April 28, 2008 § Leave a comment
From the excellent Calculated Risk
[On CNBC] I fleshed out my arguments on why the US recession will be severe and protracted, lasting four to six quarters.
… later in the CNBC program Nobel Prize winner Joe Stiglitz explicitly agreed with my view that this will be the worst U.S. recession since the Great Depression. In some ways Stiglitz was even gloomier than I have been.
Later that morning on CNBC Mohamed El-Erian, co-CEO of Pimco, fleshed out the arguments on why this crisis is not over. That interview followed up his excellent op-ed column on the FT today where he argued that we are now moving to a new stage of the economic and financial downturn.
Here is the Financial Times piece by Mohamed El-Erian: Why this crisis is still far from finished
… During the next few months there will be a reversal in the direction of causality: the unusual adverse contamination by the financial sector of the real economy is now morphing into the more common phenomenon of recessionary forces threatening to undermine the financial system.
Economic data in the US have taken a notable turn for the worse. Most importantly, the already weakening employment outlook is being further undermined by a widely diffused build-up in inventory and falling profitability. History suggests that the latter two factors lead to significant employment losses.
… The sharp slowdown in the US real economy will occur in the context of continued global inflationary pressures. As such, the Federal Reserve’s dual objectives – maintaining price stability and solid economic growth – will become increasingly inconsistent and difficult to reconcile. Indeed, if the Fed is again forced to carry the bulk of the burden of the US policy response, it will find itself in the unpleasant and undesirable situation of potentially undermining its inflation-fighting credibility in order to prevent an already bad situation from becoming even worse.
It is still too early for investors and policymakers to unfasten their seatbelts. Instead, they should prepare for renewed volatility.
April 26, 2008 § Leave a comment
Many of us have thought that Bush ill stat a war with Iran in order to saddle the country with a dangerous situation in November, and create a condition where McCain seems like the candidate who need to win to save the country. Imagine at that time a McCain-Patreus campaign to win the “war” and bring us to peace.
Meanwhile the Democrats are showing, in my mind,the immaturity of Clinton and Obama, compared to people like Dodd, who never had a chance because the press sees no story in it.
The role of the press is despicable, but the weakness of the candidates shows the immaturity f the country. We are a cowboy society the world is coming to fear.
The underlying real story is not Iraq, the election, race, or bitterness.
the underlying reality is still the shift of money upwards; the angling for advantage by selling bear sterns to oneself and trashing the economy with fake “gifts’ like the rebates which are not rebates of paid taxes, but charges loaned to ourselves to pay back.
April 22, 2008 § Leave a comment
Finances dominate reality: the election is open because we don’t know how either candidate will respond to mind breaking challenges.
From Asian Times http://atimes.com/atimes/Global_Economy/JD22Dj02.html
There are certainly indications that the over-liquefied global system is not well situated today to handle more dollar liquidity (akin to throwing gas on a fire). Inflation and its consequences have quickly become major issues around the world.
With crude hitting a record $117 at the end of last week, there is every reason to expect that newly created global liquidity will further inflate energy, food, and commodity prices generally. The Goldman Sachs Commodities index has gained 21% already this year. But when it comes to monetary instability, our financial markets might just prove the unappreciated wildcard.
I just read a report, Human Capital Strategic Plan, March 2008, from The National Science Foundation. Because of my interest in the relationship between science and the broader society, I read it carefully.
First striking thing is the mission statement.
To promote the progress of science; to advance the national health, prosperity and welfare; to secure the national defense (NSF Act 1950).
In this context “human capital” strikes this reader as being part of the problem. The word capital comes from Greek for head, and referred to the number of cattle in a herd. Capital became that which grows. Human capital reduces the human to the head, and their function to being used to grow by owners, not themselves.
This directly conflicts with the human welfare view of the mission. But typically the mission is unexamined for its assumptions and guidelines. The reductionist trend here is obvious, once you have an ear for the rends. The soul to mind to head to brain to (newest technology, such as computer) is the evolutionary line along which we are currently proceeding. This is not very adequate to real human welfare which requires an understanding of the human, which goes unexamined except insofar as the research fits the agenda of economizing the human.
and, from http://www.washingtonmonthly.com/
WHERE’S MY FLYING CAR?….Paul Krugman suggests that energy technology hasn’t advanced much in recent decades and then adds this:
I’d actually suggest that this is true not just for energy but for our ability to manipulate the physical world in general: 2001 didn’t look much like 2001, and in general material life has been relatively static. (How do the changes in the way we live between 1958 and 2008 compare with the changes between 1908 and 1958? I think the answer is obvious.)
Leaves out Internet and war technology. Otherwise, a photo of a party today and thirty years ago are hard to tell apart: dress is much the same, and no new tech is likely to be in the photo (but the photo is digital!).
More on science
BREAKING THE GALILEAN SPELL
By Stuart A. Kauffman
… Even deeper than emergence and its challenge to reductionism in this new scientific worldview is what I call breaking the Galilean spell. Galileo rolled balls down incline planes and showed that the distance traveled varied as the square of the time elapsed. From this he obtained a universal law of motion. Newton followed with his PRINCIPIA, setting the stage for all of modern science. With these triumphs, the Western world came to the view that all that happens in the universe is governed by natural law. Indeed, this is the heart of reductionism. Another Nobel laureate physicist, Murray Gell-Mann, has defined a natural law as a compressed description, available beforehand, of the regularities of a phenomenon. The Galilean spell that has driven so much science is the faith that all aspects of the natural world can be described by such laws. Perhaps my most radical scientific claim is that we can and must break the Galilean spell. Evolution of the biosphere, human economic life, and human history are partially indescribable by natural law. This claim flies in the face of our settled convictions since Galileo, Newton, and the Enlightenment. …
STUART A. KAUFFMAN, a professor at the University of Calgary with a shared appointment between biological sciences and physics and astronomy, is the author of THE ORIGINS OF ORDER; AT HOME IN THE UNIVERSE; INVESTIGATIONS; and REINVENTING THE UNIVERSE: A NEW VIEW OF SCIENCE, REASON, AND THE SACRED (Basic Books, forthcoming, May 5th).
April 22, 2008 § Leave a comment
Back from Costa Rica. Trips to other places always worth while, but maybe not the energy used to get there. The future of air travel is difficult. Cost will lead the way, as in so many things, making the world more comfortable to the rich and less accessible to the rest of us.
A big world crisis, with Rwanda like consequences, would leave the environment in terrible shape. Desperate people will eat and burn in every direction. Those who think ‘at least it would be a solution” are not thinking seriously.
I was thinking…
The solutions to the problems we face with the economy, international relations, energy, environment, food and income distribution: basically a redesign of the US and the world economy and governance lie outside the boundaries of any conversation going on among the leaderships of either party.
This led to the suggestion that it would be potentially very useful to do a draft of the inaugural speech for January 2009.
It would begin with a story about the transformations of American Society: slavery, Indians, industrialization, a response to world markets, and the large wars of the 20th century.
Next would come an analysis of the problems facing us now.
Next comes an analysis of why our current institutions are not sufficient to meet the challenge.
A look back at the new deal, banking regulation, the WPA etc..
And last would come a series of proposals that would include but not limited to:
A new relationship between the president and working committees of Congress.
A new series of national advisory boards.
A proposal for flexibility centers in every town in America where local problems can be matched with people needing to change jobs.
An amnesty for all past taxes
A new proposal for home ownership without debt.
By ANDREW POLLACK
Soaring food prices and grain shortages are bringing new pressures to use genetically engineered crops.
Pasted from <http://www.nytimes.com/>
The issue is, crises will lead to embracing otherwise bad solutions. In this case, shifting ownership of agriculture to big corporations. Timing will be important.
Kudos to James Glanz and Alissa Rubin of the NYT for getting the story! They point out that the US and Iran are on the same side in southern Iraq, both fearful of the nativist Sadr movement. This correct narrative is completely the opposite of what Americans have been spoon fed on television and by Bush / Pentagon spokesmen. I had pointed out this Bush- Iran convergence last week and also pointed out that US intelligence analysis admits it. The article is the first one I have seen to say that Iran supports al-Hakim’s ISCI in its bid to create a Shiite superprovince in Iraq’s south. I’ve never been able to discover what the Iranians feel about this and had wondered if they weren’t at least a little bit worried about a soft partition of Iraq because of its implications for Iranian Kurdistan, which might become restive and seek to join Iraqi Kurdistan. But it is plausible that Tehran might risk this scenario in order to gain a permanent regional ally in the form of the Shiite Regional Government in southern Iraq.
Pasted from <http://www.juancole.com/>
- Succession of leading sectors:
- 1992-1996: recovery from the S&L/Gulf War Oil Shock/credit crunch recession.
- 1996-2000: Alan Greenspan–over the objections of pretty much everybody else on his committee–decides to see if the high-tech boom is for real.
- 2000-2001: Crash of the dot-com boom/bubble.
- 2002-2005: Alan Greenspan decides to see if we can replace high-tech with housing as a booming sector to keep the economy near full employment.
- 2006: Uh-oh…
- 2007-2008: Can we replace housing with exports (and import-competing manufactures) as a leading sector?
Note that exports would mean viability for business but much lower wages for those doing the production.
One of the key drivers of world prices is China spending US dollars for material, energy, and food. This is the necessary fallout of the US relying on China stockpiling dollars the US paid for cheap imports.
April 21, 2008 § Leave a comment
Talked with an oil and hydrology engineer. He said that the big guys, the ones with money and connections, are so far ahead of others in getting control of the land and starting projects, that with increasing demand and having control, they will become a lot richer. I am always surprised by the way such people can be clear both how to do what they do, and the negative consequence.”They have it sowed up. Lots of opportunity but few people have the connections.”
April 9, 2008 § Leave a comment
In Costa Rica. The country is almost beautiful. Many small farms laid in large luscious landscapes. The local culture is relatively poor but people have families and the children are involved in their activities. But what used to be a comfortable and efficient distance of homes from the highway has become embarrassingly uncomfortable as the traffic has increased through tourism and construction equipment. The houses are usually quaint, cheap, ubiquitous and creative. When the family has gathered around a simple plank table in their yard as an extension of a wood plank home without doors or windows not necessary in thin climate, and eating their own goat and the children are gathered around with three generations and friends, there’s an affluence of real human life. But it is cheapened by the new comparisons people make of then own lives in the context of the of expensive road traffic and the signs of development, not for them, who are here in this land, but for others who are coming. Only the faces of children stay focused in their activities as our van drives by and the adults all turn to look from 40 feet away.
The current president, Arais, became president first in the eighties with a very progressive move to make Costa Rica a military free society. But now he seems to be supporting the developers, who, using external market forces, such as tourism and European and American retirees will force the poor people off the land and out of jobs. For example, new developments can buy expensive and deep wells that are lowering the water table beyond the reach of the cheaper wells of country people.
Costa Rica could be a beautiful example of GardenWorld if the new developments were situated in the landscape taken as a totality with that kind of sensitivity. But the reality is the independent parcel treated as a gestalt of its own and with far fewer people. The deeper issue of money and property is playing out here just as in so much of the rest of the world. Some of the younger people are smart and ready but they will leave their traditional communities to do this. Poverty, real poverty, will increase and be more visible (unlike in the US), as will environmental depredation.
The beaches are beautiful but density is coming. Not the density of people, which the landscape can handle gracefully, but that density of new buildings, cars, and tour buses which make those people and the landscape almost invisible.
One of the things that is clearer to me is that technology is always dependent on the previous appearance of money and cash flow.
April 2, 2008 § Leave a comment
on Asia Times
Iran torpedoes US plans for Iraqi oil
With the Iranian Revolutionary Guards Corps showing how much control it has over the killing fields of Iraq, by stopping the fighting in the southern city of Basra, Iran has made both the Iraqi and United States governments look very foolish. Far beyond that, Iran has frustrated the joint US-British objective of gaining control of Basra, without which their strategy for establishing control over the fabulous oil wealth of southern Iraq will not work. – M K Bhadrakumar (Apr 2, ’08)
THE ROVING EYE
The other Iraqi civil war
Even by George W Bush logic, “the terrorists” and Iran won the battle of Basra. In the north of Iraq, though, the pieces are falling into place for an alliance between the United States, Israel and a “greater Kurdistan”. If only the pesky Iraqi nationalist Sunnis and Shi’ites don’t get in the way. – Pepe Escobar (Apr 2, ’08)