Saturday, March 14, 2009

March 14 2009: Less cities more moving people

Lewis Wickes Hine Costa del Sol August 1908
Marie Costa, basket seller, lives at 605 Elm Street, Cincinnati,
Sixth Street Market, 9 p.m. Had been there since 10 a.m. Sister and friend help her

Ilargi: Bit late and lite today, sorry, I was simply running out of time. Spring happens. Today’s intro comes from Stranded Wind, who returns to something he's touched on before: the mayhem caiused by lower levels of ammonia and protein in global food production. This is a crucial issue. It may not seem to be a finance issue, but boy, will it ever turn out to be. Nothing like scarciry to drive prices up for all the millions of newly unemployed in the world.

Stranded Wind:

Wheat, Fertilizer, and Land

Farming has changed dramatically in the last century. The horse as a source of power, the cow as a source of fertilizer, and triennial mix of corn, alfalfa or soy, and letting the land lay fallow is gone. Today on the fertile lands of Iowa, Illinois, and Nebraska the biennial dance of corn and soy is giving way to economic pressure from ethanol and advancing technology; unthinkable even five years ago, today "corn on corn" is the norm.

Things are changing in equally dramatic ways in the drylands of the Dakotas, but the trend runs opposite to that seen in the wetter, richer lands to the east. Skyrocketing ammonia prices and limited moisture are driving lands out of annual wheat production and into a biennial rotation of fallow and wheat production. This sounds like something only an agronomist could love, but the reality of the matter is that lives are on the line eighteen months from now based on the decisions farmers are making today.

(If you like this you might also like Global Human Protein Deficit.)

Historically a ton of ammonia cost about eighty bushels of wheat; $2.25 wheat, $200 ammonia, and this ratio held for forty years. Two years ago that long standing relationship broke down. Today wheat is $4.50 and ammonia is $1,000 – over two hundred bushels of wheat are required to purchase a ton of ammonia.

    The first effect of this has been a reduction in fertilization on wheat planted. Instead of 14% protein we'll be seeing crops with protein closer to the 8% range. Instead of the seventy bushels per acre achieved with full fertilization we'll see yields sliding off towards the twenty five bushels per acre unfertilized wheat yielded. Fertilization isn't a go/no go decision, it's a continuum, but as the farmers seek balance it is clear that this will be a case of less being more – less money out for ammonia means more money in their pockets.

   Another effect that we'll see is the practice of simply idling land for a year. Wheat needs water as well as fertilizer and the places where it is raised are much drier than corn country. The land may be left "chemfallow", where weeds are killed with Roundup herbicide three times during the season, or it may be left summer fallow, where the weeds are periodically wiped out by mechanical cultivation. Both of these practices allow the soil to rest both in terms of water and nutrients. The Roundup method has the chemical cost and attendant concerns while the cultivation method is much more fuel intensive.

  Why would land be left out of production? Cash rent on an acre used to be 120% of the price of ammonia but now it's 50% of that $1,000.  This makes the choice very simple; half of the land is left standing idle in any given growing season, accumulating water along with the improvements associated with leaving the organic matter from the weeds on the field. The financial effect is the same as fertilization only without the attendant expense and risk.

 Bryan Lutter of Producer's Hybrids puts it succinctly:

"Farmers can't afford a thousand dollars a ton, so they've cut back on ammonia. Wheat protein percentages will drop from 14% to 8%. People are going to starve."

Let's take a look at what this means to the global food supply. Here are the 2005 production numbers in millions of tons. There are six and a half billion of us and 626 million tons produced; this staple crop provides a little less than two hundred pounds of grain per capita.

China 96
India 72
U.S. 57
Russia 46
France 37
Canada 26
Australia 24
Germany 24
Pakistan 22
Turkey 21
Other 201

World 626

   The U.S. has three hundred million people and consequently a net export of about half of our crop occurs, which means we're providing 25% to 30% of the global wheat need. Australia has a massive crop and a tiny population of ten million, Canada is in a similar situation, and historically their exports together roughly equal ours. The E.U. has a good share of global exports but I believe that is local trade and Russia manages a good bit of export, too.

   The overall condition of Pakistan is worrisome but wheat production is a bright spot. Their imports are a tiny slice of their overall consumption and their cultivation practices are more traditional as opposed to intensive. A change in ammonia based fertilizer availability should have less of an impact there than it will for the other large consumers. India's production and consumption match as well, but they've been shedding ammonia plants at a scary rate and probably face the same protein deficit U.S. crops will have. China has a variable harvest and will take anywhere from nothing to ten percent of the global export stream or about ten million tons.

   A quick look at the USDA's Economic Research Service report shows where the hammer will fall when wheat production drops.

 One sees discussion of people "being priced out of the food market" in some energy and agriculture related venues but this graph really brings home what will happen when U.S. and Australian exports crater. That big, purple developing countries portion of the graph are the ones least able to tolerate changes in market conditions and they'll be the first to lose out when supplies are tight and prices are high.

  The contributing factors do not just effect the United States. Australia has the same ammonia concerns as the U.S. and they're dealing with a very persistent drought.

  So, this does not look to be a good situation. Two producers that make up fifty percent of exports are cutting back due to the impact of the natural gas market on ammonia production and one of them is in dire straights due to global warming. This is going to lead to food riots and governments falling among the developing nations.


   This nasty graph, which just doesn't scale down well, was developed after this diary was originally written in the fall of 2008. The key thing to look at here is on the right - see the yield lines going up? See the per capita end of season stocks going down? The two curves match in shape but that counter-intuitive separation? That's the ethanol effect ... )

click to enlarge

 I worried over The Famine of 2009 so much that I got together with my co-conspirators from the Stranded Wind Initiative and we created a National Renewable Ammonia Architecture. And in my spare time I sleep.)

Less Cities More Moving People: The Fixx

Another home falls by the wayside
A few old cushions stuffed with pride
A hand is shaking from the rubble
This is spirit still alive

A servant bares his occupation
Breaks his back just growing old
Never mind his views were taken
Just saw by the rules of old

Less cities, more moving people
Rushing out with pride
Less cities, more moving people
These hands that once were tied

A church bell rang for the occasion
The average man learns what's in store
Now he sees where life was taken
Fighting heat, but growing cold

Less cities, more moving people
Rushing out with pride
Less cities, more moving people
Hands that once were tied

Is this what we call education?
Just watch the wheel of time revolve
But why is this not what I'm thinking?
It's just one mind and the unknown

Less cities, more moving people
Rushing out with pride
Less cities, more moving people
Who just forgot their lives

Less cities, more moving people
Rushing out with pride
Less cities, more moving people
Who just forgot their lives

The gap of twenty
For those longing for the halcyon days of the 1990s globalisation boom, this week has provided a blast of nostalgia. The pugnacious Lawrence Summers – then Bill Clinton’s Treasury secretary, now Barack Obama’s top economic adviser – has been telling the rest of the world how to run its economy. Europeans have been reacting with stiff-backed resentment. The UK is trying precariously to keep a foot in both the Anglosphere and European Union camps. The emerging market countries are worrying that their views are being ignored. The run-up to the Group of 20 heads of government meeting in London early next month is proceeding apace, prefigured by the meeting of finance ministers that ends today. Tour veterans of the international economics circuit digging out their Asia crisis souvenir T-shirts will find the only thing missing is a fight about the value of the dollar, though that might come.

This time, though, the economic crisis is much bigger and the credibility of the grouping that has appointed itself to combat the turmoil is itself in danger. "They have fuelled the rhetoric of co-ordination but weakened the reality," says one banker. "The markets are now expecting a lot from the G20 and there is a real risk they could destabilise the situation further if they cannot agree." This week’s drama has involved a blunt rebuff from Europe, an American attempt to soothe ruffled feathers wrapped around a giant surprise reform package, and a host country desperate for the party to go well but apparently baffled by not being able to get the main guest on the phone. The tensions have one thing in common: although governments are talking global co-operation, they are being driven by their domestic constituencies. Those pressures are pushing them in unusual directions. When the US starts using the International Monetary Fund to encourage all governments that can afford it to get out there and spend, the old orthodoxies have gone to the same place as Lehman Brothers.

As Mr Summers appeared in Monday’s Financial Times declaring, "There’s no place that should be reducing its contribution to global demand right now" and "It is really the universal demand agenda", European countries had no doubt his words were addressed to them. George W. Bush may have gone but parts of Old Europe are acutely sensitive to being lectured about the need for fiscal stimulus by the very country that many of them blame for having started the crisis. Peer Steinbrück, the German finance minister, reacted the next day with what came across – at least from a distance – as lofty disdain, implying that such a call was not worthy of discussion. "We are not debating any additional measures," he told reporters. With the crotchety air of a dowager duchess sending a sub-standard amuse-bouche back to the kitchens, Jean-Claude Juncker, Luxembourg prime minister and chair of the "eurogroup" of finance ministers from the single currency zone, added sniffily: "The 16 finance ministers agreed that recent American appeals insisting Europeans make an added budgetary effort were not to our liking."

Instead, the Germans said, the G20 summit should concentrate on reining in the financial institutions that got the world into this mess in the first place. In that category they prioritised their long-standing enemies: hedge funds and offshore financial centres. One finance official characterises this attitude as akin to that of a pugilist in a bar brawl. "You wait until a fight breaks out and then take a swing at the guy you have always wanted to hit," the official says. "Whether or not he had anything to do with starting the fight is not the point." Bashing unregulated financial capitalism in general and hedge funds in particular is sufficiently popular in continental Europe that this call even overcame the habitual froideur between Angela Merkel, Mr Steinbrück’s boss, and Nicolas Sarkozy, the French president. Later in the week, the two of them joined forces to argue that more rules rather than an open cheque book would be the way out of the financial crisis. Asked about the US push for stimulus, Ms Merkel pointedly responded: "This is the reason why we decided to speak with one voice today."

Both Ms Merkel and Mr Sarkozy are facing fractious electorates concerned about the stability of public finances and the euro. In Ms Merkel’s case, she has until September, when an election is due, to convince her political camp she has not drifted too far to the left. Yet to many Europeans, the US is also trying to deflect problems from its own domestic woes – notably the risk that American banks are drifting towards zombie status at a time when the appetite on Capitol Hill for more money for Wall Street bail-outs is close to nil. "The Europeans have developed this nice line: ‘The Americans are only asking us for money because they haven’t got the guts to ask Congress for it’," says one hedge fund manager. At the centre of this particular storm is the UK. A certain amount of schadenfreude can be detected outside the host country at its difficulties in achieving unity. It was Gordon Brown, prime minister, along with Mr Sarkozy, who insisted on portraying the last G20 summit in Washington in November as something akin to a new Bretton Woods, the 1944 conference that designed the postwar financial order.

At the time, Mr Brown was enjoying an unexpected bounce in the opinion polls from his brief status as saviour of the world after his bank rescue initiative – or at least being ahead of the global curve in his moves to recapitalise Britain’s banks. That popularity has long since dissipated and the domestic pressures on the prime minister to deliver a successful summit became evident when he blew into Washington last week. Chief among Mr Brown’s tormentors was the semi-hysterical British press, sufficiently obsessed by his relationship with Mr Obama to regard as a "White House snub" the president’s failure to hold a joint press conference in the snow-covered Rose Garden in sub-zero temperatures. Still, it was in vague terms that the prime minister talked about turning the G20 on April 2 into a global New Deal, a familiar tactic to those who have watched him over the years attach grandiose Rooseveltian labels to minor regulatory or bureaucratic reshuffles. But this week, Mr Brown was forced to choose whether to break ranks with fellow EU leaders when they declared they had done enough for the moment on fiscal stimulus.

Notably, he appeared to hold to the European consensus, despite tugs in the other direction from UK business leaders balking at the endless talk of remaking the global economic order. Martin Broughton, president of the CBI, Britain’s main business lobby group, and chairman of British Airways, described campaigns against bankers’ bonuses and tax havens as "red herring" issues and urged instead a focus on boosting demand. On top of that, it was accidentally revealed that Sir Gus O’Donnell, Mr Brown’s top civil servant, had told a conference of fellow bureaucrats that, thanks to the tortuously slow process of staffing up the Obama administration, no one at the US Treasury was picking up the phone. "There is nobody there," he said. "You cannot believe how difficult it is."

One of the people there is Tim Geithner, Treasury secretary, who is facing his own domestic popularity problems. Mr Geithner appeared in the guise of the good cop on Wednesday, promising that it was possible to walk (increase fiscal stimulus) and chew gum (reform financial regulation) at the same time, and claiming to have encountered no pushback at all from fellow finance ministers. "It is not what I hear from my conversations with my counterparts," he said. "I think you are going to find very broad support." Along with the emollience came a specific, rather startling, proposal. The IMF, where Mr Geithner himself used to be a senior official, should get $500bn (£359bn, €388bn) more in cash, he said – the money being put up by an array of rich countries but with some of the big emerging markets also being invited to join the club. Even the IMF’s management, which has been doing the rounds of reserves-rich countries such as China, was asking only for an extra $250bn.

Along with the present, though, came a less universally welcomed rider: the IMF should monitor the big economies to ensure that they kept the fiscal taps open. Europe gave a swift thumbs-down to this idea as well, and some of the emerging markets pointed out that they were not really in a position to spend like the US. The scene has thus been set for the grandmother of all gap-papering exercises that will test even the legendary capabilities of British communiqué drafters to the full. But there should be little doubt, observers say, that the divisions seen on display have already dissipated the G20’s ability to spread confidence. The FT’s discovery that the UK had divided G20 members into "priority" and "tier two" for its public relations effort will also have undermined the spirit of being all in this together. Along the way, despite the superficial similarities to the late 1990s, some extraordinary reversals have happened. Washington is lecturing the world on the dangers of fiscal prudence. The IMF is begging Asia for money. And Mr Brown is prioritising European unity. These are strange times indeed.

G20 leaders are good for nothing
At a time when our public finances are in a state of catastrophe, it is right to look for savings. And an obvious place to start would seem to be the cancellation of the G20 meeting of the world's supposedly richest economies, scheduled in London in three weeks' time. After all, it is now apparent that this circus – estimates of the cost of which seem to range from £20 million to £50 million – is going to achieve nothing. This looked to be the case from the moment it was planned, given that the governments that got us into this mess are the last people you would ask to get you out of it: it is a bit like an alcoholic deciding to switch from whisky as the boisson du choix to Bacardi Breezers. But once Barack Obama, late on Thursday, let it be known that he was not expecting any particular "commitment" to be issued at the end of the meeting, it became absolutely clear that the enterprise was doomed.

The one thing that unites all the governments of the developed nations is that each thinks all or most of the others are incompetent. Gordon Brown started this trend by claiming that our own crisis was imported from America (and he wonders why he had such a lukewarm reception when he went there last week). The French blame the failure of Anglo-Saxon capitalism, lumping us in with the Americans as villains of the piece. And the Germans seem to blame everybody else for having a delinquent approach to finance and a dependent-relative mentality towards the one true economic power left on earth – the Germans. And thus it goes on. So the hope of any agreement – even if President Obama had wanted one – was pretty remote. More to the point, the President has made it quite clear that he is going to plough his own furrow, and the rest of the world can like it or lump it. He is not new in taking this attitude to an economic problem that Mr Brown says can only be solved by concerted, global action.

The Germans, who have a history of starting international conflicts, instituted this frame of mind last September when European finance ministers met to discuss the banking crisis. Sensing not just that no other country had a clue what it was doing, but also that Germany was about to be touched for a vast sum of money to help with a bail-out, they headed back to Berlin and sensibly did their own thing. There does not need to be a meeting to sort out what has to be done. What is needed is the stimulation of demand. This will be assisted by a shift in resources from the public to the private sector – in other words, huge tax cuts for businesses and individuals.

With interest rates already insanely low, and risking massive inflation in two or three years' time, this is the only option. It is up to other countries whose exports are collapsing – like China or the eurozone – to work out that their currencies might be grotesquely over-valued, and to do something about it. But equally, it is up to countries in the West to admit that they have been living way beyond their means for years, and to tighten their belts and adjust expectations accordingly. None of this requires a meeting: it requires individual governments to shrink the size of their operations, and to make the philosophical decision to enable enterprise to lead a recovery.

Instead, our state remains bloated, and even the Opposition seems entrenched in the view that only state action – such as nationalising banks, printing money and organising the debauch of the currency – can rescue us from this. I have always suspected that Mr Brown wanted this G20 meeting not merely to create a further illusion of activity, but to try to enlist other nations in his defence of the indefensible. Instead, as Mr Obama seems now to have indicated, it really is every man for himself – and probably just as well.

Deal on IMF likely to disguise divisions
The Group of 20 advanced and emerging countries is poised to agree new funding for the International Monetary Fund on Saturday at a meeting of finance ministers and central bank governors that will paper over deep divisions on the need for more fiscal stimulus to battle the global recession. All week, officials from the US administration have urged European countries to make bigger discretionary tax cuts and public spending increases, only to be met with stiff resistance. The evident divisions on Friday led Alistair Darling, the UK chancellor and host of the meeting, to urge people to be “realistic” about what could be agreed at the G20 summit next month.

But the long-range bickering continued. Lawrence Summers, Barack Obama’s main economic adviser, called on a “large majority” of big economies to increase fiscal stimulus, arguing that an IMF benchmark of 2 per cent of gross domestic product in 2009 and 2010 was an appropriate guide. “There are some for whom it would be imprudent,” he said, noting that the crisis-hit countries in eastern Europe – which have large foreign currency debts – could not increase spending. “But for a very large majority of the world economy, [a fiscal expansion] is appropriate.” IMF officials say privately that the 2 per cent level was never meant to be a guide to spending for all countries. Later on Friday Robert Gibbs, White House spokesman, played down suggestions that the US would try to hold each G20 member to a numerical target of spending 2 per cent of GDP on fiscal stimulus.

Mr Summers’ words were countered by Angela Merkel, the German chancellor. Speaking of Berlin’s “considerable contribution, which must now take effect”, she said: “That is why we don’t think we need to draw up new stimulus packages, and I’m supported on that by German industry.” Several European countries stress their welfare systems give greater automatic stabilisers to limit a recession than does the US. The IMF gives partial but not full support to this argument. The debate also drew in representatives from international financial institutions. Robert Zoellick, the World Bank president, warned that “2009 is shaping up to be a very dangerous year” and said action was needed on many fronts.

“The danger is doing too little too late,” he said, adding that any fiscal stimulus without action to rid banks of their bad assets would be merely a “sugar high”, providing temporary relief. Many G20 officials on Friday sought to play down expectations of big policy announcements on Saturday. Mr Darling, who welcomed G20 finance ministers for two days of talks , said the meeting and next month’s London summit were “part of a process” for tackling the recession and building for the future. Mr Zoellick said that the finance ministers’ meeting should be viewed as a preparatory get-together that would probably have a positive outcome in the form of a deal on IMF funding, a condemnation of protectionism and small practical solutions in other areas.

The G20 will also welcome Thursday’s decision from the Financial Stability Forum, the club of central bankers and regulators devoted to promoting stable financial markets, to expand to include the full G20 membership and Spain. Lord Mandelson, the British business secretary, said: “We are not going to build Rome in a day but we are organising how well we lay the foundations.” While Gordon Brown remains hopeful the meeting will produce positive results, one G20 official said that the focus in Downing Street was now on finding things the UK prime minister can announce in April. The US suggested this week that the IMF should be given up to $500bn more in lending capacity by expanding the so-called New Arrangements to Borrow, an emergency financing facility provided by richer members.

But experts have warned that increasing the IMF’s firepower was likely to prove slower than its current plan of encouraging ad hoc, bilateral contributions from individual governments. Charles Dallara, managing director of the IIF, said: “Unless the countries involved can quickly get legislative approval, I am concerned that going this route is likely to take too long. It could be faster for members to receive selective ad hoc increases in their quotas [voting weights] for putting up bilateral contributions.”

AIG Paying Millions in Bonuses Despite Receiving Federal Bailout
Despite receiving $170 billion in federal aid and recording a staggering loss for the last quarter, insurance giant American International Group is doling out tens of million of dollars in bonuses this week to senior employees. While AIG agreed to pay the bonuses months before the government's rescue of the company began, the matter still is a source of anger for government officials. In a phone call on Wednesday, Treasury Secretary Timothy F. Geithner told AIG Chairman and chief executive Edward M. Liddy that the payments were unacceptable and needed to be renegotiated, according to an administration source.

The company has since agreed to change the terms of some of these payments. But in a letter to Geithner, Liddy wrote that the bonuses could not be cancelled altogether because the firm would risk a lawsuit for breaching employment contracts. Liddy also expressed concerns about whether changing the bonuses would lead to an exodus of talented employees who are needed to turn the company around.

"We cannot attract and retain the best and brightest talent to lead and staff the AIG businesses -- which are now being operated principally on behalf of the American taxpayers -- if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. treasury," Liddy wrote. AIG has agreed to restructure the $9.6 million in bonuses it would have paid to the firm's top 50 officers. AIG's top seven executives, including Liddy, have already agreed to forgo this payment altogether.

The next 43 highest ranking officers would still receive half of their bonuses now. A quarter would be dispersed on July 15 and the rest on Sept. 15, but these last two payments would be contingent on whether the company makes progress on its restructuring plan. Other bonus payments to thousands of employees, which total in the hundreds of millions of dollars, are still on track to be paid out.

G-20 Finance Chiefs Work to Tackle Toxic Bank Assets, Seek to Defuse Rift
Group of 20 finance ministers zeroed in on cleansing banks of toxic assets as they sought to set aside a transatlantic dispute on how best to fight the global recession. As the officials gathered for talks in southern England, Canada’s Jim Flaherty and Christine Lagarde of France signaled they were seeking fresh ways to tackle the banking crisis, which continues to choke off money from their economies. "You are not going to have a substantial recovery in the real economies until we solve this bank issue," Flaherty told reporters in Horsham. Lagarde, who this week stoked concerns of a rift with the U.S., said in an interview that "it would be major" if the G-20 agreed how to aid banks.

A deepening slump and the banking turmoil are forcing officials to form a more united approach. The run-up to the meeting was marred by discord as European governments rebuffed a U.S. call to spend more money and demanded more focus be paid to tightening market regulation. "We need urgent policy action," Simon Johnson, a former chief economist at the International Monetary Fund and now a senior fellow at the Peterson Institute for International Economics, told Bloomberg Television. "The financial sector problems are far from over. We have a worsening real economy." The G-20 officials dined last night at a luxury countryside retreat and continue discussions today. The gathering will craft the agenda for an April 2 summit of national leaders in London.

They met at the end of a week in which the IMF said the global economy would contract for the first year since World War II. Data in recent days showed U.S. consumer confidence near a 28-year low, Chinese exports plunging by a record and German factory orders sinking 38 percent. IMF Managing Director Dominique Strauss-Kahn warns that failure to step up efforts to rid banks of damaged securities may delay the economic recovery beyond 2010. "If you don’t take on the banking issue, stimulus is just like a sugar high," World Bank President Robert Zoellick said yesterday in London. Indicating that banks remain reluctant to lend 19 months after the crisis began, the London interbank offered rate, or Libor, that they say they charge each other for three-month funds, this week rebounded to the highest since Jan. 8. Financial companies are still hoarding cash after being stung by almost $1.2 trillion of writedowns and losses.

The U.S. has yet to implement its plan to remove tainted assets from banks, while the U.K. has guaranteed 585 billion pounds ($820 billion) of them held by Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc. German Chancellor Angela Merkel’s government is considering a plan to take over non-performing bank assets until they mature, enabling lenders to avoid massive write- offs while dodging a new bailout, according to three people familiar with the proposal. "I’m quite sure we will make progress," U.K. Chancellor of the Exchequer Alistair Darling told fellow officials as the meeting began today. One possible compromise is for the G-20 to agree to monitor what stimulus has been introduced and then judge whether more is needed. Having told LCI Television yesterday morning that G-20 members "don’t exactly have the same priorities," Lagarde later said she was "very optimistic" that a compromise could be found between the U.S.’s urging of greater stimulus and Europe’s request to toughen market rules. "Everyone is working with that spirit," she said in an interview in Horsham.

For their part, U.S. officials said they weren’t obsessed with easing fiscal policy alone and that they were as keen to overhaul governance of markets to prevent future crises. Treasury Secretary Timothy Geithner "will reiterate the dual priorities of forging consensus on the need for sustained action toward recovery and growth, while coordinating and reforming the international regulatory and supervisory system," his office said. Geithner approached the G-20 talks by lobbying his counterparts to follow the U.S. in injecting fiscal stimulus equivalent to at least 2 percent of their economy’s gross domestic product this year. European officials argued they had already spent enough, ran bigger social safety nets and didn’t want to blow out budgets.

The U.S. push for governments to do more was heeded by Japan, where Prime Minister Taro Aso ordered a third spending plan. The U.S. and Japan share the view that "combating economic and financial crisis should be a priority at this point, although regulatory reform is important," Japanese Finance Minister Kaoru Yosano said after meeting Geithner. The G-20 officials will also agree today to bolster the resources of the IMF although they have yet to agree by how much, a European official said on condition he not be named. Strauss-Kahn has lobbied for a doubling of firepower to $500 billion as countries from Pakistan to Hungary seek loans.
G-20 members are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the U.S., the U.K. and the European Union.

Germany Said to Consider New 'Bad Bank' Plan for Toxic Assets
German Chancellor Angela Merkel’s government is considering a plan to take over toxic bank assets until they mature, enabling lenders to avoid massive write-offs while dodging adding to bailout funds, three people familiar with the proposal said. The recommendation by a government panel co-chaired by Deputy Finance Minister Joerg Asmussen and Deputy Economics Minister Walther Otremba aims to circumvent pricing the assets, according to the people, who spoke anonymously because details have yet to be provided to lawmakers. Lenders would "park" the holdings in a state-controlled "bad bank" until maturity, betting a market recovery will minimize losses, the people said.

The measures draw on the lessons of a $73 billion aid program for the banking system inherited from East Germany in 1990 after re-unification. They’d mark a tack untried in the U.S. and the U.K., where officials are also struggling to relieve banks of junk assets that have frozen lending. "Taking assets off banks’ books was never going to be a smooth ride though the case for doing so is urgent," Wolfgang Gerke, president of the Bavarian Center of Finance, a Munich- based research institute, said in an interview. "Lessons learned after reunification may be a big help." Germany has had several false starts in seeking to exorcise the bad assets that BaFin, the financial-services regulator, estimates at 300 billion euros ($388 billion). Earlier plans have considered swapping government bonds for the assets and establishing a number of separate "bad banks."

In the U.S., President Barack Obama considered creating a so-called bad bank to buy the assets before scrapping the idea in favor of a public-private partnership in a program that may reach $1 trillion with government financing, if it’s implemented. British officials are selling state guarantees to banks to insure risky assets.
Merkel set up a 500 billion-euro bank-rescue fund in October that’s helped jump start lending between banks and financed the purchase of a 25 percent stake in Commerzbank AG. Some 197 billion euros of the fund were distributed by the end of February, according to its Web site.

Time is running out for Merkel, who faces elections on Sept. 27, to spark lending by banks. Companies from carmakers to shipbuilders are being starved of loans, choking cash flow that’s already shrinking as sales plummet amid the deepest global economic slump since the Great Depression. "Liquidity is the alpha and omega of operations now," Joe Kaeser, chief financial officer of Siemens AG, Europe’s biggest engineering company, told reporters in Berlin on March 12. The rescue effort represents the biggest upheaval in German banking since the aftermath of the fall of the Berlin Wall in 1989. Germany took on the assets of state banks inherited from the German Democratic Republic, giving the lenders a right to assign a fixed value for the assets -- based on a specific day in the year -- in their books. The step protected the valuation of the banks’ assets, said Gerke.

The European Central Bank said on Feb. 10 that governments should consider combining a so-called bad bank with guarantees of securities to achieve the most cost-effective way of ridding lenders of toxic assets. Risk should be shared between the state and the banking system, while the program should be allowed to run possibly as long as it takes the assets to mature, the ECB said. Under the government panel’s plan, the banks’ "old owners" -- its "Alteigentumer" in German -- would take on liability directly for potential losses when debt matures, the people said. That would free taxpayers from stumping up for losses as well as prevent banks from having to set aside reserves to anticipate losses in the form of writedowns, a member of the committee said.

The proposal faces challenges before emerging as law. Finance Minister Peer Steinbrueck is so far lukewarm over the plan as it necessitates the sale of bonds to back the creation of a unit, inside or outside Soffin, they said. Jeanette Schwamberger, a spokeswoman for Steinbrueck, declined to comment on the progress of talks to set up a bad bank or banks. The matter remains in an early, "exploratory stage," she said in an interview. The plan will probably be discussed by lawmakers of parliament’s Soffin control committee and by members of the Finance Committee in sittings scheduled in the final two weeks of this month, said the people familiar with the talks.

US treasury soon to offer details on toxic-asset plan
The Treasury will offer more details in the coming week about how proposed public-private partnerships to take bad assets off banks' books will work, a senior department official said on Saturday. The proposal for such partnerships was first made by Treasury Secretary Timothy Geithner in February but the lack of detail about them at the time disappointed financial markets led to a sharp drop in stock prices. Many analysts say the problem of toxic assets -- particularly mortgages gone bad as a result of the U.S. housing bust -- is at the heart of banks' reluctance to lend and must be dealt with before credit markets can operate normally again.

The Treasury official told reporters it wants to put out enough information in the coming week so that potential participants can better judge the proposal and it wants to indicate the timeframe within which it is expected to become operational. Geithner, who was in southern England to meet finance ministers from Group of 20 nations, had indicated that something was likely soon but gave no details. The Treasury official who spoke to reporters later said that enough information will be provided so that people can see that "market mechanisms" can be brought to bear on the issue.

The public-private partnerships could be a device for attracting investors to buy troubled assets at some discount in hope of future profit, offering financing support from the government for those that are willing to buy the assets. Treasury officials have said the public-private investment fund, or funds, would be a vehicle for putting government capital alongside private capital in a program the Federal Reserve and Federal Deposit Insurance Corp. would participate in to provide as much as $1 trillion in financing for buying in assets weighing down bank balance sheets.

At the time the proposal first was announced on February 10, the scant detail and lack of a clear time frame for removing the toxic assets disappointed investors, who sent bank shares sharply lower, helping to trigger new government rescues for Citigroup and American International Group. Since then, officials have provided bits and pieces of the plan, which is expected to involve multiple investment funds. Geithner said in testimony last week that the initiative would leverage both public and private capital to buy assets using government financing.
He said the plan could get started using the remaining funds in the Treasury's $700 billion financial rescue fund, but this and other banking stability efforts may require the Treasury to request additional funds from Congress.

A "placeholder" provision in President Barack Obama's fiscal 2010 budget plan signals a possible request of around $750 billion in new funds.
Neel Kashkari, the Treasury's interim administrator for the $700 billion rescue fund, also told lawmakers this week that private investors are ready to invest in distressed mortgage assets if they can get financing. With no private financing available, they could only pay prices that are too low for banks to be willing to sell. The bad asset plan is expected to be structured similar to the Federal Reserve's Term Asset-Backed Securities Loan Facility (TALF), which is scheduled to launch this week to help unblock consumer lending markets. In it, investors are able to borrow funds from the Fed against highly rated asset-backed securities, which then can be used to invest in new securities, helping to jumpstart consumer credit.

Obama Tries to Reassure China U.S. Treasury Debt Is Safe, Deficits Are Under Control
The U.S. sought to ease Chinese Premier Wen Jiabao’s concern about the security of his country’s investments in U.S. government debt, reiterating pledges to cut the budget deficit in half in four years. "There’s no safer investment in the world than in the United States," White House Press Secretary Robert Gibbs said yesterday at a briefing in Washington. Gibbs was responding to comments from Wen that China, the U.S. government’s largest creditor, is "worried" about its holdings of Treasuries and wants assurances that the investment is safe. "I request the U.S. to maintain its good credit, to honor its promises and to guarantee the safety of China’s assets," Wen said at a press briefing in Beijing.

President Barack Obama is relying on China to sustain buying of Treasuries amid record amounts of U.S. debt sales to fund a $787 billion stimulus package and a deficit this year forecast to reach $1.5 trillion. Investors abroad own almost half of all U.S. debt outstanding, and China last year overtook Japan as the biggest foreign buyer. Wen’s comments contributed to a decline in Treasuries yesterday. Yields on benchmark 10-year notes rose as high as 2.96 percent, from 2.85 percent a day earlier, and closed at 2.89 percent. White House National Economic Council Director Lawrence Summers, asked yesterday about Wen’s remarks, said overseas "confidence" in Treasuries would be hurt without the administration’s steps to end the economy’s decline.

China held $696 billion in U.S. Treasury debt as of Dec. 31, more than Japan’s holdings of $578 billion. Foreign holdings of U.S. Treasury debt at the end of last year totaled $3.1 trillion. The Treasury also offered a response that sought to reassure investors. "The U.S. Treasury market remains the deepest and most liquid market in the world," Treasury spokeswoman Heather Wong said in an e-mailed statement. "President Obama is committed to taking the steps necessary to restore growth and put this country on the path of fiscal sustainability, including cutting the long-term deficit in half over the next four years." During the first five months of fiscal 2009, which began Oct. 1, the U.S. budget deficit swelled to a record $764.5 billion for the period, compared with a $265 billion shortfall during the same period a year earlier. The shortfall this year already has exceeded the record $459 billion gap for all of 2008.

The administration is "tackling many long-ignored problems, ensuring that the U.S. will be in a stronger position than ever," Wong said. "We are facing whatever challenges come up and will continue to do so." Treasuries have handed investors a loss of 2.7 percent in yuan terms this year, according to Merrill Lynch & Co.’s U.S. Treasury Master index. Chinese holdings of the securities surged 46 percent last year, according to Treasury Department data. "Of course we are concerned about the safety of our assets," Wen said after an annual meeting of the legislature. "To be honest, I am a little bit worried." China should seek to "fend off risks" as it diversifies its $1.95 trillion in foreign-exchange reserves, Wen said. Yu Yongding, a former adviser to the central bank, said in an interview on Feb. 10 that the nation should seek guarantees that its Treasury holdings won’t be eroded by "reckless policies."

Treasuries have benefited from demand as a haven in the past two years as financial companies reported $1.2 trillion in credit losses. China boosted holdings of government debt as it lost more than $5 billion from investing $10.5 billion of its reserves in New York-based Blackstone Group LP, Morgan Stanley and TPG Inc. since mid-2007. "China won’t sell the U.S. debt now as that will only drive down Treasury prices, hurting not only the U.S. but also the value of its own investments," said Shen Jianguang, a Hong Kong-based economist at China International Capital Corp., an investment bank partly owned by Morgan Stanley. U.S. Secretary of State Hillary Clinton urged China, while visiting officials in Beijing on Feb. 22, to continue buying U.S. debt, which she called a "safe investment."

Despite China's jitters, Treasury bond market stays calm
The Treasury bond market hiccuped early today after Chinese Premier Wen Jiabao expressed nervousness about the "safety" of U.S. debt. But a modest rise in yields on long-term Treasury bonds quickly brought buyers back into the market, which has been remarkably resilient in recent weeks despite Uncle Sam's huge ongoing borrowing wave. The 10-year T-note yield, which jumped as high as 2.97% this morning, ended the day at about 2.89%, flat with Thursday's closing yield. The 30-year T-bond edged up to 3.67% from 3.63% on Thursday. Yields on shorter-term Treasuries ended mostly lower for the day. At a press briefing in Beijing today, Wen noted that China had "lent huge amounts of money to the United States," making China America's single biggest creditor.

"To be honest, we are a little bit worried," Wen said. "We hope the United States honors its word and ensures the safety of Chinese assets." What was his point? The Chinese may be legitimately worried about record U.S. borrowing this year to fund the Obama administration’s rescues of the economy and the financial system. Government stimulus spending is expected to be a key discussion point at this weekend’s meeting of finance ministers of the Group of 20 nations in London. If investors begin to balk at Treasury debt, forcing yields up dramatically, that would devalue China's holdings of older fixed-rate Treasuries. Wen also may have been warning the U.S. against badgering China on the issue of its currency’s value against the dollar.

China has resisted allowing its currency to appreciate quickly against the greenback, for fear of driving up prices of Chinese exports for U.S. buyers. "I think it’s a lot of political posturing for currency purposes," said John Spinello, a market strategist at brokerage Jefferies & Co. in New York. Despite Wen’s jitters, the Treasury market still is basking in the glow of surprisingly strong investor demand this week as the government sold $18 billion in new 10-year T-notes and $11 billion in 30-year T-bonds Wednesday and Thursday, respectively. A wild card that continues to buoy the market is the possibility of the Federal Reserve stepping in to buy Treasury bonds for its own account.

The Fed has said in recent months that it was considering the move as a way to push long-term interest rates lower, to help the economy. Fed policymakers are expected to provide an update on their thinking when they meet Wednesday. The Bank of England last week said it would begin buying British government bonds -- and the market reaction was dramatic: The yield on 10-year British bonds has plunged to 2.94% from 3.64% on March 4. With that kind of response, bond traders are reluctant to sell Treasuries now, figuring the Fed could work some of the same magic if it decides to jump into the market, said Lou Crandall, chief economist at bond research firm Wrightson ICAP in Jersey City, N.J.

Bank Secrecy Bites the Dust in Europe
Switzerland, Austria and Luxembourg announced a relaxation of their banking secrecy laws on Friday (13 March) following mounting pressures on both sides of the Atlantic to crack down non-cooperating tax zones. The news comes only one day after Liechtenstein and Andorra made similar declarations, as a number of financial centres around the world attempt to pre-empt any decision coming out of the G20 leaders summit on 2 April. As western governments feel the pinch due to expensive stimulus spending projects coupled with reduced tax receipts, the spotlight has been turned on a handful of geographic locations that profit by harbouring capital owned by companies and wealthy individuals from abroad.

The Swiss government said on Friday that it intends to adopt OECD standards on the sharing of banking information between different countries, citing its desire to avoid being placed on the organization's 'black list' of tax havens. "If Switzerland were to wind up on a black list it wouldn't only hurt the banking sector," Finance Minister, Hans-Rudolf Merz, said at a press conference in Bern implying that the economy as a whole would suffer. In the past, Switzerland has said that signing up to OECD standards would compromise the banking secrecy of its clients. Switzerland's largest bank, UBS, last month handed over the names of 300 customers to the US government after it produced strong evidence they were avoiding paying tax.

It is estimated that Switzerland holds around $2 trillion worth of capital from abroad reports the BBC. In a separate announcement on Friday, Luxembourg also said it would cooperate with tax authorities from other countries but will only provide client details once 'concrete proof' of tax evasion is provided. For its part, Austria said will renegotiate current agreements on banking secrecy in the fight against tax fraud and evasion its finance minister, Josef Proell, said on Friday. It too has only agreed to hand over information once supplied with evidence of tax evasion by individuals with accounts in the country.

"There won't be an automatic exchange of information, but we will renegotiate a number of the 80 tax agreements that we have with other countries," Mr Proell said in Vienna. "We have been fighting tax evasion and fraud in the past, and we will continue to do so," he added. France, which has lead calls in recent weeks for a comprehensive review of the ‘uncooperative jurisdictions', was initially guarded in its response to the news. "The devil is in the details," said French Finance Minister, Christine Lagarde, in Paris. "We must go all the way and see if banking secrecy is sufficiently lifted." UK Prime Minister Gordon Brown said the changes were "the beginning of the end of tax havens." "Tax evasion, which costs the global economy billions of pounds each year, will become more difficult in future."

Brussels pushing finance deregulation in third world
While EU and other global leaders have talked tough about re-regulating the financial sector in the wake of the economic crisis, they remain committed to pushing through banking deregulation in the developing world via trade deals. This strategy is undermining poverty reduction in these countries and is reproducing the same type of circumstances that led to the crisis in the first place, warns a new report published on Wednesday (11 March) by the World Development Movement, an UK-based anti-poverty NGO. Both via the WTO negotiations on a General Agreement on Trade in Services (GATS) and potential EU bilateral or regional trade deals with 34 countries in Latin America, Asia and the Mediterranean, the bloc continues to push for the lifting of restrictions on how Western banks operate in developing countries.

The EU In 2002, via "GATS" global trade talks, requested that 94 countries open up their financial industry, 20 of which were least developed countries and 30 were low income countries. A financial services component of GATS would mean that countries would not be able to introduce new rules that are more restrictive than those already operating, making it difficult to pass laws on risky trading such as "short-selling" or to limit the numbers of service providers or the number of transactions. All new financial services would also have to be permitted, giving the green light to the very same complex financial products that have been held responsible for the creation of the toxic asset problem in the north. Also under GATS, full ownership by foreign banks would be allowed, which can make it hard for a host country's financial supervisor to monitor the foreign bank's activities and to ensure it is acting in the interests of the host country.

Even in the EU, the problem of foreign bank ownership is exacerbating the crisis in the east. The tap of credit to much of eastern Europe - where most of the banks are owned by Austrian, Swedish and other EU parent companies - today has been all but turned off, as the owners focus on provision of credit in their home markets. After seven years of talks, however, countries are still haggling over a GATS deal, and the EU has sought bilateral and regional trade deals to get over the impasse. The bilateral strategy, known as "Global Europe," seeks to remove regulations on European financial service companies, along with other liberalising measures in a range of sectors, in case a deal at the WTO level is not reached.

The EU trade deals already signed with Chile and Mexico contain substantial chapters on financial services, while the Caribbean Economic Partnership Agreement with the EU signed in October last year contains many of the financial liberalisation clauses proposed in GATS. Similar pressure on central American nations is being brought to bear to open up their financial sectors. The report reveals that where banking liberalisation has occurred, looking in particular at India and, crucially, Mexico - home to one of the most liberalised financial sectors in the world, with 80 percent foreign ownership, poor people and small businesses see their access to credit, bank accounts and other financial services restricted. At the same time, where such credit does exist, it is in the form of credit cards, car loans or mortgages, boosting spending on consumer items rather than productive sectors of the economy such as farming or manufacturing.

On Monday (9 March), UK Prime Minister Gordon Brown himself spoke out against the "do as we say, not as we do" attitude of Western countries regarding economic policies promoted to the developing world. At an international development conference in London, he announced that he would push the World Bank and other wealthy nations to create a new fund for developing countries to help the poor through the crisis, although he did not attach any figures to the idea. While there, he criticised the imposition of "economic orthodoxy" on the developing world. "Too often in the past our responses to such crises have been inadequate or misdirected - promoting economic orthodoxies that we ourselves have not followed and that have condemned the world's poorest to a deepening cycle of poverty," he said. The World Development Movement (WDM) however, says that there is an acute contradiction between such leaders' words and deeds in pushing for financial deregulation in the third world.

"On the one hand, Gordon Brown has developed a mantra of tough talk on the re-regulation of banks," said Benedict Southworth, the director of WDM. "On the other, together with other European leaders, he is aggressively pushing free trade deals which demand that developing countries follow a deregulated and liberalised banking model." "That model has clearly and spectacularly failed here and has also failed poor people in the developing countries," she added. The study highlights how the presence of European banks in developing countries has resulted in foreign banks cherry-picking the richer customers, resulting in an overall decline in services and credit for others, and notably to rural areas.

In urban areas where foreign banks are concentrated, low-income householders and small businesses struggle to meet the criteria to open an account, let alone to receive a loan. In response, WDM is calling for financial services liberalisation to be reoved from from proposed bilateral and multilateral EU trade deals. An official with the European Commission told EUobserver that they were studying the report very closely, but that the report's authors had "confused liberalisation with deregulation." "Market access for European financial service providers in no way restrains the ability of countries to regulate financial services," the official said. "The question is whether such moves become protectionist."

Stress Test Zombies: Not Too Big To Fail? Tough Tootsies Little Banks!
There are certain professions in which the collective genius of the American people dominates the field: semiconductor design, fast food product differentiation, fire-control systems for air-to-air combat, and con artistry. That these are not, at the moment, sufficient to earn a current account surplus, is a problem being worked on, not least by the service exporters in the latter occupation.
John Dizard, Financial TimesMarch 1, 2009

Last week, we learned from Fed Chairman Ben Bernanke and Treasury Secretary Tim Geithner that Washington lacks the guts to fix the problems eating away at the US financial system, at least so far. So large are the derivative-fueled losses and so majestic the collective incompetence of the Congress, regulators and the Sell Side dealers on Wall Street in enabling these losses, that the judgment of the single party state called Washington is to simply hide the problem under an ever-widening public TARP.

Now, in most parts of the country, a TARP is used to cover unneeded things, usually a pile of stuff nobody wants, far in the back yard. This is essentially the plan articulated by Bernanke and Geithner: Buy the bad assets, invest more capital in the zombie banks, and hope asset prices eventually recover. This is not a plan to do anything but buy time and extend losses. The scary part is that nobody else in the Obama White House seems to know enough about finance to argue the point.

As we told the subscribers to IRA's Advisory Service, the Fed and Treasury have created a rule without reason, a ridiculous standard that only ensures the unsoundness and instability of the US financial system. Apparently, banks that fail the Supervisory Capital Assessment Program stress test will not be broken up as required by law, but instead given more capital at taxpayer expense. This is the solution to the financial crisis embraced by President Barack Obama. There is no market discipline, no bad results for the bond holders who stupidly funded these giant derivatives-driven, risk-creation machines.

Below is our best guess as to the identity of the 19 or so banks that are part of the stress test process. We hear in the community that these 19 domestic financials are the de facto "Too Big Too Fail" banks, which of course means that all other banks are not part of the group. We should probably add American International Group and the Depository Trust and Clearing Corp, which owns a Fed member bank, to the TBTF list.

Holding Company

Notice that there are no foreign-owned banks as part of the stress test group. Note too that there are several banks on the list that are rated "F" by the IRA Bank Monitor as of year-end 2008. These negative ratings are driven both by negative ROEs as well as above-average realized credit losses. We see two issues facing Bernanke, Geithner and the Obama Administration when it comes to the cowardly "feed the zombies" approach articulated last week. First, it is not sustainable financially and must eventually be changed because of funding constraints. And two, the policy of subsidizing the bond holders of the largest banks is unworkable politically and must eventually also be changed to conform with domestic political reality. That's right, at some point the Obama Administration may need to choose between our foreign creditors and American voters.

The Bernanke/Geithner approach to not dealing with the financial crisis amounts to a hideous public subsidy of the global transactional class, a transfer of wealth from American taxpayers to the institutional investors who hold the bonds and derivative obligations tied to the zombie banks, AIG and the GSEs. All of these companies will require continuing cash subsidies if they are not resolved in bankruptcy.

Remember that the maximum probably loss ("MPL") shown in The IRA Bank Monitor for the top US banks with assets above $10 billion, also known as Economic Capital, is a cash number representing the amount of incremental capital the banks may require to absorb the losses from a 3-4 standard deviation economic slump, such as the one we have today. If you include the subsidy required for the GSEs and AIG, the US Treasury could face a collective funding requirement of $4 trillion through the cycle. Do Ben Bernanke and Tim Geithner really believe that they can sell such a program to the Congress? To put it in perspective, the $250 billion in the Obama Budget for additional TARP funds will not quite cover Citigroup (NYSE:C).

Bottom line: The policy decision articulated this week by Bernanke and Geithner represents the largest transfer of wealth in American history, yet no legislation and been passed and no meaningful debate has occurred. The biggest danger facing the markets is that Ben and Tim still do not seem to have a clue what to do about the big banks -- other than to write more checks against the public trust. The conflict over this decision to pass the cost to the taxpayer, between the Fed, Treasury and the Congress, on the one hand, and the Wall Street dealer banks is staggering, yet nothing is said in the Big Media.

The Fed and Treasury claim that situations like C and AIG cannot be addressed idiosyncratically, to paraphrase our friend David Kotok, but the reality is more complex. Fact is, the Sell Side dealers have leveraged the real economy via OTC derivatives to such a degree that bailing out toxic waste sites like AIG, several large Euroland banks and the world of structured finance could cost trillions of dollars. That is the true cost of the crisis. The only issue is whether we recognize it directly, via a public resolution, or hide the costs via public subsidies and future inflation.

If we wish to preserve some semblance of market discipline in the US, an alternative strategy must be found. Until somebody, somehow gets to President Obama and effectively refutes the self-serving argument of the Fed and Treasury that we can't resolve C or AIG, the cost of the zombie dance party can only grow. The way you end the need for public subsidy is by resolving these firms via a restructuring and forcing the bond and equity holders of the bank's public parent company to absorb the cost of marking assets to market. If we establish a hard rule regarding solvency and break up rather than recapitalize zombie firms, then we have started to apply a real solution.

Mark to Market Accounting
To answer your many questions about our view on mark-to-market accounting, the damage - or adjustment - is done. We opposed the way the return to FVA was handled because it was too much driven by accounting and not enough other issues around business reporting. We need to be cognizant of not just accounting goals and rules, but also business reporting, investor relations, legal and business issues in order to assess this question.

We like the idea of more disclosure. We just think that swings in short-term prices observed by M2M need be confirmed by time, then you begin to convince us that the observed average price over a period of time equals value and should affect assets or income. We submitted individual comments on same to The Financial Crisis Advisory Group (FCAG) of the IASB and FASB. Members of the financial community who care about M2M should attend the open meetings hosted by FASB and submit comments to the FCAG as well.

When we stated on Bloomberg TV a while back that M2M was an attempt by the accounting industry to deal with the growing opacity and deliberate inefficiency of the OTC world, our friend David Reilly ran downstairs and declared our conversion to the forces of good "on the road to Jerusalem." Fair enough. Our recommendation is that we continue to report M2M price swings, but be more reasonable when it comes to writing down performing assets vs. income and charging-off credit exposures that are paying as contracted. The inclusion of something that resembles an impairment test may be part of the eventual solution

Ruling On Merrill Bonus Confidentiality Due By March 20
A New York State judge on Friday said he'll rule by next week on whether to keep confidential details about individuals who received bonuses at Merrill Lynch & Co. on the eve of its merger with Bank of America Corp. last year. At a hearing Friday, New York Supreme Court Justice Bernard J. Fried in Manhattan said he'll issue a ruling on or before March 20 on a request by the Charlotte, N.C., bank to prevent New York Attorney General Andrew Cuomo from publicly releasing the names of individuals who received bonuses and how much they made. Last month, Cuomo's office subpoenaed Bank of America for a list of who received 2008 bonus awards at Merrill Lynch. The bank has declined to turn over the names without having a confidentiality order in place.

Evan A. Davis, a lawyer for the bank, argued Friday that the list of who received bonuses is proprietary data and releasing it would put it at a competitive disadvantage, particularly if competitors were able to learn how much its top 200 executives were paid. "I think you have the power to fix a condition of privacy if there's a competitive harm to us," Davis said to the judge. Cuomo's office is probing disclosures related to the timing and nature of more than $3.6 billion in bonus payments made shortly before Bank of America's merger with Merrill Lynch closed last year. Davis also argued that releasing the list would cause some employees to leave because of privacy or safety concerns. He noted some highly paid employees have received threats.

Eric Corngold, executive deputy attorney general, argued the court imposing a confidentiality order on Cuomo's office would restrict its ability to conduct investigations and violate state law. "It's the nature of an investigation," Corngold said. "An investigation reveals information people may not want out on the street, but it's not a reason for the court to create a handcuff of the attorney general." The bank also wants the confidentiality order, in part, to apply to testimony given by John A. Thain, Merrill Lynch's former chief executive. A temporary confidentiality order on Thain's testimony remains in place until the judge makes his ruling. Thain was forced out in January in the wake of his handling of the investment bank's fourth-quarter loss. In a recent regulatory filing, Merrill Lynch reported a fourth-quarter loss of $15.84 billion, $500 million higher than prior estimates. On Friday, Thain's lawyer took no position on the bank's motion for a confidentiality order.

EU banks named in dirty money report
Europe's biggest banks are happy to do business with corrupt regimes in Africa and Central Asia, according to a new report by UK-based NGO, Global Witness. As late as November 2007, Barclays in Paris held a private account for Teodorin Obiang, the study says. A scion of the ruling family in Equitorial Guinea, Mr Obiang in the past 10 years spent €4.5 million on sports cars even as 20 percent of children die before their fifth birthday due to poverty in the oil-rich country. Until March 2007, BNP Paribas was involved in billions of euros of syndicated loans to the Angola ruling elite-linked oil firm Sonangol, Global Witness writes. Deutsche Bank has still not made clear to the NGO what happened to the €2 billion or so of Turkmenistan's natural gas income, which it was holding for the country's notoriously cruel dictator, Saparmurat Niyazov, when he died in January 2007.

"The international banking system is complicit in helping to perpetuate poverty, corruption, conflict, human suffering and misery," the Global Witness paper says. Coming ahead of the G20 finance summit in London on 2 April and in a climate of hostility to big bank secrecy caused by the financial crisis, the report calls for regulation of bank dealings with "PEPs" (politically-exposed persons) and a name-and-shame campaign by FATF (the Financial Action Task Force). The Paris-based FATF is a little-known international anti-money laundering body with 34 members, including 15 of the richest EU states and the European Commission.
Of 10 EU states surveyed which are also FATF members, none complied with the body's full set of recommendations on issues such as making money laundering illegal or forcing banks to carry out enhanced due diligence on PEP-type clients.

Global Witness' paper, Undue Diligence, reads like a roll call of the most respectable financial institutions in Europe. HSBC and Banco Santander are named in connection to the Obiang family. Credit Lyonnais allegedly helped Gabonese President Omar Bongo place funds abroad. Societe Generale is said to have done similar work for the ruling family of Congo-Brazzaville. Fortis bank is accused of helping the former ruler of Liberia, Charles Taylor, fund conflict in east Africa by processing payments for government-linked timber firms.

The list of banks implicated in the Angola loans includes Commerzbank, KBC, the Royal Bank of Scotland, ING and Standard Chartered. "If [banks] cannot identify the ultimate beneficial owner of the funds ...and if they cannot identify a natural person (not a legal entity) who does not pose a corruption risk, they must not accept the customer as a client," the NGO said. An article which appeared on 8 March on a Turkmenistan opposition website, the Chronicles of Turkmenistan, broadens the debate. The story points the finger at French construction company Bouygues for allegedly giving current President Gurbanguly Berdymukahemmedov an €80,000 Mitsubishi Evolution X while bidding for contracts for a new airport building and palace complex.

Ilargi: EU car sales were down 18% YoY in February. That’s pretty bad already , but the number is hugely distorted to the upside by the fact that Germany sales increased 22% on a similar government sponsored trade-in deal for used cars. The UK would like that same effect.

UK to offer £2,000 deal to trade in used cars
Lord Mandelson is preparing to put a £2,000 bounty on used cars in an attempt to stimulate the motor industry. Senior government sources said that talks were at an advanced stage and a deal could be announced in the Budget on April 22. Under the proposed stimulus package, drivers would be able to turn in their car, which must be at least nine years old, and get a £2,000 discount on the purchase of any new or one-year-old car bought at a dealership in Britain. The motorists would have to deliver their old vehicles to one of a number of car recycling plants and receive a confirmation certificate.

They would present this to a car dealer and get the government-funded £2,000 discount. Motorists would be able to purchase any brand of car. Whitehall aides said last night that no final decision had been taken but Lord Davies of Abersoch, the Trade Minister, gave the clearest hint yet that the Government was minded to introduce the scheme. In an interview with The Times, he said: "The scrappage scheme has potential. It’s been tried in other countries . . . we’re looking at it very closely." There has been a surge in new car sales in Germany since the introduction of a similar €2,500 scheme.

Roy Kishor, a car industry restructuring expert, at the consultancy Permanence, said: "Scrappage is an absolute no-brainer. It addresses the two most fundamental issues facing the car industry today – the first is that it creates demand, getting inventory moving and helping the car companies get back to manufacturing. The second is that it deals with emissions." The new or nearly-new cars that participants would be eligible to buy all have much lower carbon emissions than older cars. The Government had been examining proposals to use public money to finance car loans by giving car finance companies access to the Bank of England’s special liquidity scheme. However, this has been opposed by Mervyn King, the Bank’s governor.

European Car Sales Drop 18% as Recession Hits Once-Booming East
European car sales plunged 18 percent in February as the global recession stifled demand for Opel, Mercedes-Benz and BMW models, especially in the once- booming eastern part of the continent. Registrations fell to 968,159 vehicles last month from 1.19 million a year earlier, the Brussels-based European Automobile Manufacturers’ Association said in a statement today. It was the sharpest February drop since the organization began recording data in 1990 and follows a 27 percent drop in January, which was the steepest in a contraction that’s extended to 10 months.

The slumping economy and tight credit markets have taken a toll on the auto industry. Volkswagen AG, Europe’s largest automaker, yesterday predicted a first-quarter loss as Chief Executive Officer Martin Winterkorn said 2009 "will be one of the most difficult year’s in the company’s history." Bayerische Motoren Werke AG, the world’s top luxury-car manufacturer, said 2008 net income plunged 89 percent after it took charges for bad loans and leases. Industry deliveries in eastern Europe fell 30 percent to 66,123 vehicles, as Romania dropped 67 percent and Hungary declined 46 percent. Poland, the region’s largest market, bucked the trend, posting an increase of 7.3 percent to 30,194 cars and sport-utility vehicles.

In western Europe, demand fell 17 percent to 902,037 vehicles, as the Spanish market plunged 49 percent and the U.K. dropped 22 percent. Auto sales collapsed in Iceland, where the economy capsized after the island nation’s biggest banks failed to refinance their debt. There were 91 new vehicles registered in the country in February compared with 1,035 a year earlier. The auto industry is pressing European governments and regulators for emergency help as it slashes production to clear inventories of unsold cars. The euro-region economy will contract in 2009 for the first time since the single currency was introduced a decade ago, according to the European Commission.

Sales in Germany, which is offering consumers 2,500 euros ($3,234) on new-car purchases when they scrap an old car, surged 22 percent to 277,740. The government-incentive program has sparked a wave of deal-making, leading to discounts of more than 40 percent, according to Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg- Essen. General Motors Corp.’s Opel, sold as Vauxhall in the U.K., lost market share, as the Ruesselsheim, Germany-based manufacturer petitions European governments for 3.3 billion euros in emergency aid. Opel and Vauxhall sales fell 22 percent, eroding their market share to 7.3 percent from 7.6 percent. Sales at Trollhaettan, Sweden-based Saab, which filed for reorganization after GM halted financing, fell 54 percent.

Volkswagen AG’s Audi unit overtook BMW and Mercedes-Benz to become the region’s largest luxury brand, at least for last month. Audi’s market share rose to 4.5 percent from 3.9 percent, after sales fell 7.1 percent. Munich-based BMW posted a 29 percent sales fall, as the brand’s share slipped to 3.5 percent from 4 percent. Stuttgart, Germany-based Daimler AG’s Mercedes-Benz brand suffered a 34 percent drop, losing nearly a full percentage point of market share to 3.6 percent from 4.5 percent. Volkswagen, the region’s best-selling brand, boosted its market share to 11.6 percent in February from 10.1 percent, as deliveries slipped 6.2 percent. The Wolfsburg, Germany-based manufacturer’s Spanish Seat brand suffered from its home market’s weakness as sales plunged 31 percent. Deliveries for PSA Peugeot Citroen, Europe’s second-largest automaker, tumbled 25 percent, leading to a market-share decline of 1.2 percentage points to 13 percent.

Poles Lose in Currency-Exchange Gamble
Like many of its formerly communist neighbors in Eastern Europe, Poland has turned into a country of capitalist gamblers. In recent years, as their economy boomed, millions of Poles became foreign-currency speculators, buying property, cars and consumer goods with loans denominated in low-interest Swiss francs. As the Polish currency, the zloty, soared in value, most borrowers found it cheaper to pay off their debts in Swiss money, even though few had ever been to Switzerland or knew what a franc looked like.

Since August, however, the zloty has unexpectedly collapsed, losing nearly half its value against the Swiss franc. About two-thirds of all Polish mortgage holders now face skyrocketing payments. If the zloty continues to tumble, analysts fear the problem could lead to a wave of defaults in the region, dealing a major setback to Europe's already weakened banking system. "Just like the subprime mortgages were a wonderful idea in the United States as long as house prices kept rising, so it was with the Swiss-franc loans here," said Witold M. Orlowski, a former adviser to the Polish president and now chief economist for PricewaterhouseCoopers in Warsaw. "It was seen as a win-win game. There were warnings, but basically people ignored them."

Currency gambling has backfired in several other countries in Eastern and Central Europe. In Hungary, Romania and Ukraine, a majority of mortgages and other consumer loans were taken out in Swiss francs, euros, even Japanese yen -- all of which offered substantially lower interest rates than the Eastern European currencies. The borrowing binge rested on the assumption that the Hungarian forint, Romanian leu and Ukrainian hryvnia would keep rising in value, or at least remain stable. But since last summer, those currencies have crashed.

Moody's credit-rating agency warned last month that the region's financial system was vulnerable to defaults on foreign-currency loans and that the problem could devastate the balance sheets of Western European banks operating in the region. German, Austrian and Italian banks dominate finance in Eastern Europe. U.S. banks are less exposed, but a few, including Citibank and General Electric's Money Bank, have a substantial market share. In Poland, people owing money in Swiss francs have seen their monthly payments rise by 50 percent or more since last summer. Few have defaulted. But analysts predict the number of bad debts will jump if the zloty remains weak much longer.

Marzena Rudkiewicz, 54, a Warsaw dentist, took an extra job this month at a government hospital fitting false teeth for pensioners, saying payments on a mortgage she took out to buy an apartment for her son in 2005 have ballooned by more than half. The mortgage is denominated in Swiss francs, but she is paid in zlotys and has to exchange the weak Polish currency to pay off the debt. "I've had to change my life because I'm stuck with this loan," she said. "It's too painful to think about." Rudkiewicz's husband, Jakub, an industrial designer, took out a Swiss-franc loan four years ago so his small firm could buy its own office space. At the time, his monthly payment was 1,600 zlotys. Now it's 2,400, at a time when he can least afford it; business has slowed since the onset of the global financial crisis last fall.

Compared with some of its neighbors, Poland's overall economy is actually in good shape. Growth tailed off late last year, but analysts have not forecast a recession for 2009. Public finances are stable, and many banks are still reporting profits. Government officials said they worry Poland is being unfairly lumped together with the region's economic basket cases, such as Latvia, Ukraine and Hungary. All three countries have required bailouts by the International Monetary Fund. "You try to differentiate yourself and explain what problems exist in your own country and which problems do not," said Dominik Radziwill, a deputy finance minister. "Just because we only recently joined the European Union doesn't mean we have a bigger potential to default."

But the Polish economy is facing trouble on several other fronts. After the country joined the bloc in 2004, it had a chance to move quickly to replace the zloty with the euro. But as the zloty appreciated, lawmakers put off adopting the new currency. Today, Polish officials are kicking themselves. Two countries in the region that did adopt the euro -- Slovakia and Slovenia -- have been sheltered from the financial woes affecting the region. After Poland was admitted to the European Union, more than 1 million Poles moved abroad to seek work, particularly in Britain, Ireland and Sweden. Now that economies in those countries are swooning, many of the expatriates are returning home -- just as the jobless rate in Poland is rising for the first time in years.

Leszek Czarnecki, a billionaire developer and banker who became Poland's wealthiest investor during its go-go years, said nobody knows how things will turn out.
In an interview, Czarnecki called Poland's economy "fundamentally sound" but warned that the government's biggest challenge will be to stabilize the zloty. If it does, he said, the economy could grow by 2.5 percent this year -- a major accomplishment in the face of a global recession. But if the zloty continues to plummet, he said, the economy could contract by as much as 5 to 7 percent. "It might be totally crushed, an unbelievable crisis," he said. Czarnecki is the chief investor in Getin Holding, a banking company that specialized in Swiss franc loans. He said that his banks have not experienced a rise in defaults and that Getin remains highly profitable. But he acknowledged that, in hindsight, the foreign-currency strategy was "a mistake."

Czarnecki blamed the problem largely on credit-rating agencies and foreign banks, which he said treated the loans as low risk and encouraged them for years. Now, he said, those same institutions are telling investors to pull their money out of Eastern Europe. "We believed that well-dressed, perfectly well-spoken bankers -- some people call them 'bangsters' -- from Wall Street and London City really knew what they were talking about," he said. The foreign-currency crunch has shaken other pillars of the Polish economy. Mortgage lending has dried up, depressing the real-estate market. One-third of construction jobs have been lost since last year. Grandiose dreams have been dashed. Two years ago, Czarnecki unveiled plans to build Sky Tower, an 846-foot-tall skyscraper in Wroclaw, Poland's fourth-biggest city. The building would have been the country's tallest, but he has had to shrink it by 20 percent and postpone construction.

The story is similar in downtown Warsaw. Until last fall, the capital was jammed with construction cranes. Today, all but a handful of projects have been canceled or put on hold. One of the few buildings still under construction is a 56-story luxury apartment tower on Gold Street, in the city center. Designed by the renowned U.S. architect Daniel Libeskind, it was intended to cater to Warsaw's newly rich, with many residences priced at more than $1 million. But the developer, Orco Property Group, has been able to sell only about 40 percent of the units. "It's definitely slowed down," said Alicja Kosciesza, the marketing director. As in the United States, angry Poles are blaming the banks for excessive lending. Until banks tightened credit last fall, no-money-down loans valued at 120 percent of collateral were common. Borrowers could sign up for mortgages lasting 75 years.

"Banks started this huge competition for customers, lowering all the conditions and requirements to make loans more accessible," said Aleksandra Natalli-Swiat, an opposition lawmaker. In 2006, the Polish Financial Supervision Authority recommended that banks limit the size of Swiss-franc loans to 80 percent of the maximum it would otherwise lend a customer. The recommendation was not binding, but most banks observed it, said Andrzej Stopczynski, the authority's managing director for banking supervision. If regulators hadn't intervened, he added, today's problems would be far worse. Most banks stopped offering foreign-currency loans last fall after the zloty began to plunge. But about 60 to 70 percent of existing mortgages in Poland are still denominated in Swiss francs, Stopczynski said.

Despite the fall in the zloty, many Poles remain convinced that speculating in Swiss francs can be a good deal. Rafal Lyczek, a 31-year-old economist from Poznan, converted his mortgage from zlotys to Swiss francs last May, in a terrible bit of timing. His payments have almost doubled since then. "I didn't think the zloty could weaken so quickly," he said. Lyczek has started a Web site, dubbed "Buy a Franc" in Polish, designed to help people trade in the foreign-exchange market themselves instead of paying high commissions to banks. But he said he has no regrets about borrowing in Swiss francs in the first place. He thinks the zloty is undervalued and will make a comeback. "If I gave in now, it means I'd be giving my money back to the speculators and that I will have lost," he said.

Australian investment bank Babcock & Brown finally falls prey to crisis
Babcock & Brown, the Australian investment bank saddled with more than A$3.1bn (£1.5bn) of debt, has finally collapsed, becoming the country's biggest casualty of the financial crisis to date. The company, which has a satellite investment fund that owns British port operator PD Ports, entered voluntary administration on Friday after a group of New Zealand-based bondholders voted against a restructuring plan. The move all but ends a saga stretching back to June, when steep falls in the group's share price triggered a review of its debt facility.

Babcock & Brown, an infrastructure investment specialist renowned for its aggression at the bargaining table, had been on life support for months. It secured a provisional deal with its banking syndicate in December to restructure its debt in a programme that would have seen large-scale asset sales over several years.
Bondholders in both Australia and New Zealand, who were to receive 10 cents in every A$100, were required to approve a restructuring of their bond terms. A meeting of Australian bondholders, scheduled for Friday afternoon, was rendered pointless and cancelled after their New Zealand counterparts voted the plan down.

Senior creditors, including Australia's five biggest banks, already control the group's main operating company, unlisted Babcock & Brown International, and are now expected to sell down the $14bn asset portfolio. Royal Bank of Scotland is among overseas creditors who have an exposure totalling $2bn. RBS was earlier this week hired by Babcock & Brown Infrastructure to sell PD Ports, the UK's third-largest ports operator. Babcock & Brown says the operation of the satellite fund will not be affected by its administration, which is to be managed by Deloitte Touche Tohmatsu

Iran says oil market oversupplied
Iran's oil minister Gholam Hossein Nozari said there was "too much oil" on the market on Saturday, the eve of a crucial OPEC output meeting. "Of course, there is too much oil," Nozari told reporters upon his arrival in the Austrian capital, hinting that he could seek to lower output. But Nozari did not specify whether he would call for a new production cut at the scheduled cartel meeting on Sunday. "We'll review the market and then we decide," he added.

The Organisation of Petroleum Exporting Countries (OPEC), which pumps 40 per cent of world crude, agreed late last year on cuts to reduce output by 4.2 million barrels per day. Iran, the cartel's second largest oil producer after kingpin member Saudi Arabia, pumps approximately four million barrels of oil per day. OPEC's 12-member states have seen their oil revenues slashed because crude prices have slumped from record levels since July in line with a sharp global economic downturn. On Friday, Venezuelan Energy Minister Rafael Ramirez had called for OPEC members to comply "100 per cent" with recent output cuts to address oversupply. There is "a very good level of compliance but we are going to work to have 100 per cent of compliance" to boost weak oil prices, Ramirez said in Vienna.


timekeepr said...

A trillion here a trillion there...

Q4 2008 Flow of Funds

With the “moneyness” of Wall Street finance having disappeared, the (offsetting) issuance of government “money” has amounted to nothing less than a historic explosion of debt issuance. For the year, Agency debt expanded 9.0% to $3.459 TN. GSE MBS grew 11.2% to $4.965 TN. Over the past two years, Agency debt expanded $585bn, or 20%, and GSE MBS ballooned an unprecedented $1.128 TN, or 29%. Combined with Treasury’s two-year debt issuance of $1.477 TN, one tabulates incredible 2-year federal government (“money”) issuance of $3.20 TN (28%). And this already incredible debt growth is now poised to really accelerate. At the Federal Reserve, Total Assets expanded an unmatched $729bn during the quarter to $2.270 TN, with one-year growth of 139%. Washington should feel quite fortunate that the markets continue to accommodate such alarming debt expansion at such meager little interest rates. There is no mystery why the Chinese and our other creditors are increasingly disturbed by our government’s borrowing habits.

The Unfolding Government Finance Bubble has been somewhat able to mitigate the implosion of Wall Street finance. But the greater dilemma is two-fold: On the one hand, the distorted economy requires massive ongoing Credit creation. Here, government finance can and has taken up the slack. However, the nature of spending created by the inflation of government obligations will remain quite dissimilar to that spurred by the runaway inflation of Wall Street finance. The flow of finance has been permanently altered. There will be no rejuvenating the previous asset inflation and consumption booms. Indeed, the Household (and non-profits) balance sheet rather starkly illustrates the nature of the problem.

During the fourth quarter, Total Household Assets dropped a record $5.419 TN, or 31% annualized, to $65.719 TN. Wow… Financial Asset values sank a record $4.537 TN (to $40.814 TN), and Real Estate dropped a record $871bn (to $20.512 TN). Little wonder auto purchases and retail spending went into a tailspin, as Household Net Worth shrank a record $5.110 TN during the quarter (to $51.477 TN). For the year, Household Assets collapsed $11.30 TN (14.7%), while Liabilities were little changed at $14.242 TN. For the year, $11.213 TN of Household Net Worth ("perceived financial wealth") disappeared. This compares to the average annual increase in Household Net Worth of $5.444 TN during the period 2003 through 2006. The Household Balance Sheet continues to offer invaluable insight on the workings of a Bubble Economy.

AITrader said...

It was a dry wind
And it swept across the desert
And it curled into the circle of birth
And the dead sand
Falling on the children
The mothers and the fathers
And the automatic earth

These are the days of miracle and wonder
This is the long distance call
The way the camera follows us in slo-mo
The way we look to us all
The way we look to a distant constellation
That’s dying in the corner of the sky
These are the days of miracle and wonder
And don’t cry baby, don’t cry
Don’t cry

Yes they are. Miracles and wonders of the death that will become us. You see pitchforks I've read. I think you guess more than that. Why shirk from it?

Keep fightin' for freedom and justice, beloveds, but don't you forget to have fun doin' it. Lord, let your laughter ring forth. Be outrageous, ridicule the fraidy-cats, rejoice in all the oddities that freedom can produce. And when you get through kickin' ass and celebratin' the sheer joy of a good fight, be sure to tell those who come after how much fun it was.

Ah. Molly, Molly! You were the lass. Your mirth an vinegar. That is one for the ages ol' girl. You kicked them in the teeth and still came up smilin'. Bless yal Your footprints left imprints in many a kind soul. And your giggles and laughter lighted the dark ways. You taught us to keep on smilin'. To the bitter end. That blithe spirit quenched fires o'plenty. Your words echo down the corridors of ages still unlived.

The desire for success lubricates sacred protstitutions in the soul.

Yes it does sir. It does indeed. We fall into the shallows. Our ego leads. We debate pleasantries with lilliputians minds about the states of the DOW or S6P the next day. We've become dissolved in the shallows and forget our knowledge. Our depth. We cast the onus aside and kick it away. Whatever we might have known goes afray. To naught. Solved in the essence of the intransigent. The nethers. The unappreciated might of little minds kinned together in pursuit of the effervescent. We are truly dissolved in the nothingness of it. Like a sports fan caught in the moment. Forgetting the substance of life. We go astray. And without a conscious thought as to why. It's so easy. So seductive. To forget what we know and plumb the shoals. So goddam convenient and satisfying.

Starcade, now from Leviathan said...

I think TSHTF when the masses find out they can no longer be fed. The Powers That Be will continue to print until then, and then it will no longer be possible.

Persephone said...

I missed the roll with my last comment. Oh well.

I wanted to comment on many of the articles from the Front Page, but ended reading them with one thought:

We are so f*cked

It's bad enough that we have burnt our world to the point that we will have global starvation.
Farmers can't get paid to plant. People that could feed themselves if they wanted, no longer know how.

Our world finance advisers are scheming as to the best way to keep the party going - and deciding how much more they can rape the taxpayers, before the taxpayers are knocking on their doors.

Climate Collapse, Financial Collapse, Energy Collapse, Food Collapse

I hope that those who make it through the Darwinian Gateway have more foresight and common sense.
And now back to your regularly scheduled program
Geithner hears complaints, crowing at G20

redcatbiker said...

Cultural Consequences

Since they lost the ability to appeal to racism, rightists have appealed to culture to explain why blatant unfairness isn’t really unfair.

Now, to be sure, the concept of culture they use is hardly different than the old racial saws: When you press a reactionary for his/her definition of “culture,” it turns out to be “the way people are,” i.e., the allegedly native, pre-social qualities of specific groups.

This, though, doesn’t mean that there isn’t a cultural dimension to human affairs. People do absorb sticky habits from extended collective experiences, and those habits can and do turn around and affect what people do next.

Thursday, the Pew Charitable Trust released a study that provides a paint-peeling proof of the real power of accumulated experience. In “Findings from a National Survey & Focus Groups on Economic Mobility,” Pew reported that, despite the times, ordinary people in the United States continue to mis-frame and mis-understand their chances for “economic mobility”:

Nearly eight in ten (79 percent) believe it is still possible for people to get ahead in the current economy. This remains true even among lower-income, less-educated and unemployed Americans. Such consensus is striking given that a near-unanimous 94 percent of Americans describe the current economic condition of the country negatively.

Americans remain optimistic about the future—a 72 percent majority believes their economic circumstances will be better in the next ten years. This optimism crosses party lines and demographic groups. African Americans are the most optimistic (85 percent) compared to whites and Hispanics (71 percent and 77 percent, respectively).

Seventy-four percent of Americans believe they have at least some control over their own economic situation, while only 43 percent think that other people are in control. By a 71 to 21 percent margin, Americans believe that personal attributes, like hard work and drive, are more important to economic mobility than external conditions, like the economy and economic circumstances growing up.

Personal attributes such as poor life choices and too much debt were the top explanations given for downward mobility.

Although previous research by the Economic Mobility Project has found considerable differences in economic mobility by race and gender, respondents ascribed relatively little importance to their impact on mobility (15 percent and 16 percent, respectively). Further, the Economic Mobility Project’s research found that there is a strong relationship between parents’ income and children’s adult income. However, coming from a wealthy family was among the least important factors that respondents cited (28 percent).

By a 71 to 21 percent margin, Americans believe it is more important to give people a fair chance to succeed than it is to reduce inequality in this country. Each demographic subgroup, including those at the lowest end of the economic spectrum, concurs with the majority on this issue.

It’s no surprise, of course, that this familiar ideological package still holds sway. After all, this is the core topic — the dynamics of class inside the domestic “homeland” — on which the commoners simply must remain addled, in this, the flagship nation of market totalitarianism, the most heavily indoctrinated, commercialism-and-TV-penetrated society in human history.

How many times, even in recent months, have you heard the basic facts about class?

The real sources of wealth?

The deep imperatives and limits of corporate capitalism?

Now compare those zeroes to the number of times you’ve experienced the “anything is possible in America” diversion?

It’s still no contest out there, folks…

ether said...

Here in NorCal, the ones I know don't vote, speak, or protest.

But, it seems like everyone feels the inevitable.


Eye on the TV
'cause tragedy thrills me
Whatever flavor it happens to be

"Killed by the husband" ...
"Drowned by the ocean" ...
"Shot by his own son" ...
"She used a poison in his tea,
Then (she) kissed him goodbye"
That's my kind of story
It's no fun til someone dies.

Don't look me at like I am a monster
Frown out your one face, but with the other (you)
Stare like a junkie into the TV
Stare like a zombie while the mother holds her child,
Watches him die,
Hands to the sky cryin "why, oh why?"

Cause I need to watch things die from a distance
Vicariously, I live while the whole world dies
You all need it too - don't lie.

Why can't we just admit it?
Why can't we just admit it?
We won't give pause until the blood is flowin'
Neither the brave nor bold
Nor brightest of stories told
We won't give pause until the blood is flowin'

I need to watch things die from a good safe distance
Vicariously, I live while the whole world dies
You all feel the same so why can't we just admit it?

Blood like rain fallin' down
Drum on grave and ground

Part vampire, part warrior,
Carnivore and voyeur
Stare at the transmittal.
Sing to the death rattle.

La, la, la, la, la, la, la-lie (x4)

Credulous at best
Your desire to believe in
Angels in the hearts of men.
But pull your head on out (of) your hippie haze
And give a listen
Shouldn't have to say it all again

The universe is hostile
So impersonal
Devour to survive
So it is, so it's always been ...

We all feed on tragedy.
It's like blood to a vampire.

Vicariously, I live while the whole world dies
Much better you than I.

Anonymous said...

Catton said it in "Overshoot" and many other before and after him. The carrying capacity of the earth is way, way below the +6 billion we've coated it with. Malthus has been mocked for over 100 years but that's about to end.

Let's stop being polite with the graphs and call the "developing countries" "marginal hunter-gatherer countries." Peak phosphorus/nitrate is coming along with peak oil and everything else. There's a price to be paid for not understanding how condoms and diaphragms work and it will be settled.

Anonymous said...

How criminal that AIG disburses millions in "bonuses" so as to keep the "best and brightest" that contributed to this mess within their fold! We(America) seem to lose our way more each day and Jefferson was oh so right about the banks and money and the way our county might end up. So maybe it's time to let the big ones fail and see what really happens. Realistically, I have no idea of what would happen if the big ones fail, but the ongoing criminally in the finance sector is starting to become more than many will soon be able to bear. As Sam Houston once said, "Do right and face the consequences", and that might be something for high level decision makers in government to consider. As I have told my kids in the past, a little truth is always better than a whole lot of lies. John

adios a babilonia said...

Stranded Wind, if you are around:

Your article inspired me to look up a little about fertilizers, which led to the agricultural revolution. To paraphrase, manufactured fertilizers function like a sort of steroids for land use, and only caught on in the past couple of centuries, what with their consequent issues of soil depletion and sundry pollution issues from production on.

This of course on the heels of the industrial revolution and 19th century London, a “liberation” of peoples from their land/agriculture for the glory of factory work, which brought about the most hideous human living conditions ever seen on the planet (Kunstler deals London a deservedly devastating description in his book A City in Mind). It seems that fertilizers themselves are the requisite of only a highly industrialized people, ascribing superior values to their much more abstract lives while another class of people (or entire nationality group) is relegated to the unseemly calling of agriculture. With its 98.5% non-agriculturally-employed population, it is fair to say that the US has literally expatriated almost its entire agricultural class. Hence I see an inherent lie to touting democracy while assigning agriculture to a servant class or nation.

It seems possible that along with the death throes of mass globalist capitalism, so the environmental tyranny of industrialized farming simply is not maintainable on earth. In other words, those of us who wish to survive may have to shoulder up to the husbandry and agriculture of our own sustenance rather than palming it off on a servant nation. Never mind the irony of late 20th century emphasis on the expectation of "modern" lifestyles (rejecting agriculture for a sentence to the gym).

This is a long prologue to a nasty question: do we ultimately want to perpetuate the legacy of manufactured fertilizer? Is this not a necessary adjustment in the face of inevitable collapse?

Maybe the death of industrialized agriculture is inevitable, even a liberation from the tyranny of a soulless urban modernism. A culture that comes to mind is early 20th century Russia, where an agrarian people were also highly literate and musical. May the cultural products of a people be the witness of their collective soul, amen.

Iowa Boy said...

Dang! Crossposted and I didn't even know it :-)

adios a babilonia said...

As for how much is necessary, some interesting statistics on the survival of the Russian people post-collapse are available from this article on Dmitry Orlov’s blog:

39% were cultivating under 0.05 hectares (i.e. 500 sq.m.);
another 36% were cultivating between 0.05 and 0.1 hectares; and
none of them were cultivating more than half a hectare.
In other words, 3/4 of gardening households were gardening the equivalent of two suburban house lots. (At least based on the typical house lots we have around here, which are 50-60 feet by 100 feet.)

Considering that Russia has just 110 days of growing season per year, while most of America has much longer growing season and significantly more sunshine, this is all quite encouraging from the standpoint of what Americans and Canadians could do with their tiny suburban house lots, assuming they all learn to garden quickly enough.

trichter said...

@Stranded Wind

Thanks for the very interesting article.

Just a quick note - the population of Australia is not a 'tiny 10 million' I'm afraid. Estimates for 2009 are 21.6 million with annual growth of about 1.6%. Australia's population passed 10 million in the late 50s and has been growing steadily since. I think you meant the Australian labour force - which might be roughly 10 million.

It seems very likely that wheat production in Australia will continue to fall. The list of weather extremes which occurred this summer alone is long. Storms and cyclones battered the north west ans north east coastlines causing widespread flooding while South Australia, New South Wales and Victoria in the south and south east experienced extended periods of extremely hot weather with the well-publicised fire disasters. The enormous Murray-Darling Basin (circa 1 million square kilometres), which is key to a large proportion of argriculture in Australia continues to dry up as it is being cut off at its source in Queensland for things like cotton production. Priorities really need to shift, especially when you consider the rapidly falling price of cotton.

By the way, the charity organisation Optimum Population Trust has suggested that the population of Australia should not exceed 10 million in order to retain a high standard of living for all Australia's inhabitants.

adios a babilonia said...

Just a question I forgot:

If anyone out there reading this feels they are above doing agricultural work for reasons other than incapacity, please tell us why.

el gallinazo said...

Chemical fertilizers have introduced a host of evils into world society and the ecosphere, not the least of which is the destruction of the natural top soil. But the question arises now, even if the world's governments became suddenly and miraculously enlightened, can 6.5 B people all live without them? And if not, who is to choose who is to live and who is to die if we go cold turkey?

el gallinazo said...

@ adios a babilonia

From reading this blog and its comment section pretty much from the get go, I would be willing to bet that the number of regular readers of this blog who feel that they are "above" agricultural work is a very, very small minority. Despite its main focus being on financial issues, personal, household agriculture is the most prominent of its secondary interests.

Why would you wish to pose this "challenge" to the readership? It's kind of like asking, "How many among you feel that it is time to stop beating your wife and why?"

Persephone said...

@adios a babilonia
If anyone out there reading this feels they are above doing agricultural work for reasons other than incapacity, please tell us why."

I grew up on a small farm and have more knowledge than most in my inner circles about farming - but I have no where near the knowledge of my parents and grandparents.
My Dad can tell you exactly how to plan a plot, what month and day to plant what, what animals to have depending on your needs (and will even throw in instructions on how to slaughter chickens, hogs and cattle - if you ask).

@el gallinazo
who is to choose who is to live and who is to die if we go cold turkey?

That's a tricky question, huh - and valid.

Persephone said...

Full length video
Charlie Rose - Timothy Geithner, U.S. Treasury Secretary -

adios a babilonia said...

It is a telling moment which finds murka literally at war with its agricultural class.

Were it legal, the war would end that afternoon. Think about it. Drugs are crops. It is an agricultural war from start to finish. And guess which side finances the weapons.

ogardener said...

Persephone said...

"Climate Collapse, Financial Collapse, Energy Collapse, Food Collapse"

Ayuh, the perfect shitstorm.

adios a babilonia said...

@ El Gallinazo:

Perhaps you underestimate the number of lurkers on websites like this. I wouldn't write here if I didn't feel at home. No doubt you are true about this published community as to their lifestyles.

But numbers as to who feeds whom are tallied by the banks and their henchmen. Since when has this published community learned to trust them?

Is there any other nation so utterly unprepared for massive personal agriculture that they have engaged in active armed conflict with her ag servant class?

This is not a propitious survival index.

jal said...

Ayuh, the perfect shitstorm.
Most will say ...
"Not in my Lifetime. I've got more pressing problems to take care. Sorry, can't stay, I got to go shopping for a new pair of shoes."

adios a babilonia said...

@ Persephone

preach it sister!

DIYer said...

Re: The gap of twenty

Well you know, Dubya always wanted to be a uniter not a divider. I guess Mr. O wants the same thing. Who-da thunk they'd all agree to get upset when the US wants them to help bail out its global mess.

Well I'm about to get upset,
From watchin' my TV.
Been checkin' out the news until
My eyeballs fail to see.
I mean to say that every day
Is just another rotten mess,
And when it's gonna change, my friend
Is anybody's guess.

In sympathy for NS, I'll refrain from copying the entire lyric to this post.

Anonymous said...

Just watched a youtube by Max Keiser, he has a BBC show called the Oracle. A financial show with graveyard humor.

Max caught my attention last fall when he said in a piece on his show Hank Paulson's head should be bouncing down the Capital steps after he proposed the original TARP bank robbery 'solution'.

Max has started doing what he has nicknamed tweetcasting.

Max Keiser Oracle Tweetcast # 3

".....Greenspan opened his Pie-Hole in the Wall St journal claimed he didn't cause the real estate bubble. Of course he's responsible, of course he's responsible for selling out the country to a small cadre of bankers and insiders...

....Alan Greenspan and Ben Bernanke are Financial Terrorists, that's the beginning and end of that concept....."

He even introduced a new term for The Meltdown Players: The Gulag Oligarchy

Has a nice ring.

el gallinazo said...

@adios a babilonia

"Is there any other nation so utterly unprepared for massive personal agriculture that they have engaged in active armed conflict with her ag servant class? "

Well, then, a more interesting question to have posed may have been, "Who among you feel that you have sufficient knowledge to become agriculturally self sufficient?" I am certainly not "above" agricultural work, but I might have trouble finding the right end of a hoe.

Our elites have also been involved with continuous armed conflict with the industrial working class. As to drugs and agriculture, anyone with an IQ over 50 knows that the drugs are kept illegal to keep the high profit margins intact for the financial class. The coca leaf vendors in Peru, where chewing coca leaves is legal and as natural as chewing gum in the USA, are not driving Bentleys.

adios a babilonia said...

@ el gallinazo:

ag 101: drugs grow guns. Check.

Anonymous said...

" The Germans, who have a history of starting international conflicts,"...

Understatement of the last 100 years.

Persephone said...
This comment has been removed by the author.
Persephone said...

I meant to add Eco-Collapse. Extinction rates are unprecedented for human history.
I volunteer for a wildlife rehabber who explained that the Whitenose Bat Syndrome has extended to our area. This is devastating news for local farmers as bats are far superior insect control than anything money can buy.

Most will say ...
"Not in my Lifetime. I've got more pressing problems to take care. Sorry, can't stay, I got to go shopping for a new pair of shoes."

That's what I'm hearing. One reason that I'm so glad I found this site is that I felt a national systemic collapse brewing last summer. I would ask people what they thought - they would all but tell me I was crazy.
Thank you Thank you Thank you - Iliargi, Stoneleigh and everyone.
I'm glad to find others that recognize these very serious problems and I feel much more prepared.

@adios a babilonia

Stills grew guns from 1913 to 1933

I don't want to be preachy. I want people to be aware of the dangers we face and aware of how our parts in enabling it - by what we purchase, how we live, and what we allow our governments to do.

Anonymous said...

"Fritz Haber was a German chemist, who received the Nobel Prize in Chemistry in 1918 for his development for synthesizing ammonia, important for fertilizers and explosives. He has also been described as the "father of chemical warfare" for his work developing and deploying chlorine and other poisonous gases during World War I.

The Haber-Bosch process was a milestone in industrial chemistry, because it divorced the production of nitrogen products, such as fertilizer, explosives and chemical feedstocks, from natural deposits, ...The sudden availability of cheap nitrogenous fertilizer is credited with averting a Malthusian catastrophe, or population crisis."

From Wiki

He developed and tested the first chemical warfare agents used in WWI.

After he personally supervised the first field test of poison gas on soldiers during WWI, his wife was so distraught at him doing this that she waited until he came home from the test and committed suicide, in front of him, in their garden with his service revolver.

As a Jew, he was forced to flee Germany in the thirties, only to have the Nazis use his poison gas discoveries (Zyklon B) in the concentration camp gas chambers.

Talk about Bad Karma.

adios a babilonia said...

@ el gallinazo:

"Is there any other nation so utterly unprepared for massive personal agriculture that they have engaged in active armed conflict with her ag servant class? "

Well, then, a more interesting question to have posed may have been, "Who among you feel that you have sufficient knowledge to become agriculturally self sufficient?"

The question begs the answer. This is why they fight. So spoiled on spoils that they don't know how to farm, or very much else. So on with perpetual war.

I see it very much as a multi-faceted agricultural war. For that matter, imagine if some "terror" offense provoked the ag/kitchen class to leave in droves. It all would be over in a flash.

adios a babilonia said...

@ Persephone:

"what we allow our governments to do..."

Do you believe the people are in control of that?

If I did I wouldn't have left.

Anonymous said...

Well, then, a more interesting question to have posed may have been, "Who among you feel that you have sufficient knowledge to become agriculturally self sufficient?

I don't come from an agricultural background, but a few years ago for many reasons (one being, that I couldn't stand the waste involved with the weekend ritual of the entire neighborhood mowing the grass). I decided to get a milk cow. This may seem like a strange way to begin but grass grows everywhere in the Northwest for free! This led to chickens and then pigs for all that extra milk. It does require a commitment to being home once a day at the same time (preferably twice) but in this new world this is quite doable.

My point is, we can do this. I am not a farmy sort of person yet, I milk a cow twice a day, feed and care for chickens & pigs. Plant a largish garden, care for fruit trees and bushes, and preserve the harvest. I don't do it perfectly and I make mistakes but even an urban backyard can grow a tremendous amount of food.

Most of us who read this amazing blog (thank you I & S), are clear about what we face. We must take responsibility for ourselves and our communities in the best way that we can. IMO, growing food is the best way to start. Find farmers in your area and buy from them! It is the best way to make connections.



Ahimsa said...

Interesting discussion ...

El gallinazo said:

"But the question arises now, even if the world's governments became suddenly and miraculously enlightened, can 6.5 B people all live without them?"

Yes, we can live without chemical/industrial agriculture and without factory farms. Monsanto would like us to believe that we cannot live without chemical agriculture/GMO foods, etc.

A great percentage (60 to 90%) of grains and soybeans grown in the USA go to feed factory farm animals for the "developed" world high meat consumption addiction. Humankind could be adequately fed if the rich world ate less meat. John Robbins' books "Diet for a New America" and "Food Revolution" provide a wealth of information on this.

ccpo said...

@ el gallinazo can 6.5 B people all live without them?

Yes, actually. At least, in terms of food production. The issue of resources overall, i.e. water, fisheries, etc., may be another story, but we can easily grow the food we need. It's not even in question. What is in question is the will to do so for it involves a massive amount of change. but possible? Unequivocally, yes.

Unfortunately, only a tiny fraction of the world's population really knows about sustainable, natural farming methods and an even smaller fraction is actually using sustainable, natural farming methods. But time after time we find examples of people and/or organizations that get the same yields as agribusiness with healthier soils and more nutritious foods. Even better, you need neither chem fertilizers (what totoneila at TOC calls I-NPK) nor pesticides.

Even if you discount this - hopefully you are not so foolish - there are even more examples of people using their yards, large and small, to grow significant percentages of their food. So, if there were a so-called Victory Garden for every home, w could lose a very large percentage of agribusiness and do just fine. Of course, this is not true of all places because of population density, so to feed all people must involve some degree of trade.

Google Bill Mollison's Global Gardener series (might be on YouTube), Lawton's How to Start a Food Forest the Permaculture Way, Masunobo Fukuoka's The Natural Way of Farming found here: for starters.

There is a good series at The Oil Drum that discusses some of this, or is starting to, under the Campfire section of the site.

Also, The Garden Girl series on YouTube, Peak Moment videa series on YouTube... etc.

@ogardener: Which is why my site is named as it is.


Anonymous said...

Blogger adios a babilonia said...

Just a question I forgot:

If anyone out there reading this feels they are above doing agricultural work for reasons other than incapacity, please tell us why.

Why? Quién sabe, you masked rider, must be some latent hunter gatherer gene in me.


brendan said...

El Gallinazo's last comment is right on: Most people commenting on this blog, and most thoughtful people throughout the USA, would not consider themselves 'above' farming, but how are they supposed to know how the hell to do it? For sixty years the media has characterized a life tied to the land as at best a quaint curiosity and as at worst an abject failure. For just as long, "education" has basically meant: "the acquisition of a set of skills which frees you from dependence on nature." It's unreasonable to expect young Americans to see through this kind of brainwashing, and it's very uncharitable to think less of them for not knowing how to farm.

In fact I think the predicament that we are in can be brought into stark relief by considering that it will take a young, highly educated American man (like me--I'm 32) a nearly full adult life of study, hard work, and outrageous luck to survive and flourish going forward.

Nightly Summary said...

* Empty Shelves Prediction: It was true for stores being closed in US; Also stores in Britan; People pay attention to Ilargi's prediction; He is batting 80%; He can't be held to every word spoken about volatile system; He was spot on about firearms; Statement was a tad reckless; In heartland there is less variety on shelves, fewer items on shelves, fewer shelves and fewer stores; More stale items on shelves
* Massive government spending won't help until real economy restarts
* Obama increases pure propaganda; If successful, suckers rally has arrived
* Our system is not a free market; Free market and communism always fail but adherents want to try it again; Say it will be different next time
* Crime hasn't risen yet because people still have hope; We are stuck beteween Denial and Anger; Chris Martenson has written about 5 stages of economic grief
* Descendants may curse us in our graves; Real killer will be when next generation realizes the bailout didn't buy anything of value and when the masses learn they cannot be fed
* Liberatrian are preferable to fascists and both to dentists with hairy hands
* System has less inertia than lemmings think and more that doomers think; Slow down in collapse is due to Obama team trying to avoid crash; G20 are all in agreement on this; When crash really happens debts won't be repaid
* Many business men say they are doing fine
* US sold soul long ago; Only pain will wake us up
* Roubini owns stocks; Said he was in cash; May be modeling portfolio on great depression
* California will be hitting up Feds for more money
* Greenpa suggest quanititave cleansing instead of quantitative easing
* Disposable plunger is zenith of modern society; Will be indispensable when TSHTF
* We are toast; Malthus will have last laugh; Just too many people on the earth; Death of industrialized agriculture inevitable; We will all be doing agricultural work; Most think it won't be in their lifetime; Few of us have the ag skills we will need

Submit your advice said...

What's brown and sounds like a bell?


And comes out of a fundament?


Czarnecki called Poland's economy "fundamentally sound"
"There's a reason why even in the midst of this economic crisis you've seen actual increases in investment flows here into the United States," Obama said. "I think it's a recognition that the stability not only of our economic system, but also our political system, is extraordinary.

"I think that not just the Chinese government, but every investor, can have absolute confidence in the soundness of investments in the United States," he added.
"Our economy, I think still—the fundamentals of our economy are strong." —John McCain, speaking on the morning of September 15

jal said...

"Climate Collapse, Financial Collapse, Energy Collapse, Food Collapse, Eco-Collapse."
There is a path to survival...
Juan Enriquez: Beyond the crisis, mindboggling science and the arrival of Homo evolutis
Even as mega-banks topple, Juan Enriquez says the big reboot is yet to come. But don't look for it on your ballot -- or in the stock exchange. It'll come from science labs, and it promises keener bodies and minds. Our kids are going to be ... different.
I still want a better immune system and digestive system with a nice golden fur coat for the grand kids.

Anonymous said...

Am I missing something here? I assumed this piece was written by Stranded Wind.

"Wheat, Fertilizer, Ammonia and Land Realities Threaten Global Food Supply"

by Neal Rauhauser

Anonymous said...

Whoops. Excuse me. I see Neil is the founder of the Stranded Wind Initiative' all this time I thought Standed Wind was a writer. Goldie Hawn moment.

adios a babilonia said...

@ brendan

"it's very uncharitable to think less of them for not knowing how to farm"

The question is, does one then war against one's neighbor to control agriculture? Does one refuse the extended families of its ag class admission to its economy, even selling arms to any maniac on the border to augment the separation of classes?

It merits critique that there is no balanced critique.

Ahimsa said...

Re peak everything and general collapse -

My generation knew this was coming in the late 1960s and early 70s when many of us read "Limits to Growth" and Schumacher's "Small is Beautiful." Nothing was done by the powerful elites, nor by individuals in our Western "developed" culture. Many later embraced Reagan's unlimited growth and it's still the policy of the USA to follow the path of unlimited growth knowing quite well that it will only lead to suffering, species extinction and environmental destruction.

"We need to subject the laws that govern production and consumption to the laws of Gaia; the laws of the planet. The laws of a planet that can give forever in abundance for our needs if we do not allow the narrow minded, mechanistic, reductionist, greed based system of industrialism, capitalism, globalization to make us imagine that to be inhuman is the definition of being human." ~ VANDANA SHIVA

adios a babilonia said...

@ Enkidu

How about obsidian futures?

Mugabe said...

Living in Asia, I have acquired some vague sense of Asian culture, and the recent statements of Chinese Premier Wen struck me somewhat differently from the way they were taken in the western media. Discourse in Asia is based on face and bluff. For Premier Wen to admit he is "worried" and to acknowledge that China does not control its own fate in this regard does not really sound like a "shot across the bow" of the West.

Perhaps there are translation issues involved, but it sounds to me more like an admission that the Chinese government has f'd up bigtime and that he has lost the confidence of Chinese elite opinion and won't be in power much longer. It sounds like the first hint of a major change in the Chinese power structure as well as policy toward investing in American "liar bonds."

Persephone said...


That video is SCARY!
I was at the Science museum in Seattle earlier in the year. There was a booth on genetic mutations. The presenter said that upcoming generations would be able to cross-generate species to make 'designer pets".
(BTW the vid link doesn't work - thank goodness for the Omniscient Google)

Jeez! I beginning to HOPE TSHTF soon!

Damn Reagonites! That's what makes this truly a tragedy!

Nightly Summary rocks!

Ahimsa said...

"Rearing cattle produces more greenhouse gases than driving cars, UN report warns."


"When emissions from land use and land use change are included, the livestock sector accounts for 9 per cent of CO2 deriving from human-related activities, but produces a much larger share of even more harmful greenhouse gases. It generates 65 per cent of human-related nitrous oxide, which has 296 times the Global Warming Potential (GWP) of CO2. Most of this comes from manure.

And it accounts for respectively 37 per cent of all human-induced methane (23 times as warming as CO2), which is largely produced by the digestive system of ruminants, and 64 per cent of ammonia, which contributes significantly to acid rain.

With increased prosperity, people are consuming more meat and dairy products every year, the report notes. Global meat production is projected to more than double from 229 million tonnes in 1999/2001 to 465 million tonnes in 2050, while milk output is set to climb from 580 to 1043 million tonnes.

The global livestock sector is growing faster than any other agricultural sub-sector. It provides livelihoods to about 1.3 billion people and contributes about 40 per cent to global agricultural output. For many poor farmers in developing countries livestock are also a source of renewable energy for draft and an essential source of organic fertilizer for their crops.

Livestock now use 30 per cent of the earth’s entire land surface, mostly permanent pasture but also including 33 per cent of the global arable land used to producing feed for livestock, the report notes. As forests are cleared to create new pastures, it is a major driver of deforestation, especially in Latin America where, for example, some 70 per cent of former forests in the Amazon have been turned over to grazing.

At the same time herds cause wide-scale land degradation, with about 20 per cent of pastures considered degraded through overgrazing, compaction and erosion. This figure is even higher in the drylands where inappropriate policies and inadequate livestock management contribute to advancing desertification."

el gallinazo said...

My question of whether we could feed 6.5B people without any industrial fertilizers was not a rhetorical question. It was a question seeking real information. It appears that the answer is yes, even if the planet does not go whole hog vegetarian as Ahimsa would like. As I mentioned, if the factual answer was no, it would raise some interesting ethical questions. Once I get transplanted, I hope to become involved and more knowledgable about the nuts and bolts of organic farming.

brendan said...

@ adios a babilonia

I think we pretty much agree. The answer to your questions, from a just p.o.v., is: no.

El Gallinazo's point was that it's not the readers of this blog who see farming as being beneath them. I agree with him, and I'd take it even further and say that it's not the fault of most Americans that they don't know how to farm, and it's not them making the decision to compensate for that deficiency violently.

I can DEFINITELY understand why you left the USA, and I see a lot to lament in the American character. But I believe that it's more accurate (and I find it more hopeful) to consider that our problems are primarily to do with leadership, rather than with national character... I could certainly be wrong about that.

Anonymous said...

el gallinazo said: ...who is to choose who is to live and who is to die if we go cold turkey?

Who chooses now? It will just be a bit of a largeer turkey shoot when our chickens come home to roost. Anyhow, what is the value in living in a place as Adios B says:"(..[where we reject] agriculture for a sentence to the gym) .

We could have made a paradise but sold it for a mess of potage and whimper and moan when that potage runs out.


Anonymous said...

This past summer the price of natural gas was close to $14/MMBtu. Now it is around $4/MMBtu since the commodity bubble burst. Natural Gas is used in the production of Anhydrous Ammonia. Could you (Stranded Wind) please post a chart of Ammonia prices for the past 10 years or so? My guess is that is going down, and we won't hear about this "we're all going to starve to death" stuff next year around this time. Actually, I take that back, doomers are always going to find something to make them say "We are so f*cked"

el gallinazo said...

Natural farming is a highly developed skill taking many years of study, trial and error, and thought. Our society has placed a premium upon specialization. I have worked as a chemist, a trader of chemical products, and a teacher at the high school level of chemistry and physics. My current occupational skill set is plumbing at which I am rather good partly due to previous analytical training in the sciences. I will spare you the plumbing details, but I am not **above** "getting my hands dirty." I have made a decent living doing this work, but it is work essential for protecting the health of the community. The soil on most our island is practically non-arable, but I am the plumber for our foremost organic farmer.

While industrial farming is destroying our planet, it is possible for one to have lived one's life without developing intensive organic farming skills without being a total moral leper. As the global economy dissolves into a black hole, those of us with any intelligence, adaptability, and a wish to survive, will realize that those skills are necessary and should be developed and practiced post haste.

jal said...

Persephone said...

That video is SCARY!
I was at the Science museum in Seattle earlier in the year. There was a booth on genetic mutations. The presenter said that upcoming generations would be able to cross-generate species to make 'designer pets".
(BTW the vid link doesn't work)
I just tried it. It worked for me.

Talks Juan Enriquez:

Anonymous said...

Obama says US economy sound, reassures investors

where have i heard this before? didn't Bush say that back in Oct 08?

so there you have it, nothing more to see, move along!

adios a babilonia said...

@ brendan

"it's not the fault of most Americans that they don't know how to farm, and it's not them making the decision to compensate for that deficiency violently."

Fair enough, but a vast part of the public fail to respect those who do the job for them.

Instead the talk of the day plays hideously from here. People on the street are talking filth about their food workers. For so long I've been blogging as an advocate, and I stand as such. But living where we do, we get a load of it. Talk about merka-bashing, what are we to think? The insults and lies spew forth even from friends' mouths (it has been an astonishment), and an hallucinatory media misprision prevails about "descent into chaos and brutality" which is false about 99% of the country.

After all it is suicidal self-betrayal to insult those who harvest, cook and truck your food, think about it.

It is surreal. We bide the day tentatively remarking to one another what wonderful peace we enjoy despite the stigma, phones ringing off walls with calls from up north (the collapsees-to-be) wondering about our safety down here in light of our bloody collapse. It's like having official sources insist on your faith-based conquest by Martians; you look around and just can't see Martians but they tell you they're running the place now. Same deal.

Your irony of the day: a nation on the brink of collapse (gummnt workers/civil servants to peon ratio about 50/50) is criticizing its indigenous neighbor to the south of being on the brink of collapse (maybe 1 civil servant to every 99 citizens, but probably more like 1 to 999 or maybe even 1/9999). Now, which is going to feel "collapse" more?

adios a babilonia said...

@ el gallinazo

Who ever implied you are not part of the agricultural loop (hint: rhymes with )

After all the whole dust-up started over fertilizer.

thirra said...

Stranded Wind,you state that Australia has a population of 10 million - I wish.Try 21 million and rising rapidly due to the insane actions of the Federal Goverment- immigration in excess of 200,000/annum and welfare for breeders.

Otherwise,a good article.Austalia cannot sustain it's agricultural production due to the factors you mention plus environmental degradation.This on top of mostly poor soils and a very iffy rainfall pattern.Climate change will likely make this worse.

adios a babilonia said...

@ el gallinazo

As a gardener I've bought no few bags of your product a few steps down the line. If you're not getting cut in on the deal I'd look into that.

Anonymous said...

The question was whom could successfully switch roles to sustenance/sustainable farming.I think I could give it a good shot...I am going to see just how much food I can produce from this place this year.Prior to this ,I had eight raised beds,which I raised a little fresh this and that..[what does Boc Choy taste like?]fresh chives yum,ect ect.But too much of my food is processed fast junk.[just how much can I raise here..]
Dimitri is on the mark on this one...gardeners will have a much higher social status now I think.
The social organization I was a volunteer for..the Master Gardeners..from the ag extension university should have a thousand times the funding they have.I tried to tie then to the emergency services here,but lack of funding killed that dream.The emergency management folks here at the state level are savvy enough to know the need for this ...but no funds...lots for weapons, surveillance equipment...none for something that would really "harden"the public...Things like seedbanks,or making the Master Gardener program a high school,or college level skillset.
That is why I walked away...
Now I am looking after my own ..which is hard enough

I cannot get over these creeps at AIG and the others...They are killing this country's future.Soon our best and brightest will be learning different languages and leaving.We have blown our chance I think...


Mugabe said...

More evidence of the collapse of civilization:

Pirate69 said...

Thank you Ilgari for all the factual information and comments. You say the truth, reality.
Almost everyone else in the world that does not follow you or Nourial Roubini are just lost, living in a bubble. We need real people like you guiding our country/world. Keep up the fine work. I read you every day.

Slumlord said...

People can and will learn to grow their own food quickly. In the last four years, I have gone from nearly no production (an old plum tree) to about 5% production of my own food on a city lot (38 feet by 120 feet). This has been with very little effort; mostly berry bushes, more fruit trees (which are now starting to really produce) and lots of potatoes (the easiest food of them all). This year, I hope to grow 10% of my own calories and start an orchard on a vacant piece of property I have.

Granted, my example is not exactly survival farming. However, it should be possible to accomplish a lot more in a pinch. For example, I rather than work on the orchard in my spare weekends, I could swing by Home Depot and pick up a bunch of unemployed laborers. This would greatly increase my productivity and provide them some training for their new careers in the agricultural industry.

Most people will not maintain their standard of living by farming on their suburban lots. They will, however, survive by finding employment in industries such as farming on former municipal golf courses, or on the estate of their local land baron.

brendan said...

Well, so the AIG unit that wrote the CDS insurance apparently realized early last year that the whole thing was going to blow up in the company's face. Were they contrite? No, they threatened to leave the company and managed to secure for themselves some cozy "retention" bonuses, which now, everyone seems to agree, there is no way (NO WAY) to avoid paying them. Words fail. The names of these people need to be published.

Persephone said...

G20 backs rescue funds boost as summit looms

Is high hope for G20 summit tuning down?

G-20 Asks IMF to Track, Assess Global Crisis Response

Democrats weigh options on healthcare, energy

Prince: 'Climate Crisis Worse Than Recession'

Climate change takes center stage in Congress

Action needed to avoid world water crisis, U.N. says

Beijing blanketed by snow after China seeds clouds to beat drought

Global Famine? Blame the Fed

“Organic solution” message touches global warming, famine prevention thanks to Rodale Institute outreach

Please note I am vegetarian because of industrial cattle/swine farming

Cattle Network

National Cattlemen Beef Association

Johnston Feedlots

From Daily Kos California Milk Industry Lies Like a Motherf*

Extinction Crisis Worsens; "Dow Jones" Approach Touted

HSUS Position Statement: Genetic Engineering of Animals


Genetic Engineering in Animals


I consider myself a REALIST

Priorities - Six hurt in crowd for "Next Top Model" audition

Anonymous said...

Synthetic nitrogen is part of the fossil fuel-based ag. system developed by the agricultural industrial complex. When this energy intensive system can no longer be supported, the farming systems that arise will not need to add concentrated N but can rely on N-fixing plants. Bioloigical N fixation is an advanced solar based "technology" developed by plants and microbes a loooooooooooong time ago. In smaller scale farming, legumes can be managed to support highly productive food systesms.

Other nutreints, such as P and K, which are next in line in terms of limiting plant growth, are more of a problem. Particularly P, since the most easily mined deposists are heading for the downslope. Also, we have not been recyling these nutrients effectively. Right now P is a pollutant. These will be more challenging to supply in adequate amounts without the massive mining and processing plants that are operating now unless we recyle them (animal manure and human manure).

As several commentators have said upstream, there are many examples of successful, ecologically based farming systems. They requrie more human labor.

I think people will learn to grow food. Seed sales are up 30-40%. In every community there are people who know how to garden. In my small city, classes on food preservation etc. have been swamped beyond capacity. The apartment complex across the street from our neighborhood is putting in a 1 acre community garden. It seems that there is a certain proportion of the population that realizes things are a changin'.


bluebird said...

Persephone said: "One reason that I'm so glad I found this site is that I felt a national systemic collapse brewing last summer. I would ask people what they thought - they would all but tell me I was crazy.
Thank you Thank you Thank you - Iliargi, Stoneleigh and everyone.
I'm glad to find others that recognize these very serious problems and I feel much more prepared."


Frank said...

el G,

As someone starting up a farm, I see bits of the fertilizer debate all over the place. IMO any firm yes or no answer to feeding 7 billion people without synthetic nitrogen is faith-based. The attempt would require a Cuba level reconfiguration of agriculture all over the world.

Turning vegan at the same time is just not going to happen. Subsistence farming has always involved pigs and chickens. A worldwide crunch like giving up I-NPK would also involve a lot of ranching in places not suitable for row crops.

Anonymous said...

Also, since there are many people here who are interested in growing food, be sure to check out Sharon Astyk's list of 20 plants.

One more I would add is the Siberian Pea Tree. We are experimenting with it here in upstate NY. It is an N-fixing tree that produces edible lentil-sized seeds. Pods are supposed to be edible as a green vegetable. Its worth getting some started to evaluate if you have space and are staying put. I have not found a great souce yet (I'm planning to get cuttings from an arboretum.) My neighbor bought some plants a couple years ago and I think she ended up with the dwarf variety since they are growing very slowly.

Also, for vegetarians: Have you seen The Meatrix?


bluebird said...

Actually, Chris Martenson wrote about The Six Stages of Awareness which is a very loose adaptation of the Kubler-Ross "Five Stages of Grief" framework.

See comments from March 13, 2009.

Stoneleigh said...


Thanks for the tip. Here are a few links on the Siberian Pea Tree (Caragana arborescens). It looks very interesting and I'm wondering if my local garden centre would be able to get me some seedlings. Apparently they do grow in Canada.

From Plants for a Future (UK)

From Back Yard Gardener (US - includes hardiness zones)

Dr J said...

"recent discoveries suggest that the adoption of agriculture, supposedly our most decisive step toward a better life, was in many ways a catastrophe from which we have never recovered" - Jared Diamond

My area of interest is diet and chronic disease. Based on the scientific evidence, my own research and personal observations I am of the opinion that we should be relying on fat rather than glucose as our primary fuel. It is well understood that of the three macronutrients, fat, protein and carbohydrate, the latter is the only one for which our requirement is zero. There have been a number of recent studies demonstrating that people who suffer from the common diet-related chronic disesases, obesity, metabolic syndrome and diabetes, improve dramatically when carbohydrates are removed from their diets. If you subscribe to the notion of Occam's Razor, you must conclude from the fact that when one dietary change obviates the need for 20 classes of pharmaceuticals, that the dietary approach must be the correct one.

For an example of a good quality study on this have a look here:

For Diamond's historical perspective look here:

Bottom line: it appears that the green revolution has fueled a population bubble that is sustainable only by huge I-NPK inputs and a carbohydrate-based diet. The result is a large population afflicted with high rates of chronic disease. The alternative is a much smaller but healthier population consuming a diet more aligned with that of our hunter-gatherer forebears.

Dr J said...


Stoneleigh said...

Dr J,

Agreed. See also Good Calories, Bad Calories by Gary Taubes.

Dr J said...

I don't know why the whole url won't publish.

To find this article, google - Jared Diamond Worst Mistake in the History of the Human Race

el gallinazo said...

@Dr. J

Archeological discoveries of the past few decades prove beyond a reasonable doubt (mainly from skeletal analysis) that pre-agricultural hunter-gatherers enjoyed far better health than post agricultural societies. However, this is Darwin's year, and agricultural societies took over because they allowed far greater population growth and density. And that is the bottom line to Darwinism whether genetic or cultural: survival of the most prolific breeders. So we traded good health for population density.

Dr J said...

@ Stoneleigh - Taubes' book is excellent. For those who want to sample his ideas, to see the article that got him the advance to write the book go to:

Stoneleigh said...

Dr J,

I couldn't get the URL to work, but I looked around and found a link to this story: What If It's All Been a Big, Fat Lie?. If this one doesn't work, just do a search on the NYT site for Gary Taubes.

bluebird said...

3/12/09 Economic trends forecaster Gerald Celente bears news nobody wants to hear: the economic crisis is going to get worse. Watch the short video.

Persephone said...

Genetically Engineered Giant Crabs Will Help The Economy

Anonymous said...


Yes, this tree is hardy to zone 3. Those were my starting sources...I meant it is not easy to get more detailed info. There are several varieties including a dwarf (that is probably not so useful for food purposes). My neighbor got her plants from a nursery and they are growing very slowly so that makes me wonder: Are they the dwarf variety? Are they missing their symbiont (the N-fixing microbe)?

I wonder about whether we have the right soil microbes to partner with this tree on this continent. (That will depend on how specific the symbiontic relationship is.) This is kind of info. that is not easy to find...I'm looking in the journals for it.

As for getting some starts for this tree: It can be grown from cuttings. I'm thinking of getting some from the Univ. Connecticut arboretum unless I can find a closer source. UConn has several specimens (google Siberian Pea Tree and images). If you buy it from a nursery ask them about the source and the variety.

I will let you know what I find out...


bluebird said...

Dr J - I usually use Firefox as my browser. However, using Internet Explorer, will display the entire link to the pdf file.

Using IE, click on the title for the day's posting at top of the page

The link for the pdf file should appear in full.

Nassim said...

@adios a babilonia

I tried the link to ClubOrlov

and my antivirus - Kaspersky - denies access. Apparently, Orlov's site is on their list of sites with malicious software. I am staggered.

Orion said...

Here's one of the better articles around on unemployment across the world:

When jobs disappear

"The world economy faces the biggest rise in unemployment in decades. How governments react will shape labour markets for years to come."

It's nice to see that The Economist still has it once in a while

Anonymous said...

Dr. J

When one considers that there has been quite massive losses in the nutrient levels in vegetables that moving to a meat (animal fat) intensive diet would be likely healthier. Further if business efficiencies dictate a change in diet from whole grains to highly processed carbohydrate foods a meat dietr would seem to be preferable, but to do studies based on what are degraded foodstuffs to reach a conclusion that diets on the lines of the Atkins are validated seem to miss the the thought that it may be that degraded foodstuffs, rather than carbohydrates in themselves, are the root cause of the epidemic of chronic diseases.

I have long felt that the need to over consume carbohydrate foods is the bodies way of making up for the lowered nutrient levels in those foods.
(As a side thought one could also mention that carbohydrate is a great energy source but not really of much use to the couch potato.)


ccpo said...

Natural farming is a highly developed skill taking many years of study, trial and error, and thought.

I'm going to disagree. Like anything else, it's true for the pioneers, but then knowledge is accumulated and passed on. By reading, watching vids and maybe attending a permaculture design course one can do a decent job right off.

Were the gov't putting in time and money to educate people it could be quite quick to get a lot of people educated. I've suggested this is our real best hope wrt micro power coupled with individual/community action. The same could be true for food. Just take my Buildout Vs. The Grid and think food. Could have the entire US on micro power/highly insulated for 500B. Much less for the food education unless we are talking about land reform to get more people on their 1.3 acres.


ccpo said...


But I believe that it's more accurate (and I find it more hopeful) to consider that our problems are primarily to do with leadership, rather than with national character... I could certainly be wrong about that.

How do you separate the dancer from the dance?


Ahimsa said...

Dr. J said:

"I am of the opinion that we should be relying on fat rather than glucose as our primary fuel. It is well understood that of the three macronutrients, fat, protein and carbohydrate, the latter is the only one for which our requirement is zero."

I think you must distinguish between refined or simple carbohydrates versus complex carbohydrates. For example, as you must know, sugar and refined grains (white flours, etc.) are simple carbohydrates while legumes, fruits, starchy vegetables (such as taro and sweet potato, etc.) and whole grains are complex carbohydrates.

Overwhelming scientific research shows that refined (i.e., simple) carbohydrates are high in the glycemic index and therefore are deleterious to our health. However, a diet consisting of complex carbohydrates consisting of fruits, vegetables, whole grains, legumes and beans, and nuts and seeds, is quite healthy.

The suggestion that meat eaters are superior in health than those who primarily eat a plant-based diet is a Western racist fabrication intended to justify Westerners' high consumptive animal-based diet -- and its supposed superiority over other races and ethnic groups. According to such an argument, northern cultures are healthier and superior to indigenous cultures in the southern regions of the world such as Latin America, India, etc.

BTW, I've researched the topic of diet, health, and culture extensively since the 1980s. A primarily plant-based organic diet based on complex carbohydrates (versus meat, white flour, etc.) is the optimal diet for human health.

All of my family have consumed an organic plant-based diet (consisting of fruit, vegetables, whole grains -- oats, wheat, quinoa, amaranth, brown rice, millet -- legumes, beans, nuts and seeds) for the last 14 years and all of us are fit and healthy, have no diseases, and take no pharmaceutical drugs. I'm 58 and my husband 57.

An indispensable book on the benefits of a plant-based diet is T. Colin Campbell's "The China Study: The Most Comprehensive Study of Nutrition Ever Conducted and the Startling Implications for Diet, Weight Loss, and Long-term Health," (2005), a 20-year-long study of Chinese diet by Cornell and Oxford Universities, and the Chinese Academy of Preventive Medicine.

Dr J said...

enkidu - I agree to the extent that the more highly refined the carbohydrate, the greater the harm. However, the paleopathological studies that show a decline in health status when people shifted to a high-carb agrarian diet from a protein and fat hunter-gatherer diet were done on populations who were not eating highly refined foods. There is also emerging evidence on mechanisms at the cellular level that hinge on glucose load independent of the type of carbohydrate eaten. High dependence on glucose as a cellular fuel yields high oxidative stress which damages membranes and leads to metabolic dysfunction. Other studies show that the benefits of an overall reduction in carbs significantly exceed those achieved by shifting to the less refined, so-called "good carbs".

Dr Jay Wortman said...
This comment has been removed by the author.
Dr J said...

Ahimsa - the China study itself gathered reams of data from which thousands of associations can be drawn, some of which might support your idea that a plant-based diet is good. Campbell's book, however, is a vegetarian screed containing only the associations from the study that support his idea that we should all stop eating meat. His credibility is further diminished by his close association with the radical vegan animal rights group, Physicians Committee for Responsible Medicine, which, in turn, is closely tied to PETA.

My work is mainly with the First Nations and Inuit people in northern and coastal Canada whose traditional diets were virtually devoid of carbohydrates. They would be surprised at your assertion that: "The suggestion that meat eaters are superior in health than those who primarily eat a plant-based diet is a Western racist fabrication intended to justify Westerners' high consumptive animal-based diet -- and its supposed superiority over other races and ethnic groups."

I am glad you and your family are healthy, however, neither the current science nor the paleopathological evidence support the idea that the diet you favour is more beneficial than one that is very low in carbohydrate and high in fat.

Oops - I outed myself. I might as well direct you to my blog where you can learn more about this topic:

Starcade, now from Leviathan said...

Persephone: This is why I see myself as a Dead Man Walking. If it happens anything beyond about this Fall or Winter, I'll be more than somewhat shocked, but the only reason that we've been able to support 305M in the USA and 6+B in the world is because of what Karl calls "The Bezzle". "The Bezzle" is the lifeblood of our economic well-being, sadly, and it's finally coming apart.

A population rebalancing (reduction) is the only palpable result.

redcatbiker: Perhaps Whites think that the economy might not get better _for them_.

Anyone who thinks you can still make it through the American Dream is drinking the fucking Kool-Aid, as far as I am concerned. Of course, that Kool-Aid is the only thing keeping many millions from riot.

Anon 2059: See above. The carrying capacity has been inflated by "The Bezzle". It is everything on which our current population has been built. Take out "The Bezzle", and you have to eliminate a significant portion of the population from meaningful society as an immediate result.

el gallinazo: I'm not "above" ag work (I used to come from a community where ag work was very important.

The problem is that there is going to be a phase of time, before sustenance can really take hold, that guns will rule the day, and the ability and the willingness to kill will probably determine one's survivability -- unless you are looking at what I see as lottery-level luck.

brendan: The key two words of that statement about going forward are "outrageous luck".

ccpo: I;m not so sure that 6.5B people worth of sustainable food can be made without "The Bezzle". That's the challenge going forward -- not that it would be physically possible under present paradigms, but under _legal_ and _fair_ paradigms...

Anonymous said...

Hi Dr J,

I have a feeling you might find that some of those studies might be based on erroneous data due to the findings on site of a preponderance of animal bones. The lowly parsnip and the potato don't leave no bones. As far as fat goes I tend to avoid it as many of the industrial tend to be fat soluble and if I do grab a bit for the morning coffee I go organic, which I can't say is any less contaminated but at least it eases my mind and points a direction. As far as overuse of carbohydrate I quite agree and myself try to do keep to the spinach eating end of the spectrum.

Oh! just caught you message to A. and would only add that I love the taste of meat so don't leave it out of the diet, no Vegan me, just keep it to a level that I think I could catch if I lived in a cave in the bush ...not much. Also you are talking Fish not Meat with coastal Indians. I guess maybe it might be an idea to make some consideration for different types of fats before tarring all with the same brush. Same with how carbs fit in., they all don't come packaged the same way. BTW I think maybe the original Pueblo Indians might be taken aback if you told them corn was anathema.
(gotta hurry as it is lunch time and my sorrel/pork soup is awaiting).


Dr J said...

enkidu - I think the paleopathologists take pains to distinquish between animal and human bones. The coastal people ate seafood and marine and land mammals while those who lived in the boreal forest ate mainly land mammals. In either case, the overwhelming majority of their calories came from fat. Agriculture was practiced in some areas of pre-contact N. America, but the whole point of the Diamond article is that this led to a loss of health status, both here and in other locations around the globe. There are several lines of evidence pointing in this direction, the paleo stuff is only part of the puzzle. There is a growing scientific literature showing that the metabolic markers of chronic disease get better when you eliminate carbs. Yes, they get better when you shift from highly refined carbs to unrefined types but the biggest gain is when you cut them entirely. For clarification, I am referring to the exclusion of vegetables that contain starch or sugar. The non-starchy types like spinach are fine, as far as I can tell, so eat away. Add lots of butter, too!

Florence said...

AIG paying millions in bonuses to retain the best and the brightest. It's mad, utterly insane.

Anonymous said...

Dr J

You go on about human and animal bones?! I only mentioned parsnip bones! I think you missed or are avoiding my points. I only say 'avoiding' as you also seem to be encouraging me to poison myself by eating pesticide residue filled butter. And you a Dr. too!! Shame shame on you!!


Orion said...

BTW, Ilargi. Thanks for running that reminder on the issues of the food supply.

And the Celente clip that Bluebird mentioned above is also a good reminder. These days seem filled with distractions and propaganda. It's a different take from the typical MSM news to see him again so certain about what's coming up

Greenpa said...

A word counter the various agricultural doomsayers here. Ag research is what I do.

Indeed, ALL the catastrophic problems you point out are real- and catastrophic. Yep, nitrogen is huge. Water, soil; huge, and socially disruptive.

But. without going into vast detail (I haven't written the book yet, and am not going to this afternoon) - I'm more afraid that even industrial agriculture, which I regularly describe in my own seminars as the single most destructive technology on the planet- has hidden resiliences in it.

I'm more afraid it will NOT collapse- but will continue to feed starving, increasing, billions; as the quality of life drops to subhuman, non human species vanish, and soil disappears.

I think it's much more likely you will still be able to buy your burger at McDonalds 500 years from now, than that you'll be forced into organic servitude.

It will not be that easy to get rid of the machine.

Ahimsa said...

Dr. J,

My point is to move toward health instead of sickness, and compassion instead of violence -- these are accomplished without sacrifice of principle or palette in a plant-based diet.

There is no need to try to argue against the objective and well-documented sources I've mentioned based on fear of PETA or PCRM. Physicians Committee for Responsible Medicine is a wonderful organization dedicated to preventive medicine research. Its president Dr. Neal Barnard is a professor and practicing physician at George Washington University. He's also a well published author of numerous books and articles in mainstream medical journals. Here's their website:

This is just one among many sources.

Anonymous said...


About the only time I comment here, it's the same old song...take a rest on the weekends. Yeah, I know you're waiting for the coup that will inevitably take place then but try to figure out the difference between quantity/quality and a dead battery vs. a recharged battery.

I have donated regularly to the cause and that doesn't mean I can tell you what TO do but I will tell you what you SHOULD do in order to maintain your health, motivation and sanity. You have told me enough about politics and finance that has helped immensely and I'm just returning the favor in my area of to accelerate and/or delay burnout.

To summarize: Take a damned break over the weekends and enjoy life. Yes, the world may end during the brief time you're gone but it ends sooner when you die prematurely.

Robert K

Ahimsa said...

Ooops, I meant palate.

Submit your advice said...

Yes, we have no new OPEC cuts today

el gallinazo said...


I have passed on some of your musings to my friend Judy, a novice beekeeper. She wanted to pick up a reference manual and noted your comment about the two additions of abc-xyz,

On Amazon we have:

The ABC and Xyz of Bee Culture: An Encyclopedia of Beekeeping by Roger Morse (Hardcover - Jun 1990)
New $151; used starting at $61


The ABC and XYZ of Bee Culture by A. I. Root and E. R. Root (Paperback - Mar 30, 1947)
New at $37

Which one do you recommend more for a novice?

ccpo said...

@slumlord said: In the last four years, I have gone from nearly no production (an old plum tree) to about 5% production of my own food on a city lot (38 feet by 120 feet). This has been with very little effort; mostly berry bushes, more fruit trees (which are now starting to really produce) and lots of potatoes (the easiest food of them all). This year, I hope to grow 10% of my own calories and start an orchard on a vacant piece of property I have.

You have a tenth acre minus your house and another vacant lot? Congratulations! With proper planning you can grow virtually all your vegetables and fruits. In fact, you could grow enough grain for at least a meal a day for your family on just 124 sq. ft., and that's with only one crop a year. If you did a winter grain, you could could grow more than enough for your family. I refer you to Fukuoka's "The Natural Way of Farming" and other sources. NWofF is available on-line at the Soil and Health Library.

As for your orchard, look into the Food Forest concept. Geoff Lawton has a video on that. There's a snippet on YouTube, I believe. His website is the Permaculture Research Institute. They have a new branch in Hawaii, if you'd like some education coupled with a vacation.

No, I'm not affiliated.

For a good example of backyard gardening producing a lot of food:


ccpo said...

I;m not so sure that 6.5B people worth of sustainable food can be made without "The Bezzle". That's the challenge going forward -- not that it would be physically possible under present paradigms, but under _legal_ and _fair_ paradigms.

You're confusingyour response by using "can" in the first sentence. Yes, we can. There are more acres of arable land than there are people... so far. We will overshoot that pretty soon, though: ...there are only 12 million square miles (7.68 billion acres) of arable land.

But I agree with your point, which believe to be that without massive, exceedingly fast change, it ain't gonna happen.

But why should that stop us? Without those changes there is little to hope for, so we've got to try to make them happen. At least, I do; I have a 14 mo.-old son.


Bigelow said...

Regarding what are six billion people going to eat and being a vegetarian, you could do a lot worse than to read Hope's Edge: The Next Diet for a Small Planet Frances Moore Lappe and Anna Lappé