notes from the front row

With no GOP, what happens now?

2012-01-22T13:41:00.000-08:00

Am I assuming too much here? I don't think so. I had planned on writing a post about the amazing power and rare use of direct democracy seen in the protests against the Stop Internet Piracy Act, made possible by the Internet and the wide availability of Person Digital Devices (cell phones, computers, etc.). But this is more immediate, and is another example of democracy. How so? GOP leaders and strategists were over-ruled by the voters in the South Carolina primary; the same voters that Fox News and Rush Limbaugh have been feeding propaganda for years. Now these voters really believe

1. Barack Obama is a socialist who is raising taxes, expanding government, destroying capitalism, and leading our country down a path to ruin. Given this as a starting point, it is obvious that he must be stopped.

They also believe

2. he is so weak and ineffective (although at the same time he is a dangerous socialist threat) that someone as flawed and unelectable as Newt Gingrich can out-debate him and beat him in a general election.

GOP "elites" know this isn't true, and would give anything to stop Gingrich, but they also were happy to use the propaganda duing the 2010 midterm elections, and now they are seeing the downside of creating your own reality.

It is this force of deliberately misinformed democracy, maybe involving as much as 30% of Republican voters, that makes it impossible for the Republican Party to turn back the clock and return to its role as the reasonable voice for government restraint.

The question is, with the Democratic Party now winning all the Presidential elections for the foreseeable future, and most likely the decrease of GOP congressional power, where will that restraining voice come from? Unchecked progressivism is as much of a problem as unchecked conservatism.

Now it is true that the Democratic party has absorbed much Republican wisdom over the years. In fact what Bill Clinton began with Welfare Reform was continued by Barack Obama in his very Republican Affordable Care Act (it would have been even more Republican if he could have gotten some GOP cooperation). President Obama also offered a budget reduction deal with big cuts to entitlements, a deal that David Brooks angrily denounced Republicans for turning down. Many old style Republicans may find a place in the Democratic party for this reason.

But there is a difference, and the Democratic Party weakness of being driven by special interests and finding a government program to solve every problem needs a counterbalance. Who will provide it? Even if pundits like David Brooks and David Frum find a new party to get behind, or a revived version of the Republican party, this won't be a big enough group to counteract the Democrats. The group that supports Gingrich may end up in the Tea Party but they aren't big enough either, and the true Ron Paul grass roots Tea Party supports things that the first group doesn't agree with, like bringing home troops and non-intervention abroad.

So what will happen to our country as we sort this out in the next several decades? Maybe the young generation just coming up will change things; many of these are Ron Paul supporters. There is clearly an opening for an anti-war, more civil liberties party, but these are also natural positions of the Democratic party, and they will return to them if they are given political cover. It's hard to imagine the U.S. as a one party state, but I can't see anything else, at least with the issues I know of today.

What they talk about in those "Quiet Rooms"

2012-01-16T11:38:00.000-08:00

It looks like we're going to have our debate about the role of government, even if Romney is the GOP candidate rather than Paul. And that debate has already started in the Republcan Primaries, thanks to the populist attack adds by Gingrich and Perry, which point out that Romney made his money at Bain Capital by taking over companies, laying off workers, and selling at a profit. These are normal activities in a free market (notice that Ron Paul defends Romney), as are more popular things like business startups. You can certainly make a case that good can come from the sort of thing Romney did, and you can even support the idea that this function is a necessary part of the market. But what about those workers who lost their jobs? That's the problem, and the fact that Gingrich and Perry think they can get an advantage by pointing this out means that even Republican voters agree.

Solutions could be proposed for this problem: Maybe you could regulate hostile takeovers, or maybe increase the safety net benefits perhaps focusing on retraining for the unemployed workers while providing them with living expenses. These are the sort of things they talk about in Romney's "Quiet Rooms". But why do they talk about it at all? Isn't this something you would expect to be the province of Democrats, not Republicans? Republicans know as well as anybody that you can't govern without the consent of the governed, and you can't allow outcomes like large numbers of displaced workers. The market solution for this may be that those workers are unemployed or under-employed for the rest of their working lives, and this is not socially or politically acceptable.

Of course, approaches like the ones above are anti-free market and create unintended consequences that we may not like. But we don't like seeing a bunch of people lose their jobs either, even if we're just looking at the opinions of Republican voters. That's why we need to have this debate.

The plans that come out of the quiet rooms are likely to be more acceptable to the business/corporate lobby than those that come from a popular political campaign.

Where Does Change Come From?

2011-11-23T13:35:00.000-08:00

Right now it comes from the Tea Party and Occupy Wall Street. Some of us thought it came from electing Barack Obama in 2008, some of you were afraid that was true. Sorry to disappoint you both. Presidents can have an effect (look at the Health Care Bill (which I am glad for)l and the Iraq War and our state of seemingly permanent war (which I am not glad for) ). But big, societal change comes from the people. The Tea Party has shown us the power of a movement to redefine the political agenda; OWS can do the same.

If you want change, get behind one of the groups out there, are start another one if you don't find your issues represented by the Tea Party or by Occupation Wall Street.

I will attempt to summarize your choices, readers with better knowledge please correct me if I'm wrong.

The Tea Party stands for absolute individual freedom, and little or no reliance on government. What this means is little or no taxes, little or no regulation, and little or no social safety net and government services. Our current social safety net includes things like Medicare, Medicaid, Social Security, unemployment payments, foodstamps. Our current government sevices include things like the military, K-12 education, public Universities (tuition is state subsidized, although it is certainly not free), public libraries. Support the Tea Party if you want to be free, pay lower taxes, and see a lot of the list above go away.

Occupation Wall Street (and the other Occupy movements) seem to stand for greater opportunity for those with lower incomes. This implies an increase in the social safety net and in government services. It also implies higher taxes. I see OWS as a move toward a more European-style state (look up the German Education System and the German Tax System in Wikipedia for an example). Support the Occupy movements if you want things like free College tuition, help for homeowners who have fallen behind on their mortgage payments because they lost their job, help for the unemployed, and higher taxes.

Let me put in a plug for OWS here, since that's where my sympathies lie (unless the Tea Party takes a lesson from the Amish, that is):

Maybe you like some of the OWS issues, support for the homeowners and unemployed, but not free tuition, say. Maybe you are put off by the students demanding cancellation of their student loan debt. If some of the other OWS issues do fit with your priorities, then get involved with OWS, make your point, maybe they could learn something from you.

Right now it's either OWS or the Tea Party, or start your own.

The American Party

2011-10-03T14:24:00.001-07:00

Recent discussion with advocates of the Tea Party and also watching the first episode of Ken Burns' "Prohibition" has clarified my thinking. There is nothing evil or unusual about the Tea Party. It is a single-issue special interest group focused on cutting government spending. Tea Party followers may say that there's more to it than this, but for the purposes of analysis I think it is enough to just look at the "cut spending" issue; this explains most of the actions of the Tea Party so far. Again, there is nothing wrong with this, it is in the great tradition of U.S. politics. The Democratic party has a number of special interests that compete for attention and the Republicans have others as well.

But aren't we seeing unusual things on the political stage right now? Government grinding to a halt, heated, high-stakes negotiations over things that used to be routine, one party voting in lockstep even more than normal? Yes, there's definitely something different going on.

Here's what has happened: the Republican Party is now controlled by the Tea Party special interest. And because the single-issue concern of the Tea Party happens to be government spending, this has impact on almost all legislation.

Let's do a thought experiment. Suppose in 2013 we see the emergence of a group known as "The American Party". It started out with the Wall Street protests of 2011, got stronger after the 2012 Presidential Election, and now it opposes anything that President Christie wants to do. (Okay, I don't think Romney can beat Obama, but Christie might). With one exception, it did support his 500 billion stimulus bill (What?! say the Tea Partiers; but I told you, he's from New Jersey, not Texas). Then in the 2014 midterms the Democrats win back the House (but not the Senate, which they lost in 2012) thanks to the populist energy of the American Party. Forty new Democrat Representatives are from the American Party and the rest of the democrats are afraid to vote against them. So what is the American Party interested in? Workers rights. They want to pass "Card Check" (the bill making it easier to organize a union), but they also want a Constitutional amendment ending "Right to Work" laws. So far, so good, progressives? Although only controlling the House of Representatives, they apply great leverage by obstructing all legislative operations of government, including raising the debt ceiling. What's more, they punish any democrats that won't go along by guaranteeing a high-profile challenge in the primary.

At this point as a progressive I am thinking, "I like the American Party, I agree with most of their aims. However, right now they control the Democratic party. This is not good for the long term. Somehow we need to change our primary process to discourage their targeting. Also, it is bad for the country if we obstruct everything, we can't go along with this. And blackmail over issues that threaten the well being of the U.S. is totally out of bounds no matter what. So much as I like what they're doing, I will either get the American party to change their tactics, or I will speak out against them every chance I get."

A Model of a Working Libertarian Society

2011-09-14T11:00:00.001-07:00

Let me preface this, for those of you who don't know me, by saying that my political views are basically progressive. Below I am exploring whether Libertarian ideas could also construct a good society - my conclusion is that they could, as long as that society is a close knit community that shares the understanding that they will take care of each other. The key is, such a society would be a big change from the way we currently live. Dispensing with government and doing nothing else will not succeed.

Recent discussions with my nephew have gotten me thinking about whether Libertarianism could work. Now I have not studied the Libertarian approach, so I will come at this with the goal of describing a society that has minimal government, and leave it at that. I hope those with more knowledge will point out if and where this differs from Libertarian beliefs, but even if it does it is at least a different and valid way of looking at how we could live.

Let me describe how we could reorganize society and mostly dispense with government. Impossible, you say? Well there are many successful examples of this from history and even a couple in the present day. I don't think the U.S. had an income tax until 1910 or so, and in the 1800's we did have a fair amount of government but in small communities and in the whole of the midwest and further west it's influence was small. How did these people manage? I think the key to their success was community. They knew the people that they had business and other dealings with, there were shared ethics and conventions that took care of things that we now depend on government to do. Community projects were probably organized in a town meeting, and also the means to pay for them.

How about the present day? Well the Amish have maintained a self-sufficient society to this day using similar means to the smaller communities I just described. Yes, they have our current much larger government all around them, but I don't think it would affect them one way or the other if that went away.

If you object that both these examples are relics of the past (with the Amish simply preserving the past), what about this: the open source community is a fine modern day example of great accomplishments with very little oversight. The most obvious is the Linux operating system, but there are many others. These hackers are also an example of a competitive gift-giving economy; see Eric S. Raymond's writings for more on this, particularly "Homesteading the Noosphere".

What all three of these examples have in common is that they depend on certain cultural norms in order to succeed. All three are closely-knit communities; they know the people that they're dealing with and there is a lot of accountability. You can dispense with a lot of things when this is true. Would you buy a steak from somebody driving through your neighborhood offering you a deal when you'd never seen him before (this happened to me the other day)? But you probably would buy it from your next-door neighbor, or somebody you knew at church who raised beef. This is just an example of what I'm talking about.

So let's construct our minimal community; I invite you to participate. Clearly this is not what we're seeing in our current politics, where the call is to greatly reduce government without changing anything else about the way we live. That approach won't work. What I'm proposing here is that it could work if we can change our society at the same time.

Have I lost the progressives out there? Keep listenening: We start with no government other than a town meeting and build from there. We start with no taxes; any spending will be determined by the town meeting, they may decide on some sort of permanent tax or they may not. Liberals are long gone now. Of course at this point we have no central government, no United States. In my mind, that's not the end of the world, you may disagree. How can I get the liberals back? Okay, we also have no standing army - don't laugh, conservatives; it's possible and represents a large part of our country's history. Progressives are back in? Well we also have no Social Security and no Medicare. We have no system of higher education (Universities) and no schools. The town will probably decide to hire some teachers for grade school through high school, this was the norm in early America.

Town discussion and agreement will decide if we put any of the big three (Military, Social Security,Medicare) back in any form, but we will also have to agree on how to pay for them. Remember, we will have some doctors in our community so there may be other ways to work these things out. Likewise for the elderly, if they are part of our community and we have an understanding that we will take care of them, this may work without a formal program. Don't panic seniors, this can only work in a very close community; if we are not willing to live this closely we can't go further in our proposition.

As far as military, a small town doesn't need an army, maybe not even a police force. If we want to be part of a central government then we'll have to deal with their military priorities and whatever taxes they need to pay for it. You decide if we go this route or not, I'd be happier being just a small town with no central government.

But aren't we giving up modern life if we limit size to just a town? Yes, I think we are, but I'm okay with that. I think a lot was lost when we stopped living like this. There are many things that can only be done when you have a society of larger scale, such as public transportation, roads, large Universities. But we will need to expand our small government some to do this. We can be selective and do this on a smaller scale than what we see currently, and still keep government small. Again, you decide. Help me flesh this out.

I personally see the European social democracies as an example of how large government can work. I would also be happy with this sort of a system. But for the purposes of this investigation, let's see what sort of society we can build with very little government.

Debt Ceiling Rubicon

2011-07-05T12:10:00.000-07:00

In the next few weeks America will turn one way or the other and determine its success as a nation for years to come. I see three outcomes from the debt ceiling crisis, maybe four if President Obama uses a statement in Section 4 of the 14th Amendment (“The validity of the public debt of the United States…shall not be questioned”) to bypass Congress and raise the ceiling by executive order:

1. Pres. Obama gives in to Republican demands for no tax increases (including elimination of deductions) - the debt ceiling is raised

2. Republicans agree to raise taxes (by eliminating some deductions) - the debt ceiling is raised

3. Neither side gives in - the U.S. defaults on its debts

4. Obama raises the ceiling by executive order under the 14th Amendment clause

Only one of these options causes the U.S. to default, but all but the second (Republicans agree to tax increases) would profoundly change the nature, prosperity and influence of our country.

If both sides compromise we return to the normal political operation of our democracy and the Tea Party wing of the Republican Party is discredited.

If Obama gives in then our democracy is over, we will now be governed by blackmail. This is bad for everyone, even those who happen to be in favor of the policy advanced by the blackmail. The "Arab Spring" tells us why - when people feel they don't have a voice the situation is not sustainable. Eventually they will demand to be heard. People like me who voted for Barack Obama don't expect him to do everything the Republican Party demands. If there's 40-50% of the population who feel similarly that's a big problem. When we see democracy being frustated we lose faith in the system, which means that at some point the system will fall apart.

If neither side gives and we default then the U.S. will no longer be seen as the ultimate safe haven and icon of financial stability, a status it has enjoyed since WWII. This means big problems for our economy, diminished influence, higher interest rates, and probably a world economic crisis. I include any temporary ceiling extensions in this category; I think that market confidence would still be shaken by such measures resulting in the same outcome.

If President Obama uses the 14th amendment clause to bypass Congress he will be savaged by the Republicans. If you thought the anti-health care demonstrations were bad, get ready for real chaos. This is the most unpredictable outcome. The financial reputation of the U.S. is saved but at the cost of riots in the streets and possibly the fall of our government. Hard to say for sure if it would get this bad, but this is a wild one.

So three of the four options result in a big change for the worse, and the safe option seems the least likely, in my opinion.

The Internet Bubble As An Argument For A Directed Keynesian Stimulus

2011-02-04T15:58:00.000-08:00

First of all, the period from say 1996 to 2000 was clearly an economic bubble. Venture capitalists spent their money and investors bought stock in newly founded tech companies in order to make a profit selling stock, not because they expected a return on their investment from the company's earnings. I remember in late 1999 or early 2000 mentioning to someone in the break room at work about how amazed I was when I found out that Amazon.com still wasn't turning a profit. Various NPR shows and other news talked about how people were all excited to invest in some new IPO (Initial Public Offering) without being able to explain what the company did or why the service it provided was useful. Techies would work for startups basically for free with the promise of stock options. Employees at the consulting firm I worked for urged our CEO to take us public. Garry Trudeau ran cartoons about the "new economy" in his "Doonesbury" strip, giving the example of a couple of college students without a clue who came up with the idea for a startup and managed to sell that idea to investors. Then at the tail end of 2000 it all came to an end, with most of the new companies going out of business, investors losing all their money, and the techies going back to straight jobs if they could find them.

Yet the Internet Boom had a lasting effect and made possible the connected and greatly changed world we have today. You could look at the whole thing as stimulus spending with the somewhat vague purpose of building the communications, software, hardware, and academic infrastructure while at the same time changing the direction of the economy to be prepared to take advantage of these new things. The telecom industry expanded, laying more fiber optic cable and creating wireless networks. Universities quickly began using Java as the working programming language for computer science majors instead of C, and their computer science departments expanded with many more students majoring in this field. Consulting companies sprang up overnight, usually consisting of nothing more than a phone number, email address, and some newly hired warm bodies who served as middle-men between companies looking for temporary technical employees and techies looking for consulting work, pocketing a hefty commission (often around 50% of the consultant's billed hours) for nothing more than placing an add in the paper or online (the same add the companies could have placed directly). Big projects were completed with these temporary employees, and the consultants got much more flexibility than they would have had in a normal job, frequently working more occasional hours and taking months off at a time between projects. Many periperal businesses were able to cater to the new young techie demographic, building up other areas of the economy. People in general and businesses in particular began to think of the internet and the many applications that ran on top of it as "here to stay", and made plans with this in mind. Without the Internet Bubble would we have things like the iPhone, iPad, Facebook, the blogosphere, Barak Obama elected President, and the recent twitter-driven Middle East revolutions today?

The Internet Bubble did not directly create jobs since most of those jobs disappeared when the bubble popped, but it did ultimately create all kinds of jobs in our world economy today. Many of these never existed before and are only possible because of the Internet and software applications we have come to take for granted. And lots of people were employed during the bubble: hiring rates were at a level we would love to see now in order to recover from our current Great Recession. Most of the employers were small startup businesses, i.e. not corporations or people currently in the "business community" (I say this based on my own observations - I would love to see some statistics on this, I don't think I would be proven wrong). I wonder why we talk so much about the importance of keeping the business community happy in order to create jobs when the only example of massive job creation in modern times (the Internet Bubble) saw very little involvement by this group (again, I have no stats here, this is what I observed living through this time, tell me if I'm wrong).

If in 1995 you had tried to raise taxes on people with incomes over $250,000 per year in order to finance a big technical buildup, it never would have happened. But these same people were happy to buy stock to fuel the bubble, and ended up losing their money just as if they had been taxed. Or did they really lose it? You could say they invested it and gave themselves a better world to live in.

What am I driving at here? We should give some serious thought to our long term economic future, and to the big things that need to change if we are to succeed, as David Brooks has pointed out. I think these should be things like public transportation (trains between cities, bus lines within cities) to make our energy use more efficient, local agriculture both for health reasons and efficiency with rising energy costs, and training a highly skilled work force for high-end engineering similar to Germany. Contrary to Brooks and most others, I think we should raise taxes to pay for this, rather than cutting other spending in favor of these policies. I think you can get something good for the money you spend, and I point to the Internet Bubble as an example. Also contrary to Brooks, I think we can bring unemployment below 5% if we spend this money, and we will be accomplishing our long term goal with these "jobs", even though they may not be permanent.

A review of "Washington Rules - America's Path To Permanent War", by Andrew J. Bacevich (U.S. Army Colonel, retired)

2011-01-20T16:12:00.000-08:00

http://books.google.com/books?id=tI9POJ_lt0cC&printsec=frontcover#v=onepage&q&f=false

In "Washington Rules" Bacevich challenges and largely refutes the idea that Presidents of the United States have much effect on our country's use of military force. This is a startling idea and on the face seems false, but he makes a strong case that there is a bipartisan (or maybe non-partisan) consensus in favor of military intervention among the Washington players which is accepted by the american public. Reading Bacevich you come away thinking that even the Cheney/G.W. Bush "war of choice" in Iraq was more of a logical continuation of this policy than an abberation. I guess you could say that the pretext of weapons of mass destruction was not that much different than Lyndon Johnson's Gulf of Tonkin incident, although Johnson was motivated more by what he felt was necessity than choice.

Bacevich shows how the change from using the military for defense to using it to (attempt to) advance U.S. interests began in the 50's during the build up of nuclear weapons. (I say "attempt" because it is doubtful that the results of intervention have benefitted our interests.) General Curtis LeMay, then head of the Strategic Air Command, asked for and got the money and authority needed to give the U.S. overwhelming capability for destruction using nuclear arms. The quote below gives a window into the mood of the times:

"...Strategic Air Command and Gathering of Eagles, serious movies made by serious filmmakers, qualify as camp. Meanwhile, Dr. Strangelove, an exceedingly funny movie, retains its standing as a serious commentary on the absurdity of nuclear war..."

The public bought into the ideas in Strategic Air Command and Gathering of Eagles during the time when those ideas were the basis for policy, although they soon became laughable and horrific. But the damage was done and the legacy (multiplied many times over) is with us today and probably for years to come.

Vietnam was a sort of turning point, for a few decades making U.S. Presidents very reluctant to commit military forces, but Bacevich points out how quickly this lesson has been un-learned and erased from the national conciousness. In fact, Bacevich seems to imply that Gen. David Petraeus rewrote the Army Field Manual on Counter Insurgency precisely to justify this strategy in Iraq, when it had been discredited in Vietnam. The real lesson military brass learned from Vietnam, according to the author, is that operations that take very much time will lose public support. But this check has been removed by having an all-volunteer military. Now we have over one hundred thousand (I think this is the number) soldiers deployed in combat and most of us hardly notice. It makes an argument for bringing back the draft.

The best question posed in this book is:

Wouldn't it be sufficient if the United States' military budget was equal to the combined budgets of Russia, China, Iran, North Korea, Syria, Venezuela, and Cuba, instead of
"40% of global arms spending and ... over six times larger than the military budget of China" (http://en.wikipedia.org/wiki/Military_budget_of_the_United_States). How many of you knew this? It is clear that we have moved well beyond the motivation of defense.

My feeling is that by maintaining this huge military capability we create the temptation to use it. We need to take this option off the table. If our military budget were the size Bacevich suggests I don't think we'd be able to consider things like fighting a war in Afghanistan.

2010-11-18T14:59:00.000-08:00

These are pictures of the first guitar I built, called "First Attempt", completed in 2005. The top is Sitka Spruce, back and sides are Indian Rosewood. I originally built it with a Bouchet bar; a year or so later I decided it was overbuilt so I took off the back and removed the bar. The guitar sounded much better but had a wolf tone on the 7th fret B on the high e string so I added a smaller sort of Bouchet bar back in, working through the soundhole, glued on top of the braces. This mostly got rid of the wolf note and also helped the treble response. The interior picture shows the current bracing. I am now nearly done with my third guitar. You can see my faithful Takamine C132s in the background of some of the pictures.

a review of "Were You Born on the Wrong Continent?"

2010-11-11T10:58:00.000-08:00

http://bnreview.barnesandnoble.com/t5/Interview/Were-You-Born-on-the-Wrong-Continent/ba-p/3291

June and I spent the morning up at Powell's book store in Portland yersterday, and I was reading this book (yes, I do buy stuff at Powell's too).

What a fascinating picture of a different way things could be. Geoghegan concludes that 90% of the U.S. population would be better off with the somewhat higher taxes and much greater benefits of a social democracy such as France or Germany. He starts off by recounting the great impression the city of Zurich made on him. Again and again he advises us to look at the travel section to evaluate europe, rather than getting our ideas from the Wall Street Journal. Just walk around a city like Zurich (unfair example? then how about 50 or so other european cities he could name). Then walk a few blocks away from something nice in a great city like Chicago, for instance, where in his words it is "gulag-like". No question, I can't deny it. Believe your eyes, not your economic theories.

Geoghegan spends several chapters describing people he encounters in Paris, such as a rock-band drummer (the arts are subsidized, so this guy has a job). He talks about the feeling of joy and enjoyment of life he can see in the people he talks with.

Then he moves on to Germany and describes how worker-controlled capitalism did not try to break the unions and compete with the emerging economies on wages (a losing battle as the U.S. and Great Britain have discovered) but instead kept wages high and used their highly trained workers to specialize in high-end manufacturing, where they have a very large market share.

The five areas the state addresses in these social democracies:
Education (as in College)
Health Care
Retirement
Child Care
Transportation

It does make sense that a collective approach can be much more efficient and cost-effective than having everyone purchase these individually. The trade-off is some independence, or a certain kind of freedom. I do think this has some value, but I feel we have put way too much emphasis on it in the U.S.

In this book Geoghegan has a point-by-point discussion of the pros and cons. This is the conversation we should have been having over Health Care (only one of the five areas).

Did the Democrats overreach?

2010-11-04T15:56:00.001-07:00

If you say "yes" simply because you disagree with their policy, then I suggest that you don't understand how our democracy works. There was no violation of the normal operations of government since January 2008, everything was accomplished according to the rules and standard operating procedure for either party. If it is true that the Democrats went beyond their 2008 mandate then they certainly paid for it last Tuesday. There is nothing illegal or unconstitutional about this.

If you say "yes" because you're a Democrat and you did not want to see them lose control of the House then I'd like to meet you. I don't think there are very many of these. From what I've observed, most Democrats feel that the Senators, Congresspeople, and President they voted for compromised too much, and got nothing in return and no credit for trying to be bipartisan.

I am talking about the health care bill here, because I view the stimulus bill as something Pres. Obama and the Democrats passed because they felt they had to in order to fend of an immediate 2nd Great Depression. You may not agree with this, but at least concede that they believed this and would not have done it in normal economic times.

Was passing health care worth losing control of Congress and possibly making Barack Obama a one term President (I actually think he is still in a very strong position to get re-elected)? I think if you asked Bill Clinton if he would have traded re-election for passing his health care bill, he would say "Are you crazy? Of course!" This is LBJ-style legislation with an impact that will last for decades to come, in spite of the fixes needed.

The one problem with all this is the economic crisis we are still in. President Obama and his administration greatly underestimated the size of this problem, in spite of their massive action with the stimulus bill. In the last several months I have come to believe that they should have done whatever it took to get a much bigger stimulus and not spent political capital on passing health care. Don't get me wrong, I'm glad the health care bill passed, but it's a question of priorities. In my opinion we are now looking at recession/depression for 10 years (at least).

Another question: Do you think it would have turned out any different if the health care bill had not passed? I don't. This election was all about the bad economy and a false perception of big government generated by things like Fox News. Changing some of the facts (like having there be no health care bill passed) would not have altered this false perception since it was not based on the facts anyway.

Reality and Political Reality

2010-09-22T09:10:00.000-07:00

Someone in the G.W. Bush administration once said "We make our own reality". While this revealed the source of many of the problems encountered and created during 2000 - 2008, yet there is a sense in which it is true. As when Nixon took the dollar off the gold standard and said that it was "a problem for the rest of the world", there are times when a situation makes no sense legally or on its merits, but makes total "sense" if you understand political power. Of course with the Nixon and Bush examples and others of this kind, a tension is created that at some point must be resolved, sometimes sooner, sometimes later. I'm saying that you always end up paying for ignoring actual reality.

But political reality is a powerful force, strong enough to affect actual reality. Early computer crackers used to do "social engineering" which was pretending to be a support tech and calling someone on the phone and asking them for their password. Investor and currency speculator George Soros talks about "reflexivity", how expectation can change the market, making it an imperfect measure of value. He also used this to his advantage, most famously in breaking the British pound. President Obama will have a hard time getting anything done the rest of his term because of the angry and popular protests of the "Tea Party".

I mention all this because lately I have been thinking about David Brooks' idea of a different, winning approach President Obama might have taken. Brooks suggests that Obama should have skipped health care, given up on any short-term fix for the economy, and instead taken a long view by starting to make structural changes in the country that would help our economy prosper ten, twenty, and thirty years down the road. He says that Obama should have explained his plan clearly and told the people that it was going to be difficult for a while. Knowing Brooks as a decent and reasonable man, I assume that assurances of help for the unemployed would have also been given.

I immediately like Brooks' focus on long-term structural change; he seems to be the only one talking about this. With an economy based 70 percent on retail do I need to say any more to convince you that we need to rethink and redesign our society?

For the rest of the idea, it would clearly have political appeal since with no 700 billion dollar stimulus and no big health care bill you would have no Tea Party. And it is possible that there would have been some bipartisan support for the structural change. Brooks sees the importance of this political value of good will and much less opposition.

But I remind you that if Obama had done this we would have had at least 15 percent unemployment (in my opinion) and no health care bill (which I see as a long term very good thing). But if he had prepared people for the high unemployment and promised support for the unemployed (and I think you would have to promise a freeze on home foreclosures as well), and if Republicans had given significant support to this and to his structural legislation, and if the climate in Congress was one of problem solving rather than open war, I would take it.

David, if it is true as you say that half the Republicans would have gone along with something like this, you have convinced me.

The Paradox of an Enlightened Society

2010-09-11T19:55:00.000-07:00

The United States of America has some very dark times in its past. In the last century we saw Japanese Americans imprisoned in concentration camps, the runaway destructive fear of the McCarthy era, several leaders assassinated in the 1960's, and a costly, seemingly endless and pointless war in Vietnam. Not to mention the frequent murder of our black citizens by lynch mobs.

So we should take heart that today there is an absolute consensus against these evils. Politicians, leaders, and the general populace would condemn such things, regardless of party association or ideology. We have truly come a long way and have the benefit of a much more enlightened society.

So why is it that I feel our country has lost something vital, something that it used to possess, even in its more troubled youth? The root of our problem is that we no longer have a functioning democracy.

It is true that in the past the electorate was greatly manipulated, as it will always be. Real issues were ignored in favor of red-meat red herrings, as we see currently. But I believe there was much more substance there in the past, along with the usual political BS. Whatever your position on President Obama's health care bill, can you honestly say that we had any kind of useful debate over it? How come we have been in two wars since 2002 without any Congressional declaration of war? Why is it that Congress without question continues to approve funding for these (at a cost of something like 300 billion dollars a year if I remember correctly)? This is not democracy.

We face terrible economic peril but no political candidate is held accountable for half-baked plans that clearly would either accomplish nothing or would make the situation worse. Those that say we have to let it get worse and recover by itself are not required to explain how they would take care of the unemployed, nor are those who promise to cut back government expenditures.

There is bi-partisan consensus that we should not be dependent on oil from other countries, yet nothing is done about this, even by our progressive President with majorities in both branches of congress.

There is not a chance in hell that anything will be done about global warming - excuse my language but this is an epochal problem that transcends every other issue. The rest of the world is poised to take action but without U.S. leadership it can't happen. Therefore my children and their children will see this planet with a temperature 3 or 4 degrees warmer than it is now, when it will be a very dangerous place, more like something from a science fiction movie, with a large percentage of the population dying off.

A democracy has the advantage of the pooled knowledge, experience, wisdom, and judgement of all its citizens. Obviously they will disagree, but that is what debate is for. We will still arrive at something better collectively than what any one of us could have come up with individually. We have given that up. Instead we have a system that guarantees that a few large corporations will decide everything for us.

My Green Future: Public Transportation and Petroleum Free Agriculture

2010-06-18T11:56:00.000-07:00

President Obama recently proposed a full-scale technological assault on the problem of finding a replacement for petroleum as an energy source. He is criticized on one side for wasting money on blue-sky fantasies by those who believe we have plenty of oil if we had no restrictions on where we could drill. http://article.nationalreview.com/436654/barack-obama-dreamer-in-chief/charles-krauthammer

On the other side he falls in line with people like Bill Gates who have great faith in technology and are calling for greatly increased government funding in this area.

I have less confidence in technology than Bill Gates; I think there is no guarantee that we will find an alternative to oil. Systems theory blogger Jeff Vail has also made the point that transitioning to a new energy source will require additional energy (on top of what we normally use). I.e. making a wind turbine requires a certain amount of energy, making enough of them to supply what we currently get from oil will require a lot of energy. Even if they work as a replacement there will be several years of ramp-up time before they provide much net energy; during this time we will need to use more oil than we normally use at the same time as oil production is declining. This means that we have basically a one-time shot with whatever alternative energy source we focus on. We have to use up the rest of our oil (by using it faster than we normally would) in order to make the transition to the new energy source. If this new source does not work as expected, we have lost our chance to try something else. http://www.jeffvail.net/2009/11/2009-aspo-presentation-renewables-gap.html

Vail is skeptical about the claims for the various alternative energy sources, but points out that even if they are as good as advertised, this is a big risk.

I look at this from a different angle. Even if we could theoretically find a replacement for oil, at some point we need to address the political issue that unlimited expansion is not possible. No matter how good the energy source, there will be some limit to it, at which point we need to accept this and alter our lifestyle accordingly. I think we have hit this limit with petroleum in both its supply and the effect it has on our environment. I don't think we will find a replacement for it. But even if we did, I would like to see us try to be less wasteful in how we live.

My green proposal is this: first put all our efforts into public transportation, using existing technology and restoring existing infrastructure. Get our passenger rail system working again as it worked back in the 1920's. Then convert it to electric rail. Ignore highway maintenance, forget about the car, stop spending money on this very inefficient system of transportation.

Second, provide incentive to thousands of small organic farms. A large use of petroleum is for agricultural fertilizer. Start farming the old fashioned way, put the animals back on the farm and use the manure. Use John Jeavons' techniques of growing the organic matter needed for the soil in the form of high carbon crops like corn and putting it back into the soil. http://www.johnjeavons.info/

Use Masanobu Fukuoka's method of fixing nitrogen in the soil with clover grown along with the crop, and no-plow farming to avoid the loss of the nutrients. http://www.onestrawrevolution.net/

In short, we don't need new technology, we need to change our way of life.

"It's a Team Game" - Clyde Drexler

2010-05-24T12:25:00.000-07:00

Last Thursday Oregon Governor Ted Kulongoski (a Democrat) received a report from a task force he had created to study the state budget in the coming years. The report said that under current obligations and funding the state should expect to run deficits for the next decade. This casts the governor's race between Chris Dudley (Republican) and John Kitzhaber (Democrat) in a new light; in fact it raises the question of why anyone would want to be Governor right now.

Whoever wins this fall will have to make unpopular budget cuts. Of course this may please some, but the loss of services will ultimately be painful for most citizens, probably even including those who like the idea of cuts in principal.

This leads me to wonder if I, someone who plans to vote for Kitzhaber, would really be better off if Dudley gets elected. Chris Dudley has made statements very supportive of education, and seems to be casting himself as a moderate. During the Republican primary debate Emily Harris of "Think Out Loud" asked if any of the candidates had considered moving out of Oregon, since they thought the tax code was so onerous: no one said yes. This reminds me that sometimes loyalty and ties to a community are worth something too. I also remember that it was Republican Governor Vic Atiyeh who, after making all the cuts he felt he could, actually raised taxes during a recession.
http://www.oregonlive.com/politics/index.ssf/2009/02/in_this_recession_exgovernor_a.html

A Republican would have an easier time getting away with this than a Democrat. My bet is that a decent person guided by common sense rather than ideology would do something similar. I don't know much about Dudley as a politician, but I do know that as a Portland Trailblazer he was the ultimate team player.

A Society's Character Matters

2010-05-17T12:10:00.000-07:00

Harvard Professor Niall Ferguson does an analysis of societal collapse for "Foreign Affairs".

http://www.foreignaffairs.com/articles/65987/niall-ferguson/complexity-and-collapse

He begins by discussing "The Course of Empire", five paintings by Thomas Cole which depict various stages in the life cycle of a society. The paintings are set in the same location and show in succession a river bank in the wild with aboriginal people, a simple farming community with a large columned temple in the background, the temple turned into a palatial city with ships coming up the river, festive activity, and opulence bordering on decadence, the great city being ransacked by invaders, and finally the overgrown ruins of the city with no humans in sight. This closely parallels the history of Rome over a period of maybe one thousand years.

Ferguson then makes the argument that in spite of the narrative suggested by the pictures, the reasons for a society's collapse are more incidental than structural. Instead of an inexorable calamity years in the making, a civilization's demise can be brought about quickly simply by poor management and decision making.

I disagree with this as a general rule and I think he misses the point as to why the explanation brought to mind by Cole's paintings is so compelling.

First of all, I don't deny that terrible government can quickly destroy a society. However I think this is less likely for society that has the staying power to become an empire; there must be some inherent stability and redundancies present or it never would have gotten this far. But the story of the nation with simple beginnings grown into a behemoth that overreaches is very believable because we have so many examples of this pattern.

Ferguson says that if Rome had been better managed and had the sense to take preemptive military action against the Vandals, or had raised taxes to pay them off again, maybe things would have turned out differently. I think he ignores the fact that the character and characteristics of the Roman empire at that time guaranteed that if they avoided one danger, another would soon come along and eventually they would succumb.

Rome's size alone made it vulnerable. It was slower to adapt, harder to govern, and harder to defend than when it was a small settlement. Its success led to a softness that became a weakening of character, so that it was more difficult for its people to accept hardship.

Does this mean that it is impossible to be successful without being doomed to eventual catastrophic failure? No, but I think you have to consciously avoid the temptation to take the easy way out at the pinnacle of success. Therefore this is not common. Most people will not voluntarily check themselves or undergo some hardship when they don't have to. But this is necessary because growth cannot continue forever.

I think Great Britain is an example of a fairly graceful transition from world power to world nation.

Government or not? A review of Intellectuals and Society by Thomas Sowell

2010-04-05T13:05:00.001-07:00

This recently published book (2010) makes a very thorough case against government action of most any kind, with the exception of war. I spent over an hour looking through Sowell's latest book at Borders. The blurb inside the jacket caught my attention because it mentioned how intellectuals influence our democratic process by shaping the thinking of the electorate, rather than directly persuading elected officials. I saw this as a significant insight into how our system works. I extend the theory to any media person with a large audience, the impact of their ideas is greatly amplified. Rush Limbaugh could be an example. A good communicator with a big audience has diproportionately expanded political speech, similar to the expansion of speech rights for corporations under the new Supreme Court ruling. I would argue that the media figure actually has greater power than the corporation. Remember the clashes between GOP chairman Michael Steele and Rush Limbaugh over which of them speaks for the Republican Party?

We have all understood how big business and lobbyists are dominating our political debate and many of us see this as very bad for our nation. But I haven't heard much discussion about the great influence of the very small minority of opinion shapers. So I was disappointed to see that Sowell turned from what could have been a full analysis of this phenomenon and instead chose to pursue a one-sided attack on government. That said, he makes some very good points that should give pause to anyone attempting to govern. There is no question that history is full of examples of unintended consequences, government actions that backfire and make the situation worse, and "public intellectuals" being proven totally wrong by unfolding events. Sowell lists these out with relish. It is a truth that we cannot generally see weaknesses in our own beliefs. People with different convictions are only too happy to point these out, and we can learn from them. Sowell is not immune to this, he sees none of the failings of his own hands-off dogma. I will point these out and show that his overall conclusions are incorrect even though much of what he says is true.

One of the main arguments of "Intellectuals and Society" is that there is far more intelligence distributed among the many actors in the market than can be contained in a small group of experts. This makes sense in a certain way, and is really just a restatement of the Adam Smith's invisible hand. Yet we have an example right before us in recent history where the invisible hand guided market players to make extremely risky loans against no collateral. I have heard Wall Street experts describe how in this climate even prudent managers were basically forced to participate because if they didn't they would be outperformed in the short term by those who did, due to the bubble economics at play. In fact, any bet against the bubble would be impossible to collect, since if you were right then the counterparty to the bet was bankrupt. So experts may frequently be wrong, but the market can also be "wrong", or at least lead us somewhere we don't want to go.

When experts attempt to tinker with complex systems they can easily cause big problems, sometimes bigger than the problem they're trying to solve. Sowell uses this to argue against intervening in the system. Taken to the extreme, this means essentially no government. But what is government other than a very greatly expanded version of a group of people combining forces for greater efficiency? If a neighborhood gets together and decides to take care of their own garbage service to save money, this takes some organization, a group decision, and a willingness to abide by that decision. We accept leadership and top-down decisions in the corporate structure (and all of us who have worked in this environment know how disconnected from day-to-day reality these can sometimes be). Yet corporations can have great success being guided by an elite at the top. Believe me, I'm very much in favor of keeping things simple and keeping an organization lean and small. But does that mean that you should forgo any consolidation of forces to protect individual freedom? This is the trade-off. If you never want someone to tell you what to do, then you are reduced to a lone-wolf status, with no benefit from others resources or know-how. I am arguing that good government may sometimes tell you what to do, but you are getting a great benefit from its efficiencies and combined resources. (I know the idea of efficiencies and government in the same sentence seems ridiculous, but bear in mind that we have a huge country here and so obviously there is a fair degree of waste in this process when you consider the many levels of government involved).

I would grant that our government is too big and too centralized, so we can easily find problems with it. I would be happier with a much more local level of organization. However, this is what we've got, I don't think that means that it is useless. I don't think it means that we would be better off with nothing.

Fanaticism is more destructive than extremism

2010-03-05T09:19:00.000-08:00

Normally we seem to apply these terms to religious people in the non-Christian world. I am talking about a particular home-grown example I saw on last night's Charlie Rose show. The guest was former U.S. Representative and House Majority Leader Dick Armey. Armey is currently active as a leader of Freedomworks, a political organization that is a significant backer of the Tea Party movement.

I had never heard Dick Armey speak before, I only knew him by reputation. I must say that he turned out to be more intellectually honest than I expected, and in many ways this makes him scarier. Let me elaborate: I expected him to use any argument that was convenient as long as it supported his anti-Obama attacks. Instead he turned out to be remarkably consistent in his opposition to rules and government of almost any kind. He really believes this.

Armey holds extreme positions on personal liberty and the (lack of) need for government. He objects to almost any rule that would regulate personal behavior, with a few exceptions. He sees government's role as mainly enforcement of property rights and maintaining a stable currency. This puts him way over on the fringe of our political spectrum (maybe not among economists and pundits, but at least speaking of the general populace) but there is a sizable group with him. What I don't like is that he sees anyone who believes otherwise as a danger to the American way of life, and feels they must be stopped. This is fanaticism.

There is something wrong with holding a belief so strongly that you don't consider that you might possibly be mistaken, and that anyone who disagrees is unfit to govern. Charlie Rose called him out with outrageous quotes from speeches he made at CPAC (a recent far-right political convention) and he stood solidly behind those statements. These were things like saying that almost every official in Washington aggressively hates the constitution.

We are a democracy of many different types of people and belief systems. Any kind of government is by definition a compromise. This fanatical allegiance to a single idea leaves no room for any compromise and by nature is anti-democratic.

Signs of change

2010-01-27T13:19:00.000-08:00

Update: Oregonian writer/associate editor David Sarasohn had an interesting column in Sunday's paper observing that the voting on the two tax-increase measures did not follow the usual demographic of solidly opposed throughout the state and solidly in favor in Multnomah County (the Portland area). In this case the non-Multnomah County votes were opposed by a slim margin on one measure, and I think actually in favor on the other.
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Something very surprising happened yesterday: voters in Oregon passed two tax increases, upholding action by the State Legislature, raising 750 million dollars in order to balance the state budget without further cuts.

The two ballot measures passed by solid margins, along the lines of 55% to 45%. I have lived in Oregon for 30 years and I expected both measures to fail. The normal way it works around here is:

slightly progressive bill has early support

corporate money runs scare-add campaign

bill narrowly or solidly defeated

This time the same script was followed but with different results. I should say that these tax increases were in my opinion quite modest and no great hardship, and that significant cuts to state spending were made to complement the added tax. To me this seemed fair, and I view it as a reasonable adjustment of financial burden. I should also disclose that I work for the state and that I do not have to pay either of the taxes. I have a friend with a small business who is affected, and he still voted for them.

So what was different this time? As I said, based on past experience I had little hope that these would go through. My answer: I think the electorate is willing to hear some new ideas, and with high unemployment in Oregon, a little more desperate than in the past. They don't want state services further slashed because many more of them now depend on those services.

Let me also point out that what happened in Oregon is pretty much the opposite of what happened in Massachusetts when Scott Brown defeated the Democratic candidate for Ted Kennedy's Senate Seat.

The real issue: we need to value truth

2010-01-21T12:06:00.000-08:00

I have mentioned before that our political system is non-functional, that we are not able to have productive, intelligent debate about the issues, and that something needs to change if we ever expect to deal with the many problems our country is facing. You could put this another way: why is it that a country with all the advantages of America - an open society, great wealth, the most powerful nation in the world, the only remaining superpower - has a social structure significantly poorer than the other developed countries, an infrastructure unprepared for higher energy prices, and is bogged down in two wars with no end in sight?

I have been reading George Soros' "The Age of Fallibility"; he has given this question a great deal of thought. Soros pins the blame on a lack of regard for truth. This resonates with me because it explains so much: how come the media and politicians are allowed to steer the public debate into meaningless side-tracks and frequently present a picture that is an outright lie? Why do we fall for it again and again? Now I understand why pundits like Paul Krugman and Glenn Greenwald are so frustrated. I understand now that we cannot expect logical outcomes and behavior until we deal with the root problem.

George Soros is quite an interesting character. He has a deeply philosophical approach to life, it might not be what you would expect from a hedge fund manager. Indeed, his philosophy and life experience have formed the basis for his approach to financial speculation. He lived under Hitler's Nazi government as well as the Soviet Communist government, so he has seen the result of totalitarianism and of ideology dogmatically and relentlessly pursued. The key to his philosophy is what he calls "reflexivity", which is the idea that reality can never be perfectly understood because your own actions and thoughts and the actions and thoughts of others alter reality. This should lead you to realize that you may be wrong, i.e. you see your own fallibility. His ideal of an open society is based on the realization that we are all fallible, no one has the absolute understanding of the truth, and so we should not suppress ideas. He also talks about "far-from-equilibrium" situations, where the normal rules don't work anymore. He has had great success recognizing these times and capitalizing on them.

Why then with a philosophy based on being unable to perfectly know reality, does he value the search for truth? Because the further your actions stray from reality the more likely that reality will at last intrude and you will pay the price.

The philosophy acknowledges that we can manipulate reality to a certain extent. We have seen this in the various financial bubbles, and as someone in the George W. Bush administration said, "we make our own reality". This can be true to a point, but eventually the Iraq war looked unsuccessful even to those who championed it.

The American public, says Soros, is too easily manipulated. We value success too much in this country, and tend to have an end-justifies-the-means attitude. We are not as concerned as we should be about the truth and reality. This should be our focus if we hope to change our country.

Where we stand at the end of 2009

2010-01-04T17:15:00.000-08:00

UpdateII: President Obama should also get credit for engagement with Iran and the Muslim world, something that is politically risky at home but does great good for the U.S. image in the world and steers us away from yet another ill-chosen confrontation. Also, under his administration the EPA has begun taking on climate change, a very significant development.

4/17/2009: "The Environmental Protection Agency on Friday formally declared carbon dioxide and five other heat-trapping gases to be pollutants that endanger public health and welfare, setting in motion a process that will lead to the regulation of the gases for the first time in the United States."
http://www.nytimes.com/2009/04/18/science/earth/18endanger.html

In summary he is doing some significant good. I'm not sure if this outweighs the bad of the decision to escalate in Afghanistan. And the economic situation is a whole other level of problem, something which demands much more than we usually expect from a President or from our political system. But here it is - it must be dealt with.
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Update: Forgot to also give Obama credit for the stimulus which although too small, kept us from immediate bad times. Also should have mentioned that the health care bill would be a huge accomplishment in normal times, but right now it is not as significant because of the economic threat. Should have also pointed out that the bold economic and structural action required, which Obama has not taken, would not have been taken by anyone who could get elected President. Remember that FDR had 3 years of inaction and its consequences before he came into office. This greatly discredited the argument for inaction and gave a strong argument for large-scale intervention.
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What a year it has been. The scary financial events of the fall of 2008 were not matched in 2009, but U.S. government spending and intervention this year seem unprecedented in modern times. Barack Obama begin his presidency with promise but after a year of what I would call Washington business-as-usual I am convinced that he will not be an agent of change. He and his administration have behaved as politicians always behave, trying to insure future power for their party and collaborating with big business in exchange for financial support. That is not to say that it doesn't matter that Obama was elected president instead of John McCain. It appears that we are going to get health care coverage for many more people thanks to the flawed health care bill now in the works. This is definitely good, although much more work is needed here to control costs. The health care bill is the only difference so far between an Obama presidency and a potential McCain presidency; the troop increase in Afghanistan seems like McCain's policy, and on most other fronts Obama has continued the policies of the second half of the George W. Bush administration, with some exceptions for things like the Bush tactics of using Justice Department appointments as a partisan instrument or actively suppressing scientific findings. John McCain would also have ended these abuses.

At the end of 2009 we remain waiting for the full effects of the 2008 financial meltdown. These have not been put on the books yet, so we may have the false sense that things are turning around. While the workout seems to proceed very slowly, it must happen eventually. I think we will start to see some of it this year. There is no way you can lose a trillion dollars of real wealth without some change in standard of living. Some people have already experienced this change, but we are ultimately headed for a national leveling.

The saving grace about having Barack Obama as President is that he does seek input from a lot of people, including Paul Krugman. Krugman was quite impressed with Obama's ability to understand an analysis. If things get bad enough he may change his approach. So far he has listened to people like Larry Summers and has not understood how bad our situation really is (if he did understand he would have taken bolder action).

Unfortunately our country has forgotten the scare of 2008 and has lost the sense of desperation that helped us be willing to listen to new ideas. Instead we have polarized along out-dated lines of conflict based on economic schools of thought, of all things. This must be contrived, I think the real conflict is more of a cultural one: conservative-religious vs. non-religious (or even mainline protestant or socially liberal catholic), or intellectual elites vs. working class average Joe.

Because of this polarization and the intensity of hatred that it generates, President Obama is reviled as a would-be-communist for very moderate increases in the power of government (like the health care bill), and is given no slack for the big government intervention that was necessary and done only because of the severity of the economic calamity. Instead this is also held against him, although it is clear that he never would have done this in normal economic times.

In this climate, the bold action that is needed is politically impossible. That is, unless things get bad enough; then I think it becomes possible again - remember the fall of 2008.

If you don't like economic stimulus, what do you do about unemployment?

2009-11-10T12:33:00.000-08:00

Just to be up front about this, I favor a WPA-type jobs program (also suggested by Paul Krugman). I would go further in saying that I think it should be for something like rebuilding our passenger rail system, something that will give us a big pay off and make sense when the future seems to hold increasing oil prices.

Now maybe you're concerned about the deficit, or just believe that government should not be involved in the economy except for expanding or contracting the money supply. I would argue that while the deficit is a very bad problem and that government intervention is generally bad, now is a time when we really have no choice. Now is one of those rare times when the government should be very active. The deficit concerns me more, but I feel that unless we want to write off our society and life as we know it, we have to do something.

I would be interested in hearing arguments/proposals for dealing with unemployment that do not involve stimulus spending. If Republicans end up controlling Congress in 2010, this is the problem they will be faced with.

If you don't think anything should be done about unemployment I'd like to hear how this will work. What will prevent a continued downward spiral of the economy as more and more consumers are unable to consume? And what about the people who are unemployed and now homeless on the streets. Doesn't our society have some duty to them? And if not, they at least would be a great source of disorder and social strain.

Reagan was right, but he did not get elected in 1932

2009-10-26T12:18:00.000-07:00

Ronald Reagan won the 1980 Presidential Election by campaigning against government. After almost 50 years of uninterrupted government growth had created a bloated beauracracy, his argument that "government is not the solution to the problem, it is the problem" had traction. In 2008 Barack Obama was swept into office by a sudden populist desire for more government. When about 30 years of deregulation and hands-off federal policy culminated in a financial crisis that came very close to destroying the world economy, the American public wanted the government to remedy the situation. I generalize here because in both cases there were a significant number of the electorate who dissented from the majority opinion, but in a democracy the voice of the majority of the people does mean something. I suggest that in the United States, this is how our system works. It is ugly and imperfect, leaving many dissatisfied and angry, but we first veer to one extreme and then to the other, with no attempt to correct our course until things get bad enough to force action.

These lurching shifts are due to the way the parties in our two party system have chosen to define themselves, namely Republicans wish to limit government and Democrats wish to increase it. There is no thought in either party of tempering or altering these philosophies as the situation demands. While office holders may govern in a sensible way, they are not allowed to campaign honestly, their constituents demand strict adherence to the party doctrine. So for instance, President George W. Bush bailed out Bear Stearns and AIG, in total violation of party ideology, because it was necessary given the situation. However, a Republican could not run for office promising to do something like this.

I have startling news for you: the people on the other side are not idiots. They have good reasons for believing as they do; their beliefs hold a part of the truth. It's too bad they can't use the other part too. I say this about both Democrats and Republicans, conservatives and liberals.

So Reagan's 1980 policy was right for the time and situation, but it would not have worked in 1932, and he certainly could not have gotten elected then had he run the same campaign. There were problems created by Reagan's policies, as there were problem's created by New Deal policies, and no doubt will be by Obama's actions. But as I said, our system is ugly. It is necessary from time to time to change course, and this is how we do it. While you might not agree with these specific examples, I don't see how you can deny that the continual practice of either party's pure doctrine will eventually lead to catastrophe.

The Change That Is Coming

2009-09-15T17:04:00.001-07:00

For the past several months our country has been having a fight (debate is definitely the wrong term and even argument is charitable) over whether we should change our health care system. In some ways this is a fight about change versus keeping things the same. Alongside the health care issue is the looming shadow of the economic breakdown that has been part of our national life for about a year now. There has been great disagreement about how to best deal with this crisis, but unlike health care, on economic matters everyone's objective has been how to keep things the same. Not the same as it is now, but the same as it was in 2006 or maybe the late 1990's. This is all that the Obama adminstration is trying to do with the stimulus and bailouts, they have no hidden plan to socialize the country, they would give anything just to get it back to what used to be normal. And those who oppose President Obama's approach still want the same thing as he, literally a return to "business as usual".

It is ironic then, that the area where there is so much consensus is the one place where there will be drastic change at odds with that consensus. This change cannot be avoided, only delayed, and even that for not much longer. As Jay Leno said recently, at some point we need an economy that actually makes something that people will buy. What will we make that can't be made cheaper somewhere else in the world? The proof of this is all around you whenever you go to the store. America is no longer in a position of strength in the world economy. What we do have going for us is the world wide dependency on the U.S. as a purchaser of goods. This cannot be changed over night without causing problems for the producing countries as well as for us. So it is really in no one's short term economic interest to stop loaning money to the United States; this gives us a window to transition to a national self-sufficiency that will now be necessary in this new economic order.

All of the above is true regardless of the possible economic and political scenarios that may play out. Say the economy recovers and we manage to pay down our national debt. What sort of jobs will people be doing? They won't be working in things connected with real estate and the financial industry. They won't be manufacturing things to export to other countries unless they're willing to work for maybe a tenth of what they have been used to. They may be manufacturing things for domestic consumption but only if those items are sold for a much higher price than what we are used to paying for imported goods, which means the market for these high priced items will be small. Suppose we elect a fiscally conservative president in 2012? This will make no difference to the sort of jobs that will be available to americans now and in the future.

We are going to have drastic change in the sort of work we do and our standard of living, and the only thing we can do is get ready for it. This is where good leadership can make a difference. We do have a limited time to prepare before this happens. A leader who is willing to talk about such a politically poisonous topic and be honest and yet encouraging can make the difference between preserving the structure of society or a chaotic collapse.

In defense of President Obama and government

2009-08-15T10:14:00.000-07:00

This is a "Guest Opinion" submission to the Salem Statesman Journal; we'll see if they print it, and how many words they allow - I'm not sure if they've ever given me more than 200 words in the past. (Correction - letters to the editor are 200 words, I believe they have given me 400 words for an opinion. However, I'm wondering if we'll see any "Opinions" giving the other side on this issue).

Since the Statesman Journal recently gave around 400 words to Allan Erickson's attack on government in general and the Obama administration in particular, I hope they will give equal time to an opposing viewpoint.

I believe there is a role for government in our society, particularly in times of crisis such as the economic meltdown of the past year. If both the Bush and Obama administration had taken a laissez-faire approach during this time we would now be experiencing social chaos with homeless shelters overflowing and millions of people in bread lines. As Paul Krugman said, thanks to big government we have avoided a second Great Depression. If you read Krugman's column in the NY Times you will be familiar with the logic behind deficit spending by the government when private spending has dried up. This is exactly the situation now, the lack of available credit is having a powerful deflationary effect. Increasing unemployment is causing even people who are good credit-risks to lose their houses, driving the housing market further down and adding to the risk of bank failures. If unchecked, this continues a downward spiral of wages, business profits, and tax revenues.

The idea behind government stimulus spending in times like these is to stop the downward trend and create economic activity artificially until it can start happening unaided again. It has the added benefit of avoiding the social dislocation created by massive unemployment and homelessness. Even a "fake" job can keep someone in their house and put food on the table.

So President Bush took action to save the financial part of the economy and President Obama continued this and also passed the stimulus bill to save the every-day working part of the economy.

There is one problem with all this: you can only save an economy if there is something there to save. Unfortunately no one seems to have figured out that having 70 percent of our economy depend on consumerism won't work when the consumers can't borrow money anymore. This idea was ridiculous in the first place, but it worked for about 20 years. The stimulus spending has provided temporary relief, but when the economy does not respond (because this kind of economy can't exist anymore) we will be in trouble unless we have used our spending to transition to something else.

We should give President Obama credit for keeping things from getting a lot worse, but we should demand that he provide leadership for a new kind of economy that makes sense and provides for our needs.

CIT Update

2009-07-22T10:47:00.000-07:00

CIT did obtain a loan from its bondholders after the government refused to step in. However, the terms of that loan make me think their prospects are bleak and that they are still very likely to declare bankruptcy. A Bloomberg headline said the interest rate on the loan was more than 25 times the LIBOR rate. From that story:

"“This is called Don Corleone financing,” Egan said, referring to the patriarch in the organized-crime family depicted in the 1972 film, “The Godfather.” “You can’t lose money on this deal.”

Outside of the “urban underworld,” Egan, 52, said he couldn’t recall seeing a loan backed by as much collateral that paid interest rates so high. “These terms would make a pawn- shop operator blush.”

Why I'm not worried about inflation

2009-07-21T15:34:00.000-07:00

No matter how much money is printed it can't cause inflation if it's not in circulation, i.e. being spent by individuals and businesses. So as long as people keep losing their jobs and banks continue to issue very few loans, there's no way for available money to get out there where it can be used. Obviously the money supply isn't simply increased by the printing press, there are many things that can have the same effect: lower interest rates, making credit easier to get, etc.

When someone who is unemployed gets a job, suddenly they have more money to spend. When we are close to full employment you are more likely to get a pay raise, and again have more money to spend. In this job market you are likely to get a pay cut and be thankful that you still have a job, which means you have less money to spend. If you can get credit easily then you're more likely to buy a car or a house, etc. If a business can get credit and it knows that people are spending money because they can get credit then that business is more likely to expand, adding jobs, and putting more spending money in people's hands. But right now we see unemployment increasing and credit hard to come by. So I have no fear of inflation any time soon.

With one big caveat: inflation is no threat to our domestic economy, but the devalued dollar (a direct consequence of our soaring national debt and our increased money supply) has huge implications for our import trade. As you know we are dependent on imported oil in order for our society to function. And it seems that we have become dependent on imported food judging by the contents of the local supermarket, in spite of the fact that we could be producing our food locally. A devalued dollar will mean that at some point we won't be able to import oil and food, at least not in the quantities we are accustomed to. This will adversely impact our domestic economy by making it grind to a halt. This will then result in "inflation" in the sense that goods will become very scarce as production and imported goods greatly decrease. This inflation will occur regardless of the money supply, it will be based on unavailability of goods.

So I suggest that we go into debt now (increase the national debt) but that we use that money to become self-sufficient as a nation. Add public transit and train systems to reduce our dependence on oil. Encourage small local organic farmers who can raise food with very little petroleum input in the form of fertilizers, pesticides, and tractor fuel. Restore our manufacturing base so that we can produce the items we need in this country. This will take some time, but eventually will produce a healthy economy. At that point we can worry about inflation.

More on CIT Group

2009-07-14T09:38:00.000-07:00

Referring back to yesterday's post about CIT Group facing collapse, CIT Group is important right now because it is one of the few sources of short-term credit for businesses. In spite of the government TARP assistance or even after returning the TARP money, banks are not making loans. Maybe they have rightly concluded that the potential clients are in fact poor risks in this economy. This is part of the reason why CIT is in trouble; their loan clients have been defaulting.

Even for very simplistic business models you can see how a restaurant, for instance, would need credit to pay for this month's supplies and maybe even employee salaries in order to be open for business and make money. I suppose they could save up a cash buffer first before starting (probably some economic arguments for why this is unlikely) but in the real world this is not the reality. So if CIT goes away, things like restaurants and retailers go out of business very quickly (I would guess within a month or so). This means many more people unemployed and further reduced revenues for cities, counties, and states; in short, continued severe economic contraction.

So Paul Krugman is right, at least in the strictly mechanical sense of how our economy works: we really do need more money quickly thrown into the system to keep this from happening. The Fed is powerless to do this since interest rates are already zero, so options like the government stimulus are about all we have. If the money is not provided, I guarantee that we will see the great economic contraction; it is like a law of physics applied to our economic system.

Where I part with Krugman is on whether it is desirable to keep the system going. If it is, then it doesn't matter if the stimulus money does anything useful or not. Keynes made this point blatantly when suggesting the benefits of burying bottles of coins in the ground so mining companies could dig them up, providing jobs and profits. The whole idea is that any kind economic activity and available credit will get the system moving again so it can return to its former task of doing useful work and providing value. Our problem, as I have pointed out before, is that our system was not doing useful work or providing value even before it seized up, and the changed global economic environment makes returning to that previous model impossible anyway.

Since a further stimulus seems politically impossible, we should expect economic contraction.

A third way would be to scrap the former economy and start designing a new one. We would still have the contraction, so people would have to be basically kept alive during this period by massive government direction and intervention. There is no way to avoid this anyway, before too long social services will start to be stressed to the breaking point by the large numbers of unemployed. But if we are intentional about it we could do useful work towards the new economy while meeting these needs.

Watershed week for financial system?

2009-07-13T12:20:00.000-07:00

I'll take a page from Paul Krugman's book in not making a prediction here, just raising the question. About a year ago (I think in June 2008) Krugman hedged his forecast of a global economic catastrophe by presenting it in the form of a fictional column from one year in the future. It turned out that he was correct, but this sort of thing is hard to call because of the many ways to forestall the inevitable.

I have no doubt that things will get worse, not better, based on economic fundamentals, but the question is always "when?".

This morning on NPR's "Marketplace Morning Report" they pointed out that earnings reports for the financial institutions were coming out this week, and also ran an interesting story about CIT Group, a major player in the revolving credit market, that keeps places like Duncan Donuts running from month to month. The government was in talks with CIT Group over the weekend (sound familiar?) because of a feared run on their capital.

If the earnings reports reveal anything close to the truth then the illusion that we have a sound banking system should be shattered once and for all. The CIT group problem could have an immediate effect on the real economy, the part that people like you and I will notice.

Where's the value?

2009-07-02T12:01:00.000-07:00

I would like to discuss the idea of value in an economy. The nature of an economy is to abstract value; the most direct abstraction is:

I give you 10 units each for your 10 turnips, you then give the shoemaker 100 units to repair your shoes, she turns around and spends 20 units for a dozen eggs, where a unit might be a penny, for instance. This is the way a simple village economy used to work a couple of hundred years ago. The money in these transactions is just a placeholder for value, whether the value of some produce or some skilled labor. Without this placeholder we would need to come to some sort of barter agreement for every such exchange, which may not be that bad an idea either, but the use of money seems to make these exchanges easier.

You could complicate the picture by adding in a credit element: the bank loans a ship captain 10,000 units to sail to another land and bring back spices. The ship captain must repay the 10,000 plus an additional 1500 units upon return or else forfeit his ship. The captain expects to be able to sell his cargo for 15,000 units, which leaves him with 3500 units profit after paying back the loan.

This still makes good sense, after all the captain has to hire a crew and buy items to trade for the spices. He does not have money on hand for this but does have the expertise to accomplish the trip. The bank has the money, but does not have the expertise.

Where we start getting into trouble is when it turns out that the bank has made 20 loans like this for a total of 200,000 units, and it only has 50,000 units in its vaults. Since it did not have the currency to pay out these loans, it issued notes that were deemed to be good for the face amount, these notes were honored by the vendors and people of the community as if they were cash. This is what we call "fractional reserve banking"; it is how our banking system works today.

Now why did it make sense for the bank to loan more money than it had? Because the odds of the bank getting paid back were judged to be very good.

I'm starting to get a sidetracked here, back to our subject. In the whole scenario above, you can see value being added by each of the participants, including the bank.

I believe our problem today is that we have taken the abstraction of money to an extreme, so that we abstract the sort of situation described above by placing bets on the bank, or on the captain. Then we abstract this by placing bets on the companies placing the first bets, and so on.

Most of the jobs in the developed world involve working for one of the companies placing many-times-removed bets, or providing a service to these companies. Is there any value added by placing bets on other economic activity? If not, then there is no value added by providing services to those placing the bets.

As they say, I believe, but cannot prove, that at some point pretty early in the cycle of betting, value is no longer added and that we are many orders of magnitude beyond that point today.

This is why I was glad to hear Robert Reich say that he doesn't think we will have either a quick or slow economic recovery, because the real question is what sort of economy will we transition to, since the economy we have known for the past 30 years or so is unsustainable?

I thought it was very telling when "This American Life" discussed a lawsuit brought by shareholders against Citigroup and mentioned that the shareholders' biggest complaint was why didn't Citi unload their worthless collateral debt obligations on some other hapless fool. If they had, everything would have been okay, both for the shareholders and even the world economy. Of course this ignores the fact that the counterparty in this trade is also part of the world economy. So ultimately the only way this sort of system can continue is for a "Deus ex machina" to throw money into the system from somewhere outside. We should say "value" here instead of "money", since we are quite capable of printing our own worthless money.

This is where we currently stand with our banks. They have not sold off their bad mortgages but instead are hoping house prices will come back up and make those mortgages worth something again. If only people would start buying houses, then everything would be okay! As Dmitry Orlov slyly puts it, we will be rescued by extra-terrestrials!

Are Alternative Energy Sources Realistic?

2009-06-10T09:08:00.000-07:00

Jeff Vail talks about Energy Return On Energy Invested (EROEI) in a detailed post

http://www.jeffvail.net/

The basic idea is to account for the energy used to produce wind turbines, for instance, and determine if the energy they generate is more than the energy required to implement them (build, transport to location, and install). Obviously if it's equal or less than you shouldn't even be doing it. In fact, if it's not significantly more (by say a factor of 10) then maybe you'd be better off not doing it.

Vail points out that this calculation is very dependent on how wide you define the scope of implementing the technology. For instance, do you also need to add in the fuel needed to raise the rice to feed the worker that built the turbine blade? How about the infrastructure to educate and pay the engineer that designed it? He concludes that it is impossible to accurately account for this, and suggests a different approach, based on price of the technology in the market. He intends to evaluate Wind and Solar power using this methodology in upcoming posts.

The point to take home here is that if the energy alternatives we're considering do not have much of an EROEI ratio then we should not be wasting our time on them. If there is no alternative with a good EROEI then we should start figuring out how to get by on less energy. I think there are reasons why we should greatly lower our energy use even if a good alternative energy source exists; this is a topic for a different post.

Self Deception

2009-06-01T10:24:00.000-07:00

If what we are doing is so good, how come we have to pretend it's something else?

This question could be asked about so many things: from stressless bank "stress tests", to collaboration with the health care industry for universal health coverage rather than a single payer (government) system, to spending 50 billion helping GM through bankruptcy and not wanting to talk about whether tax payers will ever get this money back.

Is it because you just can't say out loud that the decision was made for expediency in order to balance the interests of strong lobbying groups? (You could maybe apply this to several of the above).

Is it because the best long term strategy requires the taxpayers to take a hit, but we don't dare tell them?

Bill Moyers discussed the benefits of a single-payer health care system on a recent show and concluded that this was the only way to achieve large gains in efficiency and savings. But when people asked politicians why this was not on the table, they were told, "because it will never happen", and that we would be foolish to squander the opportunity for extended health coverage on a pipe dream like this.

Unfortunately there is such a thing as the "possible" and the "politically possible".

However, it would do us a lot of good to at least say what we're really doing, instead of lying to the group and to ourselves about it.

How about this: "We're giving 50 billion to GM because we need to have some manufacturing base in this country, and they are one of our few examples. You will never see this money again. In fact, they will probably start losing money again once they come out of bankruptcy, and at that time we will have to either let them go under for real, or give them more money."

I'm not particularly irate about the GM example, it just serves as a good demonstration of what I'm talking about. I'm much more concerned about the health care solution.

Bush closer to Cheney than expected

2009-05-29T11:57:00.001-07:00

New York times columnist and "The News Hour" analyst David Brooks made the point recently that the Obama administration has essentially taken the same policy on Iraq and terrorism as the second half of the George W. Bush administration, when Dick Cheney's views were out of favor. I would pretty much buy into this, and I felt that Cheney's recent defense of torture tactics would not be supported by Bush now. However, George W. Bush gave some defense of these in a recent speech, saying that he believed they were legal at the time and that they made us safer.

Brooks also made the point that unlike Bush, President Obama gave a clear articulation of the reasons for his policy. While the policy changed in Bush's last few years, he did not emphasize this or build a case for it; instead he continued the approach of never admitting a mistake.

How do we know what's real?

2009-05-18T10:14:00.000-07:00

Europe2020

http://www.europe2020.org

describes an epochal shift in the world economy, taking place before our eyes. During this time, the old economic indicators are unreliable, and what's worse, they have been doctored by large-scale intervention so that they say what we want to believe. Below from their May 15 post:

"Of course, everyone is free to think that a few points’ monthly variation of a particular economic or financial indicator, itself largely affected by the multiple interventions of public authorities and banks, carries much more value on the evolution of the current crisis than those stepping out of century-old referential frameworks. Everyone is also free to believe that those who anticipated neither the crisis nor its intensity are now in a position to know the precise date when it will end.

Our team advises them to go see (or see again) the movie Matrix [5] and to think about the consequences of manipulating the sensors and indicators of one’s perception of given environment. Indeed, as we will examine in detail in our special summer 2009 GEAB (N°36), the coming months could be entitled « Crisis Reloaded » [6]"

Musings on Capablanca vs. Alekhine and the nature of the universe

2009-05-13T15:03:00.000-07:00

Jose Raul Capablanca was World Chess Champion from 1921 to 1927. During that time he was considered unbeatable in a match and dominated tournament play. Nevertheless, Alexander Alekhine defeated him in the Buenos Aires title contest by 6 wins, 3 losses and 25 draws. Alekhine, who had never won a game against Capablanca before, prepared extensively for the match, poring over Capablanca's games looking for a weakness. To his surprise he discovered that upon closer examination the seemingly strong moves of the champion overlooked certain possibilities. The challenger also altered his attacking style to a more patient, positional style more like Capablanca's.

So was Alekhine's victory a vindication of his baroque, inventive, chaotic play, and a refutation of Capablanca's simple, logical, positional buildup? Fischer said of Capablanca that he won his games by outmaneuvering his opponents in the middle game, so that the game was over when he simplified to end game, his opponents just didn't know it yet. Of Alekhine, Fischer said that his whole approach was wrong. Interestingly enough, Bobby Fischer combined the will to win of Alekhine with the classical simplicity of Capablanca.

Was Capablanca like Newtonian physics, true as far as it went, but lacking the deeper truth of chaotic quantum mechanics? Was Alekhine the Heisenberg Uncertainty Principal over the board?

After the match Alekhine admitted that he was honestly surprised that he won, and felt that he benefitted from overconfidence on Capablanca's part. In spite of a prior agreement, Capablanca was never given a rematch, and the two were bitter enemies until Capablanca's death, at which point Alekhine praised his former opponent.

Local real estate development mostly gone

2009-05-04T09:45:00.000-07:00

This may not be a news flash, but I think it is a good reminder about the big change our economy has gone through, and the repercussions that we have just begun to see.

The Statesman/Journal ran a front page story today on the Salem City Council's proposal to cut back it's regular meeting schedule from once a week to two days a month. The reason: lack of "residential and commercial development issues". So clear evidence here that things have changed a lot, and an unintended revelation that our city's leadership has been spending half their time on real estate development. The other issues for next week's meeting are deciding how to spend some federal stimulus money, discussing cameras at red lights, and choosing a name for a fountain.

Salem has a population of about 150,000 according to wikipedia. I believe the state of Oregon is the largest employer in the area, with Salem Hospital also employing a significant number of people. After that, not much in the way of industry or large businesses. What will become of all the people who were involved in construction, real estate, and related services, and what will be the further impact on the local economy?

Policy of Growth not Sustainable

2009-04-29T08:49:00.000-07:00

This is in response to and in support of David Ellis' thoughtful April 29 letter in the Statesman Journal "Population growth might be bad". I couldn't agree more, and I'd like to take it a step further, "Economic growth might be bad". I think in both cases it depends on where you're at in the spectrum of the physical limits of your environment. For the population issue experts concluded in the 1970's that we were nearing our planet's population limit, based on the fact that there are decades of lag time between an attempt to stop population growth and the realization of this goal. Here is the first conclusion of an abstract to "The Limits to Growth", a report to the Club of Rome (1972), "If the present growth trends in world population, industrialization, pollution, food production, and resource depletion continue unchanged, the limits to growth on this planet will be reached sometime within the next one hundred years. The most probable result will be a rather sudden and uncontrollable decline in both population and industrial capacity."

The idea that economic growth might not be desirable is really just an extension of the population growth discussion. If you think about it, continual economic growth depends on a growing population both to supply more labor and to supply more consumers. Likewise, a continually growing population depends on economic growth to provide jobs. Since the population limit is upon us, it follows that we are also at the point where economic growth is no longer good. This is a generalization, as there are still some parts of the world that desperately need this growth, but the developed world does not.

So if we can't have an economy based on continual growth, what should we do? Bill McKibben explores this idea very responsibly in his recent "Deep Economy", and it is discussed in great detail in the classic "For the Common Good" by Daly and Cobb. I suggest that we think about a system where we only manufacture what we need. This means an end to marketing ploys aimed at getting people to buy new gadgets or more stuff. It really means the end of the economy as we have known it, and a totally different way of life. I don't think this can be accomplished solely by the free market.

A promising hidden agenda?

2009-04-27T10:22:00.000-07:00

Charles Hugh Smith raises an intriguing possibility in an essay entitled "Obama's Secret Plan"

http://www.oftwominds.com/blogapr09

I quote:

"In which we speculate that perhaps Obama has a secret plan to discredit the investment banker cabal and thus undermine their vast political power and reach.

Many observers, partisans non-partisans alike, have been mystified by President Obama's continuation of the Bush/bankers/Treasury's "privatize bonuses, socialize risks" campaign of taxpayer-funded bank bailouts, phony slight-of-hand "transparency" and political support for blatantly bogus accounting of banks' profits, assets and losses."

My comment here: I count myself among those so mystified.
Mr. Smith goes on,

"Is there any strategy would might actually work? How about "give them enough rope to hang themselves"? President Dwight Eisenhower has long been dismissed as a do-nothing who "got lucky" in his two terms. Perhaps--but he was also a canny politico who didn't say much because he preferred to give his opponents plenty of stout rope. And sure enough, most of the time they promptly hanged themselves with their own excesses."

My further comment: I certainly believe President Obama capable of this level of subtlety, and I only hope it's true. Smith goes on to suggest that we should watch Paul Volcker as an indicator of whether or not there is more to this than meets the eye. He says that if Volcker resigns, then Obama actually believes in his current policy and has nothing up his sleeve. But if Volcker stays on, even in deep background as he is now, then we may be in for a big surprise.

More from Smith,

"What better way to discredit the bankers than to give them plenty of rope to complete their tarnished, fraudulent "plan to save Capitalism from itself"? How can they complain when their own bankrupt policies have been supported? ...

Make like you're doing the banker/Plutocracy's bidding in every possible way. And what will be the result?
A complete repudiation of the entire Bush/Treasury/banker bailout and "free pass" to further plundering. And when the public rises up in righteous fury, then you appear to bend, almost reluctantly, to "the public will."

Let's not forget the recent past

2009-04-27T09:25:00.000-07:00

Try to remember, if you can, the first several years after 9/11/2001 and the political climate at that time. There were very few voices raised against things like the Bush doctrine of preemption, the plan to invade Iraq, and the use of torture. Anyone in the media daring to be critical of the Bush administration (and there weren't very many) was putting their career at risk. Paul Krugman was one of those few critics. I think what he says below is true - we failed a test of national character.

From Paul Krugman's blog, 4/24/2009:
"One addendum to today’s column: the truth, which I think everyone in the political/media establishments knows in their hearts, is that the nine months or so between the summer of 2002 and the beginning of the Iraq insurgency were a great national moral test — a test that most people in influential positions failed.

The Bush administration was obviously — yes, obviously — telling tall tales in order to promote the war it wanted: the constant insinuations of an Iraq-9/11 link, the hyping of discredited claims about a nuclear program, etc.. And the question was, should you stand up against that? Not many did — and those who did were treated as if they were crazy.

For me and many others that was a radicalizing experience; I’ll never trust “sensible” opinion again. But for those who stayed “sensible” through the test, it’s a moment they’d like to see forgotten. That, I believe, is the real reason so many want to let torture and everything else go down the memory hole.

Let’s hope that doesn’t happen."

High Marks for Obama So Far - Except on Economy

2009-04-23T10:21:00.000-07:00

I don't mean this sarcastically, I sincerely believe that President Obama has done a very good job making important decisions and representing our country to the world. He has been everything I had hoped for, except in his handling of the economic crisis. I especially liked how he said that CIA agents who committed the legalized torture of waterboarding would not be prosecuted, but that the officials who decided this was legal might be. This should make future justice department lawyers and national security advisors think twice about returning to these practices.

If these were ordinary times, President Obama would be off to a great start. Unfortunately he has the privilege of dealing with an economic catastrophe that has been years in the making and that is different from anything we have seen before. His approach has been to try to restore the system; but this is not possible, as we have pointed out in previous posts. He has continued the bailout strategy begun by the Bush administration, when a clear-eyed reading of the situation should tell him and his economic advisors that this is just pouring money into a bottomless pit. It is clear that the economy as we knew it will fall apart without such bailouts, but it would be better to take it apart in a controlled manner instead of trying to prop it up. That economy is gone and bailouts only postpone the inevitable, and not for very long.

In fairness to Mr. Obama, he is a politician who has been elected President. You do not get a radical person elected to this office; instead they are a product of the general public will, which is not inclined to think very far outside the box. We should be glad that he does show some bold and revolutionary tendencies; his health care agenda, for example.

I believe Barack Obama does have the capacity to meet this extraordinary challenge, but it may take him a while to realize that something truly different and historic is called for. We need him to come to this place while he still has political capital and the public's trust.

Suggestion: controlled demolition of the financial system

2009-04-14T09:40:00.000-07:00

Note: below goes against what George Ure is predicting, but Ure is saying what he thinks will actually happen based on the government policies chosen so far, while Ringoen is arguing for a different course of action. I agree with Ringoen's idea, but I would not be surprised if Ure's prediction turns out to be true. Ringoen's plan would be a drastic (and I think needed) change in government policy, a policy that extends back to the Bush administration and is being continued by the Obama administration.

This article by Gordon Ringoen

http://www.prudentbear.com/index.php/commentary/

makes some good points about the problem with the financial system being insolvency rather than lack of liquidity. Lack of liquidity would mean that all would be well if we could get financial activity back the way it was before things fell apart, but we know that isn't true because, as the article points out, for the last several years banks were operating a ponzi-based business model by making loans that they had no intention of keeping on their books. People were buying houses with borrowed money in order to to quickly resell them at profit, etc. But this business model is over, and we do not really want to return to it. As he puts it,

" If, in the unlikely scenario, they (the bailouts) do reflate the financial system, the bubble would still exist and huge amounts of additional credit would be needed to get the economy expanding again. The bubble would just be bigger for the next bust. The amount of credit required to perform this would surely bankrupt the country by making the U.S. dollar worthless and would chase away foreign investors and central banks who own 60% of our Treasurys. The total amount of bailouts necessary to reflate is unknowable but it is more that we can withstand."

Instead he says that the market needs to deflate to bring assets back into agreement with the real economy. I think this definitely means house prices and some other things as well.

Ringoen says that the choice is not between bailouts or systemic collapse, but suggests controlled system demolition as the right alternative. This is the difference between his argument and the mindless Limbaugh-Republican fake-populist tea party anti-bailout, anti-stimulus rhetoric. He at least acknowledges that there is no return to business as usual.

He suggests,

"Instead of giving non-discriminating bailouts, the government could let these insolvent financial institutions fail and then make direct grants or loans, where necessary, to avert total collapse. It could be considered a controlled demolition. Though painful, it would reduce the total cost to the government, and most importantly, would destroy uneconomic claims necessary to bring the real economy and the financial system back to balance."

Ringoen is also in favor of stimulus spending to put people back to work in value-creating jobs. I think we have to take the unemployed into account whatever we do. Unemployment is likely to increase, and the first duty of government and community is to take care of those who are not able to take care of themselves.

George Ure shows why a policy of inflation should be expected

2009-04-14T08:35:00.000-07:00

From his blog today: http://www.urbansurvival.com/week.htm

"Now, here's what absolutely must happen at a policy level in order to kick the country out of deflation - and this window won't be open too long: A policy decision will be made at the highest levels - and you may not even hear about it being made - that what America needs to survive is a good dose of inflation. Look at the PPI data trend - the last line in the table and it should scare the hell out of you:

(table follows)

March finished goods dropping 1.2% means an annualized rate of deflation of 15.4%.

Pop Quiz Time!

Name one large country whose government has just bet several trillion dollars of future taxpayer generated revenue (and ask what a 15.4% collapse in revenues will do to financial stability/viability of said country): ____________

See how inflation is now the only option?"

They are prepared for sustainable self-sufficiency, but for all the wrong reasons

2009-04-13T12:09:00.000-07:00

And now to what I really wanted to talk about today: the Amish! I have frequently been intrigued by the fact that living right among us are communities of people who still know how to do everything for themselves and if necessary could get by quite nicely without modern infrastructure and technology. Although they are not totally detached from our economy (they use the gas/diesel engines sparingly and take advantage of modern medicine and sell things to non-Amish consumers), I believe that they would have no problem adapting if these things went away. I use the term "Amish" as a label for all sorts of religiously motivated simple-living farm communities; there are different varieties of these with differing religious beliefs and rules for living. But as a whole they represent an extreme contrast to the world most of us live in.

I was especially impressed by M.I.T. grad student Eric Brende's book, "Better Off: Flipping the Switch on Technology". Brende lives among this sort of community for 18 months, without electricity and many other things I take for granted. He comes away convinced that his life was not lacking during this period and may have been qualitatively better. He also describes the physical effort involved in a positive way and is surprised that it's not back-breaking bone-weary work. After learning more about these people he observes that about half of their crop is dedicated to providing feed for their horses, yet horses are not absolutely necessary to this lifestyle. Farming could be done by hand without that much more effort (and the total land farmed would be reduced if not providing for the horses). He concludes that a person could live like this by working only half the time, and would have the other half free for study, reflection, or other interests. It seems that the horse is the Amish equivalent of our car - they just like to have them so they can drive that buggy to church on Sunday!

This brings me to the "for all the wrong reasons" part: I did some more reading and discovered that the driving force behind the Amish lifestyle is not a desire for sustainability or even complete self-sufficiency. Instead it is the determination to keep their community intact and to keep their faith pure. This is accomplished through strict religious control and peer pressure, and by minimizing influence from the outside world. As a Christian you might think that I would agree with the idea of maintain purity in faith. My answer is that I don't wish to be someone who thinks they have all the answers and won't listen to other ideas, and I think this is wrong and unhealthy for a Christian community. We should not be afraid of the truth and we should not believe that we understand it perfectly.

Back to the Amish: cars, for instance, are prohibited because they would lead to working outside the community, would become status symbols disrupting the social order, and easy travel would bring more outside influence. Motorized tractors with rubber tires are not allowed because they could be driven into town, which would eventually lead to cars. However, horse drawn motors used to power farming operations are okay.

I am interested in these people because I think they can show us a way to a simple yet rewarding life. But can we accomplish this without their rigid social and religious control? Probably not, but when it comes to living this way because we have no other choice, they will be a great resource to learn from.

One thing that we need to learn from them is to think about long term outcomes. They give great thought and debate to making any changes that would possibly result in a change to their way of life. If there's a chance for this outcome, they simply don't do it.

I know you and I don't want someone making all our decisions for us, this is the standard argument against central planning and I think there is a lot of truth in it. But if we have no planning and restrictions at all, we end up where we are today.

Kunstler says it well

2009-04-13T09:02:00.000-07:00

Below from Jim Kunstler's post this morning, I couldn't agree more. What really surprises me is that President Obama seems to have fallen for this idea of a recovery. Obviously if it were true this would be very helpful for what he is trying to accomplish; but this is really magical and wishful thinking. You can only believe this by closing your eyes to our economic status today and to how we got here.

http://www.kunstler.com/

"It's a curious symptom of the consensus trance zombifying the American public and its auditors in the media that something like a "recovery" is now deemed to be underway. And, as events compel me to repeat in this space, it begs the question: recovery to what? To Wall Street booking stupendous profits by laundering "risk" out of bad loans with new issues of tranche-o-matic securitized paper? This I doubt, since there isn't a pension fund left from San Jose to Bratislava that would touch this stuff with a stick, even if it could be turned out in collector's editions of boxed sets. Does it mean that American "consumers" (so-called) are awaited momentarily in the flat-screen TV sales parlors with their credit cards fanned-out like poker hands, ready for "action?" Not too likely with massive non-performance out in cardholder-land, and half the nation's electronics inventory wending its way onto Craig's List. Are we expecting more asteroid belts of new suburbs carved in the loamy outlands of Dallas and Minneapolis, complete with new highway strips of Big Box shopping and Chuck E. Cheeses? Go to banking's intensive care unit and inquire (if you can) among the flat-lining production home-builders and the real estate investment trusts on life support when they expect to rev up the heavy equipment."

Note on yesterdays sports store bankruptcy

2009-04-10T08:14:00.000-07:00

I didn't make the connection yesterday because the name has changed a little, but the sporting goods store that's going bankrupt is G.I. Joe's - a fixture in the northwest since I can remember.

Local sporting goods chain goes bankrupt

2009-04-09T08:23:00.000-07:00

In todays Salem Statesman Journal, a front page story announcing that a local northwest chain, Joe's Sports, Outdoor, and More, is likely to go bankrupt. Joe's had been in business for 57 years and employs around 1,500 people who will presumably lose their jobs. One store advised holders of gift cards to redeem them today since after that they would not be honored.

Soros on the dollar

2009-04-08T13:25:00.000-07:00

CNBC, reporting on a recent George Soros talk

http://www.cnbc.com/id/30069223/

"Soros also said the U.S. dollar is under selling pressure and may eventually be replaced as a world reserve currency, possibly by the IMF's Special Drawing Rights, a synthetic currency basket comprised of dollars, euros, yen and sterling.

"I think the dollar is now under question and I think the system will need to be reformed, so that the United States will be subject to the same discipline as is imposed on other countries," said Soros, whose famous bet against the British pound earned his Quantum Fund $1 billion in 1992. "Being the main issuer of international currency, we have been exempt and we have abused that because we have effectively consumed 6.5 percent more than we have produced. That is now coming to an end."

China recently proposed greater use of Special Drawing Rights, possibly as an eventual global reserve currency. "In the long run, having an international accounting unit rather than the dollar may, in fact, be to our advantage so we can't splurge—you know, it felt very good for 25 years but now we are paying a very heavy price," Soros said."

Who takes the housing hit?

2009-04-07T09:21:00.000-07:00

This is the central question; the answer will directly affect the lives of many and will shape our society far into the future. As I suggested yesterday, we can help each other, but when someone loses their job and can't make their house payment helping them come up with the cash is beyond the ability of most of us. It could be done by taking up a collection if there were small numbers of these cases, but what if this happens to 25 percent of the population? At this point there are several alternatives:

1. the homeowner loses the house (the homeowner takes the hit, this is what normally happens.)

2. the government helps the homeowner make the payments in some way, either through some sort of loan or by giving the homeowner a job (the government/taxpayer takes the hit.)

3. the homeowner is allowed to stay in their house even though they can't make the payments, maybe with some provision that they resume payments when they are employed (the bank takes the hit).

The first possibility creates great problems if it happens to very many people at once. If a large number of people suddenly have no place to live, we must immediately find somewhere for them to stay. The most efficient way would be to just keep them where they are, which choices 2 and 3 accomplish.

The second alternative solves the homeless homeowner problem but will fairly quickly cause the U.S. to default on it's national debt because of the large sums borrowed for this purpose.

The third choice is the most direct, simply let the homeowner keep their house. This will destroy our banking and lending systems, probably requiring a permanent nationalization of these, and will create the immediate perverse incentive for people to stop making their house payments while having long term destructive effects on any economy because it casts doubt on the validity of all future contracts and transactions.

From a political standpoint, I think the second choice is the only possibility.

I would argue for the third choice, in spite of the economic fallout. I think it has the benefit of transparency since you directly do what you intend to accomplish. I also think the economic consequences could be mitigated in a future society that emphasized fairness and opportunity for everyone. I believe people have a much greater capacity to cooperate for the common good than we give them credit for.

Who is my neighbor?

2009-04-06T10:23:00.000-07:00

Okay, the title refers to a trick question the religious leaders asked Jesus related to the command to "love your neighbor"; he answered with the parable of the Good Samaritan.

There are some other things I was thinking about posting today (did you know that if you got together with your neighbors and figured out how to live more efficiently by pooling resources and buying less stuff that this would be bad for the economy? What kind of a system is that?) but I think in view of the troubles ahead this is more important.

Over the next year, perhaps as early as this summer many of our neighbors are going to be in trouble because they have lost their jobs. Or maybe you will lose your job. I don't expect this to happen to me this year because I work for the state and so it takes a little longer for this sort of thing to occur, but it could happen to me next year.

Those of us who still have jobs need to take care of our neighbors who don't. There is enough food and shelter in this country for everyone, we just need to share it. The government will try to help people out but I think the size of the problem will overwhelm their efforts, so everyone of us needs to look around us and see what we can do to help.

Why a global currency?

2009-04-03T08:25:00.000-07:00

This was the first thing that Europe2020 called for in their open letter to the G20 participants. Paul Krugman's latest column shows one of the reasons why this is necessary.

http://www.nytimes.com/2009/04/03/opinion/03krugman.html

Krugman doesn't actually think it is needed, he describes why China wants it, and then concludes that China shouldn't expect the world to bail it out of its investment mistakes. The investment mistake he refers to is China's massive buying of U.S. treasuries (T-Bills). Now China fears a sudden drop in the dollar (likely because of the greatly increasing U.S. debt), yet it can't sell it's dollar holdings because this would also cause that sudden drop before it could sell very much of this asset. What Krugman doesn't mention here (although he's talked about it before) is that the U.S. needs China to not only keep holding these treasuries but also to keep buying them. This is how we are expecting to finance things like the stimulus plan and various bailouts that keep coming up. (I'm not saying we should be doing this, I'm just pointing out what has been official policy in the Bush administration and now the Obama administration).

It may be true that China shouldn't expect to be bailed out of this predicament, except we're now trying to bail out others to prevent a system collapse. I think China's situation qualifies as having great systemic risk. Think about this: maybe they can't sell the treasuries without getting virtually nothing for them, but if the dollar drops significantly than they won't be worth much anyway. With this in mind, they have value as economic leverage at the bargaining table, since if China sold them or merely stopped buying them the dollar would plunge. Also, I think you know that the U.S. depends on China for a lot of goods and food. So I'm saying I don't think we can ignore their problem, because it's our problem too.

A side note: Jeff Vail talks about how China is currently dealing with this problem by using its US Treasuries to buy hard U.S. assets, and suggests this is a good work-around for as long as it lasts.

http://www.jeffvail.net/
March 30,2009 post

The G20 Summit did not implement a basket of currencies as a global currency; Europe2020 then says that we should expect a decade or more of global economic depression and political turmoil. Krugman agrees about the economic part, he ends his column:

"The bottom line is that China hasn’t yet faced up to the wrenching changes that will be needed to deal with this global crisis. The same could, of course, be said of the Japanese, the Europeans — and us.

And that failure to face up to new realities is the main reason that, despite some glimmers of good news — the G-20 summit accomplished more than I thought it would — this crisis probably still has years to run."

G20 Summit Results

2009-04-02T16:59:00.000-07:00

Below from Paul Krugman's blog:

"Credit where credit (line) is due: the G20 outcome was better than I expected, with something substantive and important emerging — namely, much bigger funding for international financial institutions (IFIs), plus expanded trade credit. This will help smaller, currency-crisis countries a lot.

A turning point? No. But realistically, most big-time international meetings produce nothing; this did something significant."
----
My own opinion: unfortunately I think we needed a turning point.

You be the expert!

2009-04-02T09:07:00.000-07:00

That noted economist Penn Jillette (the talking half of the Penn and Teller magic show) has some interesting thoughts about Obama's approach to the economic crisis:
http://www.cnn.com/2009/POLITICS/04/01/jillette.skid/index.html

Penn describes many counter-intuitive actions that produce unexpectedly good results, and then raises the question about the benefits of the counter-intuitive act of spending your way out of debt. He concludes with the reminder that while counter-intuitive phenomena exist, the general rule is that the intuitive action is the correct one.

While I would argue that by Keynesian analysis deficit spending is not counter-intuitive in a recession because it replaces the demand that has been lost from the economy (this is intuitive) and assumes that a recovered economy will pay back the debt, I applaud Mr. Jillette's weighing in on this important issue and support his right to do so. I also add that I don't think we're in a classic Keynesian stimulus situation because that approach depends on having a sound economy before the recession, which is not true now.

But the important thing to notice is that we are in uncharted economic territory here and in many ways Penn Jillette's opinion is just as valuable as the next guy's.

G20 Summit: global currency, nationalize banks, IMF review of US, UK, Switzerland

2009-03-31T10:09:00.000-07:00

Europe 2020 http://www.europe2020.org cites the above three actions as urgently necessary in an open letter to the upcoming G20 Summit participants. They have correctly forecast the unfolding events of the world financial crisis for several years now, and they believe that the world will have a decade or more of economic decline and political chaos unless these three actions are underway by this summer. The last of the three, the assessment of the U.S., United Kingdom, and Swiss economies by the International Monetary Fund seems the least likely to happen. Speaking for my own country only, can you imagine the blow that would be delivered to the national psyche by this event? It seems unimaginable from a domestic political point of view.

So let's keep an eye on the outcome of the April 2nd G20 meetings.

Our Sham Economy - by Krugman and Kunstler

2009-03-30T10:33:00.000-07:00

See Jim Kunstler's latest posting

http://www.kunstler.com

"Under a Flourescent Moon"

and Nobel-winning Paul Krugman's NY Times article from last week

http://www.nytimes.com/2009/03/23/opinion/23krugman.html

Both these guys are saying the same thing (that a massive wealth has been lost from the U.S. economy and there is no way to avoid the repercussions), although Kunstler fleshes it out and makes it sound even scarier with a more rabid tone. I add this observation: this is not a case where we have lost the wealth and a counterparty has gained it, instead it's more like somebody who places a bet when they don't have the money to cover it. This wealth has disappeared from the world system (it actually never existed). All the worldwide economic activity that took place based on this wealth will now unravel.

Health Care, Energy, and Education

2009-03-25T08:44:00.000-07:00

President Obama listed these as his top priorities in a press conference yesterday. I couldn't agree more, particular for the first two. Providing health care for every citizen is the duty of a civilized country. Beyond that it will allow great innovation in the private sector (how's that, you free market types) because suddenly the average Joe on the street won't have to work for a giant corporation just so his kids can go to the doctor. The promise of health care for all must also come with the warning that there are limits to what we can provide; any workable plan has to stay within its budget. But the basic idea of making this available to all is a huge leap forward for this country, and if Obama can accomplish it he will have done something that other presidents have not been able to do.

By choosing energy as a priority President Obama has correctly identified the Achilles' Heel of our society and economy. Unfortunately his focus is on finding new sources of energy and perpetuating the car as the main means of transportation. This is a mistake and I hope his administration realizes this quickly. What we should be doing is finding ways to conserve energy and move away from the car, replacing it with public transportation and social models that require less commuting. We should also begin scaling back our lives to greatly decrease our energy consumption.

Education is always a good idea and should be available to all, regardless of income. I don't think it will have the same importance going into the future as it has had in the past, because I don't think we can continue being an ever higher tech industrial society, due to limitations on energy.

How about we just do nothing?

2009-03-23T09:34:00.000-07:00

So if the stimulus is a bad idea because there is no sound economy to return to, what happens if we just do nothing? Well a Keynesian infusion of government spending was proposed because the economy is no longer functioning; if we do nothing then we must expect the economy to continue in a disfunctional state and for this to get worse. Obviously this is also bad. The only other alternative that I've heard proposed is some sort of tax cuts, which I view as a much weaker version of the stimulus since they don't have nearly the same money multiplying effect. So tax cuts are pretty much the same as doing nothing. If we do nothing then at best case we're looking at 10 years or more of Great-Depression-like conditions, and at worst case a Soviet Union-style collapse. But I don't think the stimulus will save us because we do not have a sound economy to revive. At best case the stimulus may give us a couple of years of recovery until the price of oil goes back up again and then we'll be right back where we are now, at worst the stimulus may have no or little effect and will hasten the likelihood of the U.S. defaulting on its national debt. To be fair to President Obama, at least he's trying to do something to change the situation, and he's using an approach that would have worked in the past, but won't work now. We need a much more radical solution, and even if he comes to this conclusion he will have his work cut out for him convincing the american public.

What we need is an orderly transition into a new economy, one that takes into account the reality of steadily more expensive oil and the fact that we have maxed out the carrying capacity of the planet. This is not some utopian dream; if we can't make ourselves think like this then we will pay the price very soon as our environment continues to degrade and provides for less and less of our needs.

The sort of new economy we need will have a very large place for the small farmer, and will use a lot less energy. This is all very possible and could be a very good life for all of us, just different than what we're used to.

Less Can Be More

2009-03-21T09:28:00.000-07:00

Let's be clear about this, an honest assessment of the future in this country calls for a significant decrease in our standard of living. This is because we have paid for our current extravagance with fake money from the housing bubble and with a retail economy based on cheap oil.

However, we still have enough resources for everyone to have a very good life, if we get sensible about how we use them.

First, forget about owning a car and driving all over the place, or about flying places for vacation. Also, there's no use or need for so many of us to be dressed in nice clothes sitting in a cubicle all day.

One of the first things that has to change is we have to become a lot more involved in raising food, maybe personally, or maybe by creating an economy that encourages more small farms. This isn't necessarily bad, I'd rather spend a day working out in the garden (even hard work, which it frequently is) than inside a cubicle. And with some of the ideas being developed in sustainable agriculture, farming doesn't require nearly as much weeding as in the traditional method.

National health insurance must be a top priority, I applaud President Obama for focusing on this. As you frequently hear, we are the only developed industrial country that does not have this. While our economy winds down and more and more people lose their jobs, this issue becomes even more important, since we have depended on employers to provide healthcare. Suddenly many more people will be uninsured.

If you've never read Scott and Helen Nearing's "The Good Life", this book describes an extreme example of the benefits of simplicity and self-sufficiency. Not everyone will want to take it to this level, but we've gone a long ways in the other direction as a society and we would greatly benefit from a return to the land.

Stimulate Demand for What?

2009-03-21T09:03:00.000-07:00

Classical Keynesian economics says that when the public stops spending, creating a shortage of demand, the government should step in with massive public spending to get economic activity circulating again. As Paul Krugman demonstrates in his example of the baby-sitting co-op, hoarding behavior brings an economy to a halt but the expansion of money in circulation restores the system. To apply this to our economy, often times this can be accomplished by the Fed reducing the interest rate, making money easier to borrow. Right now the interest rate is effectively at zero, so we don't have this option. But if the government spends money, this can also have the same restorative effect.

Here's my question: the examples of the baby sitting co-op and of public works projects during the great depression were both cases where the underlying economy made some kind of sense. In the baby sitting co-op couples are trading baby sitting service, something that they all need. During the depression farmers were growing food and industry could create washing machines or electric power lines. Farmers wanted electricity and washing machines and were willing to trade food for them. Since the companies themselves did not need grain and eggs, they needed a functioning economy to make this exchange possible. But what about when you have an economy like today, which until recently was based on being able to sell a house for more than you bought it for, or being able to get food or a manufactured product at a cheap price in a foreign country and sell it in the U.S. for a little bit more after transporting it here using cheap oil?

Now demand is falling in our economy, but does it do us any good to restore it when we should not expect the housing market to return to the unsustainable pattern of the last few years, and when our import based retail economy is pretty much just another version of Newman and Kramer using the mail truck to drive bottles to Michigan where they got 5 cents more (surely you've seen this Seinfeld episode)?

When Do You Break the Bad News?

2009-03-10T11:30:00.000-07:00

President Obama has been in office for less than two months and already he has many plans in motion and is projecting an image of confidence in the middle of an extremely shaky economic situation. Also, his plans assume and depend on an eventual recovery of the economy. The nature of this recovery has not been defined but it seems like it is assumed to be a return to previous "normal" levels. Does this mean 2006 levels for various indicators, the housing market, etc.? I'm not sure, but I'm pretty sure it doesn't mean a significant reduction in standard of living, or a drastic change in lifestyle.

However, it sure seems like we must expect a much lower level of consumption and personal spending, because the money that was driving all of this (the housing bubble) never really existed.

So the President's plans are going to meet an economic reality that is much worse than he and everyone else is expecting, although I give him a lot of credit for really trying to be realistic about his budget and numbers. The problem is, he happens to have arrived at a moment in history when a big change is required, and people aren't prepared to think this way.

So either he knows this and for political reasons can't say it yet, or he doesn't know this and will be blind-sided by it.

What Should the Recovery Look Like?

2009-03-04T10:09:00.001-08:00

The idea seems to be out there that if all goes well, in a year or two or maybe five we should see the DOW return to above 10,000, housing prices should gain back some of the 30 percent of value they have lost, unemployment should be below 5 percent and people should start buying cars, houses, and stuff again just like before.

This at least implicitly assumes that the terrible situation we see now is happening because our economy is merely out of adjustment and with the apropriate corrective measures it should be humming right along again. John Maynard Keynes said something similar about the Great Depression - comparing it to an automobile he said that we were having "magneto problems" but that the basic engine was sound. Now some 70 years later I don't think that we can say this anymore. The basic system is not sound, in fact it is rotten to the core and is a sham confidence ponzi game that has been going on for at least the last 30 years due to money created through credit or the last 60 years due to the widespread availability of cheap oil.

So for years we have been living with this dislocation and enjoying ourselves, but now reality is intruding.

Some have pointed this out in a limited way. Paul Krugman mentioned the other day that the problem with all the plans for helping the banks is that no one seems to realize that the bad assets are actually bad. Instead they expect to get value for them at some point, somehow, so that these losses won't have to be put on the balance sheets.

But the problem is more than just bad mortgages and credit default swaps. 70 percent of the US economy is based on consumerism: buying and selling stuff to each other. This does not create value, and is not the basis for a sound economy.

So a realistic assessment of what the recovery should look like might be:

- full employment at 20 hours a week
- everyone has somewhere to live (shelter)
- everyone has food
- everyone has health care
- everyone can get where they need to go by public transportation
-local agriculture is the norm rather than giant agribusinesses, and everyone has access to community garden land

Our Goal Now Should Be the Basic Necessities

2009-02-19T14:56:00.000-08:00

As Dmitry Orlov puts it in his hilarious address to a San Francisco audience

http://cluborlov.blogspot.com

"What should their (Congress and the Obama administration) realistic new objectives be? Well, here they are: food, shelter, transportation, and security. Their task is to find a way to provide all of these necessities on an emergency basis, in absence of a functioning economy, with commerce at a standstill, with little or no access to imports, and to make them available to a population that is largely penniless."

The Anti-Keynesians

2009-02-18T13:29:00.000-08:00

Many on the right are arguing for a "do nothing and let the economy fix itself" approach to the current situation. Ignoring for a moment the Bear Stearns rescue, the AIG bailout, the Fannie and Freddie bailouts, and the $750 billion bank bailout we could examine this argument solely on it's merits, without considering the fairness of helping Wall Street but not helping people who have lost their jobs. We could put aside thoughts of the political and social consequences of that unfairness.

Martin Hutchinson makes this case better than most http://www.prudentbear.com

When he says, "the Mellon approach would have given us a pretty terrifying fourth quarter of 2008, but in the long run it would have been worth it," I probably agree, although I think it would have been more terrifying than what he is imagining. Henry Paulson and Ben Bernanke also saw a greater danger or they never would have acted so against their free-market principles. They wanted to avoid the destruction of the global economy, while I welcome this, at least in principle. We need to figure out how to live closer to reality and to the natural world, with much simpler lifestyles. Of course the chaos involved in such a calamity might bring great suffering, and so it would be better to figure out an orderly way to make this transition.

I don't think people who make the "do nothing" argument really know what sort of world they are asking for. They see this crisis as just another downturn in the business cycle.

Wanted: New Economic System

2009-02-18T13:04:00.000-08:00

The folks at Europe2020 http://www.europe2020.org are predicting dire things ahead for the U.S. and world economy and society:

"According to LEAP/E2020, there is only one very small launch window left to prevent this scenario from shaping up: the next four months, before summer 2009. Practically speaking, the April 2009 G20 Summit is probably the last chance to put on the right tracks the forces at play, i.e. before the sequence of UK and then US defaults begin [2]. Failing which, they will lose their capacity to control events [3], including those in their own countries for many of them; and the world will enter this phase of geopolitical dislocation like a “drunken boat”. At the end of this phase of geopolitical dislocation, the world will look more like Europe in 1913 rather than our world in 2007."

They point out that President Obama and other world leaders are treating the current crisis as a problem to the system which can be fixed, rather than as a failure of the system, and that only a radical redesign will succeed.

We Don't Really Want Change

2009-02-17T09:21:00.000-08:00

NPR ran a story on "All Things Considered" yesterday about the growing use of low-power constantly-operating devices in the home such as digital picture frames. It seems we have a problem because as these things get cheaper and cheaper more people use them and therefore we need to build more power plants to supply this increased need for electricity.

They never even raised the question about whether it might be a good idea to try to get people not to use them.

I think if you look at the available supply of energy and the current effect our lifestyle is having on the environment you have to conclude that we're already at the point where we need to cut back significantly on our power usage, not expand it.

The same thing is true for our dependence on cars for transportation. There are much more efficient ways to move people around: trains and public transit, if we only had them. This is what we should be spending stimulus dollars on, not the highway system.

These are examples of the sort of change we need, but no one is even talking about it. As James Kunstler said, there are less than 100 people in the country who agree with him. I think he's wrong, I think there's at least 1000. Pitiful, isn't it?

A Simple Explanation of "the Economy"

2009-02-05T09:51:00.000-08:00

George Ure keeps laying it on the line:

"Think about this...Where does interest come from in a sound money system? Say there is $20 in the whole world and you have it all. I am flat-ass broke. I borrow $10 at 20% interest all due in one year.

Spin the clock forward one year. You still have your other $10-spot. I have gotten back that $10 and am ready to pay you. But, since I also have to pay you $2 of interest, just where the hell do you suppose that comes from?

Answer: We 'make it up'. Someone off stage prints it up and throws it in.

Except, of course, the making up is incredibly convoluted in an abracadabra sort of way."

The Lazy Way to Save the Planet

2009-02-04T13:24:00.000-08:00

From George Ure's blog today (http://urbansurvival.com/week.htm):

"If you want to solve most of the world's growing list of environmental issues, here's a dandy - simple solution: Have everyone start working 3-days a week. All of a sudden, greenhouse gases, energy depletion, and all kinds of other problems become manageable. Focus on the stuff that matters: gardening, reading, personal relationships...forget the dollar mania! Let crooked banks fail - the country made it through the crisis in the past, and we will again."

I think he's on to something, seriously.

Response to State Rep. Brian Boquist's Opinion Piece Against the Economic Stimulus

2009-02-02T12:33:00.000-08:00

Note: I submitted this to the Salem Statesman-Journal as a guest opinion; they have published some of mine before but didn't take this one. Maybe they have too much of a backlog right now. Anyway, I'm posting it here.

"Brian Boquist Impressive, But Ignores Free Market's Recent Demise"

Sunday's Opinion by Brian Boquist showed him to be a thoughtful, reasonable person, at once making a strong case against expanding government debt while also advocating cooperation with some of President Obama's ideas. Boquist fears both the growing deficit and the negative side-effects of government intervention. He is correct in pointing out these dangers, but he fails to address the fact that it was the free-market Bush administration that started down this path with the Bear Stearns rescue, the AIG and Fannie/Freddie bailout and the $650 billion TARP bailout. In fact the economic collapse of the past few months has done much to discredit a pure free-market approach among thinkers and policy makers. As George Bush said, he put aside his economic principles when faced with what advisor's told him would be a collapse worse than the Great Depression. There is much political support for the sort of massive stimulus Obama and the Democrats are proposing precisely because there is little confidence that the system will fix itself. It so happens that there is another school of economic thought advanced by John Maynard Keynes advising the government to engage in massive spending in these sort of situations. This was tried during the Great Depression and critics say that it failed and that this proves the idea has no merit; supporters say that Roosevelt did not spend enough when he tried it, and that it was his eagerness to return to a balanced budget that kept the stimulus from working. A noted Keynesian is recent noble laureate Paul Krugman, who argues that the current $850 billion plan is also too small. Some may find fault with the details of the pending stimulus plan, rightly pointing out that it includes a lot of democrat pet projects and ideology. David Brooks' Sunday column warned that trying to do everything at once just weakens what could be good programs if they were done right with more thought and planning. He suggests that it would be better to just accomplish economic stimulus more directly by something like a payroll tax cut. I confess that I voted for Obama and don't see anything wrong with the winner of an election taking an opportunity to advance his agenda in this situation if it still accomplishes the overall objective. After all, the Bush approach to Hurricane Katrina relief had lots of small business and pro-business incentives. But we're talking about a lot of money here, and I too would like to see this debt used most efficiently. My choice would be to spend it on improving public transit and rebuilding passenger rail service. I think Brian Boquist's best advice was his humorously intended suggestion about planting a garden and learning to cook from scratch. In fact, "learning to cook from scratch" is a good analogy to how we all should begin to extricate ourselves from this economic system. It's very possible that the stimulus won't work and that the perils of greater national debt will come back to haunt us. We would be better off finding ways to live without money, since needing money requires us to depend on this system. This may sound like crazy talk, but if enough houses go into foreclosure it seems possible to me that people may be allowed to just stay in their houses. In this case the defaulting homeowners have become "too big to fail". If you have shelter and can raise your own food, you're pretty close to being able to live without money. This is how the people in the Soviet Union dealt with their economic collapse in the 1990's.

Slow Motion Cascading Effects

2008-12-18T10:12:00.000-08:00

From George Ure's daily report http://www.urbansurvival.com/week.htm

"This is like watching one of those 'rooms full of ping pong balls on mouse traps that demonstrate how a chain-reaction works' except that this one happens like molasses. Seems like about one data point per quarter:

*Q2 08: Oil goes way up.
*Q3 08: Passenger travel falls
*Q4 08: Fall accelerates
*Q1 09: Airplane makers likely to cut production rates, lay off humans.
*Q2 09: Hotel/rental car consolidations/failures ought to make headlines
*Q3 09: Another round of airline consolidations
*Q4 09: More travel fall off....

And that's how a Depression looks."

Kunstler's Suburbs vs. Jeff Vail's

2008-11-24T14:13:00.000-08:00

Jeff Vail (www.jeffvail.net) in his latest post proposes an interesting future for the suburbs that is very different from the bleak fate Jim Kunstler describes (www.kunstler.com). Vail mentions research by John Jeavons into sustainable small-scale agriculture, showing that only 4,000 square feet per person is needed. This assumes a vegetarian diet, but also requires no outside input of fertilizer etc., and is achieved by growing 60% high carbon produce such as corn in order to provide compost for the soil. Since the average size of the suburban lot is larger than a city lot (Vail mentions 1/4 acre), the suburbanites at least have the space to do this.

I think Vail has a good point, and also has made the correct observation in his last few posts that we're basically stuck with the suburbs and that those who live there will have to keep living there because they won't be able to sell their houses in order to move, and even if they could then the new occupant would replace them (note to reader, the assumption here is that gasoline will be scarce or expensive or both - I know that's not true right now, but remember a few months ago?) He also has argued that commuting costs can easily be negated by measures like car pooling.

So his argument interesting, but I still think that the suburban model for current society is a great inefficiency. What he proposes is taking this model and turning it into something more like the rural past, so that it becomes efficient again. But it is no longer the suburbs then. I know it's just semantics - and I think he has given a good solution to this problem.

The big question is can people who live in the suburbs accept this.

What Happens When the U.S. Defaults On Its Debt?

2008-11-13T09:16:00.000-08:00

Okay, this is unthinkable, right? Unfortunately not. Europe 2020 http://www.europe2020.org/?lang=en , a website that forecasts political and other events and their impact is predicting that the U.S. will default this Summer (2009). This site has been warning about our current financial debacle for several years, and they seem to have called it right so far. An article in Money Week was also talking about the possibility of a U.S. default. A CNBC article shows that as we keep increasing our national debt by bailouts and other capital injections (in order to prevent financial collapse), at some point our credit rating will be lowered, which will lead to the default. Martin Hennecke, senior manager of private clients at Tyche is quoted:

"The U.S. might really have to look at a default on the bankruptcy reorganization of the present financial system" and the bankruptcy of the government is not out of the realm of possibility, Hennecke said.

The problem we face is this: we need to throw huge sums of money into our economy to keep it from collapsing, but we don't have the money, so we have to increase our debt. But increasing our debt will at some point cause the same kind of collapse, when our credit rating is lowered.

What happens to us when we default? I think at that point we will be on our own, i.e. limited to only the resources within our borders. That means very little oil. Think about the implications of that for a minute. All military activities abroad will have to stop, and the basic routine of all daily life will no longer work. The good part is that we are a vast nation still with much natural wealth, and we should be able to produce all our own food and shelter, but only if we totally redesign how we go about it. So farming must now be by manual labor rather than machines, using no chemicals for pest control or fertilizer (because all these things depend on oil). Food must be grown near where it is used. Jobs in our traditional economy will be totally useless and will disappear. They have no value since they are based on trade with the rest of the world, rather than on producing things that we need here. It seems that the only way this can happen in an orderly way is for government to create basically a command economy of some sort and assign people to roles in it. Maybe this can be done through incentive rather than directive, but we may not have time for that. And I know, China and the Soviet Union have proved that this doesn't work. So what is a better alternative?

Do you believe this can happen in the United States without massive social disorder and perhaps revolution? We better pray that it can.

What the Election Means

2008-11-13T08:54:00.000-08:00

Last week the United States of America elected Barack Obama President by a clear margin. I voted for him and believe me I am very happy that he won. I was moved to tears by the historic implications of his acceptance speech in Grant Park, as was Jesse Jackson, and it sounded like Jim Lehrer either had a frog in his throat or maybe he too was overcome by the moment. John McCain was gracious in defeat - I believe this was the real John McCain finally free of the burden of running for president, now able to be himself.

As great as this is from a historic perspective, it does nothing to change the grim financial and social circumstances we are facing. It does offer some hope, however. First of all, it means that people are ready to try something different, and we also will have a president who ran on "change" (though the specifics were not defined). And we cannot discount the new goodwill we should have from the rest of the world, and the prospect of repairing some broken relationships.

People are ready to try something different, but how different? And even if they are ready for the kind of radical social change that will be required to survive (see my next post), will Barack Obama be bold enough to risk this kind of action? It is tragic in many ways that he has inherited a set of problems decades in the making that will most likely make him or any president look like a failure. I wish him well and hope for great things from him, we are going to need an inspiring leader in the next few years.

Hold On To Your Seats

2008-10-06T10:18:00.000-07:00

...it looks like we're in for a wild ride this week! With the 700 billion dollar congressional bailout safely passed last Friday, everything should go back to normal, right? This morning with the Dow down below 10,000 , it looks like things are still coming apart. Over the weekend there was word of big problems in the foreign markets, and Paul Krugman pointed out that the credit situation was still dire, and seemed to have not been affected by the bailout. The credit crisis is the real problem, the stock market is not really the indicator to watch, but it does get people's attention.

Meanwhile we have about the weirdest and most tumultuous circumstances I can ever remember when coming down to the wire in a presidential election. The candidates are having trouble keeping up with rapidly changing events, which threaten new surprises every day. With the election 30 days off and with the rate we've been clicking off momentous historical events (3 per week seems to be about the average), this 30 days seems like an eternity. The newsmedia were talking about this, how any one of these events would have been the story of the year normally, and how they are being swamped by these things. Their reporting seems matter of fact because they haven't really had time to take it in; so you have analysts sitting around discussing the day's events with nervous laughter, when you'd expect them to be sounding the alarm, that life is changing drastically for all of us.

death spiral

2008-09-29T13:49:00.000-07:00

I don't think I need to say anything this week, the news headlines speak for themselves.

Attempted Revolution

2008-09-22T08:54:00.000-07:00

As one of the contributor's to Jim Cramer's www.thestreet.com said, "We just had a revolution". Not quite. Although by the end of the day last Friday it seemed inevitable that Congress would authorize Henry Paulson's proposed bailout of the entire Financial System, today Congress is pushing back, as some commentator's like Paul Krugman weigh in and point out that this bailout may not work unless it pays inflated values for the toxic securities. In which case the taxpayers get stuck with the bill and the financial companies make money on the deal.

Of course the bailout of AIG, the insurance giant, is already accomplished. But it looks like this last step may not be a certainty, and hopefully it won't be. What a way to make policy - basically at gunpoint. What can't be accomplished in decades by the legislative process can be engineered in 10 days if you have a sufficiently large crisis.

Finally Taking Notice

2008-09-16T09:49:00.000-07:00

Last week Fannie and Freddie were nationalized, this week Lehman Bros. goes bankrupt and Merrill Lynch is bought out for half its value. And now the news media at least is starting to notice that something is wrong. NPR anchors sounded genuinely worried Monday morning, and CNN gave breaking news coverage to the Lehman/Merrill story. News stories now openly mention the comparison to the bank panic of 1907 and the great depression.

One thing that strikes me is that back in the 1930's probably half the U.S. population were farmers, industry and manufacturing were located here, and we had large oil reserves. Now our food is raised and distributed by giant agribusinesses, we import most of our manufactured goods, and import a large amount of our oil. I think we're a lot less prepared for hard times now than we were in the 30's.

The Economy

2008-09-08T08:41:00.000-07:00

First I'll just mention that as we anticipated in the last post, Fannie and Freddie have been nationalized. This rated a front page fairly bold headline in the Salem Statesman Journal and an interview with Secretary of Treasury Henry Paulson on NPR this morning. I have the suspicion that I could ask ten people on the street and I'd be lucky if one of them knew about it.

Now back to our topic: what is "the economy". We are told that Fannie and Freddy had to be nationalized to save the economy. For the some workers this means that we can now be assured that if we sit in front of a computer screen for eight hours every day we will be able to make our house payment and car payment and buy food and household items produced in distant countries, and so life will go on as usual. For others the 8 hours in front of the computer may be replaced by eight hours or more driving a UPS truck or maybe wiring an office complex. For almost no one will it mean growing food for local consuption or manufacturing something. Manufacturing has been outsourced to other countries with lower wages, and likewise much of food production.

So what does the US economy actually produce that is of any use? I can't think of much, they say that 70% of our economy is in the service sector and retail. So we buy and sell stuff to each other and maybe provide services (James Kunstler's ubiquitous tanning salons, fitness centers, perhaps auto repair, carpet laying, etc.) Some of these things do seem useful around here, but can't be exported to the other parts of the world that we get our food and goods from.

It seems to me that right now we're pretty much living off the generosity of the rest of the world, which makes the stuff that we actually need. I can't see that we're giving them anything they need in return.

Fannie, Freddie will be nationalized

2008-09-03T15:04:00.000-07:00

Heard a story on NPR this morning saying it is pretty likely that the two home mortgage Government Sponsored Enterprises Fannie Mae and Freddy Mac will be nationalized, i.e. the taxpayer will assume all their debts. This is necessary to keep the housing market from totally freezing up (which would happen if there were no Fannie and Freddy since they are the only ones offering mortgages right now) and to keep big foreign stakeholders like China from losing their investment. We can't afford to have China lose the money they have invested in Fannie and Freddy because we depend on them so much for other debt; I believe we have about an 800 billion dollar trade imbalance with China.

Ben Bernanke and the Federal Reserve took fairly extreme action to try to prevent this around a month ago, but they still ended up in this position. The recurring theme in this housing/economy crisis seems to be that we can stall the inevitable for a little while, but it always ends up happening anyway. Why do we try to stall it? Because it is bad. Therefore when it actually does happen, as is happening to Fannie and Freddy now, I don't believe the reassurances that things are actually okay and it's perfectly fine to do this.

2008-08-05T12:11:00.000-07:00

Saw an article saying that hotel business was down 20% from last year to this year, and that 100 small cities were expecting to lose airline service this year. Also saw several articles talking about the possibility of General Motors going bankrupt - maybe Jim Cramer was on to something.

There was a surprising article in the Washington Post (surprising because I wouldn't expect to see it in this paper) saying that free market capitalism may have had its run and was now on the retreat. The writer felt that the average american had reached the point where they had nothing more to gain from increased globalism and more to lose. He also pointed out that although we like to keep government out of things, we also expect a certain level of fairness and workability in our social system regarding things like health care, and that we have fallen well below this level.

Air Travel to End Soon - July 28, 2008

2008-07-28T09:22:00.000-07:00

The local paper ran an article about the troubles of the airline industry. Last year they had 31 billion in expenses and 5 billion in profit, this year their expenses have almost doubled to 51 billion. Salem is losing it's airline service, after having it for about a year. Some of you may be surprised that this small town has airline service, and if you saw the tiny airport you'd be even more surprised. The airline is pulling out because of insufficient passengers. Another article was promising that we'd restore the service soon; I don't think it's ever coming back (and no great loss in my opinion). What's more, I think this year we will see that air travel is no longer an option for the average person. First because of the expense, and second because the airlines will no longer offer it for many routes.

What will happen to the economies based on the availability of air travel? Things like hotels, restaurants, convention centers, city budgets? As these businesses are forced to cut back due to diminished revenue, people will lose their jobs. As these people spend less, other businesses will be impacted, furthering the cycle.

You have a front row seat

2008-07-20T19:49:00.001-07:00

Sunday, July 20, 2008 - Salem, Oregon

They say an old Chinese curse is "may you live in interesting times". I'd like to welcome those of you living in the United States to what should prove to be a very interesting next couple of years. All you have to do is keep your eyes open, our nation is coming apart right in front of you.

Last week there was a front page headline about the Federal Reserve's emergency rescue of the two giant home mortgage corporations, the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC), better known as Fannie Mae and Freddy Mac. Jim Cramer (of cable's Mad Money) when asked how we'd know we have hit the bottom of the market replied - when all the banks that need to fail have failed, and when General Motors and Ford have declared bankruptcy. This is serious stuff. Last week there was also a run on a large California bank (Indie Mac - where do they get these names) causing it to be taken over by regulators.

There is much discussion of these things on the news (public radio and public TV at least), but where I live in Salem Oregon it seems like the average person on the street isn't worried and in fact isn't even thinking about this.

So I'd like to invite you to join me in watching this unfold. I plan to post what I observe happening around me here in Oregon. I'm wondering what it will take to get people's attention.