Lately the Mainstream Media and Mainstream Economists have been bombarding us with the "happy talk" that IF there is a recession, then it will be short and shallow. Just today, Barrons released its latest "Big Money Poll" of institutional investors, the majority (55%) of whom believe the worst is over for stocks. In addition, an even larger majority believe the Fed's actions to date will be enough to improve the economy by next year. So, even at this late date and with all of the credit problems that have occurred so far, there are only a few forecasters on the "fringe" who are predicting something worse than a mild recession (if any recession at all). Of those few in the reality-based camp are: Nouriel Roubini, the most bearish of well-known economists, who sees a "U-shaped recession" (as opposed to a short, shallow 'V'-shaped recession); author Michael Panzner who sees Financial Armageddon (the title of his book); and of course EWI who, like me, are predicting a severe economic depression.
Anyone reading this in the future has to understand that in the current "marketing-based pseudo-economy", reality and honesty are strictly out of fashion. There is tremendous peer pressure among economists to cede to the permanent optimism camp. Anyone who wants to be featured in the Mainstream media cannot afford to be labeled a "perma-bear" for fear of being left in the corner to play by himself. Clearly, Faux News "reporters" (Infotainers) working for Rupert Murdoch, are by far the biggest bag of liars this side of Stalin-era "Pravda"; however, even CNBC Infotainers come to work wearing pom-poms and cheerleader outfits, ready to spin every story into a sugar-glazed pile of dumbed-down bullshit.
To what extent this “happy talk” from the leading networks is a result of pressure from Corporate advertisers vs. public demand for sugar-coated news, will be subject of much debate when this charade ends. My own sense is that at this time in history, the public at large has no stomach for true “reality-based” news, because it’s too depressing (i.e. realistic). The only place these topics are discussed openly is right here in the blogosphere.
Back to the topic at hand: IF one could find an economist who didn't have his head shoved up his ass so far he thinks it’s night, then this objective economist would undoubtedly consider the current litany of economic issues to be THE WORST COMBINATION OF FACTORS to come together at any point in U.S. history. Since this crisis first got really rolling last summer with the sub-prime meltdown, things have only gotten much worse, not better.
Below is a reality-based status update on the major issues we are facing - issues that apparently most economists seem to think are no big deal:
1) Negative Savings Rate:
This is the FIRST TIME in U.S. history that the savings rate has gone negative during an expansion. In addition, the last time the savings rate went negative was during the last depression i.e. as people pulled down their savings to buy dog food (not for their dogs). Entering an economic slowdown with an already-negative savings rate is sheer suicide - it means households have no economic buffer and the slightest financial problem can bring bankruptcy.
2) Housing Collapse:
Even I am tired about hearing about the housing collapse, yet suffice to say it's getting a lot worse not better; and as one would predict, it's starting to drag the entire economy down with it. Just this week consumer confidence hit a 26 year low.
There is a steady flow of bad news about the housing sector and for those gluttons for gory details here is the best source of information about the worsening crisis.
3) Credit/Banking crisis:
Also unprecedented in U.S. history is a major credit/banking crisis starting BEFORE a recession. Normally, credit crises are precipitated BY recessions (i.e. as bad loans pile up from the economic slowdown). Not this time - this time we are already well into a credit crisis and on top of that we are now going into recession, which will only massively accelerate bank losses. Meanwhile, round one of the crisis started last year with the big bank and brokerage firms. These big banks and brokerages securitize most of their assets and are required to mark-to-market on a regular basis in tandem with the credit market fluctuations. Smaller banks by contrast, hold most of their loans directly on their balance sheets (unsecuritized), so those losses are taken over a longer period of time in the form of continually increasing write-downs.
The FDIC already predicts over 100 banks will fail in the coming year, and that’s putting on a “happy face”. Imagine what they are really predicting…
4) Unprecedented public and private debt levels on an absolute and relative basis
Combined debt for all levels of government, businesses and consumers is roughly $50 trillion. If you add-in the unfunded liabilities from Medicare and Social Security, that adds about another $50 trillion. Altogether that’s $100 trillion - or $330,000 for EVERY single American!!!
I hope the Chinese take Mastercard…
5) Massive Trade Deficit:
This country is no longer competitive, so we just keep borrowing, which gets us back to point number (4)
6) Two Never-ending Wars:
Two extremely expensive wars (occupations – call them what you will) in Iraq and Afghanistan – neither of which has any prospect of ending
7) Energy Crisis:
This week oil hit $119 a barrel and, as I wrote here, the only thing that will stop it from going higher is a major recession.
8) Commodity inflation with slow growth
In the ‘70s they called this Stagflation, but that term is not really appropriate, because wages are not rising as they were back then. So today’s situation is far worse for average Americans – it’s higher prices in combination with lower wages - I call it Decimation…
9) Fed is out of ammo
Short of printing physical money, for the time being, the Fed is out of action. As I indicated, Bernanke has done yeoman's work propping up lenders, but in a credit deflation, there is only so much he can do. Once credit collapses, then they will look to print hard currency. Needless to say, at that point the gap between rich and poor in this country will get much smaller - but not because the poor will be getting any richer…
That's the reality check update for April 2008. Either I am completely full of bullshit and making this all up, or the average economist out there is completely out to lunch. It's hard to imagine so many being wrong and so few being right at this juncture, but that's often what happens at critical turning points in history.
Saturday, April 26, 2008
Sunday, April 20, 2008
Peak Oil vs. Kyoto
It looks as though Peak Oil is going to do for us what hundreds of politicians worldwide couldn't possibly hope to accomplish with the Kyoto Treaty - that is curb mankind's demand for burning fossil fuels. This is good news for those of us who understand and accept mankind's role in Global Climate change (for those who don't understand or accept this fact, I am curious as to why you would be reading this blog in the first place -Faux News beckons). It's also good news for those of us who have absolutely no faith that governments around the world will ever adhere to the requirements of the treaty.
BAD MATH:
As oil continues its relentless ascent ($115/barrel as of today), it's clear that the supply/demand fundamentals have hit the long-anticipated wall. In a “surprise” announcement, the WSJ reported this week that Russian oil output fell in the first quarter for the first time in a decade. It’s well known that the Russians have used very aggressive methods for extracting oil from their wells (including pumping sea water in etc.), so it should come as no surprise that this day would come sooner rather than later. Meanwhile, due to declines across all of the World’s large oil fields, daily oil production is now dropping at a rate of 4.5m barrels a year as against total daily production of 87m barrels. Meanwhile, oil demand is expected to hit 100m barrels per day by 2015. Even if one believes that daily oil supply will decrease in a linear (as opposed to accelerating) fashion through 2015, that amounts to 4.5m x 7 years = 31.5m in lost daily output (based on current known reserves) vs. an increase of 13m in demand (100-87), which is a combined delta of 31.5 + 13 = 44.5m barrels of daily production that we need to “find” in the next 7 years to bridge the supply/demand gap. Unless we develop a way to convert water into oil, it will be virtually impossible to find enough new oil reserves to produce 44.5m barrels per day of output.
Add to the fact that OPEC producers have been less than forthright about their remaining oil reserves (because it affects their output quotas) and one has to believe that the supply (daily output) of oil could well be heading off of a steep cliff. It’s important to remember that “Peak Oil” production says nothing about the remaining production life of a well or field. In fact, the experience to-date has shown that peak oil output tends to occur relatively late in life for most wells. This is probably due to the fact that new techniques are constantly being invented to increase the flow of oil. So when graphed, the total output from a given well/field is asymmetric, indicating most oil is extracted prior to peak production, and then falls off rapidly once peak production is reached.
Unfortunately, on the demand side, the linkage between high prices and reduced demand, is not as direct as one would hope. This is due to the fact that the demand for oil is relatively price “inelastic”. Consider the following two scenarios: Let’s say you work in India in IT and your salary is increasing at 20% per year. So you go out and buy your first car to impress your girlfriend. Now if oil increases 10%, 20% or 30% will that stop you from driving your new car? No. You may drive less than you would otherwise, but you are still driving more than you were last year when you didn’t even own a car. In addition, you have plenty of newfound discretionary income to offset the rise in gas prices. Consider scenario two, that of the typical middle-class American worker. Her salary is going down on an inflation adjusted basis. She is being squeezed by higher medical costs, education costs, food costs and now fuel is increasing as well. She would like to cut back on fuel, but can’t afford (or isn't willing) to buy a smaller car and has to drive to work 40 miles round trip, because there is no mass transit option. So she keeps spending on gas, but cuts back in other areas. Both of these examples demonstrate (in different ways) why in the short-term at least demand for fuel is relatively inelastic (i.e. not responsive to price increase).
However, long-term, as the price of oil increases, middle-class consumers in the U.S. and Europe will be squeezed enough that this will be yet another major factor precipitating an inevitable economic decline. As consumers cut back on “other areas” to keep spending on gasoline, that will have a ripple effect on the entire economy and eventually lead to lower demand for oil as well.
So, it seems that after having faced a similar energy crisis in the 1970s and having completely ignored those lessons learned, here we are again 30 years later, facing a similar crisis except orders of magnitude worse.
The bright side of all this is that one way or another, the days of burning massive amounts of fossil fuels will eventually be coming to a forced and abrupt ending.
Go Green!!!
BAD MATH:
As oil continues its relentless ascent ($115/barrel as of today), it's clear that the supply/demand fundamentals have hit the long-anticipated wall. In a “surprise” announcement, the WSJ reported this week that Russian oil output fell in the first quarter for the first time in a decade. It’s well known that the Russians have used very aggressive methods for extracting oil from their wells (including pumping sea water in etc.), so it should come as no surprise that this day would come sooner rather than later. Meanwhile, due to declines across all of the World’s large oil fields, daily oil production is now dropping at a rate of 4.5m barrels a year as against total daily production of 87m barrels. Meanwhile, oil demand is expected to hit 100m barrels per day by 2015. Even if one believes that daily oil supply will decrease in a linear (as opposed to accelerating) fashion through 2015, that amounts to 4.5m x 7 years = 31.5m in lost daily output (based on current known reserves) vs. an increase of 13m in demand (100-87), which is a combined delta of 31.5 + 13 = 44.5m barrels of daily production that we need to “find” in the next 7 years to bridge the supply/demand gap. Unless we develop a way to convert water into oil, it will be virtually impossible to find enough new oil reserves to produce 44.5m barrels per day of output.
Add to the fact that OPEC producers have been less than forthright about their remaining oil reserves (because it affects their output quotas) and one has to believe that the supply (daily output) of oil could well be heading off of a steep cliff. It’s important to remember that “Peak Oil” production says nothing about the remaining production life of a well or field. In fact, the experience to-date has shown that peak oil output tends to occur relatively late in life for most wells. This is probably due to the fact that new techniques are constantly being invented to increase the flow of oil. So when graphed, the total output from a given well/field is asymmetric, indicating most oil is extracted prior to peak production, and then falls off rapidly once peak production is reached.
Unfortunately, on the demand side, the linkage between high prices and reduced demand, is not as direct as one would hope. This is due to the fact that the demand for oil is relatively price “inelastic”. Consider the following two scenarios: Let’s say you work in India in IT and your salary is increasing at 20% per year. So you go out and buy your first car to impress your girlfriend. Now if oil increases 10%, 20% or 30% will that stop you from driving your new car? No. You may drive less than you would otherwise, but you are still driving more than you were last year when you didn’t even own a car. In addition, you have plenty of newfound discretionary income to offset the rise in gas prices. Consider scenario two, that of the typical middle-class American worker. Her salary is going down on an inflation adjusted basis. She is being squeezed by higher medical costs, education costs, food costs and now fuel is increasing as well. She would like to cut back on fuel, but can’t afford (or isn't willing) to buy a smaller car and has to drive to work 40 miles round trip, because there is no mass transit option. So she keeps spending on gas, but cuts back in other areas. Both of these examples demonstrate (in different ways) why in the short-term at least demand for fuel is relatively inelastic (i.e. not responsive to price increase).
However, long-term, as the price of oil increases, middle-class consumers in the U.S. and Europe will be squeezed enough that this will be yet another major factor precipitating an inevitable economic decline. As consumers cut back on “other areas” to keep spending on gasoline, that will have a ripple effect on the entire economy and eventually lead to lower demand for oil as well.
So, it seems that after having faced a similar energy crisis in the 1970s and having completely ignored those lessons learned, here we are again 30 years later, facing a similar crisis except orders of magnitude worse.
The bright side of all this is that one way or another, the days of burning massive amounts of fossil fuels will eventually be coming to a forced and abrupt ending.
Go Green!!!
Sunday, April 13, 2008
CLASS WARFARE
The concept of "Class Warfare" has fallen out of favour in the past few decades, as apparently we are all "bourgeois" now; supposedly, we are all full fledged members of the "ownership" society - shareholders in our own careers and all that bullshit... The reality is that the vast majority of people always have, and always will, derive the overwhelming majority of their income from labour and not from capital. Yet, even the Democrats steer clear of the "Class Warfare" term, for fear that they will be labeled as Communist or Socialist. I am not a Communist or Socialist, but I don't believe in Ponzified crony capitalism either.
Regardless of the marketable fantasy that we are all "owners", the right wing has been propagating a silent guerilla warfare against the middle class this entire time. The key strategic elements of this guerilla attack are:
1) Supply Side Economics. SSE has been around since the beginning of time, but it's modern incarnation was resurrected by the Reagan Administration. In a nutshell, SSE is a set of policies intended to benefit suppliers (aka. employers), as opposed to demand-side policies that are geared more towards employees. Not surprisingly, there has never been a recession or depression in history that was caused by lack of supply. According to Adam Smith (and common sense), greed and self-interest is all that's needed enough to keep supply levels consistently high and rising. On the other hand, lack of demand has been the catalyst for all recession/depressions. So those who take demand for granted, do so at their own peril. There are two key primary drivers to demand: confidence and purchasing power. Once those are exhausted, no amount of interest rate cuts and cheap financing offers are going to get them back. Incidentally, it was George Bush Senior who famously derided the Reagan/Laffler version of SSE as "Voodoo Economics", BEFORE he became Reagan's running-mate. So it's highly ironic that his son, George W., would pick up the Reagan mantle and take SSE to an entirely new level.
2) "Free" Trade, aka. wage arbitrage - swapping out American workers for foreign workers, which I have discussed at length all over this blog.
3) Monetarism: Monetarism is the economic policy of controlling the economy via monetary policy and changes in the money supply. Monetarism contrasts with Keynesian policy which is about controlling the economy largely through fiscal (Government spending) policy.
This shift from Keynesian philosophy to Monetary policy took place largely in the past thirty years, starting, by no coincidence, when the Nixon Administration abandoned the Gold Standard. The dropping of the Gold Standard was the defining moment for the monetarist movement, because it released the Federal Reserve from the encumbrance of having to maintain gold reserves in proportion to the supply of money.
However, there was a deeper motivation for this policy shift: Conservatives abhor fiscal policy because, its primary mechanism of increasing economic output is through Government taxation and spending (usually on social programs), which is a transfer of wealth from rich to poor. Not to say that conservatives are strictly anti-Keynesian, as always, context matters. After all, Bush was successful in passing his massive tax cut AND starting two wars. Both of these were fiscally stimulative acts which primarily benefited wealthy tax payers and wealthy owners of the military industrial complex.
Monetary policy by contrast, works by altering the terms of credit (interest rates) and therefore represents a loan from rich to poor, as opposed to an outright give away. By lowering interest rates the government can (theoretically) avoid recession by inducing people to borrow more and spend more. Milton Friedman is venerated among conservatives for conceiving and promoting this "brilliant" policy. After all, this policy not only boosts the economy on the front-end, but it also provides interest income on the back-end! (I give it 10 out of 10 ginsu knives on the Ponzi scale). This shift towards monetary policy also explains how firms like Sears and General Motors basically became finance companies, as opposed to a retailer and an auto company - because apparently there is more money to be made from lending money than from the underlying business itself.
And of course, under this shift towards monetary policy, policy-makers couldn't stop themselves from taking a policy intended to be used sparingly and only in times of great financial crisis, and instead using it as a way of leveraging the middle class to the maximum extent possible. Today, with $48trillion in debt vs. $13trillion in income, we are at almost 4x leverage, which means many people are using their entire income for debt service (mortgage, credit cards, car loans).
It was Greenspan who largely turned Friedman's Monetarist vision into Frankenstein's monster with his view that monetary policy was a cure-all panacea with no long-term risks; however, Bernanke seems to have learned well from his master. Bernanke also understands who he works for, and lately he has been busier than a one legged man in an ass kicking contest - doing everything possible to protect lenders from their inevitable fate. To date, Bernanke has initiated the Term Auction Facility to bail out the banks, initiated the Term Facilities Lending Facility to bail out the brokers, and lent $30 billion to JP Morgan to finance the Bear Stearns buyout/bailout. In all, Bernanke has extended upwards of half a trillion dollars - more than half of the Federal Reserve's cash resources - to bail out lenders (don't worry, they can print more). On the other hand he hasn't done a damn thing to bail out consumers and average citizens. In fact, since he lowered interest rates from 5.25% to 2.25%, long-term rates have been rising due to inflation concerns, which has hurt consumers. Steepening the yield curve benefits banks, but it hurts consumers who are looking to refinance into long-term fixed rate mortgages. Meanwhile risk spreads have progressively widened, meaning interest rates on many types of consumer finance loans (home equity loans, auto loans etc.) have been steadily rising (and/or become unavailable) for many borrowers.
So, beyond helping the banks with a steepened yield curve, when you see Ben Bernanke lowering interest rates from 5.25% to 2.25%, you have to wonder what the hell is he thinking? Well, in a nutshell, he is hoping to fool the Middle Class into one more debt binge, similar to how his master, Greenspan, greased the economy back in 2001-2003 with his 1% interest rate policy. The problem is that consumers have never stoppped borrowing long enough to pay any of this debt back. The accumulated debt from the past thirty years is still out there. And like junkies on heroin, each hit of credit is giving consumers less and less of a high. Now the consumer debt junky is essentially dead from overdose and yet old Ben is trying to stick a needle into the heart - praying "Please God, don't let the Ponzi end on my watch." In fact, as I mentioned above, in the last recession, both fiscal and monetary policy were used to resuscitate the economy - the financial equivalent of a coke/heroin speedball. Here we are only 5 years later, looking for an even bigger dose of fiscal/monetary speedball...
Which brings me to the irony of the situation. Monetary policy was originally intended to favour the rich over the poor - a loan vs. a grant. However, there is an old saying, "when you owe the bank $10,000 and can't pay it back, you have a problem, but when you owe the bank a million dollars and can't pay it back, then the bank has a problem. It looks like the "bank" has a big problem on its hands, because you can't get blood from a stone and the middle class has been milked dry.
Regardless of the marketable fantasy that we are all "owners", the right wing has been propagating a silent guerilla warfare against the middle class this entire time. The key strategic elements of this guerilla attack are:
1) Supply Side Economics. SSE has been around since the beginning of time, but it's modern incarnation was resurrected by the Reagan Administration. In a nutshell, SSE is a set of policies intended to benefit suppliers (aka. employers), as opposed to demand-side policies that are geared more towards employees. Not surprisingly, there has never been a recession or depression in history that was caused by lack of supply. According to Adam Smith (and common sense), greed and self-interest is all that's needed enough to keep supply levels consistently high and rising. On the other hand, lack of demand has been the catalyst for all recession/depressions. So those who take demand for granted, do so at their own peril. There are two key primary drivers to demand: confidence and purchasing power. Once those are exhausted, no amount of interest rate cuts and cheap financing offers are going to get them back. Incidentally, it was George Bush Senior who famously derided the Reagan/Laffler version of SSE as "Voodoo Economics", BEFORE he became Reagan's running-mate. So it's highly ironic that his son, George W., would pick up the Reagan mantle and take SSE to an entirely new level.
2) "Free" Trade, aka. wage arbitrage - swapping out American workers for foreign workers, which I have discussed at length all over this blog.
3) Monetarism: Monetarism is the economic policy of controlling the economy via monetary policy and changes in the money supply. Monetarism contrasts with Keynesian policy which is about controlling the economy largely through fiscal (Government spending) policy.
This shift from Keynesian philosophy to Monetary policy took place largely in the past thirty years, starting, by no coincidence, when the Nixon Administration abandoned the Gold Standard. The dropping of the Gold Standard was the defining moment for the monetarist movement, because it released the Federal Reserve from the encumbrance of having to maintain gold reserves in proportion to the supply of money.
However, there was a deeper motivation for this policy shift: Conservatives abhor fiscal policy because, its primary mechanism of increasing economic output is through Government taxation and spending (usually on social programs), which is a transfer of wealth from rich to poor. Not to say that conservatives are strictly anti-Keynesian, as always, context matters. After all, Bush was successful in passing his massive tax cut AND starting two wars. Both of these were fiscally stimulative acts which primarily benefited wealthy tax payers and wealthy owners of the military industrial complex.
Monetary policy by contrast, works by altering the terms of credit (interest rates) and therefore represents a loan from rich to poor, as opposed to an outright give away. By lowering interest rates the government can (theoretically) avoid recession by inducing people to borrow more and spend more. Milton Friedman is venerated among conservatives for conceiving and promoting this "brilliant" policy. After all, this policy not only boosts the economy on the front-end, but it also provides interest income on the back-end! (I give it 10 out of 10 ginsu knives on the Ponzi scale). This shift towards monetary policy also explains how firms like Sears and General Motors basically became finance companies, as opposed to a retailer and an auto company - because apparently there is more money to be made from lending money than from the underlying business itself.
And of course, under this shift towards monetary policy, policy-makers couldn't stop themselves from taking a policy intended to be used sparingly and only in times of great financial crisis, and instead using it as a way of leveraging the middle class to the maximum extent possible. Today, with $48trillion in debt vs. $13trillion in income, we are at almost 4x leverage, which means many people are using their entire income for debt service (mortgage, credit cards, car loans).
It was Greenspan who largely turned Friedman's Monetarist vision into Frankenstein's monster with his view that monetary policy was a cure-all panacea with no long-term risks; however, Bernanke seems to have learned well from his master. Bernanke also understands who he works for, and lately he has been busier than a one legged man in an ass kicking contest - doing everything possible to protect lenders from their inevitable fate. To date, Bernanke has initiated the Term Auction Facility to bail out the banks, initiated the Term Facilities Lending Facility to bail out the brokers, and lent $30 billion to JP Morgan to finance the Bear Stearns buyout/bailout. In all, Bernanke has extended upwards of half a trillion dollars - more than half of the Federal Reserve's cash resources - to bail out lenders (don't worry, they can print more). On the other hand he hasn't done a damn thing to bail out consumers and average citizens. In fact, since he lowered interest rates from 5.25% to 2.25%, long-term rates have been rising due to inflation concerns, which has hurt consumers. Steepening the yield curve benefits banks, but it hurts consumers who are looking to refinance into long-term fixed rate mortgages. Meanwhile risk spreads have progressively widened, meaning interest rates on many types of consumer finance loans (home equity loans, auto loans etc.) have been steadily rising (and/or become unavailable) for many borrowers.
So, beyond helping the banks with a steepened yield curve, when you see Ben Bernanke lowering interest rates from 5.25% to 2.25%, you have to wonder what the hell is he thinking? Well, in a nutshell, he is hoping to fool the Middle Class into one more debt binge, similar to how his master, Greenspan, greased the economy back in 2001-2003 with his 1% interest rate policy. The problem is that consumers have never stoppped borrowing long enough to pay any of this debt back. The accumulated debt from the past thirty years is still out there. And like junkies on heroin, each hit of credit is giving consumers less and less of a high. Now the consumer debt junky is essentially dead from overdose and yet old Ben is trying to stick a needle into the heart - praying "Please God, don't let the Ponzi end on my watch." In fact, as I mentioned above, in the last recession, both fiscal and monetary policy were used to resuscitate the economy - the financial equivalent of a coke/heroin speedball. Here we are only 5 years later, looking for an even bigger dose of fiscal/monetary speedball...
Which brings me to the irony of the situation. Monetary policy was originally intended to favour the rich over the poor - a loan vs. a grant. However, there is an old saying, "when you owe the bank $10,000 and can't pay it back, you have a problem, but when you owe the bank a million dollars and can't pay it back, then the bank has a problem. It looks like the "bank" has a big problem on its hands, because you can't get blood from a stone and the middle class has been milked dry.
So as it turns out, in the end, the rich did "win" the Class War, except in this case it will be a Pyrrhic victory...
Thursday, April 10, 2008
STOP LOSS
The "War" in Iraq took a new turn for the absurd this week. Having added 20,000 additional troops last summer to quell the violence, the Senior Commander in Iraq, General Petraeus, is this week saying that troop withdrawals will have to be delayed indefinitely to maintain the newfound fragile peace. Let's get this straight...Can't leave when things are bad, can't leave when things are good...
This war is right out of the playbook for a Great Power in decline. It's a grand military mis-adventure based on false pretense and false pride (hubris).
John McCain, who has based his entire Presidential campaign largely on his support for the war, has recently said that we could be there for 100 years. Up until now, the war has already cost $500 billion and is running at around $100 billion per year. Someone should get McCain a calculator, because 100 Billion x 100 years is an additional $10 trillion dollars. Meanwhile, McCain should wake up to the fact that poll support for Bush and the war are in a straight line race for single digits. On a related note, has someone told the Chinese how much money this war is going to cost them? Because we sure don't have the money. Tell them we MIGHT even pay them back - with trees we cut into timber, from which we make stacks of paper that we print numbers on, and call "money".
To summarize accomplishments to date:
1) Started the war on the false pretense that Iraq was developing weapons of mass destruction
2) Drove the country $500 billion FURTHER into debt with untold future liability ($10 trillion according to McCain, above)
3) Strengthened Al Qaeda and gave them a new base of operations and many willing new recruits
4) Diverted attention from the Iranians who ARE in fact building a weapon of mass destruction
5) Destituted over 2 million Iraqi citizens, who live in squalid refugee camps throughout the Arab world - many of whom will be eager future Al Qaeda recruits
6) Found and captured The Bad Guy (Saddam Hussein) and then hanged him for crimes he committed back when he was receiving military and financial support from the U.S. - hmm...who knew what, when...?
7) Foisted the entire human cost of this war onto a small group of Americans - in lieu of a draft, we just recycle ("stop loss") the same people back into combat over and over again. Sounds fair to me...
It's a meat grinder with no way out, but nobody really gives a damn, because "hey, look who's on American Idol this week..."
"Like the war private? No? Too bad, roll those dice one more time and pray you don't come up snake eyes...". "Lost an arm, leg, eye, wife/life?" "Here's $20,000, now quit your bitching..."
Meanwhile, it's estimated that thousands of American soldiers have suffered PERMANENT brain injury from IED (Improvised Explosive Device) explosions. This brain damage typically leads to loss of memory, inability to concentrate and difficulty holding down a job. These soldiers are the homeless of the near future - thousands of brain-fucked Rambos walking around, pissed off and disoriented, no future prospects, but having an in-depth knowledge of how to operate automatic weapons. Great scenario...
8) Stranded tens of millions of working poor and children in this country without healthcare, because we "couldn't afford it".
Time to buy just an ounce of honesty and cut the losses.
This war is right out of the playbook for a Great Power in decline. It's a grand military mis-adventure based on false pretense and false pride (hubris).
John McCain, who has based his entire Presidential campaign largely on his support for the war, has recently said that we could be there for 100 years. Up until now, the war has already cost $500 billion and is running at around $100 billion per year. Someone should get McCain a calculator, because 100 Billion x 100 years is an additional $10 trillion dollars. Meanwhile, McCain should wake up to the fact that poll support for Bush and the war are in a straight line race for single digits. On a related note, has someone told the Chinese how much money this war is going to cost them? Because we sure don't have the money. Tell them we MIGHT even pay them back - with trees we cut into timber, from which we make stacks of paper that we print numbers on, and call "money".
To summarize accomplishments to date:
1) Started the war on the false pretense that Iraq was developing weapons of mass destruction
2) Drove the country $500 billion FURTHER into debt with untold future liability ($10 trillion according to McCain, above)
3) Strengthened Al Qaeda and gave them a new base of operations and many willing new recruits
4) Diverted attention from the Iranians who ARE in fact building a weapon of mass destruction
5) Destituted over 2 million Iraqi citizens, who live in squalid refugee camps throughout the Arab world - many of whom will be eager future Al Qaeda recruits
6) Found and captured The Bad Guy (Saddam Hussein) and then hanged him for crimes he committed back when he was receiving military and financial support from the U.S. - hmm...who knew what, when...?
7) Foisted the entire human cost of this war onto a small group of Americans - in lieu of a draft, we just recycle ("stop loss") the same people back into combat over and over again. Sounds fair to me...
It's a meat grinder with no way out, but nobody really gives a damn, because "hey, look who's on American Idol this week..."
"Like the war private? No? Too bad, roll those dice one more time and pray you don't come up snake eyes...". "Lost an arm, leg, eye, wife/life?" "Here's $20,000, now quit your bitching..."
Meanwhile, it's estimated that thousands of American soldiers have suffered PERMANENT brain injury from IED (Improvised Explosive Device) explosions. This brain damage typically leads to loss of memory, inability to concentrate and difficulty holding down a job. These soldiers are the homeless of the near future - thousands of brain-fucked Rambos walking around, pissed off and disoriented, no future prospects, but having an in-depth knowledge of how to operate automatic weapons. Great scenario...
8) Stranded tens of millions of working poor and children in this country without healthcare, because we "couldn't afford it".
Time to buy just an ounce of honesty and cut the losses.
Thursday, April 3, 2008
Am I My Brother's Keeper?
The philosophical question, "Am I My Brother's Keeper" is first posed with the story of Cain and Abel in Genesis, the First Book of Moses.
As we all know, the lessons from Genesis are fundamental to each of the "big 3" monotheistic religions: Judaism, Christianity and Islam. I am not personally religious, however, I view this to be an equally moral question, as much as religious question.
More to the point, I see no value in reading the rest of the "Good Book", if we can't fundamentally agree upon, and live by, the basic tenet that human beings are responsible for one another's well-being.
Two hundred years ago, prior to the Industrial Revolution, all countries around the world were relatively uniform in wealth. Differences in wealth between nations, by today's standards, were relatively minimal, as no nation had yet achieved widespread economies of scale and industrial output. With the advent of the Industrial Revolution, that all changed, as the "Western" nations industrialized and left their "undeveloped" brethren in the economic dirt, literally. Many of the undeveloped regions of the world (think Africa) are in some cases worse off than they were 200 years ago; this is due to a population explosion and the addition of just enough Western technology to have the worst of both worlds e.g. low incomes and heavy artillery.
The divide between rich and poor has grown for 200 years, but in the past 30 years it has accelerated. Two hundred years ago, human beings had at least a semblance of argument for their brutality and domination of neighbouring countries. Back then all countries were in a similar economic situation where most people were relatively poor, working conditions were awful, and existence for the majority was miserable and short. It was eat or be eaten.
Today, we have no excuse. The Western nations have historically unparalleled wealth and the undeveloped nations live in abject squalor. Depending on which figures you use, between 30,000 and 40,000 children die every day from "Poverty" i.e. for want of a few dollars worth of food and medicine. If you extrapolate the lower number (30,000) out for the past 50 years, that's over half a billion children who died, while the West was enjoying its orgy of consumption. This is a holocaust of human life, unprecedented in human history. I know, we've put men on the moon, built jet liners, invented the internet/iPhones etc. However, our economic "success" has come at enormous human and environmental cost. We live under a model that commoditizes human beings BELOW their cost of survival, and environmental resources below their cost of replacement.
As we all know, the lessons from Genesis are fundamental to each of the "big 3" monotheistic religions: Judaism, Christianity and Islam. I am not personally religious, however, I view this to be an equally moral question, as much as religious question.
More to the point, I see no value in reading the rest of the "Good Book", if we can't fundamentally agree upon, and live by, the basic tenet that human beings are responsible for one another's well-being.
Two hundred years ago, prior to the Industrial Revolution, all countries around the world were relatively uniform in wealth. Differences in wealth between nations, by today's standards, were relatively minimal, as no nation had yet achieved widespread economies of scale and industrial output. With the advent of the Industrial Revolution, that all changed, as the "Western" nations industrialized and left their "undeveloped" brethren in the economic dirt, literally. Many of the undeveloped regions of the world (think Africa) are in some cases worse off than they were 200 years ago; this is due to a population explosion and the addition of just enough Western technology to have the worst of both worlds e.g. low incomes and heavy artillery.
The divide between rich and poor has grown for 200 years, but in the past 30 years it has accelerated. Two hundred years ago, human beings had at least a semblance of argument for their brutality and domination of neighbouring countries. Back then all countries were in a similar economic situation where most people were relatively poor, working conditions were awful, and existence for the majority was miserable and short. It was eat or be eaten.
Today, we have no excuse. The Western nations have historically unparalleled wealth and the undeveloped nations live in abject squalor. Depending on which figures you use, between 30,000 and 40,000 children die every day from "Poverty" i.e. for want of a few dollars worth of food and medicine. If you extrapolate the lower number (30,000) out for the past 50 years, that's over half a billion children who died, while the West was enjoying its orgy of consumption. This is a holocaust of human life, unprecedented in human history. I know, we've put men on the moon, built jet liners, invented the internet/iPhones etc. However, our economic "success" has come at enormous human and environmental cost. We live under a model that commoditizes human beings BELOW their cost of survival, and environmental resources below their cost of replacement.
This isn't an impassioned plea to "Save the World", this is an observation that unless we find a new economic model based on fairness and compassion, then the survival of humanity itself is at extreme risk.
With the rising tide of religious fundamentalism across the world, we are seeing the inevitable associated increase in ignorance and intolerance that can only come from reading the same book over and over again. What makes this era unique however is the combination of proliferating nuclear weapons, rising intolerance, global economic instability, and weakening of the last great superpower, all coming together to form an historically lethal situation.
IF (big if), the human race is going to survive this impending "Dark Ages", then it occurs to me we will only do so by adopting a more equitable distribution of economic resources that spreads education and opportunity worldwide. For that to happen we will have to overcome our historical legacy of strong dominating the weak, and start living Judeo-Christian values, as opposed to just reciting them...
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