Tuesday, September 13, 2016

This post is to link a map of my proposal for IDS use of the turnback as a pocket track for reversing.  Thank you Frank for the original map.

Monday, June 09, 2014

There is no cure
For the bitter gall
That the future will come without me.

Monday, March 16, 2009


Market Futures

The "it really IS different this time" that nearly everyone, bull and bear alike, ignores is that we are now nearly completely a middle-class, service society. The change was beginning in the 1970-1982 "lost decade", but in 1980 there were still nearly 30% of American workers in manufacturing. The figure is less than half that now.

This is important because white collar workers are not organized into unions, which weakens them when dealing with specific employers. However, educated middle class citizens have much higher expectations of life than do industrial workers. The upper portion of Maslow's hierarchy is part of the political equation these days.

A middle-class service nation will not accept the level of impoverishment that the agro-industrial one of the 1930's did. The folks in government know this and will spend with nearly unlimited abandon to prevent a further melt-down. And you Republicans can shut right up. Had John McCain won he would have done exactly the same thing, or been impeached for incompetence after a calamitous 2010 election wiping out the remaining Republican strength in Congress.

So, I do not expect that the stock market will reach the "standard" 70-80% discount at the bottom. However, neither will it turn in the 10% returns for a decade that normally follow that severe a crash, either. I expect that stagflation is the future for the US because eventually the well of public spending must and will run dry, and we have largely lost the ability to make things needed by human beings other than packaged foods and airliners.

It's not that we have lost the mental ability to do so; we've lost the desire. And anyway, even if we doubled our industrial output, so much of process manufacturing is automated with various genera of robots that employment would probably rise only three or four percent of the workforce.

So, as commodity prices rise around the world from the inevitable pressures of the ever-growing population, the US will experience a steady erosion in the value of the dollar and resulting increases in the cost of imports. At the same time, given our sheer damn cussed refusal to devote adequate resources both financial and human to education, we will increasingly be like the UK, living on tourism and artistic exports. It's not a pretty picture but we certainly have enough housing to provide for a population 1/3 again as large as it is now, and Dios knows we're not short of food. With a concerted effort to reduce our energy consumption -- and underemployment is a great way to do that -- we can muddle along quite nicely for a century on our accumulated wealth.

Genteel decline, again very much like Britain, is not so awful a life.

Of course to accomplish this we have to recognize that the 21st century belongs to Asia (as do the future ones, clearly) and quit trying to be the biggest swinging dick in the neighborhood. We have to learn to treat one another with a higher degree of respect and compassion, but we certainly can do that. As an excellent example follow this link: http://www.greatdanepromilitary.com/Life/index.htm. Notice that the domain is "Great Dane Pro Military". A dues-paying Democrat like me wouldn't expect that address to be sending such uplifting images and messages. But someone who chose that domain did so. I think that's pretty hopeful.

Tuesday, February 10, 2009


Deer In The Headlights?

OK, I'll cop to it: I am very uneasy with Timothy Geithner as Treasury Secretary. Every time I see a picture of him I think, "what is his problem?" And I don't mean tax cheating.

He always looks either guilty or scared shitless. Every time. He never shows any sense of "I'm here in my body, and I like myself". He's almost like the Obama's opposite; whereas the President was elected largely I think for his calm temperament -- he doesn't have that much of a record on which to run -- Geithner seems always to be ready to jump out of his skin. Or in the process of jumping right now!!!

Is writing about this unfair? Probably so; I know nothing about him other than what I read and see. But I just cannot visualize him filling J.P. Morgan's size 12's. He seems more like indecisive Henry Paulsen.

Everyone is very complementary of Secretary Geithner's intellect and far be it from me to say he should not be involved in the rescue planning. If everyone from both the right and left is impressed with his skills, he must certainly have them in abundance. But it doesn't mean he should lead the effort. A volatile personality may be just fine in a technocrat -- I'm sure my I/T managers would say I've got one -- but it is not appropriate for a person responsible for making the final decision on so important a task as is before the Treasury now.

Would the Senate have bounced Tom Daschle had he not withdrawn? Of course we cannot know. But I sure wish it had bounced Tim Geithner.

Thursday, February 05, 2009


Who's The Buyer? Who's The Seller?

"The rise in Treasury yields has been pushing mortgage rates higher, complicating efforts to revive the economy. The US Federal Reserve said last week it was “prepared to” buy Treasuries if that would be a “particularly effective” way of reducing private borrowing costs." (From the Financial Times article of February 4 "US Treasury in plans for record debt sale". Link: http://www.ft.com/cms/s/0/bdf4ee70-f2e4-11dd-abe6-0000779fd2ac.html. There is a fee for the FT, but you get three articles free every two weeks. )

"Gosh-a-moley paw, those guys at the Feder'l R'srve shure do have lots a money!" "They shure do, Opie".

Where do those boys get their money? Just eighteen months ago the Federal Reserve "Balance Sheet" showed accumulated assets of $850 billion. Today it's north of $3 trillion and counting fast!

Just now Billiard Ball Bernanke proposes to "buy" treasuries in order to drive down long period interest rates. If he is successful, mortgage rates -- which are typically the 10 year treasury rate plus ((900 minus your FICO) times two and a half then divided by 100) or thereabouts -- will fall. Now I grant that doing so will "strengthen" the Fed's balance sheet, because it's full of worthless trash right now. And treasuries are somewhat worthful trash. Ten percent is better than nothing.

But exactly how is B-cubed going to PAY for those treasuries? Is this the fabled "printing press" in action? And if so, how come no inflation?

Classical economics defines inflation as "more dollars chasing the same assets" which bids up the price (sound familiar, little house?) By definition the Feds have added over two trillion to the money pot in the past little while, but prices are falling! What's that about?

Well, it seems that the removal of the capital represented in Bear Stearns, Lehman Brothers, failed banks and the Wall Street wipeout has exceeded the "creation" of capital by the Fed. Hence fewer dollars are chasing the same assets: that's deflation.

Deflation is tough on an economy because people stop spending, waiting for prices to fall further. That has certainly been true for housing, stocks and commodities. So the generally agreed plan to stop further deflation is for government to run a big deficit while the public cobbles together new capital to restart investment. It may not work, but there is no other plausible plan on offer. Without someone being the "spender of last resort" the deflationary spiral will swirl downward until some man on a horse convinces people "I can fix it if you'll let me". Even the corporadoes don't want that because they might not be able to control such a person.

However, (ah, the caveat), there will come a time soon when the impossibility that the accumulated indebtedness of the nation will ever be discharged becomes glaringly obvious to anyone with money to lend. And the spigot will be turned o-f-f! At that point the next Treasury auction will fail, and the bonds which were to have been refunded by that auction will fall into default. The dollar will be worth a dime the next day. Now that's inflation!

Wednesday, February 04, 2009


Mea Culpa

Well, it seems that the President has admitted to some bad personnel decisions. I agree wholeheartedly and commend him for his honesty and willingness to take the heat. I'd like to address him directly:

Now, Sir, do you realize that the whole sickening stew of Washington "veterans" with few exceptions is marinated in icky slime? They may be hale-fellows-well-met but they've been swimming in sleaze too long. I'm very glad you took the opportunity to climb out of the cesspool before you drowned, too.

You advocate "Change we can believe in" and 53% of the people in the country were willing to take a chance on a relatively unknown you. Because "Change we can believe in" is exactly what they want to see. Tom (and Linda) Daschle are NOT change agents. Yes, yes, yes; ol' Tom's knowledge of health care issues is broad and deep, and his wife knows even more (mostly where the bodies are buried). But they're both bound hip and thigh to the health care giants who have made them rich. Good riddance.

Supposedly you are now considering former Senator Bradley for Secretary of HHS. He'd be a great choice, and you guys could shoot HOOPS together! Pretty cool to go up against an NBA Hall of Famer! One of the perks of the job that nobody can begrudge you.

But you seriously need to slap Rahm down and tell him, "Make nice with Howard, because I need him". Because you need him as your health care advisor. If there is anyone in the party less likely to succumb to the siren song blandishments of the Big Pharma/Big Insurance lobbyists (like Linda Daschle), it's Dr. Dean. Look Sir, the old ways have run their course. There are lots of good ideas that have been created by the health care insurance industry, and winding the companies down has to be done very carefully, because there are many people working for them. But wound down they must be. Nearly 1/5 of that 15% of GDP our care system consumes is profit for Big Pharma and Big Insurance. Three percent of the US GDP is a bundle of bucks. Obviously, we don't want to kill the goose that laid the golden pills, but I truly fail to see what value the carriers bring to the table.

They're sort of the ultimate bureaucracy; they exist for no other reason than to create an insurance pool for health care coverage, but they're not mutually owned by the insured. This puts them at permanent conflict with the people who they "serve", and this conflict can not be eliminated nor even significantly ameliorated. A single-payer system is essentially a gigantic mutual insurance pool, since taxpayers are very much the same group as the insured. Obviously the government can't pay for every Hollywood face-lift, but overall there will be less conflict in a single-payer system and therefore less gaming of the system. Though it's probably true that more healthcare will be provided, the overall cost is likely to rise less than it would have in an adversarial system, because there will be significantly less administrative cost.

We already have single-payer for people over 65, and it doesn't appear to most researchers that they are suffering a woeful inadequacy of care. At the very least establish a tax and mandatory premium funded catastrophic care system now, in order to get the transition to single-payer started.

Thursday, August 14, 2008


The War In Georgia

Russia has won a victory in Georgia which is potentially devastating to the United States and could lead to the quick unraveling of NATO unless we are VERY careful how we react. We need to take a breath and think strategically as they obviously have. The hawks are correct that they have won it by goading Saakashvili until he freaked out and poked them in the eye, but by taking Georgia's military apart so utterly while killing relatively few citizens they have avoided widespread international revulsion. Putin is obviously a master strategist.

While blame is a useless exercise, if any one person in the US is likely to be the nexus of the proximate error leading to that victory, it is Randy Scheunemann. And next in line would be his patron John McCain for his ceaseless cheerleading for Georgia. Joe Biden should immediately convene hearings to question Scheunemann and his partner Michael Mitchell under oath about their communications with President Saakashvili over the past year. If they have made implicit promises of US aid beyond what is legally required by treaty, they should be prosecuted for running a rogue "parallel State department".

Others in the line-up would be Bush and Cheney for establishing the pre-emptive war precedents that Putin and Medevdev used so skillfully. For wearing out the army in Iraq. And of course for being arrogant jerks in general, Bush's surprisingly sagacious interview with Bob Costas not withstanding.

For readers who know my politics it might come as a shock that I would definitely put Bill Clinton in the line-up, too. He egregiously blew the opportunity to bring Russia fully into the world community when its citizens were positively disposed toward the US and the west while listening to Robert Rubin and other Wall Streeters who stole Russia blind as they poured drinks for Boris Yeltsin. Worse, he broke Bush Senior's promise to Gorbachev not to push NATO up to Russia's borders.

A pox on all these houses; as a result of their short-sighted greed and narcissism Georgia and its important energy channel from the Caspian region are lost. But now what to do to protect the Baltic states and Ukraine from an expansionist and strengthening Russia? It has most of Europe by the freezing balls since they depend on it so utterly for natural gas and so simply cannot support direct economic or military retaliation against Russia to keep the western oriented former satellites free at this time.

If we in the US want to keep our freedom long-term and that of our friends and allies in Europe we need an immediate and steep reduction in US oil consuption to free up African supplies currently consumed by the US for their use, to replace Russian supplies. That MIGHT allow them the latitude to stay in NATO as we rebuild our ability to fight a large conventional war if need be to protect eastern Europe while squeezing Russia's economic growth by reducing its oil income.

The way to get to that reduction is a $4 or so/gallon tax on transportation fuels to bring our pump price to rough parity with Europe's. Coupled to it should be a refundable tax credit equaling half of the revenue raised in any one year and phased out for people with income over some to be determined level, a quarter allocated to high occupancy vehicle operators (transit, van, and carpool) in cities, new subsidized rural and "far suburban" van service and rail freight capacity expansion and the last quarter to pay for recruits and material needed to bolster the military.

Some very nice side-effects of such a reduction in consumption are that the dollar would rapidly strengthen from the reduction of the trade deficit, crude prices would fall squeezing Iran as well as Russia, and long-term alternative energy changes in transportation necessary to maintain a livable atmospheric carbon level would be strongly accelerated.

Home heating oil would be exempted from the tax because it's a relatively small portion of US consumption and would be unequally burdensome for the northeast.

Europe will need to build LNG terminals as rapidly as they can to replace to the degree possible the supplies they receive now from Russia and accelerate their current pace of development of renewable energy as their parts of the plan. Once such terminals are in place, Russia's income will shrivel further and they will be forced to abandon their military build up and become a more normal country.

Just for the record, I don't want to sound like a John Bircher; I think that overall the Russians have been remarkably tolerant of NATO expansion and helpful in the "Effort to Reign in Nutcase Islamism" (a much more accurate term than "War on Terror" even though it's kind of klunky). We do NOT want to make Clinton's mistake of trying to "defeat" Russia again. It simply can't be done because they have so much resource rich territory, and like all nations, they have a legitimate need to have non-hostile neighbors and to be one themselves.

But with some plan at least roughly like the above we could make it in their economic and security interest to get back on the path to becoming a less-paranoid and more generous member of the community of nations. We here in the US could take some lessons in that, too of course.

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