Depend on your Wheelbarrow

SUBHEAD: Once you’ve swallowed the little red pill you’re kicked out of the garden of oblivious innocence and blissful ease.

By Elizabeth Scarpino on 1 November 2010 in Transition Voice

Image above: A restored wheelbarrow ready for another decade. From (  

[Author's note: The following has all been said before, more eloquently, factually, persistently and presciently by others. But living with these thoughts is certainly new to me.]

I wonder, once you’ve peered through the peak-oil lens, can you ever be truly, blithely carefree or happy again? I guess it requires the sort of psychological doubling wherein you lead your normal day-to-day physical and mental life unconscious of the immense damage that your actions and society’s deeds have caused, and suppressing odious thoughts about a radically different future.

Indeed, daily tasks like laundry and grocery shopping go so much better when free of the paralysis of fear, guilt, and the unknown. Mundane matters always remain, yet this pilgrim’s progress continues…

Friends wonder if this—peak oil—is what I’m “into” now, a new obsession. They seem dubious. “So you’re really passionate about this stuff?” If, by passionate they mean “the state of being acted upon or strongly affected by something external, especially something alien to one’s nature or one’s customary behavior” then, yes.

I don’t want this to be my passion, but is there a choice?

Hello, hello, hello, is there anyone in there?
How can you be a human, a parent, a spouse, a neighbor, a Christian, an Earthling, and not be preoccupied by this?

Once you’ve swallowed the little red pill (what used to be known before The Matrix as tasting the fruit of the Tree of Knowledge of Good and Evil), you’re kicked out of the garden of oblivious innocence and blissful ease. It’s not fun, it’s not sexy, it does not garner party invitations and it does not bring satisfaction or contentment.

It doesn’t even help you feel mentally-prepared. It just makes you feel anxious and hyper-aware. It alters relationships, as well as your perceptions of previously routine tasks and choices. It both clouds and clarifies everyday thinking.
My mind wanders now whenever it’s time to pay bills, for example: so what if the mortgage gets paid….a useless paper deed to this or any other property is so not going to matter….a paid-in-full status on the utility accounts will not bring us any more water or juice when they’re shut down….why renew the truck registration when it’ll probably soon become just another permanently-parked, hopefully raccoon-proof chicken coop?
When an average, check-writing, middle class housewife begins thinking this way, a fundamental shift has occurred. And one far more radical than simple political disaffection. It’s not about the money, it’s about the folly, about the arrangement of deck chairs on the Titanic. These things may matter for the short-term, but clearly such things will not matter one whit in the future. (I can’t even begin to imagine the anarchic thoughts of someone who has already lost life savings, or been forced from their home by robo-foreclosure or debt from hospital bills.)

You don’t need a weatherman I’m not a polemicist or a college professor or even an online thought-leader, but I can sense which way the wind blows, and these days it’s a foul wind that carries the fetid stench of rotting rubbish. The heap of decaying institutions, basic former certainties and hopes and quashed dreams grows bigger daily. And of course the municipal services that deal with this trash are dwindling, too.

It’s often said that economics is a soft science, one based more on perceptions than realities, on collective faith-leaps and mutual expectations and assurances, on responsibility and trust. Well, it’s gotten soft all right — it’s all turned to mush — and there’s just no substantial foundation on which our personal and collective futures can rest. Add to it the weight of peak oil, and the structure of slop is not just unsound, it’s altogether insane. And it takes some pretty powerful mass doubling to ignore the multi-layered obvious.

Once when I was a kid, my dad (then a senior editor at the Federal Reserve) dressed up as The Malthusian Spectre for Halloween. He wore a zombie mask and a ragged bedsheet and hung some of my old broken baby dolls and a loaf of Wonder Bread around his neck. I guess back in the seventies, economists in the First World thought that predictions of massive starvation and overpopulation were ridiculous.
But Dad’s costume sure left an impression on me.

Little did I realize we’d get the trifecta Now we have the terrible trifecta of Peaks, with a capital "P": water, food, and most importantly, oil—which is what is needed currently for the water and food. The Malthusian Specter is nothing compared to the coming collapse.

Sure it’s a drag, but current and future suffering calls upon us to be passionate, and begs us to show compassion. How we react to this calling matters. So many people I know want to avoid negativity in every way possible, even mocking or ignoring the stark realities, keeping only “positive thoughts,” “eliminating stress,” and taking the “it’s all good” approach. Hardly a balanced, real existence, embracing the light and the dark that both the human condition and the end of oil represent.
I don’t want the clumsy, ugly flatness of denial, inaction or depression.

I want to be brave. The word bravery is linked to passion, and derived from pathos, which means overcoming and suffering the barriers on our journey. In my new chain of being, someone who strives to combat The Coming Famine, and teaches and helps others do so, is at the top of the chain.

When we are all kicked out of our oil-soaked oblivion, when we’ve almost completely ruined our Eden, how we respond matters. I am determined to prepare and repair, to learn and train, to shelter, to work, to progress.

Mark my word Back in the day my dad also told me about the legendary German hyperinflation after WWI: how they had to take a wheelbarrow full of banknotes to the bakery just to buy a loaf of bread. This was just mind-blowing to my childish weekly-allowance-spending sensibilities: how could money ever be worthless?

It was the classic example of the declining value of currency when over-issued, but it happened to Deutchmarks, not dollars. That couldn’t happen to us, I reasoned — only to war-weary, pitiful Germans, who ate weird dark unsliced bread anyway.

Recently, I heard the story told again by a preacher on the radio. Only, this time, when the Hausfrau came to retrieve her cart full of marks to pay the baker, she found the pile of useless paper money fluttering on the ground; the wheelbarrow had been stolen, instead. Again, a fundamental, stark shift in the standard version of the economic canon.

This is where I am now: I would rather have the wheelbarrow. I know life will not change overnight, that the dissolution of relative prosperity and creature comforts will be somewhat gradual. (My friend and I used to lament how everyone took things for granted. We wished for a period when folks would cherish something as special as an orange for Christmas. Be careful what you wish for…) Yet my faith in basic economic models, functions and institutions has disintegrated to such an extent that I would rather have the wheelbarrow, the item of utility. The thing that will help me move soil or my own rubbish, or to grow food.

Economic upheaval is one thing: we’ve dealt with that before – nationally and internationally — always softened by the cushion of plentiful oil. But marry the foundering economy with the end of cheap oil, and our society becomes an unholy unsustainable union, with the bastard offspring of climate change. It simply cannot hold.

Sturdy shoes, warm socks Who really cares anymore about money supply, purchased mortgage-backed securities, or anything the Fed does? Even the foreclosures and loss of jobs and savings don’t exude the tragedy they once did. They’re commonplace, mainstream, old news, the new normal. There’s a whole new set of more practical concerns. I now prize things of real value, permanence and utility: stone, metal, my grandmother’s quilts, hearty plants, sturdy shoes and warm socks.
But most of all I value responsible, brave, passionate people.


White Knight of Zombieland

SUBHEAD: The Fed's effort now suggests that the harsh effects of Peak Oil are to be felt imminently. Our waste-based economy is a zombie.

By Steve Ludlum on 5 November 2010 in Economic Undertow - 
Image above: Bust of zombie version of superhero Colonel America. From (  

Now the furor over Quantitative Easing (QE) and whatnot has been swept into the past. The question now is what happens after QE proves to be a failure? The cliche is 'QE 5 - 6 - 7' but this is unlikely. Why? The failure of this iteration of QE will be the end of the Federal Reserve. In this real world, not the zombie world of phantom central banks and imaginary wealth, failure has consequences. Bernanke's bet is a tremendous gamble. There is nothing short of desperate necessity would compel him to take it; and this speaks to our clear and present dangers.

The Fed has a relevance problem which orbits around the dollar price of crude oil and the current $13.5 trillion US budget deficit. Since this latter is ongoing with no possibility of retirement in sight, it is the certain the Fed will continue monetizing (printing money). Since the crisis began servicing this debt has created difficulties requiring the shuffling of funds between primary dealers and overseas central banks.

The massive credit overhang and the effect deflation has on currency value increases both the risks and dangers of a failed Treasury auction. The solution is direct monetization but this has adverse effects on the credit market which is ... uh, useful to actually price credit risks.

The Fed argues that its goal is to reduce lending rates and increase employment but this is a lie. The Fed risks crowding out the Treasury market so as to guarantee a bid and funds for Treasury operations. Because of a relative shortage of 5- 10 year Treasury securities the Fed will also likely buy mortgage-backed bonds and protect the flailing mortgage business from the consequences of its own criminality.

By monetizing the Fed creates extraordinary risks that are then priced into debt in place of the demand for credit that is ordinarily priced into it. These 'other' risks are ones the Fed does not want to think about. By monetizing, the Fed becomes both the lender and borrower of first and last resorts.

Once begun, the Fed must monetize until the end, when circumstances will not allow it anymore. This is the kind of risk that the markets will price into Treasury issues. By attempting to solve one problem the Fed creates greater downstream problems. What the Fed buys is time but the cost is very high. Part of this new risk is showing up in 30 year Treasuries.

Part is the mechanics of the trade, the rest is this default risk. What the Fed also buys at great expense is the admission that it has no clue as to what is behind our wasting, zombie economy. Fortunately for the Fed, it and the Treasury have been monetizing US debt since the Vietnam War era. Countries that choose to monetize can do so for very long time periods, witness Japan since 1990. At the same time, doing so does not address any underlying structural issues.

Since monetizing is a compounding exponential function at some level the process accelerates then breaks down. After that point borrowing to service debt is not possible. The problem the Fed cannot hope to solve is our broken energy balance sheet, not the finance version. Servicing debts by monetizing them or burning- excommunicating- or exorcising them will not solve the structural energy waste problems that propel the current economic malaise.

Nevertheless, Bernanke is playing a clever game. He can create a distraction and hope someone else shows up with an energy solution. He also realizes if he goes too far and monetizes too much he risks being 'outed' as irrelevant. He has to monetize enough to attract attention but not enough to suggest that what is doing is failing. At the same time he cannot possibly succeed as his actions have no relationship to the real problems.

Bernanke is a rodeo clown with a beard. All he can do to keep the bucked rodeo cowboy - the US economy - from being trampled is to distract the enraged bull. I almost feel sorry for the dude! That bull is going to be trampling until the end of time. With the Treasury absent from policy and the will to legislate more fiscal funding evaporated the only support for 'Recovery Lite' is Bernanke and his con game.

 The finance nincompoops that decry the vanishing dollar and incipient inflation are playing Barnyard Ben's game. Perhaps he's hired them! Without this chorus of Zero Hedge ignoramuses Bernanke would have no traction in the real world. When Marc Faber and the central bankers of China and Germany get up and squeal that QE is ruining things they are giving BB credibility that he cannot possibly earn by himself.

The actions rather than the words suggest that the wheels are in the process of falling off business as usual. Bernanke's actions inform us that the recovery is a sham. He promotes inflation: adding more money to reserves guarantees there will be no inflation even as the recently rising oil prices also guarantee there will be no inflation.

 First of all, inflation is not that are prices rising but an increases in the supply of money. More money stuffed into reserves creates an increasing incentive to keep these reserve funds from leaking into circulation. Inflation - or in this case, hyperinflation - only takes place when funds are in circulation and transacting more frequently, which is the 'velocity' of money. As more reserves are swept into traps the increase itself represents potential inflation. That is, there would be inflation if the funds in the traps were circulated.

Since releasing funds into circulation would reduce their value, they are kept in the traps at all costs. The more reserves the Fed creates the tighter the traps are that hold them. Increased reserves guarantees that more of these reserves will be liquidated when the traps finally implode. Liquidity/currency traps are places where money goes to die. The killer is the massive overhang of unrecognized debt exposure that is on the balance sheets of the traps themselves. The amounts of the debts are far greater than the currency in the traps. Even gold is a currency trap as it is pledged as margin collateral elsewhere.

Most funds in currency traps are forms of collateral for debts on the traps' balance sheets. They aren't called traps for nothing. When the gold bubble- liquidity trap collapses, gold speculators will get hammered. Getting into a trap is easy, getting out when everyone else is trying to do the same thing is fatal. If cash in accounts is trapped within insolvent banks the accounts will be frozen and rendered inaccessible. Real estate is the worst kind of currency trap.

When the danger appears there will be no buyers for real estate and cash spent on it will evaporate. In hyper- inflationary China, cash speculative purchases of apartments are likely to return nothing as the buildings themselves will revert to state ownership leaving the speculators empty handed. Lenders will be repaid in yuan that has near- zero value. These ruined lenders will ruin others in turn returning pledged collateral to the state which holds the underlying leasehold value of the land upon which the buildings themselves are erected. The Fed cannot solve the dollar price of crude.

A Fed- generated price bubble in crude can only crash when the price reaches an unsupportable level. Afterward, the price will recover from crash lows and reestablish the equilibrium price at the upper bound where any further increase destroys demand. This is the 'value- peg' of dollars priced in crude. Here, the dollar has real value.

Currently, there is no 'scarcity premium' to ubiquitous dollars which is a world- wide benefit of the dollar as reserve currency. Since dollars have this non- money value relative to other, scarcer commodity currencies it is almost impossible for the US dollar to be 'destroyed' by reducing is F/X value. The dollar at any exchange rate by the size of its float stabilizes fuel prices ... to a point.

 If the Fed was to somehow succeed and destroy the value of the dollar by widespread dollar revulsion overseas, some other currency would become pegged in value to crude in the dollar's place. Once that happens, the US and other buyers would have to either buy that currency - at a great disadvantage to the US - or buy fuels with dollars at a discount to the pegged currency. Buying a second currency with dollars would be extraordinarily expensive. Why?

Because any other currency would be scarce in circulation relative to the dollar and this scarcity would cause its value to be bid up. If the US was to bleed liquidity traps and start circulating more dollars to afford this price the effect would indeed be hyper- inflation and fuel would quickly become unaffordable. It's price would rise in dollars faster than dollars could be circulated. The inevitable crash might not reduce the price of fuel because the post- crash dollars would not be competitive overseas versus the 'other' currency which would be held by creditor nations such as China, India, Germany and the south Asian countries.

These countries have large F/X reserves and which would certainly avoid the crash outcome that dollar inflation would wreak on the US itself. For all extents and purposes the 'death' of the dollar would effectively put the US out of business as an industrialized nation.

Meanwhile, the dollar/crude peg is aggressively deflationary. Being exchangeable on demand for a valuable physical good the dollar does now and will have increased value. This is the inevitable outcome of physical shortage. 'Barnyard Ben' Bernanke's foray into experimental monetary policy is tragic and romantic ... as well as irrelevant. Regardless of his efforts the dollar/crude peg will reestablish itself at some level with dollar recognized as a defacto hard currency.

At that point the deadly arbitrage between the dollar and other currencies will begin and the world's economic activity will shrivel into little other than buying and selling money in order to obtain increasingly valuable oil. This is the exact same thing that took place during the early 1930's and resulted in mass bank failures in the US and elsewhere and only ended when the peg between paper money and gold was broken. As was the case then, the only escape from money- value generated deflation will be for economies to 'go off' oil and break the peg. There is no other way!

Reductions in the use of crude oil will be by necessity be of the order of 80- 90% of current levels of usage - the level at which the US can become a sustainable multi- year net exporter of crude oil! The great recessions of 1973 and the early 1980's were caused by supply reductions in the US of 10% or less. Cuba's regression in the post-Soviet period were the outcome of import constraints on the order of <20 href="">The tragedy of Richard Whitney who saved the stock market on Black Thursday:
Whitney had been a legend since Black Thursday 1929, when, amid the din of the roaring calamities that were wiping out fortunes, he strode onto the exchange floor and boomed: "205 for Steel!" With this one bold offer - U.S. Steel had plummeted to well below 205, but Whitney was a Morgan man, and thus it followed that America should be no less confident than the House of Morgan - the worst panic in 50 years briefly subsided. "HEROIC ACTION RALLIES MARKET", the papers clamored, and Whitney was Wall Street's white knight from that moment forward. In May 1930, he was elected exchange president, marshal of 1,357 member brokers - and now, as the economy reeled, the nation's most vocal defender of their traditional interests. As securities values continued to decline, as suspicions mounted that slick traders were responsible, as New York Congressman Fiorello LaGuardia introduced a bill requiring securities to be registered with the government, Whitney appeared many times before the Senate Banking and Finance Committee, crusading to keep the market free, denouncing his inquisitors as know-nothings. It was not the professionals who had brought on the crash, he argued, it was the greed-maddened public, the seamstresses and the bootblacks and the rest of the ignoramuses and nuisances who pumped their nickels and dimes into a marketplace best left to the better classes. Control was not to be removed from the descendants of the men who had in 1825 begun gathering at the old Wall St. buttonwood tree to transact their affairs. It would not do. But the arrival of Roosevelt's New Deal brought still louder calls for government intervention, and increasingly Whitney was cast as the villain in the public's great war on big business, the living embodiment of the frostily conservative old-guard financial barons who controlled the nation's money. Finally, nothing could prevent the creation of the bristling New Deal watchdog called the Securities and Exchange Commission. By March 1935, even Whitney's allies agreed he had to step down from the exchange presidency to ward off any further federal incursions. There was no appeasement. Late in November 1937, SEC Chairman William O. Douglas made it plain that the stock exchange was going to be a regulated public institution. The stage was now set for epic combat between the old millionaires and FDR's Depression-stricken America. At this precise moment, disturbing matters were coming to the attention of the stock exchange's board of governors. There seemed to be irregularities in Richard Whitney's private affairs. It, well, appeared that the eminent Richard Whitney was a crook.
All so sickeningly familiar. Whitney's Black Thursday rescue was followed the next week by Black Monday and Black Tuesday, then a whole calendar of black days. The lights in America were not to be re-lit until the New Deal and then for almost twenty years when in 1948 the US used the Marshall Plan to recapitalize its economy by rebuilding Europe and Japan. Now comes the latest version of Richard Whitney with his order of "205 For Steel!" He rides a pale horse like Death himself as he streaks across a sky empty of stars. He is Ben Bernanke the White Knight of Zombieland. .

QE2 is Fooling You

SUBHEAD: This is nothing but another move by the Fed to bail out the lethally wounded banks long enough for insiders to get out.

 By Raul Ilargi Meijer on 5 November 2010 in The Automatic Earth -

Image above: Last chance to get the money out of banks. Still from "Public Enemies". From ( 

 Let's start off by repeating once again what I still don't think everyone acknowledges: in essence, quantitative easing is a measure that is entirely experimental at best. If there is any proof regarding its effectiveness, that proof is negative. Japan's early millennium QE didn't revive its economy. Far from it. The Fed's QE1, initiated in early 2009 and subsequently vastly expanded, never solved the problems it was alleged to be able to solve.

 One may argue that it kept the economy from sliding downward even further, but one can claim that, and many of those with skin in the various games do, for a litany of stimulus measures such as TARP and the "Obama stimulus" as well. The success of all these measures added together surely can't be seen as anything but ephemeral (re: unemployment and foreclosures), and the claim, if one were indeed made, that QE1 all by itself even just managed to keep the US economy in its present prolonged and drawn-out Wile E. Coyote moment, has no substance at all that is based on actual fact.

Or, to put it another way, if QE1 achieved such a thing, which we don’t and can't know, the TARP and other stimulus measures were even grosser failures than we already recognize them to be. Still, this week brought another round of QE in the US. Why is that? Are we to believe that Bernanke et al perhaps can't read or do simple calculus? Are they desperate enough to throw the nation's financial future to the sharks, come what may? Has their faith in their particular sect of economics blinded them to such a degree that they can shake off all the evidence to the contrary and goose march ahead believing that even though all they did before has failed, "this will be the one"? Of course not.

You may think by now that Geithner and Bernanke and Larry Summers and Bob Rubin and all the rest of the pack are miserable failures and two sheets to the wind and all that, but you'd do better to give them a lot more credit than that. QE2 is here, despite the gigantic failures and behemoth losses of its predecessors, because QE works like a Mother Mary statue in tears' bleeding charm. Of course these guys all know that no proof of a QE ever reviving an economy exists.

But they can pretend it does, and so they do: $900 billion, even for them, is real money. Thing is, they never meant QE2 to do what they publicly claim they intended it for. This is nothing but another move to bail out lethally wounded banks. A full additional $900 billion and counting was announced this week. Basically nothing but a swap of long term for short term paper, and therefore necessarily a -very- short term measure. What does it achieve, apart from a knee-jerk market reaction? Wall Street banks get another injection of short term breathing space. That's all. And what was that last number on insider selling vs buying again? 3000 to 1?!

Look, these people can't sell all their hygienic paper all at once, there's silly market regulations that prevent it, they need a time window to do it. Hey, Bank of America rose 2% today, and Citi was up 3.7%. Now, if all is that rosy, why are William K. Black and L. Randall Wray calling for BofA's books to be opened and the entire firm to be nationalized? Well, BofA shares are at $12, an 80% loss from 3 years ago, and Citi's at $4, a well over 90% loss over the same time period. These are America's largest financial institutions, and finance over the past 10-20 years has become a disproportionally huge chunk of the US economy.

And its politics. And that's where the crux is. I don’t know about you, but I have completely lost interest in trying to figure out which candidate in the midterm elections got how much from Wall Street. They all need their campaign contributions from bankrupt institutions such as BofA and Citi if they want to have a shot at being elected. It's a closed system, it really is. Putting a few guys behind bars wouldn't change that. And besides, none of them paid that kind of money just to be put behind bars to begin with. But let's not try and solve it all in one go.

For now, please understand that QE2 was never intended to jump-start the American economy. It was meant to prolong Wile E.'s 15 minutes of fame, to keep banks like BofA and Citi above water long enough to allow anyone who has some skin in it to get the hell out without triggering any alarm bells. I mean, I see people triumphantly proclaim that stock prices are almost back to where they were.

But look at those two banks! They're barely alive anymore, even in the markets. Citi's $4 a share is gutter territory, if not penny. Yes, sure, Goldman Sachs and JPMorgan have lost much less, percentage wise. And you know why? Because their links to Main Street are much less pronounced than those of consumer banks like BofA and Citi. That’s the difference. And Main Street is vanishing altogether. There is money being handed out in QE2, which in the end is awfully simply yours, and which is thrown overboard in a way that makes you believe it's in your best interest. Some people see it as a hidden tax, but that's a far too gentle view.

Daylight stand-and-deliver robbery or Grand Theft Auto are much more accurate denominations. After all, if this were a tax, it's clear to anyone and their pet parrot that it will never ever be paid off. QE1, by the way, was to a large extent about the Fed buying up mortgage backed securities. Which, so it turns out, are based on, to put it mildly, highly disputable underlying "assets". What was it, $1.7 trillion?! And what would you think that's worth today? Or rather, what will it be worth once mark-to-miracle accounting can no longer "do the Wile E."?

Between the Fed and Fannie Mae and Freddie Mac, the American people own very very many trillions of dollars in silly paper. It's hard to say what its true value is, but once them whips and chips come down, it’ll be safely below double digits. Which will add up to much more than any hidden tax could ever hope to pay back. Fannie just asked for another $2.5 billion of your cash, and they will get it too, and there's nothing you can do about it. And you're right, what's $2.5 billion in the grand scheme of things? Then again, what's 1 in 7 Americans relying on food stamps?

What does any of it mean anymore? 17% U6 unemployment? 4 million 2010 foreclosures, many of which are based on at least shaky, and pretty likely illegal, papers? If that doesn't have enough meaning to move media attention away from rallies to restore whatever it is that apparently needs restoration, what will? 1 in 3 on food stamps? 40% jobless? Tent cities around every major city? $25 trillion in quantitative easing? Yeah, the markets had a knee-jerk upward reaction. And that, or so it seems, is all anybody needs. Hyperinflation is sure to follow, or so they say. Then again, they said the same when QE1 occurred.

Didn't happen, though. Will it this time? Will gold rise to the stratosphere? If so, who will buy? Bank of America? With your QE2 billions? Not very likely, they need that free cash to cover up increasing losses. Is it that hard to understand, simple calculus? That every dollar spent ostensibly "on your behalf" will have to be paid back by you, even if not a penny of this, your own, money, went towards making your life better? If that is really so, then QE2 works exactly the way it was meant to work. They're not all that dumb, and they're not making the grand mistakes some folks claim they do. They're robbing you blind in plain daylight, and, as they go along, make you believe that's in your best interest.

 It’s all nothing but a high-stakes game of pick-pocketing. Just never even try to tell me again that it's not successful. And i don’t mean delivering economic growth; the US economy won’t see real growth for more years than you care to know. No, QE2 is very simply successful in fooling you.


Dollar's Decline - Oil to Soar

SUBHEAD: What current Fed dollar actions mean for Hawaii. At $100/barrel things will be looking bad.

By Brad Parsons on 5 November 2010 in Island Breath -

Image above: What's the worst case scenario. The streets of Waikiki are empty. From (

Today, the futures price of a barrel of oil rose again to above $87. As expected, it has been rising since Federal Reserve Qualitative Easing (QE2), buying government bonds with digitally created money out of thin air, began earlier this week. That is because of the logically expected reduction in value of the dollar, regardless of how it is described, a deliberate devaluation of the dollar, eventually creating inflation, whether officially measured or not.

Looking at the chart below, the beginning of the most immediate recession coincided with the price of oil rising from a similar current price to $100 a barrel in October and November of 2007. The recession was dated to have begun in Nov. 2007. QE2 is suppose to stimulate the economy, but with banks holding onto excess liquidity, QE2 is instead devaluing the dollar, raising the price of oil in dollars, and can be expected to further worsen the economy when the price of oil approaches $100 a barrel again.

Below is the futures price of an ounce of gold. From October 2008 it has risen from about $750 per ounce to as of today rising to approach $1400 per ounce. This too is in expectation of inflation on the dollar, regardless of whether officially measured or not.
For Hawaii, as we have written before, Fed monetary and U.S. Government fiscal actions, whether reasoned or not, have been escalated such that the dollar will lose value, oil priced in dollars will cost more, transportation and all other services dependent upon oil and gas fuel will go up in price, and price elastic demand will go down for services including a higher fuel cost component. This will all be very bad for cost of living in and tourism to Hawaii.

We are already seeing that the surge in tourism to Hawaii of the past summer that lasted into September, has dropped off in late September, October, and early November. Expect markets and tourism reports in the months ahead to verify this, and Oahu economists to write about it... after the fact.  


On the Precipice Again

SUBHEAD: Bank of America edges closer to tipping into insolvency... hence, so do we all.

By Jonathan Weil on 4 November 2010 for Bloomberg News - 

  Image above:Painting "Pie in the Sky" by Mark Bryan. From (  

It was only last April that Bank of America Corp. was making fools out of the doomsayers who had called for its nationalization a year earlier. Taxpayers had gotten their bailout cash back. Investors who bought its shares at the bottom were making a killing. Government leaders lauded the company’s rescues, both of them, as a great success.

Now the bank may be on the verge of trouble again. Its stock has fallen 41 percent since April 15. Mortgage-bond investors are demanding untold billions of dollars in refunds. The foreclosure fiasco is metastasizing. A member of the Troubled Asset Relief Program’s oversight panel, AFL-CIO attorney Damon Silvers, openly worried at a hearing last week about the risk that Bank of America might need another bailout. A few more months like the last one, and we may be wishing Bank of America had never returned its $45 billion of TARP money. Y

ou wouldn’t know there’s anything wrong with Bank of America by an initial look at its balance sheet. The company showed common shareholder equity, or book value, of $212.4 billion as of Sept. 30. And its regulatory capital ratios have risen steadily throughout the year.  

Tipping Point
Judging by its shrinking stock price, though, investors are acting as if Bank of America is near a tipping point. Its market capitalization stands at $115.6 billion, or 54 percent of book value. That’s the second-lowest price-to-book ratio among the 24 companies in the KBW Bank Index, and well below the 76 percent ratio the company was at in October 2008 when it landed its first round of TARP dough.

Put another way, the market is saying there’s a $96.8 billion hole in Bank of America’s balance sheet. When I asked Jerry Dubrowski, a Bank of America spokesman, about the disparity, he said: “I’m not going to comment on the book value and the stock price.” It may be the shares are a bargain at $11.52, if the company’s books are right.

Another plausible scenario is that Bank of America’s management, led by Chief Executive Officer Brian Moynihan, has lost so much credibility with investors that the stock’s decline might start feeding on itself. The problem for anyone trying to analyze Bank of America’s $2.3 trillion balance sheet is that it’s largely impenetrable. Some portions, though, are so delusional that they invite laughter. Consider, for instance, the way the company continues to account for its acquisition of Countrywide Financial, the disastrous subprime lender at the center of the housing bust, which it bought for $4.2 billion in July 2008.  

Goodwill Purchase
Here’s how Bank of America allocated the purchase price for that deal. First, it determined that the fair value of the liabilities at Countrywide exceeded the mortgage lender’s assets by $200 million. Then it recorded $4.4 billion of goodwill, a ledger entry representing the difference between Countrywide’s net asset value and the purchase price. That’s right. Countrywide’s goodwill supposedly was worth more than Countrywide itself. In other words, Bank of America paid $4.2 billion for the company, even though it thought the value there was less than zero. Since completing that acquisition, Bank of America has dropped the Countrywide brand.

The company’s home-loan division has reported $13.5 billion of pretax losses. Yet Bank of America still hasn’t written off any of its Countrywide goodwill. Dubrowski, the company spokesman, declined to comment when I asked him why not. In its latest quarterly report with the SEC, Bank of America said it had determined the asset wasn’t impaired. It might as well be telling the public not to believe any of the numbers on its financial statements.  

No Surprise
Combine that with Bank of America’s reaction to the robo- signer scandal. (Working on it! Wait, halt foreclosure sales! No, restart them! Whoops, still checking records!) Add in the $141.6 billion of home-equity loans on Bank of America’s books, the real value of which is unknown. And it should be no surprise that the company’s stock price has been plunging. So, does Bank of America need to issue new common stock to raise capital? Its executives say no. They point to the usual regulatory benchmarks, as well as their own calculations of tangible common equity. This is a bare-bones capital gauge, showing a company’s ability to absorb future losses, which excludes preferred stock and most intangible assets.

Using Bank of America’s $129.5 billion figure for tangible common equity, though, that’s still about $14 billion more than the company’s market cap. So the market isn’t just discounting the intangibles, most of which don’t count in regulatory capital. Investors are wary of the company’s other numbers, too.  

Artifice of Strength
The tough part for Bank of America executives is that the company’s future may be out of their hands. Writing off more worthless assets or boosting reserves for future losses might help their credibility. (The bank wrote off $10.4 billion of goodwill unrelated to Countrywide last quarter.) Or, the market might perceive such moves as a sign that the artifice of strength is broken. It’s hard to tell. As for the government’s too-big-to-fail guarantee, it’s probably still there. But who knows?

 Republicans have won back the House. The answer is up in the air. The only certainty is there is none, aside from the knowledge that Bank of America’s top executives have no idea what goes on inside the bowels of their company. For all we know the stock could double, or be a donut. The fate of the financial system hangs in the balance. Once again, we’re all on the hook. .

GMO Patents at Risk

SUBHEAD: Justice Department surprises biotech industry with gene patent ruling.

By Richard Harris on 3 November 2010 for - 

 Image above: Illustration of money derived from genetic engineering. From (  

The Justice Department is proposing to overturn 30 years of legal precedent by sharply limiting patents on genes. The government surprised just about everyone who follows this issue when it suggested this change of policy in a court filing last week. The U.S. Patent and Trademark Office says that for the time being, it's not changing its rules, but the government's brief has thrown open an old debate about where to draw the line in patenting parts of nature.  

Surprising Reversal
The debate bubbled up again last spring, over the issue of patents on genes related to breast cancer. Myriad Genetics, a private health care company, has patented two genes, BRCA1 and BRCA2, which are the targets of a widely used test for breast and ovarian cancer. But a judge in Manhattan sided with plaintiffs who said genes like this shouldn't be patentable in the first place. The company appealed. And Myriad general counsel Richard Marsh says they asked the Justice Department to weigh in, figuring the government would defend its long-held position.

The government weighed in, but largely against Myriad. "In that regard, yes it was surprising to see that there's been this switch in thinking by the current administration," Marsh says. Marsh says even if the company loses the court case, their tests are still protected by several other patents, which aren't being challenged. "As to Myriad, this case is not going to have any material impact," he says. "What we're concerned about is, we're part of the biotech industry, and we believe, as to the biotech industry, this will have a very, very significant impact."

 Intrinsic Value
Gene patents are critical for companies like Myriad, Marsh says. If Myriad hadn't had patent protection, Marsh argues it would never have invested $500 million to develop these tests in the first place. It would be too easy for other companies to swoop in and use that knowledge. But Bob Cook-Deegan of Duke University says the issue is actually not as sweeping as all that. "Every jurisdiction in the world has decided: Yes, you can patent genes when what you're doing is producing a valuable thing," he says.

But the patents that are now under fire have their value simply because they describe the genetic sequence on the DNA. Diagnostic tests look for that sequence. "What has never been contested in court until now is this new concept of diagnostics," Cook-Deegan says. And that's now a concern because soon there will be a whole new testing technology that will allow labs to look at thousands of genes all at the same time.

Will a company ever be able to develop that test if many of those genes are patented by other companies? "We don't want 15 different companies, or 100 different companies, testing a hundred genes," Cook-Deegan says. "It just makes no sense. And this is the first time a judge has had to make a decision about that new context, and looked at those patents in that new light."

 Bad For Business?
But the example that Cook-Deegan raises doesn't trouble F. Scott Kieff at George Washington University Law School. He says consider your laptop computer. There are thousands of patented inventions in there. The company that makes the laptop just needs to take the time and spend the money to license those technologies from the patent holders.

"While it's conceivable that patents could clog the market, could create a gridlock and be anti-competitive, our markets over the past 30 years tell the opposite story," Kieff says. He argues that biotech took off in the United States, but not in Europe or Japan, precisely because the U.S. is more generous in allowing companies to patent genes.

 Overturning that policy, he says, would be bad for U.S. business. But what about consumers who might benefit from the next generation of genetic tests? Myriad isn't required to let other companies use its patented genes. But Richard Marsh at the company says don't worry. "We clearly appreciate and agree it would be very inappropriate to have a patent on a given technology and not let it be utilized in a fashion to benefit the public," he says. But he would like his company to make the profit.  



SUBHEAD: Only by healing our belief in our separateness will we be able to finally and fully restore our balance with Nature.

By Paul Chefurka on 3 November 2010 in Approaching the Limits to Growth - (

Image above: Painting "Newborn" by Alex Gray (1996). From (

Whenever I contemplate the spectacular mischief that we humans have wreaked on our world, I am compelled to ask how this could have possibly happened. The despoilment of our planet seems to be the exact opposite of how I would expect a thinking, feeling, caring creature to treat their home. What could have driven us to this, and what perverse qualities could have allowed us to ignore the consequences of our actions for so very long?

At first blush, our problems seem decidedly physical. Dangerous gases drift in the air; acidity rises slowly in the ocean as the fish disappear from its depths; garbage and detritus of all kinds fouls the land where lush forests and grasslands once ruled. All these disturbances point back to human actions.

The proximate causes of this planet-wide distress include economics, politics, and personal and corporate greed – all facilitated by a technological cleverness that rests on a bed of dispassionate science. I have spent over 50 years of my life trying in vain to understand our environmental problems as purely physical problems.

When I viewed them in those terms, the fact that such problems even existed in a rational, scientific culture seemed nonsensical. However, when I recently began to understand them as consequences of a rupture in the human spirit they finally began to make sense to me.

Yes, they are compounded by political and economic forces, but in my view even politics and economics are simply consequences of the same qualities of the human psyche. Since the dawn of consciousness, human societies have been driven by a complex web of factors with their roots embedded deep in our evolved human nature. Power relationships and hierarchies, kinship and xenophobia, selfishness and altruism, competition and cooperation, curiosity and apathy, and countless other polarities mingle together to form the infinite variety of human dynamics. Underneath it all, though, lurks our self-awareness.

Human self-awareness is the root of our sense of separation from the natural world, and from each other for that matter. It’s the crowning paradox of the human condition – at once both our greatest glory and our fatal flaw. It is behind the dualism – the perceptual split into subject and object – that gave us science.

It’s the source of our ability to see others as “different yet the same”, giving us the power to act altruistically. It’s also behind the sense of self and other that has allowed us to assume dominion over all we survey, whether animal, vegetable, mineral or human. Our sense of separation is the rupture of the human spirit that has allowed our current predicament to develop. If this is the case, then no physical, political or economic remediation will heal the wound.

The solution to our predicament is not – cannot be – material, political, economic, or simply philosophical. If a “solution” exists at all, it's orthogonal to all those domains. Only by healing our belief in our separateness will we be able to finally and fully restore our balance with Nature.

When I began to view the situation like this, I was finally able to see that there are in fact solutions, where none had previously been visible. These new solutions don't attack the predicament directly as a series of material, political, economic or technological problems. Instead, they seek to effect change from the center, by encouraging people to mature into an inter-connected adulthood and assume personal responsibility for their actions.

This approach follows Gandhi's dictum, "Be the change you wish to see in the world." The mischievous idea of science and technology as a post-modern "religion of salvation" with Ray Kurzweil's transhuman singularity playing the role of the Rapture and an economist making a cameo appearance as the Devil (think infinite growth on a finite planet...) resonates very strongly with me. But to be a little more precise, it's not exactly science that has failed us.

We have been undone by a toxic stew of classical economics, technological cleverness, love of progress, an attitude of Manifest Destiny and an unwillingness to accept any limits on our growth. Technology lets us use scientific discoveries to satisfy human desires of all kinds.

When we harness scientific knowledge to human ends, the outcomes we choose to implement are based on our wishes. If our wish is dominion over nature, we will use scientific principles to invent technology like mining machinery, continental energy grids, factory farming and the automobile. Of course, each of those inventions is presented within our cultural narrative as an obvious, irrefutable boon.

One of the points of having a cultural narrative is to put a positive spin on human activity. The spin is always in line with the narrative – or more precisely, in line with the wishes of those who create and sustain the narrative.

The fact that these inventions, the technological expressions of science, have a subtext of dominion over nature is carefully camouflaged, and the idea that this might possibly be a bad idea is thoroughly discouraged.

None of this would have been so damaging if people didn’t have such a natural ability to delude themselves into believing that whatever they wish for hard enough is possible. It’s kind of like clapping for Tinkerbell.

"The future is always going to be better than the past," and “My kids will have better jobs, bigger houses and faster cars than I did,” are examples of such magical thinking at its finest. Those two kinds of wishing – the wish to improve the human condition and the wish to see the human milieu keep growing forever – are not inherently different. I see them more as two points on a continuum.

On one end is simple desire; on the other end is unreasonable desire. They are distinguished less by any intrinsic difference than by the attitude and realism of the one doing the wishing. It can be very difficult to tell when the reasonable morphs into the unreasonable."I wish to own a small piece of land" becomes "I wish to own an entire island" which inflates into "I wish to claim a continent for my King" and eventually becomes "I wish to rule the world." The underlying desire is the same; it's just the scale and reasonableness of the wish that changes.

Whether or not a wish is realistic or deluded depends very much on the one doing the wishing. There are people who wish for our (and by extension, their own) material wealth to continue growing forever. There is no shortage of economists who will tell them that such a strange thing is possible. Are the dreamers deluded? Are the economists deluded?

What laws of nature would need to be violated for such a delusion to become reality? How is the worship of the Charging Bull of Wall Street materially different from worshiping the Golden Calf of the Bible, when both imply a violation of the laws of nature?

The world changes only when enough people have made a choice to change themselves. At what point will we each say, “Enough!” and choose a different path? Is anything keeping you from making that choice right now? As you finish reading this article I invite you to say it quietly to yourself. “Enough!” If you listen closely with your heart, you may be able to hear the life that shares our planet say, “Thank you.”


The Leading Edge

SUBHEAD: We simply dug the coal, pumped the oil, and contaminated the atmosphere as fast as economically feasible.

 By Tom Whipple on 3 November 2010 in Fall Church News-Press - (

Image above: Actual photo of oil derricks along seawall in Huntington Beach,CA, in 1935. Tinted and labeled by Juan Wilson.

Do you remember the furor over drilling for oil in the Alaska National Wildlife Refuge a few years back? The whole country was up in arms. At various times some 50 to 60 percent of Americans favored drilling in the area as they were told this would result in lower gas prices.

Last week the USGS lowered its estimate of the amount of oil that could be extracted from the region all the way from 10 billion barrels down to less than one billion, making drilling in the area uneconomical. By the way, the amount of crude being pumped down the Alaskan pipeline now has fallen from 2 million barrels a day (b/d) when the pipeline first opened back in the 1970's to about 600,000 b/d in recent weeks.

The trouble is that when the flow of oil falls below a quantity estimated to be 200-300,000 b/d (some say 500,000) the line will have to be closed as there will simply not be enough hot oil being sent down the pipeline to keep it from freezing in winter.

Last week an organization in California, The Post Carbon Institute, released a new book, "The Post Carbon Reader," which draws a much broader picture of the serious issues facing mankind. With 30 authors, each specializing in some aspect of the multiple troubles we face, the scope of the book touches on nearly every aspect of our civilization that is out of balance, unsustainable, and headed for a fall.

The basic proposition of the book is that the world has reached the limits of growth in terms of its population, economic activity, and the ability of the atmosphere to absorb more carbon emissions. Either the world's peoples must transform themselves into a sustainable number living in a sustainable manner or there will be many dire consequences right up to the possibility that the human race itself could become extinct. Clearly, this is serious stuff.

Some hold that our sustainability problem started when we first started planting crops and domesticating animals 10,000 years ago. This thesis says if we had stuck with hunting and gathering as a race we would have been able to sustain our act indefinitely, but then we would never have had enough surplus energy to learn reading & writing, and to build cities, the Internet and space ships.

Our immediate problem, however, started in earnest with the industrial revolution about 200 years ago when we first started digging up prodigious quantities of coal and feeding it into steam engines. It wasn't long before we struck oil and the rest is history. The world's population went from an estimated 5 or 10 million when we first started farming, to a billion when we started serious coal digging, to about 7 billion today. We also got incredibly richer in terms of material goods and could sure get around much faster.

In retrospect it was an incredible couple of centuries, with some, but not all, aspects of civilization reaching new highs. Mankind's greatest omission during this period was the failure to use our newfound sources of energy and knowledge to make all these wonderful benefits sustainable. We simply dug the coal, pumped the oil, and contaminated the atmosphere as fast as economically feasible. Now these golden centuries are drawing to a close.

In surveying the detritus from our 200-year binge, the Post Carbon's authors identify at least a dozen of what it is fair to term "civilization threatening" mega-problems facing us - too many people; screwed up atmosphere, climate, and oceans; too little water; too little food; declining supplies of fossil fuels; over extension of credit and massive national debts; tottering global financial systems; and the list goes on. One of the book's major points is that all these problems are interconnected so that developments in one of them affects many others.

Now there is little new in all this. Any alert citizen is aware of at least some of the mega-problems facing us. What is lacking for many, however, is a sense of timing. We all know that someday the sun will explode and engulf the earth, but this unhappy day is said to be billions of years away. A good solid meteor hit would not do us any good either (remember the dinosaurs), but as these things seem to come millions of years apart few worry. As long as a problem is perceived as being decades, or for some even a few years away, it is not a concern.

Unfortunately the attitude that serious adverse events while coming are still beyond the horizon of concern has led to nearly universal complacency and denial. In recent years it has become obvious that we are already in the throes of at least two of our mega-problems, peaking world oil supplies and an unstable economic system.

These two problems are of course closely interconnected to the point where it now is difficult to sort out cause and effect. Some believe that the four fold increases in oil prices in the last decade was a major cause of the at least some of the world's current economic problems. Others believe that continued growth of world oil production is being hampered by our recessionary times.

In any case it seems clear that the first ripples of the tsunami that will come with the winding down of the industrial age are already upon us. Universal recognition of this fact cannot be far away.


Preponderance of the Small

SUBHEAD: Set out to do the small things that individuals in a disintegrating society can actually accomplish to better their own lives.

By John Michael Greer on 3 November 2010 in Archdruid Report - (

Image above: Detail of Tea Party painting by Mark Bryan (2010). From ( 

 I suspect many Americans these days are coming to appreciate the custom that places the peak of campaigning season in the days on either side of Halloween.

This year, the usual and interchangeable Demublican political hacks trick-or-treating for votes have been joined on the midnight streets of the American psyche by a medley of mad hatters and March hares from a Tea Party as strange as the one Alice attended in Wonderland, with the spectral forms of thousand-handed robosigners and zombie banks looming over all. It’s enough to keep mere vampires and mummies cowering in their crypts.

There’s something very reminiscent of Halloween, too, in the way that the frightening and the funny have gotten all tangled together in recent headlines. The infighting that’s broken out among the moneyed classes of late is an example worth noting.

The cause of the quarrel is simple enough: in the next few years, somebody is going to end up holding several trillion dollars in mortgage-backed securities that aren’t worth the paper no one got around to printing them on. Nobody wants to be the chump left holding the bag, and as a result, a once-sacrosanct consensus that kept the investment industry and the media alike from pointing and giggling at each season’s crop of rank fiscal absurdities is coming hastily unglued. Now of course the implosion of America’s mortgage debt is no laughing matter.

Millions of people have lost their savings, their pensions, and their jobs as a result of it, and the aftermath of the brief era of wretched excess that ended so messily in 2008 will continue to burden families and blight futures for a decade or more, even if every possible effort goes into mitigating the consequences for the bulk of Americans – and every policy proposal made by either party so far leads in the opposite direction.

Still, there’s plenty of gallows humor to be had watching fund managers and pundits announce that they’re shocked, shocked! to discover the widely publicized problems with the mortgage-backed “securities” they themselves helped market so eagerly a few short years ago. Still, the echo of Halloween I hear most strongly in America just now is one that goes to the heart of the holiday.

We pretend to be scared of ghosts and vampires and non-financial zombies, after all, because it’s a way of coping with the real terror all these things represent, which is of course our fear of our own mortality. In the same way, I’ve come to think, a great deal of the fearful predictions now surging through the blogosphere and the mainstream media alike are attempts at coping with a more immediate and real fear, which – again, like death – is hidden behind a flurry of euphemisms. The one that comes to mind just at the moment is “quantitative easing.”

Many of my readers will have heard the calm and sanitized announcement this evening that the Federal Reserve Board will be buying $600 billion of US federal debt over the next seven months.

I’m not sure how many of my readers have noted that this is the amount of debt the US government expects to issue over the next seven months. I’m even less sure how many of my readers have noticed that the Fed will be paying for these purchases by exercising its legal right to produce US dollars out of thin air. In other words, the United States is now printing money to pay its bills.

There may be an example somewhere in the long history of finance when a country has done this without facing catastrophic economic consequences in the fairly near term, but I don’t happen to know of one. Once a country starts covering its debts by way of the printing press, the collapse of its currency and its economy is pretty much a foregone conclusion.

The exact way in which the consequences come due varies from case to case; the hyperinflation made famous by Weimar Germany and, more recently, Zimbabwe is only one of the options, and there are good reasons to think that this isn’t the most likely outcome just at the moment.

My own guess, for what it’s worth, is that we’re headed into a state of affairs that might as well be called hyperstagflation: the economy and money supply both contract, but the demand for dollars drops faster than the supply as holders of dollar-denominated assets scramble to cash in their dollars for anything that might preserve a fraction of their paper value.

As in the stagflation of the Seventies, but much more drastically, prices go up while employment goes down until the economy shudders to a halt. Now of course that’s far from the only possibility; we could see a straightforward deflationary collapse; we could also see increasingly reckless use of the printing press overwhelm the contraction of the money supply altogether and tip us into old-fashioned hyperinflation.

What we won’t see for very much longer, though, is what currently passes for business as usual. I suspect a great many people in the financial community are aware of that – a supposition that gains some support from recent reports that corporate insiders in a range of industries are selling off their shares of their own companies’ stock at a record pace. I suspect the rest of us will become aware of it, too, as we approach the kind of economic, social, and (inevitably) political disruptions that people later describe in hushed tones to their grandchildren.

 All these considerations may appear unrelated to green wizardry — the home gardens, handicrafts, conservation measures and back-to-basics measures that have been central to this blog’s trajectory for the last several months. The seeming mismatch between the immense societal crisis unfolding around us and the backyard projects for individuals and families

I’ve been suggesting here has been the topic of a fair amount of comment in the peak oil blogosphere, of course, and the Green Wizardry project has been criticized more than once for failing to offer some grand response that will solve the problems facing industrial society – or, rather, will make a comforting claim to do so, and so provide a tune for the whistling past the graveyard that seems to occupy so much effort these days.

 I’m glad to say that not all the critiques of the Green Wizardry project have been on this level. At the other end of the spectrum is a very thoughtful discussion by Erik Lindberg of Transition Milwaukee of the debate a few months back between myself and Rob Hopkins.

The essay is titled The Long and the Short of It: Existential Comfort in the Age of Hopkins and Greer; it’s in five parts -- Part 1, Part 2, Part 3, Part 4, and Part 5 – and offers the clearest perspective I’ve yet seen on the differences that Rob and I tried to air in our contending essays.

One of the things that makes this interesting to me is that Lindberg founds his discussion on literary theory. He’s refreshingly attentive to the role of narratives in shaping visions of the future, mine and Rob’s among them, and uses a division of narratives into four types – romance, tragedy, comedy, and farce – to make sense of the differences between the Transition narrative, on the one hand, and the narrative of which the Green Wizardry project is a practical expression, on the other.

The Transition narrative, he suggests, is romance, defined as a story where a heroic protagonist (in this case, the Transition movement) sets out to achieve an improbable goal and does in fact achieve it. The narrative that gives Green Wizardry its context, in his view, is tragedy, defined as a story in which a heroic protagonist (in this case, modern industrial civilization) is brought low by the inevitable consequences of its own arrogant and mistaken decisions.

So far, so good. Still, the Green Wizardry project itself doesn’t offer a tragic narrative. In a very real sense, it’s an effort to find a working alternative to the central dynamic of tragedy, the doomed attempt of the tragic hero to overcome the fate his own hubris has brought down on his head.

Perhaps the one real misstep in Lindberg’s critique is that he managed to miss this, though it’s explained in so many words in a passage he quoted from The Ecotechnic Future, the book of mine he used to ground his discussion. (When an analysis of a text has to rest the full weight of its argument on a single exclamation point, as Lindberg’s does, that’s normally a sign that something has gone amiss.)

The narrative at the core of the Green Wizardry project, in fact, is a comic narrative. Put that boldly snd the notion may seem horribly out of place. Still, the same logic that leads us to festoon our houses every October with terrors in which we don’t believe, in order to help ourselves come to terms with a terror in which we all unavoidably believe, is at work here as well.

Comedy is the natural human response to tragedy. It’s for this reason that Shakespeare put comic turns cheek-by-jowl with the starkest of his tragic scenes – the gatekeeper’s soliloquy right after Duncan’s murder in Macbeth; the Fool’s ingenious nonsense punctuating the agony of King Lear. It’s for the same reason that in classical times, each trilogy of ancient Greek tragedies was finished up with a satire; and Japanese Noh plays to this day are divided by comic interludes.

To understand this, it’s useful to pay attention to the nature of the protagonists of the four kinds of narrative Lindberg discusses. The heroes of tragedy are always exceptional persons in exceptional situations. So are the heroes of romance – Luke Skywalker may look like just another Tatooine farm boy, but there’s an old man with a light saber in his future, and the Force is with him.

So, on the other end of the scale, are the protagonists of farce, who make fun of our pretensions by being exceptionally foolish, greedy, lustful, or what have you. Comic heroes are the exception precisely because they aren’t exceptional, and neither are the situations in which they find themselves.

The protagonist of Comedy is Everyman or Everywoman, and the world he or she must confront is the same one we encounter in our own lives. This is why the great tragedies and romances always contain just enough comedy to draw the spectators in and undercut the distance they try to put between themselves and the tragic or romantic hero, and it’s also why the truly great comedies always dance on the edge of tragedy, romance, or both at once, pushing their protagonists right up to the limits of the ordinary but never quite across it. I

n a gentler age, we might have the luxury of understanding the impact of history’s arc on our lives in the context of comedy pure and simple. Here in America, at least, that option has been foreclosed – or if it remains open, it’s only by way of the wry sort of comedy Cervantes made famous in Don Quixote, in which a very ordinary person becomes convinced he’s a hero out of romance, goes forth to seek some grandiose destiny, and runs headlong into one disaster after another until enough of the stuffing is pounded out of him that he heads home to La Mancha.

Still, at least one other kind of comedy is open to us, and it’s the kind I’ve sketched out above, the kind that provides a counterpoint and some degree of relief to a larger tragedy. The core plot of tragedy, again, is that an extraordinary person attempts the impossible and is destroyed.

The core plot of comedy, by contrast, is that a completely ordinary person attempts some equally ordinary task and, despite all the obstacles the author can come up with, succeeds in winning through to some modest but real achievement. When it stands on its own, comedy gets its effect by reminding us that, no matter how ordinary we are, and how embarrassing the tangles we create for ourselves, we can reasonably hope to stumble our way through it all and achieve something worthwhile.

When it functions as a counterpoint for tragedy, this same effect is even more powerful; as the tragic hero in all his magnificence crashes and burns, the comic counterpoint scrambles out of the way of the flaming wreckage and finds afterward that, like Candide, he can at least tend his garden.

Yes, I’m suggesting that this is basically the best we can hope for at this point in the turning of history’s wheel. If the promising beginnings of the 1970s had been followed up in the decades that followed, we might have had a reasonable shot at a narrative of romance; as the Hirsch Report pointed out, getting through peak petroleum production without massive economic trauma can be done if you get to work on it twenty years in advance of the peak.

We didn’t, and those possibilities are now water (however oil-stained) under the bridge at this point. The world’s industrial nations chose, in effect, to embrace the role of the tragic hero instead, and they’ve worked at it with gusto; the current US administration’s decision to put America’s economic collapse on the fast track by paying its bills via the printing press is a grand bit of tragic action, the sort of deliberate flouting of destiny that makes hubris its own nemesis.

Those who want to play the role of tragic hero on a smaller scale, in turn, can certainly do so; embracing some romantic fantasy of salvation or other, with a heroic disregard for the hard constraints closing in on us here and now, is one very promising option.

Still, this role has practical disadvantages, starting with the aforementioned habit of crashing and burning. It’s for that reason that I’ve suggested a more prosaic alternative, which is to set out to do the small things that individuals in a disintegrating society can actually accomplish to better their own lives, and those of their families and communities, while simultaneously handing down useful gifts to the future. That’s the central theme of the Green Wizardry project, though of course there are many other ways to pursue the same kind of goal.

 It’s not accidental, I think, that the anonymous Chinese sages who assembled the I Ching – and who had plenty of opportunity to reflect on the rise and fall of empires – made room for this strategy among the patterns of change in that ancient text:
Success. Perseverance furthers. Small things may be done; great things should not be done. The flying bird brings the message: It is not well to strive upward, it is well to remain below. Great good fortune.
- Hsiao Kuo, the Preponderance of the Small.

In this season, when the flying birds are headed southward with messages of the coming winter, this may be good advice to follow. In next week’s post, we’ll get back to the nitty gritty of following it, with some pointers on the dance of genetic information that’s set in motion by saving seeds. .

Whimper versus Bang!

SUBHEAD:In the list of those on the new council is new generation that’s all too willing to kow-tow to the mucky-mucks.

By Andy Parx on 3 November 2010 for park News Network - (

Image above: Tinted still frame from "Citizen Kane". Mashup by Juan Wilson.

 It’s not without a wave of ambivalence that we greet the news that we won’t have Kaipo Asing to kick around anymore. We relished the possibility that he would seek another term and actually lose at the polls after announcing earlier that the last term would be his final one, if for no other reason than to send a message that the old days of secrecy and paternalism were over.

But we can’t help but feel sad it came to that. Not only was Kaipo at one time a force for the people- and sometimes the only one- on a council full of self prompting, pro-development corporate shills but was a good friend during the years we spent attending every council meeting.

A few years ago, at the first court hearing regarding the infamous ES-177, Kaipo told us privately - and later denied doing so - that he didn’t really care what the Sunshine Law said, he had always done what he thought was best for the people of Kauai and would continue to do so no matter no matter what it took or what people said and did.

Though we, and apparently most of the people of Kauai,  eventually rejected this method of governance he was never the type of corporate shill that has dominated the council over the last few decades. Looking up and down the list of those who comprise the new council that’s all we see- a new generation that’s all too willing to kow-tow to the mucky-mucks and embrace the old boys machine when it benefits them politically.

Even a political neophyte knows Kaipo’s departure leaves a huge leadership vacuum and the fight for the chair will show a lot about the new and returning councilmembers.

A three-way battle is shaping up between Derek Kawakami, Jay Furfaro and JoAnn Yukimura but the determining factor may not be who cuts the best deals for committee chairs as it usually is when a new chair comes in but whether or not the process plays out in public or behind closed doors.

Watch to see if the “open meeting” plays out with genuine intrigue and public horse-trading or whether it appears scripted and pre-determined to give the indication of whether this council will really move in a direction that rejects the back room dealings of Asing’s council or whether the change at the top just means more room for other assorted hacks and self absorbed buffoons.

Asing’s departure could serve as a new opportunity for progressive change but with the current crop of possibilities it will most assuredly serve an opportunity for another power junkie to climb to the top of the dung heap.

e’ve been watching this movie for many years and aren’t expecting much from this group. We’ve been surprised before but no one’s holding their breath.


A Survey of Unlikely Voters

SUBHEAD: All American politicians find it in their interest to both expand government and to privatize its functions.

By Dmitry Orlov on 2 November 2010 in ClubOrlov - (

Image above: Elderly Teabagger carries sign reading "We don't need your stinkin' Public Option". From (

It is election season in the United States, and if you tune in to any of the local news programs/comedy shows you are likely to get an earful of commentary, opinion, conjecture and wild speculation on what the “likely voters” are likely to do. Allow me to save you the trouble: they are likely to go and vote.

Who they are going to vote for doesn't matter: without exception they are going to vote for an American politician: a lawyer or a businessman, someone belongs to one of a few available political categories, all of them misnomers designed to confuse the public.

There are those who call themselves conservatives, and who are in fact not conservatives at all but free market liberals. There are those who call themselves libertarians, but who have somehow forgotten their anarchist-socialist roots and are in fact also free market liberals.

Then there are the “liberals,” who are also free market liberals but aspire to being nice, whereas the rest of the free market liberals are nasty. But nobody here wants to be called a “liberal,” because in this topsy-turvy political universe it has become little more than a term of abuse.

It takes a long time to explain this nonsense to visitors from abroad, and when you round out the explanation by saying that these distinctions don't actually matter—because no matter what these politicians call themselves they are all state-capitalists who have been exhibiting quite a few fascist tendencies of late—the visitors inevitably feel that you have wasted their time.

But if you try to explain this nonsense to a domestic audience, it will be you who will feel that your time has been wasted. US voters are easy marks for political tricksters, and it is probably something that just can't be helped.

The neatest trick is getting them to vote against their class interest. A few generations ago we had the “Reagan democrats”: working class people who voted—not once but twice!—for someone who was anti-union and generally anti-labor. And now, a few decades of political progress later, we have the “Teabaggers”: middle-aged obese and sickly white people who are about to cast their vote for someone who will take away their government-provided electric scooters and their very expensive medical care.

When the political tricksters fail and the voting public actually gets a little bit upset, it is time to send in the clowns, and so most recently a couple of late-night TV comedians have joined the fray, holding a massive rally to “restore sanity.”

This new sanity is epitomized by the following family portrait: daddy is a “Conservative Republican” mommy is an “Obama Liberal,” the son is a “Libertarian,” the daughter is a “Green,” and the dog (the only one of them who is sane) is trying to run away. Meet the Losers: they are the ones who have no idea what class their family is in, or what their class interest is, and as far as their chances of making successful use of democratic politics to collectively defend and advance their class interest, well... they are the Losers—that says it all, doesn't it?

All that blood spilled in the name of liberty and democracy, and to show for it we have a country of insane Losers and the odd sane stray dog, free to a good home.
But it is all a waste of time: the Losers may vote or not vote, they may flap their gums at the breakfast table or twinkle their toes up and down the street holding signs, where they may take part in peaceful protest or get teargassed and shot with rubber bullets—the result will be exactly the same. No matter who US politicians claim to be, all of them exhibit two powerful but conflicting tendencies: to bureaucratize and to privatize.

The bureaucratizers among them wants to grow public bureaucracies, creating political machines and systems of patronage, and providing ample scope for pork barrel politics. The privatizers among them want to dismantle public institutions and privatize everything under the sun in order to shrink the public realm and to enhance the concentration of private wealth.

These two imperatives are at odds, not for any ideological reason, but simply because there is an inevitable tug of war between them: big public bureaucracies expand the public realm, but privatizing the public realm shrinks it.

All American politicians find it in their interest to both expand government and to privatize its functions.

When the US economy is growing nicely, the two factions find that their wishes are granted, and they go merrily along enlarging federal and local bureaucracies while assisting in the concentration of wealth, making everyone they care about happy—everyone except the the population, which is being steadily driven into bankruptcy and destitution, but that's just a problem of perception, easily remedied by an army of political consultants come election time.
This public-private feeding frenzy is called “bipartisanship.” When the economy isn't growing, the two factions are forced to square off against each other in what amounts to a zero-sum game. This is called “gridlock.”

Currently the US economy is growing at such an anemic rate that unemployment (defined as “percentage of working-age able-bodied people without a job”—not the fake “official” number) is continuing to increase. Even this anemic growth is likely to be corrected down in the coming months.

The future glows even dimmer: a good leading indicator of economic growth happens to be “discretionary consumer durable goods spending,” and the good people who have had their eye on it tell us that it has been trending downward for a few months now, and portends a GDP growth rate of around negative six percent, which, if it holds at that level and does not deteriorate further, gives the US economy a half-life of just under a dozen years. A continuously shrinking economy assures continuous gridlock.
Although most if not all political commentators are on record saying that gridlock a bad thing, it is hard to find a reason to agree with them.

Given the country's predicament, which of the two fruits would we wish this putatively beneficial bipartisanship to yield: the gift of more federal and local bureaucracy or the gift of more privatization and concentration of private wealth in fewer and fewer hands? Let us suppose that you are a big fan of government bureaucracy; how, then, do you expect the country to be able to afford to feed all these bureaucrats when the economy—and therefore the tax base— is shrinking?

And supposing that you idolize the ultra-rich and expect to become one yourself as soon as you win the lottery; how, then, do you expect your riches to amount to anything, seeing as the vast majority of this private wealth is positioned “long paper”—currency, stocks, bonds, intellectual property or some more exotic or even toxic pieces of paper with letters and numbers printed on them.

 All of these financial instruments are bets on the future good performance of the US economy, which, by the way, is shrinking.

A continuously shrinking economy is a large incinerator of paper wealth, and all these paper instruments are in the end just ephemera or memorabilia, like tickets to a show that's been cancelled.

The bureaucratic contingent and the wealthy-on-paper contingent have enough paper between the two of them to feed the fire for a little while longer, but does the country really need a bipartisan effort increase this rate of combustion? If you enjoy being part of this system, and want to show your appreciation for it by casting a vote, you might as well vote for gridlock, because doing so is more likely to prolong your pleasure.
Cast your vote for gridlock, if you wish; your time is yours to waste. But what of all those who aren't particularly interested in voting? My informal survey of unlikely voters indicates that a surprisingly large number of them is thinking of leaving the country.

Some days it seems like anybody who has a brainwave is thinking about running away. This is especially true of dual citizens who hold a US passport as a passport of convenience (it is one of the easiest in the world to get). For them it is more a question of “When?” It is also true of those born elsewhere, or have a foreign-born parent, or some other tenuous connection with another country.

But there are many among those who are thinking of leaving who have lived in the US their entire lives, have barely ever ventured abroad, and are not proficient in a single foreign language! They don't know how to fit in anywhere but here, but they do know that they can't stay where they are. Finding these people a good new home seems like a bit of a challenge.
It seems that many of those who are clever enough to realize that voting here is a fool's errand also want to leave this country. But how many of them are actually successfully leaving? The answer (again, based on my decidedly informal and limited survey of unlikely voters) is that the vast majority of those who are thinking of leaving are failing to do so.

This is rather unfortunate, because the planet can absorb only so many US expatriates. Should you decide to become one yourself, it would make sense for you to try to find yourself a chair to sit down on before the music stops. Even now the mood in many countries is turning anti-immigrant. The longer you wait, the higher your risk of becoming stranded in what remains of the US.
I will certainly have more to say on this topic—once the election fever has abated, Washington is safely gridlocked, and the bonfires of bureaucratic grandiosity and paper wealth are burning bright