Thursday, January 31, 2013

Hydrogen vehicles? Really?

It's pretty hard to ignore the efforts of three of the world's biggest automakers—Renault-Nissan, Ford and Daimler—when they announce they're going to throw resources into another effort to make fuel cells work in cars.  But personally, I don't see it.  I spent part of my youth playing with hydrogen (long story) and came to conclusion that this was dangerously impractical stuff.  For example, because the hydrogen molecules are so tiny, just sealing the stuff into a container is damn near impossible.  And while in theory it is possible to separate hydrogen from oxygen in water, this process requires more energy than you get back when you recombine them in either an internal combustion engine or a fuel cell.  And while supposedly it is possible to make a fuel cell work without using platinum, I haven't heard of it (although I am not privy to leading edge research in the matter).  And then there is the problem of no installed refueling infrastructure and even if there were some, it would probably be at least as inconvenient as it is for folks trying to power their cars with natural gas.

Even so, I am glad someone with money is willing to try to make fuel cells work one more time.  Some day, they may even produce a fuel cell reliable enough to power city busses and urban delivery vehicles and that would be an accomplishment all by itself.

Wednesday, January 30, 2013

The Dreamliner is grounded

If anyone ever needs a lesson in what happens when Predators take over a Producer company, Boeing will do perfectly.  In it's glory days, Boeing pretty much defined a Producer company.  Engineers ran the show.  The company would occasionally bet the farm on a breakthrough product.  There was a sense of pride you could feel the moment you passed through the plant gates.  And people who knew aircraft were often fanatically loyal to their output (It's Boeing or I'm not going.)  Yes, there were other companies that made large aircraft but sensible people would often ask "Why?"  Boeing was so sure about its products that for decades, it only had one salesman.  One was plenty because everyone knew what buying from Boeing meant.

And then it started to unravel.  In 1997, Boeing merged with McDonnell Douglas, a company that had lost its airplane-making chops and had become just another cost-plus supplier hanging off the big Defense Department teat.  Boeing also had significant ties to the defense industry but were babes in the woods compared to the sharpies from McDonnell Douglas.  Soon the sharpies were ensconced in senior management at Boeing and the rot began to set in.  The open assault on Boeing's engineering culture came out into the open during the SPEEA (Society of Professional Engineering Employees in Aerospace) strike of 2000.  The cordial atmosphere between the engineers that designed Boeing's products and the engineers that managed the company was broken.  Management even moved the headquarters to Chicago from Seattle to show the divorce was final.

Once the Boeing Producer / engineering culture had been trashed, the chance for breakthrough, industry-defining projects was trashed as well.  The Dreamliner, which was not even that revolutionary to start with, became an expensive, ongoing fiasco that demonstrated the truth of the most famous sign carried during the SPEEA strike "No nerds, No Birds."  And so now, after several years of delays and $Billions of cost over-runs, the few Dreamliners that have been delivered are grounded.  The problem isn't even an aerospace problem but rather faulty lithium batteries.  If the Predators of the "new" Boeing management were actually capable of feeling shame, they would be resigning en mass.  Yeah, that's going to happen (NOT)!

Iceland wins a big legal victory

This site, unfortunately, does not often traffic in good news.  But Iceland's victory over the demands of the greedhead bankers and their allies certainly qualifies as great news.  And just think, the weasel leadership in Iceland had already caved to the demands of England and Holland before the president stepped in with the choice of a democratic referendum.  So the citizens put a stop to paying extortion and yesterday, the European Free Trade Association upheld their judgement.

Of course, this ruling could have easily gone the other way.  Just because Iceland was clearly in the right in this matter was no guarantee that they would win.  In fact, the little countries in these sorts of disputes almost always lose so if there is some drinking and dancing in the streets of Iceland, it is totally understandable.

Everything here is from British sources.  So if there is more than just a whiff of "sore loser" about them, this is to be expected.

Tuesday, January 29, 2013

Oliver Stone's history lesson

As my regular readers know, I tend to get very serious about the subject of history.  As someone who hated the subject for the first, oh, 25 years of my life, I have more than made up for my late start once I discovered how important knowing history was to the understanding of my place in the cosmos.  Once I learned a little history, I rapidly joined the ranks of those who cannot understand how people navigate through life without this wonderful assist.  As I have said for at least 30 years now, I read history because I believe it is impossible to think as an adult without being historically literate.

This attitude leads often to a really good question.  "OK history nut," folks will ask, "what history book would you suggest I read?"  Because history is such a huge subject and I have read well over 1000 big fat history books, I often find myself reduced to helpless sputtering.  There is always Howard Zinn's The People's History of the United States which is a good primer but doesn't answer the interesting questions like How exactly did the USA achieve industrial sophistication?  One of my favorites is William Manchester's The Arms of Krupp which goes a long way towards explaining how Germany became the bad guy of the 20th century—fascinating but narrow.  I consider Carroll Quigley's Tragedy and Hope a stunner but hardly a first history book.  And so on.

Interestingly, it is recent history that folks typically know the least about.  The schools start out their American history courses with Columbus or Plymouth Rock and are lucky to get to the Grant administration before the school year ends.  So hardly anyone knows much about the Progressive Era, the Great Depression, or the World Wars.  And they know zip about the the Cold War and the rest of the madness of American Imperialism.  And what they think they know is usually comically wrong.

But now I have a new favorite answer for anyone who wants a history recommendation—watch Oliver Stone's Untold History of the United States!  In ten hours you will know almost as much about the recent history of USA as I know having read hundreds of history books.  What makes Stone's history so remarkable is he has found incredible file footage (he's a film maker, after all.)  So while I might quibble with some of the points he makes, his series is must viewing because there nothing like seeing and hearing historical figures make their important speeches.

This is Stone's great gift to the nation.  I am certain the professional liars are working to discredit this series as I write.  But it's going to be damn hard to discredit with all the file footage.  So everyone, watch it—it will be the best ten hours you ever spend.  And if you cannot find a good copy of the series, be patient—someone will float a copy past you soon.  In the meantime, you can always read the book.

Monday, January 28, 2013

An end to the Age of Stupid?

Speculations on the second inauguration of Obama

Not long after the election, I was visiting a friend who has an interesting background in network television.  Naturally the topic turned to the election-night television coverage and since I now live in sat-dish country, I had sampled a couple of new channels plus some of the channels I had not seen in a while—CNN, MSNBC, RT, Current, etc.  I skipped the networks and Fox—there ARE limits to my curiosity.  This experience had brought out the full curmudgeon in me.  Considering the seriousness of the problems facing humanity, I found the level of political commentary just hopelessly superficial.

The guy who had bothered me the most was CNN's Wolff Blitzer.  Wolff?  Blitzer??  Not even an SS lieutenant would have been so arrogant as to have people call him that name.  He stares vacantly into the camera.  But mostly, this man cannot even imagine that there are sentient beings in places like Minnesota who would rather discuss politics on some higher level than the horserace.  Of course, part of his problem is that he is Israeli so he actually has some excuse for not understanding what the middle 95% of the country is up to.  I sputtered, "Don't we have enough total idiots in the land that we have to import another?"

Warming up I continued, "I am just totally amazed at what we are supposed to treat as informed and wise.  The sheer level of cluelessness is breath-taking.  Yes, I know we are all God's creatures and we are all entitled to an opinion.  But if I must listen to it, I want that opinion to be informed, reasoned and logical, thoughtful, and relevant.  New rule, unless folks are historically, mathematically, scientifically, and technologically literate, I don't want to hear their opinions on any subject whatsoever!"

"But," responds my friend, "that pretty much shuts up every public figure I can think of.  And it takes virtually every pundit on TV off the air."

We left it at that.  But somehow I don't believe my request was so unreasonable.  Think about it.  In most high schools in the land, virtually everyone can take chemistry, biology, physics, algebra, geometry, trigonometry, calculus, several years of social studies that include some history, and even band or wood shop if you want to train your hands.  The point is that everything I consider the minimum to participate in the public debate are skills almost universally available at no cost to the student.  My minimum standard for someone participating in the public debate is merely the citizen that the taxpayers are paying for when they fund their high schools.  In other words, I am only asking that our public intellectuals know what they were expected to learn by 12th grade.

So the question becomes, "How can anyone in this era of universal opportunity for learning wind up as fucking goofy as Thomas Friedman or William Kristol?  What goes wrong?"

Reagan made lazy and stupid fashionable.  Actually, this phenomenon was predicted in the classic comedy Animal House.  The fraternity has just learned they have been kicked off campus and the head animal Blutarsky (played magnificently by John Belushi) is trying to fire up the troops for one last act of pure insanity.  He asks rhetorically "Was it over when the Germans bombed Pearl Harbor?"  Two of the upper class ringleaders give each other a puzzled look when Otter utters the phrase that will define the next 30+ years, "Forget it, he's on a roll."  Soon it would be, "Sure Ronnie, whatever you say.  An if you need an astrologer to help you plan your life, go for it.  After all, no one has ever been hurt by an astrology nut (cough-Hitler-cough)."

TV is stupid because on-air personalities are chosen for their looks and charm—NOT their journalistic abilities.  We forgot that an informed citizenry IS necessary for democracy.  Expense and time constraints made television what it was.  Yet depending on the market, there were local stations that spent their monopoly income on quality children's programming, well-researched documentaries on serious community problems, in-depth interviews, etc.  Here in Minnesota, the main proponent of on-air journalistic virtue was WCCO but others were forced to keep up.  Then in 1987, the Fairness Doctrine was eliminated and so soon were the programs of civic virtue.  By then, news was supposed to be a profit center so TV "journalists" took to chasing the vehicles with sirens—ambulances, fire trucks, and police cars because that's what the reptilian brain responds to.  Of course these tales of blood and mayhem were presented by pretty people with megawatt smiles who chatted cheerily when they sent us off to watch the prepackaged and scripted lies called commercials.

The preservation of archaic traits.  In a world made possible because of applied science, it is astonishing how few people understand the key concepts that allows scientific endeavors to vastly outstrip the other human endeavors in innovation, progress, and refinement.  People might be surrounded by an ocean of science, but it doesn't make their thinking scientific.  They cope with this disconnect using methods such as appeals to authority (example: fundamentalism and other religious-style social organizations.)  Perhaps the worst idea to emerge from the era was that effective collective action was impossible.  This stupidity of individualism stood in stark contrast to the cooperation and organization necessary to electrify a nation or build a transportation system.  Those who have attempted self-sufficiency soon discover how important honest and reliable trading partners, contractors, and yes even governments really are.  So while it may seem harmless to idealize the individual because it is impossible to ignore the practical benefits of cooperation and collective action, as a practical matter, this ideological waste of time came at a moment when we needed to organize a global cooperation to tackle the big problems like climate change.

Men love darkness rather than light because their deeds are evil.  Because everyone hates a thief, the Predators must operate in secret.  From that secrecy comes an economics that is utterly uninformed—bad ethics, bad history, a bad understanding of how science has transformed the land, and a bad understanding of how the Producers must run an economy.

Can we think like grown-ups in time to save our sorry asses?  In the final analysis, this is really the only interesting question we face.  On one hand, we just spent a generation telling ourselves that it was all right to be utterly ignorant if only we believed the unbelievable hard enough.  So any argument that ends with "Ignorance WINS" has plenty of evidence to support it.  Yet how can a society stay ignorant in the age of infinite information?  Yes, I understand that the Internet has large sections devoted to crackpot theories and the worship of ignorance.  But even if the sections devoted to reasonable debate backed with facts that can be demonstrated only account for 1% of Internet traffic by volume, the net is so large, this 1% could keep highly intelligent folks occupied nearly forever.  Ignorance may win but not without a serious fight.

And so for the first time in a very long while, we are seeing the pillars of organized ignorance such as neoliberalism and American exceptionalism trembling in the face of the reality that they are utter failures.  So while the old is dying—or at least at long last beginning to feel shame—a replacement narrative is struggling to be born.

Shale magical thinking

Three weeks ago, a cobbled together a post on fracking and secondary recovery.  If you recall, I am not much enthused about fracking's potential to supply a large market like USA's with petroleum.  Well, this Arthur Berman guy thinks the whole idea is just goofy.  If you follow this sample back to the original story, you will discover a bunch of powerpoint slides that pretty much demolish the whole Fracking-Will-Save-Us argument.

The tiny amount of petroleum we will get from fracking is nowhere near the costs of spoiled groundwater supplies alone.  Yes, humans need energy to survive—but they also need water.

Sunday, January 27, 2013

The right to die

LORD, make me to know mine end, and the measure of my days, what it is; that I may know how frail I am.  Pss.39:4

Without a doubt, the largest economic issue no one wants to talk about is end-of-life medical care and its incredible expense.  The reason is obvious—talking about death truly frightens most people.  Yet death is as much a part of the natural order as oxygen and no matter what one believes about death, it IS a part of the real economy.  And the certain fact is that the less realistic a person or society is about death, the more it will cost.  Until at the end we have funerals, the last big chance to blow a large wad on conspicuous waste.  And this phenomenon is not new—witness the pyramids and Taj Mahal.

While bronze statues and orate crypts may have passed from favor, we have replaced it with an even more grotesque form of waste—the million dollar death.  Avoiding this outcome is very difficult for a wide assortment of reasons but the biggest one is the relatives saying "Of course, we want everything medically possible done for Grandma Millie" without having a clue what is included under the heading of "everything."  The result is a medical system that spends roughly half of the overall total on the last 90 days of folks' lives.  Not only is all this unnecessarily heroic medicine hideously expensive, much of it is so painful and gruesome it resembles torture.

Some of this makes a little sense in USA where the scheme of for-profit medicine produces professionals who will keep prescribing and billing until the last known patient asset has been spent.  But apparently, they have nearly the same set of problems in Japan—a country with widespread respect for the elderly and national health care.  So it boils down to a simple dilemma—people fear death and will do a lot of crazy things to keep it at bay.  And so far, the best known cure for the fear of death is religious practice.

And so we have it—another example where economics and religious practice intersect.  As for me, after working in operating rooms and critical care units, burying both of my parents and watching most of my friends bury theirs, having attended dozens of funerals and singing in many, I have long ago come to the conclusion that I want nothing to do with the medical-industrial complex's million dollar deaths.  There is nothing about life that is so sweet that it makes worth a slow agonizing death surrounded by the insanity of a CCU.

Saturday, January 26, 2013

Let banks go bankrupt

The president of tiny Iceland is at Davos as a honored guest because that country's response to the banking crises of 2007-8 was easily the most successful by any objective measure.  The key, according to Grimsson was to ask his critics, "Why do they consider the banks to be the holy churches of the modern economy?  Why aren't banks like airlines and telecommunication companies?"

Good questions.  The obvious advantage this man has over his contemporaries is that he refuses to believe that bankers are magicians.

Iceland President Olafur Ragnar Grimsson tells Al Jazeera's Stephen Cole that Europe should let banks that are ran "irresponsibly" go bankrupt. Speaking at the annual World Economic Forum in Davos, Grimsson also held his country as a model of economic recovery after its near-collapse four years ago. "We didn't follow the traditional prevailing orthodoxies. And the end result four years later is that Iceland is enjoying progress and recovery."

Guess who actually sat in an LFA?


I was not expecting to play such a goof-off today so naturally, I did not come equipped with my good camera.  This was shot with an elderly smart-phone in difficult lighting.

I have seen dozens of pictures and followed the development of the LFA for some years so I wasn't surprised by anything.  But seeing something in the flesh is still an eye-opener.

1) It's pretty small.  This is a car that tries to have everything a high-end passenger car has but is still supposed to be ultra light.  I am two standard deviations larger than the statistically average North American male.  Because of weight considerations, my guess is that someone my size is the maximum-sized driver the LFA was designed to accommodate.  I other words I just barely fit and there wasn't any wiggle room.

2) There is no wasted space anywhere.  I can only imagine how hard it is to do something simple like changing spark plugs.  It has a V-10 and only four cylinders are actually in front of the firewall.

3) Look at the size of these brakes!!  Those are 20" wheels!  Because Toyota is the world's largest car maker and hence a big fat legal target, they must treat all design decisions very seriously.  In this case, they could not just size the brakes for the rich twit who decides to find the top end once or twice after he bought his ├╝bertoy, they must size them as if the car was going to be routinely driven to the designed top speed of 325 km / hr.  The cooling system looked big enough to handle top speeds all day long.  Etc.  It was a stunning object lesson in just how woefully under-engineered most sports cars have been over the years.

And here are the links to some of my more serious writing about the LFA and those Veblenic virtues of Workmanship and Idle Curiosity.  But even though the LFA was an extremely serious and expensive engineering demonstration, at fundamental level, this car makes serious people just giggle.  Example: One of the more unfair criticisms that Lexus has had to deal with over the years is that it's ultra-quiet and graceful cars don't "stir the soul."  So in the LFA, the shriek of a V-10 hitting a 9000 rpm redline (750 explosions per second) is captured and piped into the cabin for the driver's aurel entertainment.  Any kid who ever clipped baseball cards into the spokes of his bicycle to make it sound more like a motorcycle understands this impulse immediately.
Thursday, September 9, 2010
Japan's moon shot

Saturday, October 6, 2012
Building the LFA

Monday, December 17, 2012
Peak Auto

Tuesday, January 25, 2011
USA economic competitiveness

Friday, January 25, 2013

Climate change news gets worse

Jan 25 is the statistically coldest day of the year here in Minnesota.  We natives have rarely been disappointed by this date's notoriety.  I have seen many of them where the temps have hit -25°F (-32°C).  Such cold WILL get your attention.  Yet as I write, it is 16°F (-9°C) and as our drought grinds on, there is almost no snow on the ground.  So we don't need a lot of data to be convinced that climate change is real.  I like to say that here in Minnesota, the evidence for climate change is so overwhelming that deniers only come in two flavors—morons and drooling morons.

Thursday, January 24, 2013

Frontline investigates banksterism

Yes, I know I have covered the subject of crooks on Wall Street.  In truth, I find much of what happened unethical and cosmically stupid even when it isn't technically illegal.  But this effort by PBS' Frontline to cover the scandal that NONE of the big banksters went to jail is especially rigorous and well worth watching.

Wednesday, January 23, 2013

Building perfection

For anyone who ever says building something perfect is impossible, this clip of what Lexus went through just to build a toy designed to prove a point should give some indication of just how much perfection is possible. The levels of perfection shown here can be employed to build something more interesting than another trinket for some rich clown who probably has no idea how perfect something can be.

The sustainable society will only be built with the most elegant technologies.  Here is one example of what humans can do with the necessary resources.

Tuesday, January 22, 2013

The bill to "fix" climate change gets more realistic

As the World Economic Forum gets under way, another study surfaces that show another educated guess at how much doing something meaningful about climate change will actually cost.  As someone who has been say this is at least a $100 Trillion project since the early 1990s, I always welcome anyone who thinks along these lines and hope that they have more success than I in getting governments and other institutions to spend the money.  This from Businessweek.

BoJ caves!

Tha austerity ghouls took it on the chin today.  In one of the more encouraging developments, the Bank of Japan actually honored a request by a democratically elected official.  As NOTHING so makes a mockery of democracy as central bank "independence" (arrogance? totalitarianism?) this is very good news indeed.

Note of at the end of this first article, some German toady warns of the dangers posed by government "disturbing abuses" in the affairs of the central banks.

Wall street profits from hunger

Ripping off the world's poor for fun and profit.  And yet there are  those who actually say that those of us who use the word bankster are the ones with bad manners.  You cannot make this up!

Monday, January 21, 2013

Windpower still on a roll

As a son of the prairie, I love it whenever I see wind turbines turning against the horizon.  But wind power is not being chosen for its superior aesthetics but because in many ways, it is the most reliable way to generate electricity that doesn't involve boiling water.  Even the Japanese are getting in on the act and Japan is not noted for its wide open spaces.

Sunday, January 20, 2013

The "Golden Era" of investment banking comes to an end

The term "Investment Banking" covers a wide assortment of sins—most of them extremely dangerous to the real economy.  And because these folks made off with SO much loot, their victims number in the billions.  There are many of us who wish that the whole rotten lot would just disappear because the tiny amount of actual good these people can accomplish could just as easily be done with depositor-owned banks run by people pulling down ordinary salaries.

So now the investment banking business is imploding—mostly because the overwhelming majority of their new rackets have been revealed to be money-losers. Turns out investment bankers are too expensive even for the banking business.  And so these plunderers of the universe are losing their jobs and quickly discovering there are no alternatives that can support their lavish lifestyles.

So some are taking the advice from the rest of us who have been encourging them to leap from high places.  Now it may be a bit tacky to cheer on the suicides of these banksters, but they simply must go.  We cannot afford their piracy.  But mostly, the social order can no longer tolerate the sheer bullshit they must spew simply to justify their pathetic existences.

Friday, January 18, 2013

Electrical grid news from Germany

I am not a patient person.  I have been accused of having extraordinary patience because I built complicated things as a child.  "Oh, you must really be patient," folks would say when I showed them the flying model airplanes or radio (or whatever) I had built.  Actually, the key to building complicated things is persistence.  Patience has almost nothing to do with it—it simply cannot because I have nearly none.  Of all the things that trigger my impatience, the #1 is watching people make the same mistake over and over.  And I really become impatient with people who keep making the same mistakes because of some irrelevant belief set.

The great tragedy of the debates between individualism and collectivism is that we allowed the extreme nutjobs to control the debate.  In places like USA, we are told that collective action like governments building infrastructure or organizing medicine is the first step on the road to serfdom (Hayek).  The Marxist states actually validated this crazy paranoia by collectivizing millions of economic decisions that actually are best left to the individual.  In truth, this was a fight over nothing more than the best way to screw things up.  In a well-run society, collective needs (like a reliable supply of energy) should be collectively addressed while individual needs (like who can best run the neighborhood eatery) should be left to individuals.

After the fall of the Berlin Wall, neoliberalism triumphed world-wide.  These extremists taught that everything—even such obvious organs of collective action such as municipal water supplies—had to be privatized.  And in large part they were.  Now Germany, which has privatized electrical distribution, discovers it REALLY needs a new grid.  And a member of Merkel's right-wing government is suggesting that this grid upgrade will best happen if it is nationalized.

What this means is that someone has come to their senses and admitted that when it comes to real-world problems, pragmatism offers far better solutions than ideology.  We can only hope that neoliberalism soon disappears into the same historical hole that Communism fell into in 1989.  Because problems like climate change are FAR too serious to allow ideological nutjobs to control the arguments.

Of course, just because some German politician has made a public move back to the center does not mean the mechanisms of neoliberalism are dead.  And so we see that the Japanese company Mitsubishi wants to invest in this partially nationalized electrical grid.

Thursday, January 17, 2013

Corruption is killing us

The most depressing aspect of yet another bankster getting an important job in the government is the knowledge that whatever else happens, nothing important or useful will get done about the big problems like climate change.  Here Charles Ferguson, the documentarian who gave us Inside Job, takes a look at the thoroughly execrable Jack Lew.  Apparently, Lew is the sort of mediocrity who has taken all the intellectual horsepower the good lord gave him and put it to work figuring out how to serve the ultra-rich (and hopefully keep them out of jail when their continuing crimes are exposed.)  He absolutely DOES NOT CARE how the real economy is performing.  In fact he cannot imagine such a thing even exists outside of providing for his consumer needs.

Yup, we can predict that the Treasury under Lew will not figure out how to find the $trillions necessary to finance any meaningful solutions to climate change.  In fact, if you told him financing solutions to real problems was his new job, you would get that perfect example of a-dog-watching-a-ceiling-fan look.  He sees his job as making happy the big boys over at Goldman Sachs or wherever.  BIG difference.  And maybe some more of this foolishness wouldn't be so serious except for the fact that the time is running out to solve the big problems like climate change.  These minor-league suck-ups are dangerous because they get in the way of getting the necessary done.

Wednesday, January 16, 2013

Corn belt drought projections with great chart

This, folks, is not good news.  Most of our food is grown outdoors in unprotected conditions.  If those outdoors change, we are in for a world of hurt.
America, Prepare For A Century Of Drought

That $48.7 billion November trade deficit

The other day I got an email from a guy who claimed to be a regular reader.  He seemed to think I had missed some of the advantages of running huge trade deficits.  It was cute, in an odd sort of way, because he writes as if he had thought this up himself.  Sorry, these arguments have been around since at least the 1970s and I have been swatting them out of the park for decades.

First his arguments that trade deficits don't matter.
but, consider this: the goods we import are a permanent loss of resources to the exporters and a net benefit to us of those resources (it improves our standards of living)

our loss is the dollars we create from nothing (fiat money with no intrinsic value that can't be depleted)

  • those exporter nations love our $
  • if we had imposed reparations on post war Japan demanding trillions of $ of Sonys, Panasonics, Toyotas, etc in return for scrip, they'd have screamed - but they did (and do) it willingly!
  • the US $ has become the global reserve currency - prized
  • what other nation is willing to run unending trade deficits in order to displace us in that regard?
  • why would we be willing to deplete our real resources to gain someone else's currency?
  • all nations cannot become net exporters: assets = liabilities just a contrary thought that took me a while to digest!
Essentially this line of "reasoning" is flawed for two reasons.

1) While superficially it may seem like it's a great deal that USA can create money with a few keystroke which we can then exchange for flat-screen TVs and Toyota Priuses, this "trick" covers a huge tragedy.  Just because electronic money seems less real than say, gold, it is not.  That electronic money spent in Japan or China is money not spent in Youngstown Ohio.  The people who earn that electronic money are more prosperous than those who do not.  The trade deficit affects lives in real and very meaningful ways.

2) There are huge cultural effects of manufacturing that are lost when we give up the practice in exchange for new and novel forms of laziness.  People who make things gain the wisdom of the tool makers and users.  People who do not tend to behave as would be expected of the partially evolved.  A country that forgets how to manufacture and settles for merely knowing how to shop has made a conscious decision to dumb down.  It is not at all surprising when a country that neglects to do the jobs associated with creating the very difficult soon is also a country that doesn't do too well in other intellectual pursuits either.

Those who claim that trade deficits don't matter (or are actually a good thing) are members in good standing of the Leisure Classes.  They don't get why folks take so much pride and feel so much satisfaction from creating stunningly beautiful and difficult things.  One of the reasons the Leisure Classes are so susceptible to untrammeled greed and other sins is that those who only shop can never feel the pleasures of the Instinct of Workmanship.  A builder can take his kids out to the job site on weekends to show them what he has accomplished in cooperation with his mates.  What exactly can an expert in force and fraud point to with pride?  Not much.  IMHO the inability to take pride in one's work is reason #1 why the Leisure Classes are a haven for sociopaths.

Tuesday, January 15, 2013

Japan's attack on economic orthodoxy

The politics of Shinzo Abe continue to fascinate.  It is actually quite amazing that Japan has been so conventionally orthodox when it comes to macroeconomic policy.  Japan hasn't deviated from conventional thinking all that often in the post WW II period but when she has—such as when MITI organized the rise of her automobile industry through central planning and cartels—she has been astonishing successful.  Given such a track record, Japan should be much more daring and even arrogant in her economic thinking.  Yet she has just spent over two decades allowing her economy to be hollowed out in the name of the global conventional wisdom.  Yeah, I don't get it either.  So along comes Abe who is quite the nationalist and one of the manifestations of that nationalism is that he is refusing to follow the economic norms.

Krugman, who is about as surprised at this move from orthodoxy as I, takes the story from here.  All I can say is, Go Japan!  The conventional wisdom is literally killing us so it is refreshing to see someone try something new.

Monday, January 14, 2013

The corn belt drought grinds on

As someone who hates to shovel snow, this extra-dry winter should make glad my heart.  Unfortunately, this winter's drought is threatening the global food supply.  The immediate problem is the winter wheat crop.  But as this thing grinds on, more and more farmers will be facing a real economic crunch.  So far, high commodity prices and crop insurance have kept most of the grain growers afloat.  But high grain prices are killers for the folks who feed livestock and crop insurance is not a bottomless well either.

Sunday, January 13, 2013

About that trillion-dollar coin

In a move that shocks absolutely no one, the Obama White House has announced that it wants nothing to do with the Trillion-Dollar-Coin.  As monetary "solutions" go, the big Coin wasn't much of an idea by historical standards.  But for an administration that can't bring itself to prosecute some of the more egregious financial criminals in history, taking on the big actors of monetary policy was literally unthinkable.  I mean, look at the presidents who actually took on the money boys—Jackson, Lincoln, FDR.  Obama has MUCH more in common with W than those three.  To take on money power, one needs both courage and a deep intellectual understanding for why it should be done.  Obama has neither.

Under ordinary circumstances, I would just provide a link to my discussion of money from Elegant Technology.  I worked very hard to write that thing and I am pretty sure I cannot top it.  But this story deserves comment for one overwhelming reason—it has opened up the subject of monetary theory to the general public in a way that hasn't happened since World War II.  This awareness is critical.  Monetary power relies on no one questioning their game.  It's why William Greider called his magnum opus about the Federal Reserve Secrets of the Temple.  It's why the so-called Nobel economics prize is actually a creature of the Swedish Central Bank (Riksbank.)  It's why the Federal Reserve exercises monopoly control over the economics profession.  The folks who create the money want total control of the conversation over the creation of money.

That control has been lost.  And once someone begins to think about a $Trillion coin, cannot more imaginative ideas be far behind?

Saturday, January 12, 2013

Let's Try These 10 Budget Fixes

Trying to find the original source of the graphic below, I found this really cool site: Connect the Dots for Democracy USA. There are a few dozen excellent graphics, arranged by topic, here.

Saturday toons 12 JAN 13

Friday, January 11, 2013

A new agenda for the new year?

Probably not.  We start out with a pretty decent list of the problems being inflicted on the real economy and why these problems are routinely ignored.  You'll have to click on the link to see Johnson's solutions.  Mostly they involve sending money to his pet non-profits.

Thursday, January 10, 2013

Huge disconnect between bank deposits and bank lending

A huge disconnect between bank deposits and bank lending has developed since the crash. A stunning graph from ZeroHedge a few days ago clearly shows how dysfunctional the U.S. financial system has become. What's happened is that the Federal Reserve has created trillions of dollars in new deposits to prop up the TBTF banks, but rather than use those new deposits to advance new loans into the economy (as the myth of fractional reserve banking posits should happen), the banksters have grabbed the money and run off to play in their speculative derivatives casino.

And, as the ZeroHedge comtributor writres, it also "proves undisputedly that the US economy is much weaker now than it is purported to be as end consumers and business have far less desire to risk becoming indebted even in a zero interest rate environment."

Drive a stake in banksters' hearts - MINT THE COIN

Fortunately, the idea of the U.S. Treasury minting a $1 trillion platinum coin has broken into the open.

Unfortunately, a lot of people seem bewildered by the outlandishness of the idea.

But most unfortunate of all, people do not realize what the real, HUGE issue of platinum coin seigniorage is: breaking the monopoly hold of private banks' (ie, Wall Street's) over creating new money.

This is what the whole issue really comes down to: can we, as a sovereign nation, create our own money that is dedicated to the general welfare, or must we rely on bankers to create money only for private gain?

General welfare versus private gain. Which goal do you want your monetary system oriented toward?

Reading the various blogs that have appeared the past few days about the issue, it is downright shameful how few supposedly progressive bloggers and commenters understand this issue, and the need to destroy the banksters' monopoly on creating money, and retsoring the government's role in creation and allocation of money and credit.

The good thing is that this issue of seigniorage (seigniorage is the difference between the value of money and the cost to produce and distribute it) shows that the financial crash is finally forcing into public debate the issue of our monetary system, who owns it, and for what purpose they operate it.

So, this is similar to the late 1870s to 1880s, when the Farmers Alliances were forced to recognize that local organizing of cooperatives alone could not beat back the sustained assault of financiers and bankers. This new consciousness by the Farmers Alliances led directly to their organizing for reform of the monetary and banking systems - organizing which unleashed the grass roots forces that created the populist movement of the 1880s. The combination of the financial crash of 2007-2008, with the craven attempt by the rich to avoid taxes, has led to these ridiculous political showdowns over imaginary "fiscal cliffs." The only positive aspect is that this has forced American citizens to begin considering the very nature of the financial and monetary systems.

Joe Firestone (who uses the internet handle "letsgetitdone") recently offered an outstanding intellectual history of the trillion dollar coin idea, which includes links to the very first substantial proposal for minting a $1 trillion platinum coin; the intense discussion and debate of platinum coin seigniorage at Warren Mosler's blog;  and what Firestone identifies as "the most comprehensive and rigorous discussion available of the relationship between"  coin seigniorage and inflation, by Scott Wiler.

Solar plods forward

In theory, anyone blessed with an oil boom should immediately start thinking about what the new-found wealth should be spent on.  Unfortunately, since the temptations of materialism are virtually infinite, altogether too many oil nouveau riche opt for the Beverly Hillbillies solution by demonstrating their primitive ways out by the cement pond.  However, those who like the idea of being rich and intend to stay that way for many generations would immediately start figuring out how to make their oil windfall last beyond the life of the oil fields.

Actually, this is a pretty obvious solution.  Oil is natural capital.  The income from extracting this capital should be invested in harvesting energy income.  Turn that short-term income into something nearly perpetual.  This SEEMS to be what is happening in Qatar.  And since they have both significant oil income and land being blasted by solar energy, this conversion to a long-term income stream is mostly a matter of investing in some smarts.

Wednesday, January 9, 2013

Japan's experiment with stimulus

The actions of Japan's Prime Minister-elect Abe to reduce the Yen's value has the money wise guys thoroughly confused.  In their world, they cannot imagine anyone wanting to drive down the value of their own currency.  After all, they have just spent decades bullying the countries of the world with the threat of sabotaging the value of their currencies.  So how do you bully someone who wants the same outcome?

Well, you do what the financial press has done—throw up your hands in cultural horror at Japan's "unconventional" actions.  The scribblers must do SOMETHING.  After all, if Japan succeeds here—and there is a very good chance that they will—everything the purveyors of the "sound money" conventional "wisdom" have claimed over the years will have been proven wrong (again!).  Of course, merely being wrong will barely slow them down—after all, George Will and Thomas Friedman are usually wrong about something every damn day and they still have their gigs.

Climate change in the southern hemisphere

Those of us who worry about climate issues often neglect to look at the Southern Hemisphere.  And for pretty good reasons.  Only a small fraction of the earth's population actually lives south of the equator and they produce a tiny fraction of the greenhouse gasses.  But as the temperatures soar through the Australian summer, it looks like they aren't escaping any of climate change's more baleful effects.

Tuesday, January 8, 2013

Stiglitz writes about the real economy

Stiglitz is an interesting guy.  He grew up in a New Deal Democratic household in Gary Indiana—the classic South Shore steel town.  He was born in 1943 so he was educated in the era of Keynesian dominance.  Yet, he has been conventional enough to win the Clark and Riksbank (Nobel Memorial) prizes and his academic work has been appropriately narrow and trivial.

One is tempted to ignore anyone who has had conventional success in this era of neoliberal madness, and I guess I have been a little bit dismissive of Stiglitz.  But in the essay below, he is as serious and deep as I could have ever wanted.  I trace his big leap in seriousness to his participation in the IPPC study that won the 2007 Riksbank Prize.  The subject of climate change will do that to you.  Perhaps he is entering his sage stage of life, but I couldn't have ordered up better thoughts on the real economy than the following.

Monday, January 7, 2013

Hudson on brutal austerity

Michael Hudson is a delightful throwback to the glory days when economists actually knew what they were talking about.  Contrast this stuff with the foolishness of a Glenn Hubbard—the man who was going to be Mitt Romney's economic guru.  Hubbard may be the Dean of Columbia's business school but as events of the past ten years have demonstrated, he hasn't been right about anything.  The fact that a profession glorifies such a buffoon and does not exact major penalties for being catastrophically wrong is just further evidence that economics has devolved into a really bad (Westboro Baptist Church bad) religion.

This is the last of Hudson's new year's trilogy.  I encourage everyone to read them all.  They are superb.  Read them and you will be about as well informed about modern economic problems as anyone you know.
Part One is here.
Part Two is here.

Sunday, January 6, 2013

Peak oil and secondary recovery

Because the Bakken Oil Field in North Dakota is in the same general neighborhood as the town (Tioga) I lived in for 18 months when I was in high school, and because Bakken is one of the epicenters of the practice of fracking, I feel compelled to be extra-careful about what I say on the subject.  I have had relatives in the oil business who probably think I am a Liberal Arts idiot anyway, so I have extra incentive to get this right.

But here's the basics.  Peak Oil explains that when an oil field peaks, there is still as much oil left in the ground as has been extracted.  But what has been extracted was the EASY half.  Getting the rest will probably be very problematic.  Getting the rest has inspired a host of "secondary" recovery techniques.  Many things have been been tried including steam injection (one cousin remarked that this proved to be a particularly bad idea noting, "you would be astonished how hard it is, and how much energy it takes, to change the temperature of the earth.")  But fracking seems to work after a fashion.  It's an environmental disaster that has produced flaming drinking water and man-made earthquakes, but it does produce recoverable fuels.

And so North Dakota is having an oil boom that rivals the original in the 1950's and 60s.  Keep in mind the original was pretty much a big boy game from the start.  The wells could be over 3 miles (5km) deep.  Such wells were very expensive to drill so there was serious need for sophisticated underground mapping techniques.  This is North Dakota—a place where getting outdoor work done in the winter is nearly impossible.  And even then the wells were not especially productive—a good well in western North Dakota produces in a month about as much crude as one of the superwells in Saudi Arabia or Iraq produce in a few hours.  This was a modest enterprise.  I lived in an oil town and except for the refinery and the little airport with a runway long enough for corporate jets, it was as unpretentious any other small town out on the high prairie.

Fracking is not a refutation of Peak Oil.  In fact, it proves it.  This is especially true of the economics.  Fracking is pretty expensive (it's astonishing how much it costs to rearrange the underlying geology of the earth) and because it is a secondary recovery technique, production drops off pretty rapidly.  Of course, none of this matters to the free marketeers with their 15-second time horizons who look at the current temporary glut of petroleum products and see a salvation for the fossil-fueled economy.  That inspires article like this.

Saturday, January 5, 2013

Inside UPS's gigantic Louisville hub

Hat tip to Barry Ritholtz, for pointing to this virtual tour of United Parcel Service's gigantic sorting and distribution center in Louisville, Kentucky. UPS calls it Worldport, and its 5.2 million-square-feet includes 70 aircraft docks and 155 miles of conveyor belts able to process and sorting 416,000 packages an hour during peak operations, serviced by UPS's fleet of 230 jet aircraft. During peak operations, meaning the holiday season, one UPS jet lands at Louisville nearly every minute. Worldport achieves a sorting accuracy rate 99.9994 percent - which means 16 packages need to be "rescued" each hour. The virtual tour explains how this happens.

Inside UPS' Worldport: How a shipping titan moves 2,000 packages every 17 seconds.

Saturday toons 5 JAN 13

Friday, January 4, 2013

Our home energy audit

So the other day, we finally got a serious energy audit of the home place.  A big handsome guy with a truck full of instruments began to expose the 1958 thinking of how a house should be insulated.  Not surprisingly, there were plenty of problems.

First of all, the first ceiling insulation attempt had been done with vermiculite—a substance that sometimes contains asbestos fibers.  The immediate problem this caused was that it made it legally impossible to use his air door.  So some of the big infiltration tests we wanted to run were not going to happen because the air door could suck stray fibers into the house.

Then we encountered the occupational bias of our auditor.  His background was HVAC so while we got the 20-minute lecture about our primitive water heater and how it wasted energy, other subjects such as how many vents the roof needed got a much more cursory treatment.

Mostly, however, the audit was a real eye opener.  His infrared sensor / camera revealed wall cavities that had been filled with something (what, we could not determine) that had settled over the years leaving a space of at least a foot at the top where there was no insulation whatsoever.  And even without the air door, it was pretty easy to tell that the 55 year-old windows and doors were very leaky.

But what was most interesting about our auditor is that he had been trained to suggest solutions that had relatively short paybacks.  In practice this meant that new windows were probably not a good idea from  cost / benefit standpoint no matter how leaky they were.  Even his suggestions about how to upgrade the water heater came with the caveat that it probably wouldn't pay for itself for a very long time "because natural gas prices are so low these days."  In fact he must have brought up low gas prices at least a dozen times.

So unless someone like us wants to upgrade the insulation systems for the house to create a more comfortable and less drafty space, there really isn't a whole lot of reason to do anything right now.  Of course, natural gas prices will not be forever low and when they rise, all those calculations change.

Because we don't believe it is a good idea to heat the outdoors during the winter, and because climate change is a real problem, we will be fixing our leaky old house.  It's just that there isn't any economic pressure to do something right away.  This is a good thing because fixing our house will require a lot of careful planning.  But at least we have started the process.

Thursday, January 3, 2013

The Predators win another one

I am old enough to remember when economists still made a huge distinction between "earned" and "unearned" income.  Not surprisingly, the "unearned income" folks made out like bandits in the latest so-called "fiscal cliff" negotiations.  What is less surprising is that almost no one even brings up this distinction anymore.  After all, this was a central concept of the Progressives and New Dealers that neoliberals have tried so hard to discredit.  So I was pleased to find someone who has analyzed this latest economic debacle in terms I understand and approve of.

Wednesday, January 2, 2013

Glenn Hubbard stars again

Dean of Columbia's business school Glenn Hubbard is something of a celebrity—and quite famous by the standards of the economics profession.  His star turn came as the snarling heavy in Charles Ferguson's documentary Inside Job (a real favorite around here) where he attacks his interviewer for having the temerity for asking how much he charged for his relentlessly pro-bankster advice.

Well now we know.  It's about what a medium-priced hooker in the financial district charges.  But I think it somewhat unfair to compare Hubbard to an honest working girl.  In addition, it isn't really whoring because Hubbard actually believes the crazy shit he writes and since he is from the reality-optional, faith-based neoliberal community, he doesn't have to work as hard as he would if he actually trafficked in verifiable facts.

Just think, this wretched creature was being talked up as a possible Treasury Secretary in a Romney administration.

Tuesday, January 1, 2013

A Producing Class hero is something to be

Back in September, I posted an article about a brave crew that had sailed a 31' Hallberg-Rassy through the Northwest Passage thereby proving pretty conclusively that climate change was melting the Arctic Ice Cap.

Well, it turns out that the NW Passage had been navigated before including a trip in 2007 by a guy who, even though I never knew him, was almost a neighbor of mine.  Roger Swanson was a perfect example of a regular phenomenon of my youth—the super-smart farm kid.  He went off to the University of Minnesota to get a degree in electrical engineering but would soon return to the family farm—which is about 35 miles straight south of the tiny town where I grew up.  Eventually he would put his obvious mechanical genius to work starting a half-dozen small manufacturing companies.

Swanson would soon have the spare cash and free time for a big-time hobby.  Being a good Swede he decided to try his hand at sailing.  The lakes in the vicinity of his farm were in the category of glorified mud puddles so it wasn't long before he was chartering larger boats in the Caribbean.  One thing led to another and Swanson became the proud owner of 57' ketch.  This folks, is a serious boat with something like 8 times the interior volume of the 31' Hallberg-Rassy (just remember, volume is a cube function.)

Swanson was a lot like the guy who taught me to sail—electrical engineer, inventive, and entrepreneurial.  Apparently they also shared the desire to keep their boats absolutely shipshape and always had the perfect tool to fix anything that went wrong.  Sailors like that tend to die in their beds of old age.

Finance capitalism destroys everything else

I have been writing about the distinctions between finance and industrial capitalism since the 1980s  It is truly amazing the massive destruction the moneychangers have been causing in their naked grab for whatever has not been nailed down (and much that is.)  Any honest historian in the future will be at a loss to explain how one tiny sliver of the real economy was allowed to destroy the rest of it.  Here Hudson offers some suggestions as to what actually happened.