Month: December 2009

Yves Smith:

In a sense, this crisis is about values (the prices paid for many assets) and the rules (regulations governing financial markets). It is also about rules (rigid model based formulations of price) and values (ethics or the lack thereof).

Copenhagen’s agenda reduced to a nutshell: :

1. Targets, Timetables and Actions:
   2020 greenhouse gas reductions for developed countries at 25-40% cuts based on 1990 levels and 80% by 2050. Developing countries agree to reduce deforestation, limit emissions and select sustainable futures.
2. Funding Climate Action:
   A ‘climate finance mechanism’ with $10-$15 billion ‘fast start’ in 2010 to 2012 as well as longer term adaptation and mitigation – including forestry and technology support.
3. Common Standards:
   Common methods to track emissions, to account for, and report on emission reduction.
4. Peer Review:
   Countries to measure, report and verify.
5. Global Climate Agreement:
   Set up a legally binding 2012 agreement, built on these foundations.

That’s it.

And all of you are leaders in your communities — in the business sector and the labor sector, in academia, we even have a few pundits here — it is important to understand what’s at stake and that we can’t keep on playing games.

I mentioned that I was in Asia on this trip thinking about the economy, when I sat down for a round of interviews. Not one of them asked me about Asia. Not one of them asked me about the economy.

I was asked several times about had I read Sarah Palin’s book. (Laughter.) True. But it’s an indication of how our political debate doesn’t match up with what we need to do and where we need to go.

Obama at the Forum on Jobs and Economic Growth:

We have a structural deficit that is real and growing, apart from the financial crisis. We inherited it. We’re spending about 23 percent of GDP and we take in 18 percent of GDP and that gap is growing because health care costs, Medicare and Medicaid in particular, are growing. And we’ve got to do something about that.

You then layer on top of that the huge loss of tax revenue as a consequence of the financial crisis and the greater demands for unemployment insurance and so forth. That’s another layer. Probably the smallest layer is actually what we did in terms of the Recovery Act. I mean, I think there’s a misperception out there that somehow the Recovery Act caused these deficits.

No, I mean, we had — we’ve got a 9-point-something trillion- dollar deficit, maybe a trillion dollars of it can be attributed to both the Recovery Act as well as the cleanup work that we had to do in terms of the banks. In turns out actually TARP, as wildly unpopular as it has been, has been much cheaper than any of us anticipated.

So that’s not what’s contributing to the deficit. We’ve got a long- term structural deficit that is primarily being driven by health care costs, and our long-term entitlement programs. All right? So that’s the baseline.

Now, if we can’t grow our economy, then it is going to be that much harder for us to reduce the deficit. The single most important thing we could do right now for deficit reduction is to spark strong economic growth, which means that people who’ve got jobs are paying taxes and businesses that are making profits have taxes — are paying taxes. That’s the most important thing we can do.

We understand that in this administration. That’s not always the dialogue that’s going on out there in public and we’re going to have to do a better job of educating the public on that.

The last thing we would want to do in the midst of what is a weak recovery is us to essentially take more money out of the system either by raising taxes or by drastically slashing spending. And frankly, because state and local governments generally don’t have the capacity to engage in deficit spending, some of that obligation falls on the federal government.

Having said that, what is also true is that unless businesses and global capital markets have some sense that we’ve got a plan, medium and long term, to get the deficit down, it’s hard for us to be credible, and that also could be counterproductive. So we’ve got about as difficult a economic play as is possible, which is to press the accelerator in terms of job growth, but then know when to apply the brakes in the out-years and do that credibly. And you know, we are trying to strike that balance, but we’re going to need help from all of you who oftentimes are more credible than politicians in delivering that message.

Because we want to leverage whatever public dollars are spent, and we are under no illusion that somehow the federal government can spend its way out of this recession. But it is absolutely true that any of the ideas that have been — been mentioned here are still going to require some public dollars, and those are actually good investments to make right now.

Brad DeLong says, “It’s so nice to have an intelligent, thoughtful, and industrious president….”

Jeffrey Sachs:

We can only marvel at the disarray.

Here we are, 17 years after the signing of the UN framework convention on climate change, two years after the decision in Bali to agree a new climate policy, one year after Barack Obama’s election, and days out from the Copenhagen conference. Yet a real global strategy to avoid catastrophe remains elusive.

The truth is that even if we reach a political agreement, we’re not yet on track to achieve practical, significant and sustained progress.

Yes, there is some progress. … The mayhem, however, is at least as great.

Robin Wells:

Big savers got us into this mess, as well as big spenders.

The world is trapped in a global savings glut. It is both the source of our economic woes and an obstacle to the task of pulling ourselves out of the ditch.

Worse yet, the glut’s continued existence will feed a succession of asset bubbles until we confront it, head on, and find ways to soak up the excess.

Yes, we can blame the City and Wall Street for turning the global savings glut into fissile material. But that’s like saying, “hyenas do what hyenas do”. Given extraordinarily lax regulation and a flood of money to play with, bankers were just acting according to their incentive schemes. They merely took advantage of the opportunities the glut presented. The real culprits are thrifty Germans, and state-owned enterprises in China – along with governments of other countries, of course, turning a blind eye to the escalating problems.

well, we just gotta:

well, we just are:

The next generation of composite armor bomb resistant vehicles will be in Afghanistan along with the 30,000 extra troops.

The $1.4 million M-ATV seats four plus one gunner. Powered by a 370 hp Caterpillar C7, it weighs just under 25,000 pounds. Top speed is 65 mph using four terrain settings with central tire inflation.

Gregor Macdonald:

I am forecasting that the world will not successfully transition from oil to a broad basket of renewable energy and power sources over the next twenty years.

Instead, I strongly favor an outcome in which oil, the construction fuel for the global build-out of new power generation, becomes so expensive that the world becomes energy poor, and turns instead back to coal.

In case you hadn’t noticed, the process of energy impoverishment has already begun.

Those who would propose a successful energy transition over the next 20 years have failed to produce a holistic model that pays respect to both the history of previous energy transitions, and to the hurdles that lay before us.

When you’re impoverished you burn coal.

America Without a Middle Class

Can you imagine an America without a strong middle class?
If you can, would it still be America as we know it?

Pundits talk about “populist rage” as a way to trivialize the anger and fear coursing through the middle class. But they have it wrong.

Elizabeth Warren
Chair of the Congressional Oversight Panel

Today, one in five Americans is unemployed, underemployed or just plain out of work. One in nine families can’t make the minimum payment on their credit cards. One in eight mortgages is in default or foreclosure. One in eight Americans is on food stamps. More than 120,000 families are filing for bankruptcy every month. The economic crisis has wiped more than $5 trillion from pensions and savings, has left family balance sheets upside down, and threatens to put ten million homeowners out on the street.

Families have survived the ups and downs of economic booms and busts for a long time, but the fall-behind during the busts has gotten worse while the surge-ahead during the booms has stalled out. In the boom of the 1960s, for example, median family income jumped by 33% (adjusted for inflation). But the boom of the 2000s resulted in an almost-imperceptible 1.6% increase for the typical family. While Wall Street executives and others who owned lots of stock celebrated how good the recovery was for them, middle class families were left empty-handed.

The crisis facing the middle class started more than a generation ago. Even as productivity rose, the wages of the average fully-employed male have been flat since the 1970s.

But core expenses kept going up. By the early 2000s, families were spending twice as much (adjusted for inflation) on mortgages than they did a generation ago — for a house that was, on average, only ten percent bigger and 25 years older. They also had to pay twice as much to hang on to their health insurance.

To cope, millions of families put a second parent into the workforce. But higher housing and medical costs combined with new expenses for child care, the costs of a second car to get to work and higher taxes combined to squeeze families even harder. Even with two incomes, they tightened their belts. Families today spend less than they did a generation ago on food, clothing, furniture, appliances, and other flexible purchases — but it hasn’t been enough to save them. Today’s families have spent all their income, have spent all their savings, and have gone into debt to pay for college, to cover serious medical problems, and just to stay afloat a little while longer.

UK’s Telegraph:

“We started our research seeking men in their 20s who had never consumed pornography,” said Professor Simon Louis Lajeunesse. “We couldn’t find any.”

The study found that men watched pornography that matched their own image of sexuality, and quickly discarded material they found offensive or distasteful.

On average, they first watched pornography when they were 10 years old.

“Not one subject had a pathological sexuality.”

Robert Brenner’s Into the Eye of the Storm:

Bubbles were no accident.

The massive expansion of credit was the only way to cope with manufacturing overcapacity.

If this is correct, there is no easy fix for our problems.

The blowing of asset bubbles is not an unfortunate side effect of regulatory capture or Wall Street’s greed.

It was the only way governments could keep economic growth from falling below politically dangerous levels once traditional Keynesian methods of fiscal stimulus through deficit spending were no longer adequate to compensate for the sclerosis at the heart of the advanced capitalist economies: “worsening difficulties with profitability and capital accumulation.”

via Yves Smith.

On a general point, here’s a brain dial calibration, something to re-frame the actual world from the pseudo-world that preoccupies our daily politics.

Our media impresses politics and governments as if the entire globe is hinged on policies and statements of a few capitals and committees …or pulpits and pundits. Perhaps because profit margins are greater when managing only a few offices and stringers.

How much do we know about the real world?

Stock and currency markets turn over about $900 trillion each year and derivatives another $625 trillion while Congress frets over healthcare crippling us at well under $1 trillion. I don’t have the numbers handy on industrial transactions, inter-port carry, etc. etc.

We are uninformed.

In 1958, financial sector debt was 6% of GDP. Last year, it was 115% of GDP. Compare this to the day to day drumming about federal government debt.

But if the amount of DNA evidence is too small to be definitive, because we do that with dinosaurs already, should Amanda Knox be convicted of murder?

Yes, forensic DNA can now be built from the DNA of everyone.

I said, building evidence from the DNA of anyone.

Dr Karl’s Great Moments In Science.

Let’s look at these myth about the hyena, one at a time.

One, the horrible hyena is a pussycat.

NY Times:

The average person experiences loneliness about 48 days a year, but having a lonely friend can add 17 days of loneliness annually.

By comparison, every additional friend can decrease loneliness by about 5 percent, which translates to about two and a half fewer lonely days a year.

Chris Nelder’s frank and conversational piece on moves the big money is making into hard assets:

America is quickly learning that a purely service economy is simply not sustainable.

And the final pillar that the dollar stands on — its role as the world’s reserve currency, and the primary oil trading currency — is slowly eroding. Whether you argue it on the basis of money supply or fundamental value, the dollar is going to remain weak and under attack.

He was an angry, unhappy and frustrated man who was not able to control his emotions or his hands.

As a child I witnessed his repeated violence against my mother, and the terror and misery he caused was such that, if I felt I could have succeeded, I would have killed him. If my mother had attempted it, I would have held him down.

For those who struggle to comprehend these feelings in a child, imagine living in an environment of emotional unpredictability, danger and humiliation week after week, year after year, from the age of seven. My childish instinct was to protect my mother, but the man hurting her was my father, whom I respected, admired and feared.

Patrick Stewart on violence at home:

The situation was barely tolerable: I witnessed terrible things, which I knew were wrong, but there was nowhere to go for help.

Worse, there were those who condoned the abuse. I heard police or ambulancemen, standing in our house, say, “She must have provoked him,” or, “Mrs Stewart, it takes two to make a fight.” They had no idea. The truth is my mother did nothing to deserve the violence she endured.

She did not provoke my father, and even if she had, violence is an unacceptable way of dealing with conflict. Violence is a choice a man makes and he alone is responsible for it.

No one came to help. No adult stepped in and took charge.

Where you’re born, where you live, determines what will kill you?

Harvard School of Public Health: The “Stroke Belt” of the American South continues its tight grip on stroke risk among its native population, according to a new analysis of stroke mortality.

People born in the region and living there as adults still had a one-third greater risk than the general population.

Dr. Howard Kirshner: a hefty slide presentation with a 45 minute podcast.

Reuters reports: “Being born in one of the seven southeastern U.S. states making up the “Stroke Belt” increased a person’s likelihood of suffering a deadly stroke, whether or not they still lived in one of these states.”

…a giant captive entertainment demographic that exists solely to be manipulated for ratings and ad revenue…

Matt Taibbi:

For those of you who can’t connect the dots…

You teabaggers are in the process of being marginalized by your own ostensible party leaders in exactly the same way the anti-war crowd was abandoned by the Democratic party elders in the earlier part of this decade. Like the antiwar left, you have been deemed a threat to your own party’s “winnability.”

And do you know what that means? That means that just as the antiwar crowd spent years being painted by the national press as weepy, unpatriotic pussies whose enthusiastic support is toxic to any serious presidential aspirant, so too will all of you afternoon-radio ignoramuses who seem bent on spending the next three years kicking and screaming your way up the eternal asshole of white resentment now find yourself and your political champions painted as knee-jerk loonies whose rabid irrationality is undeserving of the political center.

Matt Taibbi:

…when the press corps decides to abandon all restraint and go for the head shot, it usually tells us a lot more about the reporters’ bosses and what they’re thinking than it does about the reporters themselves.

Your average political reporter is a spineless dweeb who went to all the best schools and made it to that privileged seat inside the campaign-trail ropeline by being keenly sensitive to the editorial wishes of his social and professional superiors.

When their bosses were for the war, they were for the war, and they battered any candidate who was “weak on foreign policy.” When the political winds shifted four years later and the consensus inside the Beltway suddenly was that Iraq had been a hideous mistake, the campaign-trail reporters mysteriously started sounding like Sixties peaceniks…