Friday, December 12, 2008

BP, HP, Shell sign Poznan communique

Houston Chronicle | BP, Royal Dutch Shell, Hewlett-Packard and 137 other companies from around the world urged delegates at United Nations climate talks in Poland to commit to deep and rapid cuts in greenhouse-gas emissions.

The recession shouldn’t be used as an excuse to delay investments needed to slash emissions and help fight global warming, the companies said in an e-mailed statement today. The proposal, backed by companies from China and Brazil to the U.S. and Britain, was dubbed the Poznan communiqué after the Polish city where the UN talks are being held through Dec. 12.

“The global economic downturn may cause some to question whether now is the time to act,” the companies said. “We believe that decisive action will stimulate global economic activity.”

Delegates from about 190 nations are in Poznan, halfway through two years of talks to devise a new treaty to fight global warming to be approved next December in Copenhagen.

“Delaying action would increase the costs of meeting any temperature or greenhouse-gas concentration goal and raises the risk of irreversible impacts” on the environment, the companies’ statement said. Other signatories to the communiqué include Shanghai Electric Group, Deutsche Telekom, Nikeand National Australia Bank Ltd.

The main obstacle in international talks is to overcome differences between the U.S. and China, the two biggest emitters. The U.S. says it won’t accept targets unless big developing nations do likewise. China says the industrialized world must act first.

“Developed countries need to take on immediate and deep economy-wide emission-reduction commitments which are much higher than the global average reduction target,” the communiqué said. “Rapidly emerging economies should continue to develop strong action at the sector level, building towards the adoption of appropriate and economy-wide commitments by 2020.”

The communiqué was drafted by the Prince of Wales’s Corporate Leaders Group on Climate Change, a group of companies brought together by Prince Charles, the heir to the U.K. throne, and managed by the University of Cambridge in England.

big carbon cap

WSJ Archives | Washington this week officially welcomed the newest industry on the hunt for financial and regulatory favors. Big CarbonCap may have the same dollar-sign agenda as Big Oil or Big Pharma, but don't expect Nancy Pelosi to admit to it.

Democrats want to flog the global warming theme through 2008 and they'll take what help they can get, even if it means cozying up to executives whose goal is to enrich their firms. Right now, the corporate giants calling for a mandatory carbon cap serve too useful a political purpose for anyone to delve into their baser motives.

The Climate Action Partnership, a group of 10 major companies that made headlines this week with its call for a national limit on carbon dioxide emissions, would surely feign shock at such an accusation. After all, their plea was carefully timed to coincide with President Bush's State of the Union capitulation on global warming, and it had the desired PR effect. The media dutifully declared that "even" business now recognized the climate threat. Sen. Barbara Boxer, who begins marathon hearings on warming next week, lauded the corporate angels for thinking of the "common good."

There was a time when the financial press understood that companies exist to make money. And it happens that the cap-and-trade climate program these 10 jolly green giants are now calling for is a regulatory device designed to financially reward companies that reduce CO2 emissions, and punish those that don't.

The Poznan Climate Change Communiqué

Inel | The United Nations Climate Change Conference in Poznan is a step on the climate change path from Bali to Copenhagen.

This week over 140 global companies issued a joint statement on climate change. This follows the Bali Communiqué issued by the same group of business leaders a year ago. Please read The Poznan Communiqué on Climate Change with its signatories, as well as the list of those who signed the Bali Communiqué. (There’s plenty more on the Bali Communiqué here.)

See also quotes from business leaders in yesterday’s announcement by Cambridge University titled 140 global business leaders unite behind an international deal on climate change.

There are no excuses for political leaders to drag their feet and dither any longer: business leaders have set out and refined the main points they believe should be included in a global climate change agreement. It is up to the so-called world ‘leaders’ to deliver more than hot air at Poznan, with ever more concrete deliverables expected in Copenhagen in a year’s time.

China filling Shandong strategic crude oil reserve

Forbes.com | China has started filling its third strategic crude oil reserve in Huangdao, in Shandong province, the official Shanghai Securities News reported, citing sources. The report said falling crude prices are providing an opportunity to fill the reserve cost-effectively.

Around 7.3 mln barrels of crude oil have been delivered to Huangdao facility, with more than half of the shipments from Saudi Arabia, the report said.

The newspaper said more crude will go into the reserve this month and in January.

China, the world's second largest consumer and importer of oil aims to build up a reserve of 12 mln tons by 2010, from 2-3 mln tons currently. Other facilities are at Zhenhai and Zhoushan in Zhejiang province and Dalian in Liaoning province, each designed to hold 30 days' supply. The Zhenhai and Zhoushan reserves are fully operational.

a quiet war over oil prices

Bloggingstocks | Will crude go up or down before the end of the year? Since it has dropped from $147 in the summer to just above $40 recently and demand is falling, betting on down makes sense.

Americans are using less gas. There is probably little reason to think that will change. Oil imports by China, a huge consumer, dropped in November to their lowest point this year, according to Xinhua news agency.

But, the drop in consumption is a collateral effect of the recession. It is, by some measures, an "accident."

What is not an accident is the need for oil producers to get prices up. Economies including Russia, Venezuela, and Iran count on crude for a great deal of their income and their ability to keep balanced national budgets. Russia, which is not a member of OPEC, will probably work with the cartel to cut production and raise prices.

The market laughed at OPEC cuts in September and oil continued to fall. But members of the cartel are desperate now and will probably take a much different view of what they need to do at their December meeting. Getting oil prices back toward $60 or $70 will be hard, but it is entirely possible.

OPEC ministers have been discussing a production cut of two million barrels a day. It their economic advisers say that is not enough to get prices up sharply, the figure could rise to three million or more.

Prices are going up. OPEC and Russia control too much crude. They can cut supply until the cows come home.

Thursday, December 11, 2008

Lovelock on Climate Change

Rolling Stone | At the age of eighty-eight, after four children and a long and respected career as one of the twentieth century's most influential scientists, James Lovelock has come to an unsettling conclusion: The human race is doomed. "I wish I could be more hopeful," he tells me one sunny morning as we walk through a park in Oslo, where he is giving a talk at a university. Lovelock is a small man, unfailingly polite, with white hair and round, owlish glasses. His step is jaunty, his mind lively, his manner anything but gloomy. In fact, the coming of the Four Horsemen -- war, famine, pestilence and death -- seems to perk him up. "It will be a dark time," Lovelock admits. "But for those who survive, I suspect it will be rather exciting."

In Lovelock's view, the scale of the catastrophe that awaits us will soon become obvious. By 2020, droughts and other extreme weather will be commonplace. By 2040, the Sahara will be moving into Europe, and Berlin will be as hot as Baghdad. Atlanta will end up a kudzu jungle. Phoenix will become uninhabitable, as will parts of Beijing (desert), Miami (rising seas) and London (floods). Food shortages will drive millions of people north, raising political tensions. "The Chinese have nowhere to go but up into Siberia," Lovelock says. "How will the Russians feel about that? I fear that war between Russia and China is probably inevitable." With hardship and mass migrations will come epidemics, which are likely to kill millions. By 2100, Lovelock believes, the Earth's population will be culled from today's 6.6 billion to as few as 500 million, with most of the survivors living in the far latitudes -- Canada, Iceland, Scandinavia, the Arctic Basin.

By the end of the century, according to Lovelock, global warming will cause temperate zones like North America and Europe to heat up by fourteen degrees Fahrenheit, nearly double the likeliest predictions of the latest report from the Intergovernmental Panel on Climate Change, the United Nations-sanctioned body that includes the world's top scientists. "Our future," Lovelock writes, "is like that of the passengers on a small pleasure boat sailing quietly above the Niagara Falls, not knowing that the engines are about to fail." And switching to energy-efficient light bulbs won't save us. To Lovelock, cutting greenhouse-gas pollution won't make much difference at this point, and much of what passes for sustainable development is little more than a scam to profit off disaster. "Green," he tells me, only half-joking, "is the color of mold and corruption."

Climate Change Gibberish

Guardian | Cyberspace has buried its head in a cesspit of climate change gibberish. The Stansted protesters get it. The politicians of Poznan don't quite. But online, planted deniers drive a blinkered fiction. We all create our own reality, and shut out the voices we do not want to hear. But there is no issue we are less willing to entertain than man-made climate change. Here, three worlds seem to exist in virtual isolation. In the physical world, global warming appears to be spilling over into runaway feedback: the most dangerous situation humankind has ever encountered. In the political world - at the climate talks in Poznan, for instance - our governments seem to be responding to something quite different, a minor nuisance that can be addressed in due course. Only the Plane Stupid protesters who occupied part of Stansted airport yesterday appear to have understood the scale and speed of this crisis. In cyberspace, by contrast, the response spreading fastest and furthest is flat-out denial.

In his fascinating book Carbon Detox, George Marshall argues that people are not persuaded by information. Our views are formed by the views of the people with whom we mix. Of the narratives that might penetrate these circles, we are more likely to listen to those that offer us some reward. A story that tells us that the world is cooking and that we'll have to make sacrifices for the sake of future generations is less likely to be accepted than the more rewarding idea that climate change is a conspiracy hatched by scheming governments and venal scientists, and that strong, independent-minded people should unite to defend their freedoms.

He proposes that instead of arguing for sacrifice, environmentalists should show where the rewards might lie: that understanding what the science is saying and planning accordingly is the smart thing to do, which will protect your interests more effectively than flinging abuse at scientists. We should emphasise the old-fashioned virtues of uniting in the face of a crisis, of resourcefulness and community action. Projects like the transition towns network and proposals for a green new deal tell a story which people are more willing to hear.

Too late?

Guardian | As ministers and officials gather in Poznan one year ahead of the Copenhagen summit on global warming, the second part of a major series looks at the crucial issue of targets. At a high-level academic conference on global warming at Exeter University this summer, climate scientist Kevin Anderson stood before his expert audience and contemplated a strange feeling. He wanted to be wrong. Many of those in the room who knew what he was about to say felt the same. His conclusions had already caused a stir in scientific and political circles. Even committed green campaigners said the implications left them terrified.

Anderson, an expert at the Tyndall Centre for Climate Change Research at Manchester University, was about to send the gloomiest dispatch yet from the frontline of the war against climate change.

Despite the political rhetoric, the scientific warnings, the media headlines and the corporate promises, he would say, carbon emissions were soaring way out of control - far above even the bleak scenarios considered by last year's report from the Intergovernmental Panel on Climate Change (IPCC) and the Stern review. The battle against dangerous climate change had been lost, and the world needed to prepare for things to get very, very bad.

"As an academic I wanted to be told that it was a very good piece of work and that the conclusions were sound," Anderson said. "But as a human being I desperately wanted someone to point out a mistake, and to tell me we had got it completely wrong."

Nobody did. The cream of the UK climate science community sat in stunned silence as Anderson pointed out that carbon emissions since 2000 have risen much faster than anyone thought possible, driven mainly by the coal-fuelled economic boom in the developing world. So much extra pollution is being pumped out, he said, that most of the climate targets debated by politicians and campaigners are fanciful at best, and "dangerously misguided" at worst.

Wednesday, December 10, 2008

In Outcry Over Siege, Two Indias Emerge

Washington Post | The recent siege brought terrorism to the doorstep of India's affluent and struck at the symbols of their prosperity. India's expanding elite, which has felt somewhat insulated from the heat, traffic, sporadic electricity outages and overall commotion in this fast-paced city, suddenly felt vulnerable.

In India, terrorists have usually targeted crowded markets and trains, seldom frequented by the wealthy. Typically, the victims have been the poor, including taxi drivers, deliverymen, shopkeepers and street sweepers. But the gunmen who struck several sites in Mumbai late last month focused much of their rage on the city's two most luxurious hotels and its most likely guests: business executives, socialites, Bollywood film directors and political bigwigs.

Never before has a terrorist attack in India brought such raw outrage and calls for sweeping changes in government. A public interest lawsuit was filed against the government over the failure to protect citizens. It was backed by some of Mumbai's richest, including stock analysts, lawyers and real estate tycoons. Billboards bearing the words "Jago, Mumbai, Jago," or "Wake up, Mumbai," went up in upper-class neighborhoods.

"The hard reality of this country is that we are living in two Indias. One is for the rich, who matter, and one is for the poor, who are invisible," said Ashok Agarwal, a lawyer who runs Social Jurist, a group that litigates education cases on behalf of the marginalized sections of society. "In India, you can use the poor for your benefit. He should cook your meals, wash your utensils, scrub your clothes, but when it comes to doing justice for the victims of other bombings, there wasn't this level of outrage. When poor people were attacked, the country wasn't suddenly insecure. This is a fundamental injustice, and it has led to authorities ignoring attacks."

let's end drug prohibition

Wall St. Journal | Consider the consequences of drug prohibition today: 500,000 people incarcerated in U.S. prisons and jails for nonviolent drug-law violations; 1.8 million drug arrests last year; tens of billions of taxpayer dollars expended annually to fund a drug war that 76% of Americans say has failed; millions now marked for life as former drug felons; many thousands dying each year from drug overdoses that have more to do with prohibitionist policies than the drugs themselves, and tens of thousands more needlessly infected with AIDS and Hepatitis C because those same policies undermine and block responsible public-health policies.

And look abroad. At Afghanistan, where a third or more of the national economy is both beneficiary and victim of the failed global drug prohibition regime. At Mexico, which makes Chicago under Al Capone look like a day in the park. And elsewhere in Latin America, where prohibition-related crime, violence and corruption undermine civil authority and public safety, and mindless drug eradication campaigns wreak environmental havoc.

All this, and much more, are the consequences not of drugs per se but of prohibitionist policies that have failed for too long and that can never succeed in an open society, given the lessons of history. Perhaps a totalitarian American could do better, but at what cost to our most fundamental values?

drug war hopeless, why not legalize?

Kansas City Star | Prohibition — and the violence, corruption and health hazards that followed — lives on in its modern version, the so-called War on Drugs. Former law-enforcement officers gathered in Washington to draw the parallels. Their group, Law Enforcement Against Prohibition (LEAP), has called for nothing less than the legalization of drugs.

And before you say, "We can't do that," hear the officers out. They have an answer for every objection.

Doesn't the War on Drugs take narcotics off the street, raising their price beyond most Americans' means?

Obviously not. The retail price of cocaine is now about half what it was in 1990. When the value of something goes up, more people go into the business.

In some Dallas junior high schools, kids can buy two hits of "cheese" — a mix of Tylenol PM and heroin — for $5, Terry Nelson, a former U.S. Customs and Border Patrol officer, told me. Lunch costs more.

Wouldn't legalizing drugs create new users? Not necessarily. LEAP wants drugs to be regulated like alcohol and cigarettes. Regulations are why it's harder to buy alcohol or cigarettes in many schoolyards than drugs. By regulating the purity and strength of drugs, they become less deadly.

Tuesday, December 09, 2008

and now for a world government...,

Financial Times | Barack Obama, America’s president-in-waiting, does not share the Bush administration’s disdain for international agreements and treaties. In his book, The Audacity of Hope, he argued that: “When the world’s sole superpower willingly restrains its power and abides by internationally agreed-upon standards of conduct, it sends a message that these are rules worth following.” The importance that Mr Obama attaches to the UN is shown by the fact that he has appointed Susan Rice, one of his closest aides, as America’s ambassador to the UN, and given her a seat in the cabinet.

A taste of the ideas doing the rounds in Obama circles is offered by a recent report from the Managing Global Insecurity project, whose small US advisory group includes John Podesta, the man heading Mr Obama’s transition team and Strobe Talbott, the president of the Brookings Institution, from which Ms Rice has just emerged.

The MGI report argues for the creation of a UN high commissioner for counter-terrorist activity, a legally binding climate-change agreement negotiated under the auspices of the UN and the creation of a 50,000-strong UN peacekeeping force. Once countries had pledged troops to this reserve army, the UN would have first call upon them.

These are the kind of ideas that get people reaching for their rifles in America’s talk-radio heartland. Aware of the political sensitivity of its ideas, the MGI report opts for soothing language. It emphasises the need for American leadership and uses the term, “responsible sovereignty” – when calling for international co-operation – rather than the more radical-sounding phrase favoured in Europe, “shared sovereignty”. It also talks about “global governance” rather than world government.

But some European thinkers think that they recognise what is going on. Jacques Attali, an adviser to President Nicolas Sarkozy of France, argues that: “Global governance is just a euphemism for global government.” As far as he is concerned, some form of global government cannot come too soon. Mr Attali believes that the “core of the international financial crisis is that we have global financial markets and no global rule of law”.

So, it seems, everything is in place. For the first time since homo sapiens began to doodle on cave walls, there is an argument, an opportunity and a means to make serious steps towards a world government.

Fallout Fallout - Proliferation's Historical Paths

NYTimes | All paths stem from the United States, directly or indirectly. One began with Russian spies that deeply penetrated the Manhattan Project. Stalin was so enamored of the intelligence haul, Mr. Reed and Mr. Stillman note, that his first atom bomb was an exact replica of the weapon the United States had dropped on Nagasaki.

Moscow freely shared its atomic thefts with Mao Zedong, China’s leader. The book says that Klaus Fuchs, a Soviet spy in the Manhattan Project who was eventually caught and, in 1959, released from jail, did likewise. Upon gaining his freedom, the authors say, Fuchs gave the mastermind of Mao’s weapons program a detailed tutorial on the Nagasaki bomb. A half-decade later, China surprised the world with its first blast.

The book, in a main disclosure, discusses how China in 1982 made a policy decision to flood the developing world with atomic know-how. Its identified clients include Algeria, Pakistan and North Korea.

A lesser pathway involves France. The book says it drew on Manhattan Project veterans and shared intimate details of its bomb program with Israel, with whom it had substantial commercial ties. By 1959, the book says, dozens of Israeli scientists “were observing and participating in” the French program of weapons design.

The book adds that in early 1960, when France detonated its first bomb, doing so in the Algerian desert, “two nations went nuclear.” And it describes how the United States turned a blind eye to Israel’s own atomic developments. It adds that, in the autumn of 1966, Israel conducted a special, non-nuclear test “2,600 feet under the Negev desert.” The next year it built its first bomb.

Israel, in turn, shared its atomic secrets with South Africa. The book discloses that the two states exchanged some key ingredients for the making of atom bombs: tritium to South Africa, uranium to Israel. And the authors agree with military experts who hold that Israel and South Africa in 1979 jointly detonated a nuclear device in the South Atlantic near Prince Edward Island, more than one thousand miles south of Cape Town. Israel needed the test, it says, to develop a neutron bomb.

Bailout Fallout

NYTimes | Gov. Rod R. Blagojevich, who met with the workers Monday morning, said the State of Illinois was suspending its business with the Bank of America, Republic Windows’ lenders, and that the Illinois Department of Labor was poised to file a complaint over the plant closing if need be. Political leaders on the Chicago City Council and in Cook County threatened similar actions. Representative Luis V. Gutierrez said he was encouraging the Department of Labor and the Department of Justice to investigate. “Families are already struggling to keep afloat,” Mr. Blagojevich said.

The company’s statement said it had been placed, “in the impossible position of not having the ability to further reduce fixed costs, coupled with severe constrictions in the capital debt markets and an unwillingness of the current debt holder to continue funding the operations.”

The workers here also blamed Bank of America for preventing the owners from paying its workers for already-earned vacation time and severance. Workers here said the owners told them last week that Bank of America had cut off the company’s credit line and would not allow payments.

As part of government bailout efforts for the struggling banking industry, Bank of America has received $15 billion, and is expected to receive an additional $10 billion. That fact left many workers here seething.

“Taxpayers would like to see that bailout money go toward saving jobs, not saving C.E.O.’s,” said Leah Fried, an organizer for the United Electrical, Radio and Machine Workers of America. “This is outrageous.”

Monday, December 08, 2008

Detroit Churches Pray for ‘God’s Bailout’

human livestock management practices



It is essential to understand the reality of the world.

When you look at a map of the world, you are not looking at countries, but farms.

You are allowed certain liberties - limited property ownership, movement rights, freedom of association and occupation - not because your government approves of these rights in principle - since it constantly violates them - but rather because "free range livestock" is so much cheaper to own and so more productive.

It is important to understand the reality of ideologies.

State capitalism, socialism, communism, fascism, democracy - these are all livestock management approaches.

Some work well for long periods - state capitalism - and some work very badly - communism.

They all fail eventually, because it is immoral and irrational to treat human beings as livestock.

Sunday, December 07, 2008

Get Strapped.....,

STL Post Dispatch | Alderman Charles Quincy Troupe's neighborhood has seen nine homicides in 10 months this year, more than all but one other section of the city.

With gunplay wreaking havoc on his ward, Troupe thinks he has found an answer: citizens arming themselves.

The alderman is pleading with constituents to get guns of their own — and learn how to use them. Troupe, who represents a swatch of north St. Louis, is encouraging residents to apply for concealed weapons permits so they can start carrying a firearm.

The city's new police chief, among others, worries that introducing even more guns into high-crime areas is a recipe for greater turmoil, not less.

Troupe, however, says he has lost faith in the Police Department and is urging residents to take it upon themselves to protect their homes and property.

"These are God-fearing people. These are law-abiding citizens," Troupe, 72, says. "They have a right to own a gun, and they have a right to carry a gun."

Solutions to the Challenges We Face

President Obama, like FDR, is a pragmatist. He will do whatever he thinks is necessary to try and keep growth economics going while increasing employment. This strategy will eventually fail because the growth economy needs enormous foreign energy and material inputs. The consumer consumption of stuff is 70% of the growth economy. When this strategy fails, he will put the country on a war footing by expanding the war in Afghanistan and Pakistan. The US economy was going nowhere in the 1930s until FDR increased industrial war preparation in anticipation of WWII.

Unlike the 1930s, in 2009 the US lacks the energy and material resources to maintain a permanent global war footing. We have just enough "stuff" for one more really big war. Energy resources in the Middle East will be seized by military force as the costs of the Iraq invasion must be recouped. Chinese or Russian objection to our activities in either sphere will result in a nuclear exchange. I believe we'd much rather have this fight with China than with Russia.

The Japanese and Germans in the 1930s were reduced to similar tactics because they needed energy and material resources to maintain their military machinery.

1998 Jay Hanson Print Ad

Sen. Wayne Morse on the Vietnam War



In 1964, Morse, who had won re-election in 1962, was one of only two United States Senators to vote against the Gulf of Tonkin Resolution (Alaska's Ernest Gruening was the other), which authorized an expansion of U.S. involvement in the Vietnam War. His central contention was that the resolution violated Article One of the United States Constitution, granting the President the ability to take military action in the absence of a formal declaration of war.

During the following years Morse remained one of the country's most outspoken critics of the war. It was later revealed that the FBI investigated Morse based on his opposition to the war, allegedly at the request of President Johnson in an attempt to find information that could be used politically against Senator Morse.

As early as 1966, Morse told a student union that he would like to see "[war] protests such as these multiply by the hundreds" across the country.

Rep. Barbara Lee 9-14-2001

Barbara Lee explains her rationale for voting against the Authorization to Use Military Force in Afghanistan, citing the overly broad nature of the bill.

Saturday, December 06, 2008

Afghanistan: Another Untold Story

Information Clearinghouse | Barack Obama is on record as advocating a military escalation in Afghanistan. Before sinking any deeper into that quagmire, we might do well to learn something about recent Afghan history and the role played by the United States.

Less than a month after the 11 September 2001 attacks on the World Trade Center and the Pentagon, US leaders began an all-out aerial assault upon Afghanistan, the country purportedly harboring Osama bin Laden and his al Qaeda terrorist organization. More than twenty years earlier, in 1980, the United States intervened to stop a Soviet “invasion” of that country. Even some leading progressive writers, who normally take a more critical view of US policy abroad, treated the US intervention against the Soviet-supported government as “a good thing.” The actual story is not such a good thing.[...]

While claiming to be fighting terrorism, US leaders have found other compelling but less advertised reasons for plunging deeper into Afghanistan. The Central Asian region is rich in oil and gas reserves. A decade before 9/11, Time magazine (18 March 1991) reported that US policy elites were contemplating a military presence in Central Asia. The discovery of vast oil and gas reserves in Kazakhstan and Turkmenistan provided the lure, while the dissolution of the USSR removed the one major barrier against pursuing an aggressive interventionist policy in that part of the world.

US oil companies acquired the rights to some 75 percent of these new reserves. A major problem was how to transport the oil and gas from the landlocked region. US officials opposed using the Russian pipeline or the most direct route across Iran to the Persian Gulf. Instead, they and the corporate oil contractors explored a number of alternative pipeline routes, across Azerbaijan and Turkey to the Mediterranean or across China to the Pacific.

The route favored by Unocal, a US based oil company, crossed Afghanistan and Pakistan to the Indian Ocean. The intensive negotiations that Unocal entered into with the Taliban regime remained unresolved by 1998, as an Argentine company placed a competing bid for the pipeline. Bush’s war against the Taliban rekindled UNOCAL’s hopes for getting a major piece of the action.

Interestingly enough, neither the Clinton nor Bush administrations ever placed Afghanistan on the official State Department list of states charged with sponsoring terrorism, despite the acknowledged presence of Osama bin Laden as a guest of the Taliban government. Such a “rogue state” designation would have made it impossible for a US oil or construction company to enter an agreement with Kabul for a pipeline to the Central Asian oil and gas fields.

In sum, well in advance of the 9/11 attacks the US government had made preparations to move against the Taliban and create a compliant regime in Kabul and a direct US military presence in Central Asia. The 9/11 attacks provided the perfect impetus, stampeding US public opinion and reluctant allies into supporting military intervention.

Bill Moyers and Michael Pollan Talk Food Security



Bill Moyers sits down with Michael Pollan, Knight Professor of Journalism at UC Berkeley, to discuss what direction the U.S. should pursue in the often-overlooked question of food policy. Pollan is author of IN DEFENSE OF FOOD: AN EATER'S MANIFESTO. This is one of five videos available at the link.

Friday, December 05, 2008

Grand Theft Nautical

NYTimes | There was some semblance of law and order in 2006, when the Islamic Courts Union, loosely linked with Al Qaeda, took over much of the country and imposed Shariah law. Though there were cruel tradeoffs, the Islamists virtually eradicated piracy. (The crime was a capital offense punishable by beheading.)

When Ethiopian forces, supported by the United States, replaced the Islamists with an ineffective transitional government in 2006, piracy returned with an intensity not seen since the 17th century.

It is evident that no nation can impose its will on Somalia; the colonial British and Italians learned the hard way. And certainly no nation can force Somalis to stop the best business in town. But if the West really hopes to eliminate the scourge of piracy in these strategic shipping lanes, then it should consider involving the courts union, the only entity that has proved it could govern the country, and its militant wing, Al Shabaab, in a new government.

If there is movement to talk to the Taliban in Afghanistan, then there should be some effort to talk to the fundamentalists in Somalia. If the Islamists were permitted to form a viable, functioning and effective government, this shattered land might be able to return to the community of nations — and supertankers will be able to deliver oil to the United States without fear of getting hijacked.

Piracy Is Terrorism?

NYTimes | The solution to piracy lies in the very nature of piracy itself. The Roman lawmaker Cicero defined piracy as a crime against civilization itself, which English jurist Edward Coke famously rephrased as “hostis humani generis” — enemies of the human race. As such, they were enemies not of one state but of all states, and correspondingly all states shared in the burden of capturing them.

From this precept came the doctrine of universal jurisdiction, meaning that pirates — unlike any other criminals — could be captured wherever they were found, by anyone who found them. This recognition of piracy’s unique threat was the cornerstone of international law for more than 2,000 years.

Though you wouldn’t guess it from the current situation, the law is surprisingly clear. The definition of pirates as enemies of the human race is reaffirmed in British and American trial law and in numerous treaties.

As a customary international law (albeit one that has fallen out of use since the decline of traditional piracy) it cuts through the Gordian knot of individual states’ engagement rules. Pirates are not ordinary criminals. They are not enemy combatants. They are a hybrid, recognized as such for thousands of years, and can be seized at will by anyone, at any time, anywhere they are found.

And what of the Emden’s problem? Are pirates a species of terrorist? In short, yes. The same definition of pirates as hostis humani generis could also be applied to international organized terrorism. Both crimes involve bands of brigands that divorce themselves from their nation-states and form extraterritorial enclaves; both aim at civilians; both involve acts of homicide and destruction, as the United Nations Convention on the High Seas stipulates, “for private ends.”

For this reason, it seems sensible that the United States and the international community adopt a new, shared legal definition that would recognize the link between piracy and terrorism. This could take the form of an act of Congress or, more broadly, a new jurisdiction for piracy and terrorism cases at the International Criminal Court.
Given what we know about the origins and habits of the Somali pirates, I find this assertion starkly discomfiting.

Africa Is "UNDER-Polluted"

The Memo

DATE: December 12, 1991
TO: Distribution
FR: Lawrence H. Summers
Subject: GEP

'Dirty' Industries: Just between you and me, shouldn't the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Less Developed Countries]? I can think of three reasons:

1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.

2) The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost. I've always though that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste.

3) The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity. The concern over an agent that causes a one in a million change in the odds of prostrate cancer is obviously going to be much higher in a country where people survive to get prostrate cancer than in a country where under 5 mortality is is 200 per thousand. Also, much of the concern over industrial atmosphere discharge is about visibility impairing particulates. These discharges may have very little direct health impact. Clearly trade in goods that embody aesthetic pollution concerns could be welfare enhancing. While production is mobile the consumption of pretty air is a non-tradable.

The problem with the arguments against all of these proposals for more pollution in LDCs (intrinsic rights to certain goods, moral reasons, social concerns, lack of adequate markets, etc.) could be turned around and used more or less effectively against every Bank proposal for liberalization.
Postscript

After the memo became public in February 1992, Brazil's then-Secretary of the Environment Jose Lutzenburger wrote back to Summers: "Your reasoning is perfectly logical but totally insane... Your thoughts [provide] a concrete example of the unbelievable alienation, reductionist thinking, social ruthlessness and the arrogant ignorance of many conventional 'economists' concerning the nature of the world we live in... If the World Bank keeps you as vice president it will lose all credibility. To me it would confirm what I often said... the best thing that could happen would be for the Bank to disappear." Sadly, Mr. Lutzenburger was fired shortly after writing this letter.

Mr. Summers, on the other hand, was appointed the U.S. Treasury Secretary on July 2nd, 1999, and served through the remainder of the Clinton Admistration. Afterwards, he was named president of Harvard University. President-elect Obama has nominated Lawrence H. Summers, Director of the National Economic Council - Lawrence Summers is currently the Charles W. Eliot University Professor at Harvard University. Summers served as 71st Secretary of the Treasury from 1999 to 2001 and as president of Harvard from 2001 to 2006. Before being appointed Secretary, Summers served as Deputy and Under Secretary of the Treasury and as the World Bank's top economist. Summers has taught economics at Harvard and MIT, and is a recipient of the John Bates Clark Medal, awarded to the American economist under 40 judged to have made the most significant contribution to economics. Summers played a key advisory role during the 2008 presidential campaign.

Living Among Somali Pirates

Kansas City Star | On the night of Sept. 17, a watchman aboard the Centauri noticed the stars shining off the wake of the pirates’ small vessel and sounded the alarm. But within five minutes of the first sighting, two boatloads of pirates armed with rifles and rocket-propelled grenades had swarmed aboard on makeshift ladders.

“They were shouting, ‘Captain, is not problem, just money,’ ” recalled Capt. Renato Tanada, his face twisting wryly.

“And when they found out we were Filipino, they said, ‘Filipino and Somali — friends!’ ” added crew member Alvin Genonangan with a laugh. “When they were shooting, we ducked down behind the walls. ... Then, when they came in, we just stood there with our hands in the air and the captain tried to talk calmly to them.”

The pirates did not let the crew telephone their families but treated them well, the sailors said, arranging deliveries of live goats to the ship for food, sharing their meals with the hostages, and encouraging them to work, fish and bake bread as a way of keeping busy. The pirates provided the flour, a luxury in impoverished Somalia, where nearly half the population is dependent on aid.

Most of the pirates were young, averaging around 25, Tanada said. They guarded the ship in shifts, with never fewer than 14 armed men on board, to be rotated every four or five days. The pirates slept on mats on the bridge and the deck, and the crew was not allowed above deck after dark.

But as the hostages got to know their guards, the crew discovered that the Somalis played a card game similar to a Filipino game. They established the rules with hand signals. Genonangan said he beat the pirates sometimes — but not too often.

In the meantime, the crew saw first one, then another captured vessel drop anchor in the blue waters alongside them.

Pirate Story Subtext.....,


"The Ethiopian invasion, which was sanctioned by the US government, has destroyed virtually all the life-sustaining economic systems which the population has built for the last fifteen years." Abdi Samatar, professor of Global Studies at the University of Minnesota, Democracy Now

There's an interesting subtext to the pirate story that hasn't appeared in the western media. According to Simon Assaf of the Socialist Worker:

"Many European, US and Asian shipping firms – notably Switzerland's Achair Partners and Italy's Progresso – signed dumping deals in the early 1990s with Somalia's politicians and militia leaders. This meant they could use the coast as a toxic dumping ground. This practice became widespread as the country descended into civil war.
Nick Nuttall of the UN Environment Programme said, "European companies found it was very cheap to get rid of the waste."

When the Asian tsunami of Christmas 2005 washed ashore on the east coast of Africa, it uncovered a great scandal. Tons of radioactive waste and toxic chemicals drifted onto the beaches after the giant wave dislodged them from the sea bed off Somalia. Tens of thousands of Somalis fell ill after coming into contact with this cocktail. They complained to the United Nations (UN), which began an investigation.

"There are reports from villagers of a wide range of medical problems such as mouth bleeds, abdominal hemorrhages, unusual skin disorders and breathing difficulties," the UN noted.

Some 300 people are believed to have died from the poisonous chemicals.

In 2006 Somali fishermen complained to the UN that foreign fishing fleets were using the breakdown of the state to plunder their fish stocks. These foreign fleets often recruited Somali militias to intimidate local fishermen. Despite repeated requests, the UN refused to act. Meanwhile the warships of global powers that patrol the strategically important Gulf of Aden did not sink or seize any vessels dumping toxic chemicals off the coast.

So angry Somalis, whose waters were being poisoned and whose livelihoods were threatened, took matters into their own hands. Fishermen began to arm themselves and attempted to act as unofficial coastguards." (Socialist Worker)

The origins of piracy in Somalia is considerably different than the narrative in the media which tends to perpetuate stereotypes of scary black men who are naturally inclined to criminal behavior. In reality, the pirates were the victims of a US-EU run system that still uses the developing world as a dumping ground for toxic waste regardless of the suffering it causes. (just ask Larry Summers) In fact, the dumping continues to this day, even though we have been assured that we're living in a "post racial era" following the election of Barak Obama. Unfortunately, that rule doesn't apply to the many black and brown people who still find themselves caught in the imperial crosshairs. Their lives are just as miserable as ever.

Mike Whitney at Information Clearinghouse Somalia: Another CIA-Backed Coup Blows Up

A Wartime Mobilization

In which Lester Brown advocates for a WW-II style mobilization to re-engineer the infrastructural underpinnings of civilization. IMOHO - conditions are too entirely different from then to now for his mobilization analogy to hold. However, in the course of the article, he did have some very interesting things to say about how the economy relates to ecology, quoted here for your consideration.
We know from our analysis of global warming, from the accelerating deterioration of the economy’s ecological supports, and from our projections of future resource use in China that the western economic model—the fossil-fuel-based, automobile-centered, throwaway economy—will not last much longer. We need to build a new economy, one that will be powered by renewable sources of energy, that will have a diversified transport system, and that will reuse and recycle everything.

We can describe this new economy in some detail. The question is how to get from here to there before time runs out. Can we reach the political tipping points that will enable us to cut carbon emissions before we reach the ecological tipping points where the melting of the Himalayan glaciers becomes irreversible? Will we be able to halt the deforestation of the Amazon before it dries out, becomes vulnerable to fire, and turns into wasteland?

What if three years from now scientists announced that we have waited too long to cut carbon emissions and that the melting of the Greenland ice sheet is irreversible? How would the realization that we are responsible for a coming 23-foot rise in sea level and hundreds of millions of refugees from rising seas affect us? How would it affect our sense of self, our sense of who we are? It could trigger a fracturing of society along generational lines like the more familiar fracturing of societies along racial, religious, and ethnic lines. How will we respond to our children when they ask, “How could you do this to us? How could you leave us facing such chaos?”

As we have seen, a corporate accounting system that left costs off the books drove Enron, one of the largest U.S. corporations, into bankruptcy. Unfortunately, our global economic accounting system that also leaves costs off the books has potentially far more serious consequences.

The key to building a global economy that can sustain economic progress is the creation of an honest market, one that tells the ecological truth. To create an honest market, we need to restructure the tax system by reducing taxes on work and raising them on various environmentally destructive activities to incorporate indirect costs into the market price. If we can get the market to tell the truth, then we can avoid being blindsided by a faulty accounting system that leads to bankruptcy. As Øystein Dahle, former Vice President of Exxon for Norway and the North Sea, has observed: “Socialism collapsed because it did not allow the market to tell the economic truth. Capitalism may collapse because it does not allow the market to tell the ecological truth.”
Worth considering on a variety of fronts, from the requested automotive industry bailout to the wars and rumours of wars swirling all over the world about now. The mobilization's NOT going to happen, but the off-the-books accounting for the ecological impacts of our unsustainable collective modus operandi is eminently worth considering and paying attention to going forward.

Thursday, December 04, 2008

Mexico Drug Cartels Send A Message of Chaos, Death

Washington Post | The death squads of the drug cartels are killing in spectacularly gruesome ways, using the violence as a language to deliver a message to society.

Increasingly, bodies show unmistakable signs of torture. Videos of executions are posted on the Internet, as taunts, as warnings. Corpses are dumped on playgrounds, with neatly printed notes beside them. And very often, the heads have been removed.

When someone rolled five heads onto the dance floor in a cantina in Michoacan state two years ago, even the most hardened Mexicans were shocked. Now ritual mutilations are routine. In the border city of Tijuana, 37 people were slain over the weekend, including four children. Nine of the adults were decapitated, including three police officers whose badges were stuffed in their mouths.

"There is a new and different violence in this war," said Victor Clark Alfaro, the founder of the Binational Center for Human Rights, who moves around Tijuana accompanied by bodyguards. "Each method is now more brutal, more extreme than the last. To cut off the heads? That is now what they like. They are going to the edge of what is possible for a human being to do."

As competing drug cartels and their fragmented cells fight the police, the Mexican army and one another for control of billion-dollar smuggling corridors into the U.S. drug market, the violence unleashed by President Felipe Calderón's war against the traffickers grows more sensational.

U.S. to Raise 'Irregular War' Capabilities

Washington Post | The Pentagon this week approved a major policy directive that elevates the military's mission of "irregular warfare" -- the increasingly prevalent campaigns to battle insurgents and terrorists, often with foreign partners and sometimes clandestinely -- to an equal footing with traditional combat.

The directive, signed by Deputy Defense Secretary Gordon England on Monday, requires the Pentagon to step up its capabilities across the board to fight unconventionally, such as by working with foreign security forces, surrogates and indigenous resistance movements to shore up fragile states, extend the reach of U.S. forces into denied areas or battle hostile regimes.

The policy, a result of more than a year of debate in the defense establishment, is part of a broader overhaul of the U.S. military's role as the threat of large-scale combat against other nations' armies has waned and new dangers have arisen from shadowy non-state actors, such as terrorists that target civilian populations.

"The U.S. has considerable overmatch in traditional capabilities . . . and more and more adversaries have realized it's better to take us on in an asymmetric fashion," said Michael G. Vickers, assistant secretary of defense for special operations/low-intensity conflict and interdependent capabilities, and a chief architect of the policy.

Designed to institutionalize lessons the U.S. military has learned -- often painfully -- in Afghanistan and Iraq since 2001, the policy aims to prepare the military for the most likely future conflicts and to prevent the type of mistakes made in the post-Vietnam War era, when hard-won skills in counterinsurgency atrophied.

The Terrorist Within...,

Truthdig | Robert Pape in “Dying to Win: The Strategic Logic of Suicide Terrorism,” found that most suicide bombers are members of communities that feel humiliated by genuine or perceived occupation. Almost every major suicide-terrorist campaign—over 95 percent—carried out attacks to drive out an occupying power. This was true in Lebanon, Sri Lanka, Chechnya and Kashmir, as well as Israel and the Palestinian territories. The large number of Saudis among the 9/11 hijackers appears to support this finding.

Collective humiliation is also the driving force behind al-Qaida and most terrorist groups. Osama bin Laden cites the Sykes-Picot Agreement, which led to the carving up of the Ottoman Empire, as the beginning of Arab humiliation. He attacks the agreement for dividing the Muslim world into “fragments.” He rails against the presence of American troops on the soil of his native Saudi Arabia. The dark motivations of Islamic extremists mirror our own.

Wednesday, December 03, 2008

Roosevelt's Brain Trust vs. Obama's Brainiacs

truthout | Even if everyone is now using the Great Depression and the New Deal as benchmarks for what we're living through, Act I of the new script has already veered away from the original.

A suffocating political and intellectual provincialism has captured the new administration in embryo. Instead of embracing a sense of adventurousness, a readiness to break with the past so enthusiastically promoted during the campaign, Obama seems overcome with inhibitions and fears.

Practically without exception he has chosen to staff his government at its highest levels with refugees from the Clinton years. This is emphatically true in the realms of foreign and economic policy. It would, in fact, be hard to find an original idea among the new appointees being called to power in those realms - some way of looking at the American empire abroad or the structure of power and wealth at home that departs radically from views in circulation a decade or more ago. A team photo of Obama's key cabinet and other appointments at Treasury, Health and Human Services, Commerce, the President's Economic Recovery Advisory Board, the State Department, the Pentagon, the National Security Council, and in the U.S. Intelligence Community, not to speak of senior advisory posts around the President himself, could practically have been teleported from perhaps the year 1995.

Recycled Clintonism is recycled neo-liberalism. This is change only the brainiacs from Hyde Park and Harvard Square could believe in. Only the experts could get hot under the collar about the slight differences between "behavioral economics" (the latest academic fad that fascinates some high level Obama-ites) and straight-up neo-liberal deference to the market. And here's the sobering thing: despite the grotesque extremism of the Bush years, neo-liberalism also served as its ideological magnetic north.

Is this parochialism, this timorousness and lack of imagination, inevitable in a period like our own, when the unknown looms menacingly and one natural reaction is certainly to draw back, to find refuge in the familiar? Here, the New Deal years can be instructive.

Mumbai mayhem conspiracy

Pakistan Times | Former Inter Services Intelligence (ISI) ISI Chief General (Retd.) Hameed Gul has said that Mumbai incident is an international based conspiracy to deprive Pakistan of its atomic power. Taking to a private TV channel on Friday, he said that to involve Pakistan in the incident reflected that some forces wanted to declare Pakistan a failure state as somehow it had become necessary to make Pakistan knee down in order to snatch its atomic power away.

He said that the way militants entered into the hotels and executed their plan in extremist Hindus like Bal Thakrey and Narender Modi’s area it seemed impossible without internal support adding these people had grudge with Muslims and wanted to defame them all over the world.

He said that the militants were named as Dakan Mujahedeen and it was particularly ridicules when neither their demands were brought to surface nor their target was clear. He said that India is habitual to accuse Pakistan whenever any mishap takes place as in the case of Samjhota Express but it could not prove the allegations and in Maligaon incident Indian Col. Srikanth Proat was later found guilty.

He feared that India would deploy its army on the boarders, like 2002 when a bloody incident took place on December 13, 2001 out side Indian parliament, to curb Kashmiris’ freedom movement and deprive Pakistan of its atomic assets saying it would be in-competency of the government if India gets success in its plane.

To a question, he said that US wanted to see Indian army in Afghanistan to disintegrate the country as new maps used to publish form US showing divided Pakistan in different four parts. When asked, the blockage of water and make the country knee down before IMF was a part of pre-planned trick.-SANA

The Budgetary Implications of Drug Prohibition

(Full Report) December, 2008 Jeffrey A. Miron Department of Economics Harvard University

Executive Summary

• Government prohibition of drugs is the subject of ongoing debate.

• One issue in this debate is the effect of prohibition on government budgets. Prohibition entails direct enforcement costs and prevents taxation of drug production and sale.

• This report examines the budgetary implications of legalizing drugs.

• The report estimates that legalizing drugs would save roughly $44.1 billion per year in government expenditure on enforcement of prohibition. $30.3 billion of this savings would accrue to state and local governments, while $13.8 billion would accrue to the federal government. Approximately $12.9 billion of the savings would results from legalization of marijuana, $19.3 billion from legalization of cocaine and heroin, and $11.6 from legalization of other drugs.

• The report also estimates that drug legalization would yield tax revenue of $32.7 billion annually, assuming legal drugs are taxed at rates comparable to those on alcohol and tobacco. Approximately $6.7 of this revenue would result from legalization of marijuana, $22.5 billion from legalization of cocaine and heroin, and $3.5 from legalization of other drugs.

• Whether drug legalization is a desirable policy depends on many factors other than the budgetary impacts discussed here. Rational debate about drug policy should nevertheless consider these budgetary effects.

• The estimates provided here are not definitive estimates of the budgetary implications of a legalized regime for currently illegal drugs. The analysis employs assumptions that plausibly err on the conservative side, but substantial uncertainty remains about the magnitude of the budgetary impacts.

Tuesday, December 02, 2008

Does Mr. O Know?

Kunstler | This raises the issue of what Mr. Obama and his team really know about our energy predicament. The president-elect has made some noises -- recently on the 60 Minutes show -- that he understands something about the current price dislocations in the oil markets resulting from the larger financial turmoil. He alluded to the public's erroneous notion that current low-ish oil prices mean the oil problem is over. But does the incoming president know some of the following details?

For instance, does Mr. O know that global oil production appears to have peaked at around 85 million barrels a day, with poor prospects of ever getting beyond that? This single naked fact has broad ramifications, above all whether we can continue to think in terms of industrial "growth" as the benchmark for economic health. There are many interpretations of the current financial fiasco. Some of them are based on long-term technical wave theories. A more down-to-earth view suggests the shock of peak oil -- though it doesn't exclude wave theories.

Does Mr. O know that world oil discovery has fallen to insignificant levels after peaking long ago in the 1960s. Does he know we are finding no more super-giant oil fields on the scale of Arabia's Ghawar or Mexico's Cantarell, which have supplied most of the world's oil for the past forty years and are now running down? Does he know that you can't produce oil that hasn't been discovered? Does Mr. O know that virtually all the oil-producing nations have entered production decline. Surely someone has whispered in his ear about the IEA's projection that global oil production would fall 9.1 percent in the coming year.

Does Mr. O know that oil exports have been trending to decline at a steeper rate than oil depletion? That is, the exporting nations are losing their ability to send oil to the importers (like us) at a rate mathematically greater than the run-down in their production.They are using more of their own oil even while their production is going down. For example, Mexico is depleting overall at more than 9 percent a year (with the Cantarell field alone running down at more than 15 percent annually). Does he know Mexico's net exports are crashing? Mexico has been our number three leading source of imports. In a very few years they will not be able to send us any oil. A deluded American public has no idea that this is happening. Will Mr. O explain it to them?

The Famine Of 2009?

Daily Kos | Last week I received a very concerned call from South Dakota farmer and agronomist Bryan Lutter. "Neal, we're out of propane!" I figured this was personal distress – he and his family farm over three square miles of land and I know this has been a tough year for many people. He promptly corrected my misconception when I tried to console him. "No, everybody is out, all three grain elevators, we can't get fuel for the bins, and we're coming in real wet this year."

There are equally dramatic issues due to the bankruptcy of Verasun and the apparent insolvency of the nation's largest private crop insurance program. Payments that would have come in June or July of a normal year are still not dispersed at the end of November and this has grim implications for next year's crop.

I started digging into the details and unless I'm badly mistaken people are going to be starving in 2009 over causes and conditions being set down right now. It's a complex, interlocking issue, and I hope I've done a good job explaining it below the fold ...

Propane Shortage Hampers Drying...,

Grand Forks Herald | Farmers in eastern North Dakota and beyond are desperately trying to bring in the high-moisture corn crop in the region, but are running into a liquid propane fuel shortage. Mike Rud, executive director of the North Dakota Propane Gas Association, said the recent sudden resumption in the corn drying activity after freeze-up is causing demand to exceed supplies.

His association has reactivated requests to Gov. John Hoeven’s office, asking for a waiver that would allow truckers to work more than 11 hours in a day — as many as 15 hours or more — to deliver propane. But the problem is bigger than that.

“For the guy that’s trying to get corn dried and can’t get propane when he wants it, it’s a huge deal,” Astrup said. He said he’s been taking care of his own propane customers. Most farmers he has talked to have been reasonable, but some — those who might purchase fertilizer, chemical and refined fuels, but get their propane elsewhere — have not understood that they can’t get propane from him on the spur-of-the-moment.

Astrup said suppliers sometimes simply can’t keep up with demands for trucking, as they might use the same tractors to haul different trailers with petroleum products, anhydrous ammonia and liquid propane. “It could be their growers are using more than they thought they would.”

Monday, December 01, 2008

"Inflation" deflated

Automatic Earth | Thanks to a credit boom that dates back to at least the early 1980s, and which accelerated rapidly after the millennium, the vast majority of the effective money supply is credit. A credit boom can mimic currency inflation in important ways, as credit acts as a money equivalent during the expansion phase. There are, however, important differences. Whereas currency inflation divides the real wealth pie into smaller and smaller pieces, devaluing each one in a form of forced loss sharing, credit expansion creates multiple and mutually exclusive claims to the same pieces of pie. This generates the appearance of a substantial increase in real wealth through leverage, but is an illusion. The apparent wealth is virtual, and once expansion morphs into contraction, the excess claims are rapidly extinguished in a chaotic real wealth grab. It is this prospect that we are currently facing today, as credit destruction is already well underway, and the destruction of credit is hugely deflationary. As money is the lubricant in the economic engine, a shortage will cause that engine to seize up, as happened in the 1930s. An important point to remember is that demand is not what people want, it is what they are ready, willing and able to pay for. The fall in aggregate demand that characterizes a depression reflects a lack of purchasing power, not a lack of want. With very little money and no access to credit, people can starve amid plenty.

Attempts by governments and central bankers to reinflate the money supply are doomed to fail as debt monetization cannot keep pace with credit destruction, and liquidity injected into the system is being hoarded by nervous banks rather than being used to initiate new lending, as was the stated intent of the various bailout schemes. Bailouts only ever benefit a few insiders. Available credit is already being squeezed across the board, although we are still far closer to the beginning of the contraction than the end of it. Further attempts at reinflation may eventually cause a crisis of confidence among international lenders, which could lead to a serious dislocation in the treasury bond market at some point.

Credit Crunch's Impact on the Energy Industries

Oil Drum | I recently looked through news articles to see which energy sectors were being affected by the credit crisis. I was amazed at how widespread and how devastating the impact is.

There are really two closely related problems. One is reduced access to credit, making new borrowing difficult for nearly every business that requires debt. Prices for all commodities have been dropping as well. At least part of the reason for this price decline is the lack of availability of credit—many of the less credit-worth buyers drop out of the market. This leaves fewer buyers and almost the same number of sellers, so the price drops.

In this post, I examine how reduced access to credit and the concomitant decline in commodity prices is affecting energy companies. The impact I am seeing across a wide range of energy companies is a decline in new investment and a stretched-out timeframe for new projects. In addition, many of the weaker companies in the energy supply chain are likely to be forced out of business by the credit crisis.

When energy production is viewed for all companies combined, the below analysis suggests the credit crisis will cause the production of virtually all fuels to be in decline, relative to what they otherwise would have been. I expect production of oil will decline (in absolute terms, not just relative terms) in the years ahead. Since oil production was already on a plateau, this decline is expected to bring about "peak oil". Because of long lead times, uranium production seems likely to fall short of what is needed by nuclear power plants, within the next few years.

The long-term implications of declines in energy production are very serious. Research shows that standards of living are closely tied to energy consumption. With less energy available, standards of living are likely to decline.