peristaltor

kmo delivered another great podcast the other day, interviewing economist Frank Rotering. Prof. Rotering has an interesting take on human progress and the limits the planet itself places on our expansion, part of which resonates well with what I accept.

For example, I whole heartedly agree that our biological imperative drives our expansion, the desire to eat the richest food (to give us strength and build our energy reserves as fat) and live in the best areas conducive to sating our desires to, well, eat and reproduce a lot. The number of simple behavioral studies that reveal this simple unconscious drive abound, each confirming that despite what we say, we are greedy little piggies that crave tasty (meaning energy-rich) foods and sex with the most reproductively viable candidates. Remember, folks, Darwin's "survival of the fittest" referred to reproductive winners, the organisms that most successfully got as many biological copies of themselves made before they croaked.

Where Frank went off the rails in the talk with kmo, though, was where he started talking about . . . capitalism. Wait, haven't I gone over this already?!?

But then the Professor did something very few who throw the C word about willy-nilly actually do: He explained what he meant. I'm not saying he got it right in my eyes, but I will say he at least had the courtesy to quote Marx's writings directly and explain the nitty-gritty details that might elude the less familiar. Someone who has obviously read Marx so carefully is rare to find even amongst Marxists. That was refreshing.

This explanation, though, confirmed something that has been nagging at me for quite some time: That Marx himself missed the most salient element of capitalism's expansionist tendencies, specifically by ( by conflating the necessity to expand with the ability to expand. )

Remember just a few weeks ago Warren Buffett bought BNSF outright? The press blather was predictable: "Our country's future prosperity depends on its having an efficient and well-maintained rail system."

Last night, though, while discussing an oil-poor future, my economist friend mentioned an alternative situation for buying the rail: electrification.

From The Journal of Commerce:

Earlier this year, BNSF Railway’s chairman, president and CEO, Matthew K. Rose, said he was in talks with transmission line companies that want to install new power lines in the railroad’s right of way. And he said BNSF was exploring whether that could help the railroad convert large parts of its sprawling western network to electricity.

Industry sources indicated other large carriers were looking at the same options, as Congress and the Obama administration push to upgrade the capacity of the U.S. electricity grid and tie in more alternative power sources including wind energy farms.

My friend also sent me a post from a rail site (sadly, one locked down to members only) which said:

If the wind- and solar-power crowd are really able to create some critical mass in their plans for mass conversion to such energy generation, transmission corridors for new high voltage lines are going to become necessary in the West. The battles for these rights-of-way are already starting to brew in several places in the West. . . .

Single steel pole towers, which are more easily situated on a railroad right-of-way than the old wider-footprint lattice-work towers, are now capable of handling up to the 765,000 volt lines being discussed for transmission from potential wind and solar fields in the West. . . .

Combine this observation with Buffett's planned wind farm facilities and one sees a definite business plan shaping up.

Buffett started as an oil man. He knows what's coming: Fuel shortages leading to ever higher fuel prices. Electric rail lines -- fed by the power lines sharing the corridor -- give him an incredible advantage, if he can get the major routes powered in time. And because he bought the rail outright, he won't have to dither about with quarterly stockholder reports. This means he can take his sweet time electrifying without worrying about "enhancing shareholder value" every few months.

I'd like to introduce everyone to David Brock, author of Blinded by the Right and The Republican Noise Machine. In Blinded, he introduces himself as a progressive and idealistic young lad who had a rude awakening during his college days in Berkeley. He went to cover Jeane Kirkpatrick's speech to the college, and was deeply disturbed when protesters interrupted her until she was forced to leave the stage:

The scene shook me deeply: Was the harassment of an unpopular speaker the legacy of the Berkeley-campus Free Speech Movement, when students demanded the right to canvass for any and all political causes on the campus's Sproul Plaza? Wasn't free speech a liberal value? How, I wondered, could this thought police call itself liberal?. . . . The few outspoken conservatives on the faculty, and the Reagan regents, raised their voices in support of Kirkpatrick's free speech rights. The liberals seemed to me to be defending censorship.

(David Brock, Blinded by the Right, Three Rivers Press, 2002, p. 4.)

This and other incidents burned in his mind, Brock turned from liberal and progressive issues and became a cheerleader for the Other Side. ( He rose in prominence, changing the course of American history as he ascended. )

First things first: I'm not someone who appreciates absolute descriptions. I see the planet and its people interacting in a myriad of ways best described with a myriad shades of grays, not blacks and whites. Is an act of offering someone a job, for example, capitalist exploitation or one of beneficent opportunity? For me, it depends on the job and the wage.

How about the decision one must make if one is "communist" or "capitalist?" In Orson Welles: A Biography, Welles tells his biographer of an encounter he had with an FBI agent during the Cold War. Agents were common in theater, since Hoover thought all entertainers were Commies until proven otherwise. Welles finally cornered the G-Man tailing him and asked him why he was being followed. The Fed said to prove he wasn't a communist. Welles asked him what a communist was. The Fed said, "Someone who gives his money to the government."

Welles pointed out that since he was at the top of the income bracket, he therefore paid 90% of everything he made in income taxes. "I guess that makes me 90% Communist," he concluded.

His answer always resonated with my belief in a spectrum of conditions providing one the boundaries of any given definition, as opposed to a binary "either/or" declaration of definition. More and more, though, I realize how unique I must be in this regard. I see in so many people the need to absolutely declare beyond any and all argument that X situation must be called X-ism, and that this definition must be maintained in perpetuity for all to see and learn from. These people can be found on both the right and the left sides of the political spectrum. The need to define and categorize knows no philosophical boundary. However, I have noticed one disturbing trend that does follow party lines, ( though not a way most could expect. )

So where are we? By abandoning nuance in favor of the bourgeois/proletariat divide, many on the left have created a blind spot in their thinking that fails to observe, collate and consider subtle distinctions in individual capitalist situations. The broad brush cannot fill in the tiny but important details. That's a problem, to be sure; but I hesitate to suggest it is a deliberate problem. No, economic theory can be complex and therefore might cause confusion. Cultural differences, historical context, personal myopia, all conspire to distort a more accurate portrayal of circumstances and the language that should be used to describe said circumstances. It's not deliberate; it's just complex.

I cannot, however, say the same is true of the right. I'm sorry, folks, but the language is in much graver danger of abuse from the more conservative elements of our society, a claim I intend to support with argument backed by evidence in Part II.

solarbird has once again passed along a couple of wonderful posts from Karl Denninger. In the first, he suggests it's time to waterboard those responsible for covering up the vast extent of our current unreported financial crisis:

All these new "proposals" are doing is attempting to once again screw the American public, turning them (once again!) into debtors and renters while lying to them about being a "homeowner." In addition if the original mortgage was a purchase money first an effective refinance into an interest-only product will destroy the non-recourse nature of the note in those states where it applies, leading those who are trapped in these loans a couple of years from now to lose not only their house but everything else they possess. (Emphasis by the author)

In the second, he seems to echo Chris Martenson (whom I've mentioned before) when he says how very badly our debt will eat our future:

Everyone in America wants "a pony" - the magical alchemy that will turn lead into gold, or return their stock market portfolio to its previous purchasing power.

It won't happen so long as our government and citizens spend more than they make.

There is one and only one way to make that happen: You must grow output faster than debt. When there is a credit overhang this means you must get rid of the debt at a faster rate than GDP declines.

Don't listen to talk of "the recovery." Until these un-discussed debt problems are dealt with head-on, there won't be one. Instead, there will only be more kicking the can further down the road, where it will grow and wait to impoverish the next generation.

Ah, that grand time of the year when the local public stations staff the phones and wait for you to call in your donation, all the while interrupting the otherwise fine programming they constantly tout with outright begging more befitting of the Calcutta poor. I did my duty. I sent in my pledge. Later, I will actually fill out and mail the check.

This year, though, something new! A comment box, one that appeared just after I gave my info in the Required Fields.

Why not? Here's what I wrote:

I am very concerned that the PBS system -- your station included -- has eroded its integrity as an entity free from commercial influence by agreeing to air "enhanced sponsorhips," what should be called openly "commercials."

At what level would we have to donate to rid the local air of this corruption? To whom would I speak to even broach the topic?

And yes, I am serious.

You see, public radio and television used to be, well, ( public. )


Addendum, October 14, 2009: There are many reasons to separate commercial interests from our source of news, chief among them Faux "News":

It's clear that in 2009, Fox News is no longer in the business of journalism. Fox News isn't trying to inform people, it's trying to misinform them. That's not journalism. It's propaganda. But as long as the press continues to hold up the façade of journalism, Fox News will try to hide behind it.

Fascinating.

Decades ago I dated a chess player, a very good chess player, one who trained with chess masters and knew first hand many of the names in competition at that time. One day in the smokey basement pub where chess players meet to play, she came back from a game downright pissed off.

She had lost. Now, she was very good, but people win and lose all the time. I asked her why she was so upset. Her explanation stumped me: "He played like a fish," she said.

Huh?

I had her describe what it meant to play "like a fish." She explained that fish make wild, unpredictable moves, that their play doesn't fit any recognizable pattern.

"But he won," I said. I suppose comments like this are one of the big reasons we haven't seen each other in almost 20 years; but I was honestly then trying to understand the difference between a truly great player who wins and a "fish" who wins. To me, they both win, so what's the difference? After all, if a master sat me down and schooled me in the ways of the board, I wouldn't know if I was undone by a lost Fibunacci Bishop or a Pawn's Gambit or the Flirty Queen. I would only know that I lost. Checkmate.

Out on a walk last night, I finally reasoned why the term "fish" might be used. Hook a fish and drag it out of the water, and it flops about madly on the deck or the dock without getting anywhere. A chess "fish," therefore, might be someone whose play seems erratic and pointless. They don't seem to be getting anywhere, or going anywhere. Ah, but the schooled opponent of the fish is judging the fish's moves on a learned pattern, the movement of one who walks on dry land.

Let's take this fish analogy a bit further and suppose that the fish player is actually playing by rules applicable in the water. Those spastic arches and flops across the board make no sense to us dry-landers; but put us in the drink and we shall see the fish's twitches move it across great distances with an admirable economy of effort. We walkers, on the other hand, slap and kick and flap about and barely get anywhere in the water. (I have a video of myself scuba diving in Hawaii, if anyone needs images of an amateur diver for comic relief.)

All this led me to reconsider a word upon which I've been stumbling quite a bit lately: ( Heuristics. )

solarbird gives what appears to be an excellent (but way over my head) analysis of the current market rally in her journal today. One of the many links had the quote in my subject line, Mark To Myth Losers: Americans posted by Karl Denninger.

He gives a frightening run-down on how many losses from foreclosures and defaults the banks are failing to report, often against the regulations requiring such reporting:

The bottom line here folks is as I have been hollering about for over two years: Banks and other institutions are carrying paper at FAR beyond its reasonable fair-market value - or that which it will EVER realize under any reasonable set of assumptions going forward.

Bluntly, we have institutionalized accounting fraud and the so-called "regulators" that are supposed to put a stop to and even prosecute these acts are willfully and intentionally ignoring them. The cities and towns across America are the big losers where these practices cause blight through intentional neglect while these "banks" claim to be in far better financial condition than is in fact the case.

In addition, this willful disregard for the truth means that these bankrupt institutions remain in the system as "zombies", unable to perform their critical role in credit intermediation. (Emphasis, this time, by the author)

This can't end well. My question is simple: Why is this info hidden only in the bowels of the intertubes? This indicates our current economic troubles are going to be far worse than the cheerleaders on the telly are suggesting.

I have an iPod. Not the fancy, wheel-controlled or touch-screen equipped money pits, but a simple iPod Nano (without the proprietary DRM earbuds). It does what I want of it. It provides audio content while costing less than my $60 limit, the amount of cash I am willing to spend on any gadget I bring to work.

When new, this little gadget did all that was promised and more. Funny thing though: Its functionality ( stopped right at the threshold of 'more.' )

Addendum, the next morning: Oh, and I completely forgot the strangest part, the part that leads me to believe there is a programing error in the pod's OS. There are only two slider switches on the Nano, Power On/Off and Shuffle On/Off. Shuffle off plays items roughly in the order you select on the sync page (see entry for infuriating limitations) -- but plays MP3s, then MP4s, Apple's proprietary format. Switch to Shuffle On -- you're going to love this -- and the unit only plays MP4s, ignoring any MP3s currently loaded.

What's more, this is the second Nano I've owned. I mentioned the shuffle switch weirdness (and some other strangeness) at the Mac store to a floor guy, prompting him to take my old one to the back and declare it FUBAR in ways no one in the back claimed to understand. He gave me a new unit . . . which does exactly the same thing.

Once I can write off as a unit malfunction. Twice and we have a design flaw.

Major Addendum, August 17, 2009: It looks like the latest iTunes upgrade (to 8.2.1(6) ) has corrected the ordering problem! By gum, the darned thing is now playing the order I want!

Now to get them to fix that podcast Autofill and we're on the verge of normalcy!

Jim Kunstler whipped out another gem in which he wrote:

For decades we measured the health of our economy (and therefore of our society) by the number of "housing starts" recorded month-to-month. For decades, this translated into the number of suburban tract houses being built in the asteroid belts of our towns and cities. When housing starts were up, the simple-minded declared that things were good; when down, bad. What this view failed to consider was that all these suburban houses added up to a living arrangement with no future. That's what we were so busy actually doing. Which is why I refer to this monumentally unwise investment as the greatest misallocation of resources in the history of the world.

(Emphasis from the author.)

Why is he so glum about our economic expansion? ( For lots of really good reasons. )


Addendum, August 10, 2009: Calculated Risk shares a paper describing a move from expanded building from city cores to a "new era of infill and redevelopment." Which will have to happen if "this monumentally unwise investment" called suburbia is ever to be corrected.

This can't be emphasized enough. To quote Rachel:

Americans are showing up at these events to shout down the discussion and to chase their congressmen. And they are enraged. And they're enraged, at least in part, by over-the-top conspiracy theories about health care. And they're being orchestrated by the corporate interests that do this for a living and do it very well.

The problem? Too few people know when they're being duped. Or dupes.

Okay, folks, I'll be honest; I've been waiting for a device like Amazon's Kindle for quite some time. Small, portable, readable, and -- perhaps best of all -- connectable directly to the internet for content. It's cheaper than a laptop, uses less power (I assume), has a direct-light readable screen, and could solve one of the nagging problems faced by the newspaper industry today: It could lower the high cost of printing papers.

According to an episode of On The Media, however, ( the Kindle might be destined for the dustbin. )

This one isn't easy for me to write simply because it involves people I know personally, people who, for one reason or another, are killing themselves ( in ways our society finds somewhat acceptable. )

Eschaton brings us the new wave. Looks like we are right now in the very lowest point of the trough, with a wave of potential foreclosures looming right before us.

Pay close attention to the second bar graph in the graphic and consider what it represents. I mean, freakin' hell, people, an over 80% increase in mortgage payments by mid '11?

From planetmoney:



Bigger

Credit default swaps have turned every big bank and corporation into a financial liability grenade. Every one of those lines is a trip wire. If the one bank/organization goes down, it triggers a massive liability to everyone connected by a line.

They established these liability linkages without considering the possibility of actual failure or holding enough liquid assets to pay out should a bank actually fail (like an insurance agency would be forced to do). That's why Lehman Bros. proved how tenuous the entire big banking system really is.

X-Posted to the_recession.

General Motors will soon be bankrupt. I'm not saying this out of spite, out of schadenfreude, out of a need to lash out at the auto behemoth. Rather, my judgment stems from a realization that the monster has become not only too big to turn its business practices around, but is further infected with a corporate culture that lacks the initiative to even attempt such a reversal of practices and fortunes. Anyone can see this to be the case. All you need to understand are the concepts of corporate culture and how they differ from business to business, from culture to culture. Right now, the biggest three auto making countries are the US, Japan and Germany. (Other car making countries like Korea, China and India are growing in importance, but their products and histories are not really available for me to judge, so I'll stick with the big three as I tick off the elements of each that give my argument some weight.)

Let's start briefly with Germany. ( Years ago, I worked with a deckhand/diesel mechanic named Jack. )

I've always wondered why folks have for years been down on Social Security. Everyone who slams the Depression-era social backstop seems to ignore that it only had to exist because the traditional market-based systems failed so dramatically. What gave them the idea that market-based solutions would work after this spectacular fail?

Turns out this has all been an elaborate long-term marketing campaign by the Cato Institute:

In the Summer of 1983, smarting under what they called the "fiasco of the last 18 months", i.e. the Greenspan Commission and subsequent 1983 Reform, the Cato Institute convened a conference in Washington DC and subsequently published the papers in their Fall 1983 Cato Journal under the title Social Security: Continuing Crisis or Real Reform. One of those articles had the intriguing title of Social Security Reform: Achieving a 'Leninist' Strategy. In that article was laid out the long term plan alluded to in my comment quoted above, which plan focused in large part on convincing younger workers that Social Security just wouldn't be there for them. Cato not only accepted that plan it institutionalized it in what was then known as the Project on Social Security Privatization but now known as the Project on Social Security Choice. (Note the domain name: http://www.socialsecurity.org/about/index.html - they have staked a claim to Social Security itself)

(Emphasis from the article.)

It's going to be hard to reverse the active marketing work -- read, propaganda -- done quietly over a quarter decade, but that's the only way to fix SS's funding problems without throwing the program out with the bathwater. Otherwise the bastards win. On the evil propagated by Cato, the author well notes: "Even paranoids have real enemies."


X-Posted to the_recession.

A quick note: Thomas Jefferson noted that country-wide education ". . . is the true corrective of abuses of constitutional power," the only way a democracy can thrive.

For those who've been hiking in Patagonia or sunning themselves on Phuket beaches this last week, cable shows have exploded with recriminations that culminated last Thursday night with Jon Stewart grilling CNBC's Jim Cramer and then raking the seared flesh with salted broken glass. (cieldumort gives a great linkage synopsis over at the_recession.)

Folks, what CNBC did over the years was entirely predictable. Why it was predictable, though, Stewart never really mentioned.

Yes, Jon accuses the network of knowing about instabilities in the financial markets but not reporting on them, of sucking up to and glorifying the very CEOs who created this mess with excess and unchecked leverage. What he does not do: Note that if the network had hired some deep investigators and run stories years ago that could have brought down the more profitable practices and many of the CEOs who practiced them, they would have quickly lost ad revenue from those firms and access to those same CEOs. CNBC's very business model forced the compromises that caused it to avoid confrontations unavoidable to true journalists.

What happens next? Because of this business model, CNBC cannot turn on a dime into the Washington Post of financial journalism. They can't afford to. What happens next becomes a poignant question when one considers that NBC affiliates have decided to keep the matter quiet. This whole thing might just blow over.

If that happens, if CNBC continues to bill itself as something other than a financial syncophantic monolith and chooses to ignore its ethical responsibility to educate and inform its viewers, this country will have no tools to correct the excesses that caused this financial clusterfuck and will continue its ignorant sink into fiscal oblivion.

Looks like the bad ol' banks were just providing the services then so very much in demand.

Just sayin'.


X-Posted to the_recession.

kmo has done it again. Yet another of his C-Realm Podcast guests has given me actual food for thought, valuable nutritional content. By contrast, what mostly passes through our mainstream media emerges as undigestable waste.

For The Growth Imperative episode, the guest was Thomas Homer-Dixon, author of The Upside of Down: Catastrophe, Creativity, and The Renewal of Civilization. ( Another long discussion follows. )

---

Addendum, February 17: On second thought, it seemed strange to only give 2/3rds of the interview. ( Here's the final section. )