Custom House tower, Boston, Massachusetts
Ilargi: The US is getting its own cash for clunkers version going, the sort of program tried and tested in European countries, in which a government ostensibly wants to get old cars off the road for pollution-related reasons, but which also is a great way to boost automobile production and sales. It will undoubtedly lift US sales quite a bit; how could it not at $4500 per vehicle from the federal government, and various extra's from different states thrown in?
Chrysler has announced it will match the $4500, and other carmakers will feel obliged to follow suit. Of course there'll be all sorts of restrictions, selected vehicles only etc etc, but the purchase of a new car looks more attractive. There may be second-hand ones eligible as well. Some dealers will sell so many cars they will go through their inventories in no time. Which will push production higher, perhaps even re-open the odd plant. It all sounds great, doesn't it? Just what a downtrodden economy needs. A million talking heads will seek to assure you that it's yet another sign of a robust recovery.
But there are a few things wrong with this picture. There are too many people already who can't afford to buy a new car even with all the subsidies. While the not-yet-so-poor, the people who can still meet mortgage payments and who still hold jobs, can now go out and buy on the cheap courtesy of the government, 99% of the 10%-20% (take your pick of U3 or U6) who are un- or underemployed, the very ones who need help more than anyone, are locked out of the cash for clunkers deals. Sure, there may be a scattered few jobs added as sales pick up. But it will all be temporary. While the unemployment numbers will not, as everyone from the president to Tim Geithner to Ben Bernanke now admits.
The government cannot forever keep using your tax money to buy a car for your neighbor. Just as it can't indefinitely keep the housing market alive through Fannie Mae and Freddie Mac, two perversely semi-private firms that today are beyond reorganization since, in Tim Geithner's words: “We cannot credibly think of that right now, because they are the entire mortgage market in the country.” Yes, that's scary, as I've often said. $5-6 trillion in loans, and who knows how much in securities. The "worst" loss numbers for Fannie and Freddie I read are $100 billion. Not even close.
So is handing over taxpayer money to people who could mostly afford a new car anyway, and who can still get a loan for one (not a trivial detail), the best way to use that money? How much of it do you think is being spent to do the right thing, to help the most needy, and how much is spent on securing votes from the more affluent? How many "representatives of the people" will play the cash for clunkers program as a personal victory in their constituencies, as a sign that voting for them means voting for the (wo)man who can get things done?
The weakest point in our democratic systems lies in the fact that the weakest people are underrepresented. Democracy works only until the people figure out that they can vote themselves an ever greater piece of the pie. And "the people" in this sense means, deceptively simply, the majority that is vocal, organized, and in the prime of their lives, who are neither too destitute nor too young or old, too sick, or stuck in one part or another of the judicial system.
Children can't vote, neither -most often- can prisoners, the sick have other priorities, and the elderly are much too unlikely to change their allegiances for give a politician reason to focus on them. Hence, the majority of public perks handed out, all of which come from the deep general coffers of society, go to what one might call the middle class. Through donations and "friendly circles", the rich always make sure they're taken care of first. But there are not enough rich people to win elections. To get enough votes, therefore, politicians will take care of the "relatively affluent". Those who have the means to buy cars. Those who purchase homes. If they get in trouble, or say they do, they are the ones who get the subsidies. Not the people who need them most.
It is often said that the true quality of a democratic society can be determined by how it takes care of its weakest elements. The relevance of that statement generally remains largely hidden when economies are doing well, when are growing. It is truly tested only in times of hardship. But the cards are stacked against the weakest elements. When the vocal majority demands to have its interests, i.e. the maintenance of the lifestyle it has become used to, be taken care of, or else they'll vote for someone else, the weakest must necessarily get weaker.
Until you wind up with so many that are so weak, they start speaking up, out of despair, and find they have become the majority. It's what you call a political crisis. And it's inevitable when growth stops in a democracy, unless you catch the fall before it happens. Blindly believing that growth will resume can only make it worse. You have to prepare for that not happening, or, as a society, you'll be caught blindsided. If a society doesn't provide a bare minimum in food and shelter, it must of necessity implode. That's not socialism, it's preventing mayhem.
PS: I got news tonight that a dear friend of old passed on yesterday in Holland, far away far far too young. I'm thinking of you, sweet Noor, and the kids.
Detroit’s Schools Are Going Bankrupt, Too
‘Am I optimistic that they can avoid it . . . ? I am not.” That’s what retired judge Ray Graves said this week when asked whether the Detroit public schools, which he is advising, would be forced into bankruptcy. Facing violence, a shrinking student body, and graduating just one out of every four students who enter the ninth grade on time, the city’s schools have been stumbling for years. Now they face a seemingly insurmountable deficit and are expected to file for bankruptcy protection at about the time that students should be settling down in a new school year.
As embarrassing as such a filing would be, it also may be the only thing that can force the kinds of changes Detroit schools need—as the financial turmoil is just the latest manifestation of a system in terminal decline. Detroit is like many urban school districts—large, unwieldy and bureaucratic, with a powerful union that makes the system unable to adapt to changing circumstances and that until very recently had an indulgent political class that insulated it from reform.
That insulation came in two forms. The first was neglect. Mayor Kwame Kilpatrick spent several years distracted by a scandal stemming from his affair with a staffer. He resigned last year, pleaded guilty to obstruction of justice, and was sentenced to four months in jail. Had he been an effective mayor, he might have also been a powerful advocate for students. The other insulating force was a conscious decision to wall off Detroit from charter schools. In 1993, Michigan’s legislature made it difficult to create new charters in Detroit by declaring that only community colleges could authorize charters for primary and secondary schools in “First-Class Districts”—defined as those with more than 100,000 students.
Detroit was the only First-Class District. In 2003 the state, under pressure from the Detroit Federation of Teachers, turned down a gift of $200 million from philanthropist Robert Thompson that would have established 15 charter schools in the city. Those charters are needed today. The net result has been a school system that’s been coming apart as the teachers union has dug in its heels. In 2006, the union illegally went on strike, killing a plan to force teachers to take a pay cut to balance the system’s books.
In June, seven students were wounded in a shooting near Cody Ninth Grade Academy just two weeks after 16-year-old Tenecia Walter was shot in the chest shortly after leaving class at Denby High School. Earlier this year a gunfight broke out in Detroit’s Central High School and last year a student was shot and killed walking home from Henry Ford High School. All of this has forced school officials to step up security measures, including increasing the number of police patrols.
Meanwhile, only 16.2% of the city’s 11th graders scored proficient in math this year on the state’s standardized Merit Examination, compared to 49.3% statewide. Detroit reading and science scores are just as bleak. And this in schools that spend $1,700 more per student than the state average. The school system also has been rocked by corruption. A few years ago, an audit revealed that Detroit’s school system misused more than $46 million on insurance and other contracts and was forced to sue venders to get some of its money back. Two of the system’s employees were recently indicted for allegedly embezzling $400,000 from the school system over the past couple of years.
To clean up the mess, the state took control of the district earlier this year and brought in Robert Bobb as an “emergency financial manager.” In June, to stem pay-check fraud he required that employees pick up their paychecks in person. Paychecks for 257 suspected “ghost” employees—people who had improperly been getting checks—went unclaimed. Mr. Bobb has been energetic in tackling problems. At the outset, he faced a $306 million shortfall in a $1.3 billion budget. He responded by closing 29 schools, laying off 2,500 employees, and cutting 80% from the budget of the department that draws up the district’s curriculum. He plans to overhaul 40 schools and has hired private companies to run 17 of the district’s 22 high schools. He also tapped Mr. Graves, a bankruptcy expert, for advice.
The Detroit Board of Education has gone along with many of these changes. But it is now seeking a court injunction to block private companies from running district high schools. The board says Mr. Bobb exceeded his authority in hiring the companies. But a court fight will only bog things down at a time when the district still faces a $260 million deficit. This is why Mr. Graves and others see little alternative to declaring bankruptcy, and why doing so would likely be a net benefit. It would allow the city to tear up union contracts, cut some of its debt, and forge a political consensus for lasting reforms. No one will want to repeat the bankruptcy experience any time soon.
What the city needs is a multitude of charter schools and other school-choice provisions that would give students a means to escape. It also needs to break free of collective-bargaining agreements. Collective bargaining for government employees is not a constitutional right; it is a special privilege, and one that has been abused. Michigan’s education laws could be amended to allow school districts to suspend collective-bargaining agreements when that district fails to meet minimal academic standards, is pushed to the brink of bankruptcy, or when the union goes out on an illegal strike.
Over the past seven years, Detroit schools have lost 60,000 students. Its system is now, according to the state’s attorney general, so small that it no longer qualifies as a First-Class District. That gives the state legislature and Democratic Gov. Jennifer Granholm an opportunity to do what they needed to do all along: Treat Detroit like other school districts in the state and hold local officials accountable when the schools fail to perform. Walling off Detroit from the rest of the state may have some appeal and was once the politically easy thing to do, but it’s only given Michigan a larger mess to clean up.
Budget deal puts California in hole for next year
aCalifornia may be about to crawl out of a fiscal crevasse now that the Legislature has adopted a $23 billion deficit-reduction plan, but the state is headed toward another deep hole even if the economy recovers, finance experts say. The budget deal Gov. Arnold Schwarzenegger plans to sign Tuesday relies on roughly $8 billion in accounting maneuvers and questionable new revenue that experts say will result in what the governor vowed never to do: kick the problem down the road.
"Next year's budget will start with a very large shortfall even if there's a good recovery," said Steve Levy, a senior economist at the Center for the Continuing Study of the California Economy in Palo Alto. And, Levy cautioned, the state's finances will face additional challenges when federal economic stimulus funds run out. The plan lawmakers approved Friday also includes more than $15 billion in spending cuts largely to education and health and welfare services. But among the accounting tricks and revenue the deal relies on are the following:
- $1.7 billion: Require taxpayers who make quarterly estimated payments to pay more in the first six months. The state's fiscal year begins July 1 so the change would lower revenues in the first half of the next fiscal year.
- $600 million: Increase income tax withholdings from paychecks. This would allow the state to grab more tax revenue earlier but would result in lower revenue later due to higher tax refunds or less taxes owed.
- $900 million: Shift state workers' June 30 pay date to July 1 so the cost is passed to the next fiscal year.
- $1 billion: Sell a portion of the State Compensation Insurance Fund's workers compensation insurance portfolio. State Insurance Commissioner Steve Poizner has threatened to file a lawsuit over this plan.
- $1.9 billion: Take revenue from counties' property tax collections under the provisions of Proposition 1A that voters approved in 2004, but the state must repay counties with interest within three years.
- $1.3 billion: Take local redevelopment agencies' funds in exchange for extending the number of years the agencies could collect a portion of property taxes in their region. Cities and counties have threatened to sue the state over this plan.
"Dogs bite people, celebrities get arrested and Sacramento politicians fiddle with the books," said Jack Pitney Jr., a political science professor at Claremont McKenna College. Pitney said there is little guarantee that the Golden State will be out of the woods any time soon. "One certainty in all of this is that California's problems are far from over," he said. Jean Ross, executive director of California Budget Project, a progressive think tank in Sacramento, called the deficit deal a "mixed bag," adding, "It certainly means we are likely to have problems in the future."
Some legislative leaders who helped broker the deal also admit it's far from ideal. Senate Republican leader Dennis Hollingsworth of Murrieta (Riverside County), one of the main negotiators of the budget, wrote in a memo to his caucus last week that the agreement has "some ugly gimmicks." State Senate President Pro Tem Darrell Steinberg, D-Sacramento, said their options were limited because the leaders were trying to craft a plan that avoids new taxes without destroying the state's social safety net. "I don't like the idea of kicking the can down the alley, but doing a little of that is better than kicking a lot of people out on the street," he said.
Schwarzenegger and legislators were under immense pressure in the past weeks to eliminate the deficit as California began issuing interest-laden IOUs to pay contractors and others owed money to avoid completely running out of cash. To worsen matters, the state's credit rating plunged amid warnings that further delay in a deficit solution could exacerbate California's teetering economy by bringing state-funded transportation and other infrastructure projects to a halt, leaving thousands jobless.
The state's financial problems began 18 months ago when revenue began steadily dropping as the U.S. economy faltered. Within the past year, lawmakers have had to deal with about $60 billion in revenue losses projected through June 2010. When Schwarzenegger spoke Friday about the deficit plan the Legislature passed, he acknowledged the economic uncertainty. The package "saves our state from financial ruin and from drowning in the fiscal abyss," Schwarzenegger said, adding that it's difficult to gauge when the state's struggling economy will improve. "We don't know how much longer our revenues will drop. We don't also know if we may not be back in the next six months to make further cuts," he said.
Experts say another problem with the plan is that it includes a $1.2 billion cut to prison spending but doesn't specify how that will be achieved. A significant chunk of the proposed prison cuts - $400 million - stem from Schwarzenegger's previous line-item veto from the February budget package to eliminate a $42 billion deficit, but the earlier prison cuts were never implemented. Schwarzenegger and legislative leaders last week promised they will tackle how to reduce prison spending when lawmakers return from their summer recess next month.t
Lobbyists had say during California budget talks
For weeks, legislative leaders and Gov. Arnold Schwarzenegger negotiated California's budget solution behind closed doors. They had plenty of outside help. Throughout the process, lobbyists waited in Capitol hallways and by their telephones to discuss provisions they wanted – or didn't want – in the budget agreement. During breaks from talks, Democrats e-mailed and called teachers union officials to determine how best to craft a $9.8 billion future repayment to schools. Republicans spoke with business leaders about proposals to squelch taxes and help companies in California.
Even during the wee hours Friday morning, as the Legislature slogged through a final budget vote, lobbyists worked lawmakers in Capitol corridors. In the end, Democrats succeeded in obtaining the repayment to schools, while Republicans were able to eliminate tax-hike and tax-enforcement proposals that businesses targeted. Through it all, state leaders helped core constituencies – and key campaign donors. "The unwritten rule of Sacramento is that legislators keep in mind not only their voter constituents but their cash constituents, and they need to deliver results if they want to continue to see cash contributions flow," said Derek Cressman, Western states regional director for Common Cause, a nonprofit watchdog group.
Republican leaders and Schwarzenegger made clear from the start that they opposed any taxes to bridge the state's deficit. They said May's failed special election was a mandate from voters, though their stance also helped businesses who support their party. They refused to consider Democratic attempts to increase the sales tax on cigarettes by an additional $1.50 per pack and impose a new tax on oil extraction – two measures opposed by businesses who are reliable GOP donors.
In the 2007-08 campaign cycle, Chevron Corp. gave $247,000 to the California Republican Party, while Altria gave $100,000. Altria owns the largest U.S. tobacco company, Philip Morris USA. Chevron this year gave Schwarzenegger's special election committee $500,000. And Philip Morris provided the governor's committee with $350,000. Democrats believed the taxes were reasonable because polls show voters support "sin taxes" such as those on cigarettes. They also argued that the oil extraction tax was palatable because costs would not be passed on to drivers – a point Schwarzenegger's own office made when the governor sought the same tax in November.
Democrats initially wanted taxes to avoid deep cuts in social service programs such as welfare-to-work, Medi-Cal and Healthy Families medical insurance for children. Schwarzenegger, however, said in May he would not sign a budget with any tax hikes. He suffered criticism for signing $12 billion in taxes in February and felt the May vote was a rebuke of such policies. "The governor always leads by what's best for California, not by what special interests would like him to do," said Schwarzenegger spokesman Aaron McLear. "Keep in mind, creating a good business climate creates jobs and improves our state's economy."
While Democrats quickly gave up on the idea of new taxes, they sought other proposals that they said would generate more dollars through stricter tax enforcement. They wanted to force online retailers such as Amazon and Overstock.com to collect sales tax on California purchases, as other states, including New York, have tried. Schwarzenegger rejected that idea. Democrats also sought a number of tax enforcement laws, most of which Republicans rejected. In a major revenue proposal, they wanted to raise $1.7 billion by forcing businesses to withhold 3 percent of payments to independent contractors – a way to capture tax dollars that Democrats believed are not being fully paid. That plan died as well. Senate Republican leader Dennis Hollingsworth, R-Murrieta, touted blocking that plan as one of his victories in a memo to colleagues.
Cash-Strapped California's IOUs: Just the Latest Sub for Dollars
To creditors of the state of California who got paid in IOUs instead of money, take it from historians -- things could be worse. You could be getting clamshells. Or chunks of plywood. During the Great Depression, hundreds of communities as strapped for cash as California is today circulated their own temporary currencies. An estimated $1 billion in this scrip was issued by towns and counties, not to mention corporations, school boards, newspapers and a few wealthy individuals.
Most promissory notes looked like paper currency, but scrip was also printed on leather, metal, fish-skin parchment and, in Tenino, Wash., on slabs of two-ply Sitka Spruce. In Hood River, Ore., Hal's Tire Service printed $1 bills on scraps of old tires, briefly giving the rubber check a good name. Today, collectors treasure remnants of those desperate times: a green-and-gold "sauerkraut note" from Minneapolis; a warrant, beautifully printed with an engraving of a clipper ship, from Cape May County, N.J. Some imagine filling out their collection with Schwarzenegger scrip, circa 2009.
"Every piece tells a story," says Neil Shafer, author of the "Standard Catalog of Depression Scrip of the United States," published in 1984. "It represents a piece of social history." Since California ran out of cash early this month, it has issued more than 194,000 IOUs, with a total value of $1.03 billion. They are redeemable in U.S. dollars on Oct. 2, or sooner if the state comes up with the money. The legislature on Friday approved a plan to close a $24 billion budget gap, but officials say it could still take a few weeks to analyze the state's cash situation and resume giving creditors checks instead of promises.
California IOUs differ from Depression-era scrip in a key respect: They are made out to individual creditors for specific amounts. Scrip in the 1930s was designed to circulate like currency and usually issued in standard denominations: 25 cents, $1, $5. Issuance exploded in early 1933, as banks in city after city suspended operations in the face of runs on their teller windows, severely restricting the amount of money in circulation.
On March 6, President Franklin D. Roosevelt shut down nearly all transactions in a "bank holiday," even as he prodded the Federal Reserve to hurry up and print more currency. Some banks reopened within days, but others remained shut for weeks. People and businesses ran out of cash. Some turned to barter. The New York Daily News, which was sponsoring a boxing match at Madison Square Garden, offered a ticket in exchange for any item worth 50 cents. Fans brought in spark plugs and nightgowns, frankfurters and jigsaw puzzles, New Testaments and noodles and golf knickers, says Mr. Shafer, who chronicled the era in his book.
But barter goes only so far. Makeshift currencies soon were popping up everywhere. Each note of the funny money was supposed to be backed by the assets of the issuer. For the most part, the system worked: When the crisis passed, holders of scrip were able to redeem it for legal tender. There were a few flops and scams. In Chicago, a hustler printed up official-looking notes bearing his name: Caslow Recovery Certificates. They turned out to be worthless. In Portland, Ore., scrip issued by Multnomah County got entangled in a legal dispute, leaving holders high and dry.
In Minneapolis, a group of jobless residents pledged to provide handmade goods, such as clothing or canned vegetables, to a central commissary. Then they printed their own currency, emblazoned with the line "Organized Unemployed," to facilitate trade. The experiment ended badly when too many members contributed nothing but sauerkraut to the commissary. "You can't buy and sell sauerkraut among yourselves for very long," says Loren Gatch, a political scientist at the University of Central Oklahoma.
Detroit had a more robust scrip economy. By early March of 1933, the city had been short of legal tender for so long that workers were fainting from hunger at their desks, according to Smithsonian Magazine. So the city printed millions of dollars of scrip, in denominations as high as $100. Unlike the pecked-out-on-a-typewriter look of some notes, Detroit's were beautifully designed and professionally printed, on the theory, says Mr. Gatch, that "if the bills looked good, people would be more likely to take them."
A newspaper in Northern California called the Pacific Grove Tribune took a different tack. It issued what it called "anti-hoarding" scrip, printed on sheets about 17 inches by 7 inches, so cumbersome that creditors who got them had an incentive to put them back in circulation quickly. The Tribune also urged each person who spent a note to first sign the back. The idea was that the growing list of signatures would be a boost to morale -- proof that, even in tough times, business was being transacted.
Historians say few scrip notes were counterfeited, in part because many didn't circulate long enough to get a racket up and running. There were a few attempts, though. In the late 1930s, two brothers from Superior, Wis., were charged with counterfeiting a local scrip. Their defense: It wasn't real money to begin with, so how could faking it be illegal? The judge didn't buy it. They were convicted.
Such stories make Depression scrip more than just old paper, collectors say. Each is a window onto the past. Collectors prowl garage sales, flea markets and numismatic conventions in search of surviving scrip. "I love the thrill of the hunt," says Jamie Yakes, a sales manager in South Brunswick, N.J. Even amid the Depression, some collectors saw the appeal of handmade IOUs, and a couple of communities catered to that by issuing novelty scrip.
The Crescent City, Calif., Chamber of Commerce issued hand-lettered clamshells, each redeemable for 10 cents when the Chamber got some money. Officials rightly guessed that most folks would hang onto them as souvenirs. Though a few issuers saved stashes of their scrip, and it now can be bought cheaply at online auction sites, many other issuers destroyed the notes after they were redeemed. With those bills, the few that survive can fetch hundreds of dollars.
Rod Charlton II, who runs a Web site called DepressionScrip.com, says there is no bigger thrill than finding an unusual note online. "I can't sleep at night because I want to get hold of it so bad," he says. "It's that kind of obsession." California's IOUs lack the flair of much Depression-era scrip; they are basic, pale-green government-issue checks, except they bear the telltale label "Registered Warrant." Still, collectors say they would make good souvenirs of today's financial crisis.
The trick will be getting hold of one. California plans to destroy the IOUs after they are redeemed. And state officials say they expect a high redemption rate. "The people who got them probably aren't sitting around thinking, 'I'm going to save this for posterity,' " says Mr. Gatch, the political scientist. "They're more likely thinking, 'How the hell am I going to cash this?' "
British economic collapse rivals Great Depression
The collapse in Britain's economy now rivals the worst days of the Great Depression, it has emerged. Economic output shrank by 5.6pc in the 12 months to the middle of the year, according to official figures which shattered hopes that the recovery has already begun. The Office for National Statistics said that Britain's gross domestic product (GDP) contracted by 0.8pc in the second quarter, following the unprecedented 2.4pc fall in the first three months of the year. Economists had expected GDP – the broadest measure of the country's economic performance – to shrink by 0.3pc.
According to calculations by Martin Weale of the National Institute for Economic and Social Research the profile of the current recession is now almost identical to the decline in Britain's output between 1929 and 1931. The 5.6pc contraction over the past year almost matches the 5.8pc fall in the year preceding the second quarter of 1931, during which Credit Anstalt in Austria collapsed, triggering a second wave of economic seizure across Europe. The recession is far deeper and more severe than those of the early 1980s and 1990s, Mr Weale added.
"Gordon Brown is now competing with Ramsay MacDonald – not a comparison he would much like," he said. "It looks as if we are pretty much tracking the 1930s, "The financial crisis has been much bigger [than in the 1930s], the period of boom beforehand was more marked; and so you might think it's thanks to the policies [from the Bank of England and Government] that we'll end up with something slightly less bad but along similar lines."
Markets nevertheless took the disappointing news in their stride, with the FTSE 100 rising for a tenth straight day by 16.81 points to 4576.61. Indeed, the 10.9pc increase in those sessions is the biggest uninterrupted increase since the index was set up in 1985. The Treasury forecast in the Budget earlier this year that the economy would shrink by 3.5pc this year, but most independent forecasters, including the International Monetary Fund and OECD, expect a far more severe contraction. The ONS figures also cast doubt on whether the economy will start to grow again before the end of the year.
Michael Saunders, UK economist at Citigroup, said although he expects growth to return in the third quarter, the recovery will feel subdued. "As well as a deep recession, we expect a slow recovery, held back by high private debts and (with inadequate bank capital) poor credit availability," he said, adding that it would take until 2013 for the economy to reach the pre-recession peaks of 2008. He added: "It will be many years before the UK returns to a well-balanced and sustainable mix of low unemployment, low fiscal deficit and low public debts, decent economic growth and low inflation."
The GDP decline also casts doubt on whether the Treasury will achieve its borrowing targets for the year – even though the £175bn of debt forecast for this fiscal year is already set to be a post-war record deficit. The Budget assumed, when drawing up these borrowing figures that the economy would shrink by 3.75pc, at worst. A bigger fall would push the deficit up further, as it would imply lower tax revenues and bigger comparative public spending totals.
Liam Byrne, Chief Secretary to the Treasury, insisted that growth would return by the end of the year. "We are not out of the woods by any stretch of the imagination, but what today's figures show is that the pace of the downturn is easing," he said.
This is how we let the credit crunch happen, Ma'am ...
A group of eminent economists has written to the Queen explaining why no one foresaw the timing, extent and severity of the recession. The three-page missive, which blames "a failure of the collective imagination of many bright people", was sent after the Queen asked, during a visit to the London School of Economics, why no one had predicted the credit crunch. Signed by LSE professor Tim Besley, a member of the Bank of England monetary policy committee, and the eminent historian of government Peter Hennessy, the letter, a copy of which has been obtained by the Observer, tells of the "psychology of denial" that gripped the financial and political world in the run-up to the crisis.
The content was discussed at a seminar at the British Academy in June that was attended by economic heavyweights including Treasury permanent secretary Nick MacPherson, Goldman Sachs chief economist Jim O'Neill and Observer economics columnist William Keegan. The letter explains that as low interest rates made borrowing cheap, the "feelgood factor" masked how out-of-kilter the world economy had become beneath the surface, with some countries, such as the United States, running up enormous debts by borrowing from others, including China and the oil-rich Middle Eastern states, that were sitting on vast piles of cash.
Despite these yawning imbalances, they say, "financial wizards" managed to convince themselves and the world's politicians that they had found clever ways to spread risk throughout financial markets - whereas "it is difficult to recall a greater example of wishful thinking combined with hubris". "Everyone seemed to be doing their own job properly on its own merit. And according to standard measures of success, they were often doing it well," they say. "The failure was to see how collectively this added up to a series of interconnected imbalances over which no single authority had jurisdiction."
That meant when the reckoning came it was extreme, starting in summer 2007 and culminating in the near-collapse of the entire world financial system after the bankruptcy of Lehman Brothers last autumn. "In summary, Your Majesty," they conclude, "the failure to foresee the timing, extent and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole."
Besley stressed that the experts had not been in "finger-wagging mode" and had agreed that the causes of the credit crunch were extremely complex. "There was a very complicated, interconnected set of issues, rather than one particular person or one particular institution." Other experts at the seminar last month included Paul Tucker, deputy governor of the Bank of England, Vernon Bogdanor, the constitutional expert from Oxford University, and HSBC's chief economist, Stephen King.
A spokesman for Buckingham Palace said the Queen has displayed a particular interest in the causes of the recession, summoning Bank of England governor Mervyn King to a private audience earlier this year to explain what he was doing to tackle it. Official figures published on Friday revealed that Britain's economy has now been contracting for 15 months, and the recession is deeper than any since the 1930s, outside of wartime.
Robin Jackson, chief executive and secretary of the British Academy, said: "The global recession is a huge development, and it is reasonable to ask to what extent it could have been foreseen. What's more, we can't say 'never again' if we don't fully understand what occurred. The academy forum was an opportunity to get an exceptional range of experts, participants and commentators in one room, sifting fact from fiction and shedding light on what had gone on. We hope Her Majesty - and indeed others - will find our letter informative."
The academy plans to hold a second seminar later in the year to ask how best to prevent another such crisis occurring. Besley denied that economics as a profession had been discredited by the scale of the crisis, but admitted that unconventional ideas - about how herd psychology and bouts of irrationality can grip financial markets, for example - had sometimes received "less play" during the boom years. He said the academy hopes to provide a forum for airing economic differences: "What we need is a forum where people can come together on a very open basis, to provide challenges and have a debate."
Professor Luis Garicano, to whom the Queen directed her question when she visited the LSE in November last year, said: "She seemed very interested, and she asked me: 'How come nobody could foresee it?' I think the main answer is that people were doing what they were paid to do, and behaved according to their incentives, but in many cases they were being paid to do the wrong things from society's perspective."
Taking stock of the newly destitute
Destitute : without resources, in great need of food, shelter, etc; devoid of (Concise Oxford Dictionary)
How bad is it out there? As bad as it gets, if Simon Community Northern Ireland has an accurate picture. When Carol O’Brien of Simon’s Northern Ireland branch used the word “destitution” at a Simon Communities of Ireland (SCI) event this week, she was well aware of its potency. It was a word that harked back to another era, the era of poverty described in Angela’s Ashes by the late Frank McCourt, she noted, but she was struck by how often it had cropped up in conversation with colleagues and others in the past 12 to 18 months: “Destitution, unfortunately, is coming and creeping through society in an insidious way,” she said.
So have we come to this? “It’s not a word we’d be using regularly here in Simon Communities Ireland,” says Patrick Burke, chief executive of the island-wide Simon federation. “We are more inclined to use the term ‘poverty’ or ‘consistent poverty’ which is the Government’s approved poverty measure, developed by the ESRI. As far as we are aware, there is not a great difference in the situations of people contacting the Simon service north or south of the Border.”
Over at the St Vincent de Paul Society they were equally wary. “It’s such a loaded word,” says John Mark McCafferty, head of social justice and policy at the society. “Destitution is in the eye of the beholder. If someone feels destitute, they are. But because it’s such a loaded word, we’d be reluctant to label people as destitute. Would that be how I would describe myself [if I was a client of Vincent de Paul] – or I am I having a little bit of a rough patch?”
The over-arching feeling, however, is that quietly but surely, many people are edging in that direction. “There hasn’t been a huge increase in the obviously destitute,” says a successful Dublin 4 businessman with a long-standing involvement in various charities. “But there certainly has been an increase in the secretly destitute . . . There is the secret destitution of people living in hell, in houses they can’t pay for; people who have set up lifestyles they can’t sustain, who are facing ruin, who have absolutely nothing and nowhere to turn . . . It’s more a destitution of hope, of prospects. It’s not the begging in the streets kind . . . This is new.”
SCI agrees. “There are those people whose homelessness or risk of homelessness is hidden – they are staying with friends and relatives, sofa-surfing, borrowing to pay rent or mortgage, not in contact with services and supports. When they can no longer stay with friends or relatives or borrow more money for rent etc, they will turn to homeless services,” said Patrick Burke. “It can take some time before people define and classify themselves as homeless due to reluctance and/or lack of knowledge about where to turn for support.
Therefore, the impact of the current economic situation will not result in an immediate marked increase in the numbers of people who are homeless but will be slower and must be monitored over the longer term.”
A social welfare official says firmly: “It’s bad out there. Really bad. People may not be in danger of starving but there are plenty who have seen a really drastic change in their circumstances. Their homes are threatened, their cars have been repossessed, their furniture has been repossessed. For seven or eight years up to a year ago, people lived in a culture of no-tomorrow, of plastic money, of lending institutions firing money around willy-nilly and now reality is beginning to bite.
“And I can tell you, it’s causing untold stress, hardship and disharmony . . . Two or three years ago, these people were concerned with where they’d go on their fourth or fifth holiday, now they’re concerned about the next bill coming through the door. Look at the increase in unemployment numbers and people claiming social welfare benefits – that has a snowball effect inside the home, believe me.”
He notes that many self-employed in particular have emerged with no welfare safety net. “Quite a lot of the people affected would be self-employed and the class of insurance they contribute towards provides no form of unemployment or sickness benefit. The only thing their insurance entitles them to is the old age pension. Therefore, all they’re left with is assistance – about €204 for a single person, another €160-€170 if there’s a spouse and a couple of children. That’s a fair comedown from what that type of person was probably earning in the boom years.
I’ve heard of tradesmen working on building sites who were taking home €3,000 a week . . . You’re looking at people like that or professionals like solicitors who specialised in conveyancing, earning a lot of money and living up to every penny of it [who] now have been laid off now with virtually nothing.” What many don’t realise, says Wicklow county councillor Irene Winters, is that even for employees who have contributed pay-related social insurance for many years, non-means-tested benefit is finite.
After 12 months, any further unemployment assistance depends on a rigorous means test, one that many people stranded with unsaleable assets bought in the good times will have difficulty passing. A small savings pot, a second unsaleable home, a spouse who is earning above the prescribed amount may disqualify an applicant. A couple in their mid-40s who had worked hard since their teens, each running a small business, had bought an old house and were slowly doing it up, but failed to sell their first home before the slump. Now they can’t sell either.
Both businesses have come to a stand-still, but for welfare purposes they are regarded as asset-rich so are entitled to no benefits. They are currently surviving on hand-outs from family members and the Vincent de Paul, as well as food parcels left on the doorstep by concerned friends. Another man who lost his job last year has only now realised that he is a month away from losing his allowances. His revised mortgage payment schedule with the bank was made on the flawed understanding that his €800 a month benefit would continue. He has no idea what lies ahead.
“If he and his wife were in private rented accommodation, they would qualify for rent allowance – which would be paid to the big developer who owns the house and which would make him wealthier. The Government seems to have all the money in the world for them,” says Winters. “Most people who haven’t engaged with the system before and don’t know how to maximise benefits have no idea what they’re heading into. They are asked to produce bank statements and they produce them – only to find that no help is forthcoming until they’ve made themselves completely broke.
This is what is coming down the line for many, many people . . . They’re on their way to destitution and they don’t even know it yet. People who lost their jobs in the past year may still be eking out their savings; maybe a family member is still working [and the] banks haven’t come the heavy yet, but that’s only a limited time frame as part of the bailout deal. Now the year is nearly up and there seems to be no Government plan for what is going to happen next year. Many of these people will not be eligible for State benefit under current rules; they can’t pay their mortgages, have no jobs to go to, no place to emigrate to and can’t sell their house or assets. There will be people with no money to pay for their children’s school books.”
The ending of the school books grants scheme for low income families not designated disadvantaged is only one of the concerns challenging the SVP. Others include the abolition of the Christmas bonus, reductions in rent supplements for social welfare tenants, the suspension of the community supports scheme for older people, all coming on top of the various cuts and charges recommended in the McCarthy report, such as welfare rate cuts, reductions in child income supports and increased charges for school transport, prescriptions and home helps.
But the system doesn’t seem to care, says a woman who rang the Department of Social Welfare to report someone who was working while claiming benefits. She told the official that the person had been pictured in his place of work and named the newspaper. The official’s response was to ask for the person’s PPS number and registered employer’s number. “No PPS, no case. That was the response,” she says. “How do they think the average citizen is going to come by that information?”
There is “a fair bit of abuse” of the system, agrees the social welfare official, “but what can you expect when you hear a distressed small farmer in Cork talking about suffering a 50 per cent drop in income [due to cuts in the Reps scheme] from a Minister who has taken only a 10 per cent cut in his own? If politicians wanted to show true leadership, they would take a 30-35 per cent cut. But that’s not what we’re seeing and it’s that sort of thing that will make the abuses even worse. For one thing, you’re going to have a much bigger black economy than ever before.
“All government support seems to have gone in so many areas of deprivation,” says the Dublin 4 businessman, “and it’s made worse by seeing people who are blatantly getting away with it . . . The developers are still living in their mighty houses and none have been thrown out even though they owe fortunes, but the people who’ve fallen a few months behind in their mortgages are being threatened with eviction.
“Yet the Government can still find money for the horse racing and greyhound industry – over €600 million in nine years in grant aid. And where does it go? Byzantine, the horse that finished second last in the Irish Derby – beaten by 52 lengths – still got €15,000 in prize money. That, remember, is taxpayers’ money, being handed over to owners who are already very wealthy. Yet they’re cutting back on special-needs schools.”
Eliot Spitzer: "The Federal Reserve Is A Ponzi Scheme"
Visit msnbc.com for Breaking News, World News, and News about the Economy
White House eases stimulus lobbyist restrictions
In a significant change, the Obama administration will now allow lobbyists to meet and have telephonic discussions with government officials regarding economic recovery projects. The lifting of the ban comes after K Street has cried foul for months and has challenged the White House on its restrictions. In March, President Obama announced that government officials would not be allowed to consider the views of lobbyists regarding specific stimulus projects unless the requests are put in writing. The materials also had to be posted on an agency’s website within three business days of receipt. Lobbyists have said that the policy was one more example of the administration's disdain for their industry.
Now, the just-revised rules will allow government personnel to accept meetings and calls from federally registered lobbyists on the implementation of stimulus projects. The head of the Office of Management and Budget, Peter Orszag, issued a new guidance late Friday regarding the administration's communications with registered lobbyists about economic recovery funds. Lobbyists can make their cases -- and agency officials can listen to them -- at "widely attended gatherings." Government officials have to ask whether the person they are talking to at such events is a federally registered lobbyist speaking on behalf of a client.
Agency officials are required to promptly disclose on the Internet all oral and written communications with lobbyists concerning policy or projects funded under the recovery act. They also have to disclose any written communications with lobbyists regarding pending applications for competitive funding. The one caveat, however, is that lobbyists can talk to agency representatives only about logistical issues or general questions regarding stimulus grants. Agency officials have to document any discussion with a lobbyist that veers toward advocacy of stimulus policy or a particular project.
Government officials are still banned from talking to lobbyists representing companies that have already applied for grants and are awaiting a competitive decision. In those cases, agency officials are allowed to accept "oral communication" only if the matter is purely logistical. Citizens for Responsibility and Ethics in Washington (CREW), the American Civil Liberties Union (ACLU), and the American League of Lobbyists (ALL) joined forces to advocate that the White House revise its rules. ALL informed its members Saturday morning of the changes.
"Essentially, you will be able to once again meet and have telephonic conversations with personnel in charge of the projects and be able to provide your subject matter expertise to them to help them make the best "merit based" decisions possible for the stimulus projects," Dave Wenhold, the president of ALL, wrote in an e-mail message to members. "Getting us back to the table and ensuring that we are treated equally has been the main goal for ALL. We are also thankful to our partners in this effort, especially the Citizens for Responsible Ethics in Washington (CREW) and the American Civil Liberties Union (ACLU). Between the main three groups and others, we made a diverse and strong coalition that advocated for these revisions."
'Mistake' on Fannie Mae, Freddie Mac to Shape Future
Fannie Mae and Freddie Mac grew to the point where they posed “enormous risk” to the financial system, an error that will shape how policy makers restructure the companies, Treasury Secretary Timothy Geithner said. “It would have been good had we figured out a way to avoid that out earlier,” Geithner told the House Financial Services Committee today. “That mistake should underpin much of what we do in thinking about how to create a more stable system.”
Fannie Mae and Freddie Mac’s size, accounting for almost half of the $12 trillion in U.S. residential home-loan debt, still pose a threat to the economy and should be supervised by a new council of regulators charged with overseeing systemic risk, Federal Deposit Insurance Corp. Chairman Sheila Bair said. “Certainly as they are functioning now, as they’ve functioned before, I believe they are quite profoundly systemic,” Bair said at the same hearing. “They were a source of systemic risk building over the years as we know now.”
The Obama administration has yet to figure out what to do with Fannie Mae and Freddie Mac, which regulators seized in September as the mortgage-finance companies’ losses threatened to further disrupt the housing market. Geithner reiterated that a restructuring is being put off until next year because of the companies’ size and as officials tackle other economic issues. “We cannot credibly think of that right now, because they are the entire mortgage market in the country,” Geithner said. “But that time will come and it will come relatively quickly.”
Bair said, “the long-term future of those two entities is somewhat unclear.” Fannie Mae and Freddie Mac, which own or guarantee about $5.4 trillion of U.S. residential home-loan debt, accounted for almost 73 percent of mortgage origination in the first quarter, Federal Housing Finance Agency Director James Lockhart said in a June 18 speech. Geithner said the companies played a “central role” in the housing crisis. The companies have received $84.9 billion in capital investments from a $400 billion lifeline pledged by the Treasury to keep them solvent. Geithner said he has no “realistic estimate” of how much it will ultimately cost taxpayers for the rescue of Fannie Mae and Freddie Mac, or other corporations.
“I don’t believe we’re in a position today, even this month, or even this year to give you a realistic estimate yet of those losses,” Geithner said. Representative Spencer Bachus, an Alabama Republican, said he isn’t anticipating repayment. “The biggest loss of all, the $85 billion that we’ve extended to Freddie and Fannie, I see no prospect of getting that money back,” Bachus said during the hearing.
The publicly traded companies were chartered by Congress to provide a backstop for home-loan financing. They fulfill that mission by buying mortgages from lenders, freeing up cash at banks to make new loans. The companies profit on the difference between their cost of borrowing and the yield on the debt, as well as from fees to guarantee and package loans as securities. “As a government, we’re going to have to figure out their future,” Geithner said. “What they are today is not going to be their future. It’s not in their future.”
Ilargi: I forget who it was that said there's more empty properties in the US than total properties in the UK and Israel combined. It provides an idea though.
U.S. Home Vacancies Hit 18.7 Million on Bank Seizures
More than 18.7 million homes stood empty in the U.S. during the second quarter as the steepest recession in 50 years sapped demand for real estate and banks seized properties from delinquent borrowers. The number of vacant properties, including foreclosures, residences for sale and vacation homes, was little changed from 18.6 million a year earlier, the U.S. Census Bureau said in a report today. The quarterly homeownership rate was 67.3 percent, seasonally adjusted.
More than 14 percent of homes were vacant in the period, the Census said. Home values dropped 33 percent since 2006, according to the S&P/Case-Shiller index, and the unemployment rate in June rose to the highest in almost 26 years. Tumbling home prices and rising job losses have thwarted government efforts to reverse the housing decline at the heart of the longest U.S. recession since the 1930s. “Job insecurity, together with declines in home values and tight credit, is likely to limit gains in consumer spending,” Federal Reserve Chairman Ben S. Bernanke told the House of Representative’s Committee on Banking, Housing, and Urban Affairs on July 21.
The percentage of all U.S. homes empty and for sale, known as the vacancy rate, fell to 2.5 percent in the quarter. It hit a high of 2.9 percent in the first and fourth quarters of 2008, the Census Bureau said. The vacancy rate fell slightly as the number of homes on the market declined because they were sold or because their owners gave up trying to market them. The inventory of homes on the market averaged 3.8 million in each of 2009’s first six months, according to data from the National Association of Realtors. Last year, the monthly average was 4.2 million. The vacancy rate was the lowest in the U.S. northeast region, at 2 percent, and the highest in the south, at 2.7 percent, according to the report.
There were 130.8 million homes in the U.S. in the second quarter, the Census Bureau said. In addition to the 1.9 million empty properties for sale, the report counted 4.4 million vacant homes for rent and 4.6 million seasonal properties that are only used for part of the year. Foreclosures are included in a part of the report that includes vacation homes intended for year-round use and homes that are unoccupied because they are under renovation or tied up in legal proceedings. There were 7.8 million such properties empty in the second quarter, up from 7.7 million a year earlier, the report said. Foreclosures could also be counted as vacant homes for sale or rent, or as owner-occupied properties if lenders have not yet evicted previous owners, the federal agency said.
Companies have shed about 6.5 million jobs since the recession began in December 2007, cutting demand for homes and eroding the consumer spending that makes up about 70 percent of the world’s largest economy.
One in every eight U.S. households with a mortgage is now late on their payments or already in foreclosure, according to Jay Brinkmann, chief economist for the Washington-based Mortgage Bankers Association. The U.S. delinquency rate rose to a seasonally adjusted 9.12 percent in the first quarter and the share of loans entering the foreclosure process rose to 1.37 percent, the bankers’ group said in a May 28 report. The total inventory of homes in foreclosure, old and new, was 3.85 percent. All three figures were the highest in records going back to 1972.
U.S. foreclosure filings -- notices of default, auction or bank seizure -- rose to a record in 2009’s first half, according to RealtyTrac Inc., an Irvine, California-based seller of real estate data. More than 1.5 million properties, one in every 84 U.S. households, received a foreclosure filing, RealtyTrac said in a July 16 report. That was a 15 percent increase from a year earlier. U.S. banks in the first quarter held $29.7 billion of property acquired through foreclosure, including repossessed homes and condominium projects gone bust, according to the Federal Deposit Insurance Corp. in Washington. That’s almost double the $15.7 billion of property a year earlier.
Bill Shows Earmarks Are Alive and Well
A House panel approved a big Pentagon spending bill this week that included nearly 150 items tucked in by lawmakers on behalf of companies and other entities whose employees donated to their campaigns. The Democratic Congress and President Barack Obama swept into power on a promise to reform the process of lawmakers trying to dictate in detail how funds are spent, known as "earmarks." When Mr. Obama signed a spending bill for the current fiscal year in March, he said the earmark-laden legislation should be an "end to the old way of doing business, and the beginning of a new era of responsibility and accountability."
But as lawmakers work their way through spending bills for the next fiscal year, which begins Oct. 1, earmarks appear alive and well -- including those written for companies, foundations, and universities whose employees and political-action committees gave money to the campaigns of congressmen doing the earmarking. The $636.3 billion 2010 defense-spending bill passed Wednesday by the House Appropriations Committee includes more than 1,100 earmarks, totaling more than $2.7 billion.
Members of the Defense Appropriations Subcommittee -- the 18 members of Congress who wrote the bill -- secured a total of 148 earmarks worth $461 million for entities whose employees have given $822,765 in campaign donations to those lawmakers since 2007. The data were compiled by the nonpartisan Taxpayers for Common Sense, which analyzed nearly 400 earmarks. The bill is still subject to a full House vote. The Senate will then vote on its version of the appropriation legislation and the two bills will then be reconciled. Most of the earmarks passed by the House Appropriations Committee tend to remain in the bill that the president signs into law.
Thomas Gavin, a spokesman for the Office of Management and Budget, said earmarks are down 25% and that the White House will continue to work with Congress to control earmarks. Mr. Gavin said the administration "knew from the start that changing the old ways of Washington would not happen overnight." It isn't illegal for employees of companies seeking earmarks to donate to lawmakers who try to secure funding in legislation. But it is controversial. The Justice Department has pursued corruption cases based on the link between campaign donations and official acts by lawmakers, including earmark requests. Some of the resulting scandals -- centered mainly around Republican lawmakers -- helped Democrats take control of Congress in 2006.
After that election, Democrats worked to make the earmarking process more transparent, requiring members to post requests for directed-federal spending on their Web sites before debate on the bill begins. But that hasn't eliminated earmarks. The defense appropriations panel, chaired by Rep. John Murtha (D., Pa.), writes the Defense Department's budget, which disburses millions of dollars to private defense contractors. Mr. Murtha, whose earmarks total about $77 million, secured earmarks for 15 entities whose employees gave to his campaigns. Virginia-based Argon ST Inc.'s employees and political-action committee donated $46,600 to Mr. Murtha's campaigns since 2007. The company is slated to get $8 million for upgrades to torpedo-decoy technology.
Matthew Mazonkey, a spokesman for Mr. Murtha, said the congressman is "proud to secure funding for businesses and organizations in our district that are delivering quality products and services to the Defense Department." A spokesman for Argon didn't return calls seeking comment. Rep. Jerry Lewis of California, the top-ranking Republican on the appropriations committee, secured $11 million in two earmarks for Environmental Systems Research Institute Inc. of Redlands, Calif. The founders of the company, Jack Dangermond and his wife Laura, donated $13,800 to Mr. Lewis's campaigns since 2007. A spokesman for Mr. Lewis said the congressman doesn't solicit funds from the Dangermonds and is proud of the work ESRI does. An ESRI spokesman didn't return calls for comment.
Lennar Signals Fleeting Builder Rally as Buyers Flee
Townhouses and loft-style condominiums overlook manicured green lawns, flower-lined footpaths and gurgling stone fountains at the Central Park West development in Irvine, California. Just a short walk away there’s a basketball court, a junior Olympic pool and a park. People are the only thing missing. While construction of the 43-acre real estate project by Lennar Corp., the third- biggest U.S. homebuilder, is almost finished, a message at the information center says some homes in the development are expected to start selling early next year.
The largest homebuilders are mothballing communities across the U.S., signaling they have little confidence that a market rebound is imminent. Builder shares have rallied 76 percent from the lows in November. They may fall more than 20 percent in the next four months unless home prices and property writedowns stabilize, said Anna Torma, a former Merrill Lynch & Co. analyst who tracks the industry at Soleil Securities Corp. in New York. “Until we see job losses abate and foreclosures begin to decline, rather than increase as we expect, there is unlikely to be a catalyst for the builders,” Torma said. “It’s going to continue to be a challenging environment.”
The Standard & Poor’s index of home construction companies rose less than 1 percent today, after falling earlier as much 3.2 percent. Lennar fell 1.3 percent to $11.11 in New York Stock Exchange composite trading and Centex Corp. rose 5 cents to $9.43. Centex, the Dallas-based homebuilder being bought by Pulte Homes Inc. for $1.3 billion, stopped construction last year at its Morningside development in Fort Pierce, Florida. It has sold 135 homes starting at $185,000 and won’t start building in the project until demand recovers, said David Webster, a company spokesman.
Toll Brothers Inc., the largest U.S. luxury homebuilder, has 33 projects on hold. Hovnanian Enterprises Inc., New Jersey’s largest builder, stopped development on 12 initiatives in the second quarter. The Red Bank, New Jersey-based company had 76 shelved developments at the end of April, according to a regulatory filing. Of Hovnanian’s 9,799 mothballed lots, more than 6,100 are in California. More than 18.7 million homes stood empty in the U.S. during the second quarter as the steepest recession in 50 years sapped demand for real estate and banks seized properties from delinquent borrowers.
The number of vacant properties, including foreclosures, residences for sale and vacation homes, was little changed from 18.6 million a year earlier, the U.S. Census Bureau said in a report today. The quarterly homeownership rate was 67.3 percent, seasonally adjusted. U.S. homebuilders may record $10 billion more of writedowns this year for property, joint ventures and expenses to walk away from land options, according a May 21 report from analysts at Deutsche Bank AG. A Standard & Poor’s measure of homebuilders fell to the lowest since 2000 in November. The shares then started to rally on speculation a federal tax credit, low mortgage rates and increased affordability would boost demand.
The index rose 91 percent from the November lows to May 4. It’s 7.8 percent off that high as the number of homes in foreclosure climbs and the federal tax credit is scheduled to expire later this year. First-time homebuyers have to complete the purchase of a home before Dec. 1 to qualify for the credit. “There are some dark clouds on the horizon,” said David Goldberg, an analyst at UBS AG in New York. “There’s a real chance things are going to get worse and the back half of the year could be worse than the first half.” Mortgage rates have risen to 5.2 percent from a low of 4.78 percent in April, according to data from Freddie Mac, the McLean, Virginia-based mortgage buyer.
Rising foreclosures also are forcing price cuts by builders. The median price for a new home in the U.S. fell 3.4 percent to $221,600 in May, according to the Commerce Department. Home values probably will decline in more than half of the largest U.S. cities through the first quarter of 2011, mortgage insurer PMI Group Inc. of Walnut Creek, California, said on July 7. Chris Serra, senior equity analyst at Thrivent Asset Management LLC in Appleton, Wisconsin, said all the pessimism about builders may be overdone given that affordability is at record levels and consumers are buying foreclosed properties to clear inventory.
Thrivent Asset Management owned shares of several homebuilders, including almost 300,000 shares of Los Angeles- based KB Home at the end of April and 1.7 million shares of Horsham, Pennsylvania-based Toll at the end of March, according to data compiled by Bloomberg. Thrivent Asset Management is a unit of Thrivent Financial for Lutherans, which has $61 billion in assets under management. “It’s an interesting time to start dabbling,” he said. “We’re on the path to a gradual recovery here. I don’t see it getting terribly worse.”
Homebuilders are trying to gauge demand. In some cases, they are opening communities and closing others. They may also open developments in stages to meet customer orders. Toll plans to be careful about reopening developments, Chief Financial Officer Joel Rassman said. He declined to provide the locations.
“The fact that we had to close them was an indication of the economy in September, October, November, December, January, and the decreasing economy before then,” Rassman said in a telephone interview. “We have opened some communities in recent months and we’ll look to open more communities that have been closed, and if the economy continues to bounce around a little for a while, we’ll be careful in opening communities.”
Central Park West is a planned community of 1,380 homes that takes its name from New York City.
The development in California’s Orange County also has a luxury high-rise project, called Astoria, with units for sale. The Astoria is being developed by Intergulf Development Group and Lennar. The Central Park West community crisscrossed with streets named Waldorf and Rockefeller, sits largely completed, down to the chaise lounges by the pool, pet-waste bag dispenser at the park entrance, and gas grills in the outdoor cooking area. One can spend a half hour midday walking around the development without seeing another person.
Lennar declined to comment on whether anyone lives at Central Park West. “We have had a longstanding policy of not attempting to keep the public informed of the details of any individual community beyond the information provided in our quarterly conference calls, or published on our Web site,” said Lennar spokesman Marshall Ames in an e-mail.
10 purchases not to put on your credit card
Six in 10 Americans don't pay back their credit cards every month. Simply put, they spend more than they take in. It's not because of the economic contraction; in just the recent boom times, it was closer to two-thirds, so we've cut back, but we're still in the hole (often while complaining that government spends more than it takes in but since we do the same, it should come as no shock we're simply electing people just like us). With credit card defaults rising, some companies are looking for reasons to cut your plastic. To make these decisions, banks rely on data about what you buy, where, and the company you keep.
Analyzing that information is called data-profiling. It's a $25 billion business, and business is up 50 percent over last year. Big players are companies like Equifax, Experian and TransUnion and using data to draw conclusions about credit worthiness is at the center of what they do. This is the general direction the financial industry is taking in the wake of the recession. And today, data is plentiful. Twenty years ago, you could get age, income, home ownership. Today, you can get thousands of variables, just from online transactions alone. Do you purchase online? It's no longer just knowing that the next trip is going to be a cruise in France, but what type of boat, what type of amenities.
With sophisticated computer software, it's easy for analysts to plug all those bits of information into intricate models that examine your past actions, figure out what makes you tick and then predict what you will do. Banks are some of the most sophisticated data profilers around and they're very secretive about it. But they'd rather risk cutting the credit of an upstanding bill payer than having another default on their books.
The say cash is king. Yeah, now more than ever. We are the most prosperous nation on Earth because we support the free flow of capital. But what's missing from that formula and what we need to do is add "money management." In fact, add "money management" to reading, writing and arithmetic. Blame the banks all you want but accept some responsibility for believing in the "free lunch" of easy credit. Buy now, pay later, but good luck.
10 purchases not to put on credit cards:
Why these things? They're red flags. Credit card companies are always watching for signs of consumers with questionable finances and according to "Credit Card Nation," by Robert Manning, any one of these 10 is a sign:
- 10 Booze: Springing for too many drinks may be a sign of job stress, financial stress, or relationship stress. Card companies will jump to conclusions at your peril. Carry cash to the bar.
- 9 Income taxes: Whenever you rack up one bill (by using your credit card) to pay another bill (your taxes) it raises a red flag.
- 8 Personal pampering: If you don't normally splurge at the spa, don't put your facial or massage on your plastic. It may look like you're trying to relax because you're worried about --what else-- money. Or a job loss, or maybe you're prettying up for a job search.
- 7 Cash advances: Credit-card companies used to love these products because they brought in loads in interest charges. But tapping your card for cash? Or using a credit-card check to pay other bills? Not a good look.
- 6 Lottery tickets: Not a good financial plan, plus you'll look like a gambler to your card company.
- 5 Marriage counseling and therapy: Needing therapy may make it look like you're unstable. Besides, the majority of marital problems are about money. It's a one-two punch for card companies.
- 4 Adult playthings: Porn is seen as escapism by card companies. And guess what they're thinking you're trying to escape from? Financial worries. Same thing for strip clubs.
- 3 Bargain binges: Downshifting to lower-cost retailers like Wal-Mart or shopping at places that attract financially pinched shoppers makes it look like you're worried about your finances or your job.
- 2 Retreading your tires: As opposed to buying new tires. What, who does this? Apparently, a lot of people. Why? They can't afford new tires. If you've bought new tires in the past, this can look like a desperate move. Credit card companies don't like desperation.
- 1 Traffic tickets: No one wants reckless people around money and traffic tickets make you look reckless. Besides, your insurance rate goes up, which might make it harder for you to pay your bills.
Bonus: Infomercials. You don't need a Snuggie or a Shamwow anyway, let alone buy one with a credit card.
When Debtors Decide to Default
Melissa Birks is being stalked. Her cellphone keeps ringing, always from a caller marked “unknown.” She says she knows it is her credit card company wondering why she stopped making payments. Ms. Birks, who owes $28,830, has nothing to say. Those on the front lines of the debt industry say there is a small but increasingly noticeable group of strapped consumers who, like Ms. Birks, are deciding they will simply stop paying. After loading up on debt eagerly provided by the card companies during the boom times, these people now find themselves trapped in an endless cycle where they are charged interest on interest and fees upon fees while the lenders get government bailouts.
They are upset — at the unyielding banks and often at their free-spending selves — and are pre-emptively defaulting. They could continue to pay for a while longer but instead are walking away. “You reach a point where you embrace the darkness of default,” said Adam Levin, chairman of the financial products Web site Credit.com. The lending industry term for these people is “ruthless defaulters.” In a miserable economy where paychecks, savings and expectations are all diminished, their numbers will surely grow.
“They’ve done the math on their account and they’re very angry,” said Corey Calabrese, a Fordham Law student who is an administrator of the school’s walk-in clinic for debtors at Manhattan Civil Court. Public sentiment is on their side, she added: “For the first time, Americans are no longer blaming the borrower but are looking at the credit card companies.” (That’s certainly true in the mortgage crisis. According to a Quinnipiac University poll in February, 62 percent of those polled blamed lenders “who loaned the money to people who may not be able to pay it back.” Only a quarter blamed homeowners.)
The deteriorating relationship between Americans and their creditors has not yet reached the level of Shays’ Rebellion, the 1786 uprising by poor farmers in western Massachusetts during a recession. But the basic issues are strikingly similar, suggesting an eternal tension between creditor and consumer. Boston merchants, who were suffering themselves, aggressively sought payment from their customers. When the folks could not pay, which was often, they were jailed. The incensed farmers sought “reforms that would permit repayment on less destructive terms,” writes Bruce H. Mann in “Republic of Debtors,” a history of bankruptcy in early America. “Creditors replied with lectures on frugality, luxury, virtue and the sanctity of obligations.”
Shays’ Rebellion provoked mixed reactions, then and now. Were the rebels trying to remedy grievous wrongs in the spirit of the Revolutionary War, or were they threatening public order and the fledgling state — acting as terrorists, in the modern parlance? Shays’ followers were quickly arrested and quickly pardoned, although two were hanged. Ruthless defaulters today face different perils. Delinquency destroys credit scores, can prompt a lawsuit and guarantees a very large number of hostile calls from collection agencies.
Still, all that can seem the better alternative. Like many who default, Ms. Birks first asked her credit card company to lower her 19 percent interest rate. No dice, Bank of America responded. After she tried to get the bank’s attention by skipping a payment, it immediately raised her rate to 25 percent. As Ms. Birks’ debt swelled, so did a sense of injustice mingled with helplessness. Bank of America has its hands full, with a June default rate of 13.8 percent, up from 12.5 percent in May. The other major credit card companies are in a similar fix. Estimates of the total industry losses are over $100 billion for the current recession.
Collectors are noticing a shift not only in ability but in willingness to pay. “With all the bailouts the government is giving everyone, no one has any personal accountability about their own debts,” said Roger Knauf, who runs a trade group of debt-buying firms. Many of today’s debtors were maxed out long before the recession. Much of this debt was of course in the form of junky mortgages on wildly overpriced houses, and it was here that people first began to rebel.
Countrywide Financial, the country’s biggest and most aggressive lender, surveyed its customers about why they were defaulting in the summer of 2007. One of the leading reasons was “low regard for property ownership.” In other words, people concluded that owning these houses was a bad deal. That people would intentionally default on loans they never should have gotten in the first place took lenders by surprise. “I’m astonished that people would walk away from their homes,” Bank of America chief executive Kenneth Lewis said in late 2007.
Nineteen months later, walking away from mortgages is widespread if impossible to quantify, and no cause for embarrassment. Rather the opposite: it shows savviness. “I’ll walk away before I take a loss,” a Dallas financier recently boasted to Barron’s magazine about his efforts to sell his $6 million vacation estate. With credit cards, this type of chest-pounding seems less evident, at least so far. Ms. Birks, 43, readily admits that no one forced her to use her cards. “Some people are good with money,” she said. “I was stupid.”
Still, just about everyone made mistakes during the boom — regulators, Congress, Wall Street. If Bank of America got a bailout for making bad loans, Ms. Birks figured, she deserved a bailout for accepting them. “You have to start looking at the future,” says Ms. Birks, who has been a writer and editor for various publications. “I already feel horrible because I can’t find a good job.” She earns $15 an hour as a copy editor for a magazine and does other part-time work.
In previous downturns, Ms. Birks’ only recourse would have been a debt management plan, where she would restructure her payments with the help of a counselor, or bankruptcy. Now there is a third option: debt settlement. This means going on strike until the lender accepts a partial payment. Ms. Birks asked Bank of America about a settlement this spring. Since her account was up to date, she was told she didn’t qualify. She stopped paying, the bank started calling. When Bank of America finally got her on the phone, it agreed for the first time to drastically reduce her interest rate. She did not take the deal, but considered it progress.
Main Street's soaring sour loans
As the effects of the economic collapse began pouring down Main Street, the government last year was left holding a record $2.1 billion in write-offs of small business loans it had guaranteed. Officials expect the number of defaults to rise as the nation continues to climb out of the recession. Records obtained under the federal Freedom of Information Act show the public is paying to offset bank losses on small business loans across the country, from a convenience store in the tiny Canadian border town of Houlton, Maine, to a graphic arts design company on the island of Hawaii, more than 5,000 miles away.
Despite having loans written off, little companies such as Caffe Sportivo, an espresso shop and small gym in Redwood City, Calif., are barely scraping by. "I just couldn't make any payments. I was barely making rent or payroll," owner Chris Sakelarios said on a recent afternoon when her cafe stood empty except for two patrons who read as they sipped coffee. "The same as everyone else. We're in a hovering pattern." It's a sign that even as record profits re-emerge on Wall Street, thanks to massive government loans and guarantees for banks deemed too big to fail, the pain on Main Street is as profound as it's been in half a century. The companies that were not too big to fail are failing.
Their plight is a shift from previous recessions when small business bounced back ahead of big employers, said Todd McCracken, president of the lobby group National Small Business Association. "This could be the first economic recovery we've seen in a long time that hits small business the hardest the longest," he said. The Small Business Administration purchased $2.1 billion in bad loans from lenders last year. Agency officials say it's likely that this year will see another high as the recession nears the two-year mark.
"It's frustrating when (banks) are getting bailed out for bad decisions they made, that there isn't more assistance for the small business," said Eric Geedey, who manages Caffe Sportivo for Sakelarios. Sakelarios obtained a $20,000 SBA loan from Union Bank in late 2007 to start her business when the economic outlook was brighter on the affluent San Francisco Peninsula. Within a year, however, she was scraping by with the help of a landlord and vendors who let her adjust payments. She has reduced the hours of her seven employees and relies on her brother and a friend to help keep the doors open on weekends. The balance of the loan was written off in early January. In addition to being dogged by bad credit, the cafe will have to report the loan charge-off as taxable income, Geedey said.
Sakelarios isn't the only recession victim and she won't be the last. SBA loan defaults generally occur in two stages. The first is when the bank decides it won't get its money back and asks the government for the guaranteed portion of the loan. In the second, the government decides it won't get any more collateral or money from the borrower. Years can elapse between the time that the borrower stops paying and the government writes off the loan.
In 2008, for example, the government concluded it wouldn't be able to recover $1.3 billion in defaulted bank loans it had guaranteed. Many loans were part of a backlog, according to SBA officials. But an AP analysis found that the time between loan approvals and loan defaults is narrowing. According to the analysis:
- More than $235 million in restaurant loans have been charged off since 2007. The 2,586 restaurant charge-offs make up the largest number of defaulted loans, according to the SBA. More than 150 loans made to Quiznos franchises — worth nearly $15.5 million — have been written off since 2007.
- The Gulf Coast fishing industry, battered by two major hurricanes in 2005, has been hit especially hard. Half of the 10 cities with the highest industry-specific write-offs are in Biloxi, Miss.; New Orleans; Ocean Springs, Miss.; Lafayette, La.; and Abbeville, La. All told, the shellfish fishing industry had 45 loans charged off, at a total cost of $19.5 million.
- The banks making the loans have also been hit hard by the recession. Bank of America Corp., which has received $52.5 billion in government aid, has had nearly 7,000 loans worth $238 million charged off since 2007. More than 660 loans worth $174 million have been charged off by CIT Group Inc., a major commercial lender forced to turn to bondholders in an effort to try to avoid bankruptcy protection after the government refused to save the company. JPMorgan Chase & Co., which repaid $25 billion in taxpayer loans last month, has written off nearly 2,300 loans worth $117 million.
"I have never seen it as rough as it is right now," said Scott Hauge, president of Small Business California, a business advocacy group. Small businesses account for half of all private-sector workers and have created roughly half of the nation's jobs over the past decade. They received some help from the $787 billion federal stimulus package in February, including higher microlending amounts and federal loan guarantees. Congress also authorized the U.S. Treasury to purchase $15 billion in pooled loans to encourage lenders to provide money to small companies. The SBA recently announced it will guarantee short-term bank loans to help small businesses pay off existing bills.
The White House has floated a proposal to take money from a $700 billion bailout of the financial system and provide small companies with working capital, allowing them to add inventory and employees. If it happens, the White House said, help might arrive by fall. That's too late for thousands of defunct companies with shuttered windows, disconnected phones and broken dreams.
Diego Garcia's soccer supply store in the modest Northern California city of Richmond has shrunk to one small location after Garcia was forced to close his two larger stores last year. Garcia started the business after launching a youth program and soccer league in gang-ridden Richmond. He had turned away from his own gang lifestyle after being shot in the chest at age 18. Garcia expanded fast, never imagining how quickly his booming business would decline. When he couldn't pay up, his bank wrote off nearly all of his $45,000 loan. He lost rental property to foreclosure at the same time.
"It's too much of a loss," he said. "We had to get loans to get bigger. Then everything went the opposite way." Eric Zarnikow, SBA's associate administrator for capital access, said the bad numbers probably will continue to rise as the agency receives charged-off loans in the future from defaults occurring now. Sakelarios, a breast cancer survivor without health insurance, tries to stay optimistic. "Anytime anyone asks me how it's going, I say the same thing. It's going really good."
Bank of America Drastically Cut Small Business Loans after Bailout
According to data compiled by the Service Employees International Union (SEIU), Bank of America isn’t quite the friend of small business it claims to be. The overwhelming majority of loans made through the Small Business Administration are called SBA 7(a) loans, and they are used to finance operating expenses. During FY 2007 (October 2006-September 2007), BofA gave out 10,878 SBA 7(a) loans worth $336 million. But during the 12-month period between May 2008 and April 2009, those numbers plummeted to just 484 loans worth $20 million. During this same period, Bank of America received $52.5 billion in taxpayer bailout funds.
Despite being named the top lender by the Small Business Administration 10 years in a row, BofA wasn’t all that generous during that time. The ranking was based on total loans issued, which belied the fact BofA lent considerably less money to small businesses than many other banks. In FY 2008, the average SBA 7(a) loan was $182,492, but BofA’s average loan was only $31,032. The real #1 lender for each of the last nine years was CIT Small Business Lending Corporation.
The SEIU also notes in its report that the bank has shifted its lending opportunities for small businesses by giving out more “Express loans,” which are smaller and have a higher rate of default, and credit card loans. According to the report, BofA has even hampered the ability of smaller banks to resume lending by demanding that banks that received TARP money pay off the credit lines they had with Bank of America.
The rich have never had it so good
Here's a truism: The wealthiest 1 percent have never had it so good. According to government figures, 1-percenters' share of America's total income is the highest it's been since 1929, and their tax rates are the lowest they've faced in two decades. Through bonuses, many 1-percenters will profit from the $23 trillion in bailout largesse the Treasury Department now says could be headed to financial firms. And most of them benefit from IRS decisions to reduce millionaire audits and collect zero taxes from the majority of major corporations.
But what really makes the ultra-wealthy so fortunate, what truly separates this moment from a run-of-the-mill Gilded Age, is the unprecedented protection the 1-percenters have bought for themselves on the most pressing issues. To review: With 22,000 Americans dying each year because they lack health insurance, Congress is considering universal healthcare legislation financed by a surcharge on income above $280,000 -- that is, a levy almost exclusively on 1-percenters. This surtax would graze just 5 percent of small businesses and would recoup only part of the $700 billion the 1-percenters received from the Bush tax cuts. In fact, it is so minuscule, those making $1 million annually would pay just $9,000 more in taxes every year -- or nine-tenths of 1 percent of their 12-month haul.
Nonetheless, the 1-percenters have deployed an army to destroy the initiative before it makes progress. The foot soldiers are the Land Rover Liberals. These Democratic lawmakers secure their lefty labels by wearing pink-ribbon lapel pins and supporting good causes like abortion rights. However, being affluent and/or from affluent districts, they routinely drive their luxury cars over middle-class economic interests. Hence, this week's letter from Democratic dot-com tycoon Rep. Jared Polis, of Boulder, Colo., and other Land Rover Liberals calling for the surtax's death.
Echoing that demand are the Corrupt Cowboys -- those like Sen. Max Baucus, D-Mont., who come from the heartland's culturally conservative and economically impoverished locales. These cavalrymen in both parties quietly build insurmountable campaign war chests as the biggest corporate fundraisers in Congress. At the same time, they publicly preen as jes' folks, make twangy references to "voters back home," and now promise to kill the healthcare surtax because they say that's what their communities want. Cash payoffs made, reelections purchased, the absurd story somehow goes that because blue-collar constituents in Flyover America like guns and love Jesus, they must also reflexively adore politicians who defend 1-percenters' bounty.
That fantastical fairly tale, of course, couldn't exist without the Millionaire Media -- the elite journalists and opinion-mongers who represent corporate media conglomerates and/or are themselves extremely wealthy. Ignoring all the data about inequality, they legitimize the assertions of the 1-percenters' first two battalions, while actually claiming America's fat cats are unfairly persecuted.
For example, Washington Post editors deride surtax proponents for allegedly believing "the rich alone can fund government." Likewise, Wall Street Journal correspondent Jonathan Weisman wonders why the surtax "soak(s) the rich" by unduly "lumping all of the problems of the finances of the United States on 1 percent of (its) households." And most brazenly, NBC's Meredith Vieira asks President Obama why the surtax is intent on "punishing the rich." For his part, Obama has responded with characteristic coolness -- and a powerful counterstrike. "No, it's not punishing the rich," he said. "If I can afford to do a little bit more so that a whole bunch of families out there have a little more security, when I already have security, that's part of being a community." If any volley can thwart this latest attack of the 1-percenters, it is that simple idea.
For Prophets Of Cataclysm, A 'Mad Max' Curriculum
It's a sticky Saturday morning, and I'm handcuffed in the back seat of a Jeep Grand Cherokee parked on a Philadelphia street. On one side of me is my boyfriend, Bruce, and on the other his best friend, Nick. Both of them are also cuffed -- and, like me, sweating like pigs. I reach into my hair and pull out a bobby pin that within seconds I've fashioned into a simple device I use to jimmy open my handcuff locks. Our assignment now is to evade 12 professionally trained trackers in a 25-square-block area for the next eight hours.
It may be hard to believe, but we asked for this. Actually, we paid for it: $550 apiece. Today is the final day of a three-day "Urban Escape and Evade" course offered by onPoint Tactical, a New Jersey-based company that teaches urban survival skills to soldiers, police officers and, increasingly, civilians.
Among the lessons we've learned are how to break through zip ties and telephone cords (the most common materials used as binding by kidnappers), smash a car window without making a sound, pick tumbler locks and padlocks, puncture the tires of a pursuit vehicle with homemade caltrops, call for help using a ham radio, kill an attack dog -- and, of course, how to escape from handcuffs. To make the exercise even more difficult, we've been assigned a variety of missions that will test our newfound prowess in urban tactical maneuvering.
OnPoint, started in 2004 by Kevin Reeve, a 52-year-old professional scout and tracker, is the only school in the country that teaches urban tactical skills. In the past nine months, demand for the course has surged. For the first time, Reeve approximates his annual revenue will top $200,000 -- a fair sum for a business in which the overhead consists largely of renting out space in community centers for classes and buying enough bobby pins to prop up coifs at a beauty pageant. In years past, Reeve said, he barely pulled in enough revenue to make a profit.
Driving the growth, in part, is a fear that resonates from the wealthiest consumers to blue-collar workers: that with the global financial crisis dragging on, life as we know it is undergoing a radical change. Looking forward, pundits say that at best we will no longer be able to subsist on the diet of credit we have so ravenously consumed for the past decade. At worst, our future looks like something out of a "Mad Max" movie.
What this has to do with breaking out of handcuffs or picking padlocks requires a rather Hobbesian leap. It assumes that if the government can no longer provide for or protect its citizens, there will be a complete upending of the societal order. It assumes that humans will act to the worst of their capacity. There is a sense that these skills are a necessity as our society becomes ever more precarious.
Each escape-and-evade class has 15 to 20 slots, and one is held each month in a different U.S. city. Last month it was Nashville, the month before that Chicago. When I attended, the class was split between the sleepy town of Medford, N.J., and downtown Philadelphia. Soon, Reeve will have a mobile training team that will be able to set up shop in Atlanta, Charlotte, Chicago, Dallas, Los Angeles, Philadelphia, Phoenix, Salt Lake City and Seattle.
Increased exposure has also helped propel onPoint closer to the mainstream. Neil Strauss, who is best known for his 2005 book "The Game: Penetrating the Secret Society of Pickup Artists," attended Reeve's class in 2007 as part of a larger quest to prepare himself for an impending disaster. In March, the diminutive writer and veritable god among sexually frustrated males published a book about his experience, "Emergency: This Book Will Save Your Life," which spent 12 weeks on the New York Times bestseller list. More than half of the people in the class I attended were there because they had read it.
Although it isn't formally tracked, the growth in the survival industry is not limited to onPoint. Firearms sales in the most recent quarter at Sturm, Ruger & Co. and Smith & Wesson have grown more than 20 percent from a year earlier. The number of background checks for firearm purchases, required before the sale of a gun at a federally licensed dealer, has risen to 6 million through May of this year, a 25.5 percent jump from the same period in 2008.
The media attribute the spike in background checks and firearms sales to fear that President Obama will move to curb gun rights. They have also claimed it is attributable to increased interest in ammo and weapons as an investment vehicle. But isn't it also possible that it has to do with the same fear that is propelling sales at camping supply and military surplus stores, which are up 50 percent?
Traffic at Post Peak Living, an e-commerce site that sells survival kits, has also swelled, particularly as the price of oil rises, says co-founder André Angelantoni. Seizing the business opportunity, he has begun to offer online courses. You can learn how to raise chickens or how to start your own garden, and then there's the $199 flagship "Uncrash" course, which helps registrants evaluate how each facet of their lives will be affected by the inevitable fall. Angelantoni and his business partner, Craig Wichner, think the world has reached its peak in oil production and society will regress to the way it operated in the Colonial era.
People have always anticipated the end of days. And in truth, while having survival skills -- whether they are tactical or horticultural -- could save your life, in reality they aren't likely to do much more than what stockpiling canned beans and toilet paper did in preparation for Y2K: that is, lend a sense of security.
At the end of the final day, after my cohorts and I had successfully evaded Reeve's trackers, we convened at a Chili's restaurant and swapped stories with the other students. None of them had been "caught," either, but many of them had been spotted by Reeve and his trackers and had run for it. Some went deep into disguise; the most shocking of all was Kyle cutting off at least 24 inches of dreadlocks for the exercise. The mood was lighthearted; we were all drinking beer. Maybe it was because, with our knowledge, we all felt a little safer -- or at least better prepared next time we got locked out of our homes.
Chinese steel executive beaten to death
The privatisation of a state steel company has been scrapped after an executive was beaten to death by workers angry at the threat to their jobs from a takeover of their firm, according to a Hong Kong rights group. The violent riot in north-east China late last week involved up to 30,000 workers, a reminder of the ongoing sensitivity about lay-offs from state firms in industries targeted for consolidation. The government laid off about 50m workers in state enterprises in the 1990s, equal to the combined workforces of Italy and France at the time, but many firms still retain bloated staffing rosters.
Tonghua Iron & Steel, a traditional state enterprise, has about 50,000 workers and has struggled to make consistent profits in recent years, making it a prime target for restructuring by its owner, Jilin province. The privately-held Jianlong Group, one of China’s largest private steel companies, had first proposed taking over Tonghua in 2005, backed out of the deal when the economy slowed last year, but re-entered negotiations recently when industrial demand picked up.
Propelled by the government’s stimulus package, China produced steel at an annualised rate of 545m tonnes in June, a record level of output. The interim general manager sent by Jianlong to run Tonghua, Chen Guojun, had infuriated the workers with his high-handed attitude, according to comments posted on internet bulletin boards in China. He had reportedly said that he would re-establish Tonghua “under the name of Chen” and lay off nearly all the employees.
“With Tonghua Steel’s retired workers each receiving only Rmb200 a month for living expenses, Chen Guojun was paid an annual salary of Rmb3m,” the rights group reported. When Mr Chen returned to the plant late last week, a large crowd of workers surrounded his office and beat him unconscious, according to a report issued by the Hong Kong Information Centre for Human Rights and Democracy. Outside the factory, mobs of workers stopped an ambulance and police from entering the compound to rescue him. The thousands of riot police then mobilised by the authorities took several hours to bring the situation under control.
Staff at Jianglong’s headquarters in Beijing confirmed Mr Chen’s death but declined to give any further details. The owner of Jianlong, Zhang Zhixiang, was China’s tenth-richest man in 2008, according to China’s most widely quoted richlist, with a fortune estimated at $2.9bn. Private entrepreneurs in China have made substantial inroads into the steel sector in the past decade, usually by buying up and restructuring tottering state-owned firms like Tonghua.
Rich China, Poor Peasants
China recently announced its GDP grew by more than 7.1% in the first half of this year, putting the country on course to displace Japan as the world’s second-largest economy by year’s end. But it’s not time to break out the maotai just yet. Peasants and migrant workers, who compose more than 65% of China’s 1.3 billion people, aren’t benefiting much from this growth. Much of it is hoarded by the central government. Last year, Beijing collected taxation and other levies of more than six trillion yuan ($878 billion), an eye-popping four trillion yuan more than five years ago. Since the turn of this century, funds flowing into the Beijing treasury have increased by around 22% a year, more than double the average 10% GDP growth for the past two decades.
This wouldn’t be a problem if worker incomes were growing in tandem with tax revenues. But according to official statistics, salaries and other income of workers and peasants as a percent of GDP declined to just 41.4% in 2006—the last year when data was available—from 53% in 1998; salaries typically are 50% to 60% of GDP in developed countries like the United States or Japan. A lion’s share of national wealth is being snapped up by about 140 state-held business groups such as the three oil-and-gas giants, four major state-owned banks and similar government monopolies in lucrative sectors such as insurance, energy, mines, telecommunications and transportation.
Under the largely nominal control of the State-owned Assets Supervision and Administration Commission of the central government, the assets and sales of these behemoths grew each year by an average of respectively 1.5 trillion yuan and 1.3 trillion yuan for the five years ending 2008. These firms are heavily supported by the government. State-owned banks issued loans worth $1.08 trillion the first half of this year, a figure which exceeds the full year of loans last year. Barely 5% of these loans went to small- and medium-sized companies, most of which are privately owned. The central government bars private firms from about a dozen of the most profitable sectors.
The top executives of these state-owned firms are mostly retired ministers as well as offspring of party elders. Li Xiaolin, the daughter of former premier Li Peng, is chairman of China Power International Development Ltd., an electricity monopoly. Her brother Li Xiaopeng used to head Huaneng Power, another energy heavyweight. President Hu Jintao’ son Hu Haifeng is chief of Tsinghua Holdings, which oversees state-held high-tech firms spun out of the prestigious Tsinghua University.
Today China boasts around 300,000 super-rich Chinese with assets of more than 10 million yuan. This wealth hasn’t trickled down. Official statistics show Chinese peasants make about one-third of what their urban counterparts earn. Tsinghua University sociologist Sun Liping estimates the standard-of-living discrepancy between cities and the countryside was actually closer to six times. He says the average global urban-rural differential in living standards is around 1.5 times.
Poor Chinese face other adversities, too. Rural residents are not allowed to permanently settle in cities and cannot enjoy the health, education and pension payouts taken for granted by urbanites. A 2008 Ministry of Health report said up to 200 million workers and peasants suffer from occupational ailments. President Hu’s mantras include “upholding social justice” and “creating a harmonious society.” Yet social inequality is yawning ever wider in China.
British banks show little interest in lending
One missed credit-card payment never used to be reason enough to refuse a mortgage application. But in these times of financial crisis, the few lenders left in the market are pickier than ever. According to Ray Boulger, senior technical manager at broker John Charcol, it is evident that while the government may have rescued the banks, their customers have been left out in the cold.
The credit card slip-up meant one client was forced to accept a smaller mortgage. Boulger says: "There is a lack of competition in the market. There are only six mortgage groups who are active in the market and that is having an impact on [profit] margins." There is growing public discontent with banks, and the issue is spanning traditional religious divisions, as RBS chairman Sir Philip Hampton discovered last week.
He was handed copies of the Torah, the Qur'an and the New Testament by religious leaders protesting about exorbitant rates of interest. As well as cracking down on City traders' bonuses, they would like to see the government bringing back the ancient laws of usury, limiting how much banks can charge for loans.
Boulger says the impact of a lack of competition has already become increasingly apparent. Before the meltdown, there were up to 100 brands fighting for business in the mortgage market. Now, by his reckoning, the only serious players left are the part-nationalised Royal Bank of Scotland and Lloyds Banking Group, HSBC, Barclays, Santander (Abbey and Alliance & Leicester) and Nationwide Building Society.
The mortgage market is the clearest illustration of the reduction of competition. But in the savings industry, too, the plethora of institutions offering headline-grabbing rates has also shrunk. The collapse of the Icelandic banks, the rescue of the Irish financial industry and the flight of savers to safe institutions has cut the number of savings products on offer. The withdrawal of some very active competitors has alleviated the pressure on those that remain to fight for customers. In the savings market, brand is now what matters. "We've gone back to a premium on the name," says one banker.
Competition, or the lack of it, in the banking industry was highlighted last week by shadow chancellor George Osborne, who pledged that a Conservative government would hold an investigation before the taxpayer's stakes in RBS and Lloyds were put on the market. "We need to have a strategic view of the kind of banking system we want at the end of that process," he said. "We shouldn't just go into it blind."
While Labour accused Osborne of hiding behind a competition review in order to avoid having to devise his own policy on the disposal of bank shares, the government itself has acknowledged that there is a problem to be tackled. In allowing Lloyds TSB to rescue HBOS last September, competition rules were deliberately overlooked on the grounds of financial stability.
The Office of Fair Trading warned the business secretary, Lord Mandelson, that the tie-up would cause "substantial lessening of competition". The combined bank controls about 25% of personal bank accounts and about 28% of the mortgage market, which would normally have raised concerns.
The reduction in competition appears to be allowing those financial firms left standing to do business more profitably. Sandy Chen, banks analyst at Panmure Gordon, says: "The margins on new business are wider. They are charging a lot more." However, Boulger points out that, in the mortgage market at least, lenders' existing loans - known as the "back book" - are likely to be loss-making, given the dramatic cuts to interest rates that have left some tracker products offering very cheap deals for their customers.
Chen's gloomy analysis of the banking sector suggests that the poorer sections of society are being hit hardest. The top earners, he argues, "are enjoying falling mortgage payments (if they have a mortgage at all), a generally deflationary environment and excess household cash flows". However, "at the other end, roughly half of UK households are facing negative cash flows, an inflationary environment and the combined threats of negative equity, difficulties in refinancing or remortgaging, and unemployment."
As long ago as March 2000, an influential report by Don Cruickshank into the banking industry was already raising concerns about competition, noting that the barriers to new entrants were high. One new lender - Bank of China - has jumped those barriers in recent weeks by piloting a range of mortgage products. But many more will need to follow to get the competition flowing again.
163 comments:
love u guys!
(Note the following article was written on Nov. 20, 2008, and the content contains some profanity and vulgarity.)
Let’s Put the Economic Blame Where it Belongs: On Ourselves
* Financial Reform = Political Reform and Washington = Goldman; This will become clear when people throw bankers out windows; No one knows what to revolt for - "from each according to his abilities, to each according to his needs" proposed and seconded. Gobachev was good. Dostoyevsky said that Beauty will save the world but he meant Truth; lack of Truth noted.
* Crisis is financial, political, social, ethical, and southern Cal.
* "Politics" in all its permutations is tarnished; the word itself is dead; Brotherhood or Honor Guard of Truth tendered as replacement terms; dark ages approach with new words for same old shit; hope medical and dental care remain during dark ages; much worth saving in coming darkness - law, cooperation, human rights.
*Request for specifics of I & S's set-up; Stoneleigh to comply at later date, oh frabjus day, callou callay!
*Dems and GOP work for same oligarchical chef; can go die; first must finish raping US middle class while touting campaign reform.
* 4 year old Grayson grilled Bernanke (is Grayson a chef?): induces cringe; Bernanke did not perjure self because 4 year-olds don't know how to ask questions; Bernanke should use monopoly money for explanations to little people.
* Repealing Glass-Steagall opened the floodgates; without GS systemic reg is impotent; If incest is banned do we need potency?
* FDR knew what's up; Pecora comission needed, but who to call a bull or a sheep? Neither, only a comission of TAErs is acceptable, all other solutions = waste of taxes.
* Ministry of Propaganda may provide Pecora-like comission; TV is primary tool of MoP; sponsors to include toilets, prison guards, guns, and sawz-all manufacturers; actually MoP is aforementioned chef; will cause politics to fail and blame Dems/GOP; StrongBad will go fishing and catch drowning gerbils with a bagel; True Pecora comission not to happen until MoP chef serves "rack of Rush" medium rare with whipped cream.
* Corporations are predatory / people are prey; crisis is one of overpredation; Gerbils should be swapped for rabbits in order to breed our way out of predicament; gerbils do not use logic when in herds while krill think about how happy whales are; humans have better memories than gerbils, maybe, but that is their only advantage.
* Canada = fcuked because stones don't bleed; Gerbils/sheeple (Sherbles?) are alread in gulag of drugs, alcohol, tobacco, and lotto tix.
* The bottom is in; I & S are wrong; Doom & Gloom are just Y2K repeat and mice don't fart, do gerbils?; Doomer track record = bad;
*Troll citations actually support doomer perspective; Trolls have small brains and are easily confused by double-speak; Trolls firm the head-bone and troll T-bones are tasty.
* Optimism will peak with market rally and TAE will be ignored; TAE is patient and will welcome back frightened rodents; Trolls advised to play nice or lord and lady TAE will toss offender to circus of doom, gloom, and aspersions; Lord of TAE gargles snake venom.
"We didn't see it coming, your Majesty"
Ahahahahahaaa!
What really annoys me is that these people actually get paid to be narrow-minded fools.
Stoneleigh and Ilargi:
What do you expect to be the total decline in GDP in the United States?
@Stoneleigh:
There's a broken link on your "June 17 2009: 40 ways to lose your future" page.
The very first link within the article (not the sidebar), "From the Top of the Great Pyramid", has got an extra ")" within the html URL. That results in a page not found error.
That might put people off who are trying to come up to speed on this stuff.
It's rather surprising that this has not been noticed before.
Concerned,
Some peak oilers have noted that past recessions tracked contemporal changes in fossil fuel supplies. Therfore it is useful to note that the US currently imports about 2/3 of the oil it consumes. (and some of the oil producers are coming to the end of their ability to export)
So over the next decade, we should expect an overall decline of more than half of GDP. There aren't any recent historical contractions this large, so it is hard to say what the undershoot will be.
And PseudoSummary,
I'm pretty sure the Lord of TAE gargles snake venom with pequin sauce. It's the only he can read such prodigious volumes of material every day.
PseudoSummary said
Dostoyevsky said that Beauty will save the world but he meant Truth
But beauty is truth, truth beauty, so via Keats, Dostoyevsky was right.
Ilargi,
My condolences about the loss of your loved one.
I appreciate your insights each day, but I have often wondered why you keep using the term democracy when referring to the United States. Of course, you aren't the only one. In fact, very few refer to it as a Republic.
One of the reasons may be that some know it no longer operates as one. Perhaps another reason is that the term "democracy" has been pumped so much (by design) through the decades that it has made us forget the true foundation of the American form of government and how much better it is/was for "we the people".
The Republic of America has been hi-jacked by a democracy which is the very reason why we are in this political crisis.
To refresh our memory, I've provided a link which is a short 9 minute video clip explaining the difference between a republic and a democracy.
http://www.youtube.com/watch?v=e2kAV4-bskY&feature=related
Words to describe our predicament:
http://findarticles.com/p/articles/mi_m1510/is_n57/ai_6203181/
@ Ilargi
Sorry for the loss :(
@ DIYer
What would happen to GDP if oil use fell by 80% in the next five years? That's quite possibly the most likely outcome with the credit collapse. Purchasing power will collapse, ability to pay staff and maintain facilities will collapse as well and exploration and drilling will pretty much shut down. We don't have a luxurious 10 years, i'd say between 2 and 5.
...and this morning Alistair, Darling, is having a polite word with the banks we own.
"Would you mind awfully lending some more cash, we seem to have run out of debtors?"
"Would love to old chap, problem is, we've got our own balance sheets to bolster, and besides, we daren't take the hit on a further house price drop, so we've factored in larger deposits and higher rates accordingly."
How hamstrung is he? How risk averse are they?
70% is a controlling share, non?
A political crisis indeed.
I wonder what the critical mass is?
How many people need to get evicted by a governBANK they elected, then 'down sized' and rehoused by the same GOVERNbank, before they realise how perverse, psychotic and schizophrenic the system has become?
Ilargi, know how you love your lyrics, don't know if you've come across this guy,
Roy Harper - 1984
He did the vocals on Pink floyd's 'Have a cigar', and this is a collaboration with Jimmy Page.
This track came into my head over the weekend, and made me think of you and your work.
Ninteen fortyeightish
"The lemmings push their pens and rush
In hoards of crashing stupor
Towards the farms of Babylon
To scramble mother nature
Where unrelenting drudgery
Is all there is to nurture
And life and death are by consent
And love is for oppression
Welcome to my nightmare
It's the one in which I always press the button..
[snip]
...There's a little man left to hold the can
He don't know how and his only plan
Is everlasting life
He beats the street with his plates of meat
In the sandwich board of his final retreat
Bellowing goodbye
Everyone sees and nobody shares
Everyone knows its the truth that he bears
That the end is nigh
And he stands against the rails at Oxford Circus
Leafleting the souls who keep this pace
That gathers speed and calls itself
The human race"
Welcome to my nightmare.
It's the one in which I walk when I'm not sleeping.
"We didn't see it coming, your Majesty"
The Guardian paper edition carried the photo of Spanish Prof., LSE, Luis Garicano showing some graphs to the Queen and uttering that sentence.
Garicano recommended to the government of Spain some changes in an article in the Economist. He is counted among the gang of 100 economists who wrote to Spanish President Zapatero to modify the laws for businessmen to be able to fire the workers for free and without justification -I am simplifying somewhat, but with unemployment near 20% Garicano wanted to do away with the troublesome differences between Spanish workers and transform all into serfs.
Of course there are differences in job security in Spain, we are not a communist country, not everyone is the same.
President Zapatero paid no attention to the Gang of 100 Economists.
As they are Professors of others, at the LSE and others exalted bodies of learning, they must be to blame for all this rubbish.
Odetta - "Bourgeois Blues"
http://tinyurl.com/lrcx27
KD has an excellent, analytical rant this morning. Worth the read.
Bernanke Dissembles; The Economy Burns
@VK,
You are right of course; I was pulling a hopeful number out of the air. The peak oil picture is not a pretty one, but we've seen some destruction on the demand side recently. Stoneleigh has been saying that demand destruction will probably outpace depletion for a while. And the import picture depends on a lot of geopolitical factors which are harder to interpret.
Another way of predicting the economy would be to look at "consumer" spending which also makes up circa 2/3 of the economy. I'm not sure what that includes but as people "save" (or discharge debts), that will decline as well.
And I & S are saying the real estate market (recently the foundation of all high flying high finance) will contract another 2/3 or more. I thought to myself "that would make houses worth less than the materials to build them", but the market does not take such things into account. It simply means that materials prices will decline as well. (and disappear as HD et al close up shop)
So yeah, 50% is probably way optimistic.
The Education cuts in California are of particular Socioeconomic interest.
Previously, the two biggest expenditures, in order, have been Education and Prisons.
They may both now be about equal, or Prisons slightly more.
If current events make future trends, as Celente says, that gives you a very clear picture of the future of California, as wel as the rest of the U.S.
"Chinese steel executive beaten to death"
Americans would never even think of this kind of accountability for their white collar 'elite'. The french workers kidnap their managers and the french public tolerates it.
US bankers have no accountability to the public, especially the FED.
If Goldman goes ahead with $500,000 bonuses while unemployment doubles, maybe that's when we'll see if banksters can 'fly' from tall building, just like pigs.
Everything on St. John, USVI except sunshine, mosquitos, and human bodies is transported across a 5 mile sound from St. Thomas via the car ferries, referred to as barges. (The bodies come and go on faster and smaller passenger ferries). There are four barges. Three of them are out of service. The one remaining is the oldest, slowest, and smallest, and may represent 15% of the total operating capacity. Of course things are a total mess. I am packing up the stuff I want to keep for shipment to FL, so I will have to move it to the shipping company in STT soon :-(
People are noticing that things are slow here, but not as bad as what they are hearing from the mainland. Leaving now is definitely the right thing to do. I gave notice last November. Besides my plumbing, I manage two "villa" rentals for a friend which have been priced at very good value at the lower end, running from $750-1800 a week, depending on unit, number of people, and time of year. In previous years, the better villas were running $4000 a week and up. The expensive ones are now hurting while the ones I managed did very well this season as people moved down the food chain. But I doubt they will have much at any level next season if the crash v.2.0 comes in the fall.
Anyway, my point is that this place can barely function during times of great pseudo-prosperity. I can just imagine in my nightmares what it will be like when the SHTF. Add to that that STT and STJ cannot nearly provide its own food, most is shipped out of FL on refers, that the government provides a huge share of the employment, and the islands income is totally tourist based. Additionally, there are strong racial antagonisms between the black, white, and Latino populations that were barely masked by the hot economy. Electricity is 100% diesel based and running around 50 cents a kWh. Yahhww!!!
The French workers, for the moment, are feeding their managers fresh baguettes instead of beating them to death. If they do start beating them to death, they will probably offer them a last Gauloises. And who says Europe isn't civilized compared to the ancient Orient? One might say that Chinese workers express their grievances more directly.
I believe it was Ilargi who wrote about a year ago that if the Chinese government could not keep up real growth of at least 8%, this would start happening.
"Builder shares have rallied 76 percent from the lows in November. They may fall more than 20 percent in the next four months unless home prices and property writedowns stabilize, said Anna Torma, a former Merrill Lynch & Co. analyst who tracks the industry at Soleil Securities Corp. in New York. “Until we see job losses abate and foreclosures begin to decline, rather than increase as we expect, there is unlikely to be a catalyst for the builders,” Torma said. “It’s going to continue to be a challenging environment.”
LOL!! no kidding.
The parallels with the great tulip bubble are actually quite good, and educational.
If you were still buying, selling, owning, or importing tulips after the start of the crash- you lost your shirt.
But of course everyone who was in tulips was frantically trying to generate enough hot air to re-inflate the bubble.
Folks, when your balloon has a rip in it, from one side to the other- you cannot re-inflate.
The rip is- the complete destruction of the "real" economy. No manufacturing. No jobs. Cut wages. No savings. No tax income for governments.
And yet, every tulip owner was still thinking- "yeah, THEIR tulips are worthless now; but MINE are a special case!"
Special all the way down.
“ We didn’t see it coming.” Of course you didn’t. After thirty years of ripping the guts out of the arts and humanities, and emphasizing nothing but math and science to the detriment of human vision, we can thank Reagan and Thatcher for a job well done. Not to imply that Reagan and Thatcher are the only ones responsible for the extraordinary elevation and cultivation of the blinded technocrat. Along the way, an army of right-wing talk show hosts were banging the daily drums and preaching the evils of the ‘liberal” arts. And so here we stand in the year 2009, and President Obama is rightly extolling the role and virtue of education in American society. But his emphasis is once again on math and science. In fact, no politician seems to have the vision or courage to call for increased art and humanities funding as that would be met with derision and scorn from the right-wing “pragmatists.”
There was a study done during the Clinton years (I read it but the exact name escapes me at the moment) that clearly demonstrated increased academic performance among children from low-economic situations exposed to well-rounded art and music programs. In fact, students from all economic backgrounds benefited from the inclusion of art and music training. The study of classical music was shown to be an especially potent educational elixir for increased math aptitude.
Education is a spark that grows into a raging fire of passion and desire as one field of study lights the match of interest for another. Most people arrive at their true calling after opening up the box of education only to find another wrapped gift contained within the box just opened. And then another gift within that box and on and on it can go if only the ‘pragmatists’ would step out of the way.
The educational system of Detroit is not exceptional in its dysfunction. All across the country educational systems are failing. And the bitter irony is that foaming at the mouth right-wing hyenas, the same crew that set out to eviscerate liberal art education now has their convenient whipping post in the teachers union.
Thanks to the short-sighted politicians, the front door of most US school houses lead directly to math and science programs. And the football field. There is very little funding appropriated for the back door, that entrance which cultivates the spirit of the educational adventurer and autodidactic. And at the end of the day, the spark of desire and motivation must come from within.
After thirty years of liberal art marginalization and math and science elevation, is it any wonder that specialization has left heads and eyes weighted down and unable to see the vast horizon of unfolding events. Perhaps that was the goal all along. And the realization that art and humanities immersion is the antidote to ideological entrenchment.
But I am probably wasting my words here. This site is all about the coming desert and wasteland of culture. There is no need for painting, sculpture,and music, only shovels, plows and plantimg seeds.
Right meet Left, Mr and Mrs Pragmatist, I now pronounce you man and wife.
Aesthete
"Today China boasts around 300,000 super-rich Chinese with assets of more than 10 million yuan. This wealth hasn’t trickled down. "
The beating death illustrates another fact of China that few appreciate.
China is FULL of people who have had extensive training in Marxist thinking, and Chinese history- specifically the evil of the wealthy "landlords". And all the stories about evil landlords have an additional force- they're true; and grandma remembers, personally.
They hate landlords more than the Japanese, if possible. And they vastly outnumber the newly wealthy- like literally a million to one.
Bad odds for the wealthy.
El G.,
Re: China: The 7-8% number mentioned last year was a pretty much across-the-board accepted one. As in the required minimum just to play even, job-wise etc.. In this video, Marc Faber estimates it's 2-3% max. at the moment, not the 8% Beijing touts.
Faber also quips that Beijing is one of the few governments in the world that knows GDP numbers three years in advance.
John Mauldin called the "official" 8% growth figure quite an achievement given that Chinese exports are down 20%.
What interests me is that all of a sudden everyone wakes up to the fact that China uses its dollar reserves to buy resources, another longstanding TAE theme.
As is the load of bad loans in Chinese banks, which is getting heavier fast right now through the immense government stimulus. I wonder if the Chinese actually think they can do the same going forward as Washington did with Wall Street banks: hide toxicity, cram in trillions and look the other way.
It certainly looks like a huge domestic gamble. Perhaps we need to see that -partly- in the light of ideas about expansionary policies, re Asia, Africa.
I love the summaries of the previous day's comments, but the one this morning was so hilarious that I was laughing so hard I was crying. Please keep them up!
aesthete,
I think there's actually a connection between math/science and the humanities. For example particle physics, at its leading edge, is almost mystical.
el g,
Thanks for the update on StJ. I was curious and looked at a satellite view with Google Maps yesterday. It looks idyllic from space. And a good place to deploy solar energy. Though the population figure, from wikipedia, sounds kinda high for such a small land area.
I almost emailed you to ask why you were leaving, but it's clear now. Looks like it'll be a microcosm for catabolic collapse...
In summary (mine) ... how it works ...
"To get enough votes, therefore, politicians will take care of the "relatively affluent". Those who have the means to buy cars. Those who purchase homes. If they get in trouble, or say they do, they are the ones who get the subsidies. Not the people who need them most.
... the vocal majority demands to have its interests, i.e. the maintenance of the lifestyle it has become used to, be taken care of, or else they'll vote for someone else, the weakest must necessarily get weaker.
... Until you wind up with so many that are so weak, they start speaking up, out of despair, and find they have become the majority. It's what you call a political crisis."
------
duh!
I thought that this was the historical norm and those at the bottom know it in their daily lives. Its only the "relatively affluent" that have been born since the second world war that are "ignorant" of how the world works.
The "political crisis" cannot be stopped since the ignorant "relatively affluent" people are on the web and learning. I called them "the grans and great grans".
Now ... lets go buy a car with cash for clunkers ... walk away from a underwater house ... rent a house that we cannot afford to buy from freddie ... negotiate the outstanding credit card balances
(debt settlement )
Make sure to get a written letter saying that your balance will be paid in full/forgiven/etc. if they receive X$ by X date before writing a check ... if your CC balance was sold to a collection agency they might have paid only 20 cent, if they have not sold it then maybe they would settle at 20 cent with you. Its pass the time to learn how the financial community handle credit.
Let's get ready for a new lifestyle! (with lower oil supply)
jal
Aesthete: "But I am probably wasting my words here. This site is all about the coming desert and wasteland of culture. There is no need for painting, sculpture,and music, only shovels, plows and plantimg seeds. "
Not necessarily. I work locally to try to reform our schools. Which have cut languages, arts, science- everything: except sports.
Painfully dumb. But a true reflection of the community- a little anti-intellectual, and proud of being "regular folks".
On the other hand- they're proud of my son "Beelar"- who graduated from the local high school with the highest gpa ever recorded there. They listen to him.
He's coming back (like, tomorrow, new PhD in hand)- and it's quite possible he'll wind up on the School Board, soon.
I promise you, the arts will not be forgotten.
DIY- "I think there's actually a connection between math/science and the humanities. For example particle physics, at its leading edge, is almost mystical. "
I'll tell you a real secret. All great science, at the leading edge, is more art than science. And no, 98% of "scientists" do not know that. The 2% do: but they only admit it to each other.
Physicists just talk about it more, because- well, heck; quantum theory, string theory, accelerating expansion- it's all right in the mystical arena already!
The "Sharp Rise In New Home Sales!" headline is all over the place now- hilarious. I haven't seen one headline with this little quibble, buried in the WSJ-
"Sales of single-family homes increased by 11.0% to a seasonally adjusted annual rate of 384,000 compared to the prior month, the Commerce Department said Monday. Though, year-over-year, new-home sales were 21.3% lower than the level in June 2008."
I'm just astonished.
Greenapa,
Well, yeah, OK. It isn't "almost" mystical, they're makin' it up as they go along 8={)}
SEC, CFTC Asked to Investigate Goldman Sachs' Special Privileges Ahead of Cap-and-Trade
http://tinyurl.com/mw2a8r
“IMPORTANT NOTICE: Inverse, Leveraged and Inverse-Leveraged Exchange Traded Funds are no longer available for new or additional purchases at UBS”
The ETF Gloves Are Off
Looks like the expected derivatives crisis is rearing its ugly.
"This site is all about the coming desert and wasteland of culture. There is no need for painting, sculpture, and music,"
An idea that is 100% yours. So I suggest you speak for yourself, not this site.
I think dark matter, dark energy, and the connected accelerating expansion of the universe may have deflated some arrogance in the "it's just working out the details" department of physics. A disappointment they we will face technological collapse before there is any resolution. Another great mystery is the null point energy conundrum. Things are rarely what they appear to be.
It's an established empirical fact that studying music increases math aptitude.
Re the demise of Proshares inverse leverage ETF's
Well there's always Barclay's iShares. This may be a deal between the Dept. of Justice and UBS. I was seriously leaning toward going with an unleveraged ETF anyway and just doubling my bet. Somewhat more risk if the S&P goes to 3000 by the end of the year or the derivative company goes belly up.
El Galizoo- "Things are rarely what they appear to be."
It is my contention that Gilbert and Sullivan covered all the true facts of the world in their operettas.
"Buttercup.
Things are seldom what they seem,
Skim milk masquerades as cream;
Highlows pass as patent leathers;
Jackdaws strut in peacock's feathers.
Captain. (puzzled)
Very true,
So they do.
Buttercup.
Black sheep dwell in every fold;
All that glitters is not gold;
Storks turn out to be but logs;
Bulls are but inflated frogs. "
and it goes on!
that last bit is in support of the "art is useful" and "comedy is truth" themes.
It's an established empirical fact that studying music increases math aptitude.
Does it really? I never studied music but I ended up doing a degree in Actuarial Science (lots of Statistics and Maths), my fellow geeks and I were not actually very musically inclined apart from one fellow in high school who has ended up doing a Masters in Mathematics and Statistics.
In the Story of Success, Malcolm Gladwell devotes an entire chapter to Chinese success in maths. That success in maths actually comes from hard work and persistence. Like any skill, it requires a lot of patience and skill to succeed in Math, you must keep plugging away at those differential equations for hours!
Japanese, Chinese culture is particularly suited to Mathematics as they are near obsessive about hard work. In my uni experience, about 85% of the people who were studying mathematics were mainly of Chinese origin and frankly they worked harder then just about anyone else. You would find them in the library all the time! There were a few who were exceptionally brilliant but they also spent a lot of time studying.
Maths scores across countries are perfectly correlated with the amount of effort put in. Personally I reckon there are too many kids studying liberal arts, something that can be done in your spare time and not enough scientists and systems engineers. We need more of them I'd say, a lot more.
Clunkers.
Appropriately named.
This is about the 4th or 5th time you have posted this material. Just in a different form. Whats the matter Ilargi? Are you realizing that you can only say, in so many ways, that the economy is unfair and that this is a political issue.
Give your indignation a rest. It is becoming forced, phoney.
http://itsgettinghotinhere.org/2009/07/27/will-america-lose-the-clean-energy-race/
Only 15 percent of undergraduate degrees earned in the U.S. each year are in science, technology, math, and engineering (STEM) areas compared to 50 percent in China, according to the National Science Foundation — all at a time when nearly half of our current energy workforce is expected to retire over the next decade.
And I bet that more then half of those with the STEM degrees in America are of Chinese/ Indian origin!
@ VK:
Dip into music theory a bit and you'll readily note the mathematics built into its structure.
@ Aesthete:
...emphasizing nothing but math and science to the detriment of human vision...
Really?
Go ask the typical Usaco to: write down an equation beyond basic math, expound on the scientific method, concoct a valid experiment, or take an accurate measurement.
I think you'll be surprised.
Aesthete,
I agree. That's why I sent my children to an arts high school. My eldest is a painter (but headed for a career in healthcare) and my son is training to be an opera singer.
My own formal background is in science and law, but Ilargi has been teaching me about music, film, literature, art and other things my early education had managed to miss.
"Education is not the filling of a pail, but the lighting of a fire."
William Butler Yeats
It's PRIME TIME: Stage 2 of the U.S. Collapse
http://truthingold.blogspot.com/2009/07/its-prime-time-stage-2-of-us-collapse.html
Also do read, along with the comments, this mammoth work of Tyler Durden (with some assistance)that covers just about everything and assures us not to trust major media reporting about the recession.
http://www.zerohedge.com/article/end-end-recession#attachments
Holy S*it Graph!
http://www.investmentpostcards.com/wp-content/uploads/2009/07/earnings-240709.jpg
@ thethirdcoast
Will check out music theory.
@Aesthete
July 27, 2009 10:34 AM
But I am probably wasting my words here. This site is all about the coming desert and wasteland of culture. There is no need for painting, sculpture,and music, only shovels, plows and plantimg seeds.
I agree with the shovels, plows, seeds and planting part but I disagree with the music part. There shall be music. It may be accoustic music but there shall be music. Life isn't worth living without music.
Stoneleigh and Ilargi:
What do you expect to be the total decline in GDP in the United States?
The Liberal Arts are a wonderful thing but the intense need for more scientists in the US is the reality.
Just out of curiosity, my friend Greenpa: Beelar has a PhD in a science field, no?
And as for the idea that education is a universal palliative, perpetual motion engine and economic driver, well, not always. I present Cuba and the former USSR as exceptions. Indeed, {and I am very sure Greenpa has met these folks} take a country like Uganda or Somalia, export the top 5% of the high school scholars to say, Oxford, then repatriate them as PhDs to the birth country. The result will be less than zero. The US is quickly arriving at that place where the educational system, generic local or regional exceptional, will be of little use in addressing the crises. If the politics and resources do not support the science research and enterprises they don't exist. I drove a cab in NYC in 1971. Lots of people with PhDs were also driving a cab. So where are we now exactly? I haven't lived in the states since 1979 and I don't find anecdotes to be very useful but perhaps someone here has some numbers. Greenpa and VK usually do and Ilargi finds some great charts. It is a kneejerk idea to promote the panacea of education. I concede that Dumbing Down isn't a great idea either, but the internal rot of the US economy and politics is so great that educational solutions like the ones we have seen since Sputnik {yeah I was there} just are not enough. The Ilargi and Stoneleigh Brand of intellectual "upside the haid" is the education that the US public needs. I have also claimed to my stateside friends and family since the early seventies that the crisis was political, and indeed, the fact that Ilargi has consistently drummed that here is why I read here every day. I studied a great deal of technology in order to make art. I was in the motion picture trade until 1975. Science and art are closely related in many ways. Politics is often the enemy of both.
I have a clunker that likely qualifies.
And I'd love to trade it in. I live in Texas and the AC on the old van doesn't work and now the windows don't roll down.
I just got a 20% pay cut, to save my company, so I won't be fixing the van or buying a different vehicle no matter what the incentive is.
How did George Carlin some up Usaco education?
"Just smart enough to run the machines but too dumb to know how badly they are being fcuked over," I believe. The baby bear blend for Goldilocks.
Re the MSNBC video with Spitzer as referee:
Eventually, with videos like this, the typical American citizen will start to "get it," but of course the horse is long gone from the barn. It was last seen swimming toward the Cayman Islands. Typical Naomi Klein Shock Doctrine, but at a scale the world has never seen before. It's too bad that Eliot couldn't keep his privates in his pants. He should have known that the banks, Fed, and Treasury, with all their resources were gunning for him.
RC -"Just out of curiosity, my friend Greenpa: Beelar has a PhD in a science field, no?"
yes, two, actually; a multi-disciplinary program, Engineering and Biology. And, in college, he and his a cappella group were PAID to sing in front of the Rockefeller Center christmas tree... and he took top prizes in solo clarinet in high school...
Besides, music is good for propaganda. I was just doing chores with Smidgen, my 4 year old, and thinking about Gilb and Sulliv, and humming "Things are seldom what they seem..."
Which morphed into Gershwin "It ain't necessarily so..."
At which point Smidgen asked me to sing a song she's never requested before... "The Bare Necessities", from Disney's Mowgli- espousing the minimalist approach to life.
She's learning something, I think!
The average American is a moron. Think back on all your years, and sum up the attitudes typically held toward those that are a little smarter than most. And the reactions people have to simple things that should be common knowledge. Confusion. Sometimes just plain hostility. And actually THINKING? You’ve got to be kidding me. Who wants to do that?
Look at what we have for entertainment to get an idea of how much people like to think, that’s just ONE example, one facet of how little most people like to think about anything…..And it’s the reason why nothing changes, the inclination to believe what we want, to believe regardless of the facts, shortsightedness: The support of public policies that are mutually contradictory, or contrary to the country's long-term interests and finally a broad category I call bone-headedness, for want of a better name: The susceptibility to meaningless phrases, stereotypes, irrational biases, and simplistic diagnoses and solutions that play on our hopes and fears.
Voting. And the other one, awareness. That word always makes me laugh. Keep on telling yourself its going to do anything meaningful anytime soon. The greedy sociopathic motherfuckers have won for now, and will keep on fucking all of us worse and worse until the time comes for things to change. It sure isn’t now. Because WE are not ready to make things change and most are too stupid to realize what the fuck is going on with the real world.
Stoneleigh: "Education is not the filling of a pail, but the lighting of a fire."
That's a keeper. 100% correct. Maybe I should quit avoiding Yates. :-)
And, RC- my guess is you'll agree- it's not that education is so useless; it's that so much of it is so VERY poorly done. No fires lit, holes poked in the buckets, and students taught to avoid it all in the future.
Five Firms Hold 80% of Derivatives Risk, Fitch Report Finds
First-quarter financials mark the first time comprehensive derivatives disclosure was mandated for all U.S. companies.
Lost Value of Equities in U.S. State and Local Government Pension Plans: Now $1 Trillion
Anon: "The average American is a moron. "
lol. How rude!!
And another perfect example of truth-telling in comedy.
Mel Brooks, along with Monty Python one of our greatest philosophers- told that truth in Blazing Saddles.
"Jim: [consoling Bart] What did you expect? "Welcome, sonny"? "Make yourself at home"? "Marry my daughter"? You've got to remember that these are just simple farmers. These are people of the land. The common clay of the new West. You know... morons. "
And the morons in the audience laugh like crazy.
DIYer,
And I & S are saying the real estate market (recently the foundation of all high flying high finance) will contract another 2/3 or more. I thought to myself "that would make houses worth less than the materials to build them", but the market does not take such things into account. It simply means that materials prices will decline as well. (and disappear as HD et al close up shop)
I fully expect finished homes to be worth less than their constituent materials at some point, although as you say the picture will be complicated by the fall in the cost of materials as well. Much of the construction boom has been an exercise in negative added value.
"The average American is a moron."
Actually, that's not what I believe. Way way back there in this forum I propounded my theory that "Homo sapiens" is in fact a crypto-species, and highly endangered; the vast majority of the population actually consisting of "Homo insapiens."
Better than that is a bit from Ursula K. Le Guin, from the Earthsea series.
The young unformed wizard confronts the old retired wizard with the fact that the old fellow is just milking goats and making tea these days. Why, he wonders, is he not still out fixing the world?
The old wizard explains that he is now "done with the life of doing." His life now is "being."
The vast majority of humans live that life of being. Partly because they are taught, forcibly, that they CANNOT "do"; and eventually they believe it. Time to milk the goats.
Also the life of "doing" is bloody damned hard work, with few rewards. A hard sell, to most.
Ogardener said:
"It may be accoustic music but there shall be music. Life isn't worth living without music."
Yes, there will always be music! Life is wonderful with music. ...
My family discovered accoustic guitar players, Rodrigo y Gabriela, a few weeks ago. They are Mexican, currently living in Ireland. Apparently, they are a hit in Europe.
http://www.youtube.com/watch?v=l-qgum7hFXk&NR=1
Don't miss "Diablo Rojo" by Rodrigo y Gabriela:
http://www.youtube.com/watch?v=-lvMQCmUVv8&feature=related
News: What was illegal is now illegal. Resume market climb…
SEC rule on 'naked' short-selling now permanent
He [Spitzer] should have known that the banks, Fed, and Treasury, with all their resources were gunning for him.
I am very sure he did know and dropping those drawers has lived to 'love' those buggers another day.
-mudlark-
Greenpa, not to be trollish or boorish, but milking goats is DOing in my book. Existence and productivity are often oscillating phenomena as the great musical philosopher Sinatra was wont to explain: Do Be Do Be Do.
@Aesthete What universe do you live in where American kids have learned math and science since about 1975? Law and business for the smart ones, 'communications' aka 'would you like fries with that?' for the dumb.
The trivium and the quadrivium went down together.
Which, from a cranky old geek, is not to say that anyone who thinks English is a more valuable major to society than Engineering shouldn't spend his/her life flipping burgers.
@Ilargi I wonder if the Chinese actually think they can do the same going forward as Washington did with Wall Street banks: hide toxicity, cram in trillions and look the other way.
The received wisdom is that they did exactly that in the 1998 meltdown (not trillions then of course). And had enough cash to make it stick.
Looking at their reserves this time, and assuming they don't give a [something microscopic] about the rest of the world, they're right on the edge of having enough cash to do it again. They'd crash Russia and the EU along with the US, but the Middle Kingdom has a 4000 year record of thinking that the rest of the world exists to be shat on.
Yeats was referencing Plutarch:
The mind is not a vessel to be filled but a fire to be ignited.
Agree with Greenpa that education is poorly done. Quoted Plutarch a little while ago in a department meeting and the dept chair blinked and mumbled something about Greeks being idiots. Rarely, rarely find fire in the eyes of my colleagues (Do I despise them? Yes--and my rage increases each year, motivating me to keep working.) They consider me a sport (ie, mutation). Yes, one gets the sense in education of trying to turn back the tide, but it's teachers who introduced me to the solace in the Taoist wei wu wei (act without action) or Krishna's advice to Arjuna in the Bhaghavad Gita:
“Oh Arjuna, do not worry about this coming battle. There will be death on both sides, indeed few will survive this glorious battle at the end of this glorious age. All you must do is perform your sacred duty as a warrior. Do not expect and anticipate the result, just be the best you can, act without attachment and know that it will only be the bodies that you kill, their souls will go on forever.”
These words often come to mind reading TAE, TOD, and DIEOFF.ORG--and as I work today preparing for tommorrow. Does a well-rounded education help? As students we need to be ferocious in our continual pursuit of truth. For those who genuinely try, it's there. Most of my educational life has been spent outside schools and colleges, but the skills to continue the pursuit came from teachers. Each of us is the civilization we know.
Rdrigo y Gabriala. Never heard of them. Must be a reason. Take a listen.
Ah, I see, I'm sure they’re nice people, but they're also merely good-willing amateurs, well promoted no doubt, when it comes to playing guitar.
Watch Jimmy Rosenberg, as talented as he is tragic (re: very). It started sort of young, 6-ish, Michael Jackson territory. Jimmy's family, uncles, also had a band, the hugely popular Rosenberg Trio. But none was Jimmy.
-------------
Jimmy at 8(?) years old. Guitar's too big.
-------------
A major comeback attempt. At age 27! Still can play a tad. Django Reinhardt himself never played a better Georgia Brown. This is how the devil would -like to- play guitar, you think at times.
-------------
10 min excerpt from a documentary on his life, heroin addiction, prison terms, the works. Jimmy's a Dutch gypsy, so you may miss a word or two, but it's about the guitar anyway. Spent $3.8 million in 9 months, gave $3000 a pop away to panhandlers, it’s a story all right.
"The kids was just crass.
He was the nazz
With God given ass
He took it all too far,
but boy could he play guitar."
@VK A good college music department needs many many ensembles specializing in this, that and the other style of music.
I defy Aesthete to find the liberal arts or generic college/university (I grant him Julliard) whose music program could survive without the Math and Physics departments.
Re need for scientists
Our world already has too many scientists, especially our Western Civilization now exported or imposed on every corner of the Earth. We need more philosophers, organic farmers, craftspeople, artists, dreamers, mystics, etc. Knowledge does not need to be acquired in an institutional setting or be a degree-seeking mission -- homeschooling and learning on one's own as an adult is worthy and inspiring.
What has formal and institutional science/technology given us for the most part? It has primarily served those in power. Nukes, industry and chemicals have been its "gifts", which are destroying us and many other species, along with the Earth.
Not a comment from anyone about the demise of the American Republic?
Following the Constitutional Convention in Philadelphia in 1787, a woman asked Benjamin Franklin what they had given us, to which he replied, “A republic madam, if you can keep it.”
Well people, we've lost it. When the beer and teevee are gone, which will be the last things to go, then the people will rise up, but not for Life, Liberty, and the pursuit of Happiness, but to get back the beer and the gizmos.
We're so pathetic and weak willed. Much less hearty, moral and principled than a century and more ago when we were in the process of losing her.
Small wonder why the ruling elite can do whatever they want to us, whenever they want to and that they have such disdain for us even though we are their perfect little slaves.
No one likes failures and losers; not even evil demons.
"Go ask the typical Usaco to: write down an equation beyond basic math, expound on the scientific method, concoct a valid experiment, or take an accurate measurement."
Try asking your typical "scientist" to conduct a valid experiment and YOU may be surprised. Much science today is a joke and/or corporate propoganda. I have studied the philosophy of science for nearly 20 years, ever since discovering it as a subject at Uni. I am appalled at what is called science, for the most part. Extreme experimental bias; sifting of results for corporate approval; statistical ignorance or manipulation; inability to draw valid conclusions; poor methodology; inability to appreciate the complexity of systems... the list goes on and on.
There is some good science going on, but much of what I come across turns out to be a self-indulgent farse, at best.
YO, Ahimsa, ever hear of the internet? Almost as dangerous as the bombs you dread, and all a result of science. Ever heard about critical thinking in your dreamy travels? There is no actual dichotomy between art and science. Honest. Plenty of people set up that straw man but he isn't there. I'm not that fond of agronomists myself, even though I farm, but I can accept and appreciate and apply the science anyway. And I'm pretty sure organic farming is a science, my daughter has a PhD from Sabatier in it. And let us not forget that propaganda, probably the vilest activity of humans, short of flaying, is an art as well as a science. I'll skip any further commentary along these lines as I have met many "Ahimsa" persons along the way. Usually they interrupt our little arguments by answering the cell phone, a very unscientific device I would guess.
I had an experience during my first honeymoon that illustrates a truth about "science".
I bought, as my first car, an old SAAB; 3 cylinders, 2 cycle ("filler up, and put this oil in the gas"), free-wheeling, weird looking.
When something went strange with it in the US, the only response we'd get from mechanics was "geez, buddy, I don't know nothing about that thing. Now if it was a Ford, or a Chevy, fine."
I became a mechanic.
Then, one day, driving east on Canada 1 in Saskatchewan, we hit a frog-strangler rain; and the car died. We limped to the side before it died completely.
10 minutes later, the rain ceased, and the first truck to pass pulled over. 2 middle aged guys got out. "Whatcha got there? Never seen one of those! Can we take a look?"
Both got under the hood, we told them what had gone on- it took them about 1 minute.
"Oh, look your carburetor got drowned in that rain. Here, let's dry it off. Oh, and look here!! There a curtain you can pull up for rain!!"
There was. We'd never noticed. The carburetor position was left over from when that engine had run boats.
The US mechanics were typical of 95% of first world scientists today- they can read a cookbook. (3rd world scientists, in my experience are MUCH better)
The Canadian guys were on the path to real science- LOOK; THINK.
No, we don't have too many. Too many poor cooks, yes. Too many actual thinkers, no.
Back to my mowing.
Greenpa said ...
"The Canadian guys were on the path to real science- LOOK; THINK."
----
Good story, and so true.
In the same vein ...
"...being a carpenter is knowing the short cuts"
jal
I don't know what to say really. Three minutes 'til the biggest battle of our professional lives. It all comes down to today. Now either we heal as a team, or we're gonna crumble. Inch by inch, play by play, till we're finished. We're in hell right now, gentlemen. Believe me. And we can stay here, get the shit kicked out of us, or we can fight our way back into the light. We can climb out of hell. One inch at a time. Now I can't do it for you. I'm too old. I look around, I see these young faces, and I think... I mean I've made every wrong choice a middle-aged man can make. I, uh...I pissed away all my money, believe it or not. I chased off anyone who's ever loved me, and lately, I can't even stand the face I see in the mirror. You know when you get old in life, things get taken from you. That's part of life. But you only learn that when you start losing stuff. You find out life's this game of inches. And so is football. Because in either game, life or football, the margin for error is so small. I mean... one half a step too late or too early and you don't quite make it. One half second too slow too fast, you don't quite catch it. The inches we need are everywhere around us. They are in every break of the game, every minute, every second. On this team, we fight for that inch. On this team, we tear ourselves and everyone else around us to pieces for that inch. We claw with our fingernails for that inch. Because we know when we add up all those inches, that's gonna make the fucking difference between winning and losing! Between living and dying! I'll tell you this - in any fight, it's the guy who's willing to die who's gonna win that inch. And I know if I'm going to have any life anymore, it's because I'm still willing to fight and die for that inch. Because that's what living is! The 6 inches in front of your face... Now I can't make you do it. You've got to look at the guy next to you, look into his eyes. Now I think you're gonna see a guy who will go that inch with you. You're gonna see a guy who will sacrifice himself for this team, because he knows when it comes down to it, you're gonna do the same for him. That's a team, gentlemen. And either we heal, now, as a team, or we will die, as individuals. That's football, guys. That's all it is. Now, what are you going to do?
I live in the third world, Greenpa. The problem now is that most vehicles, even the twenty year old ones, have one or two computers on board. Shade tree mechanics just don't have what it takes to go there.
And on my little island there is just one transplanted Ecuadoriano that has the chip collection to read the computer outputs. He's booked for weeks, and after his readings you still need to find a parts changer to address the problem. Often, with the heat and salt air, it is the computer itself that has failed. I had three vehicles and got so sick of the mechanic torture I sold two during the last year for that reason and no other. I think I have mentioned before that simplicity, poverty and living way off the beaten path is far more challenging than many of the TAE faithful may realize. On the other hand, no traffic lights, no traffic actually, never a jam, and the longest commute possible is about 11 minutes, driving really slow. It's all good.
perhaps anon 4.24 is quoting a famous cinema scene, I'm not sure, but really as to making it in life, it's all about the incremental, especially if you are in a rural milieu. "Bit by bit" we say here {in Spanish} and after not so very long, something that wasn't there a short time ago is there and getting bigger and better or best of all, growing on its own. I'm not at all convinced that progress is about winning any macho clash of the muscled game playing titans. That all seems so last century.
And either we heal, now, as a team, or we will die, as individuals. That's football, guys. That's all it is. Now, what are you going to do?
Pray that the other trolls come back?
This board is really starting to ring hollow.
Trolls, sock puppets, and other regulars that for the most part only acknowledge each other's posts.
what the dawkins is going on here?
irratianal bannings and now Evony adverts
someone please placate this - er what whas it again . . . concern troll?
'Has Evony become the most despised game on the web?'
http://www.guardian.co.uk/technology/gamesblog/2009/jul/15/games-evony-spam-internet
Blogger jal said...
"...being a carpenter is knowing the short cuts"
Measure twice, cut once :-)
Dmitry Orlov has an interesting post on education.
You Don't Have to Go to School
Ogardener
In the land of $3 rum, it's, "Shit, I cut it twice and it's still too short."
BloodyParadise
It's the great Google godlike computer in the sky that has decided that you and I are likely candidates for siliconized woman images. It could be worse.
RC
I came to my little island, 40 miles east of yours, in 1996. I came with a girlfriend who had just been downsized and laid off from a corporate job. Before we came here, I discovered that the USVI had unemployment reciprocity with Colorado. The way it worked, she had to call in to CO every two weeks and tell them how she was searching for work. This was right after Hurricane Marilyn tore the place up, and there wasn't much doing in her line. The cats were safely sleeping on the main roads.
The agent in CO was a little suspicious, this being the American Paradise and all, and asked her how far she would go for a job, to which she replied, "I would go to the ends of the earth!" He replied, "And how far would that be."
"Hmmmm, about six miles."
A 4:44
"This board is really starting to ring hollow.
Trolls, sock puppets, and other regulars that for the most part only acknowledge each other's posts."
Thanks, anonymouse for the contribution. I see that you are steering the board back on track with your creativity.
Most of the people read, or speed read, TAE front page. I speed read it, and then slow read stuff that is really new or interesting to me, which might be 20% of the articles. But I often don't comment on the news. Looking at it is just sort of looking at the waterline of my boat from the shore just to see how fast the bilge is taking on water.
This board has a certain community of the corporately alienated which is valuable and psychologically stabilizing to many as our ship takes on water. People who are willing to look some nasty facts in the eye. There is a lot of off topic value here. We can enjoy this virtual community while the technology still exists. It will end soon enough and our horizons will be back to 15 miles.
It's not the bogus intellectual content of the our new trolls and scumbags that is disconcerting to me. I find it, at worse vaguely amusing in the same sense that the film, Dumb and Dumber was amusing, It's their attempt to breach the community. That is why I reply to them with intense vitriol. That's my two cents anyway.
Ahimsa said: "What has formal and institutional science/technology given us for the most part? It has primarily served those in power. Nukes, industry and chemicals have been its "gifts", which are destroying us and many other species, along with the Earth."
Really, Ahimsa? That is such utter bullshit as to deserve a rule 308 invocation, but things are not that far along yet, so I'll leave you stand for now.
The truth is that things are as they are not because of science or technology or money or anything else that so many people love to blame. The truth is that things are as they are because of us, because of who and what we are, because of how we evolved which drives how we behave.
People have been seeking power since the caves, Ahimsa. They've been destroying nature since our hunter-gatherer period which is precisely why we stopped being hunter-gatherers - because we were so good at it and also so good at destroying the world. So we found a new game, agriculture, and we continued seeking power over each other and destroying the world. And then we gained science and technology which we used to... yep, seek power and destroy the world.
Do you notice the commonality in there, Ahimsa? It's not math or science or technology, or hell, even agriculture. It's us. Homo sapiens. We're the red-toothed, murdering, thieving, power-hungry, lying primates who are the common element. It's us. Anyone who fails to understand that is going to be fertilizer, if not a first course meal as civilization goes down the toilet.
And because of what we are, men like Snuffy are sadly teaching their grandsons to shoot, because they know they must if their grandsons are to have any chance at all. Because those grandsons will come face to face with the most awful, horrifying, murderous predator in the history of the planet - ourselves.
You apparently do not really understand that point yet. When you do, it will change your outlook forever.
What's with all the talk of leading indicators?
http://www.nytimes.com/imagepages/2009/07/24/business/20090725_CHARTS_GRAPHIC.html
See the above, all the recessions since the 60's have ended when the leading indicator turned up. All well and good but the authors of the article once again can not make the distinction between an inventory led recession and a credit driven depression.
What I would like to see is a graph of leading indicators during a credit driven recession/ depression, that would make the comparisons to previous recessions valid.
A lot of people are going to get conned and sucked in by this hype.
An excerpt from Mish's latest article on a Bloomberg report regarding real bond rates. Ties right in with Stoneleigh's predictions.
Bloomberg reported "The real yield, or the difference between rates on government securities and inflation, for 10-year notes was 5.10 percent today, compared with an average of 2.74 percent over the past 20 years."
Based on actual housing costs as measured by Case-Shiller, I have the real yield at an astonishing 9.92%, the highest in history. That number is achieved by subtracting CS-CPI at -6.2 from the current 10-year yield of 3.72).
I will stand corrected as far as the arts and this site. Thanks for the rap across the knuckles, Ilargi.
Orlov is an interesting and very intelligent voice. One of my biggest influences in life was from a former Soviet artist who moved to the U.S. The Soviets trained their artists in the same very intense manner as they trained their athletes even if the social realism genre bordered on propoganda.
Anyway, a bit from the study I mentioned in a prior post. The Carnegie Foundation and UCLA examined a variety of arts education programs using diverse methodologies. This Champion of Change: The Impact of the Arts on Learning study revealed very strong evidence corroborating the positive impact of art programs on academic performance
One of the most of the notable results of the study is that students who were involved in instrumental music over middle and high school years showed significantly higher levels of mathematics proficiency by grade 12. Specifically, keyboard training seems to produce increased and improved cognitive functioning in young children. I quote from the study:
"Other potentially important aspects of the musical experience are learning to read music and to associate musical notation with abstract concepts of time,rhythm and pitch. These experiences at first glance appear to involve forms of mathematical reasoning--the fractional senses of different musical notes( whole notes, half-notes) the relative distance of notes within scales, the perfect doubles and halves in the pitch frequencies of octaves, and even the relations among the dynamics within a musical passage. For some musical instruments, such as the piano, there is an associated geometry of music that probably reinforces the spatial-temporal reasoning effects noted by Rauscher et al. For other instruments, such as the strings, there are complex linear geometries associated with pitch that brings spatial reasoning to the production of sounds and phrases."
Aesthete
VK
Credit driven recessions are a lot rarer. I believe the last global one was the Depression v. 1.0, and we have Japan's starting in 1989. Ones before the GD had very poor data keeping.
Greenpa
Your position is completely rational and internally consistant based on your underlying belief system and metaphysics which are materialistic in the sense that physical mass and energy and their interaction determines the nature of reality.
Ahimsa position is also completely rational and internally consistent from her underlying metaphysics and belief system.
In my heart I suspect that Ahimsa's system is more in touch with ultimate reality, but it probably wouldn't stop me from gunning down a man in legitimate defense of my life or that of people I care about.. That is my primitive emotional nature.
To follow up on Greyzone, a quote from somewhere (maybe one of the more learned on here will know)....
"man is the most savage of all beasts"
You are right, there can't be a utopian society - it's all in the genes.....we are our own worst enemy.
What I think we're seeing, with all the financial numbers and California, etc. - is that we're beginning to see the population bomb rearing its ugly head. There are many "solutions" offered to "fix" this crisis (cut interest rates, print money, conserve energy, extend unemployment benefits, increase taxes, etc. etc.), but the real solution if you're just looking at numbers (increase/decrease some variable) is to decrease the number of humans.
Now of course this is completely politically (and morally) unacceptable, but from a numbers/systems approach, it is the best solution. I have no answers or solutions, just stating the obvious.
As this wears on, it's not going to be pretty.
Sorry, I just conflated Greenpa with Greyzone in my comment.
Re: some basic facts
There is a heat wave in B.C. The ravaged forests, (Pine beetles) will probably burn.
The opposition party said that they had looked into their crystal ball, beore the election), and it said that the gov. would cut spending in health care.
Cuts are being enacted. Geee! would someone tell those fools to come and read this blog.
Would someone remind them that Canada has been there done that before when they try to balance their budgets.
We are in a credit depression. We are,maybe, 4 yrs behind California but its acoming.
There is a parrallel health system that operates, in Canada and elsewhere. Its called "Workmans Compensation". Its for people injured while working.
There exist a very large support industry, clinics etc., that will be finding shortfall in their revenues.
Those in it are probably aware of it but not the general public.
Watch the unemployment numbers climb since there will be fewer workers getting injured, since there are fewer workers to treat, those business will be cutting back or closing.
Advice on investing is now worthless, because investing has been replaced by trading/gambling.
Fire your investment adviser and go into short term savings.
Get rid of the "middle men". Even money markets are not outperforming a GIC.
Banks are making money from traders doing the "trading" with your money.
----
I do know how to lower the cost of the health system so that the US can afford it.
NOO! It is not "culling".
If you are a lawmaker and want the answer, contact me. My fee is very reasonable.
jal
El G, here they can only manage to read the integers on the tape, the fractions are all guesswork.
Taking a break from the tractor-
El Galliwhatsis :"In my heart I suspect that Ahimsa's system is more in touch with ultimate reality,"
you old liberal artser you. :-)
I disagree. For one thing, my world actually contains a belief that "ultimate reality" exists. Ahimsa's only acknowledges subjective realities.
The success of technology suggests mine is the correct view- basing factories on physics results in totally predictable outputs. Basing factories on subjective reality results in-
http://aidsmap.com/cms1065793.aspx
A fine example Harvard trained scientists- with a huge wish fulfilment fantasy. Result- dang, it doesn't work.
Tell us the truth now- you were a PolySci major in college, right? :-P
@ Anon 3:42 PM:
Much science today is a joke and/or corporate propoganda.
Oh, I couldn't agree more. One need look no further than the garbage coming out of MIT these days.
@ RC:
Anon 4:24 PM is quoting Al Pacino's monologue from the 1999 film Any Given Sunday.
Video available here:
Al Pacino Any Given Sunday Monologue
Probably not the right tone for this board, but some of the sentiments would seem to apply to our current pickle.
@ Aesthete:
Great quote on the relationship between music and mathematics!
@ Greenpa:
I disagree. For one thing, my world actually contains a belief that "ultimate reality" exists.
Agreed, but human perception of that ultimate reality is heavily filtered by the limitations of our bodies and minds.
el gal - thanks
I'm not a fan of silicon women, but I now realise that google thinks my reseach into Evony means just that. Creepy google - not creepy TAE.
Creepy nonetheless. Can't that stuff be stopped?
Elsewhere I blog away, without a care in the world. Maybe because I live in France now. It does seem that in the USA people are way more wary of saying who they actually are, and where they live etc.
No crazies are going to get on a plane to do me in, out here in the vineyards.
I'm just beginning to realise you in the US don't enjoy that luxury of 'comparative' safety. I'm starting to understand that you all have to hide behind wierd names, and not let any personal info out.
Couldn't live like that for long.
But wierd names and serial anonymity just breed weird ideas with little relevance to actual life. Openness surely is better for us all.
The stuff that gets published here on TAE is no longer earth-shatteringly new ( I speak as one whose wife has been earholing me for 4 years now about I&S from their OilDrum days) - Ilarghi's Day of Judgement comes and goes with the regularity of the sandwich-board touter in Leicester Square, London (THE END OF THE WORLD IS NIGH!) and we neither visit as often as we used to.
Because we took the news to heart, a few years back, and started in on the major life changes. They now take up the time that was formerly spent following the spats on OilDrum and then TAE. It's a soap-opera - that I sometimes mistakenly get involved with late at night.
My daytime is more productively spent with people in the village, and with plants.
This is, as so many have pointed out, Ilarghi's place. He pays for it. But I too have built various websites and blogs, and I know the difference: if you want a static website with no response-function, then that's available. I can put up whatever I want and I don't have to hear any whingeing.
The moment you open a blog however, you're in a different game. You're asking for it! And if you get it, but don't like what you get? Well the you're in the thick of it. You've people in the kitchen, people halfway up the stairs, and you're going to be seen as a good host or a bad one, depending on how you deal with them.
Who cares? Well, if you're used to anonymous web-talk then none of this matters. But if you are more used to the idea of the Web as a means of personal interaction, where actual human beings might phone, and visit, and where they might be interested in what you are doing - then that distanced anonymous way of communicating might end up seeming sterile.
Ideas and talk have their place - but a diet of this stuff alone is toxic. The best ideas emerge from the action one is undertaking: they are rooted in time and in the physical. The best talk also; where hand is linked to brain (and not allowed to fly away into otherworlds).
I'm sure some people are happy that this blog is a pure ideas space - but I'm not. The degree of anonymity it confers seems to doom it to the status of hyperactive coffee-shop.
Re: China buying North America.
www.theonion.com "Yu Wan Mei" last week. Great stuff.
Stoneleigh, do you see a time in the (distant) future where North American labor costs deflate to the point where it is possible to repatriate the outsourced manufacturing jobs, and thereby employ some of the former middle class? Or do global wages and benefits all deflate together so the multinationals will still produce goods in asia etc.?
Third Coast- "Agreed, but human perception of that ultimate reality is heavily filtered by the limitations of our bodies and minds."
Hell yes. Always always.
Science is an algorithm for incrementally sneaking closer to objective reality, datum by datum, through the pea soup. It only took thinkers like 300 years to assemble that algorithm. Which is now, indeed, mostly ignored, in favor of "look, I've got a diploma. Of course I'm right!" :-)
"do you see a time in the (distant) future where North American labor costs deflate to the point where it is possible to repatriate the outsourced manufacturing jobs"
What would you have them manufacture?
"do global wages and benefits all deflate together so the multinationals will still produce goods in asia etc.?"
They won't be producing anything because there won't be customers left.
Greyzone:
Re your views on human nature.
I’m sure that our hosts would rather not see this off-topic topic elaborated on too much, but your calling my opinion “b---shit” tells a lot about your point of view. I see that you are angry and coming to this topic with your own air of violence, so I will limit myself to a few remarks on-topic and stop.
Your point of view that human beings are innately destructive is essentially instinctivism or behaviorism, popular from Darwin to the 60’s when neurosciences, psychology, and sociology began showing its errors of reason and lack of data. Instinctivism fails to distinguish the two types of aggression in human beings and instead conflates them as one innate instinct. The “fight or flight” instinct in human beings is clearly inherited from animals and can be said to be innate as a defensive survival mechanism for the individual and the species. It is essentially benign and useful in many contexts, most of which are not violent at all.
But the second type of human aggression is not innate, is not phylogenetically programed, not biologically adaptive, has no physiological purpose but to satisfy lust (using that term in the early psychological sense) and is virtually non-existent in mammals: destructiveness and cruelty. It is this form of human behavior that you are referring to, and which is the product of environment, i.e., physical stress, psychological stress, social and cultural indoctrination, mass behavior, ideology, opportunism, and socio-pathology, sadism, etc. Murder, torture, cruelty, bombing, hatreds, are all manifestations of this destructiveness. Socialization began at the beginning for all of us, and no one functions outside of societies. But those who consciously choose to be responsible for their psyche, to become conscious of the influences of what Foucault calls structures, will see that this form of aggression is neither innate, necessary, nor absolute.
My experience is that aggressive and violent adults suffered psychological trauma in childhood. They can begin to resolve this by revisiting those traumas or by simply beginning, here and now, consciousness techniques, meditation foremost among them. BTW, the contemplative traditions knew these scientific distinctions long before neuroscience and psychology recently discovered them.
Thanks Illargi. I'm just wondering what the masses of future unemployed will eventually end up doing, further down the road. The industrial nature of agriculture doesn't seem to be a likely source of mass employment. But the question stands...as north american wages and benefits get gutted, do wages deflate equally in other countries? Is there no hope it becoming economically viable to produce clothes, computers, "durable goods", especially if barriers to trade grow and grow?
@ ahimsa
illuminating stuff, and not off topic at all
Bloody Paradise,
Well, if you're used to anonymous web-talk then none of this matters. But if you are more used to the idea of the Web as a means of personal interaction, where actual human beings might phone, and visit, and where they might be interested in what you are doing - then that distanced anonymous way of communicating might end up seeming sterile.
We aren't as determinedly anonymous as you seem to think. We like meeting our readers and have met several already. Turning online connections into real human friendships means a lot to us. Of course not everyone lives close enough to meet up for a drink. France is a bit far for us to go (unfortunately, since it's a very beautiful place). We usually end up meeting people in Montreal.
Science is an algorithm for incrementally sneaking closer to objective reality
Since there are limits to neural perception, I see the process as asymptotic.
@ahimsa
You phrased it well.
And yet, Ahimsa, that violence is present in every hunter-gatherer society through every agricultural society through to our technological marvel before which so many now bow.
If this is "just" programmed into us via culture, a damning question arises - why does this happen over and over and over again?
By the way, you blaming technology is a copout, one that you didn't even address in your response. That dodge-evade-duck response is telling too.
BloodyParadise
"Can't that stuff be stopped?'
Yeah, it would be easy. Every poster would just have to start tithing to TAE - problem solved.
Most people here use pseudonyms , not because they are afraid of your typical wingnut crazy, but because they are afraid of the government-gollum complex which will shortly devolve into the government-gollum-gulag. The NSA is so plugged into the internet that the pseudonyms are useless, but it makes some people feel better. I use the one I do, because it amuses me. It shows a bird of handsome profile and deep, circumspect thought.
We do have a mechanism for people to contact each other directly on this site without posting their email address, and some people use it.
As to how rewarding this posting site is - each to his or her own. No ones feet are nailed to the board. It is my favorite. Isn't the blogosphere wonderful !!
Greenpa
Okay, you found me out. I was really a religious studies major with my senior thesis in the many trunks of Ganesha.
I have had one foot in the physical sciences and the other in spiritual mysticism since my early twenties. This admittedly can lead to some uncomfortable stretches, but it has its own rewards.
I rarely argue these metaphysics, particularly on this blog. It is something that most individuals are totally committed to. Since I am a contrarian, I figure that the more people I convert to my particular brand of ultimate reality, the more likely it is to be mistaken.
Most people wouldn't even want to believe their lying eyes if it violated their preconceptions. God help the atheist who goes to heaven - he will be one pissed off puppy.
Bloody Paradise,
Using a rant against anonymity to anonymously make false statements such as this:
"Ilarghi's Day of Judgement comes and goes with the regularity of the sandwich-board touter in Leicester Square, London ........", is about as thick as it gets.
That is, unless the touter is long dead. Or you can give a few examples.
Hey Ilargi,
Do you happen to know any sites on the web that specifically deal with peak oil/peak credit and third world countries. I don't seem to be having any luck finding them.
What would be interesting to know is how dependent agriculture in this part of the world is dependent OR independent of oil inputs.
Country Popn. Oil use
Kenya 38 mn 68,000 bbl/day
Uganda 36 mn 12,000 bbl/day
Tanzania 40 mn 28,000 bbl/day
Ethiopia 80 mn 31,000 bbl/day
Rwanda 10 mn 6,000 bbl/day
Burundi 9 mn 3,000 bbl/day
Total 213 mn 148,000 bbl/day
By contrast the US with a population of 305 mn consumes 20 million barrels of oil per day.
We also use about 1/6th of 1/20th of fertilizer per hectare I believe. I don't know how resilient Africa will be in the face of economic collapse and peak oil?! I just don't have enough data :(
ric "Since there are limits to neural perception, I see the process as asymptotic."
me too. And we're not even very close to the inflection region.
El Galinesho - very cool, fun to know.
"Since I am a contrarian"
No you're not.
:-)
This has been a fun day.
Aesthete -
"But I am probably wasting my words here... ...There is no need for painting, sculpture,and music, only shovels, plows and plantimg seeds."
You are not wasting your words on me, nor I suspect, others here. I plant seeds, I like physics and spent years in electronics And... I play music and write lyrics. But more to the point I am still learning about it all!
It's all about balance, and most people know that a well rounded individual seeks out the best of all persuasions.
Greenpa: Pirsig made your very point inZen and the Art of Motorcycle Maintenance. One of my favorite books ever.
Summary - thank goodness you didn't revive all the phalluses discussed.
I'm with all those who have a passion for music. However, after recently ending a way-too-long relationship with a producer, my taste for commercial music is a bit tapped. However, I learned an interesting bit of trivia along the musical industry journey - When music was recorded analogue, musicians had to be that good for labels to back them because the more time they used in the studio, the more expensive the project.
Now the sessions musicians make a few passes of a song. The vocals are added later and it's all cut and paste with auto-tune.
Back to economics: Roubini, Ferguson, and Zuckerman on CNN
Earlier I was speaking with someone who is supposedly very knowledgeable about finance. I was explaining why I was planning to move back to my Dad's place. He asked why I wanted to move back. I rattled off a few reasons and ended with, "and when the economy really tanks, I can always grow my own food there."
He said, "Don't you know - the recession is over. Haven't you seen the stock market this week?"
I said, "I have. Have you seen the Treasury Auction this week?"
Ahimsa - "What has formal and institutional science/technology given us for the most part?"
Well, when I was nine (exactly, on my birthday) I developed acute appendicitis. They took me to the hospital. A preacher said a prayer over me... a scientist fixed me!
Maybe, being one who thinks we should adhere more closely to natural, earthy fundamentals I should have died a painful death. But I have to admit that I am glad the scientist was there.
VK,
Not off the top of my head. DId you check graphoilogy? We'll keep our eyes open. By the way, dependence on fertilizers has risen dramatically in much of the developing world, courtesy of Monsanto et al. Also worthy of some solid and recent data.
Obama calls for deeper U.S.-Chinese ties
On the first of two days of economic and political talks, a U.S. delegation including Treasury Secretary Timothy Geithner urged China to boost domestic consumption and Beijing responded with tough questions about how Washington intends to rein in its soaring budget deficits.
*snip*
"We sincerely hope that the U.S. fiscal deficit will be reduced year after year, according to the objectives of the Obama administration."
U.S. government spending is forecast to exceed its income by a staggering $1.8 trillion in the current financial year, giving rise to concern that the dollar's value could suffer because of the flood of debt Washington is issuing.
Stoneleigh:
You think that we are heading into a deflationary death spiral that leads to a near feudal existence, and you decide to send your children to an arts high school to study painting and....opera?!
If I work for a living, I exchange my time and my physical health in exchange for money. That money represents, again, a portion of my life. To the left-wingers frequenting this site, why do you believe that it is then appropriate to take that money--a portion of my life--and give it to someone else?
You think that we are heading into a deflationary death spiral that leads to a near feudal existence, and you decide to send your children to an arts high school to study painting and....opera?!
That is a great question.
VK...
try playing around with the stats on this site:
Nation Master
it comes in pretty handy...
not sure if you will find what you are looking for- but i am sure you will come close...
Uh OH, a duel of the anonymi. Maybe we can have an Ilargi ex machina here and the new post will be ready.
"dependence on fertilizers has risen dramatically in much of the developing world"
Years ago I observed that the flower seed in major seed company catelogs never really performed all that well in my nice organic soil. This puzzled me until a happened to run into someone who had worked for one of these companies in their seed trials.
He said the fields for their flower seeds were soaked in pesticides and fungicides, and chemical fertilizer and that the seeds that thrived under those conditions where the ones being selected for further propagation, under those conditions yet again. A postive feedback loop of selection for everything Not organic.
This thinking pervades selection of food crop seeds also.
We are truly doomed in the food production department if this is the predominate method for selecting and breeding food plant seeds.
Run out NOW and get open pollinated heirloom seeds and help propagate them for future generations to use and enjoy, if not, the vampire squid will eat them.
Full disclosure:
I once cloned and sequenced some plant genes for monsanto via a corporate alliance with the firm I worked for! Small world.
Ilargi,
I am off for the night, but cannot wait to see the next post. Thanks for all that you and Stoneleigh do. A true service, if only more could listen.
Anon said,
You think that we are heading into a deflationary death spiral that leads to a near feudal existence, and you decide to send your children to an arts high school to study painting and....opera?
That is a great question + 1
I would add for those who don't get it, that Stoneleigh is presenting a seeming contradiction.
Long time lurker here.
Stoneleigh and everyone else discussion education:
I'm going to try my best to make this comment as clear as possible.
Stoneleigh's use of Yeats' quote points, in my mind, straight to the problem in the US educational system.
I agree that there is a trend to emphasize the basic math and sciences AND to give most of the extra funding to athletics over arts and humanities.
I see the problem as something deeper. It's the inability of the part of the educator/parent/school administration/school board to spark the kid's interest and imagination.
during the last school year I tutored 5 'problem' kids who were failing at our local high school. I was able to bring four from 'F' to 'B' in their subjects and the fifth actually got a few 'A's.
It wasn't that I was familiar with every subject the kids were taking, instead I made each subject fun.
For example I told the kids that it wasn't likely that someday someone would put a gun to their head and say "name the tariffs of the early American republic!" No one except historians and economists gives a s**t about tariffs, but your teachers love to put them on tests. Study them for the freaking test and move on, you can always google them later.
I also agreed with one girl that solving for X could be stupid and X was content in it's current state. We'll rename Algebra "Interfering with the Tao of X"
These tactics helped the kids to see learning as humor instead of the second coming of the Spanish inquisition. They were interested in learning again instead of fighting it.
Unfortunatly the system doesn't care about the individual, so these kind of kids never get the spark they need and for the rest of their lives they live as failures.
Addendum - This is not a judgment on Stoneleigh, but it does fly in the face of the "advice" here to focus on the necessary. If the world that S&I come to pass, an artist nor a painter is a profession that is going to permit one to survive.
Last thought,
most think commentary like that found here means "tomorrow". What you have to understand is the glacial pace of economic movement. While we have seen some spurts (like last fall) those events were set in motion long before. As the current rally has made the "all clear" call so popular, this too will now require a wall of terrible data to overcome the inertia sent forth in the markets/psyche. This is a marathon, not a sprint to play "gothcha".
My 2 cents.
Spice - I would agree that the education system is not geared towards the individual but how would you set up a system to provide the necessary attention that each child needs. Simply, there are not enough resources to do this. If as Stoneleigh and the rest of the doomers predict for the world, this is going to become all the more true.
Finally, not every child can be successful in the traditional sense of the word. What we, in fact, need to do is start sending more kids to vocational school to learn a trade rather than wasting money saturating colleges with liberal arts majors. Truth is that school should be a ground for developing ideas, AS WELL AS TRAINING ADULTS TO ENTER THE WORKFORCE. Not everyone can become a liberal arts professor and that leaves everyone else waiting tables, when the economy is doing well. You cannot have your cake and eat it. You cannot complain that industry is stripped from the US and then send most of our kids to college to study liberal arts.
Anonymous Anonymous said...
If I work for a living, I exchange my time and my physical health in exchange for money. That money represents, again, a portion of my life. To the left-wingers frequenting this site, why do you believe that it is then appropriate to take that money--a portion of my life--and give it to someone else?
Wipe your arse with it for all I care.
I hate being being stereotyped.
Anon 10:43
I understand that the system can't be flexible enough for the individual, that's why I added parents to the list of those responsible for their child's education.
Not every child can be a historian or scientist or mechanic or farmer... Everyone has their own strengths and weaknesses, so as our system collapses wee need to take that into account.
I would be very happy paying an artist with food and shelter if they would paint a mural on my ceiling.
Beauty will be more important in dark times, why do you think feudal lords and the catholic church put so much $$ into cathedrals where the peons could feel paradise was waiting on the other side?)
I also will support my child if they have the skills as a mechanic.
Our educational problem lies in pigeonholing kids. Those that aren't atheletes or make the grade in other ways are told by the system as a whole that they are somehow less because of it.
Let's just say that my mechanic IS an artist and I own him a lot.
1) Society can really only expend resources on individuals who will create value. This is how the market is. It is how life has existed since humans formed communities. Get over it.
2) If the doomer philosophy turns out to be true you won't have the resources to pay an artist to paint your ceiling. You'll be too busy trying to organize your next meal and that of your family.
Again you cannot have your cake and eat it. What is it going to be utopia or doom and gloom?
Furthermore Spice if the system collapses you can basically forget about education. That will be one of the biggest victims of any economic collapse. Again, you cannot have your cake and eat it.
Every group of people I know from very right wing libertarian/ hidebound christian homeschoolers to liberal intellectuals and all sorts in between value music and have devoted amateur musicians among them. To assume that culture is somehow antithetical to feeding yourself and others from the land is bizarre.
And you don't need to go to Harvard to enjoy opera. Opera is full of the same kind of emotional drama as contemporary music. Daytime TV dramas are called soap opera's for a reason.
Vicky
Anon,
Depends on your definition of 'value'.
If we only only value measurable additions to society, they we'd kill all of the elderly as soon as they could no longer work hard enough to support themselves. In doing so, we loose their knowledge and the babysitting service they can provide while the stronger members of society provide sustinance.
BUT we DON'T kill them, because they're valuable.
We also support jesters (comedians), poets, writers, and artists who show no measurable 'value'. Yes we may ask them to weed the potato patch and wash dishes in their free time, or to teach our children their art. Just because it doesn't bring in the almighty $$ doesn't mean it has no value.
Plus, I don't believe myself to be a doomer. I want my child's world to be as open to possibilities for her as mine was for me. But I'm realistic enough to wonder 'what if'.
I have seen death, starvation, poverty and cruelty. So I will never say it can't happen again. And I will value those who may not bring food to my table, but their presence brings light to my soul
That's the difference between a true human and a troll.
Nobody is saying that the arts should be ignored, but to pretend that it is practical to have it as a primary focus in a collapsing world is not realistic. I love art. I love music. I love drama. Heck I acted once upon a time for a short period. However, it is something I did as a hobby for my own enjoyment. I did not see it as a practical means to support myself. Would I want my kids to be exposed to art studies in school? Sure. Would I want to make that their focus in a practical sense? No.
Hum,hum, excuse me!
"Our educational problem lies in pigeonholing kids."
Gee! Would that be equivalent to the pigeonholing that has been going on for centuries ... india ... caste system.
Lets stay real. Those that want to move up have got to work for it. Getting "Knowledge" takes work and perseverance. (as noted in a previous post)
jal
Your very example proves my point. That artist or whatever needs to have some other mode of providing value. In a world where people would have problems feeding themselves, being an artist (I.e. not an indispensable service) will not get the job done (no pun intended).
As for my personal experience, I have seen the effects of widespread poverty, hyper-inflation, corruption and a degrading society. I KNOW. That said, in such a world there is a strong focus on doing that which will promote survival. There was less focus on what was perceived to be a leisurely activity. Face it, studying art is something only the well to do can do. In poor countries, they have artists but by and large people do things that will permit them to get by and for most that means more traditional things.
I am amazed at the depth of your postings. Furthermore, I went back to read some 6-8 month old posts and the insight/predictions were valid even now.
You guys have vaulted into my core "must read" circle.
To OGardender: Thanks for proving my point. You left wingers don't have a response to that one. You never do. On every website I see preaching wealth distribution I pose that question, and I have yet to see an intelligent answer.
To Vicky: Art is a hobby generally; it is only a profession in rich cultures. That is not to say it is valueless. In your communal world, are you going to pick carrots in the sun while someone else sings opera? No--you'd make them pick their own damn carrots. Now a rich person--who already has their needs met--they might fund the arts out of love.
New post up.
To Vicky: Art is a hobby generally; it is only a profession in rich cultures. That is not to say it is valueless. In your communal world, are you going to pick carrots in the sun while someone else sings opera? No--you'd make them pick their own damn carrots. Now a rich person--who already has their needs met--they might fund the arts out of love.
-----------------------------------
This is exactly right. I hail from a developing country that has struggled with hyper-inflation, crime, corruption and a declining society. It is only in places like the US, where people can afford to worry about studying art. How is this not the very same arrogance that some on here preach against?
女性会員様増加につき、当サイトの出張ホストが不足中です。女性の自宅やホテルに出向き、欲望を満たすお手伝いをしてくれる男性アルバイトをただいま募集していますので、興味のある方はTOPページから無料登録をお願いいたします
最近様々なメディアで紹介されている家出掲示板では、全国各地のネットカフェ等を泊り歩いている家出少女のメッセージが多数書き込みされています。彼女たちはお金がないので掲示板で知り合った男性とすぐに遊びに行くようです。あなたも書き込みに返事を返してみませんか
オ○ニーライフのお手伝い、救援部でHな見せたがり女性からエロ写メ、ムービーをゲットしよう！近所の女の子なら実際に合ってHな事ができちゃうかも！？夏で開放的になっている女の子と遊んじゃおう
メル友募集のあそび場「ラブフリー」はみんなの出逢いを応援する全国版の逆援助コミュニティーです！女の子と真剣にお付き合いしたい方も、複数の女性と戯れたい方も今すぐ無料登録からどうぞ
簡単にお小遣い稼ぎをしたい方必見、当サイト逆¥倶楽部では無料登録して女性の性の欲求に応えるだけのアルバイトです。初心者でもすぐに高収入の逆¥交際に興味をもたれた方はTOPページまでどうぞ。
サイト作成は初めてでぇす。プロフは友達も作ってたので私も頑張って作成しました。プロフもってる人はメル友になって見せ合いっこしませんか？メアドのせてるので連絡ください。love-friend0925@docomo.ne.jp
男性が主役の素人ホストでは、女性の体を癒してあげるだけで高額な謝礼がもらえます。欲求不満な人妻や、男性と出逢いが無い女性が当サイトで男性を求めていらっしゃいます。興味のある方はTOPページからどうぞ
あなたのSM度をかんたん診断、SM度チェッカーで隠された性癖をチェック！真面目なあの娘も夜はドS女王様、ツンデレなあの子も実はイジめて欲しい願望があるかも！？コンパや飲み会で盛り上がること間違いなしのおもしろツールでみんなと盛り上がろう
男性なら一人くらいは作ってみたいセフレですが、実は女性もいつでもSEXしたいときにできる友達がほしいと思っているのです。そのような彼女たちの欲求を満たしてあげませんか
女性向け風俗サイトで出張デリバリーホストをしてみませんか？時給２万円の高額アルバイトです。無料登録をしてあとは女性からの呼び出しを待つだけなので、お試し登録も歓迎です。興味をもたれた方は今すぐどうぞ。
「家出してるんで、泊まるところないですか？」家出掲示板には毎日このような女の子からの書き込みがされています。彼女たちは家やホテルに泊まらせてあげたり、遊んであげるだけであなたに精一杯のお礼をしてくれるはずです
SM度チェッカーで隠された性癖をチェック！外見では分からない男女のSM指数をチェックして相性のいい相手を見つけ、SMプレイしてみよう！合コンや飲み会で盛り上がること間違いなしのおもしろツールをみんなとやってみよう
性欲のピークを迎えたセレブ熟女たちは、お金で男性を買うことが多いようです。当、熟女サークルでは全国各地からお金持ちのセレブたちが集まっています。女性から男性への報酬は、 最低15万円からとなっております。興味のある方は一度当サイト案内をご覧ください
プロフ見た感想を携帯アドの方に送ってください。悪口は気が病むので止めておいて欲しいですjewely.jmtjd@docomo.ne.jp
ネットで恋人探しなら、グリーをおすすめします。ここからあなたの理想の恋愛関係がはじまります。純粋な出会いから、割り切ったエッチな出会いまで何でもあります。ミクシーから女の子が大量流入中！ココだけの話、今が狙い目です
当サイトは、みんなの「玉の輿度」をチェックできる性格診断のサイトです。ホントのあなたをズバリ分析しちゃいます！玉の輿度には、期待以上の意外な結果があるかも
セレブラブでは心とカラダに癒しを求めるセレブ女性と会って頂ける男性を募集しています。セレブ女性が集まる当サイトではリッチな彼女たちからの謝礼を保証、安心して男性はお金、女性は体の欲求を満たしていただけます。興味がある方は当サイトトップページからぜひどうぞ
携帯アドのせておきました。恥ずかしい写真とか乗せてるけど、許してください。ネット友達探してるのでよかったら連絡ください。for-a-sweetheart@docomo.ne.jp
ゲイの数が飛躍的に増えている現代、彼らの出逢いの場は雑誌やハッテン場からネットに移り変わってきています。当サイトは日本最大のゲイ男性の交流の場を目指して作られました。おかげさまで会員数も右肩上がりに伸びています。ゲイの方や興味のある方はぜひ当サイトをご覧ください。
家出した少女たちは今晩泊る所がなく、家出掲示板で遊び相手を探しているようです。ご飯をおごってあげたり、家に泊めてあげるだけで彼女たちは体でお礼をしてくれる娘が多いようです
Post a Comment