Wednesday, May 30, 2007

Prevent Forest Fires.

Nature has mechanisms to cope with excesses and imbalances, which though often unpleasant and destructive, tend to be necessary and ultimately beneficial to the long term health of any ecosystem. In the case of forests, where old trees tend to become an obstruction to new growth, fires act as a remedy of sorts, allowing the forest to replenish itself. Call it creative destruction. Nature, however, like its almost infinite creations, isn't perfect, and so one must cope with, so to speak, collateral damage, where fires not only destroy old plant life, but a lot of old (and not so old) animal life as well.

Recently I was pondering the many ways in which mankind has seemed, the operative word being seemed, to skirt naturally occurring corrective processes, and what the consequences are likely to be. The short answer is there are far too many examples outside my understanding to answer my own question. However, an educated guess tells me that if the premise that imbalances in nature, and for that matter, outside of nature, are destined to be corrected, is rock solid, then every sea wall ever built is a goner, perhaps spectacularly so, as in the case of New Orleans in the aftermath of Hurricanes Katrina and Rita. In the realm of economics, a man made phenomenon that intersects with nature, as everything man made ultimately does, it seems apparent to this observer that the powers that be have successfully avoided natural corrective processes in markets through the seemingly endless creation of debt.

Imagine, if you will, a giant, water tank located right next to an enormous forest. The water tank not only has a vast, apparently inexhaustible supply of water, but an elaborate and far reaching sprinkler system with which to douse the forest should even the mere hint of a fire arise. Of course it's all a nonsense, since outside of sunlight, which majestic as it is, is itself not eternal, there can be no inexhaustible source of water. The terrifying upshot is that at some point, who knows when, all the old growth that has been propped up by the elaborate water tower system is going to go up in smoke, almost certainly with more collateral damage than would have been the case had the system been allowed to naturally restore itself. So, while playing with matches, as per Smokey the Bear's warning, is a no no, a bigger no no might be not allowing any conflagration at all.

Friday, May 25, 2007

Bye Bye U.S. Republic

As we enter the Memorial Day weekend, I'd like to strongly suggest folks pick up a copy of Chalmers Johnson's, "Nemesis: The Last Days of The American Republic." If, for some reason, you think purchasing the aforesaid treatise simply isn't in your plans, perhaps you will consider acquiring the June 14th edition of the New York Review of Books instead. In Nemesis, Mr. Johnson makes striking comparisons between the present geo-political incarnation of the U.S. empire and that of Great Britian and Rome at their respective imperial zeniths. His comparisons are compelling, and though they represent the better part of the foundation for his argument, they are by no means all he has to offer by way of evidence to buttress his thesis that the American Republic is, in fact, in terminal decline.

For those who wish to see, none too veiled signs abound to indicate that the United States has indeed ceased to function as anything but a facsimile of a Republic. Indeed, evidence can be found in more pedestrian realms than those where the conduct of U.S. Foreign policy claims center stage. Por ejemplo, the realm of government statistics, particularly that area that pertains to the general economy, is a marvelously fertile field in which to locate appalling signs of rot. As some great sage once observed about the waging of war, "The truth is always the first casualty." Apparently this is also the case with respect to the official calculation and reportage of economic statistics in a decrepit Republic. Here in what was once proudly referred to as Freedom's Land, official tabulations of employment, consumer and producer price levels, general economic growth, and productivity, home sales, home prices, commodity prices, and on and on and on, are buried beneath moutains of statistical piffle such as hedonic price adjustments, seasonal adjustments, Birth-Death models, and many other metrics that seem designed to do nothing so much as make the U.S. turd blossom economy appear to look, act, and smell like a rose blossom.

The whole process has become such a sham that when official numbers are released, markets often behave as if there was no news released at all. Such was the case earlier this week when the latest real estate sales asserted that home sales had risen 16% percent last month. Even the most casual observer of the ongoing housing debacle could immediately see that such numbers were more reminiscent of the product of a boiler room operation than, say, the United States Commerce Department. As such, the stock market greeted the news with a severe across the board markdown of real estate investments. Such is day to day life in a Republic whose days remaining as a Republic are numbered.

Wednesday, May 23, 2007

The NBA?

Yes, the National Basketball Association, the nation's oldest professional basketball league, the one that used to proudly air commercials featuring various preening actor fops blurting, "I love this game?" The very same NBA that is in the midst of its playoffs, and a mere week away from the championship round. Well, as fate would have it, at roughly the same time the aforementioned giddy commercials were first being aired, the league was at the apex of its popularity. Alas, those halcyon days are gone, as most folks, even those who still watch NBA games with some regularity, don't really love it. Old habits are like that, hard to get rid of even when the pleasure principle that once inspired them is as withered as the skin on a month old mango.

So, while the league, as it likes to refer to itself, still rakes in money hand over fist, what with all their clever merchandising schemes and such, the NBA's salad days, like those of the once holy NBA trinity, Magic, MJ, and Bird, are long gone. I say this as one who once loved watching NBA games. In fact, for all my youth, and into early middle age, I was interested in the goings on of the NBA. But gradually, for a variety of reasons such as a degraded style of play, a certain punitive top down administrative rigidity such that players are treated as chattel, precious and overpaid chattel to be sure, but still chattel, I have mostly lost interest. There is also a sense that like the larger culture in which the NBA inhabits, it too, like so many far more important institutions, has become a bloated and not so faintly corrupt entity that might well serve society better were it dismantled, re-thought, and then perhaps, just perhaps, rebuilt in a vastly different manner.

Perhaps I wouldn't feel as strongly as I do that the world would survive nicely without the present day incarnation of the NBA had I not witnessed the aftermath of one of the most mind numbing featured events of each NBA season. I am speaking of the NBA's "draft lottery", where the five worst NBA teams are given the chance, the operative word being chance, to have first dibs on the collegiate rank's best prospect. That's right, the NBA doesn't, as in every other sports league, just automatically award the team with the worst record the first draft pick. On no, instead, in their infinite wisdom, the NBA has a hopper into which go the highest number of ping pong balls sporting the logo of the franchise with the worst record, thereby guaranteeing that the team with the absolute worst record not only has a chance- a 75% chance apparently- of not getting the top pick, but of not even coming close to obtaining the top pick. Smart! And indeed, on more occassions than any egg head statistician is sure to deem remotely possible, the worst team, as per the NBA's dunderheaded system, has been screwed out of the top pick. Such was the case again last night, as the poor, hapless, Memphis Grizzlies-formerly of Vancouver- thus explaining such a senseless name for a team from Memphis, wound up with the fourth pick. The team with the second worst record, the Boston Celtics, a once wildly successful franchise, but now perhaps the most unfortunate in all of sport, wound up in the fifth and last, nay, worst position. To a once very interested party such as I, never has the phrase, "NBA action, it's fantastic", seemed more ruefully ironic.

Saturday, May 19, 2007

We've Been Had...Again!

More and more it appears that citizens who voted for Democrats in the last mid-term election hoping that a congressional overhaul would usher in a new mode of federal governance are seeing their hopes dashed unceremoniously. As a jaded, er, wizened observer of the machinations of politicians of all stripes, I must observe that with respect to dashed hopes, the handwriting was on the wall pretty much from the get go when the newly installed speaker, Nancy Pelosi, went out of her way immediately after the election to proclaim that impeachment of President Bush was off the table. Some observers surmised that perhaps she was just talking nice for appearances sake. Alas, on that score, the California congresswoman seems to have meant what she said, and more’s the pity, since less than half a year after the big Democratic victory, not only does the Chief Executive’s hold on his office remain unthreatened, but so do most of his policies and initiatives.

A close examination of the legislation connected to the war in Iraq reveals the thinnest of gruels where prospective troop withdrawal is concerned. In fact, rather the opposite has transpired as the Democrats, despite some grumbling, have gone along with the idiotic “troop surge”. But that’s just the beginning of their weak acquiescence to the nasty, if not insane, status quo. A quick examination of the latest trade agreement, crafted just a tad too easily between Democrats and Republicans, evidences another sellout as the tough pro-labor language in the agreement only applies to those two trading behemoths, Panama and Peru, to which I say, piss poor.

Friday, May 18, 2007

Amnesty, Yea or Nay?

It's a new and very happy day in the U.S.A for the illegal immigrant cohort, a group that is estimated to number in the neighborhood of twelve million. Here in the Commonwealth of Massachusetts there are thought to be nearly two hundred thousand "illegals", several of whom, I must admit, I have personally employed. Frankly, I'm not sure if the official estimates can even be remotely trusted; I certainly don't trust official economic statistics, and with ample reason. In any event, everyone can agree that the numbers are substantial and meaningful. But that is where general agreement ends on this very contentious issue, as almost no group of any size can agree on the adviseability of instituting what is essentially an amnesty program.

Some critics assert that the new, pending legislation is nothing so much as a cop-out, and it is hard to argue that the authorities, who would prefer to craft a new law rather than enforce the onerous old one, are engaged in a massive dodge of responsibility. Another valid criticism, and one I find especially compelling, is that the new legislation is a bonanza for large, and small business interests, rammed through by the best Congress corporate money can buy. After all, if globalization has mostly been about exporting jobs where labor was plentiful, and most importantly, cheap, this is nothing more than an inversion of that process, where cheap and marginally skilled labor is, if not imported, clearly accomodated. So for the price of five thousand depreciated greenbacks, illegal immigrants who can prove they have resided in Freedom's Land prior to the beginnning of the year, can place themselves on the track for citizenship. For my own part, as the new legislation goes to the House for possible final approval, the one question I will continue to ask myself is, who benefits?

Thursday, May 17, 2007

Condi's Cold War Denial

There's an old adage attributed to Otto Von Bismarck, "Never believe a rumor until it has been officially denied." Following on that wisdom, as per Condoleeza Rice's public statement that despite a few niggling differences, relations between the erstwhile implacable enemies is fine, one can now assert that the U.S. is, in fact, in the midst of a revived Cold War with Vladimir Putin's Russia.

Strictly speaking, to say that we aren't in a new era of hostile relations with Russia is balderdash, as the evidence shows the two nations are on the opposite side of just about every major issue one can name. What's more worrying, for those inclined to be worried by such things, is the reality that Russian hostility is but one branch on a tree with Chinese, Venezuelan, and Iranian appendages. These nations are easily as hostile to the U.S. as Russia. What's more, according to Gary Dorsch, 77% of the world's 1.15 trillion barrels of oil reserves now reside in the hands of government owned oil companies in nations like the aforementioned.

As this data suggests, at least to me, our new Cold War, which is neither all that cold nor neccessarily centered on one primary adversary whose word for no is nyet, isn't a conflict that has much to do with ideology, but rather, resources, primarily oil and mineral wealth. So, thanks, Condi, for perhaps unwittingly pulling the mask off our crummy relations with the Russian bear, and giving us a big fat warning to buckle up in preparation for a rough ride.

Tuesday, May 15, 2007

Inflation or Deflation?

It is accepted wisdom that in a fiat currency system all roads lead to inflation. I, myself, have trumpeted that view many times on other forums. If we operate on the premise that the trump card where the U.S. economic system is concerned resides in the dollar's reserve currency status, particularly with respect to the petro-dollar trade, then hyper-inflation presents a most dangerous course to take by the monetary authorities. Why?

The U.S. is able to engage in its financial profligacy, to owe the world as much as it does, because the world trades the essentials, particularly petroleum, in dollars. Remove that prop, and a hyper-inflation most assuredly would, and the U.S. economy resembles an economic banana republic almost overnight. The fact is the world is trying to get out from under the petro-dollar regime and there really is nothing that can be done other than to forestall the day of reckoning.

Clearly the dollar's demise is being managed, as in the manner of a terminal cancer patient, in a slow motion sort of way. Let me amend that, it appears as if the dollar's slow death is being managed. However, the look of an orderly decline may be just a mirage, or a temporary condition that will give way to a runaway debacle at some unspecified point in the not too distant future. I am keeping my eye on multi-decade support in the dollar that is being tested for either the fifth or sixth time, right now. In my view, all bets are off as to how ugly things will get when, there is no IF as far as I can tell, the multi-decade support fails.

The deflation argument has more going for it than one might be tempted to think from the standpoint that Peak Oil, Peak Resources, in general, are ultimately massively deflationary since they in essence create enormous and irrevocable demand destruction. As some of you may know, demand destruction and Peak Oil/Resources go hand in hand. If folks like Matt Simmons of "Twilight in The Desert" are right, we should expect unhealthy doses of inflation first, (sound familiar?) followed by deflationary collapse.

Of course sans peak everything, the advent of the prosaic phenomenon known as pushing on a string, where available credit/debt is not tapped because those who would tap it are tapped out, may wind up providing the context for the onset of a runaway deflation. The ongoing housing debacle comes to mind as a state of affairs that will have a great deal of influence on the U.S. consumer's wherewithal going forward; And that in turn will have much to say about which outcome we are faced with, inflation or deflation. Make no mistake, a defeated consumer means a defeated economy.

Monday, May 14, 2007

Carbon (Dis)credit

It is the middle of the merry month of May, and the ongoing lethal game of Global Warming denial continues unabated by the U.S. government. The latest evidence of the U.S. government's fierce recalcitrance towards the realities of Global Warming comes in the form of U.S. attempts to weaken the language of a planned G-8 climate change declaration. In brief, the G-8 declaration includes "a pledge to limit the global temperature rise this century to 3.6 degrees Fahrenheit, as well as an agreement to reduce worldwide greenhouse gas emissions to 50 percent below 1990 levels by 2050", and it is this language that the U.S. seeks to eliminate.

And while this smacks of another embarrassing, if not disgraceful obstruction by the U.S. government of international attempts to deal with the effects of Global Warming, what may be at least as troubling is the gradual acceptance and proliferation of a mode of dealing with Global Warming known as the carbon credit, or emissions trading. Carbon credits are, in short, a tradable permit scheme that attaches a monetary value to greenhouse gas emissions. The ownership of, for example, one carbon credit, confers the right to emit one ton of carbon dioxide. With the advent of the carbon credit, we have a hideous real world example of capitalism at its most perverse, as a fixed dollar value is placed on the cost of polluting the air.

As George Ure of observes, the carbon credit amounts to the following:

"Upon discovering your house is on fire, instead of calling the fire department or grabbing a fire extinguisher, you instead opt to set up a fund trading pool with your neighbors and begin trading futures on your house. Your thinking is that at some point, if an investor in your housing pool is really interested in securing their position, they [not you ] will call the fire department or actually do something."

In our case, the burning house in the above scenario, is, of course, the very air we breath, and the carbon credit trading scheme that is created to address a crucial factor associated with the causes of Global Warming, simply takes on a life of its own as traders discover there is a profit to be made buying and selling not just pork bellies, precious metals, t-bond futures, grains and oil, but what amounts to oxygen futures. Score one for Capitalism, and zero for the environment.

Sunday, May 13, 2007

Good Cop, Bad Cop

The situation between the U.S. and Iran is one that seemingly won’t fade away, however devoutly some of us wish it would. And while it is arguable which nation, Iran or the U.S., stokes the flames of the present low intensity contretemps the most, (I would argue the U.S does by a wide margin for several simple, but not simplistic reasons. First, the U.S. is clearly on a mission to re-assert control of the region’s energy supplies and Iran is a key player displaying an alarming penchant for defying U.S. aims in the region. Second, the U.S. has, despite Iran’s growing ties to Russia and China, far more wherewithal, geo-politically, militarily, and otherwise, to be disruptive.) it is clear that a near term resolution of U.S. and Iranian differences is not in the offing.

In fact, the International Herald Tribune reports that Darth, er, Dick Cheney has recently issued another warning to the Iranians. And while the substance of the rotund Vice President’s latest adumbration was nothing new, the location used to deliver his address, the aircraft carrier, John C. Stennis, located a mere 250 miles offshore from Iran in the Persian Gulf, was unique in its menacing aspect.

Interestingly, as the International Herald Tribune reports, “It also came just a week after Secretary of State Condoleezza Rice talked briefly and inconclusively with Iran's foreign minister, a step toward re-engagement with Iran that some in the administration have opposed.”

Are we in the land of good cop, bad cop, with respect to the present U.S. posture towards Iran, and if so, what, if anything, can be gleaned by this new strategy? Is this indeed even part of a new, well thought out approach? After all, we are talking about arguably the most bungling administration in U.S. history, so it is more than reasonable, it is prudent, to wonder if this is merely the sign of further disarray and confusion on the part of the Bush administration as it oscillates between different approaches at bringing Iran to heel. We will have to wait and see, but given the miserable track record of the Bush administration, it is very difficult to give the benefit of the doubt to the notion that the apparent turn towards good cop, bad cop is more by design than not.

Saturday, May 12, 2007

Hideous Neighbors.

We've all had them, no doubt some of us are them. I well recall Mrs. Thacker who lived at the end of my street when I was growing up in the West End of Richmond, Va. Mrs.Thacker was, to put it bluntly, grotesque, a withered, old, neighborhood scold who systematically pilfered ours and other neighbor's garbage desperately seeking prurient material such as...gasp... Playboy Magazine, the mere existence of which she could then use to justify her predisposition to be scandalized by her obviously morally degenerate neighbors. Deeply reminiscent in her demeanor and raison d'etre to Mrs. Gulch/The Wicked Witch of The West, Mrs. Thacker appeared to live no life to speak of, except one where she could, with a sort of grimly lunatic determination, project onto we poor neighbors all manner of awfulness. Her reward for her warm and winning presence was to one day have all the neighborhood's children present her with a chocolate cake laced with ex-lax.

Lamentably, I have, of late, been reminded of the aforementioned meddlesome monster by some of my present day neighbors who have, themselves, fatally meddled in my and my wife's plans to build an addition at the back of our very small home. In fact, our home is the smallest on the street by a wide margin and sits on a very peculiarly shaped lot, a concave plot that vanishes to a two foot wide point some fifty feet or so from the back of the house. And while it was absolutely the case that we required a variance to build, it was also equally the case that had our abutting neighbors not objected as they did, the zoning board would have granted us the needed variance. The objections from all but one source were specious, claims of loss of sunlight and view were systematically shown to be without merit by me and the architect, but as we were dealing with a wholly unreasonable group on a holy mission to save the neighborhood from certain ruin, (this despite the fact that the project was deemed an aesthetic improvement on the existing house and a boon to the neighborhood by the historical commission) the zoning board, in fear of a lawsuit, refused our petition. I know this to be an accurate account because I was told this by a city employee who works with the zoning board.

Having lived in the neighborhood for many years, I knew several of my closest neighbors to be less than friendly, at times haughty, and in the case of one, a bit of a bully and busy body. However, I did not realize the degree of pettiness and blatant hypocrisy (one abutter, who has made several external improvements to her own home, actually tried to block the project on the basis of construction noise) that would emerge in response to our attempt to put on an addition. I imagine there are likely several morals to this story, one of which must be, when contemplating a building project that requires historical commission and/or zoning board approval, know they neighbors and know them well.

Friday, May 11, 2007

Whither Faith In The Feds.

For what it is worth, a recent major poll indicates that Americans are at least as disenchanted with Congress as they are with the President. Had I been polled, I would have expressed a similar sentiment, since Congress seems to display nothing so much as a peculiar and unsavory mixture of mendacity, fecklessness, sheer lunacy, and, of course, corruption.

And as is it so happens, Congress is the arena supplying much of this election cycle’s Presidential, er, kindling. I imagine you know most of the names, and I will be anxious to know your thoughts on the lineup. I do use the term, lineup, advisedly. Mitt Romney, a powerful candidate, but not of the legislative cohort, comes immediately to mind as one I will avoid with prejudice. Perhaps this is because he was once governor of the Commonwealth of Massachusetts, my home, and I know Mr. Romney to be a person who possesses a surfeit of ambition, but little else that should inspire the electorate, unless, of course, knowledge that the former governor's favorite novel, some woeful tome from the oeuvre of L. Ron Hubbard, yes, that L. Ron Hubbard, is appealing.

But my brief discussion of one candidate aside, it is a serious matter that we Americans are deeply disenchanted with both the Legislative and Executive branches of our government, and I maintain the frightfully obvious position that it augurs poorly for social stability going forward. I will also argue, perhaps less obviously, that a broad distaste for the political class inside the Beltway is indirect evidence that the nation's economy, despite Wall Street’s incessant happy talk, is in rapidly deteriorating shape.

The ongoing nationwide housing debacle, the damage from which is systematically discounted by the MSM, has far from run its course, or exacted its full pound of flesh from the general economy. In the meantime, for other reasons, the average American is losing purchasing power at an alarming rate as the actual rate of inflation runs far in excess of official government numbers. I suspect that John Q. Public is increasingly aware of the chicanery that would have him believe falsely that the contents of his wallet are not under attack. And while the hideous bungling of our criminal escapade in Iraq is almost certainly a more substantial tributary to the national mood of discontent with Federal officialdom, the corrosive effect of embedded economic mendacity, whether it is known consciously or not, should not be underestimated.