Life & Death of Gaia

SUBHEAD: So, we must learn to live with the flow of the Earth's cycles. For that, we must know a little chemistry.  

By Ugo Bardi on 21 May 2012 for Casandra's Legacy - 
  (http://cassandralegacy.blogspot.it/2012/05/great-chemical-reaction-life-and-death.html)

 
Image above: Photo of a valley on Earth where Gaia is robust. From original article.

Good evening everyone and it is very nice to be here today. You know, every time I give a talk I try to say something different - otherwise it would be boring for me and, perhaps, for you, too. So, this time I thought I could do something closer to what's my job. After all, I teach chemistry. So, shouldn't I teach you a little bit of chemistry? Then, I thought that I could start by presenting to you a chemical reaction. Here it is:

Well, after you give speeches for a while, you become somewhat telepathic. So, I know what you are thinking. Yes: I can read your minds and I know that this slide is making you happy; isn't it? By the way, the exit door is down there. Maybe you can scream something like "I forgot to turn off the gas stove!" as you run away. Well, nobody is running away and that's nice. I said that I know what you are thinking and it is true - without exaggerating, of course! You are thinking that chemical reactions are boring. And I agree with you: chemical reactions are very boring. I can tell you that: I studied chemistry, I teach chemistry, I've been working in chemistry for all my life. I should know!

So, why do chemists like the things that they hate - so to say? Are they masochist or what? Well, no. Maybe I am asking you to believe something a little too extreme, but let me tell you something: chemistry is not boring! Chemistry is fascinating, it is interesting, it is even fun. And chemical reactions are not what chemistry is about. Chemical reactions are just a shorthand that hides the really interesting things. If you look at the symbols, well, it is boring. If you look at what the symbols describe, if you look inside, well it is not the same. It may be an interesting story, as I was saying it may be fun, it may be fascinating.

You know, when I was a freshman in chemistry, I had to attend chemistry labs. There were many nice girls in my class and they were all wearing lab coats in the lab - not exactly sexy as garments. But that was just the outside: what was fascinating was the inside! So, I hope today that I could show you that the specific reaction that I am showing to you today is hiding something hugely interesting. It is called "silicate weathering" and is the basis of life on Earth.

The way I have written it, it is very simplified - it is much more complex than that. But we can take it in this form in order to understand it. If that reaction were not running all the time on our planet, I wouldn't be here, you wouldn't be here and not even those nice looking girls that I met during my time as a student would ever have existed. Nothing alive on this planet would exist. The entity we call "Gaia" would not exist. Let me explain. What do we mean exactly with "Gaia"? I think the best I can do is to show you an image.


 
Image above: Detail of rendering of the planet Pandora. From (http://cassandralegacy.blogspot.it/2012/05/great-chemical-reaction-life-and-death.html).

I am sure you recognize what this is; it is "Pandora" from the film "Avatar." Now, we can say that Pandora is a sort of an Earth on steroids. It is lush, it is full of life, full of creatures: dragons, monsters, waterfalls, trees, mountains, clouds; all that. Of course, Pandora is a fantasy world; but we are discovering plenty of new words in the Galaxy; many are about the same size of the Earth and at the right distance from their suns; so they could well host organic life similar to ours - like Pandora does in the Avatar movie.

We can't say for sure if such words exist, but one thing we can say is that - if they exist - the reaction I was showing to you before must be running on there. A world without that silicate weathering reaction running is like Mars or Venus. No silicate weathering reaction, no life. Let me explain: in order for life to exist, there have to be some materials that make it exist. There has to be oxygen to breathe, for instance. But, even more important than oxygen is a special molecule that we call carbon dioxide and that we write as CO2, pronounced see-oh-two.

 You know that carbon dioxide is what plants use to carry on photosynthesis, which is what keeps alive everything on this planet. If Pandora is so lush and beautiful, it has to have CO2 in the atmosphere, just as our Earth does. Plants make CO2 react with hydrogen extracted from water and out of this reaction they create all organic matter which is then be used to make living beings. In a sense, CO2 is Gaia's food, it is also Gaia's blood, Gaia's lymph and more. But, then, if CO2 is Gaia's food, there is a problem. CO2 is a reactive molecule and here is where the reaction I wrote kicks in:

You see that this reaction contains carbon dioxide; CO2, on the left side. And you see that this CO2 react with something written as "CaSiO3" which I can read as "calcium silicate". Now, the reaction (keep in mind that it is very simplified) says that carbon dioxide reacts with the silicates of the crust to create carbonates (CaCO3) and silica (SiO2). So, a gas, carbon dioxide, reacts with rocks to create more rocks. And, if it has to create these rocks, the carbon which once formed CO2 becomes carbonate, which is solid. Let me show you:

Image above: Photo of weathered rock in a place where Gaia is not robust. From original article.

This is a weathered rock somewhere. See? CO2 reacts with the rock and corrodes it. In doing so, CO2 disappears. Clearly, it is a very slow process. You don't see rocks being washed away by rain, unless you are willing to wait for a very, very long time. How long? Well, we are talking of geological times; millions of years, but that's not what we are worried about. The question is; if CO2 is consumed by the reaction, how long would it take for the atmosphere to lose all of it? (and note that plants would start dying much before CO2 were to disappear completely).

 On this point, there is an answer that you can find in Robert Berner's 2001 book which has a rather impressive title "The carbon cycle of the phanerozoic". Berner says that all the CO2 in the Earth's atmosphere would be consumed by the weathering reaction in about ten thousand years. In part, it would be replaced by CO2 degassing from the oceans, but even that source would be exhausted in about 300,000 years. These numbers are, of course, just orders of magnitude but for what we are concerned here, the uncertainty doesn't matter much.

Life on Earth has been going on for more than three billion years and there must have been CO2 in the atmosphere all this time. No CO2, no life. There is no escape to that. So, you see that we arrived to a paradox. The weathering reaction should have consumed all the CO2 in the atmosphere long ago but there is still plenty of it; enough, at least, to keep photosynthesis going and with it all life on Earth. But paradoxes are almost always pathways to understanding deeper truths and this one is no exception. Let's go back (once more!) to the weathering reaction:

You probably remember from what you studied in high school that chemical reactions never go fully in one direction. They can go both ways and often they are in an equilibrium condition in which reactants and products remain in constant concentrations. And you may remember that there are conditions that can shift the equilibrium from one direction to another. About the weathering reaction, we said that it goes from left to right, as you can see from the picture of the weathered rock seen before. But, if we could make the reaction go from right to left, then the carbonates decompose and become a source of CO2. If that were possible, we'd have a way to bring CO2 back in the atmosphere.

How could that happen? Well, another thing that you surely learned in high school is that the equilibrium of a chemical reaction depends on temperature. There are good reasons based on thermodynamics that say that a solid compound decomposes at high temperatures. That's what happens to carbonates, provided that you can reach temperatures of the order of several hundred degrees Celsius - possibly over a thousand. Now, where can you find these temperatures on Earth?

Very easy: look at your feet.

Think of making a hole of a few tens of kilometers and there you are. You find an area of the Earth called the "mantle" which is semi-molten rock composed mainly of silicates, but also carbonates. Here is the structure of the inside of our planet as we know it today.

You have to go deep down, but eventually you reach temperatures which decompose the carbonates. Now, if carbonates were to reach those depth, they would be decomposed into CO2 that would then degassed out by volcanoes, geysers, hot springs, all that. That's exactly what happens in the great CO2 cycle that goes under the name of "plate tectonics". Here is it:

Image above: Illustration explaining plate tectonics. From original article.

 Let me explain a little this image. It shows how the ocean floor moves and is gradually pushed inside the depths of the Earth in a process called "subduction". Everything that stands on the ocean floor is destined, eventually, to disappear into the mantle. But this is also a cycle, you can see in the figure how material from the mantle is pushed up to the surface to form new ocean floor at those regions which are called "mid-ocean ridges". A very slow process, it takes tens of millions of years for a piece of rock that surfaces at the mid ocean ridge to go back to the mantle. But it does occur. Now, this is also the CO2 cycle.

You see, we said that the reaction of carbon dioxides with silicates produces carbonates. These carbonates end up on the ocean floor, often in the form of the shells of dead marine organisms. And the final result is that this carbonate is pushed into the mantle - where it is hot enough to decompose it into oxide and CO2. Then, the CO2 returns to the atmosphere in the form of volcanic eruptions. The beautiful thing of all this is that the cycle is that it is the "control knob" of the Earth's surface temperature. Really, the CO2 cycle is a thermostat that keeps the Earth not too warm and not too cold; just right. It has been doing that for billions of years.

As a thermostat, it must be said that it has not always functioned so well: we have had ice ages and those hot periods called sometimes "planetary hothouses". But, on the whole, the Earth's temperature has always remained within the limits that make life possible. Otherwise, we won't be here. So, how does the thermostat work? First of all, you know that CO2 is a "greenhouse gas". It traps the heat emitted by the Earth's surface acting a little like a blanket that keeps the planet warm. So, the more CO2 there is, the more we expect the Earth to be warm. As a consequence, the temperature can be regulated by controlling the concentration of CO2 in the atmosphere. But how can that be done? Well, there is the trick: the speed of chemical reactions depends on temperature. It is true also for the silicate weathering reaction:

High temperatures make the reaction go faster. So, if the Earth's becomes warmer, then there is more CO2 consumed and that reduces the temperature because the concentration of CO2 goes down - and remember that it is a greenhouse gas! The opposite takes place if the Earth becomes cooler - the reaction slows down, the CO2 concentration increases because of all those volcanoes and, in the end, the temperature returns to the previous values. See?

Simple and effective. Of course, as I said, the control is far from perfect. It involves times of the order of millions of years, so it takes a huge time lapse for the planet to recover from a perturbation. For instance, a huge volcanic eruption took place some 250 million years ago in Siberia. It emitted so much CO2 that the resulting increase in temperatures almost killed all life on Earth. The silicate weathering reaction, eventually, absorbed all that CO2 and brought temperatures back to more acceptable values for the biosphere. But it took millions of years. So, if we look at the temperature record, we see that it oscillates and that shouldn't surprise us too much. Here are the data we have for the past 550 million years or so, the period we call "Phanerozoic":

As I said, the regulation is not perfect, but the fact that temperatures oscillate around a constant value tells us that there is a regulation ongoing. You see, the point is that the planet badly needs that regulation, because the sun's irradiation is far from being constant. It increases of about 10% every billion years because of reasons that have to do with the evolution of stars. So, in a period of half a billion years, as the Phanerozoic, we'd expect the planetary temperature to go up as the result of the sun becoming more and more bright. Instead, we don't see it.

What we see, instead, is a gradual reduction of the concentration of CO2. Yes, it is irregular, but there is no doubt that the concentration of CO2 has gone down, on the average, during the past half billion years. And if we make a little calculation that takes into account the increase in solar luminosity (you can find it in Berner's book) we can see that the numbers do click together. The variation of CO2 concentration is what has kept the Earth not too warm and not too cold, just right, during the geological past.

Now, I guess you are asking yourselves what's going to happen in the future. As you surely noted, the CO2 concentration has been going down and continues to do so (apart from human intervention in terms of burning fossil fuels, but that's not part of the regulation system). Eventually, we'll arrive to a point where the system can't reduce the concentration any more. Yes, and before we arrive to that point, there won't be enough CO2 for plant photosynthesis. And without photosynthesis, there can't be any life on Earth - everything must die. That's indeed the ultimate destiny of the Earth's biosphere. Of Gaia, if you like.

If Gaia is a living being then, as all living beings, it must die. It will be a slow process - very slow by human standards. But it is going to happen. In the simulation below, by Franck and others, you can see the slow winding down of the biosphere which should become extinct a billion and a half years from now. You see also that vertebrates should disappear much earlier, perhaps in less than a billion years And here is the ultimate destiny of the Earth.

To be sterilized by the sun as it becomes more and more bright. The oceans will evaporate and - eventually - the surface will melt under the tremendous heat. That is, clearly, a far away future. Maybe, by then, our descendants, if there will be any, will have found another place to live, around another star or somewhere in the galaxy.

But our main concerns are not about such a remote future. Our main concern is that even the near future may give to our close descendants, a lot of problems with the Earth's temperature. The problem is that we have been tinkering with the thermostat without understanding exactly what we were doing. And we have been emitting into the atmosphere a large amount of gases which had been removed from the atmosphere as part of the regulating mechanism. Gases which had been stored underground in the form of what we call "fossil fuels": coal, oil, and natural gas. The perturbation made to the system is very large and extremely rapid if compared with anything that has occurred in the past history of Earth.

You probably have seen this picture and it is very, very worrisome. The fact is that such high CO2 concentrations have never occurred on Earth during the past few millions of years. When we had such concentrations, tens or hundreds of millions of years ago, the sun was less hot than it is now and, nevertheless, the Earth was a much warmer place than it is today.

We might be able to adapt to a much warmer planet, but the process wouldn't be painless. Just think that the melting of the continental icecaps would submerge all of our coastal cities. We can't hope that the silicate thermostat will save us from CO2 caused warming. This reaction

is damn slow by our standards. It will, eventually, remove from the atmosphere the CO2 we have emitted, but it will take tens of thousands of years, at the very least. Look at these simulations by Dave Archer and you see what the problem is:

See? part of the CO2 we have emitted in the atmosphere will still be there in 40,000 years from now. Actually, it will stay there much longer. So, you see how important it is the reaction that I showed to you. The silicate weathering reaction is what keeps "Gaia" alive - better said, it is Gaia.

And don't make the mistake of thinking that Gaia is a goddess and that, somehow, she cares about us. No, it is more correct to say that Gaia doesn't give a damn about us - which is what you'd expect from a chemical reaction, after all. It is us who have been tampering with this chemical reaction and it will be us who will have to face the consequences. In the end, we can't hope to force the planet to do what we want it to do.

So, we must learn to live with the flow of the Earth's cycles. For that, we must know a little chemistry.

 My idea today was to show to you a bit of this chemistry. But more than chemistry, we must learn our limits, otherwise we won't survive for long. This is our Earth, not a fantasy planet, let's try to keep it the way we found it.

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Dancing Shoes

SUBHEAD: When the central banks finish destroying he meaning of money altogether you'll be paying $25,000 for a Little Debbie snack cake. By JAmes Kunstler on 20 May 2012 forKunstler.com - (http://kunstler.com/blog/2012/05/dancing-shoes.html) Image above: Opening dance scene in a bank from "Pennies From Heaven" set during 1930's Depression. From (http://www.nicksflickpicks.com/2005/11/picked-flick-73-pennies-from-heaven.html). So many shoes are dropping out there that reality is starting to look and sound like the tap-line in a Busby Berkeley production number. The meme-scape, too, is humming with viral transmissions of dire doings. Is JP Morgan unwinding like a 1911 knitted woolen Yale varsity sweater? Did it booby-trap the credit default swap universe in the process, and is that getting ready to blow? The whole world is hanging by its fingernails, refusing to be dragged into the future.

That future is all about contraction. We could navigate our way into it but we don't want to. We want to stay right where we are with all our stuff and no need to make new arrangements and we are trying every last trick to do that. Can you not sense a terrible tidal surge of implacable forces under the headlines' placid surface? I do offer Mark Zuckerberg best wishes on his nuptials, but I think he set himself up for one of fate's great pranks as FB stock goes to 99 cents while he's still on his honeymoon (playing Frogger in a super deluxe hotel suite).

Does anybody really believe that the European money problem has any other ending except massive repudiation of obligations and epic political realignment? Or that the USA isn't caught in the undertow. The only real question now is how the civilized world might remain civilized while it rebuilds its money system. Money, after all, is a representative of reality and the representations by nations and person and institutions have been so false for so long that, for practical purposes, there is no consensual reality anymore.

By the way, it was a nice gag at the time, but Karl Rove was wrong. We are not creating our own reality.

Reality's theme going forward is changing from liquidity to liquidation. The European LTRO (quantitative easing) was a nice fairy tail, and the mild buzz lasted a few months, but its flimsy spell is broken. An awful lot of parties may be liquidating gold and silver, too, this week but under the circumstances I've got to think there will be plenty of counterparties looking to buy, since uncertainty is crushing all other media of exchange. The process begins to look like a mass metamorphic conversion of winners to losers and vice-versa. In a giant unwinding of paper assets the result may be that precious metals go sideways while all other assets tank - and then once everything's in the tank, PMs tank, too, because nobody is left standing with that kind of cash. Of course, in the event just a little bitty bit of gold will still buy a lot of stuff. The other possibility is that the rumored global coordinated central bank QE (quantitative easing) doomsday machine goes off destroying the meaning of cash money altogether. Surely that sort or stunt will not cast the same spell as the LTRO, a more measured act of desperation, but will call into question the very meaning of dollars, euros, yen, and pounds sterling. That's when you'll be paying $25,000 for a Little Debbie snack cake.

Let me be first of the non-right-wing in the blogster corps to venture the somewhat un-PC idea that Barack Obama turned out to be the first black schmuck elected President of the US. He didn't do the one thing that would have mattered most: put an end to government sponsored control fraud. Control fraud at that level is so pernicious because it destroys the legitimacy of institutions. It can only make a nation cynical, by which I don't mean given to malicious humor, which is different, but just always thinking the worst of your fellow man and the very idea that the human race ever produced anything fine and durable.

And on top of that malfeasance, to try to suspend due process of law in Section 1021 of the NDAA bill (military budget) - smacked down by federal judge Katherine Forrest last week - was an amazing transgression that the mainstream press greeted four months ago with barely a shrug. Can't we just start a movement to go down to Charlotte, NC, this summer and levitate the convention center into outer space? It nearly worked with the Pentagon forty odd years ago.

What do you suppose Obama and the other feckless schmucks of the G-8 were telling each other this weekend at Camp David between weenie roasts and ping-pong round robins? It must have been the emptiest dumb show of mere protocol; an exchange of tie-tacks in the national colors, the playing of many anthems and flying of flags, issuance of bland assurances and platitudes. Nobody believes any of them anymore, even poor Mr. Hollandaise, who has been on the job a few days. Angela Merkel must be good and goddam sick of even showing up at the office.

Well, perhaps its best that the world will go where it has to go without leadership. After all, human history is emergent and improvisation suits us. Forceful leaders often only leave a big mess behind. But imagine a world where nobody gets paid. That might be our world by the end of the week.

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NATO protests in Chicago

SUBHEAD: Police van drives into protesters, web video reporters detained, held at gunpoint. By Xeni Jardin on20 May 2012 for Boing Boing- (http://boingboing.net/2012/05/20/nato-protests-in-chicago-live.html#more-161878)

Image above: Cation Police State Ahead. . From original article. Photo by C.S. Muncy

"Occupy" movement participants and an array of protest groups are among those gathering in Chicago this wekeend to demonstrate outside the NATO summit. Sunday, protesters are ramping up for the largest demonstration of the weekend. So are police and Homeland Security agents. Today, thousands of demonstrators are marching to the convention center where President Obama and other world leaders are meeting. Four men have been arrested on terror charges. Lawyers for the men now referred to by some protesters as the "NATO 4" claim undercover agents set up a bomb plot, and entrapped the suspects.

Image above: Mounted Chicago police ride into crowd. From original article. Photo by C.S. Muncy

Saturday night, at about 10:40PM local time, a Chicago Police van "drove into a crowd of demonstrators who were attempting to cross westbound over the Jackson Street bridge at the Chicago River," according to this video report and testimony from people who were present.

Video above: Police van runs into crowd of demonstrators. From (http://www.youtube.com/watch?v=0yAMBN5CWxs).

Chicago Police van number 6751, accelerated as it passed through the crowd, striking several people and seriously injuring one victim who was later transported to the emergency room. The extent of the victim's injuries are not known. The driver of the van made no attempt to ascertain the condition of any of the people that were struck. Witnesses watched as the van passed through the phalanx of police surrounding the scene and drove away from the area. Had there been a civilian driving, they would certainly have been charged with a hit-and-run on a pedestrian in the roadway and taken into custody once they had been apprehended. No order to disperse had been given to the crowd.

Tim Pool @Timcast

WE HAVE BEEN RAIDED SOS

19 May 12

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Also last night, a group of independent web video journalists report having been been harassed, detained, and handcuffed by Chicago police. They claim their gear was damaged and video documenting police attacks on protesters destroyed. Below, from the WeAreChange YouTube feed (many videos there from the Chicago protests):

Luke Rudkowksi, Tim Pool, Jeoff Shively, Dustin & Jess were driving home after covering a NATO protest in Chicago only to have their car raided by police.

Tim Pool @Timcast

Calming down, still paranoid after being cuffed at gunpoint. #nato #nonato Live at timcast.tv

19 May 12

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Tim Pool @Timcast

We are told the police scanners are tracking us... #NATO #noNATO

19 May 12

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Geoffrey Giraffe @Jiraffa

Guns were drawn, car raided just after.we.called.nlg explained we may be about to be framed to come to house while we gathered belongings.

19 May 12

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Geoffrey Giraffe @Jiraffa

Car.got raided by 12 cars, cuffed, searched, interrogated.

19 May 12

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Luke Rudkowski @Lukewearechange

My friend that i saw earlier today said he was detained illegally for 6 hrs at a DHS center and questioned about me

19 May 12

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Luke Rudkowski @Lukewearechange

HD video of CPD raid on @Jiraffa @Timcast and myself guns drawn, ustream footage deleted, cameras were shut off by CPD & lot more craziness

19 May 12

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Luke Rudkowski @Lukewearechange

The CPD got all the info on me that DHS did not get from my friend that was detained and interrogated about me

20 May 12

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Luke Rudkowski @Lukewearechange

Homeland Security wanted to know what i was wearing who i was with and where i was staying this is freaky friend will make video update soon

20 May 12

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Luke Rudkowski @Lukewearechange

Just found out my friend who was detained by DHS 10min after seeing me was interrogated about me by name where i was staying who i was with

20 May 12

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Xeni Jardin @xeni 19 May 12

Luke is another #ows #nonato livestreamer. “@Lukewearechange: Had guns drawn on me searched and interrogated while handcuffed”

Geoffrey Giraffe @Jiraffa

@xeni Also CPD slammed hard drives against running boards 4 or 5 times each. Think they thought @Timcast alt batteries were drives too.

20 May 12

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Video above: Cops stopping video crew. From (http://youtu.be/yzouTMprfPA).

And in related news: At the time of this blog post, there are reports that the City of Chicago website has been DDOS'd. Over the weekend, there were reports of other such DDOSes.

Follow the Chicago protests today as they unfold, with the livestreamers the Chicago police and Homeland Security are following: Tim Pool's web video stream, Luke Rudkowski's web video stream. On Twitter: Geoffrey Giraffe (@jiraffa), Tim Pool (@timcast), Luke Rudkowski (@lukewearechange).

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Local inaction and corruption

SUBHEAD: People all over town were asking "do you smell that?" The source as being the Kauai County Council Chambers. By Andy Parx on 19 May 2012 for Parx News Daily - (http://parxnewsdaily.blogspot.com/2012/05/blowing-chunks.html) Image above: The current Kauai County Council. From (http://www.kauai.gov/Portals/0/Council/images/2011Council.jpg). It seems appropriate that sewage is once again spilling into the ocean at Nawiliwili. After all, all that crap being generated up the hill in Lihu`e this week had to go somewhere. People all over town were asking "do you smell that?" on Tuesday and it didn't take an olfactorally-advanced detective to discover the source as being the Kauai County Council Chambers. That was when our seven stilted servants once again turned to the budget for what, from all indications, appears to be the biggest criminal enterprise on Kaua`i these days- the Office of the Prosecuting Attorney (OPA). Those who have been under a pohaku might want to read up on OPA Godmother Shaylene Iseri-Carvalho and her P.O.H.A.K.U. program. And another great must-read, blow-by-blow account of Tuesday's session is available via Joan Conrow for anyone who doesn't have the time to watch the debacle... although the latter is well worth the investment of an hour (start about an hour in) if just for the comedic value. No one expected much in the way of discussion regarding evil mastermind Iseri's all-purpose now-you-see-it-now-you-don't combination misdemeanor diversion program/reelection campaign tool. She's been busy lawyering up and taking the fifth so to no one's surprise, with the aid of her Council(hench)man Mel Rapozo and his refuse-to-recuse sidekick Kipukai Kualii, her council nemesis Tim Bynum and his second JoAnn Yukimura once again failed to get any "answers" to the same kinds of questions all the other department heads had to answer in order to receive their yearly budget appropriation. Lesser Iseri sycophants Council Chair Jay Furfaro, and Councilmembers Dickie Chang and Nadine Nakamura managed to help shut things down out and keep the relevant allegations of crimes and misdemeanors from the public's ears and eyes, running out the clock without any repercussion to the budget... and of course the local newspaper has been too busy promoting flower shows, defunct food banks and poisonous GMO corn to notice the P.O.H.A.K.U. mess. But while the council busied itself exploring new corners and crevices on the other side of the looking glass, it might well have been County Attorney Al Castillo who stole the show. This week's prize for "Most Convoluted Abuse of the Law" goes once again to the program "Legal Opinions From Al's Ass," the show that asks the statutory question "did he really just say that?" This time Castillo actually told Yukimura that the council can't appropriate "line items" in the budget- specific amounts designated for specific uses like a salary for a certain position or a piece of equipment or furniture. Despite the fact that that's what a line-item budget does by definition, Castillo told the assembled that to restrict department heads as to what the money can be used for would be violate "the separation of powers" and be "interfering with the administration." After a few "let me get this straight" questions, Yukimura simply gave up, flabbergasted by the notion that a department head like Iseri can now take all money appropriated for her department and spend it on anything her black little heart desires. Finally things got as curiouser as they could get when Nakamura revealed that, according to the finance director, the P.O.H.A.K.U. was either "pau" or "suspended". But attempted verification of that information apparently depended on how many times one asked the question, so the council spent the next half hour asking over and over until Iseri herself got up and told them it wasn't really pau or suspended but rather being run internally in her office. By that point everyone was thoroughly confused and befuddled, but it didn't really matter because that was when Furfaro ruled the clock had officially run out, apparently because the only part of the day that matters to Furfaro was beckoning: lunch. The next move in this monkey chess game will be played at this coming Wednesday's council meeting when, the council will consider the following agenda item: C 2012-170 Communication (05/17/2012) from Councilmember Yukimura, requesting Council approval of her request that the Board of Ethics conduct an investigation of whether violations of the Code of Ethics have occurred in connection with the creation and operation of the POHAKU Program and related matters. In addition, the matter is listed for an executive session. And speaking of wasting time, get ready to once again to vote on a charter amendment that would give these clods four-year terms. The claim by councilmembers is that "we can't get anything done in two years." But the message from the voters has been "we're not sure we want you to 'get anything done.' If there was a way to give you two month terms, we'd probably go for that." It's not like Kaua`i voters haven’t said "no freakin' way" way too many times to keep track of over the past few decades. Yet the council is once again apparently going to ask the electorate to approve doubling the time between elections. The last time we said "no" was in 2006 when we also passed "term limits" of eight years. If you get a chance watch the "debate," do so with an eye toward the unmitigated arrogance and sense of entitlement. The assumption that these offices are theirs once they are elected is palpable. Talk of "slots opening up" when the "eight-years are up" is bandied about with no sense of the fact that they have to run for re-election every two years. The voters will no doubt reject four-year terms once again and the council will no doubt try again in a few years. If anything, we'd probably pass a charter amendment to prohibit the council from asking us more than once every 20 years. But if you're looking for the obvious source of the sewage spill it might be the latest "big flush" of $120,000 into the Kauai Marathon. Every year it's been the same thing- for no apparent reason the taxpayers have been forced to shovel wads of cash into the event with promises that "this will be the last year." Only it hasn't been and apparently never will be since this year's appropriation seems to be circling the drain with little opposition from council members. That money could go a long way if it were to be spread wisely among the charitable non-profits that serve the island's neediest. But instead it's shunted directly into the coffers of hotel owners, airlines and other off-island entities, soon to be converted into campaign contributions. Supposedly a few dollars will trickle-down to local businesses and service industry employees, but no one is really quite sure how that works, and council members didn't seem interested in asking any questions so they weren't told too many lies. It is an election year after all. It can only get worse. .

Repairing the Damage

SUBHEAD: But God forbid the kanaka should occupy their own lands in an attempt to repair the damage, restore the sacred. By Joan Conrow on 18 May 2012 for Kauai Eclectic - (http://kauaieclectic.blogspot.com/2012/05/musings-repair-damage.html) Image above: Main highway, Haena Parking, Kauai. today. Photo by TomBarefoot. From (http://www.tombarefoot.com/info/Kauai_Beaches_Kee_Beach.html). It was so nice to wake to the sound of much-needed rain today. And so nice yesterday to see folks out picking flowers for graduation lei and parties, and to pass the bedsheets and other makeshift signs posted in high-visibility places and spray painted with congratulatory words to the class of 2012. Things like that set Kauai apart from other places. I spent most of the day on the North Shore, where the weather was glorious and the trades were gusting and the sea was that amazing color of blue-green. Nearly as stunning was the intensity of tourism. I'm not kidding when I say the ratio of rental to local cars was easily 20-1. By 10 a.m., the overflow parking lot in Haena State Park was, well, overflowing and cars lined both sides of the road from Limahuli Garden to the end. It was hard to imagine how that many people could fit on Kee Beach, or envision the level of traffic on Hanakapiai Trail. I kept thinking, wow, the day is still young, and it's not even peak season. I was also thinking of how the Hawaii Supreme Court said Ikaika Pratt couldn't exercise his traditional native rights to caretake Kalalau Valley because the state has to consider the greater good in regulating access. Problem is, the state doesn't regulate, and definitely not for the greater good. Just go to Haena State Park and you'll see it's effectively been handed over to the visitor industry. Unfortunately, that's not the only example. A friend and I spent the better part of the day walking the spectacular shoreline between Hanalei Colony Resort and Cannons. As tour helicopters buzzed overhead and tour boats bounced along offshore, I documented one case after another of blatant, intentional plantings in front of oceanfront houses — most of them vacation rentals. In the process, great swaths of public beach have been privatized. In one area, a public beach easement has been replaced with a wall, trash cans for the six adjacent vacation rentals and the increasingly common no trespassing, no parking, no more aloha signs. As we passed house after house that sleeps 8 or 10 or 12 or 14, I thought, gee, add 'em all up and you've got a defacto 200-room hotel on one small stretch of beach — operating with none of the oversight and regulations that would govern such a facility. We walked past attorney Terri Tico's oceanfront house, where some coconut palms were recently planted on the public beach, and I thought of her letter to the editor, in which she managed to plug her personal injury practice as heartily as the North Shore Path. She also falsely claimed that boondoggle project is an all-volunteer effort. Mmmm, except for coordinator Tommy Noyes and realtor/planner Ben Wellborn, who is being paid very well indeed with state Department of Health monies to come up with a “wtf?” plan — I mean “alternatives report” — that speaks of relocating taro loi in Hanalei and building cantilevers over streams alongside historic bridges. “Why should the public be paying to develop paths on Princeville land?” asked my friend, a North Shore resident who noted that people who live up there don't want their communities connected, especially not to Princeville. Besides, she said, there is no community left in Hanalei. It's full-on a resort town now. And as she pointed out, even this level of tourism isn't enough. The state and county want to keep building tourism and encourage more growth in the visitor industry, with no thought to the cumulative impact on resources, communities and the local lifestyle. Image above: Main highway, Haena Parking, Kauai. 1963. Photo by Helen Lind. Note horses wandering free. From (http://ilind.net/oldkine_images/kauai-1963/index.htm). But more important, at least to the state, the high court has affirmed that cultural practitioners will not be allowed to camp in Kalalau without competing with tourists for the proper permits. In the weird, warped mind of the state, it's OK to let tourism run amok on the beaches and trails, skies and sea. But God forbid the kanaka should even intermittently occupy their own lands in an attempt to repair the damage, restore the sacred. .

Apocalypse Fairly Soon

SUBHEAD: Greece won’t and can’t pursue the policies that Germany and the European Central Bank are demanding.  

By Paul Krugman on 18 May 2012 for the New York Times -  
(http://www.nytimes.com/2012/05/18/opinion/krugman-apocalypse-fairly-soon.html)


Image above: Cartoon of action by Europe to save Greece by Steve Bell. From (http://www.guardian.co.uk/commentisfree/cartoon/2012/may/17/greek-debt-crisis-steve-bell-cartoon).

 [IB Editor's note: We usually see Paul Krugman as not getting it. He thinks we will spend our way back to growth. However in the op-ed piece he seems to see the light.]
  

This doesn’t have to happen; the euro (or at least most of it) could still be saved. But this will require that European leaders, especially in Germany and at the European Central Bank, start acting very differently from the way they’ve acted these past few years. They need to stop moralizing and deal with reality; they need to stop temporizing and, for once, get ahead of the curve. 

I wish I could say that I was optimistic. 

The story so far: When the euro came into existence, there was a great wave of optimism in Europe — and that, it turned out, was the worst thing that could have happened. Money poured into Spain and other nations, which were now seen as safe investments; this flood of capital fueled huge housing bubbles and huge trade deficits. Then, with the financial crisis of 2008, the flood dried up, causing severe slumps in the very nations that had boomed before. 

At that point, Europe’s lack of political union became a severe liability. Florida and Spain both had housing bubbles, but when Florida’s bubble burst, retirees could still count on getting their Social Security and Medicare checks from Washington. Spain receives no comparable support. So the burst bubble turned into a fiscal crisis, too. 

Europe’s answer has been austerity: savage spending cuts in an attempt to reassure bond markets. Yet as any sensible economist could have told you (and we did, we did), these cuts deepened the depression in Europe’s troubled economies, which both further undermined investor confidence and led to growing political instability. 

And now comes the moment of truth. 

Greece is, for the moment, the focal point. Voters who are understandably angry at policies that have produced 22 percent unemployment — more than 50 percent among the young — turned on the parties enforcing those policies. And because the entire Greek political establishment was, in effect, bullied into endorsing a doomed economic orthodoxy, the result of voter revulsion has been rising power for extremists. Even if the polls are wrong and the governing coalition somehow ekes out a majority in the next round of voting, this game is basically up: Greece won’t, can’t pursue the policies that Germany and the European Central Bank are demanding. 

So now what? Right now, Greece is experiencing what’s being called a “bank jog” — a somewhat slow-motion bank run, as more and more depositors pull out their cash in anticipation of a possible Greek exit from the euro. Europe’s central bank is, in effect, financing this bank run by lending Greece the necessary euros; if and (probably) when the central bank decides it can lend no more, Greece will be forced to abandon the euro and issue its own currency again. 

This demonstration that the euro is, in fact, reversible would lead, in turn, to runs on Spanish and Italian banks. Once again the European Central Bank would have to choose whether to provide open-ended financing; if it were to say no, the euro as a whole would blow up. 

Yet financing isn’t enough. Italy and, in particular, Spain must be offered hope — an economic environment in which they have some reasonable prospect of emerging from austerity and depression. Realistically, the only way to provide such an environment would be for the central bank to drop its obsession with price stability, to accept and indeed encourage several years of 3 percent or 4 percent inflation in Europe (and more than that in Germany). 

Both the central bankers and the Germans hate this idea, but it’s the only plausible way the euro might be saved. For the past two-and-a-half years, European leaders have responded to crisis with half-measures that buy time, yet they have made no use of that time. Now time has run out.

So will Europe finally rise to the occasion? Let’s hope so — and not just because a euro breakup would have negative ripple effects throughout the world. For the biggest costs of European policy failure would probably be political. 

Think of it this way: Failure of the euro would amount to a huge defeat for the broader European project, the attempt to bring peace, prosperity and democracy to a continent with a terrible history. It would also have much the same effect that the failure of austerity is having in Greece, discrediting the political mainstream and empowering extremists. 

All of us, then, have a big stake in European success — yet it’s up to the Europeans themselves to deliver that success. The whole world is waiting to see whether they’re up to the task. 

• Paul Krugman is professor of Economics and International Affairs at Princeton University and a regular columnist for The New York Times. Krugman was the 2008 recipient of the Nobel Prize in Economics. He is the author of numerous books, including The Conscience of A Liberal, The Return of Depression Economics, and his most recent, "End This Depression Now!".  

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Post Capitalist Economy

SUBHEAD: The expansion of scarcity into areas of life once characterized by abundance is what we call economic growth. By Stuart Jeanne Bramhall on 19 May 2012 for Dissident Voice - (http://dissidentvoice.org/2012/05/conceptualizing-post-capitalist-economics/) Image above: Money getting smaller over time = negative interest. From (http://themoneyconspiracy.com/prescious-metals-envesting/united-states-hyperinflation/).

Sacred Economics: Money, Gift & Society in the Age of Transition by Charles Eisenstein is a well-researched discussion of the history of money, capitalist economics and the worldwide movement for economic relocalization. Part I explores the profound effect the institution of money has on human thinking and psychology, as well as direct links between our monetary system, the current economic crisis and the impending global ecological crisis. Parts II and III explore possible alternatives to a debt-based monetary system that has outlived its usefulness.

The book begins by describing the gift economy that has characterized all primitive cultures. Public gift giving was a major social ritual in all early societies. It was the primary mechanism early human communities employed to satisfy basic survival needs. As civilizations became more complex, gift exchange and barter were impractical over long distances. Therefore, money was introduced as a common medium of exchange. By tracing the western conception of money back to its earliest origins in ancient Greece, Eisenstein makes a strong case that the money system itself is responsible for rapacious growth and resource depletion, greed and the demise of community.

The Illusion of Scarcity

An early artifact of the introduction of money is the mistaken belief that the basic necessities of life are in short supply. This illusion underpins all western economic theory. In fact, many textbooks define economics as the study of human behavior under conditions of scarcity.

As Eisenstein points out, this is a ludicrous notion in a world in which vast quantities of food, energy and raw materials go to waste. He links the illusion of scarcity to the illusion of the “discrete and separate self.” This, in turn, stems from the concept of personal wealth and the privatization of communally owned land. Prior to Roman times, land, like air and water, was considered part of the commons and couldn’t be owned. Under Roman tradition, there was no way for an individual to legitimately take possession of common lands. Thus the Roman aristocracy must have seized it by force, just as the English stole the communally owned lands of Native Americans.

Debt, Commodification, and Perpetual Growth

Sacred Economics argues that what economists commonly refer to as growth is the expansion of scarcity into areas of life once characterized by abundance. Fresh water, which was once abundant, has become scarce following its transformation into a commodity we have to pay for.

The fractional reserve banking system, which allows bankers to create money out of thin air – through loan generation – accentuates the pressure to convert more and more of the commons into commodities. Because the debt and interest created is always greater than the money supply (current global debt is estimated at $75 trillion, in contrast to global wealth of $30 trillion), there is always constant pressure to produce more goods and services to repay it. This explains why there are always people willing to cut down the last forest and catch the last fish.

As natural resources, such as fossil fuels, minerals, forests, fish and water, are rapidly converted to commodities, a similar transformation occurs in the social, cultural and spiritual commons. Stuff that was free throughout all human history – stories, songs, images, ideas, clever sayings – are copyrighted or trademarked to enable them to be bought and sold.

According to Eisenstein, the main reason for the world’s current financial crisis is that we continue to face mountains of increasing debt – yet have run out natural, cultural, social and spiritual capital we can convert to money to repay it.

The Case for Negative Interest Money

Eisenstein argues that capitalism, like the monetary system, has ceased to serve the interests of the vast majority of humankind. However, he disagrees with a “Marxist” solution, in which capitalist infrastructure is totally dismantled. He believes major economic change can occur through gradual evolution. In addition to advocating for relocalization of economic and political power away from central government – to cities, states and regions – he also supports the creation of local “negative interest” currencies, first introduced during the Great Depression in Germany, Austria and Switzerland.

Negative interest money was first proposed by Delvio Gisell in 1906 in his book Natural Economic Order. Gisell called it “free money” because it allowed people to exchange goods and services without paying interest to the owners of money (banks) for the right to do so. A negative interest system involves “demurrage” or natural decay in the value of money. If you know that a $100 bill will only be worth $90 in a year’s time, you have a powerful incentive to exchange it for goods and services.

In the 1920s, a negative interest currency called the Wana circulated in Germany. Towns that used the Wana had plenty of money for business expansion, workers’ salaries and public infrastructure and services – in contrast to towns that relied on the Deutschmark which, owing to deflation, was in extremely short supply. Austrian and Swiss communities introduced negative interest currencies (the Worgle and the WIR) in 1932. Owing to the threat these alternative currencies posed to banks and wealthy elites, the German and Austrian governments banned the Wana and the Worgle in 1932-33. The WIR is still in circulation in Switzerland but no longer operates as a negative interest currency. During the post-World War II boom, the demurrage was eliminated to prevent the Swiss economy from overheating.

In the US more than 100 cities were preparing to launch demurrage currencies – to stimulate local communities ravaged by the Great Depression – when Roosevelt came to power in 1932. Roosevelt, who recognized the enormous threat this posed to central government, banned all “emergency currencies” by executive decree (as Thaddeus Russell writes in A Renegade History of the United States, Roosevelt set the dangerous and unconstitutional precedent of circumventing Congress to enact laws by executive order).

The main advantages of negative interest currency are:

1. Money ceases to be scarce. As it becomes easier for small businesses to access money, jobs are created and people resume purchasing goods and services. Because the new currency is commons-based (see below), higher prices for ecologically harmful products serve as a brake their production.
2. The ready availability of money eliminates the fear of never having enough, reducing greed to acquire more, one of the main causes of income inequality.
3. Debts become easier to repay. People only pay back the original loan, without the compound interest.
4. There ceases to be any incentive for corporations to convert natural resources to profit, as cash profits rapidly decline in value.
5. Banks have more incentive to fund ecologically and socially beneficial projects with a low rate of return. They lose less by lending negative interest money than by allowing it to accumulate.
6. As money loses its value and importance, there is gradual resurrection of both the gift economy and the commons, in which people work for a “social dividend” in the form of public recognition. Eisenstein sees this process already beginning with the thousands of volunteers who donate their time to create and upgrade Open Source software, Wikipedia and books, films, songs and blogs they share freely as part of the Creative Commons.

Using State Banks to Issue Negative Interest Currencies

Eisenstein can see great benefit in local, regional and state governments issuing negative interest currencies to stimulate local business development and job creation, just as the Wana, Worgle and WIR did during the Great Depression. He applauds Ellen Brown’s work in campaigning for publicly owned state banks. At present, seventeen states have introduced legislation to create publicly owned state banks, funded by interest free tax revenue rather than Wall Street. These publicly owned banks would be in an ideal position to issue local negative interest currencies.

How a Commons-Based Currency Would Work

Rather than backing them with gold or silver, Eisenstein proposes that demurrage currencies work like bearer bonds and be redeemable for the right to “deplete the commons.” Businesses could exchange them, in other words, for the right to create an agreed amount of pollution or to deplete an agreed amount of a natural resource. Because these pollution/resource depletion quotas would be extremely expensive, corporations would be forced to internalize” (i.e. absorb the cost) of environmentally harmful production, rather than “externalizing” it (i.e. making the public pay) as they do currently.

New Zealand economist Deirdre Kent has proposed using land to back locally created negative interest currency. Under her proposal, local government would issue negative interest vouchers as a “loan” to prospective home buyers. The vouchers could be used to repay these “loans,” pay property taxes (known as “rates” in British commonwealth countries) or purchase goods and services from local businesses. This would offer new home buyers a far cheaper alternative than a bank mortgage, as well as discouraging property speculation, stimulating local business and producing additional revenue for local government.

• Dr. Stuart Bramhall is a 63-year-old American child and adolescent psychiatrist and political refugee in New Zealand. Her works include a young adult novel The Battle for Tomorrow about a 16 year old girl who participates in the blockade and occupation of the US Capitol and a memoir, The Most Revolutionary Act: Memoir of an American Refugee. Email her at: stuartbramhall@yahoo.co.nz. Read other articles by Stuart Jeanne.

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PV panel price to rise

SUBHEAD: The U.S. Department Of Commerce slaps large tariffs on Chinese solar PV panels.  

By Stephan Lacey on 17 May 2012 for Think Progress -
(http://thinkprogress.org/climate/2012/05/17/486232/department-of-commerce-slaps-large-tariffs-on-chinese-solar-modules)
 
[IB Editor's note: Thanks so much Obama Commerce Department. What better deal could struggling Americans have than buying solar PV panels from the Chinese at below cost?]

 
Image above: Photo-voltaic solar panels installed on roof.From (http://www.treehugger.com/energy-policy/united-states-slaps-tariffs-chinese-solar-power-modules.html).
 
In a long-awaited decision, the U.S. Commerce Department has issued a preliminary decision to apply tariffs to Chinese-made solar modules being imported into the U.S. The tariffs range from 31 percent to 250 percent.

The preliminary tariffs were issued after a lengthy investigation by the Commerce Department into whether Chinese companies are “dumping” solar panels into the U.S. market below cost. These tariffs follow a March decision to issue small countervailing duties on Chinese module producers that are getting illegal domestic subsidies, according to Commerce.

Today’s issued tariffs are as follows: Trina, 31.14 percent; Suntech, 31.22 percent; and 31.18 percent for all other Chinese producers that participated in the investigation. For companies that did not participate, Commerce has slapped a massive preliminary tariff of 249.96 percent.

The combination of these new tariffs and the countervailing duties will add substantial cost to imported Chinese solar panels. With panel prices hovering in the $1 per watt range, it could add around 30 cents to each panel for leading producers, and vastly more for producers that didn’t get involved in Commerce’s investigation.

These are preliminary fines and can be negotiated and changed before Commerce makes a final decision. The solar industry’s trade group, the Solar Energy Industries Association, has called on the U.S. and Chinese governments to negotiate a settlement — potentially resulting in more moderate tariffs:

“The solar industry calls upon the U.S. and Chinese governments to immediately work together towards a mutually-satisfactory resolution of the growing trade conflict within the solar industry.

While trade remedy proceedings are basic principles of the rules-based global trading system, so too are collaboration and negotiations.

“Importantly, disputes within one segment of the industry affect the entire solar supply chain–and these broad implications must be recognized. In addition, the U.S. solar manufacturing base goes well beyond solar cell and module production and includes billions of dollars of recent investments into the production of polysilicon, polymers, and solar manufacturing equipment, products which are largely destined for export.

If the U.S.-China solar trade disputes continue to escalate, it will jeopardize these U.S. investments.

“Given these broader implications, it is imperative that the U.S., China, and other players in the dynamic global marketplace work constructively to avert or resolve trade disputes that will ultimately hurt consumers and businesses throughout the solar value chain.”

The solar industry has been on edge since last October, when the manufacturer SolarWorld and six other anonymous companies issued a complaint about illegal trade practices. They argued that China’s subsidies were allowing companies to dump panels below cost, thus driving U.S.-based manufacturers out of business.

However, downstream developers have enjoyed falling panel prices — a factor that has allowed the industry to expand 109% in 2011. A group of solar companies known as the Coalition for American Solar Energy has been staunchly opposed to tariffs, saying they’ll dramatically drive up the cost of solar installations in the U.S.

As expected, the antidumping tariffs are much higher than the subsidy tariffs announced in March. One reason for that difference is the fact that the Chinese market is not transparent. When China’s local government officials support local enterprises, that support is often off the books, and that makes it very hard for Commerce Department investigators to identify and measure exactly what type and level of subsidy Chinese companies are receiving. This is precisely why the World Trade Organization includes a second-stage determination, on dumping practices, specifically designed to address nonmarket economies such as China’s.

The Chinese government will no doubt respond negatively to this announcement. They may even threaten to take retaliatory action against U.S. companies. If so, Washington must respond with a steady hand. If China wants to negotiate, the United States should be ready to listen. If China tries to force the U.S. government to back down in this dispute by threatening U.S. companies, however, that is not negotiation. Backing down to those threats would be capitulation, and capitulation is a losing game. Just as we cannot allow powerful corporations to bully and harass citizens who file legal complaints against them, we cannot allow China to bully and harass U.S. companies over trade complaints.

If China wants to contest these numbers, they should follow the U.S. example and do so according to the law and within the framework of our mutually agreed trade institutions. At the recent Strategic and Economic Dialogue meetings in Beijing, Chinese leaders promised to follow global trade rules and support rather than undermine the rules-based global trading system. Now the world will be watching to see if they uphold that promise.


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Greek squeeze and Euro crisis

SUBHEAD: Germany urged to ease austerity as fears of global recession grow if Greece leaves Euro. By Larry Elliott on 17 May 2012 for the Guardian - (http://www.guardian.co.uk/business/2012/may/17/barack-obama-eu-growth-crisis) Image above: Greek flag under pressure from belt tightening. From (http://www.123rf.com/photo_9984470_greek-crisis-3d-concept.html).

Barack Obama is to put pressure on Germany to ease the pain of austerity with policies to boost growth, as he uses two days of talks with the G8 industrial nations to warn Europe that it needs to act swiftly to spare the world economy from a second deep recession in four years.

Prior to the G8 summit at Camp David this weekend, a warning from the ratings agency Fitch that Greece's days in the single currency could be numbered heightened fears in Washington that the worsening crisis in the eurozone poses a threat to America's fragile recovery and President Obama's re-election chances.

Obama will welcome the new French president, François Hollande, as a potential ally in his push for Europe to follow the US in giving a higher priority to expansionary policies, and as a counterweight to the German chancellor, Angela Merkel.

Obama can expect support from David Cameron, who told Merkel and Hollande on Thursday that eurozone leaders must embark on a series of urgent steps to prop up the single currency if a major implosion across the continent is to be avoided.

In a video conference with fellow EU leaders, the prime minister warned of a "remorseless logic" which dictates that struggling members of a single currency are supported by stronger members.

"The prime minister emphasised the importance of Greece and the eurozone taking decisive action to ensure financial stability and prevent contagion," a Downing Street spokesperson said. The video conference included Mario Monti, the Italian prime minister, José Manuel Barroso, the European Commission president, and Herman van Rompuy, president of the European Council.

Investors again turned to safe havens, fearing political chaos and economic collapse in Greece having knock-on effects for the global economy. Spain was the main focus of concern, amid reports – denied by the economy minister – of a run on Bankia, the country's fourth-biggest bank. Fitch waited for European markets to close before downgrading Greece's credit rating from B- to CCC.

"The downgrade of Greece's sovereign ratings reflects the heightened risk that Greece may not be able to sustain its membership of economic and monetary union (EMU) ... In the event that the new general elections scheduled for 17 June fail to produce a government with a mandate to continue with the EU-IMF [International Monetary Fund] programme of fiscal austerity and structural reform, an exit of Greece from EMU would be probable," Fitch said.

Leaders of the west's most powerful economies have been meeting for informal talks every year since the oil shock of 1973 brought an end to the postwar boom, and while Obama is not expecting any major decision to emerge from Camp David, it will be a chance for the Americans to vent their frustration that Europe has failed to find a lasting solution to its debt crisis, which is now in its third year.

In Greece, there were hopes that the deposit outflows from banks had reduced. But Stuart Gulliver, chief executive of Britain's biggest bank, HSBC, said: "We're in a worse place than we were a week ago. It remains a very difficult thing to call. I think the second [Greek] election in June will be a referendum on whether to stay in the euro. A month is a very long way away. We are now seeing price action that is consistent with capitulation."

Gulliver said if Greece left the eurozone, a firewall would need to be erected around Spain. If there was a run on banks in Greece, it might not be possible to wait for the elections on 17 June. He said his biggest worry "is absolutely how the eurozone plays out – whether Greece stays in, whether firewalls are high enough to protect Spain and, frankly, whether markets take things into their own hands before 17 June".

Alistair Darling, Labour's chancellor at the time of the Lehman Brothers collapse, said:

"From my own experience, these things can blow up in a matter of hours. The slow bleeding of Greek banks should worry everyone. Europe for the last two years has been running round like headless chickens. It's no wonder people now think things will go wrong."

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