar systems.

The U.S. rooftop solar water heating industry has historically concentrated on a niche market—selling and marketing 100 million square feet of solar water heaters for swimming pools between 1995 and 2005. The industry was poised to mass-market residential solar water and space heating systems when federal tax credits were introduced in 2006. Led by Hawaii, California, and Florida, annual U.S. installation of these systems has more than tripled since 2005. The state of Hawaii requires that all new single-family homes have rooftop solar water heaters. California aims to install 200,000 solar water heaters by 2017, and New York State aims to have 170,000 residential solar water systems in operation by 2020.

With the cost of rooftop heating systems declining, many other countries will likely join Israel, Spain, and Portugal in mandating that all new buildings incorporate rooftop solar water heaters. Worldwide, Plan B calls for a total of 1,100 thermal gigawatts of rooftop solar water and space heating capacity by 2020.

Moving fast to harness the world’s enormous solar potential would bring a clear win for local economies and for the climate.

Adapted from World on the Edge by Lester R. Brown. Full book available online atwww.earth-policy.org/books/wote

There are a couple of videos well worth watching on YouTube, one that’s just under 10 minutes,

and a full-length one of 1 hr 7 minutes,

Always two sides

I am indebted to my life-long friend, Dan Gomez, for this piece.

Background (Personal nostalgia warning!!!)

Dan and I go back too many years; I mean way too many!  He and I met in Spring 1979 when I was addressing a national conference of US Commodore PC dealers in Boston, USA.  I was there to promote a British Word Processing program called Wordcraft, written by Peter Dowson, that I had exclusive rights to.  I was also a Commodore PC dealer in Colchester, Essex, England; indeed I was the 8th dealer appointed in the UK.  The luck in finding Wordcraft is underlined by the fact that between 1970 and 1978 I was a salesman with IBM UK Office Products division and ended up as a word-processing specialist salesman for IBM.

Anyway, in my sales pitch to these US dealers, I used the word ‘fortnight’, a common term in England.  From somewhere out in the audience, this Californian voice shouted out, “Hey Handover, what’s a fortnight?”  Many readers will be aware that Americans don’t use that term.  That Californian voice was Dan!

From that cheeky start came a great relationship including Dan being my West Coast distributor for Wordcraft.  It was Dan’s sister, whom I have also known for countless years, who invited me to her Winter home in San Carlos, Mexico, to spend Christmas 2007 with her and her husband and which was the catalyst of me meeting Jean, who is now by most beautiful wife!

Dan, my Best Man, at the wedding of Jean and me, November 20th 2010

————————ooOOOoo————————

OK, to the theme of this article.

Shortly after the Newsweek ‘Weather Panic‘ article on the 10th, Dan sent me this email,

Paul – Saw your blog vis a vis Newsweek’s recent cover.

Don’t forget to publish the other side of this perennial story without all the sensationalism of selling newspapers and proselytizing to the unwashed masses or you could end up drinking your own cool-aid.  The science of weather cycles, sun activity, ocean currents, high-altitude jet streams, colliding warm/cool fronts have been at work long before any creature walked the earth, let alone man. The facts demonstrate this time and time again. Good science is skeptical science and needs to be viewed carefully by way of verifiable and constant testing of hypotheses.

The below article, although not at all sexy, has a different view, in general, as to the vagaries of weather extremes.  There are many like this and represent unbiased, and to some, unpopular scientific reasoning at work.

Just food for thought.

–DG

He then included this.

Recent Weather Extremes: Global Warming Fingerprint Not

by Chip Knappenberger
March 21, 2011

On occasion, I have the opportunity to assist Dr. Patrick J. Michaels (Senior Fellow in Environmental Studies at the Cato Institute) in reviewing the latest scientific research on climate change. When we happen upon findings in the peer-reviewed scientific literature that may not have received the media attention that they deserved, or have been misinterpreted in the popular press, Pat sometimes covers them over at the “Current Wisdom” section of the Cato@Liberty blog site.

His latest posting there highlights research findings that show that extreme weather events during last summer and the previous two winters can be fully explained by natural climate variability—and that “global warming” need not (and should not) be invoked.

This topic—whether or not weather extremes (or at least some portion of them) can be attributed to anthropogenic global warming (or, as Dr. Pielke Sr., prefers, anthropogenic climate change)—has been garnering a lot of attention as of late. It was a major reason for holding the House Subcommittee hearing last week, is a hot topic of discussion in the press, and is the subject of an in-progress major report from the Intergovernmental Panel on Climate Change (IPCC).

As such, I wanted to highlight some of the findings that Pat reported on. I encourage a visit to the full article “Overplaying the Human Contribution to Recent Weather Extremes” over at Cato@Liberty.

The Great Russian Heat Wave of 2010

A new paper by Randall Dole and colleagues from the Physical Sciences Division (PSD) of the Earth System Research Laboratory (ESRL) of the National Oceanic and Atmospheric Administration (NOAA) examined the events leading up to and causing the big heat wave in Russia last summer (which was also part of an atmospheric pattern that was connected to the floods in Pakistan). Here is what they found:

“Our analysis points to a primarily natural cause for the Russian heat wave. This event appears to be mainly due to internal atmospheric dynamical processes that produced and maintained an intense and long-lived blocking event. Results from prior studies suggest that it is likely that the intensity of the heat wave was further increased by regional land surface feedbacks. The absence of long-term trends in regional mean temperatures and variability together with the [climate] model results indicate that it is very unlikely that warming attributable to increasing greenhouse gas concentrations contributed substantially to the magnitude of this heat wave.”

As Pat commented, “Can’t be much clearer than that.”

Recent Winter Severity

From Pat’s article:

Another soon-to-be released paper to appear in Geophysical Research Lettersdescribes the results of using the seasonal weather prediction model from the European Center for Medium-Range Weather Forecasts (ECMWF) to help untangle the causes of the unusual atmospheric circulation patterns that gave rise to the harsh winter of 2009-2010 on both sides of the Atlantic. A team of ECMWF scientists led by Thomas Jung went back and did experiments changing initial conditions that were fed into the ECMWF model and then assessed how well the model simulated the known weather patterns of the winter of 2009-2010. The different set of initial conditions was selected so as to test all the pet theories behind the origins of the harsh winter. Jung et al. describe their investigations this way: “Here, the origin and predictability of the unusual winter of 2009/10 are explored through numerical experimentation with the ECMWF Monthly forecasting system. More specifically, the role of anomalies in sea surface temperature (SST) and sea ice, the tropical atmospheric circulation, the stratospheric polar vortex, solar insolation and near surface temperature (proxy for snow cover) are examined.”

In a nutshell, here is what Jung et al. found:

“The results of this study, therefore, increase the likelihood that both the development and persistence of negative NAO phase [an atmospheric circulation pattern that was largely behind the harsh winter conditions] resulted from internal atmospheric dynamical processes.”

Or, as Pat put it “Translation: Random variability.”

Pat also examined a third study by Roseanne D’Arrigo and colleagues who found an historical analog of the conditions responsible for the harsh winter of 2009-2010 way back in 1783-1784. The winter of 1783-1784 was a historically extreme one on both sides of the Atlantic and has long been associated with a large volcanic eruption that occurred in Iceland during the summer of 1783. Even Benjamin Franklin connected the winter conditions to the volcano. But D’Arrigo and colleagues now suggest a different mechanism. According to Pat:

But in their new study, Roseanne D’Arrigo and colleagues conclude that the harshness of that winter primarily was the result of anomalous atmospheric circulation patterns that closely resembled those observed during the winter of 2009-10, and that the previous summer’s volcanic eruption played a far less prominent role:

“Our results suggest that Franklin and others may have been mistaken in attributing winter conditions in 1783-4 mainly to Laki or another eruption, rather than unforced variability.

“Similarly, conditions during the 2009-10 winter likely resulted from natural [atmospheric] variability, not tied to greenhouse gas forcing… Evidence thus suggests that these winters were linked to the rare but natural occurrence of negative NAO and El Niño events.”

Bottom Line

The take home message of Pat’s post is worth repeating:

The point is that natural variability can and does produce extreme events on every time scale, from days (e.g., individual storms), weeks (e.g., the Russian heat wave), months (e.g., the winter of 2009-10), decades (e.g., the lack of global warming since 1998), centuries (e.g., the Little Ice Age), millennia (e.g., the cycle of major Ice Ages), and eons (e.g., snowball earth).

Folks would do well to keep this in mind next time global warming is being posited for the weather disaster du jour. Almost assuredly, it is all hype and little might.

Be sure to check out Pat’s full article which includes much more in depth coverage of these three soon-to-be-released scientific studies.

————————ooOOOoo————————

I need to mull over this when I am back home with more time.  In the meantime, comments from readers most welcomed.

50 years; just like that!

A memorable event fifty years ago, this day!

President John F. Kennedy's May 25, 1961 Speech before a Joint Session of Congress

On the 25th May, 1961, President John Kennedy summoned a joint session of Congress and asked America to commit itself to a goal – that of landing a man on the moon and returning him safely to Earth before the decade was out.

There’s a good link on the NASA site to the speech.

Plus a very good analysis of these 50 years in the Lexington column in last week’s The Economist.  As Lexington’s Notebook blog puts it,

That Kennedy speech plus 50

May 19th 2011, 15:47 by Lexington

MY print column this week notes that it is half a century next week since John Kennedy called for sending a man to the moon and returning him safely to Earth. The bottom line, I think:

If we can send a man to the moon, people ask, why can’t we [fill in the blank]? Lyndon Johnson tried to build a “great society”, but America is better at aeronautical engineering than social engineering. Mr Obama, pointing to competition from China, invokes a new “Sputnik moment” to justify bigger public investment in technology and infrastructure. It should not be a surprise that his appeals have gone unheeded. Putting a man on the moon was a brilliant achievement. But in some ways it was peculiarly un-American—almost, you might say, an aberration born out of the unique circumstances of the cold war. It is a reason to look back with pride, but not a pointer to the future.

A fascinating period!

More on Bill McKibben’s book, eaarth.

Some very telling points.

I first mentioned this book on the 13th May when I was about a third of the way in.  Because I thought there might be material useful to the course that has been running here in Payson, I did skip around the book looking for ‘attention-grabbing’ points.  It wasn’t difficult to find numerous extracts.

Try this on page 214 from the Chapter Afterword.

As it turns out, however, the BP spill was not the most dangerous thing that happened in the months after this book was first published.  In fact, in the spring and summer of 2101, the list of startling events in the natural world included:

  • Nineteen nations setting new all-time high temperature records, which in itself is a record.  Some of those records were for entire regions – [then some of the details]
  • Scientists reported that the earth had just come through the warmest six months, the warmest year, and the warmest decade for which we have records; it appears 2010 will be the warmest calendar year on record.
  • The most protracted and extreme heat wave in a thousand years of Russian history (it had never before topped 100 degrees in Moscow) led to a siege of peat fires that shrouded the capital in ghostly, deadly smoke.  [Then goes on to mention the effect of this heat on global grain prices.]
  • Since warm air holds more water vapour that cold air, scientists were not surprised to see steady increases in flooding.  Still, the spring and summer of 2010 were off the charts.  We saw “thousand-year storms” across the globe [goes into details]
  • Meanwhile, in the far north, the Petermann Glacier on Greenland calved an iceberg four times the size of Manhattan.
  • And the most ominous news of all might have come from the pages of the eminent scientific journal Nature, which published an enormous study of the productivity of the earth’s seas. [More details follow – not good news!]
That last point can be read in more detail from Nature‘s website.  It’s here.
The book closes thus (referring to how the BP oil spill was, ultimately, an accident),
But the greatest danger we face, climate change, is no accident.  It’s what happens when everything goes the way it’s supposed to go.  It’s not a function of bad technology, it’s a function of a bad business model: of the fact that Exxon Mobil and BP and Peabody Coal are allowed to use the atmosphere, free of charge, as an open sewer for the inevitable waste from their products.  They’ll fight to the end to defend that business model, for it produces greater profits that any industry has ever known.  We won’t match them dollar for dollar: To fight back, we need a different currency, our bodies and our spirit and our creativity.  That’s what a movement looks like; let’s hope we can rally one in time to make a difference.
Powerful stuff from a powerful book.
Fired up?  Then go and join:  350.org

Greece, or grease?

The agony of watching a country (and a planet) slip.

Readers will be aware that I very rarely stroll through the tangled pastures of international politics and finance.  The only reason that I do so today is on the back of a very impressive letter published in the German newspaper  Handelsblatt.  That was brought to my attention by my subscription to Mike Shedlock’s (Mish) Blog Mish’s Global Economic Trend Analysis.  You will see that I muse at two levels about where we are today.

Earlier, I had read in last Saturday’s, The Economist a leader on Greece’s debt crisis, entitled Trichet the intransigent.   That started thus,

The European Central Bank’s refusal to consider a restructuring of Greek debt could wreck the euro zone
May 12th 2011 | from the print edition

IF THE stakes were not so high, Europeans’ incompetence in the euro-zone debt crisis would be comic.

and concluded thus,

It is time for the Germans and the IMF to call the ECB’s bluff. Together they should demand, and instigate, a restructuring of Greek debt. Germany should push other European governments to cough up money to support Greek banks and, if necessary, to make whole the ECB. The fund, which knows how to restructure debt, must ensure the process is run in a competent manner. The ECB will then be faced with a choice: go along with an orderly restructuring, or trigger a much greater mess by in effect forcing Greece out of the euro zone. Surely Mr Trichet does not want that to be his legacy.

So with that as background, the letter to Georgios Papandreou, Prime Minister of Greece written by Gabor Steingart is powerful and hard hitting.  Here it is in full.

Mr. Prime Minister,

Dear Mr. Papandreou,

With the greatest respect, the Western world is monitoring your efforts to master your country’s debt crisis. No other democratic country has ever managed anything like that in peacetime. You are shrinking the state apparatus; you are fighting corruption; you are teaching your fellow countrymen how to become honest tax-payers.

You are a modern hero. You are attempting the impossible. As the son of a persecuted and ostracized politician who was chased by the military junta you grew up close to danger. When the officers were looking for your father who was hiding in the attic, they threatened you by putting an unlocked pistol to your forehead and challenged you to betray your father. You denied your father’s presence until he, worried about his son’s life, left his hiding place.Later you fled with him to America where you spent your adolescence. You are alarger-than-life-character.

Preceding governments almost ruined your country. Debts amounting to 340 billion Euros are burdening the Greek state,equaling 155 times the profit of the 60 largest companies of your country and 1.5 times the amount of debts the Maastricht Treaty allows. A year ago, this newspaper, Germany’s biggest Business Daily, appealed to the public to buy Greek government bonds in order to give to the country what Greece needs just as urgently as money: confidence. We also wanted to assist in breaking through the negative spiral of growing doubt and increasing interest rates. Everyone who granted you guarantees and loans wanted it, the European Union, the International Monetary Fund, the heads of state and government.

But since then, the spiral has picked up in speed instead of slowing down. In May 2010 the interest rate at which your country was given money on a ten year basis was at eight per cent. Today, it is at 16 per cent. And in all probability, it will be going up further. The bitter truth to which you and all parties who wanted to help Greece have to admit is that the help doesn’t help. Your country is getting deeper and deeper into the mess. Debts are growing, the gross national product will decrease by at least three per cent in 2011. But it would have to grow by three per cent instead if you were to lower your debt to the allowedlimit until 2040. This is becoming more and more unrealistic. You can’t starve and build up your muscles at the same time.

The truth that Greece has to cut back and save has turned into an untruth. The right thing has turned into the wrong thing. You already cut pensions, lowered the salaries of civil servants by 30 per cent and raised the prices of gas by almost 50 per cent. You can’t restore the health of your country by saving. And the European Union can’t restore your country’s health by again and again injecting new loans.

Soon, the day will come when the tortured body will surrender. The Greek construction industry already shrank by 70 per cent. Sales of car dealers sank by half. A daily export volume of 50 million Euros Greece is achieving  far too little.  Soon the day will come which investors fear in their nightmares. Then the word “insolvency” will be on everyone’s lips.

But it is also the day when a new truth will be born: Don’t save but invest, they will tell you – so that the Greek economy will grow again. Do not service debt with debt, you then will be recommended, but spread out the debt service, cut it and maybe even completely suspend it for a while. It will be a day of impositions, especially for those who lendmoney to you and your people. Financial markets will grind to a halt in horror – and then they will turn to embrace the future. Because Argentina in 2001, Mexico at the beginning of the eighties and Germany after World War II taught us that there is a life after death – at least, in the case of highly indebted states.

Mr. Papandreou, so far, you attempted the impossible. Now you should do the possible. Just as you deceived the officers as a boy and denied to know where your father was hiding you now must repudiate the pride of the Greeks – in order to save your country. Come to meet the new uncomfortable truth before it knocks at your door. It’s already on its way.

Respectfully yours,

Gabor Steingart

The author is an award winning Journalist, the former White House Correspondent of “Der Spiegel” and now Handelsblatt’s  Editor-in-Chief.  His book “The war for wealth. The true story of globalization or while the flat world is broken” was  published in the US, GB, China and several other countries by McGraw Hill, New York, in 2008.

You may contact him at

steingart@handelsblatt.com


Powerful, as I said.

In a sense, in a very real sense, this illustration of the end game of our love affair with debt is symptomatic of the end game in terms of mankind’s love affair with, well with mankind.  The following was written by an inmate of Oklahoma Prison in 1998.

At the root of my humanity lies a potentially insatiable self-centredness.  Given its way, it can become unquenchable. Nothing, not even the richest of imagination, will put out its fire.

This ‘what’s in it for me’ mindset is at the root of all my problems and is where my fears live.  From those fears come anger, greed, intolerance, and a host of other shortcomings.

It is no accident that all religions point to the forgetting of self, because all religions know salvation lies in self-forgetting.

As we head relentlessly towards a level of 400 parts per million (PPM) of carbon dioxide in the atmosphere, 50 PPM above the highest safe limit determined by climate scientists, the time for mankind to move on from the debt-laden, over-leveraged, disconnected life from Planet Earth, is now.

That’s now!

Blood and Oil

Continuing the thoughts of Michael Klare.

(My apologies, this is a difficult week for me as I prepare for a course that starts on the 11th May.  So posts may be a little thinner than usual.)

Yesterday, I wrote about an article by Michael Klare on the theme of the avenging planet.  While researching for that piece, I came across a film that Klare has produced called Blood and Oil.  It seemed worth mentioning it on Learning from Dogs.

Here’s the synopsis,

The notion that oil motivates America’s military engagements in the Middle East has long been dismissed as nonsense or mere conspiracy theory. Blood and Oil, a new documentary based on the critically-acclaimed work of Nation magazine defense correspondent Michael T. Klare, challenges this conventional wisdom to correct the historical record. The film unearths declassified documents and highlights forgotten passages in prominent presidential doctrines to show how concerns about oil have been at the core of American foreign policy for more than 60 years – rendering our contemporary energy and military policies virtually indistinguishable. In the end, Blood and Oil calls for a radical re-thinking of US energy policy, warning that unless we change direction, we stand to be drawn into one oil war after another as the global hunt for diminishing world petroleum supplies accelerates.

Here’s a trailer for the film.

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.

Earth Policy Release

Finding the right solutions for the 21st century and the next generation.

Just before presenting the release from the Earth Policy Institute that came out on the 20th, here’s a reminder about watching the film, Plan B, that I wrote about on the 4th April.  It’s a very good film from an excellent and creditable source.  You can watch it for FREE from PBS, BUT ONLY UNTIL THE END OF APRIL!

Here’s the link – Plan B, the film

Now to the release published in full on Learning from Dogs.

Earth Policy Release
World on the Edge
Book Byte
April 19, 2011

“LET NO MAN SAY IT CANNOT BE DONE”

www.earth-policy.org/book_bytes/2011/wotech13_ss5

By Lester R. Brown

We need an economy for the twenty-first century, one that is in sync with the earth and its natural support systems, not one that is destroying them. The fossil fuel-based, automobile-centered, throwaway economy that evolved in western industrial societies is no longer a viable model—not for the countries that shaped it or for those that are emulating them. In short, we need to build a new economy, one powered with carbon-free sources of energy—wind, solar, and geothermal—one that has a diversified transport system and that reuses and recycles everything. We can change course and move onto a path of sustainable progress, but it will take a massive mobilization—at wartime speed.

Whenever I begin to feel overwhelmed by the scale and urgency of the changes we need to make, I reread the economic history of U.S. involvement in World War II because it is such an inspiring study in rapid mobilization. Initially, the United States resisted involvement in the war and responded only after it was directly attacked at Pearl Harbor. But respond it did. After an all-out commitment, the U.S. engagement helped turn the tide of war, leading the Allied Forces to victory within three-and-a-half years.

In his State of the Union address on January 6, 1942, one month after the bombing of Pearl Harbor, President Franklin D. Roosevelt announced the country’s arms production goals. The United States, he said, was planning to produce 45,000 tanks, 60,000 planes, and several thousand ships. He added, “Let no man say it cannot be done.”

No one had ever seen such huge arms production numbers. Public skepticism abounded. But Roosevelt and his colleagues realized that the world’s largest concentration of industrial power was in the U.S. automobile industry. Even during the Depression, the United States was producing 3 million or more cars a year.

After his State of the Union address, Roosevelt met with auto industry leaders, indicating that the country would rely heavily on them to reach these arms production goals. Initially they expected to continue making cars and simply add on the production of armaments. What they did not yet know was that the sale of new cars would soon be banned. From early February 1942 through the end of 1944, nearly three years, essentially no cars were produced in the United States.

In addition to a ban on the sale of new cars, residential and highway construction was halted, and driving for pleasure was banned. Suddenly people were recycling and planting victory gardens. Strategic goods—including tires, gasoline, fuel oil, and sugar—were rationed beginning in 1942. Yet 1942 witnessed the greatest expansion of industrial output in the nation’s history—all for military use. Wartime aircraft needs were enormous. They included not only fighters, bombers, and reconnaissance planes, but also the troop and cargo transports needed to fight a war on distant fronts. From the beginning of 1942 through 1944, the United States far exceeded the initial goal of 60,000 planes, turning out a staggering 229,600 aircraft, a fleet so vast it is hard even today to visualize it. Equally impressive, by the end of the war more than 5,000 ships were added to the 1,000 or so that made up the American Merchant Fleet in 1939.

In her book No Ordinary Time, Doris Kearns Goodwin describes how various firms converted. A sparkplug factory switched to the production of machine guns. A manufacturer of stoves produced lifeboats. A merry-go-round factory made gun mounts; a toy company turned out compasses; a corset manufacturer produced grenade belts; and a pinball machine plant made armor-piercing shells.

In retrospect, the speed of this conversion from a peacetime to a wartime economy is stunning. The harnessing of U.S. industrial power tipped the scales decisively toward the Allied Forces, reversing the tide of war. Germany and Japan, already fully extended, could not counter this effort. British Prime Minister Winston Churchill often quoted his foreign secretary, Sir Edward Grey: “The United States is like a giant boiler. Once the fire is lighted under it, there is no limit to the power it can generate.”

The point is that it did not take decades to restructure the U.S. industrial economy. It did not take years. It was done in a matter of months. If we could restructure the U.S. industrial economy in months, then we can restructure the world energy economy during this decade.

With numerous U.S. automobile assembly lines currently idled, it would be a relatively simple matter to retool some of them to produce wind turbines, as the Ford Motor Company did in World War II with B-24 bombers, helping the world to quickly harness its vast wind energy resources. This would help the world see that the economy can be restructured quickly, profitably, and in a way that enhances global security.

The world now has the technologies and financial resources to stabilize climate, eradicate poverty, stabilize population, restore the economy’s natural support systems, and, above all, restore hope. The United States, the wealthiest society that has ever existed, has the resources and leadership to lead this effort.

One of the questions I hear most frequently is, What can I do? People often expect me to suggest lifestyle changes, such as recycling newspapers or changing light bulbs. These are essential, but they are not nearly enough. Restructuring the global economy means becoming politically active, working for the needed changes, as the grassroots campaign against coal-fired power plants is doing. Saving civilization is not a spectator sport.

Inform yourself. Read about the issues. Share the Earth Policy Institute’s publications with friends. Pick an issue that’s meaningful to you, such as tax restructuring to create an honest market, phasing out coal-fired power plants, or developing a world class-recycling system in your community. Or join a group that is working to provide family planning services to the 215 million women who want to plan their families but lack the means to do so. You might want to organize a small group of like-minded individuals to work on an issue that is of mutual concern. You can begin by talking with others to help select an issue to work on.

Once your group is informed and has a clearly defined goal, ask to meet with your elected representatives on the city council or the state or national legislature. Write or e-mail your elected representatives about the need to restructure taxes and eliminate fossil fuel subsidies. Remind them that leaving environmental costs off the books may offer a sense of prosperity in the short run, but it leads to collapse in the long run.

During World War II, the military draft asked millions of young men to risk the ultimate sacrifice. But we are called on only to be politically active and to make lifestyle changes. During World War II, President Roosevelt frequently asked Americans to adjust their lifestyles and Americans responded, working together for a common goal. What contributions can we each make today, in time, money, or reduced consumption, to help save civilization?

The choice is ours—yours and mine. We can stay with business as usual and preside over an economy that continues to destroy its natural support systems until it destroys itself, or we can be the generation that changes direction, moving the world onto a path of sustained progress. The choice will be made by our generation, but it will affect life on earth for all generations to come.

Adapted from Chapter 13, “Saving Civilization,” 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

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