peristaltor: (The Captain's Prop)
I haven't mentioned it recently, or at all, but a few months ago I spoke with a Bitcoin guy. He was my first, a tecky by trade who really believed in the Bit.

I asked him what the appeal was. For him, it was to take control of money in ways that separate it from people. Things proceeded to weird. )
peristaltor: (The Captain's Prop)
One of the better tiny books I've ever bought has to be, in my opinion, In Other Words: A Language Lover's Guide to the Most Intriguing Words Around the World by Christopher J. Moore. In it, we learn that there are languages without certain terms speakers of other languages take for granted. Once those terms are made known, the odd language out might embrace the foreign term to express what was absent yet blazingly obvious once it was expressed and explained.

Some great examples include the French term Esprit de escalier, literally "the spirit of the staircase;" it's the feeling you get after figuring out the perfect thing to say at a party . . . once you are coming down the stairs leaving the party. There's the Yiddish kvell, a word Harlan Ellison defined as happiness beyond all other forms of happiness, like "the sun shining in the pit of your stomach." From Finnish, there's sisu, a dogged determination to avoid defeat against all odds of winning, even when the odds are seemingly impossible. The author provides an amusing example of sisu in the introduction:

"We're outnumbered," one soldier says. "There must be over forty of them, and only two of us."

"Dear God, it'll take us all day to bury them!"


For this post, perhaps the Japanese tatemae might be appropriate, meaning "the reality that everyone professes to be true, even though they may not privately believe it," and it's counterpoint honne, "the reality that you hold inwardly to be true, even though you would never admit it publicly." Both of those seem awkward to me, since I usually am quite open with my silly notions. Hey, let's face it: I come from the land of the phrase "The squeaky wheel gets greased," meaning those that complain are usually first to get their complaints addressed. We in the States are a very personally opinionated crowd in general (not that any given internet community would provide excessive evidence of this). In Japan, no such squeaky phrase exists . . . but they do say "The nail that stands tallest gets hit first." Two cultures, two attitudes toward expression of personal opinion.

I recently heard a TED Talk that extended the concept of language in directions I had honestly not thought possible. )

X-posted to [livejournal.com profile] talk_politics.
peristaltor: (The Captain's Prop)
If you haven't already, check out Frontline's "The Untouchables", the story of why no bankers have been prosecuted for their misdeeds despite ample evidence to do so.

Next, consider what happens to people who actually do prosecute bankers. Do they rise in government? No. They find quiet teaching jobs somewhere far from civil service.

Now you're ready for some fun.



It's humor, of course, but with quite a bit of rage behind it. It also "provoked" a reaction:


Report too much, and you're dead to us.
peristaltor: (The Captain's Prop)
Got a heads-up today about a notion I've heard before, but which now seems to be getting some actual attention: What if the Treasury minted a couple trillion-dollar platinum pennies?

Thanks to an odd loophole in current law, the U.S. Treasury is technically allowed to mint as many coins made of platinum as it wants and can assign them whatever value it pleases.

Under this scenario, the U.S. Mint would produce (say) a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Fed then moves this money into Treasury’s accounts. And just like that, Treasury suddenly has an extra $2 trillion to pay off its obligations for the next two years — without needing to issue new debt. The ceiling is no longer an issue.


In fact, the most disturbing aspect of this follows immediately: Got your attention, have I? )

X-posted to [livejournal.com profile] talk_politics.
peristaltor: (Default)
The Planet Money blog mentioned the new iPhone 5 coming out soon, and quoted a note from someone at JPMorgan. The claim, according to Planet Money:

The JPMorgan note seems very mathy and precise. It starts with the full cost of the new phone, subtracts the value of the imports in each phone (imports are subtracted from economic growth numbers) and estimates the total number of phones likely to be sold in the last three months of the year.

Bottom line, according to the note: The new iPhone could add 0.33 percent to U.S. economic growth. That's actually a lot, when you consider that total economic growth is only about 2 percent.


A pretty bold claim, do you think? Jacob Goldstein thinks so, and savages the note's claim as the blog post continues: "But to arrive at that conclusion, JPMorgan assumes that every single dollar people spend on new iPhones would not otherwise have been spent on anything else during the last three months of the year." Goldstein goes on to explain Keynes' paradox of thrift, where money spent in one sector of the economy is simply taken from another, so a growth in one sector is not necessarily a boost for the economy as a whole. Got that?

So, what did Mr. Goldstein miss, and why might the JPMorgan note be accurate? Let's consult Ellen Brown for the answer:

Here is how the credit card scheme works: when you sign a merchant's credit card slip, you are creating a "negotiable instrument." A negotiable instrument is anything that is signed and convertible into money or that can be used as money. The merchant takes this negotiable instrument and deposits it into his merchant's checking account, a special account required of all businesses that accept credit. The account goes up by the amount on the slip, indicating that the merchant has been paid. The charge slip is forwarded to the credit card company (Visa, MasterCard, etc.), which bundles your charges and sends them to a bank. The bank then sends you a statement, which you pay with a check, causing your transaction account to be debited at your bank. At no point has a bank lent you its money or its depositors' money. Rather, your charge slip (a negotiable instrument) has become an "asset" against which credit has been advanced. The bank has done nothing but monetize your own I.O.U. or promise to repay.

When you lend someone your own money, your assets go down by the amount that the borrower's assets go up. But when a bank lends you money, its assets go up. Its liabilities also go up, since its depostis are counted as liabilities; but the money isn't really there. It is simply a liability -- something that is owed back to the depositor. The bank turns your promise to pay into an asset and a liability at the same time, balancing its books without actually transferring any pre-existing money to you.

(Ellen Hodgson Brown, Web of Debt, Third Millennium Press, 2008, p. 284, italics Brown's, emboldening mine.)


For further evidence that Planet Money is missing the bigger picture, let's consider the "mathy" bit of the JPMorgan note, which opens with "We believe the release of iPhone 5 could potentially add between 1/4 to 1/2%-point to fourth quarter annualized GDP growth." That's a very specific claim. He or she goes on to explain that $400 of the estimated $600 purchase price will stay in the US and thus boost GDP, the balance going to pay the factory in China.

And here's what Mr. Goldstein is missing, and what the JPM analyst might be getting: Most iPhones are probably purchased with credit cards. Seriously, have you been to an Apple store? Credit cards are no problem; every sales rep carries a wireless card swiper unit. Pull cash from your pocket, and the sales person immediately has to take you to another part of the store where the hidden cash drawer is stashed; if the purchase is a sizable one, you'd best hope you brought exact change.

Most iPhone purchases will therefore generate bank debt money, only a fraction of which will likely be paid off immediately. Most of these Number 5 Units will generate debt that will probably linger on the balance sheets of the holders for months, debt money that Apple will spend here in the US.

And as I've mentioned before, Planet Money correspondents have never, ever showed even an inkling of understanding how our bank debt money generating system works. Seriously, now that they have a transcript of the story that incited my linked ire, head over and read what they missed.

I'll cut what they said. )

As you can see, they display nothing but mysticism and/or ignorance for the role banks smaller than the Federal Reserve play in creating money. The only difference between the Fed and the smaller depository banks is the fractional reserve requirement, something absent from the Fed itself. They even, if I remember correctly, fail to note that the Fed itself is a conglomeration of private banks.

So, sorry, Planet Money folks, but if every iPhone is bought with a credit card and the balance carried for just three months, then yes, that new money will circulate in the fourth quarter and thus boost our nation's economic activity, just as the egghead at JPMorgan claims. Ellen Brown explains why above. If you don't understand that excerpt—and I have every expectation that you won't—it's time for you to become reporters and do some actual research.

Or is how banks literally make our nation's money something your sole sponsor Ally Bank would rather the American people not learn?
peristaltor: (Default)
I have to admit, I was a bit shocked when a simple observation of mine, that the GOP has a plank in its platform stating its aim to "explore a greater role for private enterprise in appropriate aspects of the mail-processing system", blew up into such a kerfuffle. The GOP, after all, has long been the party supported by anti-union forces in general and business leaders with private operations that compete with the USPS. Sometimes both.

I guess I was surprised by the anti-union rhetoric spewed in that post simply because I have long held a different mindset as to what drives union membership, one that seems to me as totally non-controversial, as natural as laws driving cloud formation. My mindset has blinded me to mindsets that lack this simple understanding about human nature, that instead rely upon a complex political and pseudo-economic rational for explaining the very phenomenon of unions. I'll address the latter later, but first I'd like to share my theory regarding the bargaining power of individuals more and less alone. )

So, where does that bring us today, and what can we expect tomorrow? )

X-Posted to [livejournal.com profile] talk_politics.
peristaltor: (Default)
For too long now, I have been remiss in a promise I made to [livejournal.com profile] alobar. For too long, I have been contemplating writing about L. Frank Baum's The Wonderful Wizard of Oz and the money parables others have found in it, but not writing it. So, fresh from a road trip to the Oregon Country Fair, today I sat down to actually write it . . . and found out that many, many other have already done so.

Still, having pored through the material available online, and having ordered holds on what books on the topic my library offers, I do think that I can contribute a worth-while synopsis and toss in a few observations I have not seen in the conclusions written to date. Let's follow that Yellow Brick Road to its not-so-obvious conclusions, shall we? )

X-posted to [livejournal.com profile] talk_politics.
peristaltor: (Default)
A couple of weeks ago, [livejournal.com profile] htpcl wrote a fine piece concerning the current Greek political situation and the rise of the extremist parties in the face of economic collapse and chaos. He made some excellent points, noting how the far-left Alexis Tsipras and ultra-nationalist Panos Kammenos have been making political points demonizing the centrist parties New Democracy and PASOK:

Tsipras . . . sensed the pulse and the big pain of the Greeks and, together with the far-right Kammenos, he said the old big parties like New Democracy and PASOK should be punished for all the evils they've brought upon the country. Now, obviously those really did fuck up big time in the recent decades, but meanwhile some of their achievements are being conveniently omitted in the Tsipras and Kammenos speeches. Like the EU entry (1980, New Democracy's achievement), the Euro-zone entry (2001, PASOK), the well organized Olympic games (2004, PASOK and then New Democracy), and the rising living standard overall. Unsustainable living standard though, and that's the main problem.

(I added emphasis)


I emboldened that phrase because, the more I delve into this whole economics thing from what some are calling a "post-Keynesian" perspective, the more I stumble on to the fact that those very achievements "being conveniently omitted" might be a proximal actual cause of Greece's troubles today. )

X-Posted to [livejournal.com profile] talk_politics.
peristaltor: (Default)
The two words "investment" and "speculation" are to some synonymous, to others diametrically opposed. I find myself in the latter camp, though the confusions and conflations these two terms suffer makes it difficult to say the least even to articulate what about the differences should be emphasized. I guess I'll first let a supposed expert discuss the difference. Take it away, Albert Wiggin. )
peristaltor: (Default)
(Just another tl;dr post I place here as well as the [livejournal.com profile] talk_politics community. Move along; nothing to see . . . unless you want to.)

I recently shocked [livejournal.com profile] montecristo by dropping a name not many bandy about: Ellen H. Brown. Ms. Brown is the author of the blog Web of Debt and has published an informative book of the same name. She is also one of the names associated with a new economics movement focusing on monetary policy. It's so new, in fact, a rallying name has yet to be, er, coined, though "monetarist" and variations thereon pop up from time to time. The goal of these thinkers: to cut through the years of economics education that has allowed graduates to achieve even doctorate level educations without understanding the basic principals of monetary creation that I briefly outlined in my last post. When it comes to books about how money works, they are few and far between.

In the shocked comment, [livejournal.com profile] montecristo asked if I were a "Greenbacker." I honestly don't know if I am or not; though I enjoyed Ms. Brown's book and have had a few email exchanges with her, I'm too aware of gaps in my understanding to embrace her entire philosophy without first trying to learn what backs it and of what value it might be. I admit I lean in her direction, but that's really neither here nor there. Today, I would like to share in what it means to be a Greenbacker. )

X-posted to [livejournal.com profile] talk_politics.
peristaltor: (Default)
Almost a year ago, I shared a graph from Calculated Risk of various economic crises of the past overlayed on the current one:


Embiggenate the history.


Back then, I noted that recessions usually take as long to a make a full recovery as it took to get to the trough. Based on that, I said 15 months would be the real test. It hasn't been 15 months, I know, but let's see how much progress is being made by looking at this recent Spencer England piece over at the Angry Bear:


Enlarge the recovery.


Some caveats: First, it looks like The Angry Bear graph only includes employment in private industry, rather than combining private and government figures. That would explain the difference in how far the bottom seems to have fallen in this recession, ±7% verses just under 9%.

[See note at bottom to explain the strikeout.] It also looks like the Angry Bear has the employment bottom at 23 months from peak, while Calculated Risk has it at 25. It's possible CR "smoothed" the data, taking a running average of the months just prior and just after the month graphed to minimize seasonal employment and other sudden, jolting effects. (It's also likely that both smoothed the data, but that CR added more months before and after the graphed to enhance the smoothing.) That mini "double dip" at the bottom of the Angry Bear graph between months 23 and 27 would average out at 25, giving credence to my theory. That would play havoc with comparing the other recessions. For example, check out the CR 1974 line (teal) and compare that with the blue '74 Angry Bear line. It looks like AB allowed more months from start of the downturn, 17 rather than 6, which is what might expect with smoothing (not to mention the data lack of less shock-sensitive government employment). That long slight dip from start to ±12 months would smooth right out of the line, shortening it considerably. This means we're not really looking at the same data; only two lines based (presumably) on the same data, one smoothed and one more rough.

Still, looks like we've got a lot of recovery to make to get back to "normal", don't it? I'll keep my eye on Calculated Risk sometime after July to see if we make it back, or if this one, like the '74 oil-based recession, is going to run a bit longer . . . you know, like until we develop a technology just as energy-dense and inexpensive as petroleum.


Edit, The Next Morning: [livejournal.com profile] cieldumort points out that the two graphs actually track different things, job losses verses hours worked. I am an idiot for equating the Angry Bear line for the Calculated Risk line. The correlation between the two data points is still striking to me, but not the same. Therefore the talk of data smoothing very probably doesn't apply here.
peristaltor: (Default)
The intertubes are a great resource for some things. Not so great for others. The instant nature of information dissemination is great for a death notice going 'round the world in seconds, as the recent deaths of Kim Jong Ill and that Libyan guy with the alphabet-soup-of-possible-spellings name demonstrate.

The not so much category, though, has to go to examining information on a more long-term, less spur of the moment manner. One must sift through a whole bunch of Rick rolls and cats with hats to find bits that fit with an overarching narrative that might, just might, prove useful to people trying to sniff out future trends. A good place to start would be this whole indefinite detention clause in a new bill that might soon be signed into law.

I'll let Glen Greenwald discuss the finer points of both this new future law and the trends that have been leading leaders to it. Essentially, not only can terrorists be indefinitely detained,

but also also anyone who “substantially supports” those groups and/or “associated forces” (whatever those terms mean).

That, I'm sure you will agree, is a pretty wide net to cast. Anyone who, for example, questions the legitimacy of the US government's actions might be described as someone who "substantially supports" terrorist groups who do the same, even though the first group bases their objections not on so-called "criminal acts" of the US, but rather on actual laws on the books within the United States itself, laws the current executive in charge might be violating. Protest too hard, and you might find yourself locked up without access to a lawyer . . . ever.

So, what future would be so extreme that the disaster planners in Washington deem unilateral detentions a necessary option? How about the breakdown of civil society?

I've already noted that just about everything in our presently organized society depends upon cheap and easy transport. If fuel costs rise too high, our economy hits the gas ceiling. From there, I've extrapolated that laws may have been crafted to protect our financial sector from the long contraction the loss of economic growth will necessarily create. (Mind you, I noted the protections were enacted for the financial sector, for the established banks and their oh-so-important bottom line of profit, not for the plebians like you and I merely relying upon our monetary system for financial survival. After all, those protections created money for reserves not lent into the economy.)



This is nothing new. The above graph was presented by M. King Hubbert himself in an article called "Exponential Growth as a Transient Phenomenon in Human History", published in 1976. Dmitri Orlov outlines the progression of Hubbert's three predictions:

In 1956 Hubbert predicted the US oil peak would be sometime between 1969 and 1971. For this he was ridiculed and laughed off the face of the earth (almost). Turned out the US oil peak was in 1970. This is something the drill-baby-drill, it's all the environmentalists' fault, ditto heads don't know anything about.

Next in 1974 Hubbert predicted the world oil peak to happen about 1998. However he DID say that if OPEC were to restrict the supply, then the peak would be delayed by 10-15 years which would put it at 2008-2013 . . . a reasonably close estimate of the actual global oil peak which started in 2005 and has continued as a plateau up to now. . . .

The chart above is his third prediction, about which Hubbert says:

"The third curve (on the left) is simply the mathematical curve for exponential growth. No physical quantity can follow this curve for more than a brief period of time. However, a sum of money, being of a nonphysical nature and growing according to the rules of compound interest at a fixed interest rate, can follow that curve indefinitely...Our principle constraints are cultural...we have evolved a culture so heavily dependent upon the continuance of exponential growth for its stability that it is incapable of reckoning with problems of non-growth...it behooves us...to begin a serious examination of the...cultural adjustments necessary...before unmanageable crises arise..."

(I emphasized.)


It seems to me our disaster planners are taking measures to prevent the gas ceiling from hitting us too hard on our collective noggins, falling in the process right into the mindset the emboldened quote above illustrates. To prevent thinking outside the so-called box of exponential growth alternatives, one might start by developing a new source of liquid fuel; no matter how expensive that fuel might prove to extract or distribute, it will be something our economy can use while we figure out how to use less. Call this our emergency supply. How about extracting liquid fuel from tar sands and shale, then move this liquid to where it is needed? A really nice map of this plan can be found here, with an interactive feature describing the links planned and completed.

Ah, but let's say we aren't able to extract enough tarry goo from low-energy geological formations to prevent further spikes in fuel price. Let's say we get alternative political groups like, say, the Tea Party or the Occupy movement (opposite sides of the same coin, if you ask me) continuously bitching about the growing price of transport, food, and other stuff of life, but the shrinking prospects for ordinary people to get employment or other decent livings. Let's say the continued snuffing of protest by riot gear clad officers really rankles a few, and they decide to shake things up by blocking or disrupting pipelines. If they do this where the goo first flows from the steam melted tar sand, there's nothing we in the States can do . . . is there?

Well, yes there is. We can send troops north at the invite of the Prime Minister. You see, the United States and Canada agreed to just such a troop-sharing back in 2008.

Canada and the U.S. have signed an agreement that paves the way for the militaries from either nation to send troops across each other’s borders during an emergency, but some are questioning why the Harper government has kept silent on the deal. . . .

The left-leaning Council of Canadians, which is campaigning against what it calls the increasing integration of the U.S. and Canadian militaries, is raising concerns about the deal.

“It’s kind of a trend when it comes to issues of Canada-U.S. relations and contentious issues like military integration. We see that this government is reluctant to disclose information to Canadians that is readily available on American and Mexican websites,” said Stuart Trew, a researcher with the Council of Canadians. said there is potential for the agreement to militarize civilian responses to emergency incidents. He noted that work is also underway for the two nations to put in place a joint plan to protect common infrastructure such as roadways and oil pipelines. . . .

“Are we going to see (U.S.) troops on our soil for minor potential threats to a pipeline or a road?” he asked.

(I emphasized yet again.)


If those minor threats come at a time when other supplies of petroleum prove in drastically short supply, Mr. Trew, then the answer might very well be yes. After all, south of our border we are enacting not just legislation but, as Glen Greenwald notes, a trend toward laws that pull the legal protections granted citizens by the Constitution and Bill of Rights, possibly all so we can avoid the societal perturbations financial crashes and famine can create.

It will take time to adapt to a world without cheap motive power. We may not have the fuel necessary to make that transition without major disruptions to our economy's current configuration and subsequently to the stuff of life that structure enables. This detention mentality is a band aid. This militarization, whether crossing borders — Iraq? Afghanistan? Canada? — or deployed right here at home might be another albeit larger wound dressing, an attempt to staunch the flow of fuel from our hungry gas tanks. People who cannot conceive of viable alternatives might be pursuing the only path they see available.

I worry that they might be exactly right.
peristaltor: (Default)
I've left this final discussion of distributed generation until now simply because I was struggling for a way to describe the dynamic method of electric utility pricing that wouldn't repeat my description from years ago. A dynamic system is one with a near infinite range of price variation, an irreducible continuum of cost, not just the three Peak, Shoulder and Off-Peak rates of Part II. It's a system that allows for more than just simple energy arbitrage, though that would be a key dynamic element of the system.

It turns out anyone who understands dynamic markets can envision this electricity market which prices needed power on the fly electronically. That's not the real element to discuss, I've decided. The truly important and revolutionary promise of distributed generation is not found in its pieces and parts but in the transformative promise the dynamic interaction of small parts can make: By spreading the responsibility for providing power to as many participants as possible, the entire grid can function with increasingly smaller elements and, by extension, with increasingly simpler organizations overseeing those elements.

In essence, a distributed system is a democratized system. And a democratized system might be our last best hope. )

Link to Berman article via [livejournal.com profile] nebris.

peristaltor: (Default)
[livejournal.com profile] solarbird just posted a video of an MSNBC host lashing out at the political Usual Suspects from the huckster brigade (you know, the familiar faces doling out the usual sound bites).

What surprises me the most? I'm used to this invective and honesty from the blogosphere, but from a paid member of the Lamestream Media? They usually represent the same views as the buyers of Congress Rattigan indicts.

I wonder how long he'll keep his job after this goes viral.
peristaltor: (Default)
About a year ago I wrote here an open letter to NPR reporter Adam Davidson challenging him to delve into the subtleties of our nation's banking system that have, from the available evidence, thus eluded him. After reading several books by authors that otherwise appear quite competent discussing economics, I realize I may have been too harsh on Davidson, since even these authors miss a single subtlety that allows banks to run roughshod over our economic system and to this day party like it's 1928. I'm referring to a fact that I've mentioned here several times, but the stunning implications of which I only realized the day I typed my last entry.

I hope you find this theory as stunning and earth-shattering as I have. )
peristaltor: (Default)
Back in August of last year, I ended the last episode of Swatting the Swarm with this paragraph:

Alan Greenspan may not have been in charge of the Fed during the most severe and obvious part of the collapse, but his actions -- or rather, his ideological inaction -- sowed the seeds for the impending disaster. To understand what happened, we need to note how systems work in general, how our economic system works in particular, and how we individuals within the systems can have more control over system outcomes than the leaders supposedly guiding the system with their authoritarian control.


I figured it only fitting to do some reading on the economy and how it works before laying out my damning indictment of Greenspan. I'm still reading, of course, but have still found enough hard informed commentary to all but dismiss that group of economic thinkers and theorists to which Greenspan belonged as a starry-eyed gaggle of dogmatic optimists sometimes led by (in some cases) out-right con artists. Sadly, this group wields an enormous amount of power and influence today, all but dictating policy in defiance of the democratic process and skewing toward their conclusions far too many aspects of our everyday lives.

Economics purports to be, you see, a science, and as such should rely on supporting its claims with empirical evidence. That's what other branches of science do, after all. Much of the following 150+ years of biology and paleontology have, for example, supported Charles Darwin's 1959 Origin of Species and his theory of natural selection found therein. That same year brought us one of the most important foundation observations supporting today's science of climatology.

As the two examples of science provided suggest, though, is that a lot of damage can be done to the reputation and understanding of good and well-supported theories if enough people with money find it in their best future interest to distort and obfuscate the official record. Believe it or not, even given the massive distortions climate change deniers and creationists have wrought on those other disciplines, economics has suffered an even greater attack and for a far more extended time. The Neoclassical and Neoliberal branches of economic theory prove far less supported in their tenets or their conclusions than either climate change denial or intelligent design, yet very few in the media even question the veracity of these assertions. As a result, we get a never-ending blast of neoclassical nonsense regurgitated by pundits, noise that effectively deafens the populace clamoring for real information they can use at the ballot box and with their checkbooks. Until that clamor is stanched, few will hold the qualifications to make informed decisions governing their very lives.

With this in mind, the following Too Long; Don't Read post addresses some of the tenets of neoclassical economic theory with explanations where I am able to provide them and dissenting opinions discussing why said tenets are theoretical at best and delusional at worst, backed by some of the books in which my nose has recently been buried. Click onward to view the Mythos. )


Addendum, May 3, 2011: In my haste, I forgot contributions from Pink and Hertz (which sounds like an S&M porn, I know). They were included today.

peristaltor: (Default)
By now, you've probably heard about the American Legislative Exchange Council, or ALEC, a group founded in 1973 that helps conservative legislators with pre-drafted legislation they can handily introduce into their houses and senates. It seems ALEC drafted the anti-collective bargaining bills in Wisconsin, Michigan and Ohio, and had a hand in the 2010 anti-immigration law in Arizona. This is exactly the kind of organization I described in Confused on the Left, Blinded by the Right (Part II, Blinded) over a year and a half ago, and contains many of the same characters. ALEC was, after all, founded by Paul Weyrich, the same fellow that founded the Heritage Foundation (and in the same year).

I mention ALEC because ALEC's little droogies in office in Wisconsin are unhappy about Professor Cronon's guide to the organization and his New York Times history of conservative politics through the ages. In response -- and most likely in retaliation -- they have started legal proceedings to obtain all of his (pertinent) emails that happen to use his UW-Madison email address. The professor explains:

My little ALEC study guide succeeded beyond my wildest dreams. Within two days, the blog had received over half a million hits, had been read by tens of thousands of people, had been linked by newspapers all over the United States, and had been visited by people from more than two dozen foreign countries. . . .

What I did not anticipate—though I guess I should have seen it coming, given everything else that has happened in Wisconsin over the past couple months—was the communication that the University of Wisconsin-Madison received on Thursday afternoon, March 17—less than two days after I posted my blog—formally requesting under the state’s Open Records Law copies of all emails sent from or received by my University of Wisconsin—Madison email address pertaining to matters raised in my blog.


The professor has good reasons not to release everything the Wisconsin Republican Party wants, reasons like student and professional confidentiality. The courts should definitely weigh in on which emails seem even pertinent to the file request . . . or even whether the file request is a legitimate use of the Open Records Law. He points out, though, that this is not really the main point:

It doesn’t take a great leap of logic to infer that Mr. Thompson and his colleagues aren’t particularly eager to have a state university professor asking awkward questions about the dealings of state Republicans with the American Legislative Exchange Council. This open records request apparently seemed to Mr. Thompson to be a good way to discourage me from sticking my nose in places he doesn’t think it belongs.

I confess that I’m surprised to find myself in this strange position, since (as I said in my earlier blog post) my professional interest as a historian has always been to research and understand the full spectrum of American political opinion. I often spend as much time defending Republican and conservative points of view to my liberal friends as vice versa. (For what it’s worth, I have never belonged to either party.) But Mr. Thompson obviously read my blog post as an all-out attack on the interests of his party, and his open records request seems designed to give him what he hopes will be ammunition he can use to embarrass, undermine, and ultimately silence me.

One obvious conclusion I draw is that my study guide about the role of ALEC in Wisconsin politics must come pretty close to hitting a bull’s-eye. Why else would the Republican Party of Wisconsin feel the need to single out a lone university professor for such uncomfortable attention?


The professor's posts are long, but well worth the read. I hope to read or hear of this in my local main-stream media news, but in the meantime I'll not be holding my breath.


Kerfuffle via Pharyngula.
peristaltor: (Default)
A bit ago, I posted in The Gas Ceiling that, since energy is our economy, and since unfrenzied, more-or-less natural increases in extraction rates may have come to an end in 2005, we should see unprecedented times ahead regarding our economy.

A recent Calculated Risk post came with an interesting way of graphing the impact of recessions:


Click for Statistical Embiggenation


This lets casual observers note the gap between the start and the end of various recessions. Some are longer in duration; other deeper; but most, as you can see, follow a fairly symmetrical bell curve progress with as much time between the beginnings and ends of the recessions. Since we're definitely not out of it yet, it's too soon to say whether or not this recession will follow that pattern, but. . . .

Just glancing at this graph, I noticed that most of them happened in the teeth of -- and probably as a result of -- temporary fuel shortages caused by supply disruptions both intentional and incidental. 1974's recession definitely started with the 1973 OPEC Embargo; 1980's with fuel shocks likely caused by Iran's 1979 revolution (and all the drama attendant thereto); 1981's downturn came soon after the start of the Iran-Iraq War.

Notice also that with the exception of 1969, all of the recessions previously ended with employment levels either at or higher than the previous peak of employment at the start of the various recessions. That 1969 exception is interesting; I've read in more than one book recently that our Western standard of living for a majority of people rose almost steadily from about 1820 to 1970; I have a theory why this happened, but will expound on it another time.

Back to the foreboding ellipsis above. I don't think the rebounded employment level will ever reach the pre-Great Recession mark, or if it does, that the curve will less resemble a symmetrical bell curve and more a cliff plunge followed by a much longer, gently rising slope upward to the "recovery." Why? It's that darned Gas Ceiling. We can't expand the economy without burning fuel, and fuel will be the one commodity that fails to materialize no matter what we try.

Oh, and I put "recovery" above in scare quotes simply because I very much doubt the jobs of tomorrow will in any way resemble the jobs of yesterday. They will not pay as well (adjusted, of course, for inflation or the lack thereof). That's why I think it will be a longer, slower recover this time around; too many will despair of the wages offered verses their wage expectations, and put off employment until the absolute last minute.

I'm not bragging, or reveling here in a Doomer Porn-gasm. Rather, I see this graph as an easily testable benchmark. The other fuel-shock induced recessions recovered after fuel supplies were recovered or secured elsewhere; if that can't happen due to Peak. . . .

We'll see what happens in, according to the graph, about 15 months. If we're back to pre-recession employment, I was wrong.
peristaltor: (Default)
Listening to the talking head blather lately has been rubbing me the wrong way. They keep talking about people needing to spend more, lest this recession continue. Worse, they keep talking about "the economy."

Here's a quote from John Michael Greer to set up my train of thought:

It's crucial to remember . . . that there's no such thing as "technology" in the singular, only technologies in the plural. The notion that technology is a single, monolithic thing is a convenient bit of mystification that is used to hide the fact that our society, like all others, picks and chooses among available technological options, implementing some and neglecting others. This fact hiding because most of these choices are made by influential factions of America's political class for their own private profit, very often at the expense of the rest of us.

(John Michael Greer, The Long Descent, New Society Publishers, 2008, p. 192.)


Just replace "technology" with "economy" and you get my angle. What everyone is calling The Economy™ is really nothing but the sum total of all of us living our lives and doing our business in our own personal economies. If "we" need to spend more, it reflects badly not on us, but on those who fail to realize that the businesses who flourished yesterday might be up Shit Creek tomorrow, and that the reason they are failing is not because of anything their customers did wrong. It might be that the products these business of The Past have nothing to offer us in the present, or that we can simply no longer afford them because, gee, there is simply less money available to spend.

Sadly, business plans have to be based on past business experience to be worth anything. That's going to be more and more difficult as the aggregate changes we are starting to experience start to add up and multiply in their interactions. That doesn't mean failed business men and women get to blame their customers for failing to fulfill those outdated notions filling those plans, or that their shills in political power get to blather and grovel in their pathetic attempts to persuade people to go deeper into debt to save The Economy™.

Everything has changed. Suck it up, Cupcake.
peristaltor: (Default)
A few years ago, I kinda saw the direction our energy shortages would have on the overall economy and coined a term to describe the phenomenon -- "The Gas Ceiling." It's a play on the Glass Ceiling, the invisible employment/income level above which women could not achieve in a male-dominated corporate business environment, but refers instead to the unknowable ratio of the currently available petroleum fuels to the current economy's demand for those fuels. This article articulates the idea well:

In 2009 the peak demand story seemed confirmed, as prices stabilized around $70 in June, and U.S. consumption remained well off its previous high. Most people thought the nearly 2 mbpd decline in U.S. petroleum demand from 2007 through 2009 owed to efficiency and people driving less.

In reality, only about 15% owed to reduced gasoline demand. The other 85% was lost in the commercial and industrial sector: jet fuel, distillates (including diesel), kerosene, petrochemical feedstocks, lubricants, waxes, petroleum coke, asphalt and road oil, and other miscellaneous products.

Very simply, when oil got to $120 a barrel it cut into real productivity, and forced the world’s most developed economies to shrink. At $147, it wreaked serious damage.

As I explained in “Investment Themes for the Next Decade,” the new normal will be cycles of bumping our heads against the supply ceiling, falling dazed to the floor, rising back to our knees, then finally standing, only to bump our heads against the ceiling once more.


And every time we hit that ceiling, we find it lower relative to the floor. Meaning we can stand only as tall as the last time, but probably not that tall. Our economies will contract. Why:

The reason is simple: Energy is the only real currency. Every dollar of fiat currency or GDP was ultimately derived from cheap energy. Trying to print your way out of energy decline is like prescribing ever-higher doses of aspirin for a headache caused by a brain tumor. Yet those at the levers of monetary policy are, by all appearances, completely ignorant (or in willful denial) of this fundamental fact.

This makes using the remaining energy available to improve the efficiency of energy-dependent systems (like transportation) problematic: experimenting with new fuel injection systems, building prototype high-mileage cars, installing electric transit and electrifying older routes -- all will compete for money, which (as noted above) is generated by burning fuel. Less fuel means fewer dollars. The competition will come down to the very immediate need for individuals to get to work with the cars they own now, verses some speculative system that (cross you fingers!) might work.

I find the "completely ignorant" and "willful denial" folks the most problematic. Sadly, most of the prognosticator "economists" fall into that category, even some of my closest friends. The rise in our standard of living started, after all, way back in 1820 (or so -- it's troubling to come up with exact numbers):

From 1820 to 1970, over every decades, average real wages rose, enabling a rising standard of consumption. These 150 years rooted workers' belief that the US was a "chosen" place where every generation would live better than its parents. (Richard D. Wolff, Capitalism Hits the Fan, Olive Branch Press, 2010, p. 51.)



George Stephenson's Rocket, the first
commercially practical steam locomotive.

1820 . . . a few decades after coal started to efficiently power industrial processes and a few years before this fossilized energy was used to propel transportation. We have been living in a period of increasing expectation for almost 200 years. The economic models on which we depend have only ever been subjected to temporary shortfalls in fuel supplies, never systemic, increasing and permanent shortages. We literally don't have the tools -- conceptual or, by extension, mathematical -- to appreciate our predicament, let alone predict what will likely happen next.

In the last few posts on monetary policy (now tagged How to Make Money), I noted that our economy has never been designed for resilience, that instead it is predicated on systems that increase our money supply or simply go bust. We have no mechanisms in place to carry our society through deflationary periods of bust that will prevent further cascading loan default and continuing economic shrinkage. We instead have constructed a system that tries to walk a tightrope between rampant inflation and collapse spirals.

Without a recovery/depression prevention mechanism, it's no wonder that our economists have been instilled with a selective historicity, education that answers "What will happen if the recessions continue?" with "They never have in the past, so things will undoubtedly look rosier in the future." Nassim Nicholas Taleb has written two books (so far) about why this answer is simply wrong.

Consider a turkey that is fed every day. Every single feeding will firm up the bird's belief that it is the general rule of life to be fed every day by friendly members of the human race "looking out for its best interests," as a politician would say. On the afternoon of the Wednesday before Thanksgiving, something unexpected will happen to the turkey. It will incur a revision of belief.

[This is the gist of] . . . the Black Swan problem in its original form: How can we know the future, given knowledge of the past; or, more generally, how can we figure out properties of the (infinite) unknown based on the (finite) known? Think of the feeding again: What can a turkey learn about what is in store for it tomorrow from the events of yesterday? A lot, perhaps, but certainly a little less than it thinks, and it is just that "little less" that may make all the difference.

(Nassim Nicholas Taleb, The Black Swan: The Impact of the Highly Improbable, Random House, 2007, p. 40.)

As a society we are all about to incur Taleb's revision of belief. The first linked article author concludes with a question or two: "All of which begs a final question: If the answers are transition to renewables, and rebuilding our infrastructure for high efficiency, then where will the money and energy to do it all come from? And how long will it hold out?"

The answer may come not from economists, but from archeologists, especially those studying the remains of cultures that no longer exist, or those that made the necessary transition successfully. Whichever we as a society choose, expect a few surprise bumps on the noggin along the way.

Profile

peristaltor: (Default)
peristaltor

July 2017

S M T W T F S
      1
2 345678
91011 12131415
16171819202122
23242526272829
3031     

Syndicate

RSS Atom

Style Credit

Expand Cut Tags

No cut tags
Page generated Jul. 22nd, 2017 02:36 am
Powered by Dreamwidth Studios