You can understand Economics

14 September 2009

CoLLapse hits the mainstream media



Wanted to share with you my discovery of one of the films shown at the Toronto Film Festival, Michael Ruppert's CoLLapse, which is provocative enough to have hit the mainstream media.

http://www.collapsemovie.com is sometimes hard to reach which may be technical, or the site may be swamped.

Here's what Ruppert's From the Wilderness Peak Oil Blog says:

CoLLapse is a film about me, my life, and the message I have come to deliver after more than thirty years on a very long path. Many of you who will read this have walked some distance with me and with each other along that path. I do not have to remind you that at this moment in human history, this film may be the last, best shot our movement has to break through into the mainstream. This Fall and Winter look to be very trying times for our species.

12 September 2009

The Destruction of the US Empire

What's significant is that someone besides a Vermont Secessionist wingnut is calling the Empire, the Empire.

Found this article today morning on one of the financial sites that I skim, the Daily Reckoning. They're selling something (not sure what) as is everybody else, but they have a good grasp.

I like Bill Bonner because he goes for the Empire in a vulnerable place, finance. Sorry, Vermonters, but solar panels, hybrids, illusions of self-sufficiency, off-grid-ness and stopping global warming (always the paper tiger) are not going to dump the Empire off our backs.

The Destruction of the US Empire

by Bill Bonner

09/11/09 London, England

Edward Gibbon described the happiest age of mankind as the period of the "five good emperors" between AD98 and AD180, when Marcus Aurelius died.

What was America's Golden Age?

It is much too soon to write the history of America's decline and fall. Still, that doesn't stop us from guessing.

We would name the period between the fall of the Berlin Wall and the fall of Lehman Bros - a period of only 19 years - as the peak of US power and wealth. Of course, Americans were dreaming during those years. The dreams were the usual imperial sort - that the US Empire was such a benefit to the rest of the world that the foreigners would support it indefinitely. Rome didn't take any chances; it forced its conquered nations to render tribute...slaves...gold...and wheat. The American empire depended on trade...and the dollar. As long as the United States had a commercial advantage, the empire was profitable. But as the 20th century aged, so did the US economy. Its competitors - notably Germany and Japan - had a big advantage. They had been bombed out in the '40s. They could build anew. America's trade advantage slipped away...and then its trade balance went negative in the mid- '80s. It has been getting more negative almost every year.

The trade losses shrank after the fall of the House of Lehman. Americans cut back. But today we get news that the trade deficit has just grown more than in any month in the last 10 years. Have Americans suddenly become big spenders again? Probably not. But we'll have to wait for another explanation; we don't have one.

No account of America's glory years - roughly the period between the reign of George Bush I and that of his son, George Bush II - would be complete without mention of the events that happened on this day eight years ago. A small group of terrorists pulled off an amazing coup - bringing down two of America's iconic buildings, right in the heart of New York City...and on primetime TV! Historians might be tempted to use this event as a milestone, marking the end of the period of maximum happiness in the United States of America. We caution against it. It was only later that it became apparent that the US reaction to the terrorist incident was suicidal. The nation desperately needed to bring its ambitions back in line with its means. It needed to save and invest in new factories and new infrastructure. Instead, it wasted trillions fighting phantoms and nobodies. But as far as anyone knew, US influence, prestige and power remained near its zenith throughout the wars on terror and Iraq.

The fall of Lehman changed things. Then it was obvious that not only was America vulnerable, she was an enemy to herself. She had diddle- daddled during the glory years, dawdling with the lion cubs that would grow up and maul her. Now, in the period we are living through, she attempts to go back to sleep and rerun her balmy dreams. That is what "recovery" is all about - a return to the land of nod and nonsense...in which people think they can actually become wealthier by squandering money they don't have on things they don't need.

Fortunately, as near as we can tell, most private citizens are now awake. A report at the beginning of this week showed that they repaid debt at a rate four times faster than economists projected. Savings rates are rising. Spending is falling. People are doing what they should do - they're cutting back.

But the feds continue their efforts to sabotage the correction and destroy the empire. They have already blown-up the budget - with $9 trillion in deficits expected over the next 10 years. Now, they're working on the dollar.

Yesterday, the dollar fell to $1.45 per euro. Gold remained just below the $1,000 an ounce mark. And the Dow rose 80 points.

Stock market investors seem to be looking forward to another big bull market. But with the economy deteriorating, they are probably just dreaming, too. Median household income fell 3.6% over the last 12 months. Of course, that's just what you'd expect in a correction. But it's not what the feds were hoping for. So, they're pulling out all the stops to try to turn it around. Most important, they're pulling out the stop that keeps the dollar from rolling down the hill.

The empire sinks into the mud. Yes, this is the downhill period…the slide into corruption…the period in which Juvenal complained that Romans were only interested in ‘bread and circuses.’

When you are on the board of a decent corporation, for example, if you have a direct financial interest in a matter under consideration you’re expected to ‘declare an interest’ and absent yourself from the vote. But in a mature democracy, the most self-interested citizens are those most likely to vote. Currently, about 20 million people work for government. About 45 million receive Social Security benefits. About 34 million depend on food stamps.

(People who count on the government to feed them, warned Jefferson, “will soon want bread.” That doesn’t seem to worry many people. But at least the state of Maryland has an Orwellian sense of humor about it. People who depend on government for food are given “Independence” cards.)

That’s 99 million people who have a direct interest in expanding government outlays…with some overlap, of course. And it doesn’t mean that every person receiving a Social Security check is going to back the feds. But it doesn’t count all the millions more who get subsidies, bailouts, welfare payments (often masquerading as tax credits), government contracts, and so forth, either.

Well, how many people does it take to win a national election? Obama won with 63 million votes.

The dollar’s weakness hasn’t been missed by it biggest foreign holder – China.

Reported earlier this week in the Telegraph:

“‘We hope there will be a change in monetary policy as soon as they have positive growth again,’ said Cheng Siwei…talking about America.

“‘If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies,’ he said.

“China’s reserves are more than – $2 trillion, the world’s largest.

“Mr. Siwei continued: ‘Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets,’ he added.”

Then, two days ago, in came a report that China is going to issue bonds of its own – in yuan.

This news is a shot across the bow of America’s imperial currency. It signals that China is moving into position to eventually challenge the greenback. Investors will have another alternative to the dollar…another bond issued by another government and backed by another economy…maybe one that is on the way up, rather than on the way down.

Meanwhile, Americans grow poorer. Bloomberg reports:

“‘The decline in incomes we’re seeing certainly has implications for consumer spending, particularly post-housing bubble when families can’t tap into home equity through loans,’ said Heather Boushey, a senior economist at the Center for American Progress, a research organization headed by John Podesta, a leader of the Obama administration transition team.

The poverty rate is likely to keep rising through 2012, even after the recession ends, adding to pressure on the Obama administration to enact a second economic stimulus package, said Isabel Sawhill, a senior fellow at the Brookings Institution in Washington, a policy research group.

“‘We will likely have not only a jobless recovery but also a poverty-ridden recovery,’ Sawhill said. ‘The stimulus money is going to go away long before the poverty rate peaks.’”

31 August 2009

Masonry Heaters, the Anti-Pellet



The American wood stove, of whatever breed, is a terror! It requires more attention than a baby. It has to be fed every little while, it has to be watched all the time; and for all the reward you are roasted half your time and frozen the other half... and when your wood bill comes in you think you have been supporting a volcano. -Mark Twain, 1891, Some National Stupidities

My neighbour succumbed to trend and bought a pellet stove; a bit of cheap technology, another collection of moving parts to make our lives better and foster some illusion of self-sufficiency. He then discovered that it was grid-dependent; each time the power went off, carbon monoxide alarm sounded --- In a pellet stove CO backs up into the house when the fan does not run.

To make the poison gas go away, he had to buy a generator as well. Now any time of the night when the electricity fails, my neighbour is wheeling that generator out, slopping gasoline into it and pulling the starter cord.

The pellets are trucked in from Georgia. The single startup firm in Vermont which manufactures pellets for the Acorn Coop, is utterly dependent on chemicals which are imported from China. We decided to go a different route.

The Kachelofen, (Masonry Heater) with its 90% combustion efficiency, no moving parts, as well as the potential to last for hundreds of years given competent care, became popular in Europe centuries ago, as wood resources became scarce and expensive. Is this at all familiar to you, energy turning from a buyer's to a seller's market?

It may seem that we have infinite wood resources here in Vermont. Boutique wood: cut, split, delivered at $250 the cord. Yet, about a century ago, Vermont had been virtually clear-cut. Resource extraction (tax-free) had pushed subsistence to the most marginal lands. We are well on our way back there again, seeing arguments about returning Vermont's marginal land to food production, if we are to be self-sufficient...

But, do we have Kachelofens in Vermont? Almost not. Twain wrote, It is certainly strange that useful customs and devises do not spread from country to country with more facility and promptness than they do. Henry George also wrote that Free trade consists simply in letting people buy and sell as they want to buy and sell... blockading squadrons are a means whereby nations seek to prevent their enemies from trading; protective tariffs are a means whereby nations attempt to prevent their own people from trading. What protection teaches us is to do to ourselves in time of peace what enemies seek to do to us in time of war.

Self-sufficiency is a myth; a free Vermont with access to global trade is sustainable. We could also manufacture much better stoves than the EPA would have allowed us, as they do in the EU today...

A bit more from Mark Twain about the Kachelofen: To the uninstructed stranger it promises nothing. It has a little bit of a door...which seems foolishly out of proportion to the rest of the edifice. Small-sized fuel is used, and marvelously little of that. The process of firing is quick and simple. At half past seven on a cold morning the servant brings a small basketfull of slender pine sticks and puts half of these in, lights them with a match, and closes the door. They burn out in ten or twelve minutes. He then puts in the rest and closes the door...the work is done.

All day long and into the night all parts of the room will be delightfully warm and comfortable... the cost is next to nothing; the heat produced is the same all day, instead of too hot and too cold by turns...

26 August 2009

Maybe Vermont Should Have Billboards




If we did have billboards, (aside from Fairpoint billboards which seem to be exempt from Vermont's anti-billboard legislation) I could invite my old friend Ron English to come up to the Green Mountains and 'improve' them.

Not that Vermonters need any GM billboards as an impetus to go and trade their dinosaurs for a wasteful Pickup 'Truck' SUV that will never pick anything up, not ever. We've already got the Obama/Sanders 'Handouts for Hummers' programme for that incentive... oops I meant 'Cash for Clunkers'.



But the usually environmental, organic-eating, hybrid or suburbu-driving Vermonters might question their complacency if ol' Ron came up to the Green mountains and did one of his famous billboards. Perhaps shocking the liberal Left out of blind faith in the Obama Bailout:




You can read more about the inextinguishable Ron English here. Here are some recent pictures of Ron's work. The historical classics are here, among them CAMEL JR:

24 August 2009

Legislative Changes that We Need to Survive


The Case for Local Wheat and Bread in Vermont by Erik Andrus (Good Companion Bakery) is extraordinarily well-written; nay, timeless. It shows what we need to do if we wish to continue to eat in Vermont, yet very little of it can happen within the current legislative and tax milieu. Secession or no secession.

Somalia have less energy than we do, in Vermont we'll have less energy soon and lots of walking too... are they better off? In Somalia, most of the land is owned by a few families that keep it out of production, preferring to skim the cream and speculate on the rest.

In Vermont we have an ass-backwards tax system that encourages speculation, by taxing us on capital improvements to the land; e.g. improving fertility through means natural or petrochemical, rather than taxing on the unimproved value, a value which is created by the community. That value is a common resource; our Commons.

Let me elaborate. Fertility added to the soil (maintained through constant renewal) is Capital. It is not the Land itself, which is part of Vermont's Commons. The Towns and the State Government currently act as a parasite on the labour of Vermonters and especially on the farmer, who, acting as capitalist, improves the land.

The Towns serve to represent absentee landowners, who manifestly pay little to no tax on the speculative value of their landholdings. This windfall makes the value go up, why would I sell it to you today for $100,000 if it may be worth $150,000 next year, and also pay no tax if I hold it out of use? The end result is development in sprawl --- and the destruction of good agricultural land. You see this landscape today, all over Vermont. Suburbia is made though the driver of land speculation, which should rightfully be discouraged through taxation, but is today not only encouraged but highly subsidised by our 'representatives'.

Homesteaders, on the other hand, are taxed highly. In the town where I live, residents have to pay a higher property tax rate than nonresidents... for no municipal services or amenities, not so much as a crosswalk, a bike rack, a park & ride, or a school zone. Homesteaders get one day of rant per year at Town Meeting, as a result of which nothing changes.

Among Vermont's absentee landowners are IBM, Middlebury College, Vermont Yankee, various logging concerns and springwater bottling companies... you get the picture. Here's how the game works: Draw off the natural resources, get rich and pay nothing (in fact Montpelier will give you incentives and subsidies). Try to make an honest living, pay high taxes --- and stay poor. Labour and Capital are in the same boat, and keep getting played off against each other by the Left. It is the tragic history of an ever-poor state, not dissimilar to Ireland in the 19th Century or Somalia today.

It is imperative that the Towns change the property tax structure to recapture the lost revenue of the Commons. The destruction of speculative land values is already being accomplished by the land bust of this past year. Then, the rest of what Mr. Andrus writes can easily fall into place. It's that or starvation and mass migrations.

19 August 2009

Everyone Tries to Walk Away with a Piece




Guns and Butter
is an excellent radio interview with Dmitry Orlov: 'Orlov's repeated travels to Russia throughout the early nineties allowed him to observe the aftermath of the Soviet collapse first-hand. Being both a Russian and an American, Dmitry was able to appreciate both the differences and the similarities between the two superpowers. Eventually he came to the conclusion that the United States is going the way of the Soviet Union. His emphasis is on all the things that can still be made to work, and he advocates simply ignoring all that will fall by the wayside.'

Usually I try to ignore what's happening back in the States, as it's too overwhelming. Try to focus on Vermont. Too much on the Web focuses on the 'We', as if there's any real nation of 'We'. There ain't, though few will see that the emperor has no clothes until imports dry up. Most're assuming that the US will last forever, just as folks in the Soviet Union assumed. Yeah. Virtually overnight, most of the loyal republics elected to go their seperate ways.

When I say 'We' I mean Vermont. A viable nation; perhaps together with Maine and the Maritimes, perhaps not. Economically, we're on our own anyway.

At some point the US Empire will no longer be able to borrow from overseas. The USD will have lost its status as the world's reserve currency. The US Empire, regardless of the new administration, are aligning with the last days of the USSR, with its record trade and fiscal deficit, military expenditure and overreach, and currency failure.

The new administration in Washington are staking everything on re-starting economic growth at ever-increasing speculative rates. At some point, people are going to realise, 'this cannot go on'. Do you believe that it can go on?

Orlov's blog is at cluborlov.blogspot.com

17 August 2009

Scott Nearing, Vermont's Founding Father?


Your government is no longer mine - Scott Nearing, The Making of a Radical: A Political Autobiography [Harborside, Maine: Social Science Institute, 1972, p. 152]

We maintain that a couple, of any age ... with a minimum of health, intelligence and capital, can adapt themselves to country living, learn its crafts, overcome its difficulties, and build up a life pattern rich in simple values and productive of personal and social good. - Scott & Helen Nearing, The Good Life'.


Recently, Thomas Naylor was kind enough to invite me to a lecture at Middlebury College about Scott Nearing, an anti-war radical who was blacklisted from academia for, among other things, his unpopular stance against child labour (The Solution of the Child Labor Problem).

Nearing became a Vermont Homesteader in the mid-Twentieth Century and successfully set up a large scale maple sugaring operation in Winhall, Vermont. He and his wife Helen wrote a book about the experience called, Living the Good Life: How to Live Simply and Sanely in a Troubled World. The Nearings also travelled the world to teach about (among other things) the importance of the rebuilding soil. This was at a time when almost nobody questioned the rise of agribusiness and factory farming, despite the Dust Bowl.

Did Nearing's life and work change the course of Vermont history? He certainly attracted more than his share of interesting people to Vermont, reversing the brain-drain. Yet Nearing gets scant mention in the Vermont histories that I've read.

Nearing's Biographer Saltmarsh wrote, 'Nearing moved through a series of secessions — from Christianity, from politics, and finally from American society itself. He voyaged to the wilderness as if on a pilgrimage to a sacred place. His experience, along with a deeper understanding of American culture, led to the inescapable consciousness that capitalist cultural dominance was too strong to eliminate and therefore too powerful to control or mold...'

In 1945, Nearing wrote to Truman, who had just destroyed two cities in Japan with atomic bombs, 'Your government is no longer mine'. Is Scott Nearing the spiritual 'Founding Father' of the Second Vermont Republic?

Regardless of your opinion, this is essential reading for anyone interested in the evolution of the Vermont independence movement... whether you're working toward secession or just feel that it's important to build the soil and sequester carbon. The Good Life is available from GoodLife.org or from Amazon. A good short biography may alse be found on the web here.