Category: Government

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

Unintended consequences!

Europe’s fishing quotas turning a seemingly good idea into apparent madness.

The European Union formally came into being in 1993 although co-operation in the form of the European Coal and Steel Community and then the European Economic Community went well back before then, back to the 1950’s.

As far back as 1957 when the Treaty of Rome was established, an Article stated that there should be a common policy for fisheries.  That became known as the Common Fisheries Policy.  Fish catches in many European waters were reducing stocks of many species to the point of extinction, so something had to be done.

Now watch this.

If you feel sufficiently perplexed to want to learn more, then Hugh Fearnley-Whittingstall,  a food and cookery writer and broadcaster, as well as a campaigner for real food, has a Campaign Website here.  There is a Facebook page here.

How on earth would one explain such actions to, say, these two kids?

 

Ready for a fish meal!

 

 

 

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)

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!

Where are we off to?

More musings on how this present civilisation is going to change, as change it must.

I have a sense that this article is going to spread across a number of posts.  Regular readers of Learning from Dogs will be aware that I am summarising Lester Brown’s excellent book, World on the Edge.  If you have missed those summaries, the last one, Part 4, was here. (Part 3 here, Part 2 here, Part 1 here.)

Details of this excellent book are on the Earth Policy Institute website including the opportunity to download the book for free.

OK, back to the theme of this article, very much connected with the mission of the EPI.

Jean and I watched a video last night from the website Top Documentary Films; great site by the way.  It was called 2210: The Collapse.  This was how the film was described on that website.

Imagine if hundreds of years from now, scientists excavated the abandoned ruins of some of our largest cities, what conclusions would they come to?

It happened to the Romans, the Anasazi, and the Mayans and, inevitably, one day our own modern civilization will also fall. In this two hour special discover how a future civilization might be baffled as to why the population of these once-great cities would suddenly abandon their technology and architecture, and turn their homes into ghost towns.

Some experts believe that there is a very real risk this could happen, and the collapse of the world as we know it is closer than we think.

Examining the parallels between cultures separated by hundreds of years, explore whether the key to preventing such a global collapse today could lie in finding renewable alternatives to our dwindling energy supplies and sustainable resources. Can we learn from the mistakes of the past before it’s too late?

Jared Diamond

In some ways the film didn’t cover any new ground despite it being an interesting way of approaching the subject of the future of our present civilisation.  But what was really worthwhile were the clips from three experts in their various fields.  They were the author Jared Diamond, Daniel Gilbert who is Professor of Psychology at Havard, and Joseph Tainter also an author.  There is much material around from these three gentlemen.

So I am going to start with Jared Diamond.  WikiPedia has Jared’s details.  The following is a video going back to 2003 which is no less relevant in terms of where we are in 2011.  (If you want more of Jared’s ideas, just let me know and they will be included in a future Post.)

“I’ve set myself the modest task of trying to explain the broad pattern of human history, on all the continents, for the last 13,000 years. Why did history take such different evolutionary courses for peoples of different continents? This problem has fascinated me for a long time, but it’s now ripe for a new synthesis because of recent advances in many fields seemingly remote from history, including molecular biology, plant and animal genetics and biogeography, archaeology, and linguistics.”

JARED DIAMOND is Professor of Geography at the University of California, Los Angeles. Until recently he was Professor of Physiology at the UCLA School of Medicine. He is the author of the recently published Collapse: How Societies Choose to Fail or Succeed, and the Pulitzer Prize-winning author of the widely acclaimed Guns, Germs, and Steel: the Fates of Human Societies, which also is the winner of Britain’s 1998 Rhone-Poulenc Science Book Prize.  (From here)