Going Going. . . .

      The feigned cluelessness in Paul Krugman's Sunday New York Times column ("The Face-Slap Theory") about the meltdown in finance is a good index of the cringing mendacity now emanating from those in service to the centers of power. I doubt an editor, or the publisher, Mr. Sulzberger, had to whisper in his ear to soft-pedal the situation. I don't even believe anything like his job depends on it. Krugman's glossing-over the truth is just social cowardice. He doesn't want to be called out dissing fellow members of his club.

      Krugman avers to the Federal Reserve's two previous big efforts since August to bail out the insolvent banks, insurers, and hedge funds with cheap loans as "slaps in the faces" of these wobbling corporations -- "yo, wake the fuck up!" -- as if narcolepsy was their only problem. (Try that with a wino on the sidewalk outside the Port Authority bus terminal and see if he immediately signs up for rehab and a high school equivalency program.) Krugman calls the club's latest plan -- for the Fed to just suck up their impaired and worthless collateral in exchange for more cheap loans -- as a "third slap," saying, with all the panache of a midwestern Rotary Club secretary, that "the third time could be the charm." Had the monkeys already flown out of his butt as he wrote that, I wonder.

     The line in Krugman's column I love best, though is this one: "Last month another market you’ve never heard of, the $300 billion market for auction-rate securities (don’t ask), suffered the equivalent of a bank run." He presumes that his readers go along with his pretense of innocence. We've never heard of the municipal bond market and it's too complicated to explain so "don't ask." Is he writing for the "newspaper of record" or Highlights For Children? Maybe it would be a good thing if readers of The New York Times asked what the fuck was going on in these markets so they could yank their depreciating dollars out and deploy them elsewhere or convert them into something of value.

     Well it was a bad week on the money scene in what is sure to be a worsening year. Paul Krugman and his fellow club members can pretend that the hallucinated finance economy is not really flying to pieces. After all, he / they are trying to avert panic. But, as noted previously in this space, the only thing we have to fear is not fear itself. We have to fear the consequences of actions by a banking leadership that has shown the grossest irresponsibility (and an American public that has been conditioned to expect a steady diet of getting something for nothing).

      The US faces a pretty stark choice right now: it can let the losers take their losses -- both the big institutions who created and traded in fraudulent securities, and all the "little guys" who borrowed too much money trying to get rich quick, or trying to live like the millionaires they see on TV. We can let them go down, and suffer the consequences of their bad choices (and maybe prosecute some of the culpable bankers and corporate executives), OR, in an effort to let these losers off the hook we can wreck the whole machinery of capital by making our medium-of-exchange worthless.

     The people in charge -- both in and out of government -- can't face the losses, so for now they've apparently decided to wreck the currency. The dollar has lost two percent of its value against the Euro just in recent weeks, as cheap loans from the Fed pour into the black hole on Wall Street (never to be seen again). Other soft-pedalers in the media claim that the financial markets have "already priced in" yet another expected .75-point interest rate drop by the Fed this week, but I'm confident that such a move will only accelerate the dollar's vanishing act.

     I'll admit, it's hard to believe what's going on in the American finance sector. But incredulity in the face of a rare catastrophe isn't the same as pretending that it's not happening. A whole flock of black swans is flying in front of the sun. Don't expect to work on your tan this month.

Comments

[IVAN]

David Mathews

The tar sands is a perfect example
of the lack of balls the so called environmental movement has. The development is there to supply your fat asses down south will oil for your easy motoring, fast-food paradise. The fact Canadians see this
boom in Alberta as a godsend not the full and thorough wasting of the Atahabasca watershed as well as destroying boreal forest baffles me. But hey the investment climate is good. Cash in on it now, get while the getting is good.
I have a simple solution that can't be exploited by retard gov't, Wall and Bay St., phony and useless environmentalists, and all others possesed by by greed and the desire to control, BUY LESS SHIT, this would be a direct action to solving many of our problems in direct contrast to the posturing going on now.

By the way I didn't own a car for the last 12 years and have planted 350,000 seedlings, can I have my Carbon credit, please?

Interesting that the plastic bag nazis here, ironically called greener footprints, that are trying to ban plastic shopping bags are distributing made in China bags covered with advertising. Lighter footprint indeed. Would it have been easier to just take the bags out of stores and shoppers would know to bring something to carry their purchases home? I guess thats no good cause someone isn't getting money from it.

[Patrick]

As usual. Shockingly unoriginal solutions abound. "Back to the land" is the same solution proposed by the Luddites. If you know what peak oil is, but you don't know what Technocracy is, than you haven't really done your homework, have you? All of those people using peak oil as a way to promote "going back to the land" are using peak oil to further their own agenda, which is to replace modern life with their fantasy of an ideal nature-oriented life. This is pretty similar to what the Taliban wanted to do - completely eliminate modern life and replace it with an agrarian civilization. This was also the goal of Pol Pot's regime. Millions of people's lives are dependent upon the continued operation of our technology, but that doesn't seem to matter to these "back to nature" types. It doesn't matter how many people have to die in order to fulfill their fantasy. It is not possible to feed as many people as we are now feeding with hand-tool agriculture. It can only be done with machines.

Do a little original thinking for once and investigate Technocracy, a real solution. It is possible to eliminate both climate change and to manage peak oil while vastly improving the lives of all North Americans. Accepting this will mean abandoning the doomer perspective/religion. The only inevitable doom will come from people refusing to investigate the very real and workable solutions to these problems which are already available to us. If we just throw up our hands and declare "we're doomed" than it will become a self-fulfilling prophecy.

[Patrick]

BTW, I'm referring to the organization Technocracy, Inc. Not the generic "Technocracy" which just means rule by skill. M. King Hubbert wrote the primary literature for Technocracy, The Technocracy Study Course. Anyone concerned about peak oil should learn about Technocracy.

[Jason]

I saw a woman leave her home holding her new green cloth shopping bag. Then she got in her car and drove the three blocks to the grocery store. That seems to sum up pretty well what most people's understand as their obligation to "saving the planet". With the new gas tax being introduced in British Columbia, folks in norther BC are complaining that Victoria doesn't understand their situation (nothing new there). "How are they going to get by with higher gas prices and consequently fewer car trips?". Perhaps, these folks are not getting that we're moving to a period similar to the 1850's when the interior of the province was first opened to settlers. The work was hard, the returns few, and the land only supported a small population. This abundance of fossil fuels made life very easy. It created a lifestyle of comparative leisure. Now we're going to start seeing things get harder and harder. Welcome back to reality!

[LaughingAsRomeWasBurningDown]

Patrick, Technocracy Study Course? Sorry, that sounds like a lot of work, and there's dirt to turn and sheet rock to hang. Can you outline in broad terms this Technocatic solution for us?

[Patrick]

That's a bit like asking me to summarize in broad terms human anatomy, or physics. But I'll give it a shot. Basically Technocracy states that for most of human history, a decrease in human labor had a corresponding decrease in production. Every since the wide-spread automation of human labor the reverse has been the case. When a new machine is invented production goes up but human labor involved goes down. Since money is rationed according to work (people must trade their man-hours for money) and the number of man hours decreases with an increase in production; than there is a decrease in purchasing power at the exact same time as there is an increase in production (and therefore a need for more purchasing power). The primary way around this problem has been an ever-increasing amount of debt, which is unsustainable.

Technocracy, headed by Howard Scott, M King Hubbert, and many other prominent minds of the time, proposed the following:

1. Money is replaced with energy accounting. Energy accounting is a bit complex, but actually far simpler than money once understood. First, it would be determined the amount of energy which could be consumed for a two year period, taking into account resource availability, environmental impact, and limitations on people's ability to consume (they can only consume so much in a day, due to the fact that you can only eat so much in a day, wear so many different outfits, travel so far, etc). A two year period is chosen because the longest cycle of production/consumption takes roughly two years, this involving the growing of sugar cane and the consumption of the extracted sugar. Energy credits are then divided evenly among all citizens, one energy credit being equal to one energy unit consumed during that two year period. At the end of the two year period energy credits would be made void and any unspent credits added to the next two year period, so that the number of credits in circulation was always equal to the the number of units of energy available to be used. Energy credits could not be transferred to another person's account or saved. All items would be priced according to the energy used in producing them. A factory would record the total energy it used for the two year period, and divide that by the number of units produced to find the per-unit energy cost. With purchasing power distributed in this way, people would have more energy credits than would be possible for them to spend, even taking into account wasteful spending. Since credits cannot be saved or transferred, it becomes pointless to differentiate in income, so everyone recieves an equal energy allowance every two years.

2. Cities are replaced with urbanates. This one is a lot easier to explain. Urbanates would be compact, self-contained cities that would not require automobiles for transportation. The construction of urbanates would bring down the per capita energy use of people to 5-10% of what it is today, with the resulting energy savings paying for the cost of construction in just 20-30 years.

3. Politics is replaced with a system of governance divided into two branches: one scientific, concerned with objective matters, and the other democratic, concerned with subjective matters. This one is a bit too complex to go into detail here, and this post is already getting really long, so I'll leave this one to you to investigate further. The whole premise of scientific governance rests on our ability to separate the objective from the subjective (this is also a requirement of science itself)

4. employment is reassigned according to desire and skill. People are motivated by two things, incentive (external) and initiative (internal). In our system initiative is discouraged by the very strong incentive to make money because it is necessary to survival. With the incentive gone, people would be motivated by what interested them and what their natural talents were. In a Technate, education would be more about helping a person discover their innate talents and interests, instead of being about preparing them to get a job for the purpose of making money. Many less "jobs" would be had in a technate anyway, since a major part of the program is eliminating unecessary activities (such as the financial sector) and the associated waste they produce. It was estimated in the 1930s that all the necessary work could be done with a 20 hour workweek for half the year, with retirement at 45.

[Laura Louzader]

Per Krugman's article, I do believe Krugman is being sarcastic.

It's been obvious for quite a few months that we are going to net a number, possibly a large number, of bank failures as a result of the biggest and most overextended credit bubble the world has ever seen.

Additionally, we will lose enough of our oil imports to make supplies much tighter. That means that not only will most of the population find driving prohibitive, but will also find the cost of heating and eating very daunting.

That means a long stretch of Make Do and Do Without, possibly for the rest of my life.

This is a larger bubble than that of the 1920s that brought us the Great Depression, and there is much more fraud involved, and more members of the general population involved.

Too Big To Fail has become Too Big to Bail. There is no way we can rescue either the unscrupulous,irresponsible institutions or the fraudulent, delusional, and irrational borrowers, even were it moral to do so.

It staggers me that politicians on both sides of the aisle are still discussing this as if it were a) a decent, moral thing to do,and b) doable to begin with.

I do not believe that within 5 years we will be thrust into the 19th century subsistance-farmer existance. However, life for most people could well resemble that of the 1930s, with its double-digit unemployment, soup lines, mass homelessness, and complete lack of opportunity. It might well be worse because we no longer have the mineral resources and manufacturing infrastructure we had then

It will, however, be a great period for anyone with the cash to buy all the deeply distressed real estate sitting around, including prime farmland that will never now be developed into more suburban housing tracts. There will, I believe, also be opportunities to the cash buyer to acquire entire tracts of existing suburban houses at prices that justify their demolition and conversion of the land to farmland.

For now, we must just LET IT GO. There is no way to "help" all the morons who borrowed over thier heads stay in "their" homes, and people like me and possibly you should not be required to chip in to keep people who lied on their loan apps in houses they never could afford. There is also no way to help failing financial institutions and we should not try to do so- best to salvage what remains by starting new institutions and putting the regulatory structure back in place that kept this situation from developing prior to the 80s.

[Perfectscotty]

I always enjoy Your posts Laura, keep it up !

Patrick : technocracy seems to be so complex to institute that it is relegated to fantasy. An interesting idea but not likely to catch on....

I have been thinking that when TSHTF we will have a two class society :

-haves

-have nots

Now knowing a little about human behavior I can promise that the have nots will go after the haves and VOILA ! A revolution. A year ago I read all about a guy named John Titor who claimed to be a time traveller from the future sent back to 2000 to warn us about a revolution coming in 2012 or so... thinking now that the john titor story gains credibility every day.

[Lost Horizon]

Laura, love the line:

"Too Big To Fail has become Too Big to Bail."

Sweet.

I love pithy expressions.

Like:

There is not enough lipstick in the world to put on this pig.

The US public and media are whistling by a very large and spooky graveyard at the moment and will have to be dragged kicking and screaming to the realization that the wheels have come off the Jolly Trolly.

Bush Baby and his lovable ilk of Crony Capitalists have done a magnificent job with the economy these last 7 years.

But like that old chestnut goes:

"You can't polish a Turd"

[Johnny Rico]

"Howard Scott, M King Hubbert, and many other prominent minds of the time"

Excuse me? Did I just read that right. 'Prominent minds' suggests somebody has heard of these people.

[Johnny Rico]

Oh, I'm sorry, you were just putting those two at the beginning of the list. How about naming some of these 'many other prominent minds?'

I'm not interested in technocracy, whatever the fuck that is. I've got my hands full with Scientology at the moment.

[dale]

Patrick,
Wow!! staggeringly utopian. I don't want to be the one pulling wings off your fly, but do you really believe that could happen? A "workers paradise" comes to mind....I'm holding out for the rapture, seems about as likely.

[Lost Horizon]

Geez Patrick

You're really trippin.

Trying to convince the general public to embrace Technocracy.

A majority of the Great Unwashed Masses think 'situation' is a three syllable word.

[Johnny Rico]

Breaking News:

Another Trusted Public Servant, A Hero of The People bites it!

Sad Day. What do they pay governors that they can afford this kinda pussy?

http://www.msnbc.msn.com/id/23561606

[Patrick]

You do know who M King Hubbert is, right? If it weren't for him none of you would be blathering about peak oil right now. I guess all those scientists and engineers who were members of Technocracy, Inc during the great depression were all just a bunch of idiots, right?

Sullivan W. Jones, Secretary
Frederick L. Ackerman, architect
Carl L. Alsberg, chemist
L.K. Comstock, electrical engineer
Stuart Chase, C.P.A.
Alice Barrows Fernandez, educator
Bassett Jones, electrical engineer
Robert H. Kohn, architect
Benton Mackaye, forester
Leland OLds, statistician
Charles P. Steinmetz, electrical engineer
Richard C. Tolman, physicist
John Carol Vaughan, M.D.
Thorstein Veblen, educator
Charles H. Whitaker, housing expert
Howard Scott, Chief Engineer

And those are just the founding members of the technical alliance, the forerunner of Technocracy Inc which at one point had thousands of members all over North America. But no one knows anything except for you, right? Dale, the only thing preventing it from happening is people who refuse to educate themselves. We have all the resources at our desposal, the only thing preventing it from happening is a lack of knowledge. It is pretty funny how many people try to compare technocracy to communism when they are completely different. Both capitalism and communism are variants of a price system which evolved during a time when human labor was the primary factory in production. Both assume that a decrease in labor would result in a decrease in production. Thus communism is completely different from technocracy and any comparison stems from a basic lack of understanding. Technocracy's Energy Accounting is the only system I am aware of which recognizes the fact that it is the non-human energy (from oil, coal, etc) that is the primary factor in production in today's technological society. If you are going to try to argue that than you are a hipocrite because all of you have been saying that society will collapse because we are dependent upon non-human energy (oil). Society will only collapse if we continue to use a system that rations purchasing power based upon human energy instead of non-human energy. It is sad how hostile people are to this idea without even investigating it. But that is just in keeping with the "fuck it, nothing will work, we're all doomed and I like it that way" mentality that many people have. That mentality is a lazy, easy way out.

[upnatpishtim]

the new life we all will be facing will be purty hard. like burning wood to stay warm or cook, at least until the trees run out.
if you have solar power, it best be portable or a sun tracker. the big secret of solar is the fall off in energy if the panels arent always facing the sun.
forget grid tied. once the grid goes down your panels go down also.
i myself have ben burning wood lately and it is very intensive laborwise. and portale solar pv?
very attention demanding. in short a totally new life style. and that aint even taking in consideration
of having to garden or make beeswax candles or spin flax into
thread. weeze are hard up against it. my life will become easier once i am unemployed in the big economic depression. that will give me lots of time to chop wood, garden and attend the portable solar generator.
prof lovelock sez it right, enjoy it while you can because the whole ball of wax is melting.

[Mr. Purple]

LaughingAsRomeWasBurningDown wrote:

"if your neighbor will let you borrow his roto-tiller"

Borrowing the roto-tiller won't be the hard part. "Borrowing" the fuel to run it will be. Hand tools are going to be the rule of the day.

[Patrick]

Lost Horizon, you are right in that the only thing keeping Technocracy from working is the general ignorance of the masses.

We have all of the resources, technology, and trained personnel to make Technocracy work. There just isn't yet a critical mass of people who know about Technocracy to demand that its plan be put into action.

[miik]

If you go to youtube and enter "carlin" and "owners" and pick a non-edited 3minute or so clip - you get the basis of why everything is messed up, and you might laugh.

Has anyone here read the excellent books "Perfectly Legal" and "Free Lunch" by David Cay Johnston?

[greenbeans]

Technocracy? Collapse is simpler. See Occam's razor.

[Johnny Rico]

Has anyone here read the excellent books "Perfectly Legal" and "Free Lunch" by David Cay Johnston?

Yes, I have.

[Patrick]

You're right, simpler and easier to understand. It's much easier to just give up. Technocracy, Inc is concerned with determining what changes would need to take place in order to avoid collapse, which is completely possible.

[Lost Horizon]

Gov Spitzer of NY was trying to put the screws to the geniuses on Wall-Eyed St and suddenly, his nuts are the ones in a vice.

What a Coincidence!

What Kismet!

Eliot, don't mess the the Big Dogs boy, they'll bite right back.

He should be glad he's not floating face down in the Hudson.

We'll have to wait and see.

[Mr. Purple]

Patrick wrote (as part of a larger discussion about the merits of Technocracy):

"the only thing preventing it from happening is people who refuse to educate themselves"

It's a nice sentiment, but a Utopian sentiment. People I know sometimes call this "Bullhorn Syndrome": the idea that if you put the magic string of words together just right, everyone will realize the error of their ways and embrace the wisdom you have.

By this thinking, all the high-school dropouts of the world are just once convincing argument away from getting their diplomas. Some people will NEVER get it, and relying on those people to suddenly wake up is the (futile) dream of idealists (of many stripes) everywhere.

Of course, there is also the problem of a group of technicians and scientists getting together and deciding that they have invented the best political system ever: they forget they are dealing with basically irrational human beings. What they produce sounds GREAT on paper... but then again, so do Karl Marx and Friedrich Engels. In reality, trying to have a committee decide what everyone gets as income will turn into a power struggle to get favorable treatment from Congre... I mean, the committee.

"When the people find they can vote themselves money, that will herald the end of the republic."
-Benjamin Franklin

[Mr. Purple]

greenbeans wrote:

"Technocracy? Collapse is simpler. See Occam's razor."

Better and more succinct than I could have ever put it. Well done!