Friday, January 15, 2010

January 15 2010: Of Trojan thoroughbreds

William Henry Jackson The Real Deal 1901
Texas cowboys

Ilargi: 2010 will be an eventful year in Europe, with a large variation in stories to tell. There's no way none of the sickly economies inside the EU and/or on its fringes is going to come too close to failure for comfort. One would almost think there’s a competition on. From Latvia, Lithuania (dare we include Ukraine?) south through Greece, Italy, Spain, Portugal and north again to Ireland and don’t let's forget Britain, which no longer has a position on any too big to fail list but its own.

It’s going to be quite a spectacle, and in good old continental tradition we could see absoluty debilitating strikes, governments falling like rotten fruit, and violent protests in numerous cities. Powerhouses France and Germany are not at immediate risk, but that doesn’t make them safe havens a few years hence. Since dissolving the European Union is not an option in any way shape or form, the rich will have to side with the poor, and the poor will be thrown back in history by decades at a time. A 20% unemployment rate is not the sort of reality that will let a society bumble along in peace and quiet for too long. Just ask the US.

Still, the year starts off with a surprising twist in the economics tale, a veritable Trojan horse, brought to you courtesy of the Greeks. Who else?

Greece has existed in its present form only since 1975. Before that it was a military dictatorship for ten years (the colonels regime, supported by the US in fine shock doctrine fashion), and before that, well, let’s just say it was a country that gave birth to a dictatorship. Once democracy was restored in its very cradle, Greece was ushered into European organizations very quickly, to a large extent because of geographic and strategic considerations. Across the Aegean lies Turkey, and beyond Turkey the Arab world. Easy as -shepherd's- pie.

Greece became a full patch EU member in 1981, only 6 years after the colonels had left. But of course the entire structure beneath the top remained intact, with a small long standing elite that has its fingers in every ouzo glass in the nation, and corruption on all levels of society that could be rivaled -maybe- only by a few African nations.

Some have suggested that today’s financial troubles in Athens tell them that Greece must have cooked its books in 1981 to get into the EU as well. And sure, the Greeks good cooks: In early 2009, Greece claimed a deficit of 3.7% of GDP, and when winter came around, it turned out to be 12.7%. Only, in 1981, the EU helped them in the financial kitchen, because everyone, EU, US, was so eager not to let Russia get its hands on the country, and voters were swinging heavily from left to right.

Which means that today's laments across Europe about Greece's problems must be seen like one of those marriages where trouble arises when one partner finds out after a number of years that the idea of changing their spouse into a person they dreamed of, is not working out. For Athens, it's obvious: you knew who we were all along. We haven't changed, but your idea about us have.

The biggest problems for Greek politics today are soaring unemployment and the riots that are closely connected to it. In that sense, in a first Trojan twist, it's a godsend for the government, whichever one it may be on any given day, to have the EU and some of its member states holler heavy rhetoric in the media about Hellas. Because now that government can point at Brussels, Paris and Berlin, and claim that's where the guilty parties are. Demands by the union of 10% across the board budget cuts, they may look nice on paper, but it'll be a whole different picture if and when shop windows are broken and barricades built.

However, people like European Central Bank President Jean-Claude Trichet and German Chancellor Angela Merkel have a greater goal in mind, a second Trojan thoroughbred. Although they publicly claim anger, denounce "irresponsible behavior" and demand budget cuts, they also know you should never let a good crisis go to waste, and have started to use the Greek situation in an attempt to achieve what they see as their number one emergency: bring down the value of the Euro.

The single EU currency's -too- high rate vs the US dollar hurts Europe like a fully equipped torture chamber, and they know it has to stop. Leaving open the option to the outside world that Greece may fail and/or leave the EU, will be, they hope, enough to terrify markets away from the Euro and into greenbacks.

And they may be right. China has stated that it feels the US dollar has gone low enough. Europe and China together may well succeed in raising the USD exchange rate considerably, and that would be bad news for America. It would also introduce some serious questions for all those who claim that central banks and Treasury department have the ability to set interest rates where they want them, and when they want.

In the end, like the US, Europe's success -and indeed survival- depend on economic recovery becoming a reality. So much so that on both sides of the Atlantic, the media have been mobilized to spread the message that the recovery is already here or very soon will be. The fact that many among the media depend for survival on that recovery as well makes that an easy sell.

Unfortunately, it's just propaganda. In scores of countries, there are amounts of debt left unpaid which in some cases will prove terminal, on all levels ranging from private to corporate to sovereign. In that order, this will lead to among others foreclosures, bankruptcies and tax increases -coupled with unrest-, while all three will increase unemployment rates and breed even more debt. There's no more surefire way to get deeper into debt than having more debt than you can service.

Home prices will and must fall further, if only to move away from their present-day insane overvaluations and get back in sync with trendlines. With consumption falling of everything, both domestically and internationally, companies will go out of business by the bucketfuls. Governments, unable to pay their bills, will need to renege on contracts for employees and retirees, with all the inevitable ensuing mess that we can all imagine.

But most of all, many trillions of dollars in toxic assets still sit on dark and dusty shelves, moldy and fermenting and waiting for resolution, on both sides of the Atlantic and the Pacific. And when all is said and done, they will be the enemy discovered too late, hiding in the one and only real Trojan horse that we invited into our cities because we couldn't resist its splendor.

Jim Rogers: Brace Yourself For Food Shortages, Thanks To The Banks Hoarding Cash

Jim Rogers is sounding the alarm -- buy agricultural commodities ahead of the riots. The financial crisis has cut off investment in agriculture, with many farmers unable to get loans for fertilizer according to Mr. Rogers. Of course, this means agricultural commodities will make a killing:
CNBC: "Sometimes in the next few years we're going to have very serious shortages of food everywhere in the world and prices are going to go through the roof." Cotton and coffee are good buys because they are very distressed, while sugar, despite the fact that it has gone up a lot, is still down 70 percent from its all-time high, according to Rogers. "I don't think that the problems of the world are behind us yet," he said.

Merkel Says Greece Means Euro Faces 'Difficult' Time
German Chancellor Angela Merkel said Greece’s mounting budget deficit risks hurting the euro, saying the currency faces a “very difficult phase.” Merkel, speaking at a private forum hosted by Die Welt newspaper yesterday, questioned the fiscal discipline of other countries using the euro, according to a transcript posted on the German government’s Web site today.

“The Greek example can put us under great, great pressures,” she said, according to the transcript. “Who will tell the Greek parliament to please go ahead and pass a pension reform? I don’t know that they’ll be enthusiastic about Germany giving them instructions.” German lawmakers wouldn’t be happy if Greece told them what to do, she said. “So the euro is in a very difficult phase over the coming years.”

Greek 10-year bonds extended declines. They yielded 5.99 percent, up 11 basis points, or 0.11 percentage points at 12:08 p.m. in Berlin. That includes an increase of 3 basis points after Merkel’s remarks were reported. In Athens, Greek Prime Minister George Papandreou announced plans to cut spending and raise revenue by about 10 billion euros ($14.5 billion) this year as part of a three-year plan adopted today to bring the European Union’s biggest budget deficit within the EU limit in 2012.

“We will do whatever it takes,” Papandreou said in a televised speech to his Cabinet. “Our country can and is obliged to exit as soon as possible this vicious circle of misery. We will not retreat; we will proceed quickly.” The plan, to be presented to the European Commission tomorrow, aims to cut the shortfall from 12.7 percent of output, more than four times the EU limit, to 8.7 percent this year. That reduction will be achieved even though the economy will contract 0.3 percent, the plan says. The budget deficit will shrink to 5.6 percent next year and 2.8 percent in 2012.

Trichet Says Greece Won’t Win 'Special Treatment', Pressures Papandreou as Greek Bonds Fall
European Central Bank President Jean-Claude Trichet intensified pressure on Greece to cut the continent’s biggest budget deficit with a warning that the country won’t get any favors from policy makers. As Prime Minister George Papandreou struggles to convince investors and European Union governments he can regain control of the country’s budget, Trichet yesterday said no nation can expect any “special treatment.” “The central bank has clearly chosen to maintain its pressure on the Greek government, rather than easing the heightened tensions in bond markets,” said Laurent Bilke, a former ECB economist now at Nomura International Plc in London.

Greek bonds extended declines after Trichet’s comments, which came after the ECB left its benchmark interest rate at a record low of 1 percent. While Greece was his main target, Trichet told other euro members to take the “difficult decisions” needed to tackle “sharply rising” budget gaps or face higher borrowing costs that hurt economic growth. The Greek remarks eclipsed those made on monetary policy as officials turn their attention from the financial crisis to the nations most hurt by the recession. German Chancellor Angela Merkel said in comments published yesterday that Greece’s fiscal woes could hurt the euro and Luxembourg Prime Minister Jean- Claude Juncker said International Monetary Fund aid wouldn’t be “appropriate.”

Rating downgrades sparked a rout in Greece’s bonds in December as investors tuned into a budget deficit of 12.7 percent of gross domestic product, more than four times the European Union limit. The yield on the 2-year Greek note today rose 6 basis points to 3.559 percent, extending yesterday’s gain of 44 points. Arguing that it has received enough of a benefit from euro membership, Trichet said the ECB won’t help Greece by delaying the reintroduction of its pre-crisis collateral rules at the end of 2010. Downgrades by Fitch Ratings, Moody’s Investors Service and Standard & Poor’s have fanned concerns its bonds will be excluded from the ECB’s market operations. “We will not change our collateral policy for the sake of any particular country,” Trichet said.

The subsequent selloff suggests the market “still harbors hopes that the ECB would abort its collateral decision,” said Elga Bartsch, chief European economist at Morgan Stanley in London. Juergen Michels, chief euro-area economist at Citigroup Inc., said the ECB will ultimately agree to rules “that do not put too much additional pressure on member countries.” Trichet also downplayed the importance of Greece for the euro region as a whole. While Greece makes up about 3 percent of the bloc’s GDP, 13 percent of the U.S. economy is accounted for by California, which is also suffering financial difficulties.

Those remarks drew short shift from Andrew Bosomworth, a former ECB economist and now head of portfolio management at Pacific Investment Management Co. in Munich. He warned Greece could still cause “contagion” to other economies with poor finances such as Portugal or Spain. “While each of those countries in their own right may not be very big, or a threat to the euro area, if one of them were to go you have potential domino effect that could snowball into a big problem for the euro area,” Bosomworth said in a television interview yesterday.

Marco Annunziata, chief economist at UniCredit Group in London, said policy makers are playing a “nerve-wracking game of chicken” in the hope that their tough rhetoric will pressure Greece into action. Budget Shortfall “If a rescue turns out to be necessary, a rescue operation will be mounted,” Annunziata said. In Athens, Papandreou yesterday pledged to “do whatever it takes” to rein in the budget shortfall and restore confidence in the country’s finances when he published the three-year budget plan.

The government’s latest proposals, to be presented to the European Commission today, call for about 10 billion euros ($14 billion) of spending cuts and revenue increases this year to bring the shortfall from 12.7 percent of output to 8.7 percent by year-end. “Our country can and is obliged to exit as soon as possible this vicious circle of misery,” Papandreou said. “We will not retreat; we will proceed quickly.

Has Greece delivered another Trojan horse?
Greece’s economic statistics are dubious in more than one sense. The country probably bent its figures to get into the euro zone. Now, the EU is angry that Greece has not been straightforward about the size of its fiscal deficit. But the greater doubts concern how an uncompetitive, highly indebted, weakly governed country can live with a strong currency such as the euro. The Trojans were shocked after Greek guile got them in. The feeling may be similar at Eurostat, the European Union’s statistics office. There is particular anger at Greece’s increase of its estimate of the fiscal deficit last year from a tolerable 3.7 percent of GDP to a quite intolerable 12.5 percent.

A revision that huge in the course of the year is ridiculous – and shows something worse than incompetence. Greece’s finance ministry blames interference in the statistics office by the previous government. But the EU, which says it has been applying intense scrutiny to Greek figures since 2004, also seems to have lacked sufficient insight. The Greeks were still keeping a lot of danger in the dark. With the numbers out in the open what Greece and the zone face is ugly. The country has a fiscal deficit of about 13 percent of GDP, government debt of about ten times that, and prices and wages that have risen far faster than those of France and Germany for a decade. Greece is uncompetitive and, as a member of the euro zone, cannot devalue.

That suggests its growth and unemployment will get worse, along with its deficit and debt. Crisis is coming. The only way to avoid it — with or without an ugly exit from the zone – is profound reform. Greece needs to balance the government’s budget, or come close to that, while the private sector cuts wages in order to become internationally competitive again. The process will be a brutal marathon. But before it has even begun Greek workers are protesting – louder than Irish ones, who have already started the slog. It’s not clear that Greece can make it to the zone survivors’ finish line.

Ilargi: Kyle Bass makes a series of excellent points, but I don't agree with his assessment of Japan vs the US. He argues -sort of- that Japan has taken 20 years to get where they are, and that should mean the US still has at least a decade left to correct its mistakes. But that would depend entirely on how bad the mistakes have been, and how costly they have been relative to for instance production rates and remaining values, wouldn't it?

Yes, there are many more factors that play into the picture, but my general impression is that the US have been far more aggressively mistaken, and moreover have done so in global economic circumstances that are much worse than the ones Japan found itself in in 1990.

Kyle Bass: I Don't See How Japan Has A Way Out

Kyle Bass is one of a growing number of investors betting on a collapse of the hedge fund market. David Faber caught up with Bass before the Hayman Capital founder testified at yesterday's crisis hearings. In the first part, Bass talks about some of his reform proposals (which we covered yesterday) though in the final two minutes he gets to Japan.

As he sees it, the country is a canary in the coalmine for what will happen here, and that at this point, there's no way out. *The fact that both the Euro breakup and the Japan collapse are getting so much attention these days, supports our contention that there are no paper currencies that anyone can possibly like right now. It's a very strange time.

Kyle Bass: Bring Back Glass-Steagall, Eliminate Off-Balance Sheet Assets, And Cap Leverage At 10X
Kyle Bass, one of the hedge fund managers that made a killing in the subprime fiasco (basically by taking the same bet as John Paulson) offers his clear-sounding ideas to regulating the financial system going forward.

Here's the nut of it:

I believe there are three important changes that are necessary to protect the taxpayer from future crisis and restore the US banking system to its historically strong position.

First, it is imperative to separate depository institutions from proprietary capital groups and derivatives traders. We cannot have systemically important depository institutions taking enormous risks in the derivatives marketplace.

Second, I thought we learned that off-balance sheet = BAD during the Enron and Worldcom fiascos. Bring all risks and leverage back on the balance sheet in order for regulators and investors to be able to compare apples to apples. Third, we must determine if 25X leverage is the correct minimum level of capitalization.

Mandating a 10% capital balance does not seem too far away from where we need to be. 10X leverage is plenty, and it still might not be stringent enough in an environment where we have a multi-standard deviation event and 10% losses become the norm.

And here's his full testimony at [the] financial crisis hearings:

Spain, Ireland Lead European Nations Using Banks for Bond Sales
Spain and Ireland led European governments raising $34 billion from bonds sold through banks this week as countries start 2010 selling debt at the fastest pace on record to finance growing budget deficits. Poland, Belgium and Austria also issued debt through syndicated offerings, boosting sales of bonds in dollars and euros 54 percent from $22 billion at the start of 2009, according to data compiled by Bloomberg.

Governments are paying banks fees to sell bonds directly to investors to fund stimulus packages aimed at lifting economies from the deepest recession since World War II. Spain posted its largest budget deficit in almost a decade last year, while Ireland has a shortfall that’s nearly four times the European Union’s limit. Euro-region countries may sell a record 1 trillion euros of bonds this year, HSBC Holdings Plc estimates.

“Deficits are higher and more issuance needs to get done, therefore countries have continued to increasingly use syndicated deals as a means of getting a wider number of investors,” said Padhraic Garvey, head of investment-grade debt strategy at ING Groep NV in Amsterdam. “You can get deals done in size and widely distributed directly to investors.” Government bond yields relative to benchmark swap rates have increased amid the surge in issuance. The yield spread on European sovereign debt widened 4 basis points this week to 28, a three-week high, according to Bank of America Merrill Lynch bond indexes. The gap averaged 25 basis points last year, and 14 in 2008. A basis point is 0.01 percentage point.

Spain, with the highest unemployment rate in the euro region, priced 5 billion euros ($7.3 billion) of 10-year bonds to yield 56 basis points more than the swap rate, Bloomberg data show. That’s less than the 67 basis-point spread on 10-year notes it issued in May. The European Commission forecasts Spain’s debt will rise to 66 percent of gross domestic product next year, up from 36 percent before the financial crisis.

Ireland sold 5 billion euros of bonds to help plug its budget deficit. The nation priced the notes due October 2020 at a spread of 150 basis points over swaps, Bloomberg data show. “It’s a very crowded and volatile market and yet Ireland managed to sell their bonds quite successfully, which shows they are confident,” said Robin Marshall, director of fixed income at Smith & Williamson Investment Management. “I find what Ireland offered quite attractive given their political willingness to consolidate their fiscal position.”

Poland raised 3 billion euros from the sale of 15-year bonds this week. Belgium issued 5 billion euros of 10-year notes and Austria sold 4 billion euros of seven-year debt. Cyprus, Slovenia and Hungary have also hired banks to raise money through syndicated bond sales.

The Coming Sovereign Debt Crisis
by Nouriel Roubini and Arpitha Bykere

In 2009, downgrades and debt auction failures in countries like the UK, Greece, Ireland and Spain were a stark reminder that unless advanced economies begin to put their fiscal houses in order, investors and rating agencies will likely turn from friends to foes. The severe recession, combined with a financial crisis during 2008-09, worsened the fiscal positions of developed countries due to stimulus spending, lower tax revenues and support to the financial sector.

The impact was greater in countries that had a history of structural fiscal problems, maintained loose fiscal policies and ignored fiscal reforms during the boom years. Going forward, a weak economic recovery and an aging population is likely to increase the debt burden of many advanced economies, including the U.S., Britain, Japan and several eurozone countries.

In 2008 and 2009, the decisions by these governments to do "whatever it takes" to backstop their financial systems and keep their economies afloat soothed investor concerns. But if countries remain biased toward continuing with loose fiscal and monetary policies to support growth, rather than focusing on fiscal consolidation, investors will become increasingly concerned about fiscal sustainability and gradually move out of debt markets they have long considered "safe havens."

Most central banks will withdraw liquidity starting in 2010, but government financing needs will remain high thereafter. Monetization and increased debt issuances by governments in the developed world will raise inflation expectations. These governments will have to offer higher real yields or investors will move to more attractive emerging markets. Some countries will continue to witness increased credit default swaps.

Higher yields and interest cost on debt will also hurt economic growth—by crowding out private consumption and investment, and reducing government's productive spending. Several factors will likely influence investors' perception about sovereign risk—a country's debt financing ability, its status as a "safe haven" relative to other developed economies, politicians' commitment to undertake fiscal reforms, exchange rate movements, and the debt maturity structure.

The UK, Spain, Greece and Ireland will face sovereign risk pressures, especially if their fiscal imbalances are not addressed immediately. Some eurozone members are quickly approaching their debt sustainability limits as deleveraging through devaluation is not an option for these countries. Countries like Germany—whose fiscal imbalances have deteriorated largely due to the economic and financial downturn—might have a greater capacity to stabilize their debt ratio.

The U.S. and Japan might be among the last to face investor aversion—the dollar is the global reserve currency and the U.S. has the deepest and most liquid debt markets, while Japan is a net creditor and largely finances its debt domestically. But investors will turn increasingly cautious even about these countries if the necessary fiscal reforms are delayed. The U.S. is a net debtor with an aging population, weaker economic growth and risks of continued monetization of the fiscal deficit. Japan's aging population and economic stagnation will reduce domestic savings.

Developed economies will therefore need to begin fiscal consolidation as soon as 2011-12 by generating primary surpluses, which can be accomplished through a combination of gradual tax hikes and spending cuts. However, an aging population, a sluggish economic recovery and higher unemployment will keep governments' entitlement spending high and revenues subdued. These factors might also make tax hikes politically challenging. Fiscal consolidation efforts might not be strong until the bond vigilantes signal shifting to safer assets. To achieve credibility, governments will need to pass binding legislation enforcing tighter fiscal belts when their economies begin to recover on a sustained basis.

Sovereign defaults top 2010 risk hitlist for WEF
The risk that deteriorating government finances could push economies into full-fledged debt crises tops a list of threats facing the world in 2010, according to a report by the World Economic Forum. Major world economies have responded to the financial crisis with stimulus packages and by underwriting private debt obligations, causing deficits to balloon. This may have helped keep a worse recession at bay, but high debt has become a growing concern for financial markets.

The risk is particularly high for developed nations, as many emerging economies, not least in Latin America, have already been forced by previous shocks to put their fiscal houses in order, the WEF think tank said in its annual Global Risks report ahead of its meeting in Davos, Switzerland. "Governments, in trying to stimulate their economies, in fighting the recession, are (building) unprecedented levels of debt and therefore there is a rising risk of sovereign defaults," said John Drzik, Chief Executive of management consultancy Oliver Wyman, which was one of the contributors to the WEF report. He said higher unemployment levels could follow, with associated social and political risks.

The report placed unsustainable debt levels and the looming shadow of the financial crisis among the top three risks, alongside underinvestment in infrastructure -- one of the fastest rising risks -- and chronic diseases such as Alzheimer's and diabetes driving up health costs and reducing growth. Other looming threats including the risk of asset price collapse, risks connected to Afghanistan and a potential slowdown in Chinese growth which could hit employment, fuel social unrest and hurt exports through the region and beyond.

The report, highlighting the risk developed nations could overextend "unsustainable levels of debt," said full-blown debt crises would have inevitable social and political consequences, not least higher unemployment. "Government debt levels of 100 percent of GDP -- which is where the United States and the UK are heading -- and higher are clearly not sustainable," said Daniel Hofmann, group chief economist at Zurich Financial Services, a contributor to the report.

"There is an inherent risk that investors may take fright, they may question the sustainability of these debt levels -- the result (would be) sovereign debt crises and defaults. "Clearly Dubai and Greece were early warnings that should be heeded," he told a press conference. Worries over Dubai, Ukraine and Greece have spilled over into global markets , and all three look set to remain under pressure, with the threat also high for the Anglo-Saxon economies -- the United States and the United Kingdom.

The WEF report said both faced with "tough choices" in the months ahead as they seek to time a "gradual and credible withdrawal of fiscal stimulus so that the recovery is sustained but not so late that fiscal deficits cause fear of sovereign debt deterioration." The report highlighted what it called a "governance gap" -- the gap between short-term pressures on governments and business and the need for long term decisions, not least on issues including health and pension reform and climate change. Too little was being done to address underinvestment in infrastructure, it said, which could hurt food and energy security. The World Bank puts global infrastructure investment needs at $35 trillion for the next 20 years.

Greater life expectancy and unhealthy lifestyles would lead to a soaring financial cost from chronic disease, they said, which must be addressed by both developing and developed nations such as through prevention campaigns promoting healthier living. "The biggest risks facing the world today maybe from slow failures or creeping risks," said the report. "because these failures at risks emerge over a long period of time, there potentially enormous impact and long-term implications can be vastly underestimated."

US retail sales drop 0.3% on widespread declines
For 2009, sales sank a record 6.2% to $4.14 trillion

U.S. retail sales fell a seasonally adjusted 0.3% in December on widespread weakness across different kinds of stores, the Commerce Department estimated Thursday. The decline was unexpected, as economists surveyed by MarketWatch were forecasting a 0.5% gain. Auto sales disappointed, dropping 0.8% in dollar terms even as the automakers reported higher unit sales. See our complete economic calendar and consensus forecast. Excluding the 0.8% decline in auto sales, retail sales fell 0.2%. The figures are adjusted for seasonal factors but not for price changes.

Bad weather during the month likely depressed sales. Perhaps in reaction to the storms, non-store sales, such as online and catalog sales, rose 1.4%. Gasoline sales jumped 1%, a surprisingly strong gain considering that prices barely budged over the month. Sales in October and November were revised up, softening the shortfall in December. November's sales were revised to a 1.8% gain from the 1.3% previously reported. October's sales were revised up a tenth point to 1.2%

Compared with December 2008, sales were up 5.4%. Excluding autos, December sales were up 5.2% from a year earlier. Sales for all of 2009 fell 6.2% compared with 2008 to $4.14 trillion. That's the largest decline on record, dating back to 1992. And it was only the second decline on record; the other was the 0.5% drop in 2008. For the year, sales fell at all kinds of retail outlets except groceries, drugstores and restaurants. Auto sales were down 12%, gasoline sales fell 25%, and department-store sales fell 6%.

Despite December's decline, economists still estimate that consumer spending added to growth in the fourth quarter, but at a slower pace than the 2.8% annualized increase in the third quarter. Ahead of the report, the median forecast for fourth-quarter gross domestic product was a 4.8% annualized gain. Much of the expected growth stems from slower inventory reductions, not final sales. In a separate report, the Labor Department said first-time claims for state unemployment benefits rose by 11,000 to 444,000 last week. Also, prices of imports into the United States were unchanged in December, the Labor Department reported.

Here's How The December Retail Data Turned Out To Be Such A Disaster
According to the Commerce Department, retail sales were negative in December. This is much bleaker data than the same-store sales comps that came out a week ago. The decline was not what economists had expected. Sales were expected to rise 0.5 percent according to economists surveyed by Marketwatch.

The only silver lining here is that retail trade sales were up 5.9 percent over last year. So this December did mark an improvement over last year’s disastrous holiday shopping season. However, a look at business breakout reveals that the types of retailers that shopping center owners rely on had the weakest performance. The best year-over-year seasonally adjusted performers were gasoline stations (+33.6 percent), nonstore retailers (+10.6 percent) and auto and other motor vehicle dealers (+7.6%).

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for December, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $353.0 billion, a decrease of 0.3 percent (±0.5%)* from the previous month, but 5.4 percent (±0.5%) above December 2008. Total sales for the 12 months of 2009 were down 6.2 percent (±0.2%) from 2008. Total sales for the October through December 2009 period were up 1.9 percent (±0.3%) from the same period a year ago. The October to November 2009 percent change was revised from +1.3 percent (±0.5%) to +1.8 percent (±0.2%).

Retail trade sales were down 0.2 percent (±0.5%)* from November 2009, but 5.9 percent (±0.5%) above last year. Gasoline stations sales were up 33.6 percent (±1.5%) from December 2008 and nonstore retailers sales were up 10.3 percent (±1.7%) from last year.

But why were the numbers so far off? Economist Dean Baker had a post up briefly here that seems to be gone now that said economists don’t account for a bias in same-store sales metrics when thinking about retail sales. Moreover, he points out that the December numbers showed a weak result in the general merchandise sector, which isn’t a great sign for retail real estate. He explains:
The big culprit in this drop was the general merchandise sector (department stores and Wal-Mart), which had a 0.8 percent drop. The likely reason that many economists missed this drop is that they continue to ignore the same store sale bias. There are many fewer stores this year than last. This means that even if overall sales were constant, sales in same stores would rise. This bias will gradually disappear as we move forward and the comparison month in the previous year looks worse, but for now it is still substantial.

Calculated Risk’s monthly take is here.

RealtyTrac Reports 2.8 Million Foreclosures In 2009, "Would Have Been Worse If Not For Delays In Processing Delinquent Loans"
RealtyTrac reported its December foreclosure number which came in at 349,519, a 14% jump from the previous month, and a 15% increase from December 2008, and an end to the favorable declining monthly trends July. And according to Rick Sharga, SVP of RealtyTrac, 2010 is expected to see between 3 and 3.5 million foreclosures, which will be another record. Some recovery.
RealtyTrac, today released its Year-End 2009 Foreclosure Market Report™, which shows a total of 3,957,643 foreclosure filings — default notices, scheduled foreclosure auctions and bank repossessions — were reported on 2,824,674 U.S. properties in 2009, a 21 percent increase in total properties from 2008 and a 120 percent increase in total properties from 2007. The report also shows that 2.21 percent of all U.S. housing units (one in 45) received at least one foreclosure filing during the year, up from 1.84 percent in 2008, 1.03 percent in 2007 and 0.58 percent in 2006.

Foreclosure filings were reported on 349,519 U.S. properties in December, a 14 percent jump from the previous month and a 15 percent increase from December 2008 — when a similar monthly jump in foreclosure activity occurred. Despite the increase in December, foreclosure activity in the fourth quarter decreased 7 percent from the third quarter, although it was still up 18 percent from the fourth quarter of 2008.

“As bad as the 2009 numbers are, they probably would have been worse if not for legislative and industry-related delays in processing delinquent loans,” said James J. Saccacio, chief executive officer of RealtyTrac. “After peaking in July with over 361,000 homes receiving a foreclosure notice, we saw four straight monthly decreases driven primarily by short-term factors: trial loan modifications, state legislation extending the foreclosure process and an overwhelming volume of inventory clogging the foreclosure pipeline.

“Despite all the delays, foreclosure activity still hit a record high for our report in 2009, capped off by a substantial increase in December,” Saccacio continued. “In the long term a massive supply of delinquent loans continues to loom over the housing market, and many of those delinquencies will end up in the foreclosure process in 2010 and beyond as lenders gradually work their way through the backlog.”

Extend and pretend will continue with less of a marginal impact as more and more of the shadow inventory, which according to Jim Cramer is irrelevant, comes to market.

US jobless rate to stay above 8 percent until 2012: CBO
The U.S. unemployment rate, currently at 10 percent, is unlikely to drop below 8 percent before 2012 unless Congress takes further steps to boost the economy in the short term, the nonpartisan Congressional Budget Office said on Thursday. The estimate is likely to give increased urgency to Democratic lawmakers' efforts to create jobs before they face voters in November. The House of Representatives passed a $155 billion jobs bill in December and the Senate is expected to act in coming weeks. President Barack Obama was scheduled to address House Democrats later on Thursday as they huddle to consider other ways to boost the economy.

CBO's estimate shows the unemployment is likely to remain high for several years as the country gradually recovers from the worst downturn since the 1930s. The unemployment rate stood at 4.9 percent before the recession took hold in December 2007. The 8 percent figure remains unchanged from the office's August 2009 estimate, when a $787 billion stimulus bill had just begun to affect the economy. The effects of that stimulus bill will peak in the first half of this year, CBO said, but further efforts could help hasten the recovery.

Increased spending on safety-net programs for the jobless will likely have the most immediate impact as the beneficiaries would spend that money quickly, CBO said. Each dollar spent on that approach would yield between 70 cents and $1.90 in economic activity, CBO estimated. That element is included in the House jobs bill, along with increased infrastructure spending and aid to cash-strapped states. Those two approaches also could boost the economy but would have less of a short-term impact, CBO said.

A payroll tax credit to encourage businesses to create jobs, which was not included in the House bill, would also be among the most effective approaches, CBO said. Tax cuts, especially for the affluent, would have less of an impact as households would be likely to save the money rather than spend it, CBO said. Any stimulus efforts are unlikely to add to inflation but would worsen the budget deficit, which came in at a record $1.4 trillion in the fiscal year that ended September 30, 2009, CBO said.

Britain's recession the steepest for 88 years
Britain's economy fell last year at the sharpest rate since 1921, despite hopes that it finally emerged from recession in the last three months of the year, according to a respected economics forecaster. The National Institute of Economic and Social Research (NIESR) said today that its latest estimate showed that GDP rose by a modest 0.3 per cent in the final three months of 2009 compared with the third quarter.

That means that, for the year as a whole, the economy contracted by 4.8 per cent, a bigger fall than in any year of the Great Depression and the biggest contraction for 88 years. However, NIESR went on to say that signs of a recovery were starting to emerge after the economy bottomed out in March last year after 12 months of sharp falls. In October, NIESR predicted that British GDP would fall by 4.4 per cent in 2009. Most economists had expected the country to turn the corner in the third quarter of the year, the three months to the end of September.

But official figures shocked economists by showing that the economy was still in recession, falling 0.3 per cent. That left Britain as the world's last major economy still in recession. NIESR's prediction of 0.3 per cent growth in the fourth quarter is broadly in line with most economists forecasts. Today, official figures for Britain's industrial sector provided a mixed signal on whether Britain did indeed come out of recession in the last quarter.

A surge in oil and gas extraction meant that production grew 0.4 per cent from October to November, but manufacturing output had stagnated at low levels with no change for the second successive month. Further fears about the sustainability of any recovery were triggered today by official figures for Germany showing that, after modest growth in the third quarter, the economy ran out of steam in the fourth quarter. Growth slumped to close to zero, meaning that, for the year as a whole, the German economy fell a record 5 per cent. The Office for National Statistics will produce its official estimate for GDP third-quarter growth in two weeks' time.

China’s Forex Reserves Growing to Infinity
by Jon C. Ogg

If you are one of the ones worried that China is taking the world over, you might not need to worry about its military doing that.  AT the current rate, China will just be able to start buying countries in the future.  China’s central bank showed that its foreign exchange reserves rose to a record $2.399 trillion at the end of 2009.  That is the world’s largest and is a sharp 23.3% gain over the reserve levels of 2008.

The reserves were listed as close to $2.27 trillion in September.  While China’s exports were lower for much of 2009, that has started to rebound.  The December exports rose 17.7% and direct foreign investment doubled on a year over year basis to about $12.1 billion. If China did this during a time when the world is was in recession, imagine how much it can grow when things are back at 3% to 4% growth.  David Bowie sang the song “The Man Who Sold the World” (it wasn’t Nirvana)… Bowie just didn’t say that China was the buyer.

And to think, China is still considered an emerging market by most….

Shortfalls for US cities could reach $56 billion-report
U.S. cities will face a collective budget shortfall of at least $56 billion over the next two years, with the current recession not seen hitting bottom until 2011, according to a report on Wednesday. The National League of Cities said that because economic recoveries in cities lag national ones by about two years, the pain from the recession that began in 2007 could continue for years to come.

The collective shortfall could reach $83 billion through 2012, the league said. Cities will seek to cure revenue declines and spending pressures with higher service fees, layoffs, unpaid furloughs, and drawing on reserves or canceling infrastructure projects, the report said. Many cities have already used these options as the recession has worn down their finances. States are also threatening to cut another lifeline for cities -- direct aid transfers. As they attempt to reconcile their own battered budgets, states are saying they can send less money to cities. California, for one, has already taken back aid it had granted.

States cut aid to cities by 9 percent in 2003 and 2004 in response to the 2001 recession, according to the report. "In comparison, the current recession is by nearly all measures more severe than the 2001 recession, suggesting that state cuts in transfers will, if anything, be more severe as well," the group said. If states simply cut 10 percent of aid per year from 2010 to 2012, cities will lose $21 billion in total, the league estimated.

Like the states, cities are pressing for more federal aid, through a job creation bill like the one recently passed by the House of Representatives; a transportation bill; or additional funding for programs begun through the economic stimulus bill passed last February, such as the energy efficiency grant program. "We urge federal action that would create jobs. Inaction at the federal level could worsen the already difficult situation facing cities and the country," said the group's president, Ronald Loveridge, who is mayor of Riverside, California, one of the areas hardest hit by the housing downturn.

California's debt rating cut to A-minus by S & P on budget woes
S & P, worried that the state could face a cash crunch in March, warns that the grade could be further reduced.

California's only remaining A-level credit grade from a major rating firm is in greater danger as the state's budget woes deepen yet again. Standard & Poor's on Wednesday cut its rating on California's $64 billion in general-obligation debt to A-minus from A and warned that the outlook was "negative," meaning another reduction could loom. S&P cited new concerns about the state's finances, including a possible cash shortage "if the state's revenue and spending trajectories continue."

Scrambling to close a $20-billion budget gap, Gov. Arnold Schwarzenegger has proposed a number of one-time fixes -- including having the federal government contribute nearly $7 billion in new aid. Yet the state's chief budget analyst believes the odds of getting that much help from the U.S. are "almost nonexistent." S&P worries that the state could face a cash crunch in March, before it receives the income tax payments due in April.

"There could be days in March when they go into a negative cash position," said Gabriel Petek, an S&P analyst in San Francisco. Although Petek said he didn't believe California would be in jeopardy of missing any payments due on its debt, he said the government might pay other obligations with IOUs, as it did last summer, or the state might require a short-term loan from Wall Street.

S&P's main rivals in the credit-rating business -- Moody's Investors Service and Fitch Ratings -- already rate California's debt the lowest of any state, and below "A" level. Moody's rating is Baa1; Fitch's is BBB. Falling bond ratings often can drive up the interest rates a state or municipality must pay to borrow. But in California's case, even as the budget picture has worsened over the last two months the market for the state's bonds has been fairly placid, with yields on the securities holding relatively steady in the marketplace.

After a flurry of bond offerings last fall, California Treasurer Bill Lockyer has no plans to test investors' appetite for new state debt in the near future, a spokesman said. In a statement, Lockyer's office said S&P's move Wednesday "highlights the critical need for the Legislature and governor to act swiftly to solve our budget problems, and do so in a way the market finds credible." "The agency made it pretty clear that a failure to adopt real budget solutions in a timely manner will threaten us with a further downgrade. Every time that happens, taxpayers' debt service burden grows heavier. It's time we started lightening that load, not making it worse."

Report Challenges California Budget
California lawmakers and analysts are challenging Gov. Arnold Schwarzenegger's days-old budget proposal, which relies on billions of dollars in emergency federal aid. A report released Tuesday by the state's nonpartisan legislative analyst said the Republican governor's spending plan, which would close a $20 billion budget shortfall over 18 months, is built on risky assumptions -- including agreement by Washington to rescue the state.

"While the odds seem favorable for some federal relief sought by the administration," the report said, "we believe that the likelihood of Washington agreeing to all of the governor's requests is almost nonexistent." The report also said Mr. Schwarzenegger's proposal, which envisions spending $82.9 billion in the 2010-11 fiscal year, is built on optimistic revenue and spending estimates. Such challenges to the Republican governor's Jan. 8 budget proposal illustrate the task of solving California's latest budget crisis.

State lawmakers last year closed a $60 billion deficit with spending cuts, accounting gimmicks and other maneuvers, but only after battles that forced California to delay payments and issue IOUs to creditors to keep from going into default. Legislators have said they were prepared for another stalemate that could further strain the state's finances. The challenge from the legislative analyst's office was directed at Mr. Schwarzenegger's budget proposal for the 18 months ending June 30, 2011. The proposal calls for $8.5 billion in spending cuts, $4.5 billion in accounting maneuvers -- such as shifting money to the general fund from other accounts -- as well as $6.9 billion in federal aid.

Without the federal funds, the governor said he would cut an additional $4.6 billion in spending, in part by eliminating major health and welfare programs, and raise $2.4 billion in revenue, largely by extending the suspension of tax breaks. The governor said last week that the federal government owed California the money because the state sends far more in taxes to Washington than it receives, adding that federal mandates force California to spend money it doesn't have.

House Speaker Nancy Pelosi, a San Francisco Democrat, and the state's two Democratic U.S. senators have said new federal aid was unlikely, given that California has already received billions of dollars from the stimulus package. "The federal government is not responsible for the state of California's budget, and we look forward to hearing a sustainable plan for the state to get its house in order," a spokesman for Ms. Pelosi said after the budget was released Friday. Added Sen. Barbara Boxer: "If you're talking about a straight check to the governor, I don't think we're going to do that."

Mr. Schwarzenegger said on NBC's "Meet the Press" Sunday that he thought the California congressional delegation was not "representing us very well." He reiterated his concerns in a speech Monday. Even if the nation's most populous state gets more federal aid, Mr. Schwarzenegger's budget proposal faces challenges from the state Legislature's Democratic leaders. They said Friday that they wouldn't consider the major cuts and indicated a preference for industry-specific taxes, such as on tobacco and oil extraction.

The report by the state's legislative analyst, Mac Taylor, also said the governor's plan doesn't factor in the possibility that some of his proposals could be challenged in court. Because of that and optimistic forecasts, "the legislature and governor eventually may have to address a budget problem a few billion dollars larger than the administration identifies," the report said. The report added that legislators were unlikely to find a way to avoid the deep spending cuts the governor proposed. It said legislators, instead of eliminating some social programs, could pare them to benefit only the "most vulnerable."

The report did say the governor's estimate of the size of the problem was reasonable. "We commend the [legislative analyst] for recognizing that our budget was a reasonable estimate of the problem and for encouraging the governor and the legislature to seek federal fairness," said gubernatorial spokesman Aaron McLear. The report concluded that to save money through new spending cuts in the current fiscal year, the state Legislature and governor must approve a budget by the end of March. That will be difficult in a statheouse where the majority Democrats are likely to have trouble winning over enough Republicans to pass a budget by the required two-thirds majority.

California Rating Cut Shows $20 Billion Gap Lifts Bond Costs
California bondholders got an early glimpse of what the state’s budget-negotiation season may bring as a looming $20 billion deficit led Standard & Poor’s to cut its credit rating for the second time in less than year. S&P yesterday lowered its assessment on $64 billion of the most-populous U.S. state’s general obligation bonds one level to A-, four steps above speculative grade, saying a plan by Governor Arnold Schwarzenegger to erase the spending gap relies too much on proposals that may not succeed.

It was S&P’s first downgrade of California since February, when it preceded Moody’s Investors Service and Fitch Ratings in lowering the state’s rating as lawmakers were locked in a stalemate over how to fill what was then a $46 billion gap. “This is déjà vu,” said Kenneth Naehu, who invests $2.5 billion in municipal bonds for Bel Air Investment Advisors in Los Angeles.

A taxable California bond maturing in 2039 traded yesterday for as little as 97.90 cents on the dollar, to yield 7.73 percent. That’s down from 98.67 cents a day earlier, when the yield was 7.66 percent.
The extra yield on California 10-year bonds was 1.30 percentage points yesterday compared with top-rated municipal securities. Last year at this time, the so-called yield spread on California 10-year debt soared above one percentage point, or 100 basis points, for the first time in more than a decade.

Schwarzenegger’s budget plan seeks to cut spending by $8.5 billion on top of the $30 billion slashed last year. He said he’ll lower it another $7 billion if the federal government won’t reimburse California for money he said the state is owed for health care mandates, education standards and illegal immigrants in its jails. “There is no rational way to absolve Washington of any responsibility for state budget deficits until Congress acts to remove the barriers that prevent states from reducing spending as needed to live within our means,” Schwarzenegger said in a letter yesterday to the state’s congressional delegation.

The 62-year-old Republican governor isn’t likely to get much of the federal aid he’s seeking, California state Legislative Analyst Mac Taylor said Jan. 12. At the same time, criticism of his proposal from top Democratic state lawmakers, who control both chambers of the Legislature, has stoked investors’ concern that prolonged political fighting over the $82.9 billion budget will drain the state of its cash, as it did last year.

George Strickland, who invests $4.5 billion of municipal debt for Thornburg Investment Management in Santa Fe, New Mexico, said he’s avoiding adding California bonds, anticipating that the fiscal negotiations will depress prices should the budget fight extend into mid-year again. “It’s going to make last year’s cycle look not so bad,” he said. “It will spook a number of investors.” Controller John Chiang in July resorted to using IOUs to pay bills to make sure the state had enough money for payments given the highest priority under the law, including debt service. Budget officials have already said they may delay paying some of the state’s bills in March because the cash balance will dip below the $2.5 billion cushion they like to maintain.

S&P’s cut brings its rating on California closer to that of Moody’s and Fitch, which have the state at Baa1 and BBB, respectively. California is the largest borrower in the municipal bond market. Moody’s lowered its assessment of California’s debt in March and again in July, leaving it three steps above non- investment grade, according to the California Treasurer’s office. Fitch reduced its grading three times last year and now rates it two steps above so-called junk, according to the Treasurer.

California Treasurer Bill Lockyer has rejected any assertion that the state will default on its obligations to bondholders. Lockyer said last week that the state may be forced to shutter or delay thousands of public works projects should it lose access to the bond market and in December he told lawmakers he may need to look to international investors to sell debt after issuing $36 billion of securities last year. Peter Hayes, who oversees $115 billion of municipal bond investments for New York-based BlackRock Inc., said this week before the S&P cut that California politicians would move to preserve the state’s investment-grade rating, as losing it would shut off access to some investors and increase interest costs. “I don’t think the state of California wants to go through that process,” he said.

Jobless Claims in U.S. Increased 11,000 Last Week to 444,000
The average number of Americans filing first-time claims for unemployment benefits over the past four weeks dropped to the lowest level since August 2008, indicating companies are making fewer job cuts as the economy improves. Jobless claims increased in the latest week. The four-week moving average of initial claims fell to 440,750 last week from 449,750, Labor Department figures showed today in Washington. Weekly jobless claims, which are more volatile, rose by 11,000 in the week ended Jan. 9, more than anticipated, to 444,000.

Factories are ratcheting up production and companies are slowing the pace of firings as the economy rebounds from the worst recession in seven decades. An unexpected decline in employment last month indicates companies are hesitant to add to payrolls until demand accelerates. “The labor market is moving in the right direction,” Ryan Sweet, a senior economist at Moody’s in West Chester, Pennsylvania, said before the report. “The outlook for the labor market still hinges on broader business confidence. Businesses appear to be very, very cautious.”

The number of people receiving unemployment insurance declined to the lowest level since Jan. 10, 2009, and those receiving extended benefits decreased. Economists forecast claims would increase to 437,000 from a previously reported 434,000 for the prior week, according to the median of 43 projections in a Bloomberg News survey. Estimates ranged from 400,000 to 450,000. Claims have fallen 34 percent since reaching a 26-year high of 674,000 in the week ended March 28.

Continuing claims dropped by 211,000 to 4.6 million in the week ended Jan. 2. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs. Today’s report showed the number of people who’ve used up their traditional benefits and are now collecting extended payments decreased by about 135,587 to 5.3 million in the week ended Dec. 26. Thirty of the states and territories where workers are eligible to receive the government’s latest six-week extension have begun to report that data, a Labor Department spokesman said.

The unemployment rate among people eligible for benefits, which tends to track the jobless rate, fell to 3.5 percent in the week ended Jan. 2 from 3.6 percent, today’s report showed. Thirty-seven states and territories reported an increase in claims, while 16 had a decrease. These data are reported with a one-week lag.

White House changes stimulus job accounting
New method will make it impossible to track ones saved or created
The White House has abandoned its controversial method of counting jobs under President Barack Obama's economic stimulus, making it impossible to track the number of jobs saved or created with the $787 billion in recovery money. Despite mounting a vigorous defense of its earlier count of more than 640,000 jobs credited to the stimulus, even after numerous errors were identified, the Obama administration now is making it easier to give the stimulus credit for hiring.

It's no longer about counting a job as saved or created; now it's a matter of counting jobs funded by the stimulus. That means that any stimulus money used to cover payroll will be included in the jobs credited to the program, including pay raises for existing employees and pay for people who never were in jeopardy of losing their positions.

The new rules, quietly published last month in a memorandum to federal agencies, mark the White House's latest response to criticism about the way it counts jobs credited to the stimulus. When The Associated Press first reported flaws in the job counts in October, the White House said errors were being corrected and future counts would provide a full and correct accounting of just how many stimulus jobs were saved or created.

Numbers published last month identified more than 640,000 jobs linked to stimulus projects around the country. The White House said the public could have confidence in those new numbers, which officials argued proved the administration was on track to keep Obama's promise that the stimulus would save or create 3.5 million jobs by the end of this year. But more errors were found, with tens of thousands of problems documented in corrected counts, from the substantive to the clerical. Republicans have used those flaws to attack what so far is the signature domestic policy approved during Obama's presidency.

The new rules are intended to streamline the process, said Tom Gavin, spokesman for the White House's Office of Management and Budget. They came in response to grant recipients who complained the reporting was too complicated, from lawmakers who complained the job counts were inconsistent and from watchdog groups who complained the information was unreliable, Gavin said. "We're trying to make this as consistent and as uniform as we possibly can," he said.

The new stimulus job reports will continue to offer details about jobs and projects. But they were never expected to be the public accounting of Obama's goal to save or create 3.5 million jobs, Gavin said. The quarterly job reports posted on the Web site for the Recovery Accountability and Transparency Board reflect only a fraction of the jobs created under the program and can't account for job creation stemming from other stimulus programs such as tax rebates and other federal aid, the spokesman said.

But the result of the new rules will be that future claims of job creation from the stimulus will be even more misleading, said Rep. Darrell Issa, the ranking Republican on the House Oversight and Government Reform Committee. "It is troubling that the administration is changing the rules and further inflating the Recovery Act's impact and masking the failure of the stimulus to produce sustainable economic growth or real job creation," Issa said in a letter sent last week to the government board monitoring stimulus spending.

Recipients of recovery money no longer have to show that a job would have been lost without the stimulus help, and they no longer are required to keep an ongoing tally of jobs saved or created. The new rules allow stimulus recipients to limit the job tally to quarterly reports, making it impossible to avoid double-counting a job that was created in one quarter and continued into the next. Issa wants the Recovery Board, the government's independent oversight panel, to change how it identifies the count of stimulus jobs and to add a note on its Web site explaining that there is now a different definition for what constitutes a job under the stimulus.

One In Eight Dollars In Receivables During November Collection Period Has Been Written Off As Uncollectable
by Tyler Durden

Taking a playbook straight from Wall Street, consumers maxed out their store-branded retail cards and decided simply to not pay them in November-December. And even that could not prevent December retail sales from coming it at below expectations: one wonders just what it is that will drive the retail dynamo that ever more clueless pundits on CNBC claim will boost 2010.

Here are the facts: "Fitch notes that in December more than one in every eight dollars of receivables was written off as uncollectable during the November collection period on an annualized basis." Well, at least the government (if not private retailers) got something out of this and managed to revise November sales slightly higher. Good luck repeating this. One knows when a "rating agency" tells you things are bad and getting worse, it behooves one to listen:
"We do not foresee any meaningful improvement in the retail card credit quality in the coming months," said Managing Director Michael Dean. "U.S. consumers remain under stress on a number of fronts, most notably on the  employment front, and retail card chargeoffs will continue to reflect those pressures."

Despite the elevated chargeoff and delinquency measures, Fitch expects retail card ABS ratings to remain stable throughout 2010. Excess spread remains robust, which coupled with loss coverage multiples and other structural protections will shield investors from potential downgrades or early amortization scenarios.

In December, Fitch's Retail Credit Card Chargeoff Index snapped a two-month decline, rising 122 basis points (bps) to 12.56% from the previous month.  Throughout 2009, chargeoffs surpassed the previous record (12.25% in January 2005) five times, establishing a new all-time high of 12.81% in August. Throughout the year, retail chargeoffs averaged 11.88% (more than 42% above the historical average of 8.34%).

Perhaps consumer have finally figured out the great scheme: if nobody will lend to you, what use are good FICO numbers? Which is why spend, spend, spend, and max out anything and everything you can. As for the consequences: well, just write a letter to Obama, explaining how your $50,000 in credit card debt makes you too big to fail. If you are lucky, you just may get bailed out. Holding a few trillion in Interest Rate swaps with Goldman as a counterparty sure would help.
High unemployment and ongoing household deleveraging will continue to limit demand for consumer credit in 2010. Consumer confidence as measured by the Conference Board remains historically low despite rising in the most recent period and unemployment is expected to remain elevated averaging 10.2% in 2010. 'Households will remain cautious with their spending and further curtail their use of retail cards in 2010,' said Dean.

This does not bode well for prospects of a robust rebound in retail sales or credit usage in 2010 as the employment situation and economic environment overall continues to weigh on consumers' spending decisions. The latest Fed figures show revolving credit usage decreased at an annual rate of 18.5% in November - the largest dollar-value drop since 1968 and the 14th consecutive decline since October 2008. As long as the employment and income growth remain weak, demand for consumer credit - especially retail credit - will be limited.

Well, with credit increasingly limited, thank god consumers at least have jobs, savings and steady incomes to fall back on. Otherwise one may be forced to take all those predictions of strong retail performance in 2010 with just a grain of salt.

Mortgage Default Is A Patriotic Duty
by Michael David White

I read a mysterious statement the other day.

“My data show that between 1890 and 1990 real home prices actually didn’t increase,” said Robert Shiller, in Newsweek (Dec 30, 2009), Why We’ll Always Have More Money Than Sense.

We have all been in a long state of delusion. Our psychosis is simple. We are married to real estate which increases in value. I can get rich. You can too.

The belief in increasing values of real estate is the president of our financial crisis. Now we know he didn’t deserve the office. The price will be paid. We can all confirm the high stupidity of the crowd which we are in. Of course I’m a member, but I’ve decided I’m done, and you have too.

Now we are cured. Or some are. Or a few maybe.

residential property price index case shiller 1880 to Q3 2009
price my data show

If real estate is a “flat” asset, with price changes created only by inflation, and not true increases in value, than you know we still have quite a big fall to go ahead of us. And if we don’t fall, that’s almost certainly worse. The graph above shows Case Shiller through the third quarter of 2009. The numbers are adjusted for inflation.


Take a minute and pick out the most striking feature of the graph. Study it a minute. What do you think it is? Do we agree?

The striking feature is that the current breaking bubble is a bubble which was a King Kong bubble. Any predecessor bubble in the last 120 years was a hiccup. Now we have gangrene. At least one limb must go.

The best numbers, which are Case Shiller, predict a fall of 22% from current levels. And that’s if we don’t overshoot.

Over the last three or four months I have been looking closely at the data on pricing from Case Shiller, Freddie Mac, The Federal Housing Finance Agency, and First American Core Logic. I have been surprised by how negative the forecast is based upon long-term price trends.

While there are variations, all of the different data sets point to patterns very much like what you see above from Case Shiller. If history has a pattern, and the most educated voice on the matter says it does, then a fall is written in stone. The critical question: Should we respect what the stone says? Or should we try to break the tablet?

Who can imagine the perverse effects of a policy which successfully circumvents something as towering as the pricing of all of our 129 million residential housing units?

If successful, the most obvious perversion of our current policies on housing is that we will continue to pay too much for the most expensive cost which each of us shell out for every day and every month and every lifetime. We are fighting an ocean’s tide retreating. How will we hold the water on the shore? We are forcing a more expensive lifestyle across our entire economy. Rich and poor. Young and old. All are scheduled to pay more if the bubble doesn’t pop completely.


We live in a world of radical price competition. The obvious competition we are losing is the competition based upon the price of labor. Expensive housing exacerbates our competitive disadvantage.

Our focus should be on providing our services for a lower cost. Does anybody think it makes sense for us to increase the cost of housing when the price of labor is too high? If housing costs are high, will that help our competitiveness?

rate federal home bank data 1971 to 12 2009

Those new to this argument about the price of housing should consider that the government effort to artificially inflate prices includes radical intervention. Fannie Mae, Freddie Mac, and the FHA, all government banks, are the entire mortgage market today. Private investment in mortgages is gone. No sane banker is going to make a loan on an asset that has fallen 30% in value.

The federal government is also literally giving money to buyers through a tax credit. And the federal government is buying a huge percentage of mortgages to artificially keep interest rates low (see above). And the federal government has issued an unlimited credit line to Fannie and Freddie so they can write as many mortgages as they want.

unit sales NAR 1999 to 200911
sales units

If you don’t understand all of these names and programs, trust me when I say that nuclear bombs have been used on the housing market.

Think about that for a minute, and look at the pathetic unit sales above. The government is dropping nuclear bombs on the mortgage market and nobody is dying. They can’t move the product.

What has been taking off are foreclosures. They are soaring. The general feeling is that foreclosures are terrible and should be stopped because of the distress they bring both to a family and a neighborhood. The more important truth, widely ignored, is that foreclosures promise to bring back cheap prices. We know from the first chart in this story that lower prices are natural.

In our post-bubble world, foreclosures are the surest mechanism for creating affordable housing. Consumer advocates should now welcome this method of price correction. Those true to their mission will embrace a mass-foreclosure remedy.

In a credit bubble, the smart economist makes the highest goal a true reckoning with phony debt. The common man now has a chance to play the smart economist.

Let the house go back to the lenders. The bank will throw the mortgage in the garbage. Reality will return. Prices will fall – perhaps dramatically. Systemic mortgage debt in the United States will be reduced.

Default is now a patriotic duty. It is a courageous intelligent act. Take the right steps so we can beat the Chinese. We need the jobs. We need to get back to work. We don’t need the phony debt issued to buy a bubble.

The government has screwed up management of the financial crisis by granting debt assets special status. What the owners of debt assets deserve are losses. It’s time for the people to fix the financial crisis.

FDIC chief puts blame on Fed for crisis
The Federal Deposit Insurance Corporation laid much of the blame for the financial crisis at the door of the Federal Reserve at an inquiry that causes fresh problems for the US central bank. Sheila Bair, chairman of the FDIC, which insures depositors against bank failures, said on Thursday that the Fed waited seven years to use fully its powers to regulate subprime lending. “If HOEPA (Home Ownership and Equity Protection Act) regulations had been amended in 2001, instead of in 2008, a large number of the toxic mortgage loans could not have been originated and much of the crisis may have been prevented,” she said.

The typically forthright written testimony from Ms Bair to the second day of the hearings from the new Financial Crisis Inquiry Commission pits one of the most politically powerful regulators against one of the weakest. The Fed is under attack on multiple fronts in Congress with attempts to conduct sweeping audits of the central bank and remove much of its regulatory role.

The FCIC, which on Wednesday heard from four Wall Street executives, also heard from Mary Schapiro, the Securities and Exchange Commission and Eric Holder, the attorney-general. Ms Bair acknowledged that many regulators had failed in the crisis in a thorough 54-page analysis of the events leading up to the 2008 shocks across the credit and equity markets. “Regulators were wholly unprepared and ill-equipped for a systemic event that initially destroyed liquidity in the shadow banking system and subsequently spread to the largest firms throughout the financial system,” she said.

Ms Bair has opposed giving the Fed a principal role in regulating systemic risk. She also reiterated her belief, which goes against the wishes of Tim Geithner, Treasury secretary, that a new “resolution” fund, used to wind up a failing systemically important fund, should be built up before a crisis with a new assessment on the industry.

Banks are already reeling from the news that they will have to pay about $90bn over 10 years in a levy to recoup the government’s costs of bailing out the system. Finally, Ms Bair concluded with a call for the financial sector to be constrained from outsized growth. “Longer term, we must develop a more strategic approach that utilises all available policy tools — fiscal, monetary, and regulatory — to lead us toward a longer-term, more stable, and more widely shared prosperity,” she said.

Geithner faces demand for AIG phone records
The House oversight committee has submitted a legal demand for any phone records and e-mails from Tim Geithner that discuss payments from the New York Federal Reserve to AIG's counterparties. Republicans on the committee are attempting to link the Treasury secretary to the bail-out of AIG's counterparties - a list headed by Société Générale and Goldman Sachs - which were made while Mr Geithner was president of the New York Fed.

The Treasury has said Mr Geithner recused himself from the case ahead of a move to the top economic job in Barack Obama's new administration. The New York Fed has emphasised that Mr Geithner played no part in a decision not to disclose details about the AIG -payments.

In 2008, with AIG under threat of collapse because of demands from counterparties that the insurance group pay increasing amounts of cash collateral on credit default swaps, the New York Fed stepped into avert what it believed could be an event that threatened the financial system. But its decision to pay $27.1bn to 16 institutions has been subject to scrutiny ever since, with both Democrats and Republicans asking why the New York Fed did not demand a discount from the banks and whether it improperly asked AIG to withhold details on the deal from the Securities and Exchange Commission.

Darrell Issa, the senior Republican on the oversight committee, has led the campaign to implicate Mr Geithner in the decision. Edolphus Towns, the Democratic chairman of the committee, has asked the Treasury secretary to attend a hearing in spite of the administration's protestations that he was not involved. The Treasury has not yet confirmed that Mr Geithner will attend.

Why the Financial Industry Can't Pre-Fund Its Next Bailout
Nicole Gelinas

Would President Obama’s financial-industry tax be okay if Obama presented it as a sort of FDIC fund for high finance — that is, an industry-funded insurance pool into which “too big to fail” financial firms would pay to pre-fund their next bailout? No. Confusion here is understandable. But applying the FDIC model to the broader financial system is unworkable.  
A permanent bailout fund for the “too big to fail” financial industry would have to measure in the multiple trillions of dollars. For a “too big to fail” bailout fund to replace implicit and explicit government guarantees, it would have to be big enough to do credibly what the federal government has done over the past two (!) years.
TARP doesn’t even begin to cover the resources that taxpayers have devoted to banks and other financial firms since March 2008, when Washington took on the risk of some of Bear Stearns' murkiest assets. The federal government essentially backstopped the financial industry after Lehman Brothers collapsed that September. Washington has backed everything from AIG’s derivatives obligations, to hundreds of billions of dollars' worth of investments on Citigroup’s balance sheet, to money-market funds and the multi-billion-dollar bonds that banks floated in late 2008 and early 2009 to replace the money their private lenders had once provided.
The “too big to fail” bailout fund, then, would itself represent a systemic risk to the economy. Washington and Wall Street would have to invest the fund's trillions of dollars in something. What? Treasury bonds? It then would be a new pool of cash from which the feds could borrow with no market surveillance. The global stock markets? At the hint of the next crisis, markets would panic at the understanding that the fund could have to sell those assets at fire-sale prices to cover its unknowable obligations, depressing similar asset prices worldwide. Mortgage bonds? Let’s not even go there.
No tax in the world would be onerous enough to cover the massive risk that is posed to the economy by a “too big to fail” financial system immune from free-market discipline. The bailout fund would need its own bailout fund, because it would effectively be the biggest “too big to fail” financial entity in the world.
The FDIC, by contrast, is not a bank bailout fund. The FDIC is in some ways the opposite. In the Thirties, it was an elegant solution to one of the Depression’s biggest problems: how to let bad banks fail — yes, fail — with their bondholders and other lenders taking their losses, but at the same time protect small depositors from the impacts of such failures. Until the 1980s, Washington allowed large lenders to commercial banks whose deposits exceeded FDIC guarantees to take their warranted financial hits. Washington stopped enforcing such market losses consistently in 1984. Look where that strategy got us (here).
We need not live with “too big to fail.” In fact, over the long term, we can’t live with it. Washington must properly regulate finance, as it did, more or less, from the Thirties ’til the Eighties. If Washington does not do so, a future financial crisis will rupture the sovereign cocoon that finance currently enjoys. The U.S. government will not be able to borrow enough money on affordable terms to bail Wall Street’s lenders and other creditors out.

Obama to Unveil Proposal on Bank Taxes
President Barack Obama is expected Thursday to propose taxing large banks and other companies based on their exposure to risk, White House officials said. The plan marks the latest in a slew of proposed fees, penalties and constraints the White House envisions slapping on Wall Street during the cleanup of the U.S. financial crisis, and marks a new stage in the White House's populist assault on the finance industry. Administration officials went out of their way Wednesday to show no sympathy for big banks they acknowledged would lobby hard against the proposal. "The banks that are in question were significantly responsible for the enormous degree of the reckless risk-taking that was borne throughout the economy," one official said.

If approved by Congress, the new tax -- which the White House calls a "financial crisis responsibility fee" -- would force about 50 banks, insurance companies and large broker-dealers to collectively pay the federal government roughly $90 billion over 10 years. Of the 50, about 35 would be U.S. companies and 10 to 15 would be U.S. subsidiaries of foreign financial firms. A senior administration official said the largest 10 institutions would pay about 60% of the tax's total cost. Roughly half the 50 would be U.S. banks, including the largest, Goldman Sachs, J.P. Morgan Chase, Bank of America and Morgan Stanley. Because large firms that benefited from the government's debt guarantees would also be included, the tax would hit companies such as General Electric Co. Banks that have repaid their TARP money wouldn't escape taxation.

The taxed firms are expected to pay the cost of bailout money that went to General Motors Co. and Chrysler LLC, which are exempt from the tax. The administration official defended the omission by contending that U.S. auto makers collapsed in part because of a financial crisis of the banks' making. The numbers could change as the final tally of losses from the $700 billion Troubled Asset Relief Program is calculated. The White House estimates that with a rash of repayments, TARP costs now stand at $117 billion, down from the $341 billion it estimated last summer. Officials say costs should ultimately fall to $90 billion, about what the tax is expected to raise, but the tax will stay in place until all of the costs are recaptured.

The top five Wall Street banks earned profits of about $30 billion through the third quarter last year. The proposal will also help the administration tackle the U.S.'s budget deficit, projected to reach $1.4 trillion this fiscal year. The banking industry has already objected to initial reports of the proposal, which Mr. Obama is expected to detail Thursday morning at the White House. "Using tax policy to punish people is a bad idea," J.P. Morgan Chase Chief Executive James Dimon told reporters after a hearing in Washington. Mr. Dimon said it would be unfair for banks to be left shouldering the cost of the auto bailout.

The proposal wouldn't require small banks to pay the fees, administration officials said, the latest sign that Washington's post-crisis clean-up is hitting large financial institutions most heavily. Using boldly populist language, a senior administration official rejected criticism from bank executives, lobbyists and Republicans that the fee would be passed on to consumers. Doing so would put the taxed banks at a disadvantage against small-to-medium-sized lenders that would be exempt. He suggested companies look to their bonus pools to pay the tax. "It is just beyond the pale for any of the any of these major financial institutions to suggest that they were islands unto themselves, untouched and not benefited by the extraordinary policies that have been taken under the Obama administration," the official said.

Under the proposal, a 0.15% tax would be levied on liabilities. The tax would apply to bank holding companies, thrifts, insurance companies that own financial arms and broker dealers with at least $50 billion in assets that received assistance under TARP, the FDIC's temporary loan program or other crisis efforts. The tax would be levied on total assets, minus a type of capital considered high quailty, such as common stock, and disclosed and retained earnings. FDIC-covered deposits and insurance policy reserves would be untaxed because such assets are already subject to federal fees, the administration official said.

Under that formulation, banks that lean heavily on funding sources other than customer deposits would pay proportionally higher taxes. That means that Goldman Sachs and Morgan Stanley could get penalized. Another big loser could be Citigroup, whose main U.S. banking unit's insured deposits represent a relatively small slice of the company's liabilities. The 2008 law creating TARP required the White House to come up with a proposal to recoup any losses. The White House and Treasury Department considered several different options, including a tax on bank profits or a tax on transactions made by large banks.

Ultimately, the White House opted to tax bank liabilities, seeing it as a way to constrain risk at specific firms. Liabilities, traditionally, are defined as what the bank owes -- for example, customers' deposits. Administration officials believe that the tax would also serve as a constraint against banks taking on too many risky bets with borrowed cash. Many Democrats are expected to support the levy. House Financial Services Committee Chairman Barney Frank (D., Mass.) said Wednesday that it was "entirely reasonable" for the financial industry to make the taxpayer whole on any losses.

Rep. Scott Garrett (R., N.J.) has said any tax or fee could hinder the economic recovery and further limit the industry's ability to extend more loans. Mr. Dimon, when asked how any tax could be felt by consumers, said "all businesses tend to pass their costs on to their customers." "How you are going to tax banks and expect them to lend more is frankly lunacy," said Rep. Jeb Hensarling (R., Texas). As large banks appear to regain their footing on Wall Street, their standing in Washington continues to deteriorate. Sen. Bill Nelson (D., Fla.) said Wednesday that he planned to impose new restraints on executive compensation at large banks.

The new White House tax would be in addition to other fees against big banks authorized by a recent bill passed by the House that would require large financial companies to finance a $150 billion fund to pay for future failures of large companies. White House officials have said the financial industry should do more to repay taxpayers for the extraordinary public support extended the financial crisis. Public fury at the banking industry remains high, particularly as they report high profits and pay packages while unemployment remains high.

Obama’s “Get Tough on Banks” Again Tries to Play the Public for Fools
by Yves Smith

Today, Obama said to the banking industry, “We want our money back and we’re going to get it.” Has he forgotten that possession is nine-tenths of the law?

While Uncle Sam is normally able to defeat such long odds, all bets are off with our “Speak moderately and carry no stick” President. The fact that Obama is finally, after months of open intransigence by the big capital markets firms, saying a few mildly critical words is supposed to signal a change of posture. But he is clearly begging: “I’d urge you to cover the costs of the rescue not by sticking it to your shareholders or your customers or your citizens but by rolling back bonuses.” Hint: urging gets you nowhere with this crowd.

Obama has been repeatedly praised for his soaring rhetoric, and I simply do not get it. It’s pretty easy to sound grand if you aren’t dispensing ideas that challenge the status quo. We are supposed to take his way-too-little-too-late finger shaking at the banksters seriously. By contrast, consider this section of FDR’s first inaugural address:

….the rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.

True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit. Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. The joy and moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits. These dark days will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and to our fellow men.

Recognition of the falsity of material wealth as the standard of success goes hand in hand with the abandonment of the false belief that public office and high political position are to be valued only by the standards of pride of place and personal profit; and there must be an end to a conduct in banking and in business which too often has given to a sacred trust the likeness of callous and selfish wrongdoing.

Yves here. Admittedly, it is much easier telling Americans that the pursuit of lucre is a false god when most of the country is broke. But more is that FDR from the very outset set himself up as an opponent of rule by the banking classes. He depicts them as failures and calls them unscrupulous and selfish. By contrast, have were ever heard Obama even hint that bankers were less than ethical? Let’s see, last December, he called them “fat cats“! Ah yes, of course, everyone knows a cat will steal a sardine if you aren’t watching. Yeah, that Obama sure knows how to dress those bankers down!

As we discussed at greater length earlier this week, this new “get our money back” idea is pure three card Monte. Put the spotlight on the TARP so everyone will ignore all the other massive subsidies that the banks have gotten, continue to receive, and are abusing. Those who claim many banks have “paid back the TARP” are missing (more likely choosing to obfuscate) the point: the TARP calculus grossly understates of the gives and the gets here (although as we have said before and will say again, Obama’s focus on the TARP is pure political expediency).

The point of all these covert subsidies is to rebuild bank balance sheets through extra-Congressional processes. Post the hard fought battle to pass the TARP, and the fully deserved anger that dishonest process created, it would be hard to get another set of bank rescues passed, unless Team Obama had been willing to resolve the sickest ones (and they seem to react to hearing the “s” word, socialism, like a vampire reacts to garlic, so that was never going to happen).

Now in the S&L crisis, the US not only had funds allocated to winding down sick banks (and Congress was in fits over the allocation of working capital to the Resolution Trust Corporation) but it also had a stealth recapitalization program, namely Greenspan’s engineering of a very steep yield curve. As a result, banks sported much better earnings than anticipated and rebuilt their balance sheets. But this time, the Fed supports are far less covert (kinda hard to miss the ballooning of its balance sheet) and the banks are being pigs and undermining the purpose of this operation by skimming way too much off in employee pay.

But it certainly appears no one has called the bankers into a private meeting and threatened them (and the regulators do hold the whip hand, even if they have been brainwashed into not recognizing that). Bernanke seems unable to see how his whole market manipulation program has been repurposed by the industry into welfare for the rich. Merely paying back the TARP is grossly inadequate given the risks involved. As Roger Ehrenberg pointed out last summer:
The US taxpayer has been systematically looted out of hundreds of billions of dollars….Goldman Sachs is posting record earnings and will invariably be preparing to pay record bonuses, not nine months after the firm was in mortal danger? Whether anyone will admit it or not, without the AIG (read: Wall Street and European bank) bail-out and the FDIC issuance guarantees, neither Goldman nor any other bulge bracket firm lacking stable base of core deposits would be alive and breathing today.

Goldman….stood with the rest of Wall Street as a firm with longer-dated, less liquid assets funded with extremely short-dated liabilities….In exchange for giving the firm life (TARP, FDIC guarantees, synthetic bail-out via AIG, etc.), the US Treasury (and the US taxpayer by extension) got some warrants on $10 billion of TARP capital injected into the firm….. Lloyd Blankfein smartly paid the full $1.1 billion requested. He looked like a hero for doing so, a true US patriot repaying the US Government in full for its lifeline, thanking the US taxpayer in the process. $1.1 billion… $1.1 billion…Hmm…something doesn’t seem right. You know why it doesn’t seem right? BECAUSE THE US TREASURY MIS-PRICED THE FREAKING OPTION.

There is not a Wall Street derivatives trader on the planet that would have done the US Government deal on an arms-length basis. Nothing remotely close. Goldman’s equity could have done a digital, dis-continuous move towards zero if it couldn’t finance its balance sheet overnight. Remember Bear Stearns? Lehman Brothers? These things happened. Goldman, though clearly a stronger institution, was facing a crisis of confidence that pervaded the market. Lenders weren’t discriminating back in November 2008. If you didn’t have term credit, you certainly weren’t getting any new lines or getting any rolls, either.

So what is the cost of an option to insure a $1 trillion balance sheet and hundreds of billions in off-balance sheet liabilities teetering on the brink? Let’s just say that it is a tad north of $1.1 billion in premium. And the $10 billion TARP figure? It’s a joke. Take into account the AIG payments, the FDIC guarantees and the value of the markets knowing that the US Government won’t let you go down under any circumstances. $1.1 billion in option premium? How about 20x that, perhaps more. But no, this is not the way it went down….

More important, despite the firms’ claims otherwise, they are now effectively backstopped by the government, and they know it. They should be paying insurance premiums, NOW, hefty ones, for being beneficiaries of the “No more Lehmans” policy. But there is no desire for anything remotely resembling a full accounting from the crew in the Administration.

Obama wants record $708 billion for military next year
President Barack Obama will ask Congress for an additional $33 billion to fight unpopular wars in Afghanistan and Iraq on top of a record $708 billion for the Defense Department next year, The Associated Press has learned - a request that could be an especially hard sell to some of the administration's Democratic allies. The extra $33 billion in 2010 would mostly go toward the expansion of the war in Afghanistan. Obama ordered an extra 30,000 troops for that war as part of an overhaul of the war strategy late last year. Military officials have suggested that the 2011 request would top $700 billion for the first time, but the precise figure has not been made public.

The administration also plans to tell Congress next month that its central military objectives for the next four years will include winning the current wars while preventing new ones and that its core missions will include both counterinsurgency and counterterrorism operations. The administration's Quadrennial Defense Review, the main articulation of U.S. military doctrine, is due to Congress on Feb. 1. Top military commanders were briefed on the document at the Pentagon on Monday and Tuesday. They also received a preview of the administration's budget plans through 2015.

The four-year review outlines six key mission areas and spells out capabilities and goals the Pentagon wants to develop. The pilotless drones used for surveillance and attack missions in Afghanistan and Pakistan are a priority, with the goals of speeding up the purchase of new Reaper drones and expanding Predator and Reaper drone flights through 2013. U.S. officials outlined the coming requests on condition of anonymity because the budget request will not be sent to Congress until later this month.

Obama's request for more war spending is likely to receive support on Capitol Hill, where Republicans will join moderate Democrats to pass the bill. But the budget debate is also likely to expose a widening rift between Obama's administration and Democratic leaders, who have watched public opinion turn against the military campaign. "The president's going to have to make his case," House Speaker Nancy Pelosi, D-Calif., told reporters last month at her year-end briefing.

The 2010 budget contains about $128 billion for military operations in Iraq and Afghanistan. That figure would rise to $159 billion next year under the proposals prepared for Congress. The Pentagon projects that war funding would drop sharply in 2012, to $50 billion, and remain there through 2015. That is a calculation that the United States will save money from the withdrawal of forces in Iraq, as well as a prediction that the Afghanistan war will begin to wind down in the middle of 2011.

Obama has promised that U.S. forces will begin to withdraw from Afghanistan in July 2011, but his defense advisers have set no time limit for the war. The Pentagon projects that overall defense spending would be $616 billion in 2012; $632 billion in 2013; $648 billion in 2014; and $666 billion in 2015. Congress sets little store by such predictions, which typically have fallen short of actual requests and spending. Defense Secretary Robert Gates and Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, are expected to testify to Congress about the budget and the policy review in February.

The four-year policy statement is a more important statement of administration goals. For the current wars, the policy statement focuses on efforts to refocus money and talent on beefing up special operations forces, countering weapons of mass destruction and terrorism threats, and maintaining cybersecurity. For example, the Pentagon would like to expand special operations aviation by expanding the gunship fleet from 25 to 33.

The FCIC Should Swiftly Summon Alan Greenspan
The public debut of the Financial Crisis Inquiry Commission on January 13 featured Wall Street bosses striking alternately defensive and humble poses while pundits recalled the glory days of New Deal investigator Ferdinand Pecora. The bankers' contrition seemed mostly shallow, especially compared to their obvious impatience over the occasional sharp question. More important, it seems likely that the hopeful historical references to Pecora will ultimately prove disappointing.

One way the commission could salvage something meaningful from the hearing room theater would be to bear down on a former Washington player so far not on the witness list. That would be Alan Greenspan. In the runup to the commission's opening act, many commentators invoked Pecora, the peppery chief counsel who 77 years ago galvanized a Senate investigation of the 1929 crash. The Pecora Commission, as it came to be called, revealed abuses that showed Depression-era Americans just how much Wall Street was a semi-fixed casino. We will likely get some of the same as the Financial Crisis Inquiry Commission (and let's hope someone devises a catchier name soon) holds hearings in coming months.

The Pecora Commission also laid the groundwork for legislation establishing the Securities & Exchange Commission and insulating the staid depository and lending functions of commercial banking from the riskier trade in securities. That framework kept commercial banking relatively safe, if dull, for a half-century. Its bipartisan demolition, beginning in the 1980s—together with the purposeful demoralization of institutions such as the SEC—helped recreate a free-for-all, 1920s-style environment in the 2000s. You know what happened next.

Do not expect the bipartisan FCIC, chaired by Phil Angelides, a former California state treasurer, to rival the impact of Pecora. We will not see the likes of the Securities Act of 1933, the Glass-Steagall Act of 1933, and the Securities Exchange Act of 1934. This time around, Wall Street lobbyists got the jump on the legislative process. The major battles on Capitol Hill have already been fought, with only the details left to resolve.

After all of President Barack Obama's fulminating over the largely symbolic issue of investment banker bonuses, Wall Street is writing checks with just as many zeroes and Congress isn't going to do anything about it. Obama and lawmakers bought the financial wizards' insistence that substantial curbs on derivatives speculation would somehow threaten the Republic. What we'll probably get instead is greater transparency for some—but not all—derivatives trading.

This half-measure will allow new petri dishes of systemic risk to fester in darkness, as Wall Street returns to the "financial innovation" laboratory. But the idea of revisiting Glass-Steagall's separation of commercial banking from securities speculation never got past the daydreams of Paul Volcker, Obama's marginalized emissary from a distant and more commonsensical era of regulatory caution. The big three credit-rating agencies will continue to enjoy a government-blessed oligopoly while they collect fees from the very institutions whose securities they evaluate.

That's not to say that the Angelides commission will fail to examine some episodes of fraud, greed, and hubris. "We may well find criminal activity as well as egregious practices that were not only permitted, but exalted," Angelides said on Jan. 13. The Wall Street CEOs conceded that things got out of hand, implying that all the really horrific stuff happened in some other guy's shop. "Too many financial institutions and investors simply outsourced their risk management," Lloyd Blankfein, Chairman and CEO of Goldman Sachs, said in his opening statement.

Hearing room talk is one thing—real change, another. Ask the cigarette manufacturers. Representative Henry A. Waxman (D-Calif.) publicly sautéed their CEOs in 1994. A lot of lawsuits followed. But tobacco remains a lucrative and deadly business.

The best way for the commission to make a name for itself is not to focus solely on banker avarice and mortgage fraud—much of which has already come to light in the past year—but to conduct a symposium on the fundamental causes of our financial troubles. The two major ones: 1) the persistently low interest rates in the early 2000s that inflated the bubbles in housing and credit and 2) the notion that financial markets police themselves.

As the Fed's domineering chief from 1987 to 2006, Alan Greenspan enforced a hands-off orthodoxy based on the idea that government officials can't distinguish between markets overheating dangerously and prices rising because of economic fundamentals. Rather than prick bubbles too early, the Fed should do damage control after a crash, he told the Senate Banking Committee in July 1999: "mitigate the fallout when it occurs, and, hopefully, ease the transition to the next expansion."

Following this strategy, Greenspan did little to address the Internet craze of the 1990s, which ended in a stock bust and recession. He and his colleagues mitigated the fallout by hacking interest rates and flooding the economy with cheap money. That seemed smart at the time—the recession of 2001 was relatively brief. But by keeping rates artificially low for several years, the Fed replaced the Internet stock bubble with a real estate bubble, as New Yorker economics correspondent John Cassidy observes in his instructive book How Markets Fail (2009). Faced with the consumer borrowing binge and soaring home prices that ensued, Greenspan and his colleagues did nothing.

They also ignored the manic leveraged gambling on Wall Street that was predicated on a fantasy of ever-rising real estate values. Investment banks could be trusted to keep one another honest, Greenspan said. That turned out to be incorrect. Greenspan's legacy is to have combined reckless easy money policies with even more reckless antiregulatory zeal, Richard A. Posner, the economist and federal judge, argues in his forthcoming volume, The Crisis of Capitalist Democracy. Posner adds: "The regulators of money and banking—of monetary policy and financial intermediation—were asleep at the switch."

So I suggest that the crisis hearings quickly move to giving Greenspan the third degree. In his characteristically convoluted way, the ex-Fed chairman already conceded to Congress, in October 2008, that he had been naive about self-regulation. Let's get him to say it in plain English—and more than once. Hearing a discredited Greenspan concede egregious error could possibly free Washington of his lingering influence; it could even embolden a few more lawmakers to show some resolve in the face of Wall Street's formidable lobbying machine.

The commission could sit Greenspan's successor, Ben Bernanke, next to him at the witness table. Bernanke, who has agreed to testify, acknowledged in early January that regulatory failings contributed to the crisis. But since he was at Greenspan's right hand as a member of the Fed board for most of the crucial 2002-06 period, Bernanke's passive-voice implication that it was someone else's regulatory screw-ups that led to woe seems, well, inadequate. Even more disturbing, Bernanke continues to insist implausibly that low interest rates didn't feed the bubblefest.

A reincarnated Ferdinand Pecora would want to skewer a few dishonest mortgage peddlers and unmask reckless credit-default-swap jockeys. Some of that wouldn't hurt. But if the Financial Crisis Inquiry Commission wants to make its own name, the panel needs to expand its witness list by at least one.

Waiting for a Correction
by Doug Kass

[On Monday], the following clouds gathered:
  • renewed fears of populism as the administration considers launching a tax on financial institutions.
  • a disappointing Alcoa earnings release;
  • China guided the one-year bill higher to curb lending and this morning raised bank reserve requirements; and
  • we experienced a different sort of market close.

My responses?
  • I remain fearful of the ramifications of populism in 2010-2011 on economic growth and on the market's prospects.
  • The industrials trade is far too crowded.
  • China is setting the stage for a rise in benchmark interest rates in the first half of 2010 (something included in my surprises for 2010 list).
  • And I know that when things look too good to be true (read: the markets persistently rise), they usually are!

I am not a Cassandra, and I have suggested on RealMoney Silver that, while there are numerous market positives in place as we enter 2010 that could produce favorable economic and corporate profit growth outcomes, there are also many probable outcomes that are less benign.

Often, the irrational is rationalized in such strong market settings, and arguably, this has been the case over the past six months, as headwinds (e.g., still sluggish labor markets, rising populism and marginal tax rates, commodities pressure, higher interest rates, etc.) are too easily ignored and perception becomes readily detached from reality. In markets and in life, we are consistently bamboozled by appearance and consensus. Too often, we are played as suckers as we just accept the trend, momentum and/or the superficial as certain truth without a shred of criticism.

Just look at those who bought into the success of Enron, the financial supermarket concept at Citigroup, the uninterrupted profit growth at Fannie Mae and Freddie Mac, housing's new paradigm of noncyclical growth and ever-rising home prices in the early to mid 2000s, Saddam Hussein's weapons of mass destruction, the uncompromising principles of former New York Governor Elliott Spitzer, the morality of our politicians (e.g., John Edwards, John Ensign and Larry Craig), the consistency of Bernie Madoff's investment returns (and those of other hucksters) and the clean-cut image of Tiger Woods.
"Do you want to know the truth or see me hit a few dingers?"
-- Mark McGwire

And, even the heroic home-run production of steroid-laced Major League Baseball players such as Mark McGwire is ignored until the facts are made public in black and white.

The United States Of Fantasyland
by Paul Vigna

With the heads of four of the nation’s big banks (and why isn’t Citi represented?) testifying in Washington today to the Financial Crisis Inquiry Commission, it’s a good time to look at one of the root causes of the crisis, something I guarantee won’t be explored by the commission. We’ve become a nation of rubes.

So Mark McGwire finally admitted what everybody’s known for years, that he was on the juice (and on it quite a lot, it turns out.)There wasn’t any shock, any surprise. Some delayed anger certainly. But what should be shocking is to remember just how easily we all fell for it, the Paul Bunyonesque myth that was built up around him that we were so eager to accept. And while our gullibility didn’t cost us much over baseball, it has cost us dearly in other arenas.

I remember very clearly the night McGwire broke Roger Maris’ single-season home-run record, that night game against the Cubs, with the Maris family on hand. When he hit that rifle shot over the left-field wall, the place went nuts.What a spectacle we all were caught up in. McGwire getting that hug at home plate from Sosa. The Maris family coming out and handing off the metaphorical baton to the new home-run king. How splendid it all was. How good it made us all feel, for some odd reason.

But even back then, it was clear something was up. Suddenly an awful lot of players were hitting more home runs than they ever had before. And you can’t tell me that back then it wasn’t obvious that the players weren’t taking something to enhance their game. It’s not like steroids hadn’t been invented before, or had ever been an issue in professional sports. Lyle Alzado comes to mind. Everybody knew, it’s just that nobody wanted to admit it. I guarantee you, the owners knew. Observant fans knew. Other players knew. Everybody knew something was up, even if they didn’t know all the details. It’s just that nobody wanted to ruin such a good story, even if it just wasn’t true.

Sound familiar? Sound like, oh, say, the housing market in the Aughts? The stock market? The derivatives market? We’ve developed a little bit of a problem in this nation. We believe everything we’re told, and that line in “Duck Soup” comes to mind: who are you gonna believe, me or your lying eyes?

We’ve fallen for an awful lot of stories that in retrospect were clearly lies. That baseball players weren’t taking steroids. That the market’s efficient. That earnings don’t matter, a chestnut from the dot-com boom. That home prices can never fall. That Iraq had something to do with 9/11. Now, of course, we’re being told the markets are healing, that the economy’s recovering, that we can as a nation get tens of trillions into debt and somehow manage it all without so much as raising taxes.

It’s time to stop buying fairy tales. It’s time to bring back some sorely missed skills, like critical thinking. This is something that too often has left even the press, whose singular role in the scheme of things is to be the nation’s critical voice. We have to start asking hard questions, as a matter of course. A refresher course in Aristotlian logic wouldn’t hurt, and renewing an affection for the Socratic method could do a nation some good. But, man, we’ve got to stop being so damn gullible.

Trichet Says Interest Rates Appropriate for Recovery
European Central Bank President Jean-Claude Trichet signaled officials will wait for more signs of economic recovery before withdrawing emergency measures further. “The current rates remain appropriate,” Trichet told reporters in Frankfurt today after the bank left its benchmark interest rate at a record low 1 percent. Trichet, who warned Greece it can’t expect any special treatment from the European Union, said the euro-area economy still faces a “bumpy road” and a “great level of uncertainty.”

Europe’s recovery from the worst recession since World War II is showing some signs of running out of steam as joblessness and Greece’s fiscal woes hurt confidence. The German economy probably stagnated in the fourth quarter and Renault SA said today that Europe’s car market could contract as much as 10 percent this year. “The ECB is in no rush, and won’t be in a position for some time to come, to allow higher rates,” said Christoph Rieger, co-head of fixed income strategy at Commerzbank AG in Frankfurt. Trichet’s comments on the economy and exit strategies closely echoed remarks made at last month’s press conference.

Trichet last month outlined part of the ECB’s exit strategy after it pumped unlimited liquidity into the banking system to fight the worst recession since World War II. The ECB tightened the terms of its final tender of 12-month funds, one of its flagship measures, and will end its six-month loans after March. Policy makers will “continue to implement the gradual phasing out of the extraordinary liquidity measures which are not needed to the same extent as in the past,” Trichet said. The ECB will take further decisions on its liquidity operations in March, he said.

Attention at the press conference was focused on Greece’s struggle to convince investors it will get to grips with the European Union’s largest budget deficit. Those concerns have already roiled the country’s bonds and cast doubt on the country’s membership of the euro region. While Trichet said it’s “absurd” to argue the country could be forced out of the bloc, he warned that Greece can’t expect “special treatment.” He also said the ECB won’t change its collateral rules to take account of its woes. Greek bonds extended declines after Trichet’s comments, pushing the yield on the 2-year note 38 basis points higher to 3.44 percent.

“By claiming that the rules would not be changed for any one country, the central bank has clearly chosen to maintain its pressure on the Greek government, rather than easing the heightened tensions in bond markets,” said Laurent Bilke, an economist at Nomura International Plc. On the economy, Trichet said the euro region is threatened by “low” factory usage and the “ongoing process of balance sheet adjustment,” which will counter the benefits of improving exports. At the same time, risks to the economy are still “broadly balanced,” he said.

The ECB forecast last month that the euro region will expand 0.8 percent this year and will publish revised forecasts in March. Trichet also said today that price pressures are “subdued” and inflation expectations are “firmly anchored.” “After the ECB Council essentially set the course to exit unconventional monetary policy at its December meeting, it is absolutely no surprise that no new decisions were taken at this month’s meeting,” said Michael Schubert, an economist at Commerzbank AG in Frankfurt.

US crisis tax threatens recovery for Europe banks
A "crisis tax" proposed by the Obama administration would cut substantially into bank earnings across Europe and could sidetrack the sector's recovery, analysts and industry officials said Friday. While there is little clarity over the practical effect of the levy, many questioned its fairness given that the European banks it would affect did not get bailouts in the United States and lack many of the guarantees their U.S. competitors received.

Under the proposal made Thursday, financial institutions with balance sheets above $50 billion would be assessed a fee equal to 0.15 percent of certain assets. About 15 international firms fall under that umbrella. Europe's three biggest economies were quick to distance themselves from the proposal. German Chancellor Angela Merkel said she favored a financial transaction tax, Britain said the problems in the United States were uniquely its own, and France said a tax on bonuses was the most efficient response for it.

Deutsche Bank was named as likely to be one of the European banks most affected, given its U.S. exposure. "The tax will fully hit annual profits," Merck Finck analyst Konrad Becker said, adding he calculated Germany's largest bank had to brace for a tax of more than $550 million. Morgan Stanley estimated the fee could eat up 4 percent of Deutsche Bank's 2012 earnings per share, 3 percent for British bank Barclays, and 2-3 percent for Swiss banks Credit Suisse and UBS. President Barack Obama's stated aim was to ensure the U.S. taxpayer does not make a loss on the $700 billion Troubled Asset Relief Program (TARP) with a "Financial Crisis Responsibility Fee" that would be in place for at least 10 years. While the long-term fallout could be acute, investors reacted calmly with major European banks stocks down 1.0-1.3 percent in a flat broader market at 1330 GMT.

"While market (share) price action suggests some doubt over its successful introduction, we are concerned it could weigh on not just the recovery of the banks sector (and particularly investment banks) but also of the economy," Nomura analysts said. The Japanese brokerage estimated the fee could cost large European commercial banks up to 11 percent of normalized earnings and up to 20 percent for investment banks. In total, Morgan Stanley forecast an EPS hit of 3-6 percent for its U.S. and European bank coverage group from 2010-12. Evolution Securities put the impact in dollar terms, forecasting a cost of about $1.7 billion just for the four biggest European payers.

Industry sources said there was disgruntlement at British lenders, which like most non-U.S. institutions did not benefit from TARP but will still have to pay up. Others, however, said banks were simply being made to pay for systemic support, something most have acknowledged they need to do. British bank HSBC said it was studying the proposals but a raft of other major European banks would not comment, including BNP Paribas, the French bank most exposed to the United States, and Spanish banks BBVA and Santander. There were doubts about how effective Obama's new tax would be if other countries do not take part, particularly since TARP losses are seen as largely a U.S. problem.

"I do not think there is necessarily a logical premise to support the assumption that you will get a readacross to the UK or Europe," said analyst Ian Gordan at Exane BNP Paribas. Germany's finance ministry said Friday it was a priority to find an international solution on bank taxes, while French economy minister Christine Lagarde said bonus taxes were more effective than the American solution. The British Treasury said the United States had problems which were uniquely its own and required a different plan. "The U.S. government expects to lose more than $100 billion from its intervention to deal with troubled assets. It is right they take steps to recoup the cost of their interventions, taking account of their own domestic financial and political situation," A British Treasury spokesman said.

Infrastructure cuts 'threaten UK quality of life'
Britain must maintain its investment in new infrastructure projects, despite the mounting national debt, or face an energy crisis, the Institution of Civil Engineers (ICE) has warned. In a report, "Manifesto for UK Infrastructure", the ICE insists that the Government must press ahead with key projects, such as Crossrail, the expansion of nuclear energy, and high-speed rail links, to drive a recovery in the economy and quality of life. It also calls for "urgent action" to prepare for a predicted shortfall in electrical power generation capacity from 2016 – potentially through improving insulation in homes and substantially increasing the UK's gas storage capacity.
Britain's budget deficit has soared to almost £200bn and the country has been warned it must reduce its national debt or face the loss of the precious Triple-A credit rating. However, the ICE says long-term infrastructure schemes must not be sacrificed and expressed its concern at the "debate and uncertainty" about the financing of projects in the recession.

It has proposed the introduction of a UK National Infrastructure Investment Bank as a way of attracting private capital to support the estimated £400bn needed for new and refurbished infrastructure by 2020. The ICE also wants the planning system made quicker, but supports the introduction of new state body Infrastructure UK, announced in the pre-Budget report, to deliver projects. Tom Foulkes, director-general, said: "This is not just for the benefit of industry and the economy, but for the benefit of society as a whole – our quality of life depends on infrastructure."

US cult of greed is now a global environmental threat
The average American consumes more than his or her weight in products each day, fuelling a global culture of excess that is emerging as the biggest threat to the planet, according to a report published today. In its annual report, Worldwatch Institute says the cult of consumption and greed could wipe out any gains from government action on climate change or a shift to a clean energy economy. Erik Assadourian, the project director who led a team of 35 behind the report, said: "Until we recognise that our environmental problems, from climate change to deforestation to species loss, are driven by unsustainable habits, we will not be able to solve the ecological crises that threaten to wash over civilisation."

The world's population is burning through the planet's resources at a reckless rate, the US thinktank said. In the last decade, consumption of goods and services rose 28% to $30.5tn (£18.8tn). The consumer culture is no longer a mostly American habit but is spreading across the planet. Over the last 50 years, excess has been adopted as a symbol of success in developing countries from Brazil to India to China, the report said. China this week overtook the US as the world's top car market. It is already the biggest producer of greenhouse gas emissions.

Such trends were not a natural consequence of economic growth, the report said, but the result of deliberate efforts by businesses to win over consumers. Products such as the hamburger – dismissed as an unwholesome food for the poor at the beginning of the 20th century – and bottled water are now commonplace. The average western family spends more on their pet than is spent by a human in Bangladesh. The report did note encouraging signs of a shift away from the high spend culture. It said school meals programmes marked greater efforts to encourage healthier eating habits among children. The younger generation was also more aware of their impact on the environment.

There has to be a wholesale transformation of values and attitudes, the report said. At current rates of consumption, the world needs to erect 24 wind turbines an hour to produce enough energy to replace fossil fuel. "We've seen some encouraging efforts to combat the world's climate crisis in the past few years," said Assadourian. "But making policy and technology changes while keeping cultures centred on consumerism and growth can only go so far. "If we don't shift our very culture there will be new crises we have to face. Ultimately, consumerism is not going to be viable as the world population grows by 2bn and as more countries grow in economic power."

In the preface to the report, Worldwatch Institute's president, Christopher Flavin, writes: "As the world struggles to recover from the most serious global economic crisis since the Great Depression, we have an unprecedented opportunity to turn away from consumerism. In the end, the human instinct for survival must triumph over the urge to consume at any cost."

Arctic permafrost leaking methane at record levels
Experts say methane emissions from the Arctic have risen by almost one-third in just five years, and that sharply rising temperatures are to blame

Scientists have recorded a massive spike in the amount of a powerful greenhouse gas seeping from Arctic permafrost, in a discovery that highlights the risks of a dangerous climate tipping point.
Experts say methane emissions from the Arctic have risen by almost one-third in just five years, and that sharply rising temperatures are to blame.

The discovery follows a string of reports from the region in recent years that previously frozen boggy soils are melting and releasing methane in greater quantities. Such Arctic soils currently lock away billions of tonnes of methane, a far more potent greenhouse gas than carbon dioxide, leading some scientists to describe melting permafrost as a ticking time bomb that could overwhelm efforts to tackle climate change.

They fear the warming caused by increased methane emissions will itself release yet more methane and lock the region into a destructive cycle that forces temperatures to rise faster than predicted. Paul Palmer, a scientist at Edinburgh University who worked on the new study, said: "High latitude wetlands are currently only a small source of methane but for these emissions to increase by a third in just five years is very significant. It shows that even a relatively small amount of warming can cause a large increase in the amount of methane emissions."

Global warming is occuring twice as fast in the Arctic than anywhere else on Earth. Some regions have already warmed by 2.5C, and temperatures there are projected to increase by more than 10C by 2100 if carbon emissions continue to rise at current rates. Palmer said: "This study does not show the Arctic has passed a tipping point, but it should open people's eyes. It shows there is a positive feedback and that higher temperatures bring higher emissions and faster warming."

The change in the Arctic is enough to explain a recent increase in global methane levels in the atmosphere, he said. Global levels have risen steadily since 2007, after a decade or so holding steady. The new study, published in the journal Science, shows that methane emissions from the Arctic increased by 31% from 2003-07. The increase represents about 1m extra tonnes of methane each year. Palmer cautioned that the five-year increase was too short to call a definitive trend.

The findings are part of a wider study of methane emissions from global wetlands, such as paddy fields, marshes and bogs. To identify where methane was released, the researchers combined methane levels in the atmosphere with surface temperature changes. They did not measure methane emissions directly, but used satellite measurements of variations in groundwater depth, which alter the way bacteria break down organic matter to release or consume methane.

They found that just over half of all methane emissions came from the tropics, with some 20m tonnes released from the Amazon river basin each year, and 26m tonnes from the Congo basin. Rice paddy fields across China and south and south-east Asia produced just under one-third of global methane, some 33m tonnes. Just 2% of global methane comes from Arctic latitudes, the study found, though the region showed the largest increases. The 31% rise in methane emissions there from 2003-07 was enough to help lift the global average increase to 7%.

Palmer said: "Our study reinforces the idea that satellites can pinpoint changes in the amount of greenhouse gases emitted from a particular place on earth. This opens the door to quantifying greenhouse gas emissions made from a variety of natural and man-made sources." Palmer said it was a "disgrace" that so few satellites were launched to monitor levels of greenhouse gases such as carbon dioxide and methane. He said it was unclear whether the team would be able to continue the methane monitoring in future. The pair of satellites used to analyse water, known as Grace, are already over their expected mission life time, while a European version launched last year, called Goce, is scheduled to fly for less than two years.

The new study follows repeated warnings that even modest levels of global warming could trigger huge increases in methane release from permafrost. Phillipe Ciais, a researcher with the Laboratory for Climate Sciences and the Environment in Gif-sur-Yvette, France, told a scientific meeting in Copenhagen last March that billions of tonnes could be released by just a 2C average global rise.

More on methane
While carbon dioxide gets most of the attention in the global warming debate, methane is pound-for-pound a more potent greenhouse gas, capable of trapping some 20 times more heat than CO2. Although methane is present in much lower quantities in the atmosphere, its potency makes it responsible for about one-fifth of man-made warming. The gas is found in natural gas deposits and is generated naturally by bacteria that break down organic matter, such as in the guts of farm animal. About two-thirds of global methane comes from man-made sources, and levels have more than doubled since the industrial revolution.

Unlike carbon dioxide, methane lasts only a decade or so in the atmosphere, which has led some experts to call for greater attention to curbs on its production. Reductions in methane emissions could bring faster results in the fight against climate change, they say.

Possibly all the way to zero
by Nathan Martin

Next I want to quote Dr. Robert McHugh from his email update last night, I think he has some very interesting things to say. What he is saying is shocking relative to what the masses are being spooned. I respect his work immensely, he bases his findings on fact and sound logic:
I find it astonishing that ten years later, to the day, the Dow Industrials sit precisely 1,000 points under that closing top level from 2000. That closing top was 11,722.98. The intraday high today, Thursday, January 14th, 2010, and the high for the rally from March 9th, 2009, was 10,723.77. This is astonishing for the obvious reason that they sit an even 1,000 points apart. But, also astonishing is that after ten years, and after the quadrupling of the money supply, the Industrials are down 8.5 percent. Add to that, investment advisor bullish sentiment is currently at an extreme high. Why? Makes no sense. Because a propaganda machine called Wall Street has absolutely snookered the masses, has convinced, maybe even controlled, the Treasury and Fed into policies that the economy is Wall Street, not Main Street.

We believe the third major top of the past decade is imminent. Maybe it happened today. Maybe it comes in two weeks, maybe at our next phi mate turn date in February. The key here is not to pick the exact top. This top will lead to a stock market decline that could be far worse than the past two of the 2000 millenium. The first major decline started on January 14th, 2000, and bottomed October 9th, 2002, a 38 percent plunge. The second major top started on October 9th, 2007 at 14,164.53 (closing basis) and plunged to the March 9th, 2009 bottom at 6,547.05, a 54 percent plunge. The next plunge should start soon and lead to a decline over the next 2 to 4 years, possibly all the way to zero, in stair step fashion, not all at once. The massive Bearish Head & Shoulders tops forming all over the world suggest this downside target, and relentless decline, will accompany world-wide calamity.

Major tops usually are slow, rounded affairs. Prices move slowly into tops, and roll slowly out of them initially. Then prices start to accelerate lower, bounce back a significant portion of the initial loss, then fall hard.

For the year 2009, Commerce reported that Retail Sales fell 6.2 percent versus 2008. This was the largest annual decline in Revenue since government records were started back in 1992, by a mile. The only other year a decline occurred was 2008, down 0.5 percent. This is not evidence of a recovering economy, but rather of a faltering one.

I would not ignore this man’s work. His technicals underscore what I’ve been saying about debt saturation and how we are running out of places to force more debt into the system. In the beginning, the numbers compound slowly, but as you are nearing the end they compound faster and faster. We are seeing that now rocketing from the billions into the trillions. What should you do? Perhaps consider a little silver, gun blue, and gold? That or just try to run with the pack, LOL… Seriously, it’s time to be careful.

Crawford predicts mid-year massacre
Was Wednesday's rebound in the stars? Well, maybe a mid-year massacre is, too.

Let the record show that Arch Crawford's Crawford Perspectives, published January 11, contained this comment:

"JAN 13 = Saturn retrogrades but Venus & Sun aspects to Uranus bring exciting social changes. Maybe better or more stable markets."

Yes, yes, it's an astrology letter. But he was right, wasn't he?

Crawford's comments on the rest of the month:

"JAN 17-18 = Jupiter and Venus change signs = More likely another positive pop upside, which could finish a top formation near term."

"FROM JAN 25 = Many minor negatives, markets drifting or lower."

"JAN 29-31 = There are some hair-raising negatives, including a full moon conjoining Mars (God of WAR!) and Saturn square Pluto! This combination could bring more negative economic stats, and real possibilities for more war and/or terrorism."

Worrying -- but nothing compared to Crawford's discussion of the entire year, which he heads: "ANOTHER MAJOR CRASH?! BUT NOT RIGHT AWAY."

Note Crawford's query. That's reassuring, isn't it?

He writes: "The year ahead appears to us to contain the most powerful planetary alignments in centuries, not just decades. These are likely to change the world as we know it in ways that we can see only through a glass, darkly."

"It would be considered a 'done deal' or a high probability that world markets will crash again during 2010. The point of greatest exactitude of the general 'meanness' will show itself in late July and early August. During that period Mars will conjoin Saturn, both opposing Jupiter conjoining Uranus (you can joke all you want, but THIS is no laughing matter). Pluto will form a square angle to all four, making a T-Square pattern of extreme animosity."

"We will do everything but guarantee you that stocks will crash worldwide within three months of August first (that is between May 1 and November 1). It is expected that technical market analysis of data generated by current market action will assist in pinpointing most danger/opportunity as critical moments approach. The fate of the world is in the balance!"

Crawford is a veteran of the investment letter wars and offers a lot of more conventional analysis too, although he's unusually astrological this month. And he has this going for him: He triumphantly avoided the Crash of 2008. (See Jan. 9, 2009, column.)

It wasn't simply a flash in the pan. Over the past three years, the letter is up an annualized 8.17% by Hulbert Financial Digest count compared to a negative 5.25% annualized for the dividend-reinvested Wilshire 5000 Total Stock Market Index.

Crawford's given back some ground more recently -- over the past 12 months, the letter was down 9.96% against a 28.3% gain for the total return Wilshire 5000. And over a long career, he's had ups and downs. But avoiding the Crash of 2008 was the kind of up that has to earn him attention now.

Crawford is also radical in a more conventional way (if you see what I mean). Like what seems to be a growing number of investment letters, he believes that financial markets are being systematically manipulated by what he calls "a consortium of broker-dealers, or hedge funds, or our government." He says: "It is our considered opinion that the Federal Reserve has been using off-balance-sheet transactions to finance the manipulation of our stock markets, and perhaps others."

This radicalism inevitably appears more credible after the extraordinary government interventions of late 2008. Crawford also thinks it can't last.

He writes: "Gold has been putting in credible strength against a wide range of international currencies. We project that before this major economic dislocation is done, nations and currencies will fall and chaos reign, not limited to a few borderline cases from the emerging sectors."


scandia said...

@ Ilargi...such a colourful metaphor!
" Greece became a full patch EU member..." LOL

Bigelow said...

Place your bets.

UltraShort Euro ProShares (EUO)
UltraShort Yen ProShares (YCS)

snuffy said...

The comments by Rogers about food shortages are enough to increase sales to a few of the emergency supply companies...And widen my eyes: that a guy who is a regular on CNBC is sounding real dye-in-the-wool doomer....Hmmm.
Those hearings are for the rubes...good theater,may be a "crook"gets told to take one for the team,but the culture will continue,the looting will continue,until....
{we are like a grasshopper in a spiders web,well wrapped,not a damned thing to do till they decide when to have lunch.]
They could arrest every made man from gold-in-sacks and remove them from the administration,and drop them in gitmo with a charge of domestic treason ......Yes, I agree it will never happen.But short of that they intend to ride this pony 'till it drops dead.And America with it.

Its starting to look like we will get to see what would have happened to America if Roosevelt had be deposed by Gen.Smedly Butler.The sons and grandsons of those same plutocrats are the ones forming our new aristocracy,those you will never see,and never know about,as the truly wealthy keep a real low profile,especially in the type of place America is about to become.
Our gentle hosts keep a steady stream of hard news that is being ignored by most of the transfixed by the catastrophic events in Port-a-Prince.Interesting...around 300-400 years ago they had the same type of event,only it was the local pirates who paid the Ferryman that time,supposedly,due to their wicked ways.....If it was not tragic events,our would find another bit of fluff,another tiger woods moment to keep our attention away from the 3-ring circus going on behind the curtain.
My continued belief that external events will trigger a cascading monetary event here is continually re-enforced by the warnings of sovereign debt failure.

One of the considerations,besides enslaving the rest of the world,was to integrate every nation so tightly into the rest of the world was to preclude the world from ever rolling into another world war...if the rice you eat is coming from the same place your having problems with the tendency is to try and settle problems w/o war...or so went the theory

We are about to find out if that is true when the Chinese say,oh,I dont know,maybe they decide they want Hawaii,AND Alaska for the debt we owe them...

Would we be in a position to say no?

We have some strange times ahead of us...most likely weirder than we can imagine..


Starcade said...

Something I had to respond to from Karl:

"WE (the people} HAVE RIGHTS"??

No, we do not. That's the whole point: The only thing retaining order is the fact that the people believe they have rights.

When the truth finally comes clear, blood will flow.

What is in Haiti now will be in the US in the short to medium-term... How much longer? How long can they continue to lie through their freaking teeth??

Unknown said...

Snuffy: good point.

I've never understood why we have countries when the probability of a civil war is much smaller than the probability of a normal war.

Perhaps someone makes a good profit off war?

Ah. Oneness doesn't produce profits.

VK said...

@ IM Nobody

People far less worthy than Joe Six-pack have more than once been handed an imperial sceptre.

How would you define worthiness? I meant that people usually of higher status obtain power. And that status is secured either through means of fear eg Saddam Hussein, Stalin or through the idea that the leader is near god-like eg Roman, Incan, Mayan, Chinese emperors etc. Even in present day America, Obama has a soaring rhetoric, meant to create transcendence and aura of 'emperor' around him.

In America plenty of myths abound about how you too can get ahead and be rich. What no one says is that life is fractal, the chances of becoming the next google is 1 in 10,000 or more but the idea that if you work hard you can make it, is so entrenched, it has become a pathological irrationalism. Civilizations are structured around hierarchy, only 1% can be the elite or less. There must be a large supply of people, usually 50-60% who must be poor and work for the elites.

BTW it's not that the elite actually plan all of this out, life is fractal, it happens in all civilized societies, that a few somehow obtain nearly everything. So I would loathe to put a conspiracy label on it. I think addiction to power, self preservation and power as the greatest aphrodisiac serve as powerful incentives to the elites and those who aspire to be like them.

Edison, Ford, Rockefeller, JP Morgan, the Rothschilds, Carnegie, Buffett etc are names we all recognize as the pinnacle of wealth and the American wealth dream. Yet how many people will be like them of the millions upon millions who have read about them? Not even one IMO. But the message society sends out is one of the desire of success. That's the cultural message and it's a powerful driver.

Women desire successful men. Everyone loves ambition, they'll even admire those who tried and failed but they will be particularly angry at the fellow who seeks and desires nothing - he's seen as a cultural loser.

Anyway I lost my chain of thought around here - losing brain power rapidly here and at 23 only. Sigh.

I think I was trying to connect civilization, biological drivers of human behaviour and cultural factors that create hierarchy and the need to aspire to something and follow someone who is 'higher' then ourselves as it becomes an engrained myth & legend.

There was this French King, I forget his name, who was a nice fellow, wore only suits though and hung out with banker chaps such as the Rothschilds. Poor fellow wanted to help France but he lost support amongst the people as they saw him as too like them, too common. One of the Rothschilds even scolded him in public for coming late for a train departure. This really angered the public at him and they drove him out of power and gave power to the nephew of Napoleon just because he was the nephew of Napoleon. (This from the 48 laws of power and no I didn't buy the book, was given to me as a gift, sheesh!)

If I ever remember what I wanted to post cohesively, I shall do so.

alex_uk said...

Britain’s unsavoury debt mire
...However, if McKinsey consultants are to be believed, the real leverage giant – at least among the big western economies – is actually the UK. After crunching the data, McKinsey estimates that the gross level of British private and public debt is now 449 per cent of GDP – up from 350 per cent at the start of the decade..

UK are Champions again! The other things that the UK lead are in teenage pregnancies and binge (alcohol) drinking.

The questions that some people are asking now is what does a sovereign default look ride?
E.g. Would state employees still be paid?
Would bank savings be nominally safe?
Would National Savings deposits?
Would daily life for most (working, shopping at the supermarket, etc) continue as usual?
How would it affect inflation and interest rates?
Thanks in advance.

APC said...

Ilargi wrote:

"Greece has existed in its present form only since 1975. Before that it was a military dictatorship for ten years (the colonels regime, supported by the US in fine shock doctrine fashion), and before that, well, let’s just say it was a country that gave birth to a dictatorship.


Greece became a full patch EU member in 1981, only 6 years after the colonels had left. But of course the entire structure beneath the top remained intact..."

Yes, and imagine the baggage eastern europe brought with it in its ascent to european membership. A monetary union without institutional reform. Wow! How long can that sorta thing last?

Fuser said...


Your post reminds me of something Che Guevara said:

"The laws of capitalism, blind and invisible to the majority, act upon the individual without his thinking about it. He sees only the vastness of a seemingly infinite horizon before him. That is how it is painted by capitalist propagandists, who purport to draw a lesson from the example of Rockefeller — whether or not it is true — about the possibilities of success. The amount of poverty and suffering required for the emergence of a Rockefeller, and the amount of depravity that the accumulation of a fortune of such magnitude entails, are left out of the picture, and it is not always possible to make the people in general see this."

Great intro, plus I wanted to check in. -everyday reader

Phlogiston Água de Beber said...


Now that's why I want you in here posting. Don't worry about the brain thing, happens to me all the time.

As to leader worthiness, I'm sure there must be many examples that I know nothing about. One situation that comes to mind is the period in Roman decline when the barbarian general Flavius Ricimer, who being germanic was ineligible to be emperor, installed a succession of bootlickers on the throne. Ricimer was the man with the power, but still the Emperor was the "leader" with the associated status.

I think we see much the same thing playing out in recent years here in Usanistan. Since his installation as our "leader" Obama has said and done almost exactly what Bush said and did. In terms of personality, intellect, heritage and cultural background they couldn't be more different. So, how does it happen that nothing has changed. To me it spells a Ricimer somewhere in the woodpile.

You seem to have gone to some trouble to convince me/us that a decent civilization requires oligarchy. I completely agree. I have previously cited a work by Robert Michels, available as a PDF here,
in which he claims that creation of almost any organization will bring an oligarchy into existence.

The problem is that the oligarchs rather quickly figure out that it's in their interest to look out for their interests first. Inevitably, those interests diverge and things begin to break down. That pattern is readily discernible in recent Usanistani history. The current empire is doomed.

Lindsay said...

VK said:
"Women desire successful men. Everyone loves ambition, they'll even admire those who tried and failed but they will be particularly angry at the fellow who seeks and desires nothing - he's seen as a cultural loser."

Speak for yourself please. I find this generalisation pretty insulting. And I was so enjoying the rest of what you had to say.

Will said...

Here's the recruiting trailer my son saw at the movie theatre last night...

Worth a view. Seriously.

Ilargi said...


VK was indeed speaking for himself. More than you realized. Read that quote again, I suggest.

mikel paul said...

I was gonna say something about the evidence that CO2 'follows' temp since I find historical data a good place to begin to build a case.
But alas, as we seem to be giving hall passes to those who have cooked our economic books, admitted it and then been told to well, isn't surprising to me that when it comes to mother nature herself, scientists in large numbers are doing the same thing by way of their lovely models.
'What if' is now the truth?


justaguy said...

I am torn between liking the look of the new "TAE" banner, or chilled by its obvious ...... barranness. Sign to come, I guess?

Phlogiston Água de Beber said...


I have learned over too many years that insults are easy to find if one is looking for them and sufficiently open to feeling insulted. This is especially true on the internet. I know that I run a risk of causing you to feel insulted just by writing this. I invite even implore you not to let that happen.

As he (actually I haven't reached a firm conclusion on VK's gender) said above (s)he's only 23. Generalizations come rather easily to 23 year olds of both genders, as best I can remember. I seriously doubt any insult was intended. When we are struggling to make a point we often add an argument that probably should be left off.

We have produced over 6 billion humans and I know for a fact we come in all kinds. I have met women that wouldn't have anything to do with ambitious men and vice versa. I have also known people of both sexes that wouldn't dream of marrying someone that didn't make at least as much as themselves. Sometimes ambition, wealth, power or even looks have little or nothing to do with it. Two people may just look at each other and say to themselves, "yeah that's the one".

I'm glad you liked the rest of what VK had to say, because VK is one of the gems here. I hope that you have something more to say. The female segment of the commentariat here has contributed very useful thoughts, IMHO.

zander said...

@ alex tring

I think some major UK cities have notable top ten places in the stabbing league as well.
Can't even imagine how a UK default will eventually pan out, but you have to assume your first five questions are probable nos.
Im meet different members of joe public every day and there has most definitely been a mood swing since year turn, almost all my clients expect a nasty shock anytime soon without actually knowing what's coming, thats quite a sea change from the mood going into the festive period, however the shock of such an unexpected severe weather pattern may have contributed to this with the stories of gas shortages, true or not, doing the rounds.
I've been out of HBOS since sept 09 and am currently with co-op who were, to my knowledge, the only UK bank NOT to receive, indeed need, bailout cash, they are notoriously prudent, and as tight as a gnats chuff when it comes to lending.
You gotta tick every box with them, however in the event of a big enough monetary collpse whether or not even they would remain untouched is a great unknowable.
They are easily the safest bet though IMO.


Lindsay said...

I.M Nobody, your calm and measured way of expressing yourself, and the consolation you gave me another time on this forum, means I could never be insulted by what you had to say. In general, I'm actually quite a fan of VK as well.

Sure, I am especially sensitive to perceiving sexism. I think I have valid reasons for that tendency. Let's drop the discussion of feminism here though, and not go into it :)

Ilargi said...

"I am torn between liking the look of the new "TAE" banner, or chilled by its obvious ...... barranness. "

I just wanted some peace on my eyes, and a bit more neutrality overall. I want a lot more too, but I would need a programmer to do most of it.

Still, I was going to say, if you look well, the mountains of the original banner are there.

And that in turn reminded me (or, more accurately, made me think about it for the first time), that TAE will have its 2nd anniversary on January 22.

Wonder what Stoneleigh will be doing that day. She'll be somewhere out west, that I know.

If anyone still hasn't signed up to meet her who live over there, Vancouver, Portland, Seattle, I'd say do so fast, I happen to know she's prepared a lecture like you've never seen before, and you may never see again.

Seriously, I doubt there's anyone on the planet who can do the big picture better than Stoneleigh can. I haven't seen any. Jim Kunstler may be more entertaining, but I'm sure he'd be the first to confirm my opinion if he'd see her speak.

Don't miss it, people.


Shamba said...

Ilargi, Thanks for changing the banner. I got awfully tired of looking at those red-orange palm trees.

Also, is it possible that you will have Stoneleigh's out-west presentation typed in nice form for us to read here?

zander said...


will stoneleigh's lecture be captured in any form?
Pretty difficult to get there from Scotland :)


Rototillerman said...

I've booked a venue for Stoneleigh's Portland presentation:

Hopefully I've done an OK job describing a presentation that I've never seen :)

thethirdcoast said...

@ Will:

That recruiting ad is ridiculous.

It would appear that someone at the Pentagon has been watching and assimilating a lot of the in-film ads from the "Starship Troopers" series of films.

ogardener said...

Hi Everyone.

The Shaman sent me this today.

Don't wanna focus on doom too much.


Greenpa said...

I'll second Ilargi there- don't miss it.

When Stoneleigh and I met a month or so ago (and yes, we had wonderful conversations) I made a suggestion to her which I will reiterate here:

You should charge people to attend this meeting.

Why? a) so you guys don't go broke; b) so the attendees will pay much closer attention to what is said, and c) so that you will reach MANY more people.

It's late for arrangements this time; but the pattern is one that could happen repeatedly-

Those who know TAE are dedicated and willing to travel several hundred miles to meet; when the opportunity occurs.

Some of those same folks have local networks they could plug into "hey, there's this person coming; you should meet her- it's just $20 for the event. You should get the word out on your listserve..."

It's not likely, yet, that this will result in traffic jams and over-capacity crowds the police have to come for- but it could easily turn a meeting from 10 great folks to - 20 great folks. From different spheres, forsooth.

It is an ancient and well understood principle of marketing/teaching/herding- if you charge nothing for your wisdom- that's what 99% of the audience will value it at.

Just charging ANYTHING puts it into a different realm.

The story I told Stoneleigh; when I was learning how to teach self-hypnosis, my teacher strictly abjured me: "Never, ever- EVER teach for free. Charge them $5; if you want; but never for free. They won't listen; they won't practice; none of them will ever develop it as a personal tool- and your time will have been totally wasted. Don't."

Of course- I had to test that, and prove it for myself, and of course, not to my surprise, my teacher was 100% correct. Maybe 120%.

Think about it. In my opinion; it's just more effective.

Incidentally, it's only taken me 30 years or so for this to sink in...

VK said...

@ IM Nobody & Lindsay

I am indeed a 'He'. My comment was not clear enough and frankly right now I've forgotten what I wanted to say initially even.

The comment was not meant to be sexist, just general (I think.) Females look for fitness indicators in Males and vice versa and these are indicated by height, wealth, physical appearance - symmetry, ambition, personality, physical fitness etc.

Things such as wealth play a key role in sexuality, I recently read that women orgasm more as their partners wealth and status increase as a means to keep them loyal. There are lots of subtle, subconscious things happening when men and women interact that humans generally miss at a conscious level,when humans interact face to face, about 7% of communication is done by speaking, 40 odd % by voice tone and the rest by body posture for eg standing upright shows confidence, slouching shows a lack of it or general resignation.

All pleasure has function, even though we don't realize it. If something causes you pleasure - it's evolved and hence there for a reason for e.g. we love fatty foods as we evolved in times when such foods were scarce and hence our body stores them really, really well (even though we don't like it). During the act of oral sex, the body is unconsciously testing for health, disease and fitness via taste, smell and other stuff we have no idea about.

I reckon human behaviour is sort of designed around 3 main principles

1) The acquisition of status via wealth and resources.
2) The desire for attention given that we are a social species.
3) The deep desire for approval, to fit in within our group.

These are sort of inbuilt into our core, maximising relative status, attention and approval leads to a greater level of mate selection, power, fame, wealth and all that jazz.

Not all men/women are status seeking to the same extent, genes place their bets and depending on the environment, some pass, some don't through the sieve of natural and sexual selection. The ratio of alpha to beta males is about 1:1, so while alpha males are dominating, testosterone driven and very sexually aggressive. Beta males are more nurturing and seek longer term relations. If there is an imbalance, it would lead to chaos. Imagine if all men were macho or totally sensitive?

Sigh, I've once again lost my chain of thoughts. Oh well, next time.

Greenpa said...

pssssssst. VK. between thee, and me- since no one else is listening- your generalization is generally broadly entirely correct; as biology.

However- be aware- many academic careers have ended in flames when some poor dolt extrapolated what we know from biology to "humans". Humans, you know are definitely NOT animals.

In current mythos; including academia.


Hombre said...

VK, you're a brilliant guy but you surely are good at digging youself into a hole as well.


Gender relations are about as predictable as the weather... and sometimes just as volatile!

As Kunstler would say...

gylangirl said...

Women desire successful men.

- Spoken most often by men unsuccessful in love.

A typical response upon hearing from a woman that he [or another man] has insulted a woman with a sexist remark: "your hurt feelings are not valid therefore I do not owe you an apology but we shall extract one from you for your having expressing your hurt feelings."

Said apology having been dutifully delivered by the woman rather than by the man, one could deduce that "men prefer women who hide their true feelings/ men prefer women who are just seen and not heard/ who pretend to be dumb and blonde/ etc".

The message is also very clear to women that men want women to contribute to blogs as long as they don't share anything from a woman's point of view, such as indicating when men insult women with sexist remarks, intended or not.

Rule established: Sexist insults are permitted against women. Women's pointing out sexism is not permitted. Then they wonder why so few women contribute on the blogs.

Wyote said...

2010. 1-15. three bank failures to clean-up.
Est. cost to FDIC = $296.3 million.

Lindsay said...

Hi VK,

Evolutionary psychology is a fascinating subject, but as a field of research has so far been quite poor and has yielded little of interest. Two things:

1. I'm not sure where you have read about the correlation between women's orgasm and their male partners' wealth, but since you haven't gone into detail my BS meter is quite alert with this one. If you read it in a non-academic journal or newspaper, be aware that MSM reporting of scientific research is about as misleading as their economics reporting. Also, if you did get it from an academic source, be sure to check any published critiques before you buy into it. It reminds me a lot of the popular evolutionary psych idea that men are attracted to a waist-to-hip ratio, of 0.7 I think it is, in women. This has in fact been published in academic journals, but has also been shot throughly down in other academic critiques. So basically, be wary.

2."it's evolved and hence there for a reason" - be careful here. There are some traits that have evolved as a byproduct of the evolution of some other trait, rather than a direct product of adaptive selection. The term that Stephen Jay Gould gave to this is "spandrels". For example, nipples on male mammals. They do not serve a direct evolutionary purpose, they are there indirectly, because of how fetuses develop in the womb (ie along a female track at first), and females need them to feed their young.

There is (a quite convincing, I think) argument that orgasms in women are in fact 'spandrels' too - men need to orgasm to procreate but women don't. Actually a significant portion of women never orgasm ever. The fact that women can may also be a result of our shared physiology, rather than it having a direct evolutionary purpose.

gylangirl said...

women orgasm more as their partners wealth and status increase as a means to keep them loyal

more proof that vk doesn't know jack about women's orgasms.

jal said...

@ VK
Dig deeper!

Why are we on earth/living?

Not for that American Dream/Nightmare.
(don’t go religious!)

Think through the following observation ...

ALL life seek minimum energy output for their required energy input.
Therefore, there is preying and consuming of those forms of life that are capable of supply our energy needs without having us do the foraging ourselves. (efficiency)
ALl forms of life clone themselves or reproduce in an attempt to continue the cycle.

“.... minimum energy output for their required energy input...”

Being in command of wealth and power is a form of minimizing energy output to meet your energy input.

Had a great meeting with Stoneleigh.


New Doomer said...


How do I get the info to meet Stoneleigh. I am in Vancouver

Bukko Boomeranger said...

I don't know how Stoneleigh's lecture will be (and it's on an island in the middle of the Georgia Strait, so I probably won't get to see it) but she gave some illuminating mini-lessons at the TAE nosh today. Pity that more people were not there -- just JAL, Reuben and his partner, plus me and Mrs. Bukko.

Everyone was like the smartest kid in the class, without being showy about it. And nobody pulled any "my doomstead is better-fortified than your doomstead" stuff. But then, everyone else (save Stoneleigh and me) was Canadian. Canucks are so mannerly that they would probably say "Excuse me" before shooting you for trying to steal their stash of survival oats after the apocalypse.

Anyway, I bet the Pac Northwest Americanos will have an erudite time at your get-together there. I would suggest giving Stoneleigh your cellphone numbers to alert you in case she's running late again.

Eric Lilius said...

Ilargi said:

"I happen to know she's prepared a lecture like you've never seen before, and you may never see again."

Any chance Stoneleigh will record this lecture?


Ilargi said...

What Stoneleigh will do with her lecture, like publish it or something, I honestly don't know.

New doomer, write to TheAutomaticEarth •at• Gmail •dot• com.

Ilargi said...

And that goes for everyone who'd like to attend one of Stoneleigh's presentations, BC or Washington State, write to TheAutomaticEarth •at• Gmail •dot• com.

Ilargi said...


Argentina seems a good example for a sovereign default. Slums building around cities, that sort of thing.

Would state employees still be paid?
Not all, and not the same money. Both the number of workers and their nominal pay will fall, likely by a lot, many services will no longer be available.

Would bank savings be nominally safe?
I would doubt that. I think Argentina confiscated all dollar holdings and changed them to (new) peso's, and people could access just $100 a week (?!)

Would National Savings deposits?
Not very likely.

Would daily life for most (working, shopping at the supermarket, etc) continue as usual?
Much would disappear, food availability would suffer greatly.

How would it affect inflation and interest rates?
The general point is that, in effect, a new currency was launched in Argentina (greatly devalued). I'm sure that wiped out much in the way of savings deposits as well. If the new currency gives you a new pound for each old pound, but the new one is worth just 10% of the old one, much is lost.

Inflation and interest could be very erratic initially, as in the first five years.

But Argentina did all this in a world that otherwise largely functioned. Going forward, we may see a dozen countries failing at the same time. And it's a bit everybody's guess from there on in.


alex_uk said...


Thanks for your comments.


zander said...


what about capturing the lecture and putting it up on site (downloadable)for Regular TAEr's for a fee -re Greenpa's Idea-, giving you guys much needed and deserved xtra revenue.
dont know if this is poss. just a thought.


VK said...

@ Lindsay

I guess more research needs to be done, the scientific paper showing correlation between female orgasm and wealth levels is here (PDF Warning).

I will politely disagree with you and still say that all pleasure has function. I didn't say all organs have a function, merely pleasure.

Why are we predisposed to enjoying sex, salt, fine foods and wine? How many people exist that don't enjoy sex, salt, food, alcohol etc? Their reproductive success would be limited IMO.

For more I defer you to books such as Matt Ridley's the Red Queen, The Mating Mind by Geoffrey Miller, The Selfish Gene by Richard Dawkins and Robin Baker's book Sperm Wars which delves very deeply into the topic of orgasms, about 99% of a man's sperm are killer and blocker sperm and only 1% are used to fertilize the ovum. Essentially most of a man's sperm is designed to compete with those of another man.

At a purely biological level women encourage men to compete for them and as they say, "let the best man win"

I'll pull a quote from Sperm Wars, which is backed by a large body of scientific research.

"On average, about 10 per cent of children are not sired by their supposed father. Some men, however, have a higher chance of being deceived in this way than others — and it is those of low wealth and status who fare worst. Actual figures range from 1 per cent in high-status areas of Switzerland and the USA, through 5-6 per cent for moderate-status males in Britain and the USA, to 10-30 per cent for lower-status males in Britain, France and the USA.

Moreover, the men most likely to sexually hoodwink the lower-status males are men of higher status. Anthropological studies have shown precisely the same pattern. Men of higher wealth and status obtain partners earlier, start to reproduce earlier, are less likely to have their partners impregnated by other men and are more likely to do exactly that to other males. So in all ways, men of wealth and status have the potential to be reproductively more successful than their lower-status contemporaries."

There's a reason men want to be rich. And there's a reason we have a grow or (and?) die economic system.

Hombre said...

Ilargi 5:07 - Curious, for a value hedge... how expedient would it have been for an Argentine to have stashed some PM's during this crisis? (assuming it was possible for them to do so.)

Gender discussion... SCOOP! not all men and women are alike! I only know how I think, not other men, and certainly not other women.
And anyway, I have to wonder to what extent our "awareness" has to do (is focused by) our physical body. ?

Anonymous said...

VK, very interesting, but one problem with your conclusion that stands out, "There's a reason men want to be rich. And there's a reason we have a grow or (and?) die economic system."

Globally, one-quarter to one-third of all families are headed by single mothers, calling into question the normativeness of couple headed families. Developed countries, in particular, are experiencing an increase in single-parent families as divorce becomes more common. The United States has the highest percentage of single-parent families (34% in 1998) among developed countries, followed by Canada (22%), Australia (20%), and Denmark (19%). In developing countries, divorce is not as common, but desertion, death, and imprisonment produce single-parent families, primarily headed by women (Kinnear 1999). Rates vary country to country from a low of less than 5 percent in Kuwait to a high of over 40 percent in Botswana and Barbados. In countries such as Ghana, Kenya, Rwanda, Cuba, Puerto Rico, Trinidad, and Tobago more than 25 percent of households are headed by women.
Demographic Trends

The increase in affluence and power that occurs as nations 'develop' leaves behind increasing numbers of women and children struggling alone against poverty.

Orgasms aside, single mothers generally define their own personal well-being in terms of the well-being of their offspring. In the United States, approximately half of the children living in poverty are in single parent homes (42% of children in single parent homes live in poverty).

Does that mean that as a society's economy grows, the role of men shifts from that of co-provider for the children to mere sperm donor?

At the risk of sounding flippant, perhaps the competition should be extended beyond the mating ritual? As in --which males stick around longer? Surely not the ones doing the least amount possible for their own personal survival.

bluebird said...

Building on Alex's questions above and reading previous Automatic Earths, I know it is important to keep some cash safely at home. Is it enough to have cash to pay bills for 5 years? Or what would happen, if in 3 years, the dollar is devalued such that it is no longer a valid currency? What happens to that extra cash? Does it become worthless, or would these dollars be able to be traded in for a new currency?

After some much value is there to storing cash at home, or in the bank, or money market funds are frozen, or Treasury Bills are worthless, when in 3 years or 5 years or at some point, there is no value to U.S. dollars? Or could dollars still have some value to be used locally, like a barter system?

M said...

Forget about all that research written by men in order to intellectually soothe a painful upstream swim in the MTV shallow waters.

Seek out some of that Bonnie Raitt Slow Ride wisdom instead.

You’ll learn quite a bit more, and it’ll be a whole lot of fun,Fun,FUN!

Stoneleigh said...

I'm having a wonderful time out west so far. It's great meeting people in person :)

I'm in Vancouver at the moment and will be heading for Seattle this afternoon. I'll be in Portland Monday evening and Tuesday evening and back in Vancouver late Wednesday. It might be possible to organize doing a talk in Vancouver on Thursday evening if people are interested. I know it's rather short notice, but I'm happy to do it if it could be arranged. I have my computer with me, but I would need a projector and a screen or a blank wall.

VK said...

Hi Bluebird,

Have a look at this local currencies post from,

"On July 5th 1932, in the middle of the Great Depression, the Austrian town of Wörgl made economic history by introducing a remarkable complimentary currency. Wörgl was in trouble, and was prepared to try anything. Of its population of 4,500, a total of 1,500 people were without a job, and 200 families were penniless.

The mayor, Michael Unterguggenberger, had a long list of projects he wanted to accomplish, but there was hardly any money with which to carry them out. These included repaving the roads, streetlighting, extending water distribution across the whole town, and planting trees along the streets.

Rather than spending the 40,000 Austrian schillings in the town’s coffers to start these projects off, he deposited them in a local savings bank as a guarantee to back the issue of a type of complimentary currency known as 'stamp scrip'. This requires a monthly stamp to be stuck on all the circulating notes for them to remain valid, and in Wörgl, the stamp amounted 1% of the each note’s value. The money raised was used to run a soup kitchen that fed 220 families.

Because nobody wanted to pay what was effectively a hoarding fee [technically known as 'demurrage' and often referred to as "negative interest"], everyone receiving the notes would spend them as fast as possible. The 40,000 schilling deposit allowed anyone to exchange scrip for 98 per cent of its value in schillings. This offer was rarely taken up though.

Of all the business in town, only the railway station and the post office refused to accept the local money. When people ran out of spending ideas, they would pay their taxes early using scrip, resulting in a huge increase in town revenues. Over the 13-month period the project ran, the council not only carried out all the intended works projects, but also built new houses, a reservoir, a ski jump, and a bridge. The people also used scrip to replant forests, in anticipation of the future cashflow they would receive from the trees.

The key to its success was the fast circulation of scrip within the local economy, 14 times higher than the schilling. This in turn increased trade, creating extra employment. At the time of the project, Wörgl was the only Austrian town to achieve full employment.

Six neighbouring villages copied the system successfully. The French Prime Minister, Eduoard Dalladier, made a special visit to see the 'miracle of Wörgl'. In January 1933, the project was replicated in the neighbouring city of Kirchbuhl, and in June 1933, Unterguggenburger addressed a meeting with representatives from 170 different towns and villages. Two hundred Austrian townships were interested in adopting the idea.

Unterguggenberger was opposed to both communism and fascism, championing instead what he referred to as 'economic freedom'. Therefore, it was deeply ironic that the Wörgl experiment was first branded 'craziness' by the monetary authorities, then a Communist idea, and some years later as a fascist one."

Tristram said...

Ilargi's example of Argentina is one of sovereign default on debts in foreign currency in an environment of hyper-inflation of the local currency. I don't think it applies to the UK because UK debt is all in the local currency and there is no hyperinflation (yet).

Greek default will involve reversion to drachmas as the national currency, which will be mega-messy, something like Argentina.

The UK, in contrast, is more likely to do a soft default through inflation. It starts when ... check that. It started already. It really gets going when the government can't service its debt within the envelope of political possibilities other than by printing the money. The pound sinks in exchange markets and interest rates shoot up (the later having the happy effect of allowing the central bank to buy its debt back at a big discount.)

Probably they try to stage it as a cathartic episode, with a year or so of double-digit interest rates during which the central bank monetizes a big chunk of its debt at a discount. The price of imports would shoot up, and in a bad case the pound might even cease to be a hard currency for a while (become un-tradeable in the open market) since no one outside the UK would take it or know what it's worth. In that circumstance, the UK's ability to import would become limited to its ability to export, and the government would need to introduce exchange controls like in the old Eastern block.

The net effect on regular people would be mostly flow from an acute scarcity of imported products, including energy. In a global economy that would be painful, and the bureaucrats would be working night and day to allocate the limited foreign exchange to various industries who need foreign inputs. Ordinary Britons would be choosing between gas to unfreeze their bums, and raw materials to keep their factory open and job going. The propaganda ministry would remind people of the war, the German blockade, and say buck up, we survived before, will again. Also, there would be no ability to travel unless you pre-positioned foreign currency abroad. If you ever visited Poland before '89 -- it's like that.

Ruh Ro said...

The "Recruiting Trailer" cries for a shout out to this little dinger on the Ticker Forum. A quick scan leads me to think it hasn't been recommended yet.

Enjoy the comparison.

Phlogiston Água de Beber said...

@VK, Greenpa, gylangirl, Lindsay, M & WgS,

I feel like, in some way, I must be responsible for this kerfuffle getting started. And if it's true, I offer no apology because I think it has been good. I'm going to throw in a few of my thoughts.

I love knowing about, well just about everything through the lens of science rather than superstition. But, I have discerned that sometimes the product of scientific inquiry can be not much different from superstition and possibly sometimes worse. VK's assertions about status seeking seem to be quite useful when applied to scientists. Publish or perish!

A significant problem the human animal has in dealing with the world is the issue of certainty. I don't know if it still circulates, but we used to enjoy a joke about the effects of age on knowledge. It went something like this. Young children know very little and ask lots of questions. By their late teens, they know almost everything there is know. From then on they seem to know less and less until finally what they don't know fills libraries. The early 20th century humorist Will Rogers once said this about Congress, but I think it applies generally. "The problem with Congress isn't so much what they don't know. It's what they know that ain't so."

I posted a little rant during the holidays about a report I had read about a "scientific" study to determine whether vodka or whiskey was more likely to cause a hangover. Now, I have some anecdotal expertise in that area. My rant was over the narrowness of their sampling. It being done in Usanistan, they used only Bourbon whiskey. I can tell you that Bourbon is one of natures finest hangover producers. Vodka is less so, but I've never cared much for the taste of plain alcohol. For most of the nearly 50 years that I have indulged I have preferred Scotch or Irish whiskey, which I find has nice flavors and usually only mild hangovers. Only a week ago, I hurt my back rather badly shoveling snow. Ibuprophen did nothing, so to get some relief I drank approximately a 10th of a liter of an inexpensive single-malt Scotch and to my surprise next morning had no hangover. Is that science, no, is it worth knowing, I think yes.

So, I thank the ladies for sharing some of their truth. I don't know if men and women understanding each other a little better will help them in the hellscape to come, but I like to think it couldn't hurt.

eeyores enigma said...

VK - the reason I don't believe in local currency other than for maybe 10% of activity is you can not pay debt, taxes, insurance, and any activity involving script means activity where you are not making "real" money that you must have to pay those things.

First we must kill the beast then, as your example wonderfully illustrates, we as a community can get to work.


Greenpa said...

VK- I'm having lots of fun watching the interplay here regarding men, women, sexism, etc. :-)

I wouldn't DARE begin a conversation on this topic in a forum like this- the opportunities for massive misunderstandings are, um, gynormous.

I WILL, however, contribute this- my own feelings on the topic are that you are vastly better off looking at primate research than at research done on humans.

My impression (as a person with substantial training and work in ethology) is that the great majority of research done on human subjects is deeply, deeply flawed by human preconceptions and cultural colorings, before, during, and after the investigation.

It's not that all such research is useless (I've done some; so OBVIOUSLY...) but- it's such an incredible amount of work to untangle it, and extract something with a chance of being unbiased- it's almost not worth the effort.

Primate, and other animal research can be less fraught with peril- but is also far from devoid of it.

Early work on social/sexual dynamics in a lot of African primates is currently being extensively revised- because a bunch of it is now being found, pretty clearly, to have been biased by the fact the early observers were... male. And seeing through male-tinted glasses. Surprise; when the same species are observed by women; they see different dynamics.

VK said...

Hi Greenpa

LOL at your comment. We could always go much deeper and question the very word objective? Apart from physics, engineering and chemistry to some extent all other fields require a lot of interpretation on the part of the inquirer.

I'm thinking economics, biology, psychology, medicine, plumbing (sawzalling *wink wink*) etc. So is there any study which can be truly objective regardless of how statistically rigorous you try and make it? The lens of bias is created through experience, culture, ethnicity, social hierarchy, work pressures et al.

So does that mean that we can merely chip away at the truth? And if we are all so damn biased can we ever get to the truth? What the heck is truth anyway? One of the things that people assume is that we have free will, but so many of our decision making abilities lie in our subconscious that we might have no real free will and we are merely puppets of our fragmented genomes and their battles.

My favourite quote from Richard Dawkins is this tasty food for thought morsel that absolutely blew my mind and any preconceptions I had when I read it about 3 years ago,

"Was there to be any end to the gradual improvement in the techniques and artifices used by the replicators to ensure their own continuation in the world? There would be plenty of time for improvement. What weird engines of self-preservation would the millennia bring forth? Four thousand million years on, what was to be the fate of the ancient replicators? They did not die out, for they are past masters of the survival arts.

But do not look for them floating loose in the sea; they gave up that
cavalier freedom long ago. Now they swarm in huge colonies, safe inside
gigantic lumbering robots, sealed off from the outside world, communicating with it by tortuous indirect routes, manipulating it by
remote control. They are in you and in me; they created us, body and
mind; and their preservation is the ultimate rationale for our existence.

They have come a long way, those replicators. Now they go by the name of genes, and we are their survival machines."

ps - I also believe in some strange esoteric concepts like love being the essence of the universe and that we live many lives across different planets/ universes. Just putting it out there, I'm not a godless atheist who is a science fanatic. I am to a certain extent, but biology is to reductionist in it's approach. The idea that we are just gene photocopying machines is to appalling, even for a doomer like me. It might be true but my alleged free will protects me from such 'truths'.

Ilargi said...

"Coy Ote said...
Ilargi 5:07 - Curious, for a value hedge... how expedient would it have been for an Argentine to have stashed some PM's during this crisis? (assuming it was possible for them to do so.)

Curiously, gold was at its low just when the Argentine crisis hit. And selling gold into a collapsing market is not all that easy to start with, obviously. People who had USD stashed outside the view of the authorities likely did on average much better than gold holders. But most Argentines kept their dollars in the bank, confident that the 1-to-1 tack to the USD would remain in place. The government exchanged their dollars that way, and then A) said it's now 1-to-4, and B) you can only take out $100 a week while the peso loses most of its value on international markets.

I'm not saying it will be repeated elsewhere in years to come, but USD was the preferred store of value for obvious reasons


"UK debt is all in the local currency... "

What? They bleeding wish. Large pats are in USD and Euro's, and that's hurting.

"The UK, in contrast, is more likely to do a soft default through inflation. It starts when ... check that. It started already...."

What started? Inflation in Britain? And nobody told me?

Anonymous said...


Beware of "research" conducted and cited by male scientists in our patriarchal society/world.

BTW, Richard Dawkins is a repulsive materialist.

Hope you find a wonderful woman who will love profoundly her beta husband! :)


Thanks for the excellent articles on leaking of methane and the cult of greed.

Ilargi said...

As an aside:

Anytime you see Bill Clinton and W volunteer to spearhead an operation, any operation, you know there's an agenda playing out. And in Haiti, it's obvious: there's land to be conquered.

How do you donate to Haitians to help them keep the dogs out? You can't, I'm sure.

Various sources are complaining that the US military, which has taken control of the Port au Prince Airport, is giving preferential treatment to Americans, that aid flights from other countries are diverted etc.

It's not a crisis, it's an opportunity!!


zander said...

UK inflation

goods, services, wages et al all going south here.
Food and energy costs are the only things treading water or increasing.


Will said...

"It's not a crisis, it's an opportunity!!"

Let me guess...

Somebody's gonna connect the dots and wonder why it takes an earthquake to shake loose the full court press to provide health care to a foreign population?

And maybe the US gov. should do that at home too?

Jim R said...

Well since Ilargi hasn't yet shut down this side topic, I'll offer my view of sexual dynamics ... though after six decades of observation I can't say it won't be colored by my own gender.

To me it appears that women are more 'wired' for selection of a mate that will yield descendants, grandchildren. So wealth, strength, and status in the community are big factors. Men seem to have similar selection factors, but more simply aimed at first-generation offspring.

Men are not so much wired for grandchildren, but then you aren't going to have any if that mate is beyond childbearing years.

Now as I've gotten older, I find myself attracted to smart women. Not sure why, but perhaps because they make interesting grandmothers :-> Meredith, Janet, or Stoneleigh would make fantastic family members.

Anonymous said...

"Doctors Without Borders Cargo Plane With Full Hospital and Staff Blocked From Landing in Port-au-Prince"

Greenpa said...

VK- regarding objectivity- you may be interested in an older essay of mine; put up on my blog:

Actually, the objectivity part comes in Part 2, which makes a good deal more sense if you read part one. Strangely. Just click on "newer post" at the bottom.

A brief but cogent excerpt:

"The goal here is to strip the blatantly unobjective “I” from the science; science must be done by objective, non-involved persons, who can see things clearly without the clouds of personality.

This is a crock, of course. All observation is done through the lenses and smogs of our own culture, our sex, our past, our training, what we ate for breakfast, and who we last talked to. Ask any anthropologist, or psychologist, priest, or advertising exec. To believe humans can be objective, I will venture to point out, is gloriously irrational."

Later in your comment you say; "but biology is to reductionist in it's approach."

Even besides the two typos, I can't IMAGINE a more OFFENSIVE thing to say to a biologist!!!


Actually, I am one biologist you can safely say that to; but I know thousands who would not be.

And my own current work is so far from reductionist that it is proving incomprehensible to most mainstream biologists- which is not a lot of fun.

Hang in there kid. You're really very advanced in your thinking for someone your age.

But keep in mind there may be a reason why the old professor- the guy in the back of the seminar room- is so quiet. And when somebody nudges him and says "What do YOU think about the topic, Professor?" His answer is almost always "well, I don't know, exactly..."


Semper Augustus Gloop said...

And in Haiti, it's obvious: there's land to be conquered.

It's not obvious to me. Usually there's a reason; resources, good location for a base, symbolism.

Vicky K said...

Just have to jump in on the subject of womens orgasms and mate selection and all those wonderful theories floating out there.

Most scientists and laypeople get fooled by statistically significant results. Once something seems to prove a hypothesis by preponderance of evidence, the thesis is then promoted as THE cause rather than a partial and maybe even not very important influence on the system being studied.

For example, waist to hip ratios. New studies indicate that the tiny waist to hip ratio is desirable only in cultures where women are seen as sexual trophies primarily. In cultures where women are also obvious providers of valuable work and even money [Africa for example] larger waist ratios are preferred. Sexual dimorphism is either accentuated or given lesser importance due to culture rather than a strict biological trait that all humans are triggered by.

And as to female orgasms, there is a significant [but not actually that important in the big picture]effect on drawing sperm up into the womb. So you could say that women have orgasms with men that they actually want to reproduce with. Not necessarily to keep them loyal.

As to the attraction of 'rich guys', from this woman's standpoint it is more in the way of competency being a turn on. Athletic showing off or just being really good at something to admire is actually more exciting than just a big bank account or a powerful position in society. Not all women are trophy wife material and find their standards of attraction based on actual achievements rather than proxies of manliness. Even the 'bad boy's' have their appeal. Good looks are part of it too.

to be con't

Vicky K said...

Just because it only takes an ejaculation to create a pregnancy doesn't mean that sex is primarily for men, and women are just passive receptacles for the species to reproduce. This myth is a rape based myth. If we were like other species that only had periodic receptivity you might make the case for the selfish gene theory.

Women don't have frequent orgasms in this society because men think of women as masturbation fantasies. Their masturbation techniques are transferred into the bedroom. 'All about me' and don't waste time are the habits they cultivate. The differences in latency times for male and female orgasm is not a mismatch that nature made. It is a cultural mismatch. Men in our culture have no idea about their own possibilites as participants in sexual behavior that is really pleasure based and bonding for their own survival. Personal survival is also a biological necessity and men that are partners with women live longer. And their chances of having more surviving children are enhanced.

Women's sexual potency has been lost from our modern cultures and needs to be revived. It's not about a matriarchy overcoming the failing patriarchy but about the sexes regaining their partnership status again. Men need to reevaluate the idea that their ejaculation is the point of sex. Long lives, few children and very long developmental periods for the children mean that reproductive sex is the tiniest part of a lifetime of sexual activity.

Human's [and maybe the bonobo's our nearest relative] have the unique ability to have sexual congress out of reproductively potent times. Womens sexual potency [from the viewpoint of men] has been crushed by the rise of civilization and relegated to whores that are not even considered worthy of respect.

There is some speculation that arousal and orgasm are part of the parasympathetic neural system and only ejaculation is part of the sympathetic neural system. This essentially means that relaxation and loving kindness vie for dominance with the fight flight fear impulses. Slow sex with high arousal for extended times tips the scales towards high levels of oxytocin in the blood. And women have the capacity for multiple orgasms. I think men are envious of this and equate it with the equivalence of their ejaculations. Not the same thing. Men can have orgasms without ejaculation if they just learn how. And give up a few seconds of ultra high dopamine levels.

I would suggest that it is women faking orgasms that is a really interesting phenomena. I suppose there may also be some orgasms that are hidden from a partner for reasons that I cannot fathom. And all those in between states of exquisite sensations and feelings without total orgasm are considered artifacts of getting the egg fertilized. We seem to have forsaken our biological capacity for real bonding and reduced it to genetic fitness as defined by men.

Scholastica said...

@VK Getting back to the original discussion about civilization and oligarchy: What do you see as the likely replacement for our current corrupt cartel? And what would you like to see? I'm curious what other posters are expecting or hoping for in this regard.

Ilargi said...

From:, response to Willem Buiter's Sovereign default in the eurozone and the breakup of the eurozone: Sloppy Thinking 101

Much as I like the FT as a newspaper this makes me laugh. Scotland will devolve its pound sterling from the rest of the UK and establish a Scottish pound/Pound sterling exchange rate. Anglo-Welsh-Irish pounds will no longer be legal tender in Scotland. Scotland will change its coinage to ensure Anglo-Welsh-Irish coins cannot be used fraudulently. The Scottish parliament and the Bank of Scotland will fix the exchange rate for Scottish pounds (know know as Poooonds-wee-Jimmy) to the Euro in order to comply with Euro membership.

The Scots will build a border between it and the English to prevent the massive growing black market in agricultural diesel and the movement of goods to double claim EU subsidy. The company that build the wall (Hadrian PLC) demand a public-private-partnership based on collecting a toll of £1.25 for English people going into Scotland and two Poooonds-wee-Jimmy for journeys in the opposite direction. Sir Fred Goodwin, SMP for Dumfries and Galloway declares the wall unconstitutional and demands for its immediate privatisation.

Following the closure of the Anglo-Scottish borders in 2014 the EU president Nigel Farrage calls for England to be evicted from the EU for its behaviour towards the Scots. Prime Minister Rothschild agrees to dismantle the wall and sell the bricks on ebay to pay the ever growing deficit caused by the second bailout of the banks in 2011 and the decision of then PM David Cameron to sell Northern Rock to James Goldsmith for 4 million pounds at a monumental loss to the taxpayer.

Gordon Brown, head of the IMF, agrees to allow "exceptional circumstances" to over-ride the entry criteria and Scotland joins the Euro.

On May 17th a row breaks out about the design on the new Scottish Euro coinage as to whether it should have the head of the UK's King William or Scotland's head of state Lorraine Kelly. Scottish voters demand an immediate return to the UK and its "old money". Violence erupts and the wall is pulled down crashing sterling as a result of the £650 billion loan that English finance minister Hazel Blears had taken out with PayPal just after her defection to the Conservative party. A UN peacekeeping force of Afghani soldiers is deployed in Berwick on Tweed but fails to cover the rest of the border as the soldiers become captivated with the lace and humbug memorabilia in John Prescott's gift shop.

On June 23rd Prime Minister Rothschild takes England, Wales and Northern Ireland into the Euro and forms an alliance with the Scots in which the Scottish parliament covers all four countries in return for a fixed fee for the management of the region covered by the Conservative government. The deal, knows as fookyootoo, privatises the entire management of the former UK and generates 20 billion Euro for the UK's leading bank Goldman-Rothschild PLC. The problem of who's head to place on the Euro coinage is resolved by the decision to use the head of the late Tony Blair, former PM, ambassador to the middle east and Catholic suicide bomber.

On September 11th the former UK is purchased by Nomura Securities and turned into a burger restaurant. The general manager for the area known as "England", Deepak Patel, appears on the front page of the Wall Street Journal (Europe) with a delegation of the new Japanese owners and is quoted as saying "the former UK now rivals Chengdu as a world city". Daily Mail editor Harriet Harman calls it a great day for Great Britain.

The Euro finally reaches parity with the Yuan.


Greenpa said...

Oh, the generalities!

(weeping, as the great Sexplin sinks in flames...)

Phlogiston Água de Beber said...


Oligarchs do not just go quietly into that good night. They will fight tooth and nail to stay on top.

We can characterize them as a corrupt cartel, but IMHO the level of corruption is still pretty moderate. We should expect it to get a lot worse, if history is any guide. The Haiti rescue and reconstruction efforts will undoubtedly provide some nice opportunities.

My actual expectation is that the monsters who rule us (and do God's work) will probably hang on until enough environmental damage has been done to guarantee a fairly rapid slide to extinction. Of course, that's just speculation and sometimes I am wrong.

Lindsay said...

Hi VK, thanks for the link to the PDF. I see it was only published in March 2009 so hasn't been cited in any other papers yet.

You said: "I recently read that women orgasm more as their partners wealth and status increase as a means to keep them loyal". Actually, the paper showed only a correlation, and the authors went to some pains to state that they haven't shown the reason for this correlation. In addition to this, you need to take into account this research was done on a sample of Chinese women. Your hypothesis is about the relationship between sexual dynamics and financial power - so the sociological context likely is a factor. Which means, these findings might not apply to countries/cultures where different sexual and power dynamics between men and women.

gylangirl, I love your post where you stated "Rule established: Sexist insults are permitted against women. Women's pointing out sexism is not permitted." It's strange becuase round here we all love Stoneleigh, and many of us deeply admire Sharon too, and others, so coming accross a bit of sexism here gave me a shock.

VK, I understand that perhaps you don't intend to be making blanket statements of fact, but instead are just giving your thoughts lately on how things might work. Nonetheless, when your thought is a gross generalisation, demeaning or not, we get to call you on it. Also, the fact that you don't see that it's demeaning...well, I'm not even sure what to say about that!

ROFL @ DIYer "Now as I've gotten older, I find myself attracted to smart women." Only now that you're older? The funny thing is, you're not even joking.

Tristram said...

I am admittedly not an expert on the subject, but I would have thought all or nearly all of the UK central government's debt was in Pounds aluminum (or whatever they are called now.) Of course UK financials and other companies and even individuals have foreign currency (private not sovereign) debt, which could be very difficult to pay in case of a currency crisis and exchange controls. In which case the counter-parties simply get stiffed, or seize collateral within their reach, or need to forbear a while while things settle down.

One other wrinkle I did not think about, however -- if UK banks have Euro or other currency deposits (both inside and outside the UK) that are insured according to EU law, the UK government would be on the hook for that. After reaming out Iceland for not honoring deposit insurance, they would be a bit embarrassed to blow it off themselves. A UK currency crisis would perhaps set off runs against UK banks elsewhere, forcing bank holidays outside the UK (but not inside, if your account is in pounds, which can be printed at will).

A rush would occur to see whether British multinationals could, and would be permitted to, maintain a separation between domestic and offshore components, if the offshore parts were solvent, so the latter could maintain the faith of their business partners and continue to function, somewhat insulated from the soft default / currency crisis in the UK proper. There would be a test of the UK's good faith in whether UK companies' foreign currency holdings would be permitted to be used to satisfy their foreign currency obligations, or would be commandeered by the government to deal with its foreign exchange difficulties.

When I say it's already started, I mean the soft default via debt monetization, not necessarily the inflationary side effects yet. At the riot in the streets phase, you can be sure the debt held by central banks will simply be canceled, net effect being a portion of sovereign debt disappears thanks to the printing press. If that is not inflationary, cool. Just buy it all and cancel it all, and we will have debt-free sovereigns everywhere.

The essence of soft default is -- government officials try to keep it going softly for years, avoiding a full-blown crisis (and early success perhaps gives them exaggerated confidence they can pull it off). If the crisis happens, there would be warning signs for the watchful as smart money takes defensive measures (flees UK banks, moves hard currency offshore, stops providing foreign currency credit to UK companies, dumps pounds.)

Phlogiston Água de Beber said...


Knock, knock, it's the Spelling Police!

I think you probably meant the great Sexpelin. :)

Phlogiston Água de Beber said...

I hardly know what to make of this item.

Senegal's president says he will offer free land and "repatriation" to people affected by the earthquake in Haiti.

VK, do you know anything about Senegal? If so, do you think they could do this? And then of course one might ask why would they do it?

Ric said...

VK writes: but biology is to reductionist in it's approach."

I've been trying to put myself in VK's shoes and imagine what love is like for someone in his 20's during die-off. What choice does he, or anyone that age, have? When I was 23, my love was fueled mostly by lust and dreams of a future life with a present woman--dreams of boundless trust, emotion, and family. While my love was real and sublime at 23, it kept getting side-tracked by thoughts of the future and unreasonable expectations. What if such youthful dreams of love are so impractical during die-off even an ethical, passionate and brilliant 23 year old like VK can't bring himself to believe them? What's left?

This led me to wonder what my response at 23 would have been if my current self had somehow time-traveled back to tell myself what love with my wife is like three decades in the future. The love I have now might have seemed the most glorious dream come true, but I don't think I could have communicated it comprehensibly to myself back then because such common-place simplicities don't sound like love--a charitable laugh, patiently waiting while the other gets ready to go. Would I have understood that love is a willingness to bear terrible suffering and give up everything? I agree the essence of existence is love, but such love is not our love, nor it's not for ourselves. There is a future for love in a time of die-off. I may be wrong, but VK may face far more opportunities for love than my failed generation.

Bay Tree Bookstore said...

Ilgari, have you ever been to Haiti? There is no land to conquer that is not home to desperate poverty. It is true that the US is focusing on it's citizens and it infuriates me to no end that the flight from Doctors without Borders was diverted. But please explain just what could be gained from a country so terribly torn apart?

Ruben said...

I could get both a blank wall and a projector for a Stoneleigh presentation in Vancouver.

APC said...

Considering relocating your business?

(Content warning: Could break the heart of an Ilargi)


VK said...

Myths vs Reality

Myth: Economic growth leads to prosperity all round and lifts all boats. Rising growth has pulled billions out of poverty and China is a shining example of what growth can achieve.

Reality: Economic growth is akin to a temporary sugar high, 30-40 years of Global growth is a mere blip in the general scale of things. Yes, hundreds of millions got out of poverty but now billions will be pushed back into poverty or worse. As the system collapses under it's own weight of bad debt and malinvestment. We are facing global decline.

Myth: We are mostly kind, happy, gentle, nice people who really had nothing to do with what the elites are doing. I went to anti-war demos even though I have to drive a car to work everyday.

Reality: We are all cogs in the system. Period. The system is essentially a predator-prey system, if you don't exploit someone else, they will exploit you. It's on a continuum. When you buy shoes from China you directly contributed to the deaths of babies born along the polluted Yangtze river. When you drive a car you've directly contributed to the deaths of someone in Iraq, Nigeria and to many more in the future - a world without oil and dieoff.

When you switch on the lights in your home, you emit carbon. When you consume meat you support the industrial farming of animals that release dangerous methane gas into the environment. Climate change and our rapacious energy consumption will affect generations for millennia, causing death, disease and hunger.

They have paid a terrible blood price for our greed. Everything we do in this world carries a blood price short of leaving everything behind. We have to account for the deaths of billions.

Myth: Human relations are based on love, affection and warmth. We are now more evolved and make better choices. The races, sexes, classes will soon converge in a singularity of knowledge and openness.

Reality: Human society is built on lies and deception. Infact lying is essential to our survival, too much truth and society would collapse. As the economic system collapses, look to the early 1800's, late 1700's as a guide. A tiny elite shall lord over the majority (just like now, but much worse). There is a high degree of probability that women's rights will be stripped away, creation of a landless serf class with little power, democracy could essentially end in it's current form, race relations will sour terribly as group survival outweighs all else.

A world of proxy wars and even an outright nuclear war is even probable. (Via Jay Hanson from Dieoff)

We are a species in denial. Denial about our true nature that is observable to us in the outside world - a world of hunger, misery, poverty, suffering and despair. In denial about our very dark side, if we open our eyes we'll see that as a species we are hurtling towards a brick wall at 200mph.

And when you go into the safety of your warm beds tonight, do say a prayer. We have far too much blood on our hands, the blood of innocents who are yet to be born. Born into a world of misery and suffering we have helped create out of a perverse helplessness of inertia and ignorance.

VK said...

Hi Lindsay, Vickykomie

I'll just take an excerpt of Robin Baker has to say, you may then pursue the issue with him! :)

I also highly recommend the book along with the book "Strangers to ourselves" on how we know only a fraction of our bodies decision making capacities.

The excerpt:
"Very crudely, while accepting that the tremendous variation in female sexuality largely defies categorization, we can make life easier for ourselves by recognizing four main types.

The first consists of women who are programmed sometimes to have (and sometimes not to have) the full range of possible orgasms (masturbatory, nocturnal, foreplay, intercourse and postplay - with some being multiple). Although only about 5 per cent of women have absolutely the whole range, an additional 25 per cent have all except multiple orgasms, and an additional 40 per cent again have all except multiple orgasms and nocturnals. All women in this category can manipulate sperm retention in all of the ways we have discussed (Scenes 22 to 26).
In particular, they can vary the frequency with which they have and do not have every type of orgasm so as to take maximum advantage of the men and opportunities which present themselves. They are thus probably the women most able to exploit sperm warfare whenever it is advantageous to do.

Although as a whole this first category of women is probably the
largest (about 75 per cent), there is tremendous scope for women to
differ within the category. For example, about 30 per cent within the category both masturbate and have nocturnals, whereas 50 per cent only masturbate and 10 per cent only have nocturnals. These
differences probably reflect variety for variety's sake, as we have discussed. Masturbation and nocturnals are alternative means to the same end (Scenes 22 and 23). Variation in emphasis on one or the
other outlet allows women to differ. It may also influence their
scope for secrecy in preparation for infidelity (Scene 23), but it is unlikely to have major repercussions on their ability to manipulate sperm retention. In addition to differences between women within the category, each woman also has so much scope for varying her own behavior (from phase to phase and man to man) that she need never become predictable.

The second category consists of women who are programmed to avoid one or other of the major avenues for the manipulation of sperm retention and warfare. Either they do not have solitary (masturbatory and nocturnal) orgasms or they do not climax in the presence of men. In most cases, however, such women sacrifice only a little of their manipulative ability. In compensation, they gain by being slightly less common. Thus, about 10 per cent of women are programmed neither to masturbate nor to have nocturnals, which has the effect of delegating responsibility for the manipulation of sperm to orgasms in a man's presence. The full range of sperm manipulation is still possible (via orgasms during foreplay, intercourse and post-play - Scenes 22 to 25), but it becomes much more important to the woman that she chooses a sexually competent man. Other women (again about 10 per cent) are programmed never to climax in a man's presence but do masturbate and/or have nocturnals. They also have the full range of sperm manipulation. They can secretly prepare a strong or a weak cervical filter- but what they cannot do is change their minds at the last minute and bypass an over-strong filter (Scene 25)."

VK said...

Continued from previous post

"The third category consists of those 10 per cent of women who
climax virtually every time they have penetrative sex. Such women
can still manipulate sperm retention, and thus play an active part in influencing the outcome of sperm warfare - as long as they vary the timing of their climax relative to the moment of insemination (Scene 25).

An orgasm more than one to two minutes before the man allows low sperm retention; any time thereafter allows high sperm retention.

The final category consists of those 2-4 per cent of women who
never orgasm, either during intercourse or via masturbation or
nocturnally. In compensation, as mentioned above, such a woman
gains by not educating her partner in sexual techniques that would aid
his infidelity. Unlike those in the previous three categories, such women are the least able to influence the outcome of sperm warfare. They are, however, well suited to the relatively safe process of selecting a mate and making the most of that relationship. They do have some control over sperm numbers, largely through waiting for their cervical filter to weaken with time since their last intercourse (Scene 22). But since sperm numbers are far less important for conception than they are for warfare, in the absence of any possibility of the latter it does not really matter how many sperm such a woman retains from each intercourse."

Unknown said...

VK et al:

I think the best thing for a man to do is to just never talk about these things with women.

It's just best to be nice, good-looking, rich and sexually compatible.

As a man I've found that nothing drives a woman away from a man as fast as the man's unsolved problem (unhappiness, for example). If you've got a problem, well, solve it then. Don't leave it unsolved, because that's a sign of weakness; your weakness, you loser.

Sure, you can pretend to be a nineties man by talking about your issues. But you'd better make damn sure that you've solved all of them before you do that.

This is just the way it is. It's just biology, nothing personal.

Tristram said...

How is it that the TAE comments section is suddenly all about sex? And Ilargi has not compained a peep? Must be sweeps week in the blogosphere.

soundOfSilence said...

Mugabe said...

How is it that the TAE comments section is suddenly all about sex? And Ilargi has not compained a peep?

Here here... geezum people. There's two basic arguments – (1) it's all about “sex” so all women what is the alpha male, (2) all women care about is “home and hearth” so they don't want a knuckle dragging moron but rather someone that’s a provider.

Since we're all doomers here lets go with everyone here is at best a beta, gamma, delta or some other letter of the Greek alphabet.

Can we move on now?

ben said...

from the peanut gallery...

with respect, your myth vs. reality bit was banal and fraught with incoherence, and a bedtime prescription i could've done without. i can however relate to such sounds and furies.

as for the gender bender we're on, i found gylangirl's initial analysis to be astute, although i suspect it was obvious to her, and lindsay's overall position the most sound. tero brought us full circle, to put it generously.

the LGBTQI community, too, i gather, has a continuing claim on sexual politics.

rototillerman, thank you for arranging the lecture space, and siting it down the street. what is the capacity? this singular opportunity makes me want to invite a handful of important people in my life if that's workable.

looking forward to tuesday, then, earthers.

Josh said...

TAE has jumped the shark.

Zaphod said...

Two quick comments:

1) VK must have been deep in his cups to bring up gender topics here. Still, I enjoy the information and references, though there isn't much rigor in a discussion with broad claims on one side and individual testimonials on the other. All I know is that sex discriminates against the ugly and the timid.

2) The only thing to be protected in Haiti is the facade that you can depend on the (US) gov't. Haiti isn't that much different than any US ghetto, only bigger and with lower support levels.

Anonymous said...

Reading through some Kyle Bass testimony -

Excerpt: Greenspan's Monetary Policy/F&F

"As you recall the HSFC put forth a proposal in May 2005 to address such a problem.

At the time private competitors and certain White House officials were critical of the proposed reform, claiming that it was not stringent enough, did not address all of the relevant issues, and kept too much power in the hands of these two institutions. I would not be sitting before you over four and a half year's later had these critics not been proven correct.”

It's clear these banks are a deadly threat to the people of every nation they do business with and in every possible way.

In line with the Greek theme, Goldman Sachs et al, as Hydra - cutting off one of its nine heads only results in two more taking its place. But what to do? There are so many faces on this beastie, yet one claims to be immortal! Our 2nd task is to ensure no more heads appear while going after the god-like one - immediately. By the time the last Alt.Mort has flushed down the pipes, it will be too late.

Game. Set. Match.

A problem I have with this compelling enough narrative is a failure to comprehend why we want advice from “hedge-fund-manager-who-made-a-killing-betting-grandma-gets-evicted” Mr. Bass?

Does he have a code of ethics not visually apparent from the very nice .doc viewer screen? If so, I'd like to inspect them line-by-line wearing my good glasses.

bluebird said...

Paleocon said "The only thing to be protected in Haiti is the facade that you can depend on the (US) gov't."

And when people in the U.S. have no food nor water, will the U.S. gov't take care of its own citizens like it is assisting in Haiti? Spouse says nothing to worry about.

Ilargi said...

Understanding governmental responses to Haiti is not possible without understanding the shock doctrine.

In that frame, it's highly curious that Jeffrey Sachs had an opinion piece on Haiti in Sunday's WP, days after Slick Bill and W43 moved in to take control of the money flowing in. Not a good sign for the victims, nor the donors. I wouldn't donate a penny with faces like that fronting the operation.

These people are a lot more ruthless than most of you think. For them those 10 million Haitians are just so many expendable nuisances standing in the way of greater plans and greater glory. They're hell-bent on using the disaster.

I haven't seen Sarkozy publicly addressing France''s role either, and that too stinks.


Will said...

"Understanding governmental responses to Haiti is not possible without understanding the shock doctrine..."

OK. Illargi, I read this.

But what is it that Haiti offers?

There are no mineral resources.
It's location is insignificant.
It's population is poor.
It's ecological situation sucks.

What is there to take?

VK said...

Getting back to the original discussion about civilization and oligarchy: What do you see as the likely replacement for our current corrupt cartel? And what would you like to see? I'm curious what other posters are expecting or hoping for in this regard

Hi Scholastica

Well there's a huge chasm between what I'd like to see and what I think will occur.

Essentially I'm in favour of survival socialism. I know, I know, capitalists and libertarians are going to be pissed off. But if we look at the scarce resources around us, the world on it's present trajectory is not sustainable.

We have a global peaking in civilization IMO, a condition brought about by Debt constraints, declining marginal productivity of society as a whole, energy constraints leading eventually to food constraints - think lack of fertilizer and especially phosphates.

What we require is a long term mind frame, the ancient Egyptians had a 2500+ year civilization and this too without a proper money system. Today we have a civilization hurtling towards collapse (decline in complexity) due to over-stretching itself and the related falling marginal benefits and rising marginal costs. The goal of a civilization should be longevity as opposed to height and prosperity. Can we bequeath to our children, the world as we found it? This should be our goal.

To do so, I would personally go along with Jay Hanson's solution from Dieoff/ WarSocialsm. People are the same now as they were thousands of years ago - we require 3,000 calories of food per day. Currently the US is spending 240,000 calories per day per person to get that individual 3,000 calories of food. This is inherently unsustainable.

The new system should be one where everyone is guaranteed food, shelter, healthcare etc by the Government. Education should be a localized community affair. Only 5-7% of the population needs to work,we just need the basics - food, water provision, healthcare etc. The rest of the population can do what it wants - read books, paint, teach, drama etc.

Flights should essentially be banned or made prohibitively expensive and people should be encouraged to grow crops and kids should be taught basic skills in school - carpentry, plumbing, composting, gardening etc.

Also if possible, the number of children should be limited to 2. This would mean we have declining population pressures over time.

Obviously this is wishful thinking on my part. I can't think of one society that chose to be poorer by it's own accord. Societies usually collapse to that point. I agree with Stoneleigh that the world will be a sea of red and there will be a few green zones. Proxy resource wars will become common and poverty will rise unfathomably.

The spectre of nuclear war is a very real possibility as well. Usually at times like these demagogues and right wingers come to power. I fear the rise of the right wing, as people look to regain a lost sense of being through their supreme leader eg Beck being president of the US?!

The Germans went from being a welcoming, open society to the holocaust in less then a generation? Genocide and tribal hatred is quite common across the world. As westerners you read about poverty, despair, a society on the brink - I live in one.

How many of you have felt the fear of knowing that just a few kilometres down the road there is slaughter taking place. That your country is going down the brink, that your family might have to evacuate to safety (if one can afford that), not knowing if you have enough food to last. I have known that fear. It is deeply engrained in my mind.

One set of corrupt, inept elites usually replace the one they threw out. With diminishing resources and financial constraints, we must all mentally prepare for the worst and pray for the best.

Greenpa said...

VK- and now that you have figured all that out-

how will you make it come about?

Wandering about saying "So this is it, then, we're all going to die." worked well for Arthur Dent; but if you recall, that was supposed to be ironic humor.

DOES change happen? Manifestly.

CAN humans affect change? Or effect?

Today is an unusually good day to ask that question. And I can add my own "yes". I have pushed on icebergs; and won.

My point- it might be most useful for a young and passionate person to study "how" first; and "what" later.

Mere pessimism is pointless.

And I'll toss this grand bit out gratis; someone above has asked "so what is the point?"

The point to Life is Life. It's quite enough.

Phlogiston Água de Beber said...

As if it wasn't bad enough that the great Sexpelin is on fire, this was posted this morning by the BBC. "Women with blonde hair have the competitive edge, being more aggressive and determined than redheads and brunettes, say scientists." At this rate, scientists will soon be socially less acceptable than pederasts. What I find really amazing is that presumably intelligent people are willing to pay large money for that kind of education.

I am wont to believe that Ilargi has allowed this conversation because he may believe as I do that better understanding between the two halves of the human race just might be really important in societies spinning down the drain. We have all lived on the peak of capital availability, which has allowed us to nurse our relationship wounds in relative comfort and safety. I think most will have noticed, that has not been the case for the least prosperous among us. That class is growing rapidly already.

If men and women can develop even a little more tolerance and compassion for each other, I think it might pay good dividends in the survival lottery. I am inclined to think that the rigor all should be most concerned about is rigor mortis.

Top Hat Cat said...

Gender banter is always amusing on a financial site.

Almost, but not quite as amusing as the Diet Wars.

Ah, belief systems on Fellini's, la Grande Parade.

The rise of universal suffrage (minority civil rights and womens rights) track the historic rise of cheap fossil fuel very closely.

Despite protest to the contrary from some quarters, were it not for cheap fossil fuel displacing the cheap exploited labor of both women and various minorities, there would have been damn near zero change in racial or gender roles.

As we slide down the dark depressing back side of no-more-cheap energy, how many think the modern enlightened progress in women's and minority rights will hold? Anybody?

Anyone seriously want to present an intelligent case here that women's gains in equality will somehow magically not regress back to the bad old days as soon as the cheap oil party is over? That society and 'culture' are so evolved that there is no 'going back' on women's rights?

Get real, 'rights' for women or minorities or most men will evaporate like mist on the meadow in an era of expensive scarce energy.

I guess it was just a 'coincidence' that when minorities and women gained the most access to better employment opportunities in history during the 70's, that real inflation adjusted wages flatlined and have never recovered or risen since, fancy that. Doubling the labor pool depressed real inflation adjusted wages, WWT (Who Woulda Thunk?).

On the run up in cheap oil, having the ability to produce cheap over abundant labor, via conceiving babies, was a plus. TPTB loved cheap over abundant labor for the fossil fuel/consumer factories, the more the merrier, more profit for them.

On the slide down the cheap oil era, having the ability to produce cheap over abundant labor via conceiving babies for The Greatest Depression in World History will not be such a plus, it will be the kiss of death in many instances.

Just look at Haiti.

From Jim K's latest:

"For decades, the USA's policy (and the UN's too) was just to stuff more food aid onto an island already so far beyond its carrying capacity for human existence that every new birth certificate was a death warrant in disguise. But free people are free to do what they will do, and in Haiti there was not much more to do than make more people...."

Well, I would love to hear the case made that the gains in women's struggle for economic equality, both in the third and first world, will not de-leverage and collapse even faster than they were gained over the last century or so.

Progress in 'equailty', be it in gender or racial or in economic or cultural mores, will not hold.

In a recent interview, Jane Goodall was asked about chimps killing each other, was this the genesis of murder in the more highly evolved humans?

She said that chimps kill in the moment, it was situational, not premeditated.

The Premeditated Murderous Monkeys that 'humans' have evolved into show no sign whatsoever, from where I sit, of rising above this primary fatal character flaw.

Phlogiston Água de Beber said...


You are quite right, Haiti has nothing worth taking. Neither does Afghanistan, except for poppies. What Haiti has is 10 million desperately poor humans. To the ruling class, poor humans have considerable value.

I got a real kick out of J. Sachs allegation that we embargoed Haitian industries out of existence to restore democracy. Yeah right, just like we're doing now to Honduras, Hah! Is it not more believable that Haiti's sewing machine operators were a little too competitive with China's and that sinking the blood funnel into China was really important?

But, that isn't working out quite the way they expected is it? Therefore, keeping a few million poor humans alive on the west end of what used to be called Hispanola probably sounds like a good idea, just in case. Of course, they are expecting you and me to pay for it with lots of opportunities for graft. Heads or tails they win.

LynnHarding said...

Oh please stop with the men/women/evolutionary stuff. Every man I have ever met who is into this conversation has been a creep. My fingers are sore from scrolling along to avoid it. Where are you Illagi? Stop them!!

jal said...

All this talk of sexuality is an attempt to try to understand what we are, how we are made and what motivates us.

(Save this post for future contemplation)

A mutation could be the cause of an adaptation and therefore, we could say that there occurred an evolutionary step. When refering to evolution, it is understood that we are refering to increasing the ability of a specie to survive in its ecological nitch. We climbed into the trees and should have evolved to be the best of the foragers in the tree tops. What happened? We fell out of the trees. We did not evolve. We mutated.
MUTATION would be something that occurs at the DNA level. (i.e. the lost of a gland). The magnetic reversal probably had an impact on mutations. A good book on this is:
"The Magnetic Field of the Earth" by R.T. Merrill, M.W. McElhinny, and P.L. McFadden (Academic Press, 1996).
I'll quote a few things for your interest. p. 182 has a chart of the magnetic reversals for the last 18 M. years. In the last 10 M. years there have been 46 magnetic reversals. (.780, .990, 1.070, 1.770, 1.950, 2.140, 2.150, 2.581, 3.040, 3.110, 3.220, 3.330, 3.580, 4.180, 4.290, 4.480, 4.620, 4.800, 4.890, 4.980, 5.230, 5.894, 6.137, 6.269, 6.567, 6.935, 7.091, 7.135, 7.170, 7.341, 7.375, 7.432, 7.562, 7.650, 8.072, 8.225, 8.257, 8.699, 9.025, 9.230, 9.308, 9.580, 9.642, 9.740, 9.880, 9.920 ). Data from Cande and Kent (1995) which includes both marine magnetic anomaly records and magnetostratigraphic sections.
p. 184 There is an other time scale showing magnetic changes to 160 M years.
p.196 The Cretaceous Superchron, which extends from approximately 118 M years to 83 M years (Cande and Kent, 1995).
p. 244 Has a chart showing the Relative variations in the Earth's diople moment for the past 4 M year as determined from deep-sea sediment cores. There are 25 accepted magnetic reversals and drifting poles in this time period.
Another good book, "Reversals of the Earth's Magnetic Field", by J. A. Jacobs, sec. edition 1994, Cambridge University Press
From the present to .780 M. yrs.( identified as Brunhes/Matuyama) there are 10 contested observations of the variations of the magnetic poles. The times are: Githenburg flip 12,350, Mono 28,000, Lake Mungo 30,000, Laschamp 50,000, Blake 110,000, Lake Biwa I 176,000, Biwa II 292,000, Biwa III 380,000, Big Lost 575,000, and Delta 645,000.
My observation: In the last 65 M. years the evolution of the mammals had a lot of help/hinderance from the sun ( 46 times). I think that we had a lot of bad luck. The mutations, which, most of the times are bad, did happen to us. (The following are still within our DNA and could be reactivated.)
Loosing your tail instead of developing it into an other grasping hand, as do the monkeys, for swinging through the branches was a disadvantage. Then to make things worst, the feet get modified so that you cannot grasp branches with your feet. It is a wonder that our ancestors who fell out of the trees, managed to survive among all the predators on the ground.
As I understand it, the lack of a ozone protection layer does not mean the death of all the living orgasms nor does it mean that there would result viable genetic variations in every living thing. However, the odds are that something would have changed and survived. Here are three ways of obtaining a change to the DNA. First, and least likely, from an alpha or betta particle disturbing a sperm or an egg. Second, from the food chain which has been changed so that the chemicals are capable of affecting the DNA. (Remember the thylamide babies and the present concerns over genetically modified foods.) Third, and I think, the most probable, the DNA modification could have occured in a virus which would then do a DNA modification in the human.
Madeline Drexler, in her book, "Secret Agents", by Peguin Books 2003, gives good background information of the role of virus etc. in the evolution of mankind.

Ilargi said...

"But what is it that Haiti offers?

There are no mineral resources.
Its location is insignificant."

Are you guys looking at the same maps that I am? On mine, Haiti is only some 50 clicks from Cuba. If the wind is favorable, you can literally piss on Fidel from there.

It's also an ideal central command post to control both the Caribbean and every piece of land between Mexico and Brazil. And the US has plenty attack plans for the region. All eyes are on the Orinoco.

Haiti is prime real estate. Just need to get rid of the people you can't use as servants, hookers and chambermaids. How about a nasty disease or two in the next 2-3 weeks?

jal said...

Maybe, the primate time scale will fit with the possible influx of cosmic radiation...? All that is needed is one woman or man to have a viable DNA modification. For instance, Mitochondrial Eve who lived in Africa about 150,000 years ago (Lake Biwa I 176,000). And the Neandertals who died off 30,000 years ago. (Lake Mungo 30,000) " many changes occurring around 2.5 million years ago"... coincide with 4 magnetic reversals. (1.950, 2.140, 2.150, 2.581)
The is a good article in Scientific America by Luann Becker. It combines the information of impacts, volcano eruptions and Mass Extinctions. It is available on the net at COMETS
Another good reference is "Rogue Asteroids and Doomsday Comets" by Duncan Steel,John Wiley & Sons Inc., 1995.
p. 103 ... conclusion that the last wave arrived within the past 1 to 5 million years ago.
p.107 The idea of "punctuated equilibria" being the mode through which the evolution of life forms mainly takes place, rather than the gradual changes visualized by Charles Darwin ... Advances in our understanding of the influence of impacts are now showing that the equilibria may be "punctured" rather than punctuated, the puncturing agents being asteroids and comets that every so often invade our territory, wreaking havoc as they do so.

jal said...

ADAPTATION would be something that happens to what is already existing. (i.e. not using the forelegs for walking)

1) Did you know that all mammals (well! almost all), have a baculum? It's still in our DNA.
I would like to know when humans (mutated) lost this important tool. It has to give an evolutionary advantage since it is so widely used by all other creatures.
2) Did you know that all mammals use estrus, and pheromones to signal to the males that it is time for copulating/REPRODUCING? (Going into heat.) It's still in our DNA.
Humans had this ability in the past. I would like to know when we lost (mutated) this ability. Almost all reproducing living creatures use this mechanism. It is the most successful mechanism invented for the reproduction of the species, and we don’t have it. For millions of years the life expectancy of primates was 18 years. That implies that the age of sexual maturity had to be lower than 13 years, as with us, because there would not be enough years available for child rearing. Fewer years to get to estrus would also mean fewer years of being able to think without having the interference of the pheromones. Since we are the only ones not "going into heat" and we are the only ones "capable of thinking" it seems obvious to me that there must be a relationship. Now, that is bad luck. Losing the universal mechanism for reproduction.
3) Did you know that humans are the smelliest creatures on earth?
We have two types of glands that produce smell; the sebaceous glands, and the apocrine glands. Those are the glands that make us sweat and gives us an oily skin.
Being so smelly gives us two strikes against survival. First, any predators that use his nose to find a human prey would have no trouble finding and hunting humans. Secondly, any prey that uses his nose to avoid predators would be far gone before we got within attacking distance.

jal said...


4) Did you know that humans are the only mammals that have 40% physical stimulus and 60% mental stimulus for achieving ejaculation?
The ability to make and to interpret symbols must come from an exceptional cause, such as, THE SURVIVAL OF THE SPECIE. Procreation is the strongest pressure that I can think of that would make our brains evolve.
I would like to know if anyone has done any studies that would make the link with the fact that humans DONT go into heat and that we have evolved the ability to "think".
I am presuming that males lost their penis bone and their ability to detect a female going into heat and that the females lost their ability to go into heat, prior to the enhancement of their brain capabilities. The start of the runaway brain expansion of 200,000 years ago is probably when we lost our ability to go into heat.
I credit the female as being the one who made the first breakthrough that put humans on the path of "intelligence". The survival of the female was probably linked to her ability to have children from the alpha male. If she could not go into heat, she could not attract the alpha male or any males for that matter. This would have resulted in the end of that specie. Therefore, she would have been obliged to observe, and to determine that a male was stimulated by an other female, and, therefore, interpose herself and presented herself as receptive even though she wasn't in heat.( Ability to "think"). I assume that the male did eventually wake up and realized that the female was trying to "communicate" a symbol by her actions. Eventually, the offsprings would evolve this action as a substitute to going into heat. As a result, today, most of our sexual stimulus comes from our brain.
Another possibility is that we evolved sex as a social behavior before losing our ability to go into heat. Just like the bonobo are doing. For more information on the bonobo go to BONOBO AND SEX
Like the bonobo, who enjoy the stimulation of their sexual organs, our human forefathers (mothers) had to have developed such a mechanism prior to losing "going into heat" to assure the continuity of the specie. A good book, to get you prepared for the above statement, is "What's Love Got To Do With It?", by Meredith F. Small, Anchor Book, 1995.

edsel said...

@Top Cat
From what I remember, I thought the shock Jane Goodall experienced in witnessing the murderous monkeys was due precisely to their actions being premeditated and systematic (the murders occurred over several days, if not weeks, were carried out cooperatively by a group of males, and were directed specifically at the males of another group).

Ilargi said...


Look, you can't even spell my name right. Where do you think that places you on the evolutionary ladder?

Me, I'm all torn because Dr. King is God in my eyes, but word is he didn't treat his women right.

Greenpa said...

IM - re "Sexpelin" -

I did actually consider that spelling, as well as several others; but decided it might too easily morph into "Sexpalin" to the casual eye; which would be just a tad too confusing. :-)

Greenpa said...

Top- "In a recent interview, Jane Goodall was asked about chimps killing each other, was this the genesis of murder in the more highly evolved humans?

She said that chimps kill in the moment, it was situational, not premeditated."

While Goodall has been cosmically great, in many ways, she is not without the occasional foible.

I think this IS one- her own research really contradicts this statement; many of the documented chimp killings followed a long history of friction and agression.

One thing to watch with her, and her group- they tend to worship chimpanzees; the "noble savage" thing. Bonobo researchers sometimes refer to them as the Chimp Mafia- they can be proprietary about primate funding, to extent of poo-pooing other work for questionable reasons.

Greenpa said...

""But what is it that Haiti offers?

There are no mineral resources.
Its location is insignificant."

Ilargi has the better insight here. While it's desperately degraded, for the bulk of the colonial/slave centuries, Haiti was the great star of the Caribbean; much more productive of profit than other islands.

Greenpa said...

LynnHarding said...
"Oh please stop with the men/women/evolutionary stuff. Every man I have ever met who is into this conversation has been a creep."

I sympathize, and I'll believe you.

"Evolution" has been desperately abused as an excuse to justify bad bad things since Darwin, at least.

I saw the "Blondes have the advantage" bit before it was referenced here- my opinion is that the data is sound, but virtually none of the conclusions are.

There is a lot of that going around, and nowhere more than in all areas of "human behavior".

Evolution is the most powerful tool biology has- and like all powerful tools, it can be used for good or evil. And is.

Bigelow said...

Societal gender stereotypes are so yawn. Behold the countenance of an Amazon Warrior’s descendant.
And she’s red haired too! (Always a plus).
Secrets of the Dead: Amazon Warrior Woman

Afterwards, should couples decide to legalize all that mating selection stuff:

“Not all marriages fail for the same reason. Nor is there usually one reason for the breakdown of a particular marriage. Nevertheless, we hear some reasons more often than others.

They are:

Poor communication
Financial problems
A lack of commitment to the marriage
A dramatic change in priorities

There are other causes we see a lot, but not quite as often as those listed above .They are:

Failed expectations or unmet needs
Addictions and substance abuse
Physical, sexual or emotional abuse
Lack of conflict resolution skills”
Making Marriage Last -American Academy of Matrimonial Lawyers

Unknown said...

Really good comments on important contemporary issues beat the gender war hands down.

I guess we don't have anything smart to say about important stuff because we're having the gender war.

Maybe we're not that smart after all.

Oh no. What now?

g-minor said...

@ jal

Usage police call.

"SPECIE" means coins (rather than paper money).

"SPECIES" is both the singular and plural form of the taxonomic category.


Phlogiston Água de Beber said...


Here I thought I was making good progress toward being perceived as a nice guy and you have to go and unmask me. Dammit! BTW, might I ask what you think of the ladies that have chosen to participate in the discussion?


Yes, you were right to be concerned about that potential ocular deception. I'm terribly sorry.

VK said...

Venezuela's President Hugo Chavez on Sunday accused the United States of using the earthquake in Haiti as a pretext to occupy the devastated Caribbean country and offered to send fuel from his OPEC nation.

"I read that 3,000 soldiers are arriving, Marines armed as if they were going to war. There is not a shortage of guns there, my God. Doctors, medicine, fuel, field hospitals, that's what the United States should send," Chavez said on his weekly television show. "They are occupying Haiti undercover."

"On top of that, you don't see them in the streets. Are they picking up bodies? ... Are they looking for the injured? You don't see them. I haven't seen them. Where are they?"

@ Greenpa

This reminds me of your infamous line regarding Palin. "Like shooting MILF's in a barrel."

@ LynnHarding


Top Hat Cat said...


Jane Goodall's initial shock years ago when she first observed chimps killing each other has apparently been tempered by the years and other considerations, as Greenpa discreetly mentioned.

The word 'premeditated' has to be defined however.

Is it an hour from now? A week? A month?

The Shock Doctrine of the Chicago School of Economic Fascist Goons & Thugs® is premeditation on a decade long scale.

There are numerous arguments raging on the boundary line between what separates humans and animals. Tool making, language, cooking, complex emotions, control of fire, yadayadayada.

Me, I've always regarded the ability to project forward and backward in Time, at will, as the lynch pin that makes 'humans' different than animals.

Those Big Bad Cortexes are storage capacity. For Time travel if you will.

I have a cat that I consider very emotionally complex and extremely intelligent (more so than any animal I've ever know in my life). She apparently runs in her dreams chasing mice, judging by her paws twitching and her vocalizing. She has a rich compliment of talents and a genius for mischief. I'm going out on a limb here, but I'm pretty damn sure she does not contemplate what will be for dinner next Monday nor does she remember what she had last Monday.

Her 'premeditation' window is very small. So are chimps compared to humans.

If Ronnie Raygun and Bonzo had conspired to enslave the U.S public with crushing Ponzi debt loads disguised as 'free market' economics, I'm pretty sure most of the heavy "premeditation' part of it would have fallen on Ronnie (just barely though to be fair to Bonzo).

Chimps don't plan robbing a liquor store next week.

People do.

And then there's Bonzo Goes to Bitburg by the Ramones

Semper Augustus Gloop said...

Are you guys looking at the same maps that I am? On mine, Haiti is only some 50 clicks from Cuba. If the wind is favorable, you can literally piss on Fidel from there.

Pan out a little on that map and you'll see Florida and, dare I mention it, Guantanamo??

Your previous backpeddle I could accept; that Bush and Clinton Inc could make some bucks by commandeering aid. But you really believe Haiti is tactically important for Cuba.

That's astonishing.

VK said...

"What we've got here is failure to communicate.
Some men you just can't reach...
So, you get what we had here last week,
which is the way he wants it!
Well, he gets it!
N' I don't like it any more than you men." *

Look at your young men fighting
Look at your women crying
Look at your young men dying
The way they've always done before

Look at the hate we're breeding
Look at the fear we're feeding
Look at the lives we're leading
The way we've always done before

My hands are tied
The billions shift from side to side
And the wars go on with brainwashed pride
For the love of God and our human rights
And all these things are swept aside
By bloody hands time can't deny
And are washed away by your genocide
And history hides the lies of our civil wars

D'you wear a black armband
When they shot the man
Who said "Peace could last forever"
And in my first memories
They shot Kennedy
I went numb when I learned to see
So I never fell for Vietnam
We got the wall of D.C. to remind us all
That you can't trust freedom
When it's not in your hands
When everybody's fightin'
For their promised land

And I don't need your civil war
It feeds the rich while it buries the poor
Your power hungry sellin' soldiers
In a human grocery store
Ain't that fresh
I don't need your civil war

Look at the shoes your filling
Look at the blood we're spilling
Look at the world we're killing
The way we've always done before
Look in the doubt we've wallowed
Look at the leaders we've followed
Look at the lies we've swallowed
And I don't want to hear no more

My hands are tied
For all I've seen has changed my mind
But still the wars go on as the years go by
With no love of God or human rights
'Cause all these dreams are swept aside
By bloody hands of the hypnotized
Who carry the cross of homicide
And history bears the scars of our civil wars

"We practice selective annihilation of mayors
And government officials
For example to create a vacuum
Then we fill that vacuum
As popular war advances
Peace is closer" **

I don't need your civil war
It feeds the rich while it buries the poor
Your power hungry sellin' soldiers
In a human grocery store
Ain't that fresh
And I don't need your civil war
I don't need your civil war
I don't need your civil war
Your power hungry sellin' soldiers
In a human grocery store
Ain't that fresh
I don't need your civil war
I don't need one more war

I don't need one more war
Whaz so civil 'bout war anyway

Guns & Roses
Civil War

Ilargi said...


I don't backpeddle. I don't even have to look up what you think you're referring to, and of which I have no clue. One thing I know is I never said anything about Bush and Slick making money off aid. Not too smart an allegation, that. Pay attention! And don't ever go into tactical planning; not your forté.

carpe diem said...

C'mon Ilargi.....after all what's in a name? besides what we call a rose.
Give Lynn a break- you're not exactly a Tom, Dick or Harry and even you make spelling mistakes. Perish the thought!

Re: The sex thing- it's way over rated.
I'd rather have a great meal and a fine bottle of wine! (just kidding -hmmm -but now that I think of it........).

; )

Phlogiston Água de Beber said...


I agree that the country that lavishes more money on its military than all others combined doesn't need bases on Haiti to invade Cuba. Actually, I can't imagine Usanistan invading Cuba until after all need to keep Usans afaid of commie invaders has passed.

I can easily imagine though, a roomful of TPTB saying upon hearing of the disaster, "we gotta keep those Haitians from being treated by any of those Cuban medical teams that you can bet those no-good Castro brothers will offer to send, they are after all prone to slave revolts". To achieve that aim you must seize the ports of entry. The UN troops have been keeping the place locked down the last few years, but they kind of got decapitated and disorganized by the quake. It is likely that we will be there for quite awhile. The Haitians have my sympathy.

california womanl said...


Thanks for a wonderful presentation at Todd's house !

Barbara and Ken Hazleton

Anonymous said...

Re Chavez on US intentions in Haiti

Of course, Chavez is right! Oh, and Ilargi's comments are correct as well. How can anyone not see that? For a start, some people here need to read Chomsky's works and Howard Zinn's, "A People's History of the United States."

Cassandra said...

Ulterior motives?

A little bit of digging on Aceh and I got this:

"(3). Our research has also shown that players with diverse economic interests are eager to wipe Kuala Bubon off the map, so that the existence of that village will not hinder several plans to build special harbors along the Bubon Bay, including a ferry harbor to transport commuters and other passengers from the Aceh mainland to the island of Simeulue, which may becoming a new economicgrowth centre after the discovery of huge hydrocarbon reserves northeast of the island. "  

All I know is that we don't know the half of it.

Scholastica said...

Top Cat said, "Get real, 'rights' for women or minorities or most men will evaporate like mist on the meadow in an era of expensive scarce energy."

"Rights" will certainly evaporate. But if nature allows a viable population of humans on the other side of the bottleneck, it may not be what we expect. Ants survive quite nicely with only a few short-lived males. Our future may bear little resemblance to our present or our past.

Anonymous said...

Senegal offers land to Haitians

What's really behind this? My gut tells me it isn't simply altruistic.

Phlogiston Água de Beber said...

A fellow named Charlie Ehlen said to Joe Bageant. When did America become a goddamn homeland? And shared a few other interesting thoughts.

Phlogiston Água de Beber said...


I posted a link to that story yesterday and posed a similar question. Just now while pondering your question, a reasonable answer popped into my head.

The Senegalese President has no doubt seen stories discussing the mountain of money being bandied about for aid to Haiti and thought to himself, why not see if I can get them to spend some of that money in Senegal. I doubt anything will come of it.

Frank said...

I'm with Lord Bacon. This is the shark jump. Florida is 100 clicks from Cuba, Gitmo is, count 'em, zero. Whatever the US might want with/from Haiti, a military base vs Cuba is not it.

Also, there are Cuban doctors in Haiti. Fifty clicks is easy boating. It's not hyped on US media, but CNN showed a couple over the weekend.

Oh and the UN force already there is twice what the US will have.

justaguy said...

I. M. Nobody said...

A fellow named Charlie Ehlen said to Joe Bageant. When did America become a goddamn homeland? And shared a few other interesting thoughts.

I have often thought the same damned thing!

Ilargi said...

New post up.

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