Wednesday, April 27, 2011

Catastrophe-- Part 5 of a series

Lester Brown draws our attention to three factors contributing to a possible catastrophe in world food supply. See Journey to Planet Earth, PBS.
1. World population continues to grow, even with some population planning bright spots in Bangladesh, etc.
2. As income rises in places like China and India, the demand for animal products grows that literally takes bread out of the mouths of the remaining poor.
3. Conversion of food crops (especially corn) to ethanol.
This adds up to higher food prices that we are already seeing, which is particularly ominous for the poor of the world. We are already seeing some failed nation states where inadequate and more costly food is part of the problem—Chad, Somalia, Afghanistan, Sudan, D.R. Congo, and Haiti.

Sunday, April 24, 2011

Catastrophe-- Part 4 of a series

The people who object to an energy policy for the U.S. and reject the Kyoto agreement, argue that it is too costly. The environmentalists say that the costs are not fully accounted for. They point to failures in the market. But the problem is not inherent in markets, but rather in the property rights that are prior the market. A steel plant would not pay for labor if slavery were legal. And, it would not pay for iron ore if the pits were not owned. The question is who owns.
If the distribtion of rights is acceptable, there is little need for regulatory/administrative rules. This may sound like the familiar "markets are superior to regulation," But, it is quite different. There is no way that market processes can change property rights to those that we might like. Rights are anteceent to the market.

Friday, April 22, 2011

Your Brain on Music

"Research is showing that our brains understand music not only as emotional diversion, but also as a form of motion and activity. The same areas of the brain that activate when we swing a golf club or sign our name also engage when we hear expressive moments in music. Brain regions associated with empathy are activated, too, even for listeners who are not musicians.

And what really communicates emotion may not be melody or rhythm, but moments when musicians make subtle changes to the those musical patterns."

New York Times, April 18, 2011

Thursday, April 21, 2011

Catastrophe-- Part 3 of a series

After you Alphonse: The western nations are embroiled in a fruitless debate with the developing world like China over who should reduce their carbon emissions. The growth in emissions will be in China and India, as they want to be like us. It is my observation that arguments over equity often result in everyone going down together. It is like an argument over who should bail as the boat sinks. Perhaps for every percentage that the US cuts its present emissions, China could reduce its growth in emissions by a similar amount.

Tuesday, April 19, 2011

Catastrophe-- second in a series

The major catastrophe facing the world today is not natural, but human induced climate change. The problem for acting on it is the fact that it is slower than a tsunami. Carbon emissions from coal burning and autos are threatening the polar ice caps and glaciers. Do I care if the problem is only the polar bears? A big problem would be slackened flow of India’s rivers used for irrigation and thus food production. And, perhaps rising sea levels flooding heavily populated coastal low lands. Acid rain released with burning coal is destroying our forests.
No more coal-burning electric generation? Could we do it Now? In World War II we turned our industrial capacity to the production of planes, tanks, etc. We simply said, no more production of private cars. The prohibition lasted almost three years. When we saw a clear and present danger to world survival, we acted. Instead of present danger, catastrophe is a few years off. But, if we are to reverse present trends in time to avert catastrophe, we need to act now.
1. No new coal-burning power plants.
2. No more cars with less than 50 m.p.g.
3. No more additions to the inter-state highway system, but rather a massive building of high-speed rail.
4. Massive and immediate development of a national electric grid to carry electricity from areas of solar and wind energy to populations centers.

Tell Me A Story Goldilocks

Double-dealing Goldman Sachs sold CDOs on subprime mortagages to investors all the while it was taking positions betting the mortgages would fail. They purchsed "insurance" agaist loses from AIG. AIG soon had so many claims against them that they could not pay off, so the government bailed them out to the tune of $182 billion, and thus made Goldman golden. This was called an AIG bailout, but it was really a Goldman bailout. Goldman used their politial power to insist that AIG could not sue Goldman for misrepresenting investments they knew were going bad.
Goldman insists that the contradictory actions were made by separate entities acting independently within the firm. Sure, tell me another funny story.
Not new news, but worth remembering.

Sunday, April 17, 2011


Debt has become a scare word meant to paralyze thinking and to create a search for how to reduce it and by how much rather than to examine its assumptions. Here are some facts.
1. All money is debt, there is no other kind.
2. When a bank makes a loan to a business, it creates money.
Policy suggestion:
If a bank can create money for business, why can't the Federal Reserve (the nation's own bank) create money for the Treasury to keep our schools going and the police and fire fighters employed?

Outrage of the Day

Noted without further comment:
U.S. Senator John Kyl, R-AZ, stated that abortions comprised over 90 percent of the services performed by Planned Parenthood. It's more like 3 percent. When questioned he said, "No problem--it wasn't meant to be factual."

Wednesday, April 13, 2011

$4 Gas

Why have gas prices shot up in the last several weeks? Did a whole bunch of oil wells explode? Not much has changed in the real world, just in the imaginary world of casinos called futures market contract trading. Speculators think prices may be higher in the future, so they bid up the price of a contract to deliver oil sometime in the future, perhaps a year away. If the price does go up, they make a lot of money. In the meantime, the big oil companies are happy to charge us more now.
Some claim futures markets are jutified by giving big users of the product (such as the airlines) a chance to lock in a price for future delivery. But, in fact the market for futures is much, much larger than the users of the product. Most of the players are simply gamblers. Gamblers in ordinary casinos don't bother the rest of us, but these speculators do.

They Still Don't Get It

General Motors announced the Cadillac CTS-V Wagon that has a 556-horsepower V-8,which uses premium gas and qualifies for the $1,300 gas guzzler tax. And we tax payers saved their butts for this innovation? Well, Texans need something to drive on their 85 MPH highways!

World Ruled by Gamblers

The denizens of the casinos called bond markets wrecked the world economy in 2008 with their extreme bets on derivatives. Now they are attacking individual countries.
New York Times, April 13, 2010
"Portugal's Bailout Unnesessary"
"Portugal had strong economic performance in the 1990s and was managing its recovery from the global recession better than several other countries in Europe, but it has come under unfair and arbitrary pressure from bond traders, speculators and credit rating analysts who, for short-sighted or ideological reasons, have now managed to drive out one democratically elected administration and potentially tie the hands of the next one."

Monday, April 11, 2011

Great Britain (and Holland) is bringing suit against little Iceland over money their nation's depositors lost when Iceland's banks went bust. They might better sue Goldman Sachs who caused the problem in the first place. Goldman got all their money back for poor bets courtesy of the American taxpayer. Why is the American Tea Party after medicare spending when Goldman's billionaires took them for a ride?

Saturday, April 2, 2011

Catastrophe-- Part 1 of a series

The movement of the tectonic plates and subsequent tsunami off the coast of Japan reminds us that we live on a thin crust subject to the whims of nature. In 2004, a similar event in the Indian Ocean killed 230,000 people in dozens of countries. Devastating as these tsunamis were, they had little effect on the atmosphere, unlike that of volcanoes. I am reminded of Krakatoa between Sumatra and Java, Indonesia in 1883, which killed 36,000 people. In the same area, Tambora, in 1816 produced an ash cloud that resulted in a year without a summer, and stunted harvests and created hunger in Europe and Russia.
David Keys in his book, Catastrophe, presents evidence of a much larger eruption in 835 that blew away the island upon which it sat. He associates the major climatic change to follow (floods and drought) with the disintegration of the Roman Empire, waves of bubonic plague, westward movement of the Avars out of Mongolia, and the rapid rise of Islam. When food sources change dramatically, political and social changes follow.