Destitute family. Five children, aged two to seventeen years, American River camp, Sacramento, California
Ilargi: Went to see the movie adaptation of Cormac McCarthy's The Road last night. I know, I should have been working, but since we were going with a good friend and I’m off to Europe for a while this weekend, I went anyway.
The movie, starring Viggo Mortensen, Charlize Theron, Robert Duvall and Kodi Smit-McPhee, remains very close to the book. Which is an absolute gem. And books that good make one's mind work overtime in producing its own visuals, so I didn't know if seeing the film would be a good idea. Still don't, really. The movie is great, and I recommend it to everyone. It outdoes the book in the sense that it grabs you by the throat even more and leaves you with nowhere else to turn.
The collapse McCarthy envisions is not the one we address here at The Automatic Earth. A credit collapse, and whatever it is that comes after, is not the same as the fall-out of large-scale nuclear disaster. The main common thread here may well be that of the worries parents have for the future of their children. Once you're no longer there to protect them, what is going to happen? That is a general theme, a worry as old as the world, made more poignant by crises of virtually any kind. The Road provides an extreme version of the theme, but the reality of our economy is, for those willing to listen, extremely threatening as well. The chances that your children will be better off than you are fast approaching the freezing point, you just don't know how much worse off they'll be, and therein, in the uncertainty, lies the main threat.
After the movie, the good friend said that, in his view, things -referring to the credit collapse- are developing very slowly. I replied that they are not, that it's just his viewpoint that makes him see it that way. If and when you follow a development as closely as we do, that is, you read extensively about it on a daily basis, you risk having your view distorted. When I said that part of him wishes for things to unfold faster, he predictably denied that, and even took it as being accused of having "collapse cheerleading" views. Apparently there are places on the web where that exists. But that’s not what I meant. When you want to watch a flower grow, camping out 24/7 next to it can easily make the process seem real slow.
I have things like this John Williams graph in mind when I think of how fast or slow things are unfolding.
US unemployment, no matter how you measure it, U3, U6 or SGS, has gone up about 100% in the last 20 months, and 60% in the past year alone. And if you call that slow, than what is fast? You'd have to get to a speed that would be hindered simply by practical reasons. To lose jobs any faster than this you'd need something like government ordered mass closings, or a bank holiday or something. In other words, you’d have to do the exact opposite of what the US government does, which is to keep anything open that is broke. And that, more than anything, should make you sit and think. These unemployment numbers are here despite everything the government tries.
People like my friend and I do have the tendency to want to see it go faster, in order to have our fears, our ideas confirmed. We know it’s inevitable, so let's have it already, that sort of thing. That's not the same as cheerleading though. We're simply so focused on the topic that our perception of time gets warped. There's nothing slow about the development of US unemployment.
There's also nothing slow about the collapse of available credit in the US, another area of miscomprehension. Even if that's apparently hard to understand, borrowing money from a bank is not the same as borrowing money from yourself. Which is what you do when you sign up for a great looking 3.5% down mortgage covered by the FHA, a government agency. Or, if you want to make it a notch or two worse, if you’re not the one getting the loan, it's your neighbor who borrows your money to buy a home (s)he in all likelihood (just look at the stats) will default on a mere few years down the line, leaving you with any losses (s)he can't pay.
So if Jane Doe who flips burgers or Joe Blow who's a Wal-Mart greeter, are purchasing homes putting their $8000 tax credit towards a 3.5% downpayment, that's not credit, not in the way we have always defined credit. That's a government trying with all the means it can think of to perpetuate the lie that home prices are stabilizing or even going up again. Credit, the way we should define it, consists of one market party lending out money to another because it is confident the money will be returned, along with a profit in the form of interest.
Under the present circumstances, no commercial lender will touch these home-buyers with a ten-foot pole, simply because they are not confident the loan will be repaid. Moreover, the securitization craze that characterized the start of this millenium is over. Mortgage backed securities are as popular as holes in the head. And even though home prices have fallen some 30%, there is no sign of a return of confidence in the market. Which means there are two options going forward towards a market equilibrium. You can either let prices come down to a level that both lenders and borrowers are comfortable with (traditional credit), or you can set up a gigantic system of government intervention (not traditional credit). The choice Washington has made is glaringly obvious. The taxpayer underwrites 95% of all new mortgages, while the Federal Reserve has bought up even more in mortgage-backed securities.
That choice is not hard to explain. It keeps up appearances. It keeps banks alive. It keeps people in their homes and out of bankruptcy. And most importantly, it keeps them believing in magic for a while longer. Come to think of it, that's what makes The Road different: there's no reason or space for pretending. The flipside is that the lift Washington's choice provides to home prices is completely artificial, and temporary: when the support is withdrawn, prices must and will tumble, since they have been kept high by that support only. And when that tumble comes, your debts will have grown by a trillion here and a trillion there. So far, the artificial boost has cost roughly $1 trillion per month.
Credit, defined the way we used to define it, is gone. We throw TARP funds and FHA loans at the problem, and make people think they are the same sort of credit they have always known, that nothing has changed, just a minor bump in the road. But that same sort of credit will not return for a very long time, if ever. Both lenders and borrowers are profoundly broke, and they can neither lend nor borrow the way they used to. The system now runs on your money. Which you don't have.
My friend perceives things as unfolding slowly, until he takes a better look. Many think that there is something greatly reassuring in losing 'only' 500.000 jobs per month, in a rising gold price, in a sheikh who claims Dubai is strong and persistent, and most of all in a rising stock market. But the stock market is not the real economy. And neither is it representative of that economy, in fact it's probably less so now than at any point in the recent past. And it can turn in a second and on a dime.
But it still works. People claim there's plenty credit still to be had, that the markets can keep on going up, that things seem to remain pretty much normal. Still, if the only "credit" you can get is the one that goes from your left pocket to your right one, and if unemployment numbers are 60% higher than they were a year ago, with no sign of abating, things are by no means pretty much normal, and it makes no difference if they look to be from where you happen to be sitting. 17.5% unemployment is an astounding number, says Howard Davidowitz. Amen.
I sent my friend, who's an associate university professor, an email last night after I got home:
You can be impatient without being a [doom] cheerleader. It's just a different sort of impatience. I have it too, it's inevitable when you spend an abnormal amount of hours reading on it.
That's why it's important to ask yourself when you think it's all going slow: really?
My friend sent a reply today:
True.
Things are not going slowly. It is a matter of perspective. My circumstances are simply better than many at present. That will change soon, with, for example, forced furloughs of public servants in Ontario, of which I am one.
Thanks for the wake-up.
He then finished with a quote from the book version of The Road, in what in the film is a conversation between Viggo Mortensen and Robert Duvall:
From among the many memorable scenes of The Road, the comments on "prepping" hit home with me:
They bivouacked in the woods much nearer to the road than he would have liked. He had to drag the cart while the boy steered from behind and they built a fire for the old man to warm himself though he didnt much like that either. They ate and the old man sat wrapped in his solitary quilt and gripped his spoon like a child. They had only two cups and he drank his coffee from the bowl he'd eaten from, his thumbs hooked over the rim. Sitting like a starved and threadbare buddha, staring into the coals.
You can't go with us, you know, the man said.
He nodded.
How long have you been on the road?
I was always on the road.
You can't stay in one place. How do you live?
I just keep going. I knew this was coming.
You knew it was coming?
Yeah. This or something like it. I always believed in it.
Did you try to get ready for it?
No. What would you do?
I don't know.
People were always getting ready for tomorrow. I didn't believe in that. Tomorrow wasn't getting ready for them. It didn't even know they were there.
I guess not.
Even if you knew what to do you wouldn't know what to do. You wouldn't know if you wanted to do it or not. Suppose you were the last one left? Suppose you did that to yourself?
Do you wish you would die?
No. But I might wish I had died. When you're alive you've always got that ahead of you.
Or you might wish you'd never been born.
Well. Beggars cant be choosers.
You think that would be asking too much.
What's done is done. Anyway, it's foolish to ask for luxuries in times like these.
I guess so.
Nobody wants to be here and nobody wants to leave.
What Recovery? U.S. Consumers Getting "Dramatically Worse," Howard Davidowitz Says
According to the National Retail Federation, retail sales over the Thanksgiving holiday weekend were $41.2 billion, up slightly from a year ago, while about 195 million consumers shopped, up from 172 million last year. Meanwhile, Coremetrics says the average online shopper spent 35% more on Black Friday vs. a year ago, while robust sales were predicted for Cyber Monday. Against that backdrop, you might expect Howard Davidowitz of Davidowitz & Associates to backtrack from some of the bearishness he's professed on Tech Ticker (and elsewhere) in the past year. But you'd be wrong.
"The consumer is in worse shape since I was here last" in August, Davidowitz says, citing the following:
- Unemployment has exploded: "We've lost a ton of jobs since I was here last," Davidowitz says, noting the "real" unemployment rate is 17.5%. "That's an astounding number."
- Housing continues to sink: "The consumers' biggest asset is down trillions" in value while "foreclosures are exploding" and a huge percentage have negative equity -- 23% according to CoreLogic.
- Record numbers of consumer bankruptcies: The American consumer has "never been further behind...never defaulted more" on mortgages, student loans, auto loans, and credit card bills, he says.
- Poverty on the Rise: One in eight Americans and one in four children are receiving food stamps, as The NYT reported this weekend.
"A lot of people were out on Black Friday -- you're always going to spend some money because it's Christmas," he says. "[But] the consumer continues to get dramatically worse."
Davidowitz predicts "the noise will be taken out" about "strong" Black Friday sales in the coming weeks and a sobering reality will settle in: "People will look a stores closing and a rash of bankruptcies after Christmas. People will start to look at this and say ‘wow, this is terrible,'" he says.
Somali sea gangs lure investors at pirate lair
In Somalia's main pirate lair of Haradheere, the sea gangs have set up a cooperative to fund their hijackings offshore, a sort of stock exchange meets criminal syndicate.
Heavily armed pirates from the lawless Horn of Africa nation have terrorized shipping lanes in the Indian Ocean and strategic Gulf of Aden, which links Europe to Asia through the Red Sea.
The gangs have made tens of millions of dollars from ransoms and a deployment by foreign navies in the area has only appeared to drive the attackers to hunt further from shore. It is a lucrative business that has drawn financiers from the Somali diaspora and other nations -- and now the gangs in Haradheere have set up an exchange to manage their investments. One wealthy former pirate named Mohammed took Reuters around the small facility and said it had proved to be an important way for the pirates to win support from the local community for their operations, despite the dangers involved.
"Four months ago, during the monsoon rains, we decided to set up this stock exchange. We started with 15 'maritime companies' and now we are hosting 72. Ten of them have so far been successful at hijacking," Mohammed said. "The shares are open to all and everybody can take part, whether personally at sea or on land by providing cash, weapons or useful materials ... we've made piracy a community activity."
Haradheere, 400 km (250 miles) northeast of Mogadishu, used to be a small fishing village. Now it is a bustling town where luxury 4x4 cars owned by the pirates and those who bankroll them create honking traffic jams along its pot-holed, dusty streets. Somalia's Western-backed government of President Sheikh Sharif Ahmed is pinned down battling hard-line Islamist rebels, and controls little more than a few streets of the capital. The administration has no influence in Haradheere -- where a senior local official said piracy paid for almost everything.
"Piracy-related business has become the main profitable economic activity in our area and as locals we depend on their output," said Mohamed Adam, the town's deputy security officer. "The district gets a percentage of every ransom from ships that have been released, and that goes on public infrastructure, including our hospital and our public schools."
In a drought-ravaged country that provides almost no employment opportunities for fit young men, many are been drawn to the allure of the riches they see being earned at sea. Abdirahman Ali was a secondary school student in Mogadishu until three months ago when his family fled the fighting there. Given the choice of moving with his parents to Lego, their ancestral home in Middle Shabelle where strict Islamist rebels have banned most entertainment including watching sport, or joining the pirates, he opted to head for Haradheere. Now he guards a Thai fishing boat held just offshore.
"First I decided to leave the country and migrate, but then I remembered my late colleagues who died at sea while trying to migrate to Italy," he told Reuters. "So I chose this option, instead of dying in the desert or from mortars in Mogadishu." Haradheere's "stock exchange" is open 24 hours a day and serves as a bustling focal point for the town. As well as investors, sobbing wives and mothers often turn up there seeking news of male relatives missing in action. Every week, Mohammed said, gang members and equipment were lost to the sea. But he said the pirates were not deterred.
"Ransoms have even increased in recent months from between $2-3 million to $4 million because of the increased number of shareholders and the risks," he said. "Let the anti-piracy navies continue their search for us. We have no worries because our motto for the job is 'do or die'." Piracy investor Sahra Ibrahim, a 22-year-old divorcee, was lined up with others waiting for her cut of a ransom pay-out after one of the gangs freed a Spanish tuna fishing vessel. "I am waiting for my share after I contributed a rocket-propelled grenade for the operation," she said, adding that she got the weapon from her ex-husband in alimony. "I am really happy and lucky. I have made $75,000 in only 38 days since I joined the 'company'."
Howard Davidowitz Sees Our Future And It Is Japan
Many economists draw comparisons between the United States now and Japan in 1990. For those who aren't familiar with Japan's recent economic history, this is not a good thing. Japan's stock market peaked in 1989 at about 40,000. It now trades around a quarter of that level, or 10,000. GDP, meanwhile, has barely grown at all. Economists used to refer to Japan's malaise as "a lost decade." Now they're saying "lost decades."
Our guest Howard Davidowitz sees a similarly horrific future in store for the U.S. He calls America's current path, rich in deficit spending and weak in currency a "road to nowhere."
He also doesn't buy the arguments of those who reassure us that Japan's problems are "cultural" and "demographic"--and, therefore, that it's different here. Japan's problems are the same as our problems (artificially low interest rates and a bailout culture), Davidowitz says. The only difference is that we're about 20 years earlier into the collapse. If we are Japan, what is the outlook for the stock market (and your retirement savings)? Not good. If the DOW behaves the way Japan's NIKKEI has, the DOW will trade at about 4,000 in 2025.
Morgan Stanley fears UK sovereign debt crisis in 2010
Britain risks becoming the first country in the G10 bloc of major economies to risk capital flight and a full-blown debt crisis over coming months, according to a client note by Morgan Stanley. The US investment bank said there is a danger Britain’s toxic mix of problems will come to a head as soon as next year, triggered by fears that Westminster may prove unable to restore fiscal credibility. “Growing fears over a hung parliament would likely weigh on both the currency and gilt yields as it would represent something of a leap into the unknown, and would increase the probability that some of the rating agencies remove the UK's AAA status,” said the report, written by the bank’s European investment team of Ronan Carr, Teun Draaisma, and Graham Secker.
“In an extreme situation a fiscal crisis could lead to some domestic capital flight, severe pound weakness and a sell-off in UK government bonds. The Bank of England may feel forced to hike rates to shore up confidence in monetary policy and stabilize the currency, threatening the fragile economic recovery,” they said. Morgan Stanley said that such a chain of events could drive up yields on 10-year UK gilts by 150 basis points. This would raise borrowing costs to well over 5pc - the sort of level now confronting Greece, and far higher than costs for Italy, Mexico, or Brazil.
High-grade debt from companies such as BP, GSK, or Tesco might command a lower risk premium than UK sovereign debt, once an unthinkable state of affairs. A spike in bond yields would greatly complicate the task of funding Britain’s budget deficit, expected to be the worst of the OECD group next year at 13.3pc of GDP. Investors have been fretting privately for some time that the Bank might have to raise rates before it is ready -- risking a double-dip recession, and an incipient compound-debt spiral – but this the first time a major global investment house has issued such a stark warning.
No G10 country has seen its ability to provide emergency stimulus seriously constrained by outside forces since the credit crisis began. It is unclear how markets would respond if they began to question the efficacy of state power. Morgan Stanley said sterling may fall a further 10pc in trade-weighted terms. This would complete the steepest slide in the pound since the industrial revolution, exceeding the 30pc drop from peak to trough after Britain was driven off the Gold Standard in cataclysmic circumstances in 1931. UK equities would perform reasonably well. Some 65pc of earnings from FTSE companies come from overseas, so they would enjoy a currency windfall gain.
While the report – “Tougher Times in 2010” – is not linked to the Dubai debacle, it is a reminder that countries merely bought time during the crisis by resorting to fiscal stimulus and shunting private losses onto public books. The rescues – though necessary – have not resolved the underlying debt problem. They have storied up a second set of difficulties by degrading sovereign debt across much of the world. Morgan Stanley said Britain’s travails are one of three “surprises” to expect in 2010. The other two are a dollar rebound, and strong performance by pharmaceutical stocks.
David Buik, from BGC Partners, said Britain is in particularly bad shape because the tax-take is highly leveraged to the global economic cycle: financial services provided 27pc of revenue in the boom, but has since collapsed. The UK failed to put aside money in the fat years to offset this time-honoured fiscal cycle. It ran a budget deficit of 3pc of GPD at the peak of the boom when prudent countries such as Finland and even Spain were running a surplus of over 2pc.
“We need to raise VAT to 20pc and make seriously dramatic cuts in services that go beyond anything that Alistair Darling or David Cameron are talking about. Nobody seems to have the courage to face up to this,” said Mr Buik. The report coincided with news that Britain is now officially the only G20 country still to be in recession. Canada reported that its economy grew by 0.1pc in the third quarter. Britain, by contrast, shrank by 0.3pc, the latest estimates show.
Morgan Stanley: First Comes The Banking Crisis, Then Comes The Sovereign Debt Crisis
What happens after governments go trillions into debt to rescue their banking systems? The governments themselves collapse. It's what Niall Ferguson has been warning about. It's the lesson that Roubini sees in Dubai.And now Morgan Stanley, in a new report about the upcoming slog, reminds us of some history.
Banks De-Leveraging At Rapid Fire Pace
Analyst Dennis Gartman points out that banks are beginning to de-leverage post-crisis at a pace never seen before:The Gartman Letter: One week ago this morning we wrote about the growth in bank assets, drawing upon a chart sent to us by our friend, Eric Pomboy of Syzygy Research Group. We noted that bank assets have been falling rather sharply over the course of the past several months as the nation’s banks collectively and individually deleverage at a pace we’ve not seen before in our lifetime, nor are we likely ever to see again.
From their highs approximately $12.6 trillion in late ’08, bank assets have fallen to $11.75 trillion in recent weeks, and as banks have de-leveraged they’ve essentially swapped-out loans for US Treasury security holdings. We said then that simply by “casting” forward a trendline that we thought rather evident we could guess-timate that the unwinding or deleveraging of America’s banks would stop sometime in mid’11 when total bank assets were down to $10.0-10.5 trillion.
We like to keep things simple. Advanced math and computers scare us, and in the case of Long Term Capital Management, or Bear Stearns, or Lehman or the IMF, they’ve proven utterly and rather completely worthless… or worse!
‘Deep down, even the fiercest equity bulls must be doubting themselves’
The latest missive from the dynamic SocGen strategy duo, Albert Edwards and Dylan Grice, landed in the FT Alphaville inbox on Tuesday, and it’s a stunner.
Some of the top lines from the presentation — titled: “The investment opportunity of a generation or the start of another lost decade?” — include (emphasis theirs):
We have just had the worst decade’s performance for equity investors on record. Relative to government bonds, equities have been an even bigger disaster. Surely after such a terrible decade for equity investors things can only get better?
On a ten year view, equities may indeed prove to be a good investment. On a 1-2 year view, however, we still see much pain to come. After what we have been though so far, where the bulls’ optimism has been crushed in 2001/2 and in 2007/8 surely there must be a heavy weight of self-doubt yoked onto the shoulders of the bulls - but apparently not!
The lesson from Japan is that while de-leveraging plays itself out, the global economy will remain extremely vulnerable. The Great Moderation is dead. It was built on a super-cycle of private sector debt. We know from Japan, we now return to what was before, i.e. highly volatile and unpredictable cycles. Recession will quickly follow recovery.
US equity valuations did not reach revulsion levels in March this year. After some 15 years of gross overvaluation do we really believe that this valuation bear market that has been in place since 2000 will finish with equities looking cheap for only three months? Long term-valuation measures suggest equities will fall substantially below March lows.
Government bonds are now an extremely poor investment. On a 10-year view, the insolvency of government finances will surely end in substantially higher inflation. Yet on a 1-2 year view, we believe the key threat remains deflation. Markets will react aggressively to this as the cycle stalls in 2010. Expect sub-2% bond yields to accompany new lows on the equity market next year. Thinking the unthinkable has paid off over the last decade and should continue to do so.
And here’s our favourite graphic from the piece:
That is scary.
Tri-Party Repo Could See 1st Round Of Reforms By Year-End
Progress is being made in reaching agreement on a first round of reforms for the crucial tri-party repo market and details could be revealed as early as the end of this year, according to people familiar with ongoing discussions. The reforms, which focus on margin requirements and intraday credit, are a first step in making security repurchase transactions more secure and preventing this $4.3 trillion over-the-counter market, where firms raise cash against collateral, from becoming a source of instability for the broader financial system.
They also come at a time when the repo market will be in the spotlight as the Fed plans for the day when it will start to pull the massive amounts of cash it has extended to markets from the system. The Fed is planning to use reverse repo operations--selling dealers securities such as Treasurys for cash with the agreement to buy them back later at a higher price--as one tool to achieve that goal. The drive to reform the repo market--whose smooth functioning is key to the health of the financial system--has recently gained traction, in part due to the expiry of the Fed's primary dealer credit facility in February 2010.
The facility serves as the current borrowing backstop for the big banks that deal directly with the central bank. Without it, the banks will have to rely more on repo for funding, which adds to the need to strengthen its functioning. According to one person involved with the talks, the New York Fed-sponsored Tri-Party Repurchase Agreement Infrastucture Task Force could issue a progress report on repo reform discussions and seek feedback from the broader market as early as December.
The reforms will focus on the tri-party repo market, which makes up the biggest chunk of the repo market. In this market, a clearing bank stands between the borrower and the lender, holding collateral and facilitating the trades. The two dominant clearing banks in the U.S. are J.P. Morgan Chase & Co. and the Bank of New York. In a first step, reform will focus on steps that market participants can address without outside input: standardizing margin requirements and tackling the issue of the intraday extension of credit in the market. Longer-term reforms to reduce systemic risk in tri-party repo are still being debated.
Standardized, or minimum margin requirements, would add security for the two clearing banks. Higher margins could be required for certain types of securities, such as commercial paper, or high-yield debt, or for riskier banks. Intraday credit has also been a top concern. Currently, for operational efficiency, the two clearing banks extend intraday credit on term repos, or repos longer than overnight, meaning they return cash to the lender and securities to the borrower each day even though the contract continues to run. That leaves the clearing bank on the line should either counterparty falter.
One possible solution is to bring the U.S. term repo market more in line with overseas markets, by not allowing term repos using less liquid securities, such as corporate debt, to unwind every day. Other transactions, such as those using the more liquid Treasury securities, would still unwind every day. The need for repo reforms has been apparent to policymakers for years, but was paid greater heed after severe disruptions in the market during the recent financial crisis. Borrowers, lenders, clearers, industry groups and the Fed came together in September to form the repo task force and have been meeting every few weeks since then. Members have been working on crafting an initial set of reforms that would help to protect the tri-party repo market from future financial market disruptions.
Job Cuts Loom as Stimulus Fades
Highway-construction companies around the country, having completed the mostly small projects paid for by the federal economic-stimulus package, are starting to see their business run aground, an ominous sign for the nation's weak employment picture.
Tim Word, vice president of Dean Word Co., a heavy-construction company in New Braunfels, Texas, said his income is now coming mostly from projects that are winding up. He said that in normal times he has about $100 million of signed contracts in hand. But that number has fallen to $30 million, and the pipeline is empty. In the past two years, his work force has shrunk nearly 40% to 260 from 420. "Having something to bid on is the lifeblood of the industry, and it's running out," said Mr. Word. He isn't sure what will happen next year without new projects. "There's no pavement fairy that's going to help."
Since the recession began in 2007, employment in the construction industry has fallen by 1.6 million, the Labor Department says. Though the housing sector accounts for many of those job losses, road builders have also suffered, and executives in the industry expect layoffs to rise next year. More broadly, the Congressional Budget Office late Monday said it estimates that the federal stimulus package sustained between 600,000 and 1.6 million jobs in the third quarter, and raised gross domestic product by 1.2 to 3.2 percentage points higher than it would have been without the program.
The construction industry's unemployment rate, including related extraction businesses, such as gravel processing, climbed to 19.1% in October, up from 10.7% a year earlier. The transportation and material-moving sectors saw unemployment rise to 11.6% from 7.9% over the same period. State officials and local contractors trace the industry's woes to the recession and the collapse of the residential and commercial real-estate markets. In addition, they cite the federal government's delayed plans to enact a transportation bill. In one version, the law would have provided $450 billion for highways and infrastructure projects over the next six years.Congress is no longer actively considering the bill, which has been bumped aside by competing priorities such as the Obama administration's health-care overhaul and by growing support for reducing the federal budget deficit. Some lawmakers fear that continued stimulus spending could harm the economy down the road by saddling the nation with higher debt-servicing bills. But high unemployment could revive the transportation-spending bill's prospects. Earlier this year the Obama administration was opposed to pushing a big highway bill, deterred in part by the prospect of raising gasoline taxes to pay for it. Faced with a 10.2% jobless rate, however, officials here are rethinking their stance. Thursday, the White House will hold a "jobs summit" to discuss ideas, which are likely to include shifting some spending to transportation projects.
Without an infusion of federal funding, state transportation departments say they can't develop long-term roadway projects, which are critical to the industry. About half of states' funding for such projects comes from the federal highway trust fund, which is funded by the gasoline tax. Christian Zimmermann, chief executive of Pike Industries Inc., a 1,200-employee company in Belmont, N.H., that paves roads and operates gravel pits and asphalt plants, recalls waiting out 2003 and 2004 while Congress deliberated on the last highway bill. "It was miserable," he said. The industry's saving grace then was a booming private sector. This time around, the private sector isn't picking up the slack. "Two years ago, our phones would have been ringing off the hook with the good weather," Mr. Zimmermann said. "This year the phones ain't ringing."
Without long-term government projects, Mr. Zimmermann said he may have to lay off as many as 150 people next year. "The stimulus was a shot in the arm, but that's all it was," he said. Industry executives say that the $27 billion out of the $787 billion stimulus package that went to highway construction went mostly to relatively small "shovel ready" projects, those that didn't require much lead time. The $27 billion—77% of which had been committed as of Nov. 13, according to the Associated General Contractors of America—has saved some jobs.
"But if I'm a big company, I need major freeway rehabilitation work and bigger projects," said Steve Simmons, deputy executive director of the Texas Department of Transportation. Texas's wish list is taking "a back seat because we have no funding for it," Mr. Simmons said. In the near term, House Democratic leaders are considering paying for some transportation projects that weren't funded by the stimulus package. The size of the spending package hasn't been decided, nor has the question of how it would be funded. Congress is also weighing a broader set of initiatives to spark job growth. Jim Berard, spokesman for Rep. James Oberstar (D., Minn.), chairman of the House Transportation and Infrastructure Committee, said the White House is "warming" to the idea of considering a bigger highway bill sooner than it had initially planned.
A recent survey by the Associated General Contractors of America found that more than 76% of contractors expect state transportation departments to put less work up for bid in 2010 than this year. And 44% said they are likely to lay off employees next year. John McCaskie, chief engineer at Swank Associated Cos., said his New Kensington, Pa., bridge-and-highway rehabilitation company faces more competition for the few projects out there. He said contracts worth less than $2 million are attracting a dozen competitors these days, compared with around four previously. "You end up bankrupting your company to be the low bidder."
If contractors cut back, their equipment suppliers will be hurt as well, said Ken Taylor, president of Ohio CAT, Broadview Heights, Ohio, which sells equipment made by Caterpillar Inc. Contractors have usually placed orders for the spring construction season by now, he said. That hasn't happened, and he may need to eliminate $50 million of his $175 million inventory. Mr. Taylor has pared his staff to about 750, down from 1,000 in June 2008. "I feel like I'm at a spot where we've done a lot of things, and we should be able to manage through. But if it gets worse I may be looking at closing a couple locations."
Worse Than Enron?
by Nomi Prins
Enron was the financial scandal that kicked off the decade: a giant energy trading company that appeared to be doing brilliantly—until we finally noticed that it wasn’t. It’s largely been forgotten given the wreckage that followed, and that’s too bad: we may be repeating those mistakes, on a far larger scale. Specifically, as the largest Wall Street banks return to profitability—in some cases, breaking records—they say everything is rosy. They’re lining up to pay back their TARP money and asking Washington to back off. But why are they doing so well? Remember that Enron got away with their illegalities so long because their financials were so complicated that not even the analysts paid to monitor the Houston-based trading giant could cogently explain how they were making so much money.
After two weeks sifting through over one thousand pages of SEC filings for the largest banks, I have the same concerns. While Washington ponders what to do, or not do, about reforming Wall Street, the nation’s biggest banks, plumped up on government capital and risk-infused trading profits, have been moving stuff around their balance sheets like a multi-billion dollar musical chairs game. I was trying to answer the simple question that you'd think regulators should want to know: how much of each bank’s revenue is derived from trading (taking risk) vs. other businesses? And how can you compare it across the industry—so you can contain all that systemic risk? Only, there's no uniformity across books. And, given the complexity of these mega-merged firms, those questions aren’t easy to answer.
Goldman Sachs and Morgan Stanley, for example, altered their year-end reporting dates, orphaning the month of December, thus making comparison to past quarterly statements more difficult. In the cases of Bank of America, Citigroup and Wells Fargo, the preferred tactic is re-classification and opaqueness. These moves make it virtually impossible to get an accurate, or consistent picture of banks ‘real money’ (from commercial or customer services) vs. their ‘play money’ (used for trading purposes, and most risky to the overall financial system, particularly since much of the required trading capital was federally subsidized). Trading profitability, albeit inconsistent and volatile, is the quickest way back to the illusion of financial health, as these banks continue to take hits from their consumer-oriented businesses. But, appearance doesn’t equal stability, or necessarily, reality. Here’s how BofA, Citi and Wells Fargo play the game:
Bank of America : The firm reclassified its filing categories upon acquiring Merrill Lynch, but it doesn't break down the trading vs. investment banking revenues of Merrill. This either means the firm doesn’t truly know what's going on inside its new problem child, or doesn’t want to tell. (No wonder no one’s jumping for the upcoming CEO vacancy.) That said, despite the obvious information clouding, new acquisitions generally don’t have their activities broken out, which makes it a lot harder for regulators, shareholders, or we, taxpaying subsidizers, to know whether the merger was a success or not.
According to Scott Silvestri, Bank of America’s spokesman, “On our second quarter's earnings release, there was a note explaining why we changed reporting structure. But, with every quarter that passes, it's harder to unscramble the egg. It's been a merged entity since January 1, 2009.” He added that “we have an earnings supplement. Every quarter, we put out a standalone Merrill 10-Q that shows its profitability.” True, but what’s the point of issuing a separate Merrill report, without delineating Merrill’s contribution in its main books so that you can clearly see how specific parts of Merrill’s business impact similar ones in the merged entity? Furthermore, we can’t even figure this out ourselves—the Merrill results in the 10-Q don’t map directly to those of BofA’s books. This all just creates more complexities for a bank that still floats on $63.1 billion in various government subsidies.
When it wants to, it appears that BofA can merge and then break out Merrill’s numbers. Under the "Global Wealth & Investment Management ” classification, we discover that Merrill contributed three-quarters of the $12 billion BofA took in over the first nine months of 2009. According to Silvestri, “The numbers of the old Merrill are there because the brand name was kept, vestiges of the old Merrill Lynch exist.” Talk about semantics. Why not also break out the area where revenues tripled and trading account profits jumped significantly (from a $6 billion loss in 2008 to an almost $14 billion gain in 2009)? Something is clearly going on there: the best measure of trading risk, VaR (“value at risk” or a firm’s daily trading variation) doubled between 2008 and 2009. If I was the CEO, I’d want to see this critical comparison on my merged company filing.
Elsewhere, the sum of Bank of America’s quarterly figures doesn’t quite add up to the nine months totals. (A few hundred million of discrepancies between friends.) Another item "all other" is off by nearly a quarter of a billion dollars. And so on. The firm also declared, that it “may periodically reclassify business segment results based on modifications to its management reporting methodologies and changes in organizational alignment." In other words, whenever it feels like it. Comforting, isn’t it?
Citigroup : Another balance-sheet renovation, this time because of a sale (Smith Barney, which it offloaded to Morgan Stanley) rather than a purchase, and another trading miracle. Citigroup’s main trading arm, housed in what it calls the Institutional Clients Group (ICG), made $31.5 billion in net revenue for 2009, compared with a $7.8 billion loss in 2008. Its average daily value at risk jumped too, though “only” by 15 percent or so.
That’s a huge and extremely fast trading rebound for the main recipient of government subsidies (at $373.7 billion). But, there is no overall breakdown present in the summaries of Citigroup’s latest filings. And the sum of the trading totals doesn’t equal the parts, because the firm also noted that certain numbers deemed an “integral part of profitability” weren’t included in those computations, without giving any apparent reason. (After adding the missing number, it still didn’t add up.) Again, it’s “just” a couple billion of discrepancies, but with books this massive at banks this big and risky, accuracy matters. Plus, such nuances make it extremely difficult to understand its books for regulators or the public.
Citigroup’s Danielle Romero-Apsilos said that they periodically change reporting. "ICG existed, but after Smith Barney, we decided to divide it—we call one part securities and banking, one part global transaction services, etc.” That describes the chain of events, but doesn’t get closer to determining trading related revenue. Romero-Apsilos said, “We don’t break up the financials specifically for those businesses. Over the years, we may have broken out different things."
Wells Fargo : Yet more innovative accounting maneuvers. For example, the innocuous sounding category, “wholesale banking” which provides traditional lending, finance and asset management services, was expanded (following the Wachovia acquisition that completed on December 31, 2008) to include more speculative activities like fixed-income and equity trading. But, those activities aren’t broken down in the firm’s SEC filing, making it difficult to determine which portion comes from trading vs. commercial or investment banking. Wells Fargo spokesperson, Mary Eshet (who still has a Wachovia email address) confirmed there is no separate Wachovia 10-Q (like there is for Merrill Lynch), but that it wasn't the case that "Wells Fargo broke out trading related revenue previously either."
In fact, Wells just provides totals for their four main business segments, each of which increased sharply, Community banking rose from $33 billion in 2008 to an annualized $59 billion in 2009. Wholesale banking shot up from $8.2 billion in 2008 to $20 billion in annualized 2009. And, wealth, brokerage and retirement quadrupled from $2.7 billion in 2008 to $11.6 annualized for 2009. (The fourth segment is called ‘other.’) Yet, all these rosy numbers come with no specific breakdowns for their various trading business areas.
Separately, Wells states in its filing that its management accounting process is “dynamic” and, not “necessarily comparable with similar information for other financial services companies.” This statement should give lawmakers pause: if banks are so complex as to constantly fluctuate their own reporting, deciphering figures just before a crisis won’t exactly be a walk in the park. With taxpayers now on the hook, we need an objective, consistent evaluation of bank balance sheets complete with probing questions about trading and speculative revenues, allowing for comparisons across the banking industry. This lack of transparency leaves room to misrepresent risk and trading revenue.
The long-term solution is bringing back Glass-Steagall. Being big doesn’t just risk bringing down a financial system—it means you can also more easily hide things. Remember the lesson from the Enron saga: when things look too good to be true, they usually are.
Deflating the bubble
by Charles Goodhart
Between the failure of Lehman Brothers in September 2008 and March 2009 asset prices in financial markets, world trade, confidence and real output dropped faster than in 1929. Since then there has been an, almost miraculous, recovery in financial markets and confidence, and a stabilisation and incipient recovery in trade and output. The turning point coincided with the aggressive adoption of quantitative easing (QE), especially in the US and UK. The most common explanation of this recovery in financial markets is that it has been due to the abundant provision of liquidity; and liquidity is exactly what QE generates.
Yet QE has not worked as many had first expected. A now defunct theory of the supply of money had the central bank controlling this by operating to adjust the reserve base of the banking system. Banks were expected to maintain a reasonably stable ratio of reserves to assets/deposits so, if the authorities should raise their reserve base, primarily their deposits with the central bank, then total?assets/deposits should rise by the same level. Since total assets/deposits are normally a large multiple, say 25 times or more, of the reserve base, this relationship appeared to enable the central bank to adjust total bank?assets/deposits by a multiple of their open market operations to affect the reserve base, the “money multiplier” as the theory was known.
From June 2008 to June 2009, reserves held by commercial banks with their central bank doubled in the eurozone, and increased by an even greater percentage in the UK and US, yet bank deposits and total bank assets barely changed, so the multiplier collapsed to zero. Banks, in aggregate, just absorbed the additional reserves by allowing their ratio of reserves to deposits to balloon, without any attempt to use their greater liquidity/reserves to expand their balance sheet. Why?
This may appear to have been a purely passive response to cash injection, but nevertheless commercial bank treasurers will have consciously decided that accumulating vast cash reserves was preferable to using them in any other way. This may be partly insurance against uncertain future needs to roll-over wholesale funding. At a time of tightening bank capital requirements, and rising prospective defaults, the limitations on lending to private sector borrowers, except on most favourable terms, are obvious.
But why not buy safe public sector debt? Lower yields on short-dated government bonds, pushed down by QE, as well as interest rate risk, enhanced by rising debt ratios, may make public sector debt appear less attractive compared to the safe remuneration on deposits at the central bank. This is a condition for a typical liquidity trap; hence my proposal for applying a negative return, a charge, on such deposits. Perhaps a lesson that should be learned is that the relativities between the interest rate on bank deposits with, and borrowing from, central banks gives each central bank another degree of instrumental freedom, on top of their control over the official short-term rate.
Despite the total collapse of the money multiplier, QE has, I believe, been a major factor in the recovery of financial markets and confidence. The scale of asset purchases has been so large that it has led to a huge injection of liquidity, and to portfolio rebalancing, on a large scale amongst non-bank financial intermediaries and financial market participants more widely. Bond yields have come down quite sharply, more so in riskier corporate debt than in government debt, as risk premia also get reduced. Equities rise, and exchange rates fall in countries pursuing QE more aggressively (USA and UK) relative to those doing less (eurozone and Japan). The rise in asset prices and fall in yields, has allowed large corporates, including banks, to refinance themselves in capital markets; with fixed and inventory investment still low, such fund raising allowed repayment of bank loans. It is ironic that QE may have facilitated a reduction in bank lending and deleveraging.
So if QE has been such a success, and the prospective recovery still looks anaemic, why not continue it? Partly because the money multiplier has been defunct, QE has operated primarily via a restoration of prices, confidence and capital gains in financial markets rather than impinging directly on the access to credit and expenditure decisions of small and medium enterprises and households, where the real problems remain. If the authorities go on blowing up financial markets too much, at some point yet another bubble will develop. The last time the financial bubble burst, the taxpayers got soaked. There will not be a next time for this support mechanism, since the taxpayer neither can, nor will, repeat it. Central banks need to check their proclivity for generating a further bubble to overcome the effects of the previous bust. Certainly, we can never get the timing exactly right, but now does seem the moment to declare victory for QE and withdraw.
Howard Davidowitz's Winners of the Retail Apocalypse
Retail analyst Howard Davidowitz debuted on our show in February and declared the American consumer is toast, and that the U.S. standard of living is permanently changed. One of Tech Ticker's most popular guests ever, Davidowitz lit up our message boards.
With unemployment at 10.2% -- a 26-year high -- and Americans saving more and spending less, Howard, chairman of Davidowitz & Associates, remains bearish on the consumer. But not all retailers are created equal. In a fierce game of survival of the fittest, the most cost-effective, creative and nimble retailers are actually gaining market share in a weakened economy. Among the "gold standard" retail winners:
- Kohl's: A low cost-to-run leader that's able to offer quality merchandise at lower prices.
- Dollar Tree: With $1 goods, the chain is so profitable new stores operate in the black right out of the gate.
- Bed Bath & Beyond: With competitor Linens N Things out of business, the retailer of home merchandise is gaining strength.
- Wal-Mart: You know the story here. But now the behemoth is putting traditional food retailers out of business, too.
- Amazon.com: Shares of the online retailer hit an all-time high Monday as consumers turn to online shopping for bargain hunting and price-comparison shopping. Plus with no costs associated with running physicals stores, Amazon can compete with giant Wal-Mart.
And the retail losers? Sales trends so far aren't looking good for the luxury sector such as jewelry stores. While Tiffany's recently topped analysts' profit forecasts for the third quarter, some-store sales fell 6%. (Quarterly profits were helped by overseas sales and cost cutting.) Longer term, Tiffany's needs to reassess its revenue model, Davidowitz says.
FDIC too broke to Takeover Banks? No Bank Failure Friday on Black Friday. Can 5,300 Employees Deal with $5.3 Trillion in Deposits?
The Federal Deposit Insurance Corporation (FDIC) was hammered this week when a third quarter report demonstrated that the FDIC was running in the red to the sum of $8.2 billion. This is troubling since the FDIC protects deposits in member banks up to $250,000 and funds covered by the deposit insurance fund (DIF) are over $5.3 trillion, this amount is over one-third of our nationwide GDP. The FDIC as of Q1 of 2009 has 5,381 employees. Is that enough to deal with the enormous banking crisis?The FDIC is proud of saying that since 1934 no depositor has ever lost a single cent of insured funds due to any bank failure. Yet what isn’t stated is the trillions needed to prop up the failing banking system. Of course, as time has gone on and the banking system has gotten more fragile the amount of insured deposits has ramped up:
- 1934 – $2,500
- 1935 – $5,000
- 1950 – $10,000
- 1966 – $15,000
- 1969 – $20,000
- 1974 – $40,000
- 1980 – $100,000
- 2008 – $250,000
Did you notice how no banks were taken over this week? This definitely bucks the overall trend for the year:
The FDIC has dealt with 124 bank failures in 2009. Yet this week the third quarter report shows the fund in the red, so no banks are taken over? Can it be that the FDIC is so deep in the red, that it is in poor shape to take over any additional banks? On November 20th only one bank was taken over. Maybe this was in anticipation of the quarterly report. Since the third quarter ended, the FDIC has taken over 29 additional banks so the fund is likely to be further in the red than the $8.2 billion announced.
What is troubling, as the fund goes negative, more deposits are now under the DIF purview:
From the second to third quarter, DIF-insured deposits increased by $491 billion yet the DIF balance swung down by $18.6 billion. Where will the fund be at by the end of the fourth quarter? It isn’t because banks are doing better. The number of troubled institutions has also increased to 552:
The troubled bank list is made up of banks that are still functioning. Banks like IndyMac and Washington Mutual that ended up costing the FDIC billions didn’t even appear on the list. Troubled banks under the FDIC watch now have over $300 billion in assets at risk. So what options does the FDIC have?
If you recall, the FDIC also has a lifeline of $500 billion with the U.S. Treasury:
“(FDIC) Chairman Bair distinguished the DIF’s reserves from the FDIC’s cash resources, which included $22 billion of cash and U.S. Treasury securities held as of June 30, as well as the ability to borrow up to $500 billion from the Treasury. “A decline in the fund balance does not diminish our ability to protect insured depositors,” Chairman Bair concluded.”
The FDIC instead of tapping into the U.S. Treasury has decided to assess early premium payments on banks. But how long this can go on is hard to say. Politically the nation is getting exhausted with bailouts going to a banking system that is failing and is clearly only taking taxpayer money to protect its balance sheet. In fact, since the major bailouts most lending has decreased in overall size:
This is where you see the real shift. You’ll notice that with residential loans, banks are now pushing government backed paper while tapering off their own balance sheet. If this is the case, why doesn’t the public just go to the U.S. government for mortgages with the benefit of the Fed’s zero bound interest rate? Also, you’ll notice that credit card lending has also fallen by 4.5 percent in the last year even though banks have received trillions in bailout funds. Where has the money gone? Take a look at the jump in loss reserves. A jump of 40 percent. Real estate owned has jumped by 65 percent. To be more clear, banks fooled the public by utilizing their spokespeople in D.C. that the money given to banks was necessary to maintain lending. But in reality, the trillions in bailouts were merely a requirement to patch up the balance sheet of banks.
I wouldn’t mistake the last couple of quiet weeks in terms of bank failures as good news. It just seems odd that a broke FDIC would be taking over a broke bank. Banks are in deep trouble. We just saw that Dubai, the hyper center of commercial real estate development has requested a pause on their debt payment. They like many homeowners are unable to make their payment. This merely serves as a reminder that problems still sit in the banking system. The FDIC will undoubtedly be using that $500 billion lifeline just like the FHA will be needing a bailout in 2010. How many bailouts will our fragile economy take while the money is funneled to the entrenched banking interests?
AIG May Face An $11 Billion Shortfall In Insurance Reserves
The disaster at AIG keeps getting worse. Today a Sanford C. Bernstein analyst released a note on his discovery that the insurer has an undisclosed $11 billion shortfall in reserves to pay property-casualty claims. Todd Bault said that AIG may have cut back on its use of reinsurance and become too "aggressive" in pricing workers' compensation and professional liability policies. As a result, AIG would likely have take a huge reserve charge before it could sell its Chartis property-casualty business.
“AIG shareholders and the federal government face considerably more uncertainty than they may have anticipated,” Bault wrote. For months there have been rumors that Chartis was selling insurance an unsustainably low levels. Chartis officially dismisses these as whining from competitors. But if Bault is right, it looks like there may be some merit to this complaint. Bault cut the price target on AIG from $20 to $12. Look out below!
Fed reduces AIG's debt by $25 billion
AIG announced Tuesday that it completed a deal wiping out $25 billion of its debt to taxpayers by selling stakes in two subsidiaries to the Federal Reserve Bank of New York.
The troubled insurer gave the New York Fed preferred shares of two of its international life insurance companies, including $16 billion of American International Assurance Co. and $9 billion of American Life Insurance Co. The deal was originally announced in March.
The deal brings the New York-based insurer's debt to the New York Fed down to $17 billion. AIG also still owes the U.S. Treasury $44.8 billion from a separate Troubled Asset Relief Program (TARP) loan, so the insurer still owes taxpayers just under $62 billion. AIG Chief Executive Bob Benmosche said, in a press release, that the debt reduction "sends a clear message to taxpayers: AIG continues to make good on its commitment to pay the American people back." AIG's stock rose more than 4% on the news in morning trading.
"The agreements further the goals of enabling AIG to fully repay the assistance that it has received from U.S. taxpayers and advancing the company's global restructuring process," the New York Fed said in a statement when the deal was first announced in March. The Federal Bank of New York initially provided $85 billion worth of support to AIG in September 2008, when the company was on the brink of collapse. AIG's government rescue plan has since been restructured three times, and its total bailout is now worth up to $182 billion.
But much of that bailout has come in the form of government asset purchases that AIG does not need to repay. In addition to the $25 billion announced on Tuesday, the government in March bought up nearly $40 billion of insurance agreements and mortgage-backed securities held by AIG and its business partners. To pay back the remaining $62 billion it owes the government, AIG will continue to sell off its assets. Despite recording two straight profitable quarters, AIG has said it will not generate enough earnings to repay taxpayers with profits alone. AIG said Tuesday's transaction will force the company to take a hefty $5.7 billion restructuring charge in the current quarter, which will likely wipe out any profits AIG would have registered in the last three months of 2009.
Despite the government support, the company still faces a steep uphill battle to return to health. Shares of the insurer tumbled 15% Monday, after Bernstein Research analyst Todd Bault told investors that he cut the 12-month price target to $12 a share from $20 because the insurer's "loss reserves are significantly deficient again, much sooner than we would have forecast two years ago." On Nov. 25, AIG announced that it had resolved its legal dispute with former chairman Maurice "Hank" Greenberg.
How the United States Inflated the World
After the United States discarded the gold standard, the dollar remained the worlds reserve currency. Trade around the world was still conducted in dollars even though it had depreciated against most currencies. This created havoc. Exporters to the United States received the depreciated dollars for their goods. OPEC (the Organization of Petroleum Exporting Countries), an exporter of oil to the United States, received less value for each gallon of oil exported. (The dollar fell about 50 percent against other currencies during the 1970s. This varied, depending on the foreign currency, and requires many qualifications). Since OPEC could buy fewer goods for each gallon of oil sold, it wanted more dollars for the exchange.
Another example, the trade loop between the United States and Germany, presented a similar problem for Volkswagen. When an American bought a Volkswagen, the dollars wound their way to Volkswagens headquarters in Germany. (This is a hypothetical case, with no knowledge of how Volkswagen operated.) The automobile manufacturer did not want dollars. It shipped them to the German central bank (the Bundesbank). In return, Volkswagen received deutschmarks at the appropriate exchange rate.
Americans were spending much more abroad than at home. Since dollars in circulation in Europe were rising in relation to deutschmarks spent on goods from the United States, cars from abroad cost more: Americans were paying for goods with less valuable dollars. The German government did not want its exporters to suffer. The Bundesbanks dollar-deutschmark transaction with Volkswagen increased the German money supply. This slowed the rise of the deutschmarks value against the dollar, but also increased German domestic inflation. In fact, the excess dollars led to inflation around the world. This flood of dollars led to price inflation in the 1970s. More recently, the flood of dollars has led to asset inflation, including the worldwide housing bubble.
The Federal Reserves Inflation Calculation
Arthur Burns [Chairman of the Federal Reserve 1970-1978 ed.] followed the most expeditious route to tame inflation: changing how the measure was calculated. Stephen Roach was a young economist at the Federal Reserve. After oil prices quadrupled, Arthur Burns instructed his staff to calculate a CPI stripped of energy costs. Burnss rationale was the blazing Yom Kippur War, over which the Fed had no control. Why the Federal Reserves influence should matter in how the rate of consumer price inflation is calculated could be better understood by reading memoirs of the Nixon administration than by studying Arthur Burnss seminal textbook, Measuring Business Cycles.
Roach recalls: Alas, it didnt turn out to be quite that simple. Burns thought the disappearance of anchovies off the Peruvian coast caused food costs to rise. They too were removed from the price index. Next went used cars, childrens toys, jewelry, and housingabout half the costs that consumers absorbed in their daily struggle with rising prices. Today, three decades after the anchovy shortage, without much ado from the economics guild, the media announces the monthly ex-food, ex-energy CPI, produced by the Bureau of Labor Statistics. This gently rising CPIa charade has compounded at a much lower rate than the true costs paid by Americans. This is one reason the collapse in living standards among the lower half remains a mystery to those who trust government press releases and the media that report them.
The science of economics as applied to national statistics was (and is) more a confiscation of the truth than a midwife to it. Incumbent and future politicians, including future Fed chairman Greenspan, introduced and nurtured such hullabaloo as hedonics and the birth-death rate in the highly publicized but little understood calculations of economic growth rates and unemployment numbers. The figures were a disgrace, and so were the parties responsible for their introduction and dissemination. Greenspans turn at the Council of Economic Advisers was to be a screen test for a future role in the charade, a dress rehearsal for his political, acting and dissembling talents, the inestimable qualities needed by a Fed chairman in an economy that was rocketing off its moorings.
In any case, numbers cannot capture inflation, which generally works hand in hand with deterioration.
The Collapse of Finance
by Bill Bonner
“Dubai sends markets into turmoil,” begins The Financial Times. Dubai is a financial center, built on sand. Probably a good thing US markets were closed for Thanksgiving when this news came out. In Europe, the Dubai affair caused the biggest drop in 7 months. European banks have lent $40 billion to Dubai. Jim Chanos, a famous short seller, thinks Dubai is merely the camel’s nose in the tent, so to speak. “China is Dubai times 1,000…if not a million.”
“People are panicking: this whole process counters everything that the rulers have been saying and the way it has been communicated before the holidays is confusing,” said one hedge fund manager. The ‘rulers’ are the fellows who run “Dubai World,” and incidentally Dubai itself. Whether they are fools, knaves or sly geniuses was what everyone wanted to know. Dubai officials announced that they had raised $5 billion on Tuesday. Two hours later they said they weren’t paying interest on it or on any of the rest of the $80 billion in borrowings. What’s going on? Are they really broke? Or are they playing for some kind of advantage?
“Dubai gambles with its financial reputation,” says one headline at the FT. Then, on the facing page, the editors think they know how the gamble will turn out: “A breath-taking blunder in Dubai…Dubai is looking more like Argentina than Singapore – but a lot less predictable,” says the FT editorial. No on is sure what is going on. Most people take from this story what we knew all along: lending to shady characters in sunny places is not an easy way to make money. Especially when the shady characters own the country. Trouble is, shady characters run near all the world’s countries. If an investor cannot trust the ruling family of Dubai, how can he trust the commies who run China? Or the hacks who run the United States of America?
To err is human. For a central banker, it is practically a professional requirement. Count on a major ‘error’ to trigger a sell-off in the world’s bond market. But Dubai’s mistake did not infect all other sovereign debt. German bond yields went down, not up. Investors sought safety from Dubai debt in Deutschland debt. But what is the real meaning of what is going on in Dubai? It’s the story of the collapse of the financial industry. Dubai has no oil…no natural resources…and no real industry. The rulers tried to turn it into a financial center. Entirely financed by debt. And now finance itself is falling apart.
“The camel put his nose in the tent,” says colleague Simone Wapler. “He saw that there was nothing there.”
What will he think when he gets a closer look at Britain’s finances? Britain, too, relies heavily on the financial industry. And Britain, too, is heavily dependent on debt. Its public finances are among the worst in the world. Japan’s public debt, to add another example, is already 200% of GDP. It’s expected to reach 300% in a few years. And yet, Japan – like the US and Britain – just keeps borrowing. How long can this go on? When will Britain, the US, and Japan announce their own moratoria on debt service payments? This bubbly bounce must not have much time left. And it is surrounded by 10,000 pins.
On Friday, US markets reacted to the Dubai news. The Dow lost 154 points. Gold lost $14. Oil slipped to $76. Our crash flag is still flying. But that was not a crash. Just a bad day. And today’s news tells us that other Gulf States are rallying around Dubai, ready to extend a helping hand and lend a buck or two. Oil is rallying on the news. Does that mean this bubbly trend is stronger than we thought? Is this a bubble made of Kevlar? Will it resist other pins? We wouldn’t count on it. When China pops, we’ll see US stocks down a lot more than 154 points. In fact, we expect to see the Dow in 5,000-ish territory when this bounce is over. And when that happens, emerging markets will probably be hit even harder.
Dubai was a “wake up call,” for investors in emerging markets, says The New York Times today. But the pin that pricks recovery hopes won’t necessarily be imported. There are plenty of sharp objects in the homeland too. There is, for example, the growing realization that the recovery is a fraud. “Half a recovery,” says a New York Times columnist, may be all we get. Today, the press will concentrate on analyzing Black Friday sales results. Already, The Wall Street Journal has rendered its verdict: more shoppers; fewer sales.
If the initial reports are correct, the traffic wasn’t bad on Friday. But retail outlets were only able to snag sales by offering discounts. It’s a deflationary world, after all. Shoppers want lower prices to make up for the fact that they have less money to spend. And they’ll get lower prices too. Because this is a de-leveraging cycle. The world has too much debt, too many factories and too many workers…at least for the real, available purchasing power. Prices will go down naturally until excesses are absorbed…dismantled…or converted to other uses.
But wait…there are also unnatural forces at work. Governments are bailing out bungled companies. They’re supplying zombie industries with fresh blood from the taxpayers. They’re standing in the way of the de-leveraging progress. They’re creating “money” out of thin air. It’s this last point that is most explosive. As long as government is just stalling the correction, it doesn’t cause too much distortion or volatility. But when it fiddles with the money…oh la la; that’s where it gets interesting.
Traditionally, people buy gold when they think the monetary authorities are up to something. Throughout the world, investors are getting edgy…they’re wondering how it is possible to add so much cash and credit to the economy without sending prices to the moon. We’ll tell you how it’s possible: there’s a depression. In a depression, the flow of cash and credit coagulates. Even if you increase the cash in bank vaults, it doesn’t circulate into the real economy. Banks don’t lend. People don’t borrow. Consumers don’t consume. It just sits there…waiting for the end of the depression…like a teenager waiting for Friday…
Thirty financial groups on systemic risk list
Thirty global financial institutions make up a list that regulators are earmarking for cross-border supervision exercises, the Financial Times has learnt. The list includes six insurance companies – Axa, Aegon, Allianz, Aviva, Zurich and Swiss Re – which sit alongside 24 banks from the UK, continental Europe, North America and Japan. The list has been drawn up by regulators under the auspices of the Financial Stability Board, in an effort to pre-empt systemic risks from spreading around the world in any future financial crisis.
Insurers are considered systemically important for a variety of reasons: they might, for example, have a large lending arm, such as Aviva, or a complex financial engineering business, akin to that of Swiss Re. AIG of the US, the failed insurance group, was proven to be a vast systemic risk last year, in large part because of its diversification from insurance into complex financial engineering. Raj Singh, chief risk officer of Swiss Re, said: “The real interconnectivity for the insurance industry is more muffled in that there needs to be a dual trigger for there to be any big systemic effects.”
The list, which is not public, contains many of the multinational bank names that would be widely expected.
The exercise follows the establishment of the FSB in the summer and is principally designed to address the issue of systemically important cross-border financial institutions through the setting up of supervisory colleges. These colleges will comprise regulators from the main countries in which a bank or insurer operates and will have the job of better co-ordinating the supervision of cross-border financial groups. As a spin-off from that process, the groups on the list will also be asked to start drawing up so-called living wills – documents outlining how each bank could be wound up in the event of a crisis.
Regulators are keen to see living wills prepared for all systemically important financial groups, but the concept has split the banking world, with the more complex groups arguing that such documents will be almost impossible to draft without knowing the cause of any future crisis. Paul Tucker, deputy governor of the Bank of England, and head of the FSB working group on cross-border crisis management, said recently that the wills – also known as “recovery and resolution” plans – would have to be drawn up over the next six to nine months. National regulators, led by the UK, are known to have begun pilot-testing the living wills exercise with some of the listed banks in the past few weeks.
Supervision spotlight: Banks
US
Bank of America Merrill Lynch
Citigroup
Goldman Sachs
JPMorgan Chase
Morgan Stanley
Canada
Royal Bank of Canada
UK
Barclays
HSBC
Royal Bank of Scotland
Standard Chartered
Switzerland
Credit Suisse
UBS
France
BNP Paribas
Société Générale
Spain
BBVA
Santander
Japan
Mitsubishi UFJ
Mizuho
Nomura
Sumitomo Mitsui
Italy
Banca Intesa
UniCredit
Germany
Deutsche Bank
Netherlands
ING
Insurance groups
Aegon
Allianz
Aviva
Axa
Swiss Re
Zurich
Willem Buiter Will Join Citigroup as Chief Economist
Citigroup Inc. hired Willem Buiter, a former Bank of England official who has criticized the Federal Reserve for being too close to Wall Street, as its chief economist. Buiter, 60, will join the bank in January and fill the position left vacant by Lewis Alexander’s move to the U.S. Treasury eight months ago, New York-based Citigroup said in a statement today. The appointment by the bank, which is 34 percent owned by the U.S. government, puts an academic known for his outspokenness in its most senior economics position.
In 2008, Buiter told the Fed’s annual symposium in Jackson Hole, Wyoming, that it pays an “unhealthy and dangerous” amount of attention to the concerns of the biggest U.S. financial institutions. “As one of the world’s most distinguished macroeconomists, Willem’s deep knowledge of global markets and economies, and emerging markets economies in particular, will be invaluable to our clients,” Hamid Biglari, Vice Chairman of CitiCorp, said in the statement. Buiter, currently a professor of political economy at the London School of Economics, has been unafraid to speak his mind about former or potential future employers.
“In August 2007, several CEOs of major cross-border banks admitted they didn’t know what a CDO was,” Buiter said at the European Banking Congress on Nov. 20 in a discussion on the role of collateralized debt obligations in the financial crisis. “Most members of the Bank of England’s Monetary Policy Committee didn’t either.”
Buiter called Citigroup “a conglomeration of worst- practice from the across the financial spectrum,” in an April posting on his blog, posted on the Web site of the Financial Times. In June, he wrote in the blog that the appointment of former Citigroup Chairman Winfried “Win” Bischoff to help oversee a report on the future of U.K. international financial services was “the most ridiculous appointment since Caligula appointed his favorite horse a consul.”
Buiter was one of the founding members of the U.K. central bank’s rate-setting panel when he joined in June 1997. In March 1999, he voted for a 0.4-point interest-rate cut, the only attempt in the MPC’s history for a move that wasn’t in a quarter-point multiple. In 2008, Buiter turned his fire on his hosts when the Fed invited him to its annual retreat in the Teton Mountains. “The Fed listens to Wall Street and believes what it hears,” Buiter told an audience of central bank officials from the Fed and around the world. “This distortion into a partial and often highly distorted perception of reality is unhealthy and dangerous.” Fed Governor Frederic Mishkin said at the same event that Buiter’s paper fired “a lot of unguided missiles,” and former Vice Chairman Alan Blinder “respectfully disagreed” with his analysis of the central bank’s crisis management.
Buiter has been a consultant to Goldman Sachs Group Inc. since 2005, according to today’s statement. He has a bachelor’s degree from Cambridge University and a doctorate from Yale University. Questioned on Bloomberg Television today about government- controlled Dubai World’s request for a standstill agreement with creditors, Buiter said that they shouldn’t expect a full state- backed rescue. “This is a business that’s fallen on hard times and its creditors and bondholders simply have to take their lumps and not expect a sovereign bailout,” he said. Buiter was chief economist for the European Bank for Reconstruction and Development from 2000 to 2005. He has been an adviser to the International Monetary Fund, the World Bank and the Inter-American Development Bank, according to the statement.
Alexander, who had worked at Citigroup since 1999, left in March to become a counselor on domestic finance issues to Treasury Secretary Timothy Geithner. He was paid $2.4 million by Citigroup in 2008 and the first months of 2009, according to his financial-disclosure form filed with the Treasury. In December 2007, he predicted the U.S. would probably avoid a recession. Buiter is married to Anne Sibert, an economics academic who was appointed as a member of Central Bank of Iceland’s five- member Monetary Policy Committee earlier this year, according to a Web log posting on his site.
British households repay record amount of debt in October
British consumers repaid the highest amount of unsecured credit on record in October, reducing their debt at twice the rate economists had expected. Net consumer credit fell for the fourth straight month in October, dropping by £579m in October after a £299m decline the month before, Bank of England data showed on Monday. That was the biggest fall since records began in April 1993 and compared with analysts' expectations of a £200m fall. After a decade of easy credit and rising personal debt levels, Britons are paying the price of their borrowing binge as they suffer the longest recession in over 50 years.
Net mortgage lending, however, continued to rise, increasing by £922m. That was roughly in line with expectations and follows a similar £898m increase in September but is a tiny fraction of the volumes in the boom years up to mid-2007. Mortgage approvals also rose in line with expectations to 57,345 in October after a 56,205 rise the previous month. That was the highest since March 2008, but is well below average levels of around 85,000 a month during the years of rapid house price rises. "Approvals continued to inch higher, suggesting there is some improvement in underlying activity, but levels remain very depressed," said David Page, economist at Investec.
Broad money supply, M4, rose by 1.6pc in October, the biggest monthly increase since January. But the Bank of England's preferred measure, M4 excluding intermediate other financial corporations, dropped by 0.7pc on the month and by 5.3pc on three-monthly annualised rate. That will cast further doubt on the effectiveness of the central bank's £200bn quantitative easing policy, which many had expected to raise money holdings outside the financial sector and thereby stimulate economic growth. "The underlying position looks weak," said Ross Walker, economist at Royal Bank of Scotland. "There's not much evidence that QE is boosting those real economy money and credit aggregates. If it is working, it's through financial sector channels rather than through households and non-financial companies." BoE policymakers have argued that the policy of buying assets - mostly gilts - with newly created money is working well in that it has raised the price of those assets and brought down borrowing costs for large companies.
Merkel Faces Rebellion Over Planned Tax Cuts
Chancellor Angela Merkel's center-right coalition is already beset by internal disputes and controversy after just four weeks in office. Now she faces a rebellion by conservative state governors, who say the new government's plans for tax cuts worth 8.5 billion euros are irresponsible. Chancellor Angela Merkel's center-right coalition of conservative Christian Democrats and the pro-business Free Democratic Party (FDP) became embroiled in a potentially damaging dispute over tax cuts over the weekend as several conservative state governors voiced opposition to measures to cut taxes by €8.5 billion ($12.8 billion) on Jan. 1.
The governors of five states controlled by Merkel's Christian Democratic Union (CDU) threatened to vote against tax cuts in the Bundesrat upper house of parliament in December because they believe the resulting shortfalls in revenues will put an excessive burden on their state finances. Merkel has warned the governors that she will not compensate them for the tax cuts. The Free Democrats in particular are adamant that the tax cuts must go ahead to stimulate economic growth. The CDU governor of Schleswig-Holstein, Peter Harry Carstensen, has threatened to resign over the dispute, German newspapers reported at the weekend. Without his state's support in the Bundesrat, Merkel's tax relief plans will not pass.
CDU governors in Thuringia, Saarland, Saxony-Anhalt, Baden-Wuerttemberg and Saxony also voiced opposition to the plan, saying it was irresponsible to cut taxes at a time of deficits. "We can't cope with the tax cuts," Thuringia's CDU governor Christine Lieberknecht told the television station ZDF. "We can't vote for it. It wouldn't be responsible for our state and the budget." Andreas Pinkwart of the FDP, the deputy governor of Germany's most populous state, North Rhine-Westphalia, said the tax cuts were urgently needed to help small and medium-sized businesses. "Anyone who delays or criticizes them is threatening jobs," Pinkwart told Rheinische Post newspaper. "The delicate flower of recovery must now be strengthened. This requires brave and determined action."
Volker Kauder, the head of the CDU's parliamentary group, urged the states to back the tax cuts. "We've got to be sensible. We've got to give this coalition a successful start," Kauder told ZDF television on Sunday. The rebellion by state governors comes at a bad time for Merkel. Just one month into her second term, she had to reshuffle her cabinet on Friday when Labor Minister Franz Josef Jung resigned over charges that he covered up details of an air strike that killed Afghan civilians when he was defense minister. Merkel agreed the tax cuts with her FDP partners in coalition negotiations after the Sept. 27 election even though government debt has soared as a result of the economic crisis. Several politicians have warned that failure to implement the tax cuts would damage the government.
Pyongyang Revalues Won, Spurs Chaos
North Korea revalued its currency for the first time in 50 years and strictly limited how much old money could be traded for new, moves that appear designed to confiscate much of the cash people earned in market activities the country's authoritarian government doesn't like. The action triggered chaos, according to news outlets in South Korea that specialize in obtaining information from the North, as people rushed to banks and offices of the ruling Workers Party to get information, make exchanges or trade existing North Korean won for euros and U.S. dollars.
The revaluation was announced Monday over a cable-broadcast system that can't be monitored outside the country. North Korea issued new notes with an exchange value of 100 to 1 -- an old 1,000 won bill, for example, becoming a new 10-won note -- and said people could make exchanges from Tuesday to Saturday. The revaluation was confirmed Tuesday by China's state-run news agency, Xinhua, which has an office in North Korean's capital, Pyongyang. Xinhua quoted one store clerk as saying that state-run stores in the city are closed this week so employees can reprice goods.
It is the latest and most sweeping step by the North Korean regime to rein in an unofficial economy that has grown in recent years and is perceived to threaten the grip of dictator Kim Jong Il, the government and the Workers Party. For more than a year, reports from aid groups and media outlets that specialize in North Korea have described crackdowns on markets that operate unofficially but became the center of economic activity when the state-run distribution system broke down after a famine a decade ago. According to the reports, authorities have forced women, who more often than men are found selling goods in markets, into work at state-run factories and farms. In June, they closed the country's largest unofficial market, Pyongsong, where about 30,000 small businesses were believed to be selling food and goods in a suburb of Pyongyang.
The move will have little economic impact outside the country since the North Korea won isn't used for trade and isn't recognized for exchange by any country, even China, its chief trading partner and political benefactor. Merchants in the Chinese city of Dandong, the most active border crossing with North Korea, said Tuesday that North Korean trading partners had told them about the revaluation but that they didn't know the details. Trade on the China-North Korean border is mainly conducted in U.S. dollars and euros, so the Chinese traders said they weren't expecting much impact on their business.
Inside North Korea, the economic impact of the revaluation is difficult to gauge since there has been no official data about the size of the North Korean economy or its banking system since the 1960s. Until now, the won has traded officially at 135 per U.S. dollar. But defectors say that in North Korean border cities, where foreign currency is most necessary, the won has generally traded at about 2,000 to 3,000 per U.S. dollar. A typical North Korean earned about 5,000 won a day, aid workers and defectors say.
Initial reports indicated the government would allow only 100,000 old won to be exchanged for new. That would potentially wipe out the holdings of people who have earned and saved in won from market activities for years. Those who have saved in foreign currencies -- which, though not illegal, is difficult for ordinary North Koreans -- would appear unaffected. According to an account by NKNet, a Seoul-based Web service focused on North Korea, people in Pyongyang on Monday night pressed party officials to allow more money to be exchanged. In response, according to the report, the officials lifted the exchangeable amount to 150,000 won in cash and 300,000 won in savings accounts. North Korea last issued new currency in 1992 but hasn't revalued currency since 1959.
Martin Armstrong – WE WON!
Can you believe it? In the face of overwhelming pressure from YOU, the Department of Prisons backed down and agreed to keep Martin where he is! My understanding is that they just want to make the calling STOP!
Thank you to everyone who did, you may have just saved him from a terrible fate. I hope everyone realizes how RARE this event is. The Prison system is used to working in SECRET and they do stuff like this all the time according to my sources. Well, we shined a spot light on them and as soon as we did, they were forced to back down. This is a great example of the power that people possess and they don’t even know they possess it. It is, quite unfortunately, going to be very important that we use this power in the future again, and I’m sure that the next fight won’t be as easily won. That’s because the abuse in our prison system is a SYMPTOM of a much larger problem, that problem is rooted in our economy, in our money system, and in our failure to follow the rule of law.
Now then, we are still using the attorney to file a protective order for Martin, as we want to hold them to their word. The prisons are notorious for providing RETRIBUTION against prisoners who make waves – we must ensure that does not happen!
Also, there are other battles still to be fought! On the bigger issue of Martin being there to begin with, there is a law that prohibits courts from not honoring time served when they are sentenced. The judge in Martin’s case did not give credit for his time served while he was held in contempt of court as he made up his own exclusion to the rule… that exclusion does not exist in the law and the law says that the judge SHALL honor all forms of time served (shall is a mandatory word, I have a copy of the law coming). Then there’s the battle for punishment that is CRUEL and UNUSUAL. How come, three years after being beaten nearly to death, does he not have his teeth fixed?
And so, we may need your help again to get them to do what’s right. In the meantime, we can deservedly celebrate a clear VICTORY in keeping him safe for now! THANK YOU!
172 comments:
I posted the following in yesterday's after this new blog.
A closer look at $30 billion
http://www.abcnews.go.com/Blotter/president-obamas-secret-100-al-qaeda-now-afghanistan/story?id=9227861
President Obama's Secret: Only 100 al Qaeda Now in Afghanistan
With New Surge, One Thousand U.S. Soldiers and $300 Million for Every One al Qaeda Fighter
By RICHARD ESPOSITO, MATTHEW COLE and BRIAN ROSS
Dec. 2, 2009
Obama's National Security Adviser, Gen. James Jones, put the number at "fewer than a hundred" in an October interview with CNN.
Sen. Jeanne Shaheen, D-N.H., referred to the number at a Senate Foreign Relations Committee in October, saying "intelligence says about a hundred al Qaeda in Afghanistan."
As the President acknowledged, al Qaeda now operates from Pakistan where U.S. troops are prohibited from operating. "We're in Afghanistan to prevent a cancer from once again spreading through that country," he said.
Ilargi...
I'll go see The Road. And read it. The perspective take is so so so valuable. How we see only the tightest of degrees even when we are right in the middle of a 360. Nothing surprises me anymore. Yet everything does. You know?
Your intro should be framed my man.
peace
mikel
Illargi, have only read the intro and it kinda made we want to relate a personal anecdote regarding wanting the crash now so it's over and done with:
Last week my wife took critically ill and we rushed her to hospital. We have suspected for some time that she has lymphoma but she was unwilling to go to doctors, million excuses - "don't have time", "I can't afford the time off sick", "It's just stress" - and so on go the excuses - just like the US and other governments, anything but deal with reality.
That is until reality decides to deal with you.
Anyway, the three year period of "suspicion" we have been going through has been absolute hell for me, was starting to have lustfull thoughts and wet dreams about making love to one of my firearms, many aspects of our world were starting to fall apart (not financially strangely enough), not knowing was truly soul destroying.
Anyway, the diagnosis has just come back - stage 4 follicular lymphoma which the doctors are very confident they can treat to remission. Chemotherapy is pretty ugly, especially for one as sensitive as my better half.
Somehow, at some level, we do feel better about life now that we are on a new course, even if it is a very uncertain one. We are taking it one day at a time time and really managing to draw joy from something simple (like an hour free of pain spent cuddling each other and our pets before the agony and vomiting set in again).
We are going to watch a lot of comedies, ( Hangover and My Name is Earl last night) unfortunately I don't know the analogous remedy for a critically ill nation.
Now I'll go back to reading your web page.
PS: Maybe the Yanks should copy the Aussie health care system, I have had 3 major surgeries in the last ten tears and now my wife's lymphoma, we have NO insurance, never have, and it won't cost us one cent, even though we earn 100G per year - that's a health care system to believe in. If you earn less than 10G per year I think they actually pay you to be sick here in Australia.
Nice post Ilargi. Will try to see movie if it in fact gets here (Europe). Where are you goin in Europe?
I suppose I will have to go see the road...but I dont think I will "enjoy"it much.Too much of my mindset is on dark doom now to want to go see it for yahas...
This weekend "Collapse" is going to be shown at cinima-21 with a on-site appearance for a Q&A by one of the doomer heavies Mike Ruppert his self.Many are saying most of his rap is "woe is me"ect...but then calling out Dick Cheney as a traitor,calling peak oil years ago,and writeing/publishing 4 counter-culture 911 conspiracy type books is bound to get you talked about...
I dont know if I can work up the motivation.It seems more constructive to stay home and work on the doomstead ,than go have my picture taken with every radical hardcase in Portland Ore.and surrounding area.[and I wonder how many "bad"guys are in the group who will attend...if for nothing else than to jump his ass about events that happened when he was running"From the wilderness" down south in ashland/medford...decisions, decisions,...]
I like your discussion/observations about the relativistic perceptions each of us have about the speed of our collapse.For someone in the terrifying process of losing their home to foreclosure,I can see the days running swift as sand in a hourglass...for those of use watching the glacially slow dealings and operations of the economic system,and the inertia of a country as it prepares to destroy the accumulated wealth of the majority of its citizens...things appear frozen,a timescape of movement detected at the corner of a eye....never seen directly...
You can only detect the change if you remember how it was,If you use your memory to compare today to a year ,or better yet 2 years ago...how it used to be be....
Wayyy too many hrs to work...cash in your hand for any whim...see a flick,hit a concert
Whatever you wanted...you saw it within your grasp...if you were willing to put the effort in to it.
........2 years later.........
Now the whole world has changed...
You buy what you must...save anything you can...
Do you really NEED it?
Can you wait? Dinners in the frig,lots of goodies at home..
[Restaurant foods spendy,and you don't know where it came from and who made it] Home is safe.Computer time is cheeep,Flu bugs,avoid crowds...saving is manditory,never enough money..
Our perception is reality
.................................
I have a small secret to share.I enjoy giving gifts.Its one of the few true pleasures I have.There are those in my family who have many times said I am generous to a fault[Times get hard this will be something I will have to be careful of...]
I am indulging myself by putting together 2 care packages for 2 men who work for our company that are over doing the dirty work in the middle east.The company sends them each a package a month with whatever we chip in.When I looked in this time,there was a few bags of chips and little else,so,sitting in the front seat of my beat-up toyota is a 2 plastic sacks with batteries,hot sauce,ear-phones,Tillamook cheese,and all kinds of goofy doodads on the list for care packages.....
With a message..."stay safe guys,Merry Christmas".
Later
snuffy
I am posting this separately because I didn't want to taint what I said in the previous post.
I am getting tired of KD and his rants. First he demeans science issues about which he knows nothing about and now he is moralizing.
I am reminded of when I was a student in University of Alberta (a very long time ago). The Provence had a person in charge of viewing movies and deciding if they were suitable for viewing by the the public. Essentially he was a protector of peoples morals. Movies with too much sexual content were banned.
After leaving university, someone sent me an article from the Edmonton Journal where the protector of peoples morals was found to have a huge stash of pornography beneath his bed and apparently was turned in by his daughter for abuse.
Moral: Those who constantly rant about other peoples morals are themselves suspect. In recent years this has been Confirmed over and over in the "press" (the sensationalistic rags that many newspapers have evolved into).
I feel that KD's latest rant about Tiger Woods is racially motivated. Admitted he has ranted about some white folks with poor track records too. But to me it has racial over tones because Tiger is not moralizing to people all the time like other examples above.
Personal matters that do not involve corruption affecting others - such as pyramid schemes - are just that - Personal matters. And should be kept that way.
When former French president Mitterrand died both his widow and his mistress attended the funeral. Hardly a French eyebrow was raised. That is the way it should be. Personal affairs are just that - personal.
Thus ends my rant.
"...we were going with a good friend and I’m off to Europe for a while this weekend, I went anyway."
Should you be coming to France, Brittany more precisely, would be a pleasure to meet up.
Just saying...
Robert, APC
I'll be in Holland to see my mother and in France to see my brother and friends (if I can manage all of it). Roughly areas: Angers, Biarritz, Grenoble.
Glennjeff,
All the best to the two of you.
Ilargi, we live in France. If you give me a protected e-mail address, I will send you our address and would love to see you, if we are not to far out of the way. We live in Lot.
Regards,
Robert
Robert,
TheAutomaticEarth •at• Gmail •dot• com
Robert:
Le Lot? I used to live in Figeac, Cahors, St Cere, Lacapelle Marival. Of course that was many years ago...
Small world.
Ilargi:
I'm now living about an hour drive from Rennes, so not really on your path unfortunately. Should a change in your schedule arise and you could be passing nearby, please let us know.
We all have differing points of views on art.
I couldn't wait to get my hands on the novel. Luckily my mother had a copy that she sent me.
I couldn't believe how formulaic, cliche-ridden, and implausible The Road was. I was bored by it, and even laughed at the scene where daddy and boy conveniently stumble upon an underground shelter with all kinds of nice old-fashioned canned goods in it.
After huge blocks of turgid, sentimental dialogue, some apocalyptic stuff happens.
When the baby skewed on a spear showed up (shish-ka-babe?), I closed the book, never to open it again.
Capitalism they say is the best of the worst systems. I have to agree and disagree with this statement. On the one hand capitalism as we have witnessed has brought humanity tremendous progress in terms of standards of living, healthcare, entertainment etc. Yes I know Austrians will be aghast saying that today's Capitalism is not pure,it is infact a mixed breed of Central planning via the FED and lots of Govt bureaucracy.
I would argue that the FED doesn't set interest rates, it simply follows what the market tells it to do. It may for a while not follow the market but in the end, the credit dog wags the FED tail. So while some would argue we don't have free markets, I say prior to the bailouts we mostly did to a certain extend combined with Fabian fascism or fascism lite which is the preferred system of choice that society seems to revert too, with the peasant underclass, the don't know, don't care middle class and the elite aristocratic overlords commanding vast empires and fortunes.
The present monetary system was designed to favour economic efficiency (well it was, prior to the bailouts) via capital allocation but capitalism in all it's forms - pure to impure - dismally fails in two aspects, social efficiency and resource efficiency.
A socially optimum society would not see such large divergences in pay between people. Nothing justifies Lord Blankfein earning a 1000 times more then the average worker. Nothing justifies how society has come to exist in a box, we drive little boxes on wheels, go to big box shopping malls to buy food in boxes. We come home and watch images on a box and we work in box like cubicles and in the same looking box sized homes (No, having a yellow room and green cushions and a table tennis table doesn't differentiate you from your neighbour).
This is not socially optimum, humans need public spaces and places to interact and feel human. How did it come to be that the only way humans could come together is via consumption? Be it eating, drinking, watching movies etc. Life revolves around the consumer, NOT the citizen. Capitalism is not socially optimum as the resource misallocation and social inequity it produces will be tremendously damaging in the long run.
As resource depletion takes full hold on the world, we also learn that capitalism/ fascism lite is resource inefficient. It takes 240,000 calories of fossil fuel energy which is non renewable to feed one US citizen (should I say consumer?) per day on 3,000 calories. Oil is so precious it should not be burnt for use on wasteful gas guzzlers or any cars for that matter.
Capitalism is not the answer to all our problems, it would work well on an infinite planet, not a finite one. Capitalism's proponents make good arguments, such as Mr Bill Bonner does on a daily basis but what is the basis of success of a civilization? Is it the peak it reaches or the longevity? The present prosperity we have achieved is entirely short term, maybe 150 years from start to finish. If we had used the resources we had wisely, predicated on long term thinking, we would have resources to last us millennia.
Capitalism is an epic fail. We must come up with a new monetary system,one that is consistent with resource scarcity and reduced economic activity.
Ilargi - I am glad you posted the Davidowitz article, which I had read via a link posted in the previous thread yesterday.
I had copied the bulleted statements from it and posted them in the local online "newspaper" as a response to an opinion piece which was almost giddy with confidence. What people want to see, they see!
As to The Road, I read it last year, although I found it very depressing and somewhat unrealistic IMO. (what people want to see, they see!?)
Still, I will take a look at the movie (which I did not know was being produced).
As always I appreciate your posts, StoneLady, and the entire "board" of interesting and articulate contributors.
Very informative post I&S, thank you. I wish you happy times on your trip abroad, Illagi. In past better days I traveled extensively and miss it a bit. Pertaining to Robert's synopsis of KD; am I the only one getting tired of the way the word 'racist' is hurled about? If everything is apparently racist that Western Europeans do and say, perhaps it would be more convenient to only observe those few miserable things that aren't racist. You know, to save time. One could opine "My!, how non-racist!" and it would therefore seem positive. Just a thought.
Robert - I totally agree with your opinion of the Karl D thing concerning Tiger woods. I sensed an underlying element of racism, jealousy, and fanaticism--similar to what I detect with the likes of Beck, Hannity, Limbaigh, etc.
Pointing fingers from outside of a relationship is like steering a vessel with blindfolders on! But beyond that, why do it? I suspect, like you, some dark and underlying motivation for such an attack.
Capitalism is an epic fail. We must come up with a new monetary system,one that is consistent with resource scarcity and reduced economic activity.
Nice statement, punctuated with a fruitless hope.
Capitalism is an epic fail because humanity is an epic fail because humanity must work in the service of Entropy.
Capitalism, perhaps, was inevitable and is simply a massive tribute to the bloom-dieoff Bataan death march of Life On Earth.
The Ancients perceived this. It's the real meaning of "Oedipus Complex": Fated to Fail.
And the whole earth was of one language, and of one speech.
And they said, Go to, let us build us a city and a tower, whose top may reach unto heaven; and let us make us a name, lest we be scattered abroad upon the face of the whole earth.
And the LORD said, Behold, the people is one, and they have all one language; and this they begin to do: and now nothing will be restrained from them, which they have imagined to do.
Go to, let us go down, and there confound their language, that they may not understand one another's speech.
So the LORD scattered them abroad from thence upon the face of all the earth: and they left off to build the city.
Sick,
Barclays is set to award its 22,000 investment bankers big salary rises to beat Government clampdown on bonuses, as RBS board threatens to resign en masse over pay controls.
Salary rises of upto 150%...
Just one more thing...I usually don't post but I'm having one of those blue moons when I'm feeling Flush With Insights:
You want apocalypse, I'll give you apocalypse. I just got in from the barn. The weather here in northern New England, which I thought couldn't get any worse--and which the core media have no time for, given Tiger Woods' Passion Story--this weather has just advanced another notch up the hockeystick chart of exponential increase in Badness:
It is December 3 and it is 65 degrees F.-for-Fail, and we can't yet figure out how much RAIN pounded us last night, but it's, once again, measured in Inches.
The summer was a disaster. I slave part-time at a local "organic" farm as the Tractor Guy, and I watched their whole tomato crop fail due to rain-enhanced late blight.
(Luckily I had personally given up my silly romantic delusions of sustainable "organic" gardening and had sprayed my own Nightshade crops with Captan and insecticides. I would go to work and pull up tomato plants, then come home and twist my own up the twine twellis, I mean trellis.)
There is literally a POND where there should not be a pond--right in front of the barn door.
I took hay up the hill and lost a boot while a tropical gale sucked the hay off my fork.
As the Gospel Thomas says, The kingdom of God is laid out in front of your face, if only you'd open your damned eyes and see it.
To which I would add: So is the Apocalypse. It's right there in the mudhole. No puerile novelistic fantasies required.
VK,
I have faith that we will develop new monetary systems to deal with the intractable problems you just laid out for us. I don't know how, when, or precisely what it will look like, but I'm sure we're going to do it. As the old phrase goes - necessity is the mother of invention.
I hope where I live it goes along the lines of Worgl, Austria, but with greater longevity.
Re Techguy (and scepticus from some months ago) and others who seem to think that heads of government and central banks can choose to initiate hyperinflation now (or unilaterally set negative interest rates across different types of institutional actors in the economy):
I was re-reading some posts by John Robb over at Global Guerrillas and came across this snippet on the financial crisis from a year ago:
"NOTE: The current crisis is global in scale (too big for any nation-state to handle) and far too complex to model. Worse, it morphs faster than governments can respond. This failure to return conditions to stability will cause a widespread and catastrophic loss in legitimacy for nation-states. As a result, a psychological shift is in motion, spreading at epidemic rates on a global scale, that will put loyalties to family, gang, community, church, etc. (in toto: primary loyalties) far above loyalty to nation-states. The end result will be that global guerrillas and resilient communities will become the two poles of the social spectrum in the future. Don't be caught in between."
Basically saying the same thing as Stoneleigh when she says that the global financial system is not some machine with levers that those in charge can simply push or pull to get the outcomes they want.
Stoneleigh's "machine with levers" false analogy came to mind when, while reading Kunstler's Monday Clusterf*ck Nation, I came across this snippet and thought maybe our global financial system actually IS a machine with levers, only it's not our politicians and bankers doing the pulling:
. . . and forget about "the gods" -- one begins to see the monotheistic hand of "Old Scratch" himself working the levers . . .
MikeB,
Interesting update on the weather. We seem to have your snow here in Texas. The heck of it is, just about the time you give up and plant bananas in Maine, it'll shift back the other way.
Or as I've been saying for a couple decades now, GW doesn't mean warmer weather, it means more chaotic weather.
Best wishes to Don and the kitties, and to that cast iron stove in your kitchen. :)
Why would anyone bother reading KD or Mish after they revealed their insane biases so readily by swallowing the "Climategate" stuff hook line & stinker?
My wife is dipping her toe in some tax prep courses and came across a little ditty with the home tax credit, it actually has to be paid back over 15 years.
Classic.
Mike G, I gave up growing tomatoes in the open because of the blight problem. I now grow our organcic tomatoes only in a tunnel. We use drip irrigation placed under reusable black plastic with holes punched at intervals for plants. As long as plant leaves are dry there is no problem with blight. The blight organism needs 48 hrs straight of wet plants to get established. We never had blight 10 years straight while neighbours sprayed with copper spray multiple times each summer to control it on outdoor plants.
Just in case some one wonders, our tomatoes had the best taste of any available locally and were in constant demand.
Not all tomatoes adapt well to greenhouses.
From article in today's post - "The FDIC has dealt with 124 bank failures in 2009. Yet this week the third quarter report shows the fund in the red, so no banks are taken over? Can it be that the FDIC is so deep in the red, that it is in poor shape to take over any additional banks?
I have been checking the status of local banks here at banktracker...
http://tinyurl.com/dynzhz
And it was supposed to be updated in November--but it was not! I have to wonder why? The last rating was in June 2009 and the locals had been steadily degrading by the quarter. I can only think that is true all over.
lysander - "Pertaining to Robert's synopsis of KD; am I the only one getting tired of the way the word 'racist' is hurled about?"
Actually, I tire of the term also, but I could not get a handle on the KD rant from any other perspective. Why this mountain moral indignation spewing forth? I kept asking myself that as I read.
Much of what he writes, about financial matters, I appreciate thus I read him.
DIY, thanks. All is fine here. Except the weather. Did you ever get that property up here?
Robert, the tunnel idea is nice, but Captan is cheap, easy, harmless, and works on our tomatoes, potatoes, apples, grapes--anything susceptible to fungi.
I'm now among The Fallen. And I like my cellar full of goodies.
Coy Ote said: "Much of what he writes, about financial matters, I appreciate thus I read him."
Ditto that
But his use of profanity is starting to wear on me. How much more respected and appreciated he would be if he learned how to keep his mouth out of the gutter.
@MikeB Did you actually get any tomatoes or peppers? We're down in the Monadnock region. Blight got our potatoes, and stunted our tomatoes, but the peppers were unaffected. Nonetheless, the cold and rain kept them from setting fruit so we only got a very few just before frost in September.
OTOH the spring peas kept bearing till October.
I have been sitting on Waikiki beach for the last couple of days. Last time I was here was 24 years ago. Three things that appear different:
1) everyone is fatter - I remember lots of slender American women from my last trip, very rare now.
2) lots of Japanese - the place is crawling with Japanese tourists; somewhat ironic and, of course, they are all slender.
3) military activity - in the comings and goings of maritime traffic yesterday I counted about seven warships; that seems a lot for a country not actively engaged in a naval war; seems like something's up.
Hi, Frank.
I managed to nurse the tomatoes along to the point that I could strip the fruit off green and harvest them indoors, but the yield was low. The farm where I work had almost zero tomatoes.
The potatoes did excellent because they got sprayed a lot earlier than the tomatoes. I also did what an online site recommended.
In late August when blight appeared at the farm where I work, I came home and cut ALL the foliage off the potatoes and composted it. Then I simply left the tubers in the ground for two weeks before harvesting them.
Apparently, the soil over the tubers protects them from the spore and after two weeks the spore dies before it can get into the tubers.
I had a good crop, but I'm watching the barrels in the cellar like a hawk in case the tubers start to go bad.
The pepper plants were a loss except for the banana types. I had to plant melons twice, and one variety never bore.
The only way I was able to get a crop of squash and pumpkins was by watering them with diluted surplus milk from our cow. The nitrogen "pumped" them up and I got fruit JUST as the frost came.
Yes, peas! The crop was magnificent. They were planted the earliest every (April 20) and they grew up over the trellis and flopped down the other side. Because I rotate peas with cukes, and because the peas hung around so long, I had to strip the mature green bearing plants off the trellis to make room for the July cukes, which I was barely able to harvest from.
I managed to sell a bushel of baby cukes to a friend and to have enough for four batches of pickles.
The struggle this year has been unbelievable, but luckily I have twenty years of experience and know when to intervene.
Nice post today Ilargi...
Perception is indeed everything.
I listen politely while friends and acqaintences talk about how they have just purchased homes or cars and what a good "deal" they got on them and I smile and congragulate on the outside but inside I am shaking my head increduously and am mentally calculating how much debt they have just saddled themselves and thier families with and the liklihood of them ever repaying such debts.
I took my two little ones to the park this morning for some excercise since the weather in Philadelphia is so warm today and parked myself on a bench and just watched and listen to the children play and I was almost overcome with emotion at the contradiction between thier innocent and carefree play and the smoked out wreckage that is thier future. I could literally "see" the two realities in my mind and the scope of the coming tragedy hit me right in my gut.
I feel like a lunatic sometimes but lately everywhere I go (even though in my neck of the woods the Depression has not really begain to bite hard yet) all I see is dead people (financially speaking) whot think that they are still alive as they casually go about thier business as usual.
And it just keeps getting more insane by the day.
Glennjeff said...
... We are going to watch a lot of comedies, ...
------
You would be surprised at what the elders can do ...
http://www.thevaudevillians.com/Home.php
-----
Re.: gardening
This summer, the west coast had such exceptionally good weather that even the tomatoes ripened, ... with no help.
jal
Wolf,
Your experiences and thoughts are very similar to my own. I wouldn't be surprised if it's generally the same for many of us around here. The feeling of being haunted...
Glennjeff, I'm so sorry to hear about your wife. Best Wishes to you both.
Ilargi,
Safe travels to you.
Peace to All,
Shamba
MikeB said...
Why would anyone bother reading KD or Mish after they revealed their insane biases so readily by swallowing the "Climategate" stuff hook line & stinker?
Probably for the reason that anyone could read I&S with their ridgid economic position and piss poor market 'timing', one tries to ignore the blind spots.
Gotta think for yourself, Mike, be discriminating try not to throw out the babies along with the diapers.
About movies:
Comedies that missus charley and I really like, and that Glennjeff and spouse might, although of course chacun a son gout:
Groundhog Day - we see this every year - it is a very warm and wise movie, and an excellent depiction of what Dabrowski called "positive disintegration"
A couple other Bill Murray films we have great affection for: What About Bob, Big
One with Liam Neeson, Oliver Platt and Sandra Bullock, which I don't think was a big hit: Gunshy
About 'The Road' quote
Or you might wish you'd never been born.
I was reminded of something 'Spengler' put in his September 18, 2007 Asia Times column:
>>What makes the Jews different is their unique belief that the Covenant gives them eternal life, a belief grounded, to be sure, by thousands of years of history, and survival against all odds against the depredations of the Egyptian, Assyrian, Babylonian, Alexandrine and Roman empires, not to mention more recent unpleasantness. It is not changing the baby's diapers or changing grandma's bedpan to which the Jews refer when they speak of delight in life, but rather the idealized, perpetual life of a kinship community.
As for the ordinary sort of life, the Jews tell nastier jokes about it than anyone else. But even in the banal sort of jokes that they tell to one another, the Jews take the perpetuity of their existence to be self-evident.
One joke that circulates in many versions involves two elderly Jews deep in conversation. One says, "Life is so painful, joy is so short, pain is so long, that we would be better off dead than alive!" The second Jew says, "You are right." The first adds, "Even better than to be dead would never to be born!" To which the second responds, "But who has such luck? Not one in ten thousand!" <<
This line also appears in Woody Allen's movie Match Point, which is NOT a comedy.
'Spengler' has decloaked as David Goldman, a name which suggests his comments about Jews are not from the outside looking in.
Snuffy - "I suppose I will have to go see the road...but I dont think I will "enjoy"it much."
:-) I avoid those things like the plague. What I do instead is- watch the movies made in the 30's. Marx Brothers, The Thin Man, and Astaire and Rogers.
The efficacy of self flagellation has always seemed problematic to me.
Dr. J -"I have been sitting on Waikiki beach for the last couple of days. "
ew! Whatever for! Get your butt out to Hanauma Bay park, or if you're just going to sit anyway, Sandy Beach. Or Makapuu.
Makapuu has the best bodysurfing anywhere- and was getting too popular. So the park department pulled all the signs. Unless you already know where it is- you can't find it. (It's just across the road from Sea Life Park)
Waikiki is good for tourist watching, but not much else.
:-) (kamaaina here)
In addition to the Marx Bros and Fred & Ginger, dig into some Preston Sturges Comedy as well, he cannot be beat:
Sullivan's Travels - Resonates today as much as it did 60 years ago
The Lady Eve - Stanwyck is dynamite
The Palm Beach Story - Screwball
Miracle of Morgan's Creek - Just a fantastic picture, with Eddie Bracken and William Demarest in terrific performances
Christmas in July
Remember the Night (writer), a nice Christmas Themed Flick
The Great McGinty
Unfaithfully Yours
Some other Classic Comedy Gems:
Arsenic and Old Lace - Cary Grant at His Best
My Man Godfrey - Classic William Powell, very timely
You Can't Take it With You - Capra and Jimmy Stewart, once again
It Happened One Night - Swept all Major Oscar categories
His Girl Friday - More Cary
The Philadelphia Story - Cary, Jimmy and Kate
Some Like It Hot - Billy Wilder at his best
One Two Three - Jimmy Cagney's last true great movie role
Singing In The Rain - One of the best musicals of all time
Harvey - Jimmy at his best
Best wishes for a speedy recovery.
Glennjeff,
The story of your wife's illness and medical care is so stirring that I feel a need to compare it to my own. It seems your wife may be a lot like mine was. She too was sensitive about her appearance reputation, etc. Her brother refused chemo for his cancer, which he survived with radiation. I'm sure she would have refused it if she had developed cancer. I sincerely hope chemo will work for your wife. Losing one is a horrible thing.
She too had some unusual symptoms that she refused to see a doctor about. I had insurance coverage on her through my job, but jobs come and go in Usanistan and it paid poorly so I couldn't afford the fools-gold plated package. Her fear was that a diagnosis of any major problem could prevent her being covered in the future, here in the land of the pre-existing condition.
One evening in the middle of a conversation she developed a clot in the carotid artery. For all practical purposes, she died almost instantly right in front of me. The hospital in Portland provided excellent diagnostic services and kept her breathing in the ICU for about a day.
The cost to me was over $10k, the insurance company paid a fraction of that. Thus my contention that private health insurance is not only deadly, but also practically worthless.
Now that I'm on medicare, my recent diagnosis of a rare disease involving an ophthalmologic exam and blood work at Mayo Clinic cost me less than $20. I can now fully appreciate, as it seems you can, how lucky you are to be Aussies. May you be even more lucky than that.
ps: It may not be a good idea to go around publishing such details about your "socialist" healthcare system. Given the vast number of plum-crazies in Usanistan and how many of them have power and influence, getting to be known for that sort of thing might just get you added to the same list as "Old Europe." .)
Depressing but less-than-surprising look at life in Dubai, over at the Telegraph. Effective slavery for the lower class, oblivious acceptance by the expat class in exchange for unrestricted hedonism, and lordly superiority mixed with self-serving fear for the emerati class. Dubai doesn't sound like a material paradise so much as an Alice in Wonderland-esque prison.
Snuffy,
I'm at a complete loss as to why nobody has mentioned the likes of W. C. Fields, Buster Keaton, Abbot & Costello. So, Nobody just has. .)
About why things are seemingly moving so slowly, the theologians call this "prophetic foreshortening." This happened to me, several years ago - I put some of our money into a euro-denominated CD in a US bank. As it happened, though, the exchange rate soon resulted in a loss for us, and at the second anniversary I took the cash out in dollars for just about what I had put in (i.e. I had lost the interest). If we had kept it there we would now be substantially ahead.
It's hard making predictions, especially about the future, and timing can make a big difference.
At prodigalthought.com, it is written, about prophetic foreshortening:
>>In his book,The Bible and the Future, Anthony Hoekema defines this as, ‘events far removed in time and events in the near future are spoken of as if they were very close together.’
We can look at a mountain range for an illustration of this concept. When one stands far away from a mountain range, it seems as if each mountain peak follows one after the other, all with no gap in between them. Yet, as one walks, or drives, through the range, you realize that there are quite large gaps between each particular mountain, maybe even miles.<<
Recovery the China style: a brand new city and no one to live in it. Some GDP pushers, aren't we...
http://www.youtube.com/watch?v=0h7V3Twb-Qk
Glennjeff and I.M. Nobody,
Best wishes to both of you!
If I was facing a serious illness, I would consult an alternative medicine specialist -- herbalist, naturopath, homeopath, etc. -- before submitting myself to the toxic effects of Big Pharma medicine.
Paz!
Ilargi, thank you for sharing your thoughts on "The Road." My family and I are looking forward to viewing the film when it comes to our area. We expect the film to be as moving as the book.
I too thought that The Road was well written. However, it must be treated as pure allegory. If one applies any sort of reality test to it, it sinks. The irony here is that McCarthy goes into great detail regarding practical things like making bows and repairing pushcarts, but the whole underlying premise of the book is unreal. He is certainly brilliant enough to be aware of this, but I am not quite sure why he chose to construct it this way. While this bothered me quite a bit, it would drive Greenpa around the bend. Everything, I mean everything, is dead except some humans. This is from a nuclear war and radiation fall out. Please! Archy the cockroach would still be typing free verse, and while some plants might look a tad peaked, few would be kicking off before the humans. And everything being absolutely dead besides humans is integral to the entire story, as all food must be scrounged from past stores. I can see allegory, mood, and symbolism there, but if you are into practical reality, it presents serious problems. So Greenpa, save your sanity and skip it as is your wont anyway.
Re KD
I wonder if Woods' wife and purported girlfriend looked like Oprah Winfrey, whether he would be in such an uproar. KD surely doesn't even know why he is having a tantrum about this. Introspective insight is not his long suit.
As too Mish, his union bashing is disgusting and his climate change bashing shows a lack of cognitive integrity. But despite all this, he often comes out with some useful and instructive integrative insights about the economy. And I didn't find his open letters to Uncle Ben to be egomaniacal. This is a long used didactic tool.
RE - MikeB: Your posts just goes to remind -- no matter how much we all hate Monsanto; sustainable agriculture can't prevent a massive die-off. Make no bluff, Organic and Local are choices for the rich, not a possibility for the many. I pay the extra to get the good stuff right now, but I don't fool myself that the hundreds of thousands in my neck of the woods could switch to local food (realistically). Without BigAg, the die-off begins in earnest.
When you're Local/Organic crop fails, what do you turn to right now? BigAg.
In the future, when BigAg fails and your Local/Organic fails, what will you turn to? Eating your cat...then your dog...then the shish-ka-baby.
Life is tender. Those close to the land know it best.
Karl Denninger continues his unabated march into irrelevance. I don't think his rant was racist, just pointless. There has been a perceptible decline in the quality of his writings. That much I would posit. He has become a major embarrassment. His attitude, bias, partisan-mindedness and fringe thinking in certain areas will ensure that he will never appeal to a wide audience, remain a fringe figure and will never be taken seriously by most.
OK! Where was Casablanca and The African Queen on the old movies list?! :-)
My sincere sympathys to GJ and IMN as to the revelations regarding your spouses. I am indeed fortunate to be in good health and my spouse as well.
May I second the possibilities Ahimsa mentioned regarding alternative, natural sources of med. attention.
I read everything and all perspectives if I think there is something to be learned from the experience, which is why I read The Road. Did I learn something?, I imagine so, but I cannot define it. I agree with El G in that there are things worth taking in even though they be shockingly graphic and presented in a somewhat unrealistic manner.
Still, it is not a boy scout manual, nor would I recommend it to my grandaughter.
BTW I thought Ron Paul presented himself well today on C-Span --better than usual. IMO
MikeB via King James
"And the LORD said, Behold, the people is one, and they have all one language; and this they begin to do: and now nothing will be restrained from them, which they have imagined to do.
Go to, let us go down, and there confound their language, that they may not understand one another's speech.
So the LORD scattered them abroad from thence upon the face of all the earth: and they left off to build the city. "
Now I see! First you have Gollum Sucks, JPMC, and Deutsche Bank. Then you have the central banks. Then you have the International Bank for Settlements. But then you have the Lord, who has decided once again that he is going to throw a wooden shoe into David Rockefeller's life dreams and schemes. The more things change, the more they stay the same.
Ahimsa,
Gracias. And that just about exhausts my facility with Spanish. .)
I'm with you with regard to the horrors perpetrated by Pharma. Santa Cruz Mountain hippies introduced me to the wonders of natural medicine many years ago. I have routinely used homeopathic remedies for things like food poisoning and carpal tunnel syndrome. Unfortunately, non-allopathic practitioners are not too common out here in deepest Hickistan.
El G and EBrown brought to light a claimed natural immunosuppressive agent. Now if I just knew where to find those little devils. I'm sure there must be some around here somewhere.
Coy Ote said...
"OK! Where was Casablanca and The African Queen on the old movies list?! :-)"
The ones I came up with were strictly comedy..
the non-comedy department.. that's a whole different story...
I did forget Dr. Strangelove though, very pertinent and sad but funny in these times...
Greenpa - no argument with your take on Waikiki. Just a very brief visit here to get my vit D levels up. I'll be back skiing in the alpine within 48 hrs.
Funny but I find the commentary on KD's rant over Tiger's indiscretions more indicative of the racism that's inherent in society than anything in KD's rant itself. There's plenty to pick on when it comes to China or immigration with KD, but this rant? The wild assumptions say more to me than anything he does.
Most of you commenting about KD have just demonstrated to me that you probably will not survive any serious downturn. You won't make it through the bottleneck.
Now I don't always agree with KD but the entire point of the Tiger Woods rant was to talk about morality. Yes, that horrible word that some people like to pretend doesn't exist. And I'm not pushing any particular morality here. For example I am aware of a great nation that was quite religious but later turned its back on the religion of its founders and fell on hard times. It was called Rome.
My point is simple - morality, ethics, whatever you like to call it, is how societies maintain some level of trust. The less morality, the less trust, and the more corruption. Primitive hunter-gatherers have their morality totally focused on the self and tribe at nearly equal levels. Violating the tribal morality would mean exile which often meant death.
Thus it becomes even more important for some form of morality to exist and be enforced in larger societies. Yes, yes, the Christian right will try to sell you a particular morality but it doesn't have to be that one. Any consistent morality that places the biologically most important parts of the "tribe" first (women and children) has worked for homo sapiens. Tribes can take rather large losses of adult males and survive. Tribes that lost an entire generation of youth or a majority of females often collapsed.
So what was KD ranting about? The fact that morality, across the board in the Western nations, appears to have gone into hibernation. Thus we have this financial crisis, multiple political crises, and public figures making mockeries of themselves (like Tiger Woods).
It's a relevant comment. Now I am not sure I agree with the particular brand of morality that KD might choose to sell but the observation that morality has broken down is downright obvious, unless you simply want to stare at the backside of your own navel.
And frankly I think we need to find a new morality based on more than just greed (ala Adam Smith).
But I understand the roots of KD's rant and I generally agree. A moral nation would not have allowed this or even tolerated this.
What is stunning is the supposed claim from some of you that you don't understand why he was ranting at Tiger Woods. You don't have to agree with KD and you could even suggest that he's wasting his time on that rant but completely failing to understand the point of KD's rant suggests a philosophical vacuum that, at this late date, is likely not going to be repaired. But that's ok. Gaia needs lots more fertilizer.
Smokin':
"Bunning Grills Bernanke To A Crisp"
http://www.youtube.com/watch?v=kQs0NVrWTt0
RE: Dan W.
I'm afraid I have to take issue with the idea that everyone will die if BigAg dies. It just doesn't take that much space or resources to grow enough food to feed a family. It may not be 5 star cuisine (I don't eat that anyway), but it isn't hard. What it does take is more labor than we are used to putting toward our food - growing lots of food in a small space with few resources just takes old fashioned work. There may very well be a die off when BigAg fails, but it won't be because small farms and backyards CAN'T pick up the slack. It will be because we don't have enough people with the right know-how to use the same land and grow several times over the useful food.
Furthermore, BigAg has succeeded in growing lots of calories but very little nutrition. The case can be made that it has actually KILLED more people through heart attacks, cancer and obesity than it ever saved. Most of the extra production from the green revolution got fed to our livestock - not to starving people. If we stopped feeding grain to animals (and accepted less animal protien in your diet) you would find that the American grain harvest could be cut in HALF without causing a single additional person to go hungry. If you looked into it a little more than that, you would find that if we in the developed world would stop feeding grain to our cattle and our cars (ethanol), the entire world would have enough calories to live very well. Instead, we compete on price with people who have no money to pay. They go hungry, we drive our SUV's and eat steak. Sounds about par for the course.
Maybe instead of saying that when the local co-op fails you have to turn to BigAg, you should plant a few vegetables. Then you could say when your garden fails, you turn to the co-op. You would also learn a whole new appreciation for your food.
As far as "having" to use fungicides, insecticides and herbicides to get good yields - that's a load of crap. Our garden has never had a chemical introduced to it. Through the wet summer this year, our tomatoes didn't have any blight. We also (like another poster said) use drip irrigation so that the leaves don't get wet when we water. The plants are on a fence so that they dry out quickly after a rain, even at night. It is all about management. Its also all about diversity. When one crop doesn't do well, another does. Our winter squash (a nutritional powerhouse for winter eating) failed almost totally this year. The sweet potatoes (an even match on nutrition) did amazing (over 200 lbs worth). That's what diverse, small farms can do and what BigAg can't. My family grows all of our own vegetables on about 1/10 of an acre with only organic methods.
You are right - those closest to the land do know.
el g said...
But then you have the Lord, who has decided once again that he is going to throw a wooden shoe into David Rockefeller's life dreams
Amen to that.
One of my favorites has long been, "and ye shall know a tree by the fruit it bears." We have learned, much to our sorrow, that in the case of banking trees, the bigger they get the more poisonous their fruit.
About inflationary spirals, aren't those things usually enforced by wage-price spiralling?
Yet so few are actually earning wages, and from this level of indebtedness a doubling of all wages would still not be sufficiently inflationary, as the extra moneys would mostly not be spent on direct consumption.
I suppose that the classical wage-price mechanism of inflation transferral is somehow broken and has been non-functional for years, extreme wage increases would not cause inflationary spirals for quite some time.
@Greyzone:
One of my favorite quotes from one of my favorite authors:
I regard "ideology" and "morality" as the two most dangerous forces on this planet. About "ideology" I have expressed my suspicions elsewhere; here I will only mention John Adams's verdict that shortening "ideology" to "idiocy" would save some space and add a great deal to clarity. He had the French Revolution in mind, but "ideologists" haven't changed much since then, have they?
As for "morality" -- or "moralic acid" as Nietzsche called it -- I consider it the major cause of almost all the major atrocities not caused by "ideology." This wonderful invention, "morality," allows people -- normal, ordinary people -- to do things so cruel and violent that they could never bring themselves to do them for selfish reasons. What the sociopath and sadist do for fun, the "moralist" does on behalf of "duty" or "justice."
"Morality," today, allows Moslems to stone women to death, as it once fueled the Christian witch-hunts. "Morality" has excused every war, and glorified some of them. "Morality" constantly plots to subvert the Constitutional guarantee of free speech. "Morality" inspires gay-bashing and the bombing of women's clinics. Why, without "morality" we might all suddenly go stark staring sane.
My vision of Utopia would include a hell of a lot more kindness and mercy than we have now, and a hell of a lot less "morality.'
-Robert Anton Wilson
There are lies... "I did not have sex with that woman"... and there are lies... "They have weapons of mass destruction and we must go in after them."
Both are wrong. One is clearly criminal and astronomically more destructive.
FarmerAmber,
Right on!!! Thank you for saying it so well.
Down with BigAg!!!
Dr. Jeff Masters at the Weather Underground in his Wunderblog of December 3rd discusses the climate change email hacking. The charts are colorful and the narrative convincing. I don't know how to post links but if someone here does know how I think others would be interested.
WTF moment of the day,
Ben Bernanke at his senate confirmation hearing saying that he had no leverage on the 180 Billion bailout of AIG...
That there was no way with a 180 Billion dollar cheque, without which the banking system would have failed, he had any influence at all. That he had to agree to pay 100cents on the dollar for the toxic garbage.
WOW, just wow, either he is a terrific liar or he really is powerless in the face of large banks.
It might just be socially optimum to let the banks fail but to give the bankers some 200 billion dollars a year just to keep them in their homes and away from ordinary Americans. In the current system they burn through lord knows how many trillions to make little cuts of each transaction to earn 162 Billion in bonuses.
What a disgrace these markets are and so is the whole show in DC and on Number 10 Downing Street. Disgraceful that people are sleeping while their countries are being torn apart and shredded to the core.
@Farmer: "It will be because we don't have enough people with the right know-how to use the same land and grow several times over the useful food."
Totally agree and I probably could have said what I said much better.
Of course we CAN move to sustainable agriculture (at least at a certain population level)...but do we have the will? Go take a walk around the mall. Tell me those people are ready to tend rows for 8 hours a day in the sun. It's a cold-hearted analysis, but when the oil runs out and BigAg can't produce the garbage that keeps the Eaters alive, the die-off ensues.
Those that are left will be forced to rebuild a local system of food production. In time, the skills will evolve, the land will heal, and a new society will emerge that may look nothing like what we have now.
Who knows.
As per my family: Got $300K I can have to buy a house with a yard big enough to grow something? I'm one of those who lost out on taking on huge debt and who still won't join the FHA, 3.5% down money-grab at this late date. Best I can hope for is to rent a place this spring that has enough room for some basic container gardening. Till then, I shop the co-op and hope^TM it all holds up.
The bankers just seek to rub it in with their immorality.
First Barclays comes up with a 150% pay rise and now Gordon Brown has given in on the whole RBS issue.
Afraid that 'talent' is going to leave, he mentioned RBS won't be singled out.
What is talent now exactly? Dismal failure? Rewarding super failure and unethical behaviour? Is this what is taught in once fine educational institutions? Power and greed alone? Whatever happened to men of character?
Aaaarrghhh!! And tomorrow more drama and spin from the now Comcast owned CNBC - Complete Nonsense and Bull Crap over the jobs numbers.
These people are pathological liars, deceitful, immoral perverts and are committing financial genocide on this planet. Billions are going to suffer for the crimes of a few. It's derivativecide!
Dan W,
If you're still in Vermont, try getting involved with a community garden and visit farmers markets where produce is less expensive and fresher than at food coops. Montpelier has a great farmers market.
I.M. Nobody,
These links might be of interest:
http://www.herbalhealer.com/
http://www.herbalhealer.com/brain.html
Lynn Harding - Dr. Jeff Masters wunderblog article
http://tinyurl.com/cltcx
Greyzone
"What is stunning is the supposed claim from some of you that you don't understand why he was ranting at Tiger Woods. You don't have to agree with KD and you could even suggest that he's wasting his time on that rant but completely failing to understand the point of KD's rant suggests a philosophical vacuum that, at this late date, is likely not going to be repaired. But that's ok. Gaia needs lots more fertilizer."
Glad to see that my imminent return to fertilizer will give you and your sense of morality some smirking pleasure. Wouldn't want it to be a total waste beyond my recontribution to the ecosphere. I'll ask my son to post it on your blog.
Also,
i think that minute toward the end of Dr. Strangelove where Peter Sellers tries to prevent his black leather gloved hand from strangling himself was, in its own sick way, probably the funniest minute in all of cinema. And Slim Pickens riding down the H-Bomb flapping his ten gallon hat was also a stopper.
I read The Road when it first came out and was depressed for a month afterward, it seemed so real and so possible.
Another very insightful and recently-written post-apocalyptic novel is The Pesthouse by Jim Crace.
Note to Robert re: KD posts -
If you don't like it, don't read it. I think KD has a unique viewpoint and a lot of experience from which to speak.
I remember when OJ was first arrested. People in my family were angry and insisting that he could not, would not, would never ever do what he was accused of.
But in the end, that was just lame hero-worship that they should have outgrown years before. Now they all think he did it.
My point - maybe you should be examining your own beliefs, not KD's.
To DJ -
Since you don't believe in morality then obviously you think it's just fine for the banks to be paying themselves billions in bonuses from taxpayer bailouts.
I've had it with all the blabber abut Karl here. Go over to his place if you really must talk about him. Not here.
Blogger LynnHarding said...
Dr. Jeff Masters at the Weather Underground in his Wunderblog of December 3rd discusses the climate change email hacking. The charts are colorful and the narrative convincing. I don't know how to post links but if someone here does know how I think others would be interested.
climate change email hacking
I enjoy helping out a fellow blogger.
Lynn Harding, RE posting a link:
go here
This found through the Help Center on the Blogger settings page of your account.
-Wyote
On the main topic of this post - I suspect that many TAEarthlings have experienced some degree of wanting the crash to occur. I know I have at times.
When I examine my emotions that surface when I feel that way and the associated thoughts I find a mixed bag.
I have a bit of longing for schadenfreude that I know is coming my way when some high rolling banksters lose big. I aspire to reach a point of enlightenment where I would not feel pleasure at another's downfall, and I readily admit that I am not yet there. I do still expect that I'll experience couple serious bouts of "you had it coming, jerks," when the next round of credit contraction and fear set in.
I am tired of living in a weird world of mild cognitative dissonance. Daily life for the employed person is still ticking along without major change from one or two years ago. I recently changed my employer and had absolutely zero problems doing so. I only went to one round of interviews. This is not to say that I want to have a harder time finding work, but it is strange to hear people talk about being unable to find any job at all. For me and my circle of associates there still isn't a depression on. I recognize this is not the case for many and plan to give to charities this holiday season since I do still have a job.
There's a part of me that wants to "be right". I saw this cataclysm coming since I learned about peak oil and then took my financial education.
Finally, I want the crash to come so I can start working out how to deal with it. There is a good chance the place my brother and I just bought will end up being the family's bug-out spot. If worst comes to worst we'll at least have some sort of warm rooms, some fresh water, some food, and a way to grow more of it.
But when I look at my level of prep - really lack thereof, I think, "my god I hope the real crash doesn't arrive for another three years at least." I'd be shocked if we have that long before teh next round of instability arrives. But I hope I'm wrong ;)
this was a parenthetical from charles hugh smith at www.oftwominds.com yesterday regarding the illusion of gov't/central bank control of the global financial system:
"(government control of private debt repudiation is largely an illusion, as we shall soon see in 2010-2012)"
Regarding Greyzone's unbridled outburst over morality, I too appreciate the satisfaction he apparently will receive over my more-or-less impending contribution to gaia's fertility. However, unlike His Vulturine Eminence, I will not be having anyone notify him.
Anyone else here remember something supposedly said by a non-blogger sometime before the internet. I hear many people believe this non-blogger was seriously moral. I think it went something like this, "let he who is without sin cast the first stone." I wonder how that would work?
Ilargi,
first off, have agreat trip.
Second,
hate to finally disagree with you on only our second point of contention, but I think if the children of tomorrow have to do with much less I see that as a positive. Now this is spiken by a mid 30's adult that had no electricity many months, ate spaghetti 5 times a week and pinto beans the other two, and did not have a computer until 2000. I think we need our kids to get tougher and more hungry to compete. Just my 2 cents. 2.00 australian after hyperinflation and .0000000002 dollars after deflation.
GYC
"....hate to finally disagree with you on only our second point of contention, but I think if the children of tomorrow have to do with much less I see that as a positive"
What that I said does that disagree with?
Ilargi,
"What that I said does that disagree with?"
I may have missed my point. Nobody "who really cares about heir kids" would allow such things to go on. As we know, by testimony, 100% of parents care 100% about their kids, yet still proceed towards failure. Go figure?
Only a reset will wake people up. I still cannot eat more than 2 times a day cus I did not eat for a while, what will be our reset?
re shadenfreude / willing it to occur soon
I confess to hoping instead for a reflate so I can unload this half million dollar TH mortgage on a different "sucker"; then rent til the prices drop again; and buy a much cheaper acre or two - free and clear - for a permanent family bugout.
It's not gonna happen. :(
Nevertheless I practice growing foods and building soil [composting] on my postage stamp sized lot - just in case. My backup plan is to rent out rooms and teach all my neighbors [what's left of them] to guerilla garden together on the common areas.
Leave it to the National Retail Federation to find green shoots in the pile of horse dung that is the US Holiday Shopping Season:
...the National Retail Federation (NRF) expects holiday sales to decline 1% this year, an improvement from last year's 3.4% drop in sales for the season.
Once again movement from bad to less bad, -3.4% to -1%, is relative movement in a positive direction, and that qualifies as a green shoot.
Furthermore:
...the biggest overhang on consumer spending is the job market, Hoyt said. "Consumer spending will turn when the job market improves," he said.
The mechanism for economic improvement, however, has a circular quality to it, instead of a straight line relative character. Consumer spending will improve when the job market improves, but they're waiting for an increase in consumer spending to kick start economic growth, which will in turn lead to increased hiring.
I broke down and attended the "Collapse" movie,ran into TAE "nelson"...got some interesting takes on things from the night...but I am just too pooped to post a long one.
Nelson,I will clarifie/explain, and complete the conversation I was having with you when Ruppert arrived @ our location,and made it impossible to talk...just too tired to get into it now...
snuffy
EBrown,
We are living in collapse and have been for many years. When exactly does winter arrive?
Rennes! I loved Rennes... then we went to some anonymous hamlet east of Paris. That, not so much. Paris? Not at all.
Non sequitur.
FarmerAmber,
Love your attitude and would like very much to have your brain to pick! I'm getting myself trained up. We're about to buy a property. Hope to get about a half acre going immediately around us and would like more.
Despite my low training, I'm trying to get involved in permaculture training here.
And we're working on building community. Look up the Georgia Street Community Garden and the Garden Resource Program Collaborative in Detroit as examples of community working together, even in an economic wasteland.
Please contact me should you like to do a little mentoring.
Cheers
@ Mike, I couldn't pull up the Bunning/Bernacke video but did read Bunnings statement on his web site.Certainly backs up his statements with evidence. I felt so happy to read it but then the cynic within reminded me to think strategicly,that Gollum has a replacemnt candidate waiting in the wings. The decision to sacrifice Bernacke will be a bankers' decision.
Re the secret desire for collapse I notice I long for collapse when overwhelmed by more complexity than I can process. So-o-o many stressess on " our way of life ".
So-o-o many " what ifs ".....
WOW, market is going to surge on this report.
Only 11,000 jobs lost in November and unemployment rate fell to 10%
I find the Unemployment numbers to be incredulous to say the least, my company, Verizon, just layed off 8000 workers in November alone..
Something stinks
Positive news all over.
But still odd: how were they off by 40+% for October/September?
October went from 190.000 to 119.000?!
What I really don't get is the services sector.
According to yesterday's ISM non-manufacturing index, the sector contracted.
But today, the BLS claims it added 86.000 jobs.
Anyway, lousy day for gold bugs.
.
Even more interesting about the employment report: the household survey (which both KD and Ilargi often cite as more meaningful than the headline number), employment actually rose 227K from October to November.
BLS numbers for each month of 2009
Not seasonally adjusted (noisy):
140105 139833 140586 140363 140826 141055 140074 139079 139088 139132
Seasonally adjusted:
141748 140887 141007 140570 140196 140041 139649 138864 138275 138502
Hard to figure but the market loves it. I was two-deep short mid-day yesterday, but chickened and closed it all before the market went off a cliff at the end. Kicked myself all day. But looks like I'll have another chance.
"... the household survey [shows that] employment actually rose 227K from October to November."
True, but it also says that the number of people "not in the labor force" rose by 291.000. Which is just plain weird.
@Dan W Aren't you in the Upper Valley? I doubt that there are hundreds (plural) of thousands up there. Even if you count the whole Kingdom and everything North of the Notches I don't think you hit a quarter million.
Also, while I don't know the Vermont side of the river, there's a surprising lot of decent land still being farmed up around Littleton and Lancaster NH.
Anyway, my version is that if the trains from the midwest stopped in January people would starve up there. If they were warned in January that the trains would stop in July, no one would starve. If the trains stopped in September no one would even need to get seriously hungry.
Employment in professional and business services rose by 86,000 in November.
Temporary help services accounted for the majority of the increase, adding 52,000 jobs. Since July, temporary help services employment has risen by 117,000.
Well what is interesting is that yesterday as Ilargi mentioned the service sector contracted sharply while today we learn it added thousands of new jobs??
Probably the not in labor force number is rising because there has been a stampede by people on the edge to apply for social security or disability.
@Dan W.
I am worried about the mall dwellers also. I have hope though. I have found that the actual physical labor of growing food is really not that strenuous. Even with the size of garden that we have and the amount of food that we preserve (winters are not kind in Kansas), we have never had to work a solid 8 hour day at it. Growing enough food to keep our family (2 adults, 2 youngish children) fed takes about 30 hours a week of work spread out over the course of the week from about March through October. A significant amount of that time is spent doing very low effort things – tying up tomatoes, watering, and picking (which is surprisingly easy in most cases). That is far from back breaking labor. The harder jobs like moving mulch and spreading compost can be spread out over several days to make them easier when you start out. The only really tough time is spring planting because it happens in a big bunch, must get done quickly, and requires lots of getting up and down. Its hard on the knees. Its also pretty brief. Everyone I know who has started growing their own food has been amazed by how easy it really is and how little work is really required. That said, part of that is how we grow our food – raised beds (=no hoeing), lots of mulch (=very little weeding), and no till (=*duh* no tilling).
It is part of the bill of goods we’ve been sold by industry that working a 50 hour a week job is “saving” us from the “toil” of growing our own food. I hope that when people begin the work of growing their food (as most of us must in the coming years), they will be able to appreciate the joys of spending time with their loved ones (working) and seeing seeds turn into sprouts turn into food. We have found it rewarding on an entirely new level from anything industry offers. The key is to get the word out to more people. In my experience with teaching people to grow food, it takes about a growing season of mentorship to get someone to the point that they can provide for themselves (basics of planting, tending the plants, harvesting and basic preserving). It takes another couple of years of specific lessons (seed saving, planting rotations, new veggies they didn’t try the first year and general soil care) to get them where they can be self-sustaining at it and teach others. It takes a lifetime to try and learn it all. :-) That is also part of the fun.
@ccpo
I am happy to help anyone who wants to learn to grow food. Feel free to email me at jajlehrman *at* yahoo *dot* com. That goes for anyone else too. We all need to know this stuff and it just isn’t that hard. I would also recommend a few other blogs out there that have certainly helped me – Sharon Astyk’s blog at www.sharonastyk.com and the Dervaes blog at www.pathtofreedom.com. Both are well worth checking out for inspiration and practical advice. Sharon’s books are also inspiring and provide excellent fodder for convincing others of what we need to do. If she’s reading this, I suspect she will recognize some of the arguments (I spent a lot of time saying *right on* when reading your books).
Worth noting that seasonally unadjusted, U6 rose by 0.1% from 16.3 to 16.4%.
FarmerAmber,
A couple questions that might be of general interest:
What is the total square footage of your raised beds?
What do you mainly plant?
Is it 30 hours per week per person or total?
BTW, what you do sounds a lot like the Fukuoka method. I stopped tilling two years ago and it is great.
Farmer Amber- "As far as "having" to use fungicides, insecticides and herbicides to get good yields - that's a load of crap."
WHAT!! How can you believe such nonsense!??
Don't you know history has proven that 100% our agricultural ancestors died of starvation at the age of 3 before the introduction of pesticides in the 1800's !!??
;-)
El Gal- "While this bothered me quite a bit, it would drive Greenpa around the bend."
lol! You know me well. It would like drive my co-habitants wacko too, since I would likely be unable to refrain from sniggering and wailing "god save me from science by English majors!! Please!!"
HG Wells - The New World Order [1939]
It is, or at any rate it has been, the function of the contemporary money-credit system to bring worker and material together and stimulate their union. That system always justified its activities on that ground, that is its claim to exist, and if it does not exist for that purpose then for what purpose does it exist and what further need is there for it? If now the financial mechanism will not work, if it confronts us with a non possumus, then clearly it resigns its function.
Then it has to get out of the way. It will declare the world has stopped when the truth will be that the City has stopped. It is the counting-house that has gone bankrupt. For a long time now an increasing number of people have been asking questions about the world counting-house, getting down at last to such fundamental questions as "What is money?" and "Why are Banks?" It is disconcerting but stimulating to find that no lucid answer is forthcoming.
One might have imagined that long before this one of the many great bankers and financial experts in our world would have come forward with a clear and simple justification for the monetary practices of today. He would have shown how completely reasonable and trustworthy this money-credit system was. He would have shown what was temporarily wrong with it and how to set it working again, as the electrician does when the lights go out. He would have released us from our deepening distress about our money in the Bank, our little squirrel hoard of securities, the deflating lifebelt of property that was to assure our independence to the end. No one of that quality comes forward. There is not so much as a latter-day Bagehot. It dawns upon more and more of us that it is not a system at all and never has been a system, that it is an accumulation of conventions, usages, collateral developments and compensatory expedients, which creaks now and sways more and more and gives every sign of a complete and horrifying social collapse.
Most of us have believed up to the last moment that somewhere distributed among the banks and city offices in a sort of world counting-house, there were books of accounts, multitudinous perhaps and intricate, but ultimately proper accounts. Only now is it dawning upon comfortable decent people that the counting-house is in a desperate mess, that codes seem to have been lost, entries made wrong, additions gone astray down the column, records kept in vanishing ink. . . .
Regarding how much land a family needs; the old traditional Chinese measure is a "mou"; around 1/8 of an acre- which was by definition the amount of land needed to feed a family (of 4, I think) for a year.
Assuming you worked your butt off, of course. :-)
Ilargi : "True, but it also says that the number of people "not in the labor force" rose by 291.000. Which is just plain weird."
I don't find it weird, but kind of expected. Wouldn't those be the terminally discouraged folks, who are no longer looking for work? That number should grow for quite a while.
And, another interpretation for "falling job losses" - there are simply far fewer EASILY disposable jobs to cut. We've already cut millions of them. It's not an infinite resource.
At any steady down pressure on jobs, I think the losses should slow, basically asymptotically. Then when a new down pressure is added- more jobs become available to lose.
yes?
@Farmer: I'm a different Dan W. than the one that lives in Vermont. I'm out in the soggy PacNW.
Again, I completely agree with what your saying, but have to be realistic about access and timing of getting in a garden. I have no-where to plant anything. Land here is still selling at grossly inflated prices...maybe people still think someone wants to buy a 1/2 acre to build a McMansion on. So, no matter how much I "want" to grow my own food and learn the skills, I'm priced out of it.
And I make a comfortable living right now. If I can't afford to grow my own food, the mall-dwellers, the single moms, the two parents making min. wage, they have no chance in hell. They are 100% dependent on BigAg to keep them alive (while killing them with pesticides, anti-bios, and HFCS).
Of course, I could move somewhere where the land is cheap...but then, how to pay the other bills with no job?
And so, I continue to look for that elusive good deal on a run-down house with a big yard. Who knows, maybe when the Fed pulls some liquidity...
@DrabMatter
I have heard of Fukuoka, but I haven’t read any of his writings. From what I know, yes, I think we do things very similarly.
I have roughly 2000 sq.ft. of beds. Some have sides so they are truly “raised” and a few are more wide rows with permanent aisles for perennial plantings (strawberries, asparagus). For the coming year we plan to add another 300 sq. ft. as we convert more of the space between the sidewalk and the street into raised beds.
We plant about everything. Lets see what I can remember….several kinds of lettuce, strawberries, raspberries, rhubarb, asparagus, broccoli, cauliflower, brussel sprouts, cabbage (red and green), corn (popcorn and flour corn), potatoes, sweet potatoes, 4 kinds of dried beans (black, red, white and spotted), green beans, 5 kinds of tomatoes, 10 kinds of peppers (sweet, hot and paprika), kale, chard, onions, shallots, garlic, green peas, black eyed peas, amaranth, turnips, beets, kohlrabi, radishes, okra, lots of different cooking and medicinal herbs, carrots, cucumbers, 4 kinds of winter squash, watermelon, cantaloupe, spinach and some other greens. That’s all I can think of at the moment. We also have 2 peach trees, 2 apple trees, 2 cherry trees and a plum tree (his mate didn’t make it through the first year). We’re planning to add 5 grape vines, another plum, and blackberries to the mix in the spring. I’m sure I’m missing something – I always have to look back at my notes when I start planning the garden.
It is 30 hrs per week between my husband and I, not 30 hrs for each of us. That’s all it takes for planting, tending, harvesting and preserving. For a lot of the season its less than that per week. As we’ve gotten started, there have been plenty of weekends and afternoons where we’ve had to spend time building sides for new beds that aren’t included in that total. We’ve also built a rainwater collection system (it’s a string of used plastic barrels connected to each other) some nicer compost bins, and a greenhouse in the last year and that time is not included in the 30 hrs per week. If you included them if would bring some weeks’ totals up closer to 50 hrs between the 2 of us (when building the greenhouse). The water barrels and compost bins didn’t take more than a weekend each though. The greenhouse took about 3 months, partly due to city codes. Those projects are also not required to grow food – we grew 1200 lbs last year before any of those projects existed.
I hope I covered your questions – let me know if not. Thanks for the interest!
Future or present mini-farmers, a must read--check out amazon.com for it... circa 1900... China
Farmers for Forty Centuries
Author - F. H. King
How to feed 300,000,000 people using natural methods.
Re.: Employment numbers
The rate was 10.2%.
The rate fell to 10%.
Yet the number of people unemployed increased by 11,000.
I must be mathematically challenged.
The rate should have gone up since more people are out of work that last month.
jal
On doom...
It's easy to think that it occurs homogeniously to everyone and everywhere. But, I don't think this was the case in the 30's, nor today. There are skills and areas of the country that do well. And, as with prepping, advertising how well someone is doing, and which communities are holding their own, can invite unpleasant consequences.
In the past two months I've received numerous (10-12) job offers. But, each required me to move to a different location and/or it required me to use my talent in a most distasteful way. (support the manufacture of nuclear weapons, etc..)
I, too, at times wish the damn thing would unfold because I get tired of thinking about it. Even Orlov wrote about the unpleasantness of listening to people talk about the dark side of events continuously. And since we can't change it--it seems best to focus on mental preparation (once some basic preps are in place).
On prepping... really, to be totally prepared one would have to put the entire universe in one's backpack ;) There are many things that require relationship/community. This cannot be bought at the army surplus store.
Thanks, again for the article and comments.
Gravity, I like your HG Wells. Here is my take on it... for gravity's sake.
I had a dream last night. A group of men thought it was funny to hold a small dog high in the air. The puppy tried with all it's might to fly. The men thought this was great. Then the puppy fell.
As I was explaining the dangers of their act, a voice declared, "Going out of business!"
I realized, THAT is the way it should be.
@Dan W.
It is true that city land is outrageously overpriced at this point. I would second the other commenter who recommended finding a community garden. They're everywhere, but often hard to locate. I work with one here that has plenty of space for new people to plant in. I don't know that you would have enough to grow everything (you couldn't ask for 2000 sq. ft. of their space) but it would let you start to build your skill set. You can learn to plant a lot of different crops in a very small space. How you do it is the same whether you plant 1 sq. ft. or 100. I would encourage you to explore that option.
Also, if you're willing to relocate there are still areas of the country where educated people are in high demand. Land is usually cheap too. Ironically enough, I suspect these areas will be the least effected in the coming times – people are already having to do for themselves.
As far as the host of humanity that currently lives in cities, it is a given that in the coming times that will have to change. People will move out of the cities in search of food, work, and security as the industrial supports of the city vanish. It is over-simplifying to say that they will stay where they are and starve - look at the mass migrations of the great depression. The challenge for anyone with land is how to set up systems that can accommodate this outflow. If we don’t have a way to funnel the tide of humanity into productive work with a fair system (likely on a family farm or city level) then hunger will drive people to violence and no-one will be safe. It is far more productive to plan for how you could feed not just your own family, but another for several months until crops can be planted. It would be wise if you have acreage to begin thinking of how you would set up a fair sharecropping system to enable people to grow their food and work in community. If you don’t plan for it, it will be forced upon you. I don’t care how many guns you have – you can’t see in the dark and you will never know when they are coming. You will have your back to somebody, sometime. You might as well prepare for making that person your partner, not your enemy. It won’t work all the time and many will still die in violence, but we have the ability, now, to minimize that by preparing a way for those that will surely come.
It is a powerful statement to say “the way has been prepared for you”.
Glennjeff,
I wish you and your wife the best. My younger sister was diagnosed with stage 4 lymphoma earlier this year, with tumours in her lungs, liver, pancreas and kindeys. After several rounds of chemo, she is now in remission, and probably won't need radiation. Her prognosis has gone from about a 50% over 4 years to an 80% chance. We are grateful for small miracles, especially as she has very young children. I'll be thinking of you both as you face the same battle.
FarmerAmber,
Thanks for the detailed response. Very useful. I also live in the Pacific NW like Dan W. but am lucky enough to have 3/4 acre even though I am near a big city and this is exactly what I would like to do. I think this is the best thing I could possibly do for my children, probably better than sending them to college.
Re.: reading blogs.
I just listened to Obama.
He said what we were saying last year. He must be reading the blogs.
He is not in a rosy bubble.
He gets it ... just like us.
He has the “bought lawmakers” to deal with. He gets it.
He is aware of the coming commercial loan meltdown.
Its an interesting sweater that is being weaved.
jal
DanW,
it was tough, but eventually we found our little old house on a junior acre here in the Beaverton area, and it's walking distance from MAX.
Sure, the "value" of the property has continued to decline since we bought it two years ago, but so what? It's our "dying house," and the only way we're leaving here is feet first.
It's been both joy and toil to work this place, putting in a well, remediating the soil by hand, and pulling out the G_D_ English Ivy. But it's my gym membership and Vitamin D source rolled into one, and it comes complete with all the freshest, sweetest air you could ask for.
I'm in decent shape, but it's never-ending, backbreaking work managing the maples and turning the soil. I hope it all comes together in a few years, but I can't see it ever becoming "easy." Such is the legacy of Cain, cursed to live by the sweat of his brow and condemned to eat the thorns and thistles of the field.
Why should it be otherwise? All species compete to survive, fighting daily to find food and not become food. It's a fight that every creature eventually loses. "Life is hard - then you die." Humanity will remember as much as our profligate, technology-driven growth spree continues its tilt into inevitable steep decline.
@Greenpa Don't forget climate when you're mouing. A family needs a lot more land in Inner Mongolia than it does in Ganzhou. (Vermont...Louisiana)
And on the unemployment thing, ADP's number came in well over 100,000 as expected. The BLS will put out a correction on the afternoon of Christmas Eve.
Just to delurk for a minute--although I do so with fear and trembling because I have so much respect and admiration not only for Ilargi and Stoneleigh but most of the contributors here--but I wanted to point out in response to El G that for The Road, which is a great novel although not nearly as brutal as his masterpiece, Blood Meridian, McCarthey basically said that the event he presupposed was a meteor strike. I don't know if that would change the versimilitude of how mostly only people survive, but wanted to throw that in.
Now I'll go back to reading the most vital blog online, but I'll make a small contribution as a show of gratitude.
The FIFA World Cup Draw has just completed, these are the following groups. Who knows, it might be the last world cup? So enjoy while you can!
Group A - South Africa, Mexico, Uruguay, France
Group B - Argentina, Nigeria, South Korea, Greece
Group C - England, USA, Algeria, Slovenia
Group D - Germany, Australia, Serbia, Ghana
Group E - Netherlands, Denmark, Japan, Cameroon
Group F - Italy, Paraguay, New Zealand, Slovakia
Group G - Brazil, North Korea, Ivory Coast, Portugal
Group H - Spain, Switzerland, Honduras, Chile
TAA DAAone !!! Drum roll, please........
HERE http://tinyurl.com/yhd2ksb is one of the land tax increases that Stoneleigh has been consistently warning about; right here, right now- and affecting YOU.
Particularly if you are a small farmer.
Scott County is just SE of Minneapolis; some of it is urban, tons is suburb, and quite a bit is "bedroom" communities.
The tax folks claim they're aiming at "hobby farmers", who are actually wealthy, and not farming. But at the moment- everybody not "farming" , ie cultivating- at least 10 CONTIGUOUS acres- is no longer a farm.
They already "weeded out" anyone working less than 10 acres some years ago.
Doomsteaders- take note.
I'm not immune to the worry, either; though we have 160 acres- all of which we work- we don't till. And one of the tree crops we harvest- a couple years ago, seeking some technical work by a state facility, I was told "that's not a Minnesota crop." - although I was sitting on 2 tons of it in storage at the time.
Ain't beans. Ain't corn. Ain't a farm.
From the WSJ
WASHINGTON -- Congressional Democrats are moving ahead with a roughly $170 billion package to spur jobs growth and boost emergency assistance to the unemployed, Democratic congressional aides say.
The two separate bills are taking shape amid an improving jobs picture, but with unemployment still at 10%. President Barack Obama will deliver a speech Tuesday at the Brookings Institution where he intends to lay out his own ideas for a narrowly targeted jobs bill, which will overlap with Congress's intentions but won't be identical.
Commodities trader accidentally buys real coal--via Metafilter
http://thedailywtf.com/Articles/Special-Delivery.aspx
Charles Hugh Smith offers a technical argument for the imminent end of the stock market rally.
The unemployment news today presents a major contradiction of arguments made repeatedly on this website.
Does anyone have some explanations?
Does anyone plan to revise some of their predictions?
@Greenpa, 1 mu ~ 1/6 acre (3 mu = 2000 sq. m.)
south of Yangtze river, in order to feed more people, same piece of land is used to grow three crops consecutively in one year: two crops of rice and one crop of winter wheat or rapeseed. the work required is truly hard and back breaking without ICE+FF.
Cheryl,
The explanation on my part is that no, the unemployment news today doesn't contradict I&S' analysis.
Now, if you'd care to make more than a pithy denouncement, I suppose I would care to make a more substantial reply.
TrimTabs employment analysis, which uses real-time daily income tax deposits from all U.S. taxpayers to compute employment growth, estimated that the U.S. economy shed 255,000 jobs in November. This past month’s results were an improvement of only 10.2% from the 284,000 jobs lost in October.
Meanwhile, the Bureau of Labor Statistics (BLS) reported that the U.S. economy lost an astonishingly better than expected 11,000 jobs in November. In addition, the BLS revised their September and October results down a whopping 203,000 jobs, resulting in a 45% improvement over their preliminary results.
Something is not right in Kansas! Either the BLS results are wrong, our results are in error, or the truth lies somewhere in the middle.
We believe the BLS is grossly underestimating current job losses due to their flawed survey methodology. Those flaws include rigid seasonal adjustments, a mysterious birth/death adjustment, and the fact that only 40% to 60% of the BLS survey is complete by the time of the first release and subject to revision.
Seasonal adjustments are particularly problematic around the holiday season due to the large number of temporary holiday-related jobs added to payrolls in October and November which then disappear in January. In the past two months, the BLS seasonal adjustments subtracted 2.4 million jobs from the results. In January, when the seasonal adjustments are the largest of the year, the BLS will add anywhere from 2.0 to 2.3 million jobs. In our opinion, trying to glean monthly job losses numbering in the tens of thousands or even in the hundreds of thousands are lost in the enormous size of the seasonal adjustments.
In November, the BLS revised their September and October job losses down a surprising 44.5%, or 203,000 jobs. In the twelve months ending in October, the BLS revised their job loss estimates up or down by a staggering 679,000 jobs, or 13.0%. Until this past month, these revisions brought the BLS’ revised estimates to within a couple percent of TrimTabs’ original estimates.
The large divergence between the two results begs the question of what is causing the difference. While we don’t have an answer today, we will be poring over the data in an attempt to answer that question.
Ahimsa,
I've been absent for awhile.... but I did manage to catch the Jane Goodall interview. Thank you very much for the link. She is a gem and I admire her greatly and contribute to her cause.
I wondered if you caught the brilliant interview the other day on CNN with Dr. Sanjay Gupta, Aubrey de Grey (world famous geneticist/researcher on aging) and Dr. Dan Buettner - He's the one who travelled the world studying the 'blue zones' on the planet (Okinawa, Sardinia, Loma Linda California (7th day adventists), Ikaria in Greece, Costa Rica)- places with the most centinarians. He studied their diets and lifestyles. His conclusions are nothing new to you and I but are nevertheless facinating as a reminder. His book 'The Blue Zones' is worth reading. He also wrote the article a few years ago in National Geographic on the same subject. You can access the interview at CNN/VitalSigns.
After travelling the world he is now writing another book on the 'happiest' cultures around the world.
Stopped watching the talking heads on the news. Only gives me a headache. Nice to have the likes of I & S, Kunstler for reality checks and updates.
Nothing riveting from my neck of the woods except Roman Polanski is back in town wearing a new bracelet.
Ho Hum :)
Cheryl - Try this...
The Truth About BLS Lies
http://www.zerohedge.com/article/truth-about-bls-lies
OK, Cheryl, I'll take the bait. After you tell me which things I&S have said that are no longer true just because the jobs report might have been surprisingly good.
A key point to remember is that nothing is all good or all bad; all up or all down. Life is not linear. There will be impulse-correction waves all over the place in all facets of the market and the economy. Much of what I&S have described will unfold over time, not in 24 hours due to one government report.
The unease that many have described over the last few weeks (and longer, really) is the disconnect between what looks fabulous on the surface while the foundation is rotted away by termites.
The image I have of the world as it is, is the contrast between the surface appearance that the "perfect" Ozzie and Harriet family presents to the outside world while on the inside there's alcoholism and child abuse and bankruptcy and who knows what else. What you see is not what you get. There's all kinds of secrets that the family will try desperately to hide in order to preserve appearances and be successful at keeping up with the Joneses.
The massive liquidity that has been pumped into the economy by the govt has provided a feel-good papier mache veneer that masks over just how rotten the foundation is.
Nothing is materially different today at the market close than was the case this morning when the jobs numbers came out. Do not be deceived. It's just as bad today as it was yesterday.
Who is officially unemployed?
Here is a quiz I ran across a little while ago. See if you can guess who counts in the official tally.
Those 'not in labor force' numbers must be astronomical! What a way to not count people, eh?
@ Coy Ote
LOL, I already posted the whole Charles Biderman article, just scroll up :)
@Cheryl - You will never get a retraction from any of the true believers.
The willingness to believe is deeply embedded in our collective evolutionary history. Why it represents a successful reproductive strategy may be related to clan support and allocation of scare resources.
Regardless, it makes the emergence of religion, whether secular or ecclesiastical, one of the most intractable issues facing humanity. That's because once a belief is firmly established, it merely takes a "leader" to coalesce various factions in which to effect "change".
The belief at TAE is that the world banking cabal simply cannot, must not, have the capability of devaluing excess claims so as to avoid bankruptcy and crash the global financial system.
If that belief was found to be invalid, then all other following conclusions (and preparations) may themselves be found to be invalid. Thus, it cannot be.
But what if is is? What if the global banking cabal has sufficient power & control? What would our world look like? Would it be comprised of consistent inflationary expansion over generations? That is, exactly the world, we and our forefathers have lived infor centuries?
Why would it ever come to an end? If currency is simply nothing more than a series of relationships on a spreadsheet, then isn't "value" nothing more than to which a sufficiently powerful group collectively agrees to assign?
Humans by nature are acquisitive. Sure there are exceptions, but for the most part, people want to run the rat race (at least while they are young). Give them sufficient means and incentive, and set them free to shop. The only thing holding back another burst of consumption mania is this slight issue of existing debt overhang which needs to be devalued away. But not to worry, our fearless leaders are manning the printing presses as we speak.
The only way we will ever see any of the wished for TAE results to occur is if the current political power structure is weakened. So bet long unless those wacky Americans voters somehow upset the apple cart.
Cheryl said...
The unemployment news today presents a major contradiction of arguments made repeatedly on this website. Does anyone have some explanations? Does anyone plan to revise some of their predictions?
-----
Not me!
Easy credit is disappearing.
Assets are changing hands to those who have cash.
Debts are disappearing.
Everything is just fine for those who have cash.
The humming sounds of the printing press are keeping the the senior swans asleep.
jal
worth noting that the "WONDERFUL!!" job news- had zero effect on the market. Except metals are down a tad. Looks to me like a HUGE number of people have programmed automatic "sells" for Dow 10,500. Enough so the market automatically drops in response.
How automatic it all is. :-)
Even the subsequent carping- see! see! toldja~ toldja!!
I love the free entertainment.
Cheryl,
As of right now the employment participation rate is at 65% of the eligible population, a number not seen in 20 years. Additionally, the BLS keeps writing people "out of the labor force" so they don't have to be counted as unemployed.
Let's look at the actual numbers in today's report.
One thing that immediately pops into view is that the BLS claimed the labor force was 154,912,000 people at the end of June. Yet now, at the end of November, the labor force has magically contracted to 153,877,000 - a decline of over 1 million people who are no longer counted.
For further analysis, I suggest reading Jobs Contract 23rd Straight Month; Unemployment Rate Drop to 10.0% by Mike Shedlock.
Then if you want even more analysis, read The Truth About The BLS Lies over at Zero Hedge.
To show you how bad it is, I recall reading a comment about a year ago by an upper level government person in Argentina (I believe, my memory may be off here) who said he wished his country could get away with counting unemployment the way the US does because Argentina would look so much healthier if so.
In short, the BLS numbers are heavily politicized and have been for years so don't blame Obama alone. He's just taking advantage of the mucked up numbers as much as anyone else in his position has.
Finally, if things are so much better, Cheryl, why do state sales tax receipts continue to decline, states continue to go deeper into debt, and Trimtabs payroll tax data (real time) continue to go down if people are actually being hired?
P.S. To everyone else, let's watch the good ship Dubai and see if it makes it to a safe haven this weekend or actually sinks. The question of the day is who holds the CDS against a Dubai default and how much do they owe?
The 6 Bank failures tonight have cost the broke FDIC nearly $2.4 Billion so far.
The biggest to go down was AmTrust, one of the nations top 100 banks.
Per Greyzone @6:11, it does seem that those numbers smell a little like chicken soup. Inquiring minds might want to ask, is it possible that the honorable employees of the Usanistani government deliberately cooked up those numbers just so "Cheryl" could dance in here and try to bust some chops. Oh, surely they would never do anything like that.
Unlike government statistics, predictions do not get revised, you just make new ones.
I'll make one right now. The next time .gov trots out some preposterously good numbers, "Cheryl" will be back with another strangely crafted demand that somebody prostrate themselves and confess their sin.
I for one do not come here for I&S's predictions. I'm here for the attitude. This is the best damn community on the web and I hope I'm not the only one that intends to keep it that way. Oh, and contrary to some unworthy opinions, it's not a religion. It's not even a movement. It's folks talkin across the back fence, er, well actually it's thru those internet tubes.
Speaking of Greyzone, he recently expressed deep concern about Gaia's fertilizer needs...just sayin.
VK,
How insensitive of you to post a thing like this
The 6 Bank failures tonight have cost the broke FDIC nearly $2.4 Billion so far.
The biggest to go down was AmTrust, one of the nations top 100 banks.
on the very day that euphoria broke at Cheryl's house. After all who cares how many banks fail, or how big, we've just been informed that wage slavery still has a long future.
Shame on you!
.).).) (.(.(.
OMG!!!!!!!!!!!!! You GOTTA see this!!!!!!!!!!
http://www.washingtonpost.com/wp-dyn/content/article/2009/12/04/AR2009120402016.html
Neel Cash-carry - remember him? - has got himself a doomstead!! I guess setting up TARP tired his sensitive soul.
And he found a fantastic sycophantic journalist!! I guarantee belly-laughs as you look over the photo gallery, as he and his dogs rough it!!
Can someone explain these three sentences regarding the seizure of AM Trust Bank (sentences from a WSJ article).
1) "The Federal Deposit Insurance Corp. said the AmTrust failure was expected to cost its deposit-insurance fund about $2 billion."
2) New York Community Bancorp Inc., Westbury, N.Y., is acquiring AmTrust."
3) "As part of the deal, the FDIC is shielding New York Community from most losses on $9 billion of AmTrust's assets."
----------------------
My question: If the FDIC is "shielding" New York Community Bank from $9 billion of losses on AmTrust assets, then why is this bank failure only costing the FDIC $2 billion (see sentence 1). Shouldn't the total cost to the FDIC be $11 billion ($2 billion for insured deposits and $9 billion for "shielding" NY Community bank).
Semi random thoughts by occasional poster, me, rapier.
The drumbeat for QEII is growing exponentially. Ben might be thrown overboard because he is not loose enough. Irony overload.
Nobody want's deflation. Nobody. Injustice and unfairness are big things, the Middle Ages another. Another thing that won't solve the first two.
I think one has to allow for one more asset inflation cycle. Assign it some probability.
If the economy where the bottom 80% lives stops going down now then maybe 10% more will have fallen to the bottom since the top in 05-07. in America. Meanwhile a billion elsewhere are better off, depending on how you count the externalities, over the last X years, as the inflationists reigned..
I am struggling here for an ethical argument in favor of inflation by money printing. Not arguing for or against, just saying. Partly because so many fellow bears and alt economic thinkers are not nice people. I mean when you have to agree with the looney racialist wingnut Senator Jim Bunning when he lays into Bernanke it has to make one wonder.
* The Road is shocking, well written, moving, depressing, unreal, formulaic, cliche-ridden, turgid, and implausible; The Road is long with many a winding turn that leads us to who knows where, who knows where
* Don't get sick until you're on Medicare; Don't go broke until you are dead
* Only comment on TAE if you are flush with insights:
- Toughen up your kids
- Our perception is our reality
- Captan kills fungus
- Cheese makes a nice gift
- Self flagellation is problematic
- By their fruitless hopes ye shall know them
* Denniger's rants and food wars are thema non grata at TAE; Leave Tiger alone
* People shouldn't moralize; Morality is dangerous; People who enforce their own morals sometimes don't keep the same; Morality helps maintain societal trust; Lack of morality is causing collapse; We should insist on morality, just not any particular morality; Those who attack morality won't make it through The Great Bottleneck and will be turned into fertilizer
* Some both agree and disagree that capitalism is both the best and worst system; Capitalism is an epic failure with a cast of billions; Capitalism serves entropy; Capitalism was invented by Nimrod
* We live in, shop at, drive in, eat from and work in boxes; This is not optimum or even optimal; American life revolves around consumers; One US citizern requires 240K calories of fossil fuels per year; Oil is too precious to burn
* Texas is too cold and snowy; New England is too warm and wet; Oregon is perfect
* Can the heads of government control the economy? The power to destroy a thing is the absolute control over it; Someday we will develop a new monetary system that will solve our intractable problems
* Economics moves at a glacial place; I and S prophetically foreshorten; TAEarthlings are tired of waiting for the crash; The four horsemen are stuck in a mud hole in front of MikeB's barn
* When your friends go into debt congratulate them; I see bankrupt people all the time, some don't even know they are bankrupt
* Mall walkers can't grow their own food and will die-off; Organic food is only for the rich or hard working; The claims of BigAg that you can't grow your own food are myths; Those left after die-off will create a new society
* Ben Bernanke paid the bank-whores $180B but still couldn't get laid
* Obama commits 100 US soldiers and $300M for each Al-Qaede member in Pakistan; Obama gets it, just like us
* TAE crowd has been brainwashed and won't admit that the government can keep the plates in the air forever; Collapse is now a religion whose adherents ignore the facts; Right thinking people know that only wacky American voters can cause collapse
* Visit Beautiful Hawaii - Inflated Americans, deflated Japanese and plenty of warships
This is really annoying.I wrote enough to triiger the "you wrote tto much"and it just erased a huge post.
booo,blogger.
snuffy
@Nelson
and turning the soil.
No need to, and better not to. Please read Fukuoka on natural farming. You may be able to get his books here if you can't afford to buy them: http://www.soilandhealth.org/index.html
Not tilling/turning not only gives you healthier soil, but releases less carbon.
@FarmerAmber
Thanks much. Will be in touch.
Greenpa,
The current market is ignoring about 99% of the data that a more normal market would follow. I strongly suggest checking the FOREX Dollar Index and plotting it against the S&P 500 from about June 1 of this year forward. There is over a 90% correlation between the two. If the dollar goes down, the market goes up. If the dollar goes up, the market goes down.
Most of the rise in the market this year was directly to offset the decline in the dollar. So, while some Americans may think the market improved, in terms of other currencies it improved very little at all.
What happened today was this - the market was poised to open higher because the jobs data had been leaked to the program traders at GS, JPM, etc. So the market opened up about 130 points on the DOW. But the Dubai situation is not "contained" at all, as was promised. Instead, Dubai's creditors are applying heavy pressure and refusing to give Dubai World any time to reorganize this. They want the default.
Why? The default will pay them off from whichever bank was silly enough to do credit default swaps against a Dubai default. Further, the banks (Dubai's creditors) want Abu Dhubai to cover for Dubai World, just like the US covered for Fannie Mae and Freddie Mac, even though neither was actually a government protected entity and even carried warnings to that effect on their securities.
What the banks are trying to do is force the UAE to cover for Dubai World, thus putting the UAE on the hook? Why? Because the UAE has significant oil reserves and the banks want to control and own most of that cash flow.
Instead though, the UAE told the banks to take a hike. So the banks are not (yet) getting what they wanted. This caused massive fear around the world that immediately caused the dollar to surge from 74.4 on the FOREX index almost to 76.0 (just short). That's a huge rise in such a short time period. People ran to the dollar in safety because they don't know which bank or banks will be on the hook for the CDS payouts, which could far exceed the actual debt load of Dubai.
And when the dollar did that, the dollar shorts found themselves badly exposed so they needed cash to cover their short positions, thus they liquidated stocks, causing the market to come right back down.
All of this is fascinating stuff. The action in the markets is not just people investing. Wealthy families are using the market as a place to conduct their wars. And they are fighting for position and control of resources and even entire nations. Dubai is one such battleground right now.
@ Greenpa
Thanks for the link, posted it on Automatic Earth Twitter and facebook.
Quite an article, the Washington Post makes him sound almost heroic and Hank Paulson is this wonderful football playing guy who mentored him.
While the article shows he was clearly very stressed out, it seems quite strange as to why he would actually build a shed in the middle of nowhere? People would normally take a break by going to a beach resort and relax. He knows the system is fragile IMO and one little downturn could blow it up.
It's amazing that so many people are still so complacent as to the risks inherent in the financial system. Lets just move money from one pocket to another and oh wait, we'll just borrow that money from another pocket and voila the problem of the hole in the trouser pocket is solved, just gotta keep more money in the pocket with the hole - that's what.
So yesterday we had a horrendously distorted jobs data report and today we have this piece fawning over the good guy Kashkari. All this kicking the can down the road, someday the can is going to explode as it's filled with TNT when it hits the proverbial brick wall.
@Ed Gory, Community bancorp is taking over assets with a nominal value of 9 billion. The FDIC will cover their losses. The current best guess is that the assets are actually worth 7 billion, thus the FDIC expects to be on the hook for 2 billion.
I just read the Cash-Carry article. I don't have the impression they consider their "getaway" much of a doomstead. He drives two miles to take out the trash? And he visits the gym on a daily or bidaily basis?
The photo gallery is something else too - that chainsaw photo with the chips flying could be in a promo for how to kill yourself with a small engine. He's kneeling (ha!) which means he'd be pinned rather than bumped if that leaner of tree he's cutting slips the wrong way. He's cutting a leaner, which is inherently very dangerous since there are extra pivot points and less overall stability in the bole. He has no helmet, faceguard, or ear protection. He's holding the saw upside down to make his cut. I really, really hope that was a staged photo.
And I'm happy for him that he's made so many positive changes in his life. It sounds like he recognized that he needed to make some changes and did so. I hope he doesn't have to learn about taking safety precautions the hard way.
Anybody know what happened to Dan's blog, Ashes Ashes All Fall Down http://ashizashiz.blogspot.com/
Trying to access it: "The blog you were looking for was not found."
Re the “Climategate” BS
Was over at Zero Hedge, and Oberleutnant Marla Singer poses the blog poll question as to which destroys more capital, financial fraud in the UAE or scientific fraud in UEA. OK. I didn’t know what UEA stands for either, but googling it gets a hit on the University of East Anglia. So she is referring to the purported fraud there on global warming data presentation.
So I went down and read the comments and they were all of the Mish / KD stamp. So here we have a lot of very bright people as measured by their GMAT scores who respond as total idiots. Should we be surprised?
The “climategate” advocates claim that a handful of scientists at a fairly obscure UK university fudged the presentation of their data to make climate change appear more severe than it really is, and that this handful (I am not really sure how many are purportedly involved but it is four or less) has invalidated all the data of thousands of other world class scientists. This is, of course, ridiculous, even if the charges against them are valid, which is far from clear to begin with, since the hacker theft size was huge and the Libertarian media cherry picked it. But even assuming this handful did fudge their data presentation, it would simply be an example of minor fraud of less than one percent of the whole data base.
Frankly, I don’t really need the scientific data base. As the late, great Richard Pryor said to his wife when she caught him in bed with another woman, “Are you gonna believe me or your lying eyes?” I have seen with my own eyes and felt with my feet the receding glaciers in the Andes and the reduced snow pack in Colorado; and the videos of the breakup of the ice pack in the Arctic Ocean; the collapsing ice shelves in Antarctica; the almost total loss of glaciers at the summit of Mount Kilimanjaro.
So the functional idiots at Zero Hedge will do anything to believe the debunkers and not their own eyes. They do this because they do not wish to deal with the consequences of the truth. It is too frightening and calls for either drastic action or fatalism. But they are right about one, very important thing, which is that the oligarchs have every intention of subverted the need for drastic action into legislative and executive action which will do next to nothing to fight the problem but will hugely enrich the oligarchs at the expense of the peasants. And “cap and trade” is how they intend to do this. But they are not bright and/or honest enough to separate the two issues.
Gary Null has the only approach that makes sense which is to tax the bejezus out of fossil fuels and then keep that tax money out of the hands of the oligarchs, but rather use it as capital for alternative energy investment.
Dmitri Orlov gave one of his best short interviews on New Zealand radio recently. It was one of his best because the interviewer asked smart questions and then just shut up for a while. Mad Max could take interview lessons from him.
http://cluborlov.blogspot.com/search?q=new+zealand+radio
Anyway, Orlov states that the problem with energy is not the lack of energy but rather EROEI and the consequent capital investment in energy. Of course, as I&S continually point out, investment in alternative energy doesn’t mean we can keep driving around in lithium battery Hummers. Huge changes in conservation and life styles must take place.
And of course, everything I just wrote is just blather since I belong to the fatalism school anyway. But just as with 9/11, the Kennedy and King assassinations, and the Gulf of Tonkin non-incident, I just hate to see the propaganda stand in as truth. If you have to be raped, at least go through it with your eyes open.
Eventually, U3 will contract to less than 1% and U6 will expand to 60+%, as unemployment benefits disappear. So thank Bob that the MSM is keeping U3 as the real measure of unemployment.
(footnote: Bob is my deity.)
Have to make a minor retraction of my recent comment regarding Zero Hedge. One has to vote in the poll in order to get the results. So I vote that financial fraud in the UAE destroys more capital than scientific fraud at UEA, and it turns out that over one-third of the ZH blog commentariat voted the same way. Much higher than I had expected.
Hello,
I think people are being unduly hard on Cheryl. She has already made it clear that she is, on the whole, convinced by the arguments presented here, but that she must also convince her husband.
I can well imagine her difficulty in convincing him in the face of the official unemployment figures and that could be the reason for her harsh reaction here.
All I can add is that many of us (myself definitely included) have been very surprised by the time required for these things to play out. That makes for impatient spouses, but does not detract from the validity of the overall analysis.
The next leg down did not occur at the end of the summer and may not even occur this autumn. So what! The fundamentals are the only thing that counts and it is certainly not one set of "less bad than expected" unemployment figures that has changed them.
Use this time to prepare, not to gripe that the crash has not hit yet. A sense of priorities is needed here.
Ciao,
FB
el g,
I don't think one can really make a case that the ZH commentariat is stupid because they believe in the secular religion of denialism. The various events you mention are also aspects of the secular religion of US exceptionalism -- "It just isn't possible that there's an evil cabal pulling off these stunts; if it was Russia maybe but not here". We humans tend to be quite superstitious.
And as JMG pointed out to me a while back, I myself have long been a practitioner of the secular religion of "Science and Technology". I'm trying to recover from it, and figure out where the best place is to be for the couple of decades I may have left around this sector of the milky way. (I'm attempting to use science and technology to figure that out, heh :)
Dan Weintraub closed Ashiz earlier this week, he sent me this notice:
"I'm working on other projects. Ashiz has become a distraction. Peace!"
And I might add to that:
Not all secular religions are equivalent. Some are more like, say, cargo cults while others have real staying power, like Buddhism.
Climate denialism is a cargo cult.
Although I enjoy reading the declarative prose of Snerfling, I find myself qualifying most of his assertions by recalling the content of his past posts. Snerfling’s predictions and assertions vacillate quite a bit from one post to the next, depending on how much he seeks to annoy Ilargi. In fact, as a result of Ilargi’s occasional muzzling, I also find myself pondering how much Snerfling actually believes what he types or how much is just meant to climb upon a hill of the moment in order to agitate his occasional censor. Either way, at the end of the day Snerfling is a Neo-Conservative champion of “American Exceptionalism.” According to his past pronouncements, might and theft will make right via military force in order to heal a moribund economy. On any given day, or month, one of his posts might read as “we are economically screwed” --mostly in his anti-Obama moments-- to jingoistic chest-thumping channeling the spirit of conquering empires plundering the planet.
But never mind thumbing through the impossible archives of blogger land. His last post is evidence enough of some very curious reasoning . Snerfling does not address the fundamental issue of jobs and wage growth, or global arbitrage, in the battle against debt overhang. In Snerfling’s world, these structural issues will be solved with the threat of militarism--it’s great to be the king, and the rest of the world a punching bag, acquiescing to “their best interest.” It’s a stagnant, linear world view, steeped in the belief of military superiority in a world that now has the capability to turn on a strategic and tactical dime. The real human nature, which Snerfling whistles Yankee-Doodle-Dandy right on past, is one of people and nations not so easily leveling a playing field which would place their current best interest back at a previous reset point. And that is the ultimate flaw in Snerfling’s logic, even as he cites another, more narrow aspect of human nature, the proclivity towards consumption.
Snerfling does, however, hold out for the possibility of a TAE scenario, but only when a electorate marches into the voting booth donning their Davy Crocket hats of rebellion. Still the true believer in Manifest Destiny, Snerfling seems oblivious to the following consideration: Exactly whom will the American people vote for in order to upset the apple cart? And when was the last time this happened?
Personally, I enjoy the variety and contrast that a Will-O-The-Wisp poster such as Snerfling provides against the still consistent expectations of Ilargi, Stoneliegh, and the other “true believers” on this site.
DIYer,
Well, I didn't say the ZH commentariat was stupid, I said that they were functionally stupid despite being, for the most part, very bright in conventional measurements. I was then forced even to retract that, as I mentioned in my follow post, as over one-third refused to drink Marla's kool-aide.
Perhaps Cheryl would like to pass around the latest EPI Fact Sheet at her weekend green shoots meeting.
(Note that all numbers are current as of December 4, 2009. States numbers are current as of November 20, 2009.)
The jobs crisis
•Number unemployed: 15.4 million (up from 7.5 million in December 2007)
•Portion of unemployed who have been jobless more than six months: 38.3%•Total jobs lost during the recession: 8.0 million•Jobs lost in November, 2009: 11,000•Jobs needed to return to pre-recession unemployment rate: 10.9 million•Number of jobseekers per job opening: 6.1•Unemployment rate: 10.0%•States with double-digit unemployment in October, 2009: 15
•White unemployment: 9.3%; black unemployment: 15.6%; Hispanic unemployment: 12.7%
•Manufacturing jobs lost since the start of the recession: 2.1 million (15.5% of sector’s jobs)
•Construction jobs lost in the recession: 1.6 million (20.8%, nearly one in five construction jobs)
•Mass layoffs (50 or more people by a single employer) in October 2009: 2,127; jobs lost: 217,182
•Underemployment rate: 17.2%; Share of workers un- or underemployed: more than 1 in 6
•Under- and unemployed, marginally attached and involuntary part-time workers: 26.9 million
Hardships and the safety net
•Americans with no health insurance in 2008: 46.3 million
•Drop in children covered through parents’ employers, 2000 to 2007: 3.4 million
•Annual Social Security benefit for average retiree: $13,922; Share of older Americans receiving all their income from Social Security: more than 1 out of 4
•Number of children in poverty in 2008: 14.1 million (over one-third)
•Drop in real median income from 2007 to 2008: 3.6% (largest one-year drop since 1967)
•Growth rate of nominal, hourly wages of production workers over the last three months: 1.7%
•Additional people covered by Medicaid/SCHIP in 2008: 3 million
American Recovery and Reinvestment Act
•Average weekly unemployment benefit in September (including additional $25 per week from the American Recovery and Reinvestment Act): $334
•Number of additional people each week receiving unemployment compensation because of ARRA in October: 3.9 million
•Average monthly cost of COBRA with American Recovery and Reinvestment Act subsidy: $370; Without American Recovery and Reinvestment Act subsidy: $1,057
•Jobs lost since February 2008: 2.7 million ; Jobs likely lost since February 2008 without passage of ARRA: 4.0 to 4.5 million
Prosperity is right around the corner.
FB,
I second you on Cheryl. She asks very simple and legit questions. I think she's wrong on most of what she seems to believe these days (or rather, perhaps, her husband), but that can be talked about in a civil manner. I have a few hours left till my flight, and I'll try to respond to a degree.
M
Snerfling doesn't so much agitate as bore me. We know what he thinks, but it still has to be repeated in ever more words time and again. I don't like banning or deleting, but I see little of use in these diatribes, as I've now said more than enough.
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Re Fukuoka's farming methods
No tilling and the use of straw around plants work well for our organic garden. Straw seems to protect plants from heat stress in So. Florida even though, technically, one should not mulch with organic material that is breaking down but rather with compost. We move the straw just enough away from the plant in wet or cool or cloudy weather and for airflow. But we are not at the point when we can quit fertilizing or calling our garden a permaculture zone.
The wonderful thing about Fukuoka is how he intertwines Buddhist and Taoist thought into gardening and farming.
"Natural farming is not just for growing crops, it is for the cultivation and perfection of human beings." ~ MASANOBU FUKUOKA
Carpe Diem,
I'll check out the works of Dan Buettner. One of my favorite topics. Thank you for the suggestion.
Hey Ilargi - have a safe journey!
“In Beijing’s strongest criticism on the matter to date, Li Wei, vice director of the State-owned Assets Supervision and Administration Commission, singled out Goldman Sachs, Morgan Stanley, Merrill Lynch and Citigroup in a long and highly critical article in the latest issue of an official Communist party newspaper.
The large losses suffered by Chinese state companies were “closely associated with the intentionally complex and highly leveraged products that were fraudulently peddled by international investment banks with evil intentions,” Mr Li asserted. “To a certain extent some international investment banks were the chief criminals and the root of ruin for the Chinese enterprises who encountered this financial derivatives Waterloo.””
Chinese official slams banks over derivatives
Hi Ahimsa,
Before checking out his book 'The Blue Zones', I'd watch the interview with Dr. Gupta.., Buettner and Aubrey De Gray.
Wonderful interview and only about 1/2 hour long.
States the obvious as I said but worth a listen.
CNN.COM/VITALSIGNS
Namaste :)
New post up.
A Golden Double-Edged Sword
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Ahimsa,
Why quit fertilizing? Even Fukuoka doesn't advocate that! He used chicken poo, etc. The issue is organic fertilizer, not whether to fertilize or not.
(You must know this, but your response was a little unclear, so I posted anyway.)
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