Month: July 2010

Eric Garland:

There’s a whole ton that economists don’t do:

• SOCIAL TRENDS like Boomer retirements, a culture of hiring and firing people every four minutes,
• TECH TRENDS such as ubiquitous wireless communication flattening hierarchies and enabling global collaboration,
• ECOLOGICAL TRENDS such as water shortage and the end of cheap energy,
• POLITICAL TRENDS such as the removal of primacy of states and even European nations in favor of central bank currency manipulation and fiat economic activity.

Uh, sort of everything except their incredibly narrow abstraction of the universe.

I’m going to just say it – neoclassical economics is basically worthless. Its ludicrous curves and CIGS, its absurd Keynesian Katfight, its outmoded and ignorant concept of “gross domestic product” – their intellectual output simply is useless in the real world. Their performance in response to the last two years make the moniker “The Dismal Science” an incredibly optimistic assessment.

Does anybody need economists? We need top-down analysis of economic activity in our complex world. We are not receiving it from those who claim to provide it. What shall we do?

An oil supply crunch looms large. This is both unstoppable and taking place at an unprecedented pace. A lack of oil by 2013 could force the price of crude above $200 a barrel.

One of the world’s most respected institutions warns that business is facing catastrophic consequences by not preparing for oil scarcity.

Supply security and climate change is forcing a wave of initiatives that will revolutionize the way that we manage and use energy.

• Businesses which prepare for and take advantage of the new energy reality will prosper – failure to do so could be catastrophic
• Market dynamics and environmental factors mean business can no longer rely on low cost traditional energy sources
• China and growing Asian economies will play an increasingly important role in global energy security
• We are heading towards a global oil supply crunch and price spike
• Energy infrastructure will become increasingly vulnerable as a result of climate change and operations in harsher environments
• Lack of global regulation on climate change is creating an environment of uncertainty for business, which is damaging investment plans
• To manage increasing energy costs and carbon exposure businesses must reduce fossil fuel consumption
• Business must address energy-related risks to supply chains and the increasing vulnerability of ‘just-in-time’ models
• Investment in renewable energy and ‘intelligent’ infrastructure is booming. This revolution presents huge opportunities for new business partnerships

The insurance market has a major interest in preparedness. Lloyd’s calls on manufacturers, retailers and the wider business community to reassess global supply chains and their just-in time models because the “current system is increasingly vulnerable to disruption.”

Whether the spill is capped in July, August or September, about 20% of the oil particles will ooze beyond Florida and into the open Atlantic.

Though diluted, the east coast could see oil by October. In one year, garbage in the Atlantic gyre will be shined and nearly the entire Gulf is sheened.

The full Univ. of Hawaii animation is here.

There’s nothing safe out there. You should have seen that coming. People don’t think about what could go wrong.

Space shuttles shatter. Bridges buckle. Hotel walkways collapse. Levees fail. An offshore oil rig explodes, creating the biggest offshore oil spill in U.S. history.

The common thread is technological arrogance and hubris.

With a career studying more than 600 disasters, Robert Bea said, “I’m an engineer – I’m in the prevention business. But you can’t prevent what you don’t understand. Look at the oil spill problem. Everyone thinks it’s a technological problem. It’s not. It’s a management problem.”

“It’s just the arrogant presumption that you have got the thing under control, whatever the thing is. In this case, it’s drilling beyond your depth.”

Most of the global food supply is just 12 crops and 14 animals, an alarmingly shallow gene pool.

What doesn’t bend, breaks.  That’s the worry of too few.

Three-quarters of the world’s critically important food-crop varieties have disappeared during the 20th century, and hundreds of locally adapted livestock breeds are on the verge of doing so.

Diversity is an alternative to catastrophe. The more variety in a system, the more resilient it is.

Another damaging shift:  Suburban poor increased 25% over the Bush years; five times more than in cities.

A third of the very poor now live in the suburbs, the largest and fastest-growing poverty demographic area in the country. Suburban governments are not prepared.

Wow.

5 billion of our 6.9 billion people now have a mobile phone.

In the year 2000, about 720 million people had a cellphone. That’s 2 million new contracts per day.

The House Energy Committee called BP’s pipeline chief to Washington. After the second hearing in a month, Kevin Hostler has decided to quit.

The 800-mile Trans-Alaska Pipeline System transports 700,000 barrels of oil per day, about 15 percent of US crude oil production. BP’s severe policies has cut the 2010 budget to $1 billion, compared with $1.1 billion in 2009 and $1.3 billion in 2008.

Based on hundreds of pages of internal documents and interviews with more than a dozen senior employees on the safety and integrity of the pipeline, the ‘Business Practices, Employee Concerns Program and Compliance and Ethics Group’ will develop a plan for enhancing the open work environment to deal with issues of intimidation and fear.

“There is a risk ranking exercise that is used and the concern that the risk ranking is being used primarily for budget reductions and although work is shown as lower risk it still should be done to protect the environment.”

Alaskans are celebrating. The pipeline’s owners issued an executive obit:

“This is consistent with the recent employee survey that demonstrated there has been a reduction in employee comfort in reporting concerns to senior management.”

Stealing credit from her predecessor, Sarah Palin boasts on radio and TV, : “I had to set up our Petroleum Systems Integrity Office so that we could be there on the front lines making sure what the oil companies were telling us was legit when they were dealing with their corroded pipes that we find out and other lax maintenance issues….“

More than 100 recorded incidents of corroded pipes and “other lax maintenance issues” between 2001 and 2007 reveals Palin’s pipeline oversight was bogus

“More than one American in five thinks that buying lottery tickets constitutes a sound retirement plan.

“What a lottery sells is a dream. That dream is of great personal wealth, even if the lottery is the only game in the world in which your chances of winning are not greatly increased by playing.

From The Economist, here’s a firm and revealing ‘Special Report On Gambling’:

• Shuffle up and deal
• The risk instinct
• At war with luck
• Bet on the bot
• Log on, ante up
• Lengthening odds
• Cutting off the arms
• When the chips are down
• The dragon’s gambling den
• Come, all ye gullible
• Sure thing

“The most popular forms of gambling—slots, lotteries and casino games—are simply bad bets which players are likely to lose.”

Before you sob, laugh out loud. The rich are tops in walking away from mortgages. “The rich are different: they are more ruthless.”

NYTimes:

Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent. One in 12 mortgages below the million-dollar mark is delinquent.

There’s nothing more to know about Reagan Republicans.

How long it will take to fix the post-80s frenzy of finance?

Ponder these charts of our total debt in the credit market. The green line is government debt; red line is private debt.

Austerity policies after the crash of 1929 triggered massive unemployment and misery for 13 years. Obviously shrinking spending and budgets by 10% of GDP/year was much too rapid.

How many years do we pay down the massive accumulated debt and interest of the free market fiasco?

Japan we can see. Tackling debt since 1998 at about 6%/year, less painful than outright depression, their debt load has been reduced by half.

Stuart Staniford calculates the overall process will spin out to 2025, adding that we don’t know the appropriate speed to offload debt. And this time it’s global.

Perhaps one of a few in 100 years, a professor is asking:

We need big innovative American businesses that can scale, export and employ millions of workers, many without a college degree. How are we going to get there?

We consume the equivalent of 1.4 Earths, but a small percentage of us are responsible for the vast majority of consumption, pollution, land and water degradation, and biodiversity loss.

Nearly 25 percent of California’s children have never seen a dentist.

OECD countries need to create 80 million jobs.

Diabetes is exploding  in Vietnam, Thailand, Malaysia, Singapore, Cambodia and Laos. Why? Fast food is everywhere.