Posts Tagged ‘Crisis’

Carbon Tax, Or Global Crash

June 22, 2014

GOLD MAN SPEAKS:

In brief: The major plutocrat, Henry “Hank” Paulson, who presided over the 2008 financial crash as Bush’s finance minister, has come strongly in favor of a carbon tax. He compares the on-going climate catastrophe to the worst crash imaginable. After a few arguments of support of my own, I extensively quote this “suppot de Satan” (Satan’s support in Middle Age French). Facing the worst, the devils themselves can come in handy. Nothing below is new on this site, but it’s important to repeat it as a prayer, and hope.

It’s only natural that people clean the mess they make. So carbon polluters ought to pay the poisoning of the atmosphere, and the acidification of the seas. Because they are the ones causing this mess. They have to pay for the destruction they inflict. Not that people in general are innocent. Clearly some countries are living on the hog, not to say like hogs. Here are two views of the CO2 emissions per capita:

 I Pollute & Ravage, Therefore I Gloat

I Pollute & Ravage, Therefore I Gloat

CO2 list-countries-co2-per-capita

Few will argue that life is actually drastically worse in, say, France, in spite of all the carbon pinching there (France has no oil, gas, or coal; and fracking is illegal).

To tax carbon enough for the damage it causes, is the only way to price correctly the activity. Non carbon polluting energies will them be able to compete with the pirates who are attacking the biosphere… For profit.

The world emits 48% more carbon dioxide from the consumption of energy now than it did in 1992 when the first Rio summit took place, and Al Gore went down there with an immense retinue of adulators… To do nothing, but self-glorification.

First notice the astounding economic inefficiency of Anglo-Saxon countries (except for the European United Kingdom which emits less than 9 tons of CO2 per person per year).

FRANCE pollutes with 6 (six) tons of CO2 a year, per person. Germany with 9 tons (nine). The USA with 18 (eighteen) tons per person per year. Canada and Australia are even worse. The European Union, and its half a billion people, is around 7.5 tons of CO2, per year, per person.

As I have explained in the past, it’s no coincidence that the three powers that annihilated the Natives are busy now annihilating the biosphere: it’s the continuation of a mood (that the same, sort of, can be said about Russia is not reassuring, either: the main reason why Putin annexed Crimea is oil and gas in the Black Sea, just off shore).

Can we get out of that spiral from hell? Yes, with a carbon tax. Also please learn that the EU and the USA, together, control most of the world GDP. So they could impose a Carbon Tax. Unilaterally. By force. Yes, force, empire, all that brutish stuff. Evil in the service of goodness. The WTO has agreed already that such a tax-for-the-good is legal in the WTO statutes (the EU, or some of its countries, notably France, already impose carbon taxes, of sorts, in spite of strident USA-China-Russia opposition).

Much of Chinese economic activity is Western industrialized activity, translated to another place. Chinese dumping, say of solar panels could be addressed (in spite of… German(!) opposition; Germans sell luxury cars to the PRC, and in exchange mount cheap solar panels).

The question that the West would be at an economic disadvantage from imposing a carbon tax is a false argument. What is true is that some of the CO2 hogs would have to become more economically active to change radically their socio-economies: more people at work, quality work.

Paulson below says nothing I have not said before, and, often, many times. Yet it’s worth having it in his own words, thus allowing me to eschew the accusation of radical lunatic unreal leftism.

Lessons for Climate Change in the 2008 Recession

By HENRY M. PAULSON Jr. June 21, 2014

THERE is a time for weighing evidence and a time for acting. And if there’s one thing I’ve learned throughout my work in finance, government and conservation, it is to act before problems become too big to manage.

For too many years, we failed to rein in the excesses building up in the nation’s financial markets. When the credit bubble burst in 2008, the damage was devastating. Millions suffered. Many still do.

We’re making the same mistake today with climate change. We’re staring down a climate bubble that poses enormous risks to both our environment and economy. The warning signs are clear and growing more urgent as the risks go unchecked.

This is a crisis we can’t afford to ignore. I feel as if I’m watching as we fly in slow motion on a collision course toward a giant mountain. We can see the crash coming, and yet we’re sitting on our hands rather than altering course

The solution can be a fundamentally conservative one that will empower the marketplace to find the most efficient response. We can do this by putting a price on emissions of carbon dioxide — a CARBON TAX. Few in the United States now pay to emit this potent greenhouse gas into the atmosphere we all share. Putting a price on emissions will create incentives to develop new, cleaner energy technologies...

I was secretary of the Treasury when the credit bubble burst, so I think it’s fair to say that I know a little bit about risk, assessing outcomes and problem-solving. Looking back at the dark days of the financial crisis in 2008, it is easy to see the similarities between the financial crisis and the climate challenge we now face.

We are building up excesses (debt in 2008, greenhouse gas emissions that are trapping heat now). Our government policies are flawed (incentivizing us to borrow too much to finance homes then, and encouraging the overuse of carbon-based fuels now). Our experts (financial experts then, climate scientists now) try to understand what they see and to model possible futures. And the outsize risks have the potential to be tremendously damaging (to a globalized economy then, and the global climate now).

Back then, we narrowly avoided an economic catastrophe at the last minute by rescuing a collapsing financial system through government action. But climate change is a more intractable problem. The carbon dioxide we’re sending into the atmosphere remains there for centuries, heating up the planet.”

[PA’s warning: It’s worse than that: At least a third goes into the sea, turning it into an acid soda.] Paulson again:

“That means the decisions we’re making today — to continue along a path that’s almost entirely carbon-dependent — are locking us in for long-term consequences that we will not be able change but only adapt to, at enormous cost. To protect New York City from rising seas and storm surges is expected to cost at least $20 billion initially, and eventually far more. And that’s just one coastal city…

When I worry about risks, I worry about the biggest ones, particularly those that are difficult to predict — the ones I call small but deep holes. While odds are you will avoid them, if you do fall in one, it’s a long way down and nearly impossible to claw your way out.

Scientists have identified a number of these holes — potential thresholds that, once crossed, could cause sweeping, irreversible changes. They don’t know exactly when we would reach them. But they know we should do everything we can to avoid them.

Already, observations are catching up with years of scientific models, and the trends are not in our favor.

Fewer than 10 years ago, the best analysis projected that melting Arctic sea ice would mean nearly ice-free summers by the end of the 21st century. Now the ice is melting so rapidly that virtually ice-free Arctic summers could be here in the next decade or two. The lack of reflective ice will mean that more of the sun’s heat will be absorbed by the oceans, accelerating warming of both the oceans and the atmosphere, and ultimately raising sea levels.

Even worse, in May, two separate studies discovered that one of the biggest thresholds has already been reached. The West Antarctic ice sheet has begun to melt… Now that this process has begun, there is nothing we can do to undo the underlying dynamics, which scientists say are “baked in.” … those who claim the science is unsettled or action is too costly are simply trying to ignore the problem. We must see the bigger picture.

…waiting for more information before acting — is actually taking a very radical risk. We’ll never know enough to resolve all of the uncertainties. But we know enough to recognize that we must act now…

We need to craft national policy that uses market forces to provide incentives for the technological advances required to address climate change. As I’ve said, we can do this by placing a tax on carbon dioxide emissions. Many respected economists, of all ideological persuasions, support this approach. We can debate the appropriate pricing and policy design and how to use the money generated. But a price on carbon would change the behavior of both individuals and businesses.

At the same time, all fossil fuel — and renewable energy — subsidies should be phased out. Renewable energy can outcompete dirty fuels once pollution costs are accounted for.

… our failure to act on the underlying problem is deeply misguided, financially and logically.

In a future with more severe storms, deeper droughts, longer fire seasons and rising seas that imperil coastal cities, public funding to pay for adaptations and disaster relief will add significantly to our fiscal deficit and threaten our long-term economic security. So it is perverse that those who want limited government and rail against bailouts would put the economy at risk by ignoring climate change.

This is short-termism. There is a tendency, particularly in government and politics, to avoid focusing on difficult problems until they balloon into crisis. We would be fools to wait for that to happen to our climate…..

When it comes to developing new technologies, no country can innovate like America. And no country can test new technologies and roll them out at scale quicker than China.

The two nations must come together on climate. The Paulson Institute at the University of Chicago, a “think-and-do tank” I founded to help strengthen the economic and environmental relationship between these two countries, is focused on bridging this gap.

We already have a head start on the technologies we need. The costs of the policies necessary to make the transition to an economy powered by clean energy are real, but modest relative to the risks.

A tax on carbon emissions will unleash a wave of innovation to develop technologies, lower the costs of clean energy and create jobs as we and other nations develop new energy products and infrastructure. This would strengthen national security by reducing the world’s dependence on governments like Russia and Iran.

Climate change is the challenge of our time. Each of us must recognize that the risks are personal. We’ve seen and felt the costs of underestimating the financial bubble. Let’s not ignore the climate bubble.

Henry M. Paulson Jr., an ex-football player, is the chairman of the Paulson Institute at the University of Chicago, was CEO of Golman-Sachs,  and secretary of the Treasury from July 2006 to January 2009. When Satan himself is melting, the heat is on.

Patrice Aymé

Equality, Innovation, Civilization Sustained

December 14, 2013

Civilization is technological, or is not. Civilization is progressive, or is not. Why? Because resources get exhausted: sustainability is always unsustainable.

Some will laugh, and point out at their new renewables: the sun, the wind, sea currents. However, all would die in a full run-away greenhouse we are pointing towards. (How that could be was exposed in some of my essays, long ago, and will be left as a question, to motivate the students! After all, that’s the way I used to teach math and, or, physics!)

We need bigger solutions. Or we will keep on sinking.

When God Humbled Plutocrats

When God Humbled Plutocrats

[Roman Emperor Henry IV left out in the cold on the left; head down on the right.]

Speaking of students, Krugman is progressing in his awareness of the socio-economic situation. So is Obama who made a confused discourse about inequality (in Obama befuddled brains, the solution to inequality is more free market, Obamacare style, as he reminds us in his incoherence… and then joins stupidity to insolence by asking us if we have a better solution; well all advanced countries, but for the USA, have a solution: public health care).

Obama is a piece of flotsam moved by the tsunami of plutocracy unchained. He mentioned innovation, correctly. However his administration has made strides against it. As always, in the name of the so-called tech giants (truly plotting monopolies). As nearly always, implemented reality is the opposite of Obama’s lenifying discourses.

Intellectual Property (IP) has been seriously gutted out for the little guys (aka the inventors) since 2008.

The Obama administration has engaged in a war against “trolls“, an ill-disguised campaign for the largest corporate actors (ignoring that IP is fungible, the very principle of patents and copyright).

The Federal Circuit came up with a weird decision, AGAINST “injunctive relief”.  Large corporations can infringe in peace.

Moreover the Supreme Court decided recently that large damages amounts are more difficult to prove. NOW, if a corporation infringes on a patent, “apportionment” has to be effected.

This is a three-pronged attack against innovation.

But the pawns march on. March of the drones, all lined up behind the drone-in-chief.

The best way to get to get to Greece or Zimbabwe, as a society, is through rising inequality. Because tremendous inequality is what characterizes these societies most. In turn, it generates other ills of an overwhelming nature.

Economic inequality, at some point transmogrifies and changes dimensions, becoming fiscal and then political inequality (as presently in the USA). In the next step, even the appearance of democracy erodes (see Bush versus Gore, when a correct recount in favor of the on with the most votes was… outlawed).

Aristocracy and fascism arose from economic inequality. This was known for 26 centuries, and acted up by the creators of Greek democracies and the Roman Republic, through redistribution of wealth, or out-lawing the rise of hyper wealth.

There was a law in Rome blocking great wealth; the non-respect of this law brought civil war between the People and the plutocrats; the plutocrats won… until the Franks took over, 650 years later.

If we go full paleolithic, we will worry about food on the table, and energy. Both are under threat. Human organizations have to rise to the challenge. The distinctions between public and private, when a crisis gets strong enough, are irrelevant (look at WWII when Britain and the USA adopted economic command and control).

As we are threatened by several crises, of never seen-before severity, which are already having an impact, the time may come to avoid the self-reflective reflector jargon about neo-Keynes, post counter-counter neo Hayekism, etc…

The economists have failed to understand that, inasmuch as too much central planning is bad, so is too little. Part of economic theory ought to address the part of the economy that is public, not just the “free”-market, for profit part.

We do need governmental projects, not just government money (especially not just money sent to private banks). If Inertia Confinement Thermonuclear Fusion could be made to work well enough, for example, all our energy problems would be solved.

Fusion break-even was just achieved at LLL national laboratory; the only other project that way, worldwide, is from the French government. That sort of huge project, with potential giant, civilization changing impact, is only made possible from the largest economic entities around, governments (or even union of governments, as with the LHC, and ITER; these are not just science projects, but economic enterprises of incalculable cost… literally). The stupid sequester had an impact on thermonuclear fusion: researchers were ordered not to even reveal the breakthrough they had achieved.

The fascist plutocratic Roman imperial government was adverse to real scientific innovation (as ideas threaten plutocracy).  However, its barbarians enemies caught up with Rome technologically on the battlefield. That resulted, not just into defeat on the battlefield, but in the permanent outright replacement of Roman Army by the Franks (after experimenting with the Goths, and even the Huns).

Contemplate the Chinese dictatorship trying the first soft landing on the Moon, Luna, in 37 years; contemplate the fact China can access space at this point… But the only way Americans or Europeans get to space is by paying mentally unstable KGB dictator Putin.

Another factor in the fall of the Greco-Roman world was the exhaustion of resources. This had started early on, when, for military reasons (building the Athenian anti-Persian War Navy), Athens had eradicated the forests of Attica (500 BCE). Seven centuries later, the crisis was major, and multi-dimensional.

By 1300 CE, a similar crisis was affecting Western Europe. Half of the population died in short order (even more did during the Dark Ages). Yet, this time, innovative solutions were enacted swiftly, and civilization barely missed a stride (although, soon, horrendous religious and plutocratic wars wrecked the West).

The powerful kept supporting the loftiest intellectual ventures (just the opposite of what happened in Rome, when fake, mediocre intellectuals were supported; mediocre intellectual advice is worse than none).

Innovation is not just a central to the economy, but to the survival of civilization. But to have innovation, one needs the People experience enough equality to push for it. Although it humbles me to admit this, the Christian Church, with its strong socialist tendency (thank you Jesus), limited plutocratization: after all, kings in good standing washed the feet of the poor.

Not just this, but the Church, whatever its insanities, was viewed as of unimpeachable advice, even by the mightiest.  That’s another safeguard that has ceased to exist. The rumor has it that Pope Francis, by taking strong positions against organized crime and hyper wealth, also known as plutocracy, is endangering his life.

Even in the darkest of the Middle Ages, this was inconceivable (forgetting the special case of Philippe Le Bel). Once a (German-Italian-) Roman emperor, Henry IV, was forced to humiliate himself on his knees waiting for three days and three nights, naked below a shirt, fasting, before the entrance gate of the Pope’s castle, while a blizzard raged in January 1077.

Nothing can humiliate our plutocrats as much nowadays. It’s in our hands.

Let’s make laws. Let’s make a worldwide register of all properties. Then we can tax the pirates and profiteers, let alone run of the mill, .01% plutocrats.

Representation without taxation is a bad joke plutocrats played not just on us, but on civilization itself.

Patrice Ayme

***

Note: China just made the first soft landing on the Moon in 37 years. Well, Obama is already there! OK, the Franco-American robot “Curiosity” on Mars is more sophisticated with its (French Thales) rock blasting laser. Yet, a warning: the Jade Rabbit is supposed to look for Helium 3 (a thermonuclear fuel).

Rich Now Ruling By Taxing Poor

November 16, 2011

Q & A ON FINANCE.

Abstract: The financial crisis spreading in Europe is not intrinsic to Europe, the European Union, or the euro. The crisis has to do with sponsoring the wealthiest.

For purely mathematical reasons, the properties of the exponential function, the wealthiest always had to be taxed more. This has been known for 12,000 years, but forgotten thanks to Milton Friedman and associated gnomes.

For the last thirty years, instead of taxing the rich more, treacherous politicians have forced their countries to do the EXACT OPPOSITE. Politicians forced nations to borrow from the wealthiest, enriching the latter with the interest paid to them.

In other words, the taxing of the rich, which is necessary for a sustainable society, has been insolently perverted into the taxing of the poor.

And this, ever more, because the wealthiest fix the interest rates. Don’t expect the obsequious servants of plutocracy known as politicians to admit this. This inverted perversion is not just unjust, but insufferable. However, here we are. Thus the situation in the EU and USA is similar to that of 1789 France: odious debt.

The masses may rise in revolt, as they ought. But they better direct their rage well, and that means getting informed by reading this essay rather than the misleading, self serving disinformation oozing from the likes of the “Financial Times”, “Economist”, “Wall Street Journal”, “New York Times” (I am subscriber to all). Here we focus on the truth, therein our profit. And the truth is a value ordered function.

***

Why is there a crisis in Europe?

It is not just in Europe. Nations have borrowed money on the market, but the rates, controlled by plutocracy, have gone up. All countries are infected. A few days ago, the Netherlands, Austria or Finland viewed themselves immune, but now they are threatened, like France. And the turn of Germany, Britain and the USA is around the corner. Headline inflation in Britain is now 5.9%. Bond Vigilantes are not going to ignore this very long.

*

Does the euro have anything to do with the financial crisis as Obama, and others, have suggested?

Obama is trying, rather pathetically, to divert blame from the failed Bush-Obama economic strategy of enriching the richest of the rich, throwing money at banks, and telling plutocrats they belong.

In reality, it’s rather the other way around: American economic weakness put the PIIGS (Portugal Ireland Italy Greece Spain) economy in great difficulty, as those countries depend upon tourism more than a country such as the USA, which is still the world’s greatest economic and industrial power. 

When Obama panics about Europe he makes, unwittingly, the implicit argument that hysterical financial derivatives drive the economy of the USA. Indeed whereas quotes on the financial markets have gone nuts, the European real economy is not going belly up yet. It will, but not yet.

The latest GDP growth Spring to Summer 2011 in Germany and France are respectively .5% and .4%, or about a +2% annualized GDP growth, measured instantaneously, for the 150 million citizens duo (not adding the Benelux, as the Netherlands are faltering). By European standards, this is respectable growth. Volkswagen has never sold as many cars (it’s somewhere around 6 million), and is on its way to become the world’s largest carmaker (quality sells).

So Obama’s claim that the USA is doing poorly because of Europe is premature. The only explanation is that Obama admits that the financial operators are the ones deciding upon the state of the economy of the USA. As the financiers are worried about Europe, they decide that the USA ought to be unhappy too.

Let me repeat this slowly:

In truth the euro has nothing to do with this European debt crisis, which was caused by banks making imprudent loans, and by highly leveraged conniving speculators playing the violin of sovereign debt.

Why is the financial crisis getting worse by the day?

Nations are rolling over their debt constantly. Using new debt to pay old interest. So the debt is consistently recomputed at variable interest rates.

The arrangement has been highly profitable to the plutocracy, allowing it, among other things, to organize a worldwide real estate bubble which peaked in London, the place where the worst financial manipulations endured.

Paying debt with augmenting interest was the main mechanism which caused the subprime disaster with the ARMs (Adjustable rate Mortgages). The worst ARMs are now unlawful in the USA. But not so with nations. However the ARMs used against nations right now are the artifacts of obvious conspiracies, and they ought to be made unlawful by the same legal reasoning which outlawed ARMs in the USA, instead of bending over backwards to please the loan sharks (as is done with present “rescue” packages).

*

Is that why the Greek debt is supposed to go from 120% of GDP to 192% during the next 12 months?

Yes. Fully austerity on, the debt explodes! It was 120% of Greek GDP 3 months ago, now it’s 143%! Only plutocrats and their obsequious servants find that this is OK. Interest charged to Greece have skyrocketed, thus so did the Greek debt. Same with Italy too. Italy has no primary deficit and most of the Italian debt is rolled from decades ago. Italy has to roll 350 billion of debt in the next year.

Wait, I am confused! Why would nations borrow money? Can’t they just raise taxes?

Of course, they can. And they long have. But, in the last thirty years, nations decreased taxes on the wealthy. While putting the plebs to sleep with welfare programs. The loss of the income from taxing the rich was compensated by borrowing money on the market of money. The main actors of the money markets are the wealthy.

Thus, instead of taxing the wealthy, nations are now borrowing from the wealthy, and enriching them with interest. It is a double win-win for the wealthy. Moreover, for mathematical stability, the taxation on the rich has to be so large that wealth cannot increase exponentially. Thus cancelling taxes on the rich as Bush and Obama did had two dreadful effects:

1) it made the rich exponentially richer, thus powerful and capable to sawy people through propaganda. Thus what I say here is not said by Krugman, or the Main Stream Media, and thus not by parrot bloggers.

2) It forced states to borrow much more. Hence Obama borrowed 12% of the GDP of the USA last year. The interest 0n that debt goes straight to the wealthiest. It’s the same throughout the West. One third of the total French national debt is due to decreasing the tax on the rich in the last ten years. 

*

Market of money? Money market? Is money for sale on a market? Why would you buy money with money?

Individual and organizations find themselves sometimes with money that they cannot spend. So they lend it if one can interest them in doing so. Except if motivated by love or charity, that means they want more money back than they lent to start with. 

*

Why can’t they be loving and charitable?

This is what the old Jewish religion and its outgrowth, the Muslim Sharia, seek to impose. Actually the Christians, when they had more clout than now had also forbidden to lend against monetary interest. But the interdiction applied only within each religion, so they came to depend upon each other, love and hate each other, as indispensable partners in crime.

Why should not the Sharia be imposed? No more borrowing, no more problem!

It is a question of economic efficiency: if actor A has plenty of money, but no use for it, whereas actor B has a need for it, and society too, then why not allow A to lend to B? If one does so, one transfers the power to employ people from A to B. A has no work, but B does, and now it can pay those it employs with the money it borrowed. So two things happen:

1) More people get employed.

2) More things get done.

This is why lending money against interest is superior. And one of the reasons why the West took off economically, while the regions dominated by the Islamist superstition stayed economically stagnant.

By the way, this is indicative of an important effect that those who evalue civilizations generally neglect. The reason why Catholics could lend to Catholics in Middle Age Italy or France is that influential Catholic leaders such as the king of France (the biggest fish around), or the leaders of the Italian republics did not give a hoot about fundamentalist Christian doctrine.

So, during the Middle Ages, Christianism was not the leading ideology of Europe anymore. It was just a facade. The political-fascist prominence of the Inquisition later masked that fact to simplistic historians. Throwing superstition in the heap of history was necesseray to Europe’s ascendency. (Cynics will point out that early Franks were not very Christian, either… Christian philosophers is more like it.) 

Have states always borrowed on the money markets?

No. This is a recent phenomenon. Although Italian republics in the Middle Ages borrowed from bankers to pay their armies, there were not really money markets at the time, with many potential lenders. At some point Florence defaulted. Later, Francois I and Charles V, both born in northern France, fought each other in an enormous war financed by Italian and German bankers respectively.

Why are European states borrowing on the money market?

Two reasons. 1) after a long socialist lull after the Great Depression and WWII, plutocracy counterattacked electing Thatcher and Reagan, and making the gnomic Milton Friedman the guru of the new age. The Nobel prize in economics was then given to another 13 economists of the same persuasion.

Also the message was sent by the entire academic and propaganda machine in the Anglo-Saxon world that the Anglo-Saxon, so called liberal, highly leveraged, economic model was optimal. As I explained, the argument is worthless: it is as if arguing that a criminal who stole a lot of people by killing them, and has not been caught yet, has been a remarkable success.

Enthralled leaders, worldwide, decided that as long as money could be made from an activity, it was good, and if not, that activity was bad, and it should go away. That was excellent for those that corruption tempted. So Clinton, Major and Blair made personally giant amounts of money after their plutocratic serving tenures, but could persuade themselves that it was good because it was profit motivated, the absolute good. So corruption became an absolute good. All over.

A consequence: American education and health care are getting ever more expensive and worse, except in particular cases were profits can still be made, such as in publicly financed private universities.

Please do not be sarcastic, it hinders your message.

I am not sarcastic, but ferociously veracious. Great private universities in the USA are not just privately financed, but also publicly financed. However, mostly indirectly so. Same for the banks, Same for the military-industrial complex. Same for the drug and HMO industry. Same for the largest corporations. Same for the hyper wealthy. Socialism for the wealthy, taxes for the rest.

What was the persuasion of Friedman and his cohorts?

That greed is all you need. Friedman and his aliases and allies believed that, given enough greed, even a bloody dictatorship like that of Pinochet in Chili, could do no wrong. Friedman went to Chili, and preached that message at the catholic University. In truth those buffoons were just agents, paid and promoted by the plutocracy, the hyper wealthy owners of the USA, who had to suffer through the GI Bill and Johnson’s “Great Society”.

Why do you use an offensive term such as “buffoons” to discredit a pillar of society such as Mr. Milton Friedman?

I met Friedman. I will reserve my full opinion of him for a more opinioned piece. Let’s just say that his personal experience led him to believe that pain was man’s best friend. Having made greed the main, if not the sole economic motivation, has been a disaster. It pushed away other, more valuable motivations, and, because it was an all together unreasonable opinion which was made into the ultimate reason, it made all of society more irrational.

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What was the other reason that pushed European states to adopt financing on the money market?

French socialists have a lot to do with it. After rejecting the Anglo-Saxon model in 1980, they were forced to embrace it again, and did so with great vengeance. Under Prime Minister Pierre Bérégovoy, a simple soul, the discovery was made that France, with her AAA rating, could borrow very cheaply from the money markets. It was a easier way to find funds than by raising taxes. The reasoning was extended all over the European Union during the Stage Two of the European Monetary Union before the creation of the euro on January 1, 1999.

Bérégovoy committed suicide, or was suicided, shortly after (in connection with various financial scandals: allegations against him, and the Triangle Affair).

So there were two surrender of sovereignty by European states, one to the European Central Bank, the ECB, and one to money markets?

Yes, and they are generally conflated by the ignorant or the biased. Paul Krugman affects to believe that the surrender of sovereignty was to Germany. But that is simply not the case. There was a surrender of short term interest to the ECB, and one of long term interest to the actors of the private debt markets.

Actors in the debt markets such as the late Lehman Brothers. Lehman Brothers was a “Designated Market Maker” of the market of USA government debt.

In other words, Europe decided to borrow freely from the coolest, wealthiest gangsters in the world. Although Lehman failed, because of gross mismanagement, if not organized crime, dragging the debt markets with it, its three highest officers, including its CEO, Fuld, walked away with 5 billion dollars between themselves. According to Friedman and those who, like Obama, read the Financial Times too much, and too exclusively, that was just cool. However their actions arguably led to the loss of thousands of billions of dollars and euros to the public. And now an economy where the main missions of the states are not sustained.

So what is the problem exactly?

To maximize the money they have at their disposal, nations have learned to borrow, with impunity, as much as the hyper wealthy was willing to lend them. In particular, nations borrow money to pay the interest of the previous debt. One minute of the most basic differential equation analysis shows that the process is exponential.

Indeed the debt augments proportionally to the interest on the debt. Hence the debt is a function whose derivative is a fraction X of itself, the exact definition of the exponential.

What about inflation?

Right, Inflation has to be taken into account. If the interest on the debt is less than inflation, the fraction X is negative, so the debt decreases exponentially. However, the Fed and the ECB have been targeting 2% inflation. Thus the interest rate X on German debt interest payment on the ten year obligations, today at 1.81% is just in balance. But France is another story: X has reached nearly 4%. And Spain and Italy are above 6%. Greece is around 30%. That means that Greek debt will more than double in 30 months. Thus knocking off half of Greek sovereign debt now will bring just as much sovereign debt in 30 months. Cut half the heads of the plutocratic hydra, and they grow back within years, or maybe months.

Why is that not happening in the USA?

Well, it happened in the past. The bad actors behind that were called the “Bond Vigilantes”. Paul Krugman sang on all rooftops that they were invisible, inexistent, a figment of the past. He sang that way, although some interest rates in Greece had already reached 100%. It is baffling.

So what about the USA? Well, it has not happened yet. And there is a very good reason for that: the speculators are pouncing on the smaller and weaker countries first. An avalanche can start small, and grow enormous.

Who are the speculators?

Banks, hedge funds, etc. They use quasi infinite leverage. Corzine’s hedge fund just collapsed by doing something wrong while manipulating European debt. He had for 100 billion of investment, nominally, backed up by only one billion of capital.

Why should not that be legal?

For two reasons: 1) it allows to manipulate markets of genuine investors investing genuine money. Corzine did not have 100 billions. He just claimed he had. As it made him an enormous property owner, his buying and selling could move markets in direction he, or his accomplices, found profitable. One such technique is “Painting The Market” (a generalization of painting the tape). Although a few of these techniques are unlawful in the stock market, most are not, because regulators, who are supposed to have no teeth, plead ignorance.

2) there is no difference between being rich, and claiming to be rich and being believed by the Most Serious People.

If I claimed I had 100 billions, and people, companies, countries, did as if I did, I would be instantaneously rich, especially if dealing with another 10,000 gangsters claiming the same. One can actually do some pretty telling math. Plutocrats claim to have 600 trillion dollars in derivatives. Say each of them claims to have 100 billion that he truly does not have. So, with 6,000 such gangsters, you cover the derivative market. About two third of it consist in derivatives related to the bond market (CDSs, Credit Default Swaps).

Thus, a conspiracy of gangsters are allowed to roam the planet, and are treated as if they had 12 times the entire planet’s wealth among themselves. A consequence: they called themselves the “markets”, and they are believed, and they can do whatever they want. If they say something, it goes. The end result: a band of greedy conspirators has hijacked civilization.

OK, so what do you propose?

I propose changes at several levels. First at the European level, European institutions ought to be erected immediately to endow the European Union with the same powers as the USA in monetary and fiscal matters. Some of these powers ought to become effective in a matter of weeks. For example to make the ECB the lender of last resort, and give the ECB an explicit mandate to buy as many bonds as needed to keep sovereign yields below 6%, as it has done a bit, but not enough.

Hysterical Euroskeptics claim that plotters want a European “superstate” 

As it is, we have a world superstate already: it’s the world plutocracy. A few deciders in New York and London, the two main pirates’ dens, believe things are for the best, as their cities live pretty well from it. So it is that part of Somalia lives pretty well from the pirates’ trade. But that impression cannot be shared by the rest of the planet, including those who, in developing countries, enjoy subjugation to the sub-dictators of the plutocracy.

What Euro haters are saying is that they want to stay with the present plutocratic superstate.

The fact remains that you suggest Europeans change once more the European constitution.

Yes, and that means changing their own too, as usual. It has been done many times in the last sixty-three years, as far as France and Germany are concerned, so it will be more of the same. There are provisions in the last European constitution to make some tweaks immediately, and actually it is part of what the ECB has been doing with its modest bond buying.

Philosophically, is not the rise of a European superpower worrisome? It worries some Brits.

Nationalist fanatics of the existing superpowers on the wane cannot be pleased by the rise of Europe. This means people entangled with the USA superpower, and the faltering Russia. That means poodles of the established New York-London financial order, such as Krugman and Summers (collaborators of reagan), or anybody having anything to do with the City of London.

Paul Krugman was just saying that New York was the greatest city in the world. That gave an inkling of his true heart: New York, right or wrong. Thus, Wall Street, right or wrong. Because New York would be just a shadow of its former self without wall street and its worldwide manipulations. I mean, it’s not the Silicon Valley. Of course, new York makes Krugman rich and influential. But that explains why he hates the euro so much (OK, now Krugman claims he wants to save it, and in a parallel development, Larry Summers is all out for an enormous stimulus!)

Said Brits worried by the rise of European superpower are often vested in the activities of Londonistan. London has tremendously profited from financial profiteering. The old British canard has been that Britain would not tolerate the rise in Europe of a power as great as the British empire. As I explained in The Anglo-Saxon Economic Model, that worked well for centuries, but the British empire is now the European Union, not the Commonwealth.

Super powers such as China, India, and Brazil, are much more sympathetic to Europe, because they are wary of the USA.

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How do you propose to give the ECB the same powers as a normal central bank?

There is no reason why things could not be explained clearly, and referenda be conducted within weeks in France and Germany. alternatively, France could proceed speedily, as the representative French system, with its National Assembly, Senate, Presidency and Constitutional Court, should be able to pass something within weeks.

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Why should France and Germany take all the decisions?

Because nobody else does, and because they foot most of the bill. In the end, it ought not to matter to the French and Germans what others are whining about when their economic destiny is at stake. The USA certainly does not take into account others’ whining in deciding its own internal economic policy. Nor does Russia, China, India, Brazil, or, for that matter, Argentina. Argentina defaulted, a decade or so ago, and its economy is doing great.

Is not default an injustice?

Being unjust to an injustice is not unjust. The exponential nature of the debt incurred, say by european countries, at the mercy of what highly leveraged speculators, such as Mr. Corzine, ex-CEO of Goldman Sachs, ex-governor of New Jersey, that is, Krugman, makes it the definition of Odious Debt.

If we do not stop the debt speculators now, we will have a feudal order within ten years.

Are you not happy that the Franco-German accord on Greece provided a default of 50% as you insisted ought to be done?

Yes and no. If French and German taxpayers are going to reimburse the banks for said default without nationalizing them and acquiring control, one will have transferred an intolerable burden on the Greeks into an intolerable burden on French and German taxpayers, and their economies (as austerity will cause a recession).

What else do you propose?

A worldwide limit on leverage, and that means limit on the Fractional Reserve System. A worldwide Financial Transaction Tax on all transactions. The outlawing of most derivatives. Outlawing of Credit Default Swaps. Right now the Swap market uses 100 times leverage, allowing speculators to sink countries. Next, they will be capable of volatilizing planets, like in Star Wars, and our politicians would say it’s OK, they read it in the Financial Times first (as Obama crows). It’s may be wiser to put an end to their evil empire now.

Outlawing of any trade and organizations threatening nations’ economies. Differential treatments on derivatives between commercial operators (provided with insurance) and speculators (providing liquidity). The outlawing of all banks too big to fail, using anti-monopoly and security laws (Britain evoked anti-terrorist law against Iceland, for financial terrorism, so there is a precedent!)

Last and not least, criminal prosecutions of one the greatest criminal organization ever, the present worldwide plutocracy. Not to forget forced regurgitations of ill acquired gains. And president Einsenhower tax of 90% on the great fortunes. 

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What do you think about the synchronized worldwide crackdown on the Outraged, Indignes, Occupy Wall Street movement?

Well, ever since the worldwide crackdown on Wikileaks finances, we know that the plutocracy will do whatever it takes. Just contemplate Auschwitz. Plutocracy brought that too, and did whatever it took to conduct its business for its best. Many who are powerful nowadays descend from those who financed, organized, instigated or collaborated with individuals or organizations which facilitated, or constituted various aspects of fascism. American soldiers fighting on the beaches in Normandy, would not have believed that they were shooting at forces that American plutocrats made possible.

So why do people accuse the euro and the European Union so much?

There are a lot of euro haters out there, and a lot of individuals, and governments looking for scapegoats. The rise of Europe steals power from others, such as Wall Street plutocracy. When Krugman howls against the euro, he howls for Wall Street, which, however indirectly, feeds him and his nationalist fiber. without Wall Street, new York would not amount to much (who would pay the 35,000 police force?) Krugman was telling on his blog recently how New York was the “world’s greatest city“. Making Wall Street, I guess, the world’s greatest street. Is an economist in love with Wall Street still an economist? Are those whose ‘breath is taken‘ by New York still fully human?

Where does the obsession with Europe come from?

The negative obsession comes from the plutocracy, and it is, to a great extent, 17 centuries old. The Franks were antagonistic to the system of the Late Roman empire, which was anti-democratic, fascist, plutocratic and theocratic. Their rule was much less of all the preceding, to the point that the Franks refused to create a durable European superstate (on the ground of equality). Half a millennium later, Muslim jihad, and various invasions from Mongols and Vikings, forced the creation of a military caste, the Frankish aristocracy, though.

“Europe” is an attempt to reconstitute the ancient Imperium Francorum, when France and Germany were the same polity. Various attempts in the past were too muscular, or poorly thought out. Whereas Francia and the Holly Roman Empire  (Imperium Romanum Sacrum) were rarely in conflict in the middle Ages, complicated conflicts have become quasi permanent since the Sixteenth Century. It is time to put an end to them.

Interestingly the conflict with Francia started with Parisian haughtiness, nothing deeper than that. So West Francia and East Francia grew estranged, as the centuries flowed by. After Louis XIV, Frederick the Great, Napoleon, Bismarck, Napoleon III, Prussian fascism and Hitler, the French and German people have realized that they were victims of an horrendous crime in July 1914 (when French and German socialists scrambled to organize a general strike rather than let the fascists unleash war; unfortunately they failed).

So the European project is perfect according to you?

No. The present crisis shows clearly that the federalization of Europe has to be cranked up a lot. Needed federal structures need to be erected. The European Central Bank needs to become a central bank with full prerogatives, same as those of the US Fed. European statistic and fiscality have to be improved considerably.

The lesson of the growing enmity between Western and Eastern Franks, 1,000 years ago, is that indifference is not an option, and that acting locally without thinking globally is not an option either. “Imperium” is not a dirty word. Quite the opposite. The Romans were right on that. And, originally, the Franks, for centuries, viewed themselves as another, improved, phase of Rome. And they were right.

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Can you give a more philosophical perspective?

In democracy, people rule. in plutocracy wealth, and accompanying characteristics of Pluto, rule. The money creation system cannot be left to Pluto, but ought to be the prerogative of the People. Indeed, money represents power, and power rules. If all the money and power if left to the wealthiest, there is no more democracy, de facto. Hence the banking system has to become anti-plutocratic.

That means, first that invisibility, one of the Dark Lord’s characteristics, ought to be taken from Pluto. Hence all financial transactions ought to be declared, and Shadow Banking ought to be outlawed.

All of banking ought to be remade under transparent democratic watch.

Instead what we see is Goldman Sachs partners ruling the world, more than ever. And not just the White House. The new head of the ECB and the new Italian PM were, or are (!) Goldman Sachs principals (so called “associates”). Goldman Sachs systematically recruits people at the heart of power (central bankers, EU commissioners. The new head of the ECB was in charge at Goldman Sachs of selling to Southern Europe a “product” to dissimulate debt to Eurostat.)

What is going to happen?

It depends how well informed and thoroughly angry People get, in a timely manner.

Plutocracy is the most frequent and most important cause of civilizational collapse. It generally prevents to solve lethal ecological problems (see the Mayas). This is happening today. For example the craze for fracking and extremely deep sub-oceanic oil is a distraction, as the greatest ecological catastrophe in 65 million years unfolds. “As each year passes without clear signals to drive investment in clean energy, the “lock-in” of high-carbon infrastructure is making it harder and more expensive to meet our energy security and climate goals,” warns Fatih Birol, International Energy Agency Chief Economist. By 2020, every currency unit economized by not investing in clean energy, will cost 4.5 times more to society in ecological damage.

The plutocrats love war, because war is Pluto’s celebration by all, united in mayhem. Not developing an energy and ecology plan will certainly bring war (fracked water, or a fracked quake, may get you first). 

In 1914, the plutocrats were hiding behind the (plotting Prussian) fascists, and they were not stopped. Nor were they stopped in the 1920s and 1930s. France and Britain had to unleash a terrible war in September 1939 against Hitler (and Stalin, and American plutocracy!) This time, we stand forewarned, and it’s going to get worse.

The naïve Pinker, a psychologist at the propaganda outfit Harvard, just wrote a book, the “Better Angels Of Our Nature” (he lifted the sentence from Lincoln’s Inaugural Address, March 4, 1861). Pinker argues that we are better, and smarter than ever. However, Pinker is the victim of an illusion. What is going on out there is an unsustainable bubble. Including an unsustainable bubble of population (population augmented by 5 billion in less than a century!) In other words, we are on the verge of an incomparable crash. The sort of crash the Dark Side of Homo is made for. Pigs rule, slaughter comes, biosphere gets re-established.

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Patrice Ayme

 

THE WAY OUT (AND WHY IT IS NOT CHOSEN)

February 20, 2009

 

A PARTICULARLY CONCISE STATEMENT OF THE CRISIS, AND HOW TO REMEDY IT. FOLLOWED BY TECHNICAL ADDENDA AND WHY OBAMA IS CHOSING THE WRONG STRATEGY.

Overview: This is a companion essay to Paul Krugman’s “Who’ll stop the pain?” (NYT, Feb. 20, 2009). As Krugman puts it: “The Obama administration’s policy initiatives will help in this difficult period — but they are intended to mitigate the slump, not end it. No doubt this recession will pass — but how, and when?”

This is not simply a credit crisis, it’s entangled with efficiency and energy crises. They all have to be addressed simultaneously, leading to counterintuitive strategies (rising some taxes). As usual, I propose the usual solution. In the addenda, I make some extremely specific recommendations, down to which technologies to push or transfer. So far Obama has chosen instead to continue the general path of fixing the broken, and vicious system many of his closest advisers have profited from (this is explained in the final addendum). 

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This is indeed Great Depression III. The (inflation adjusted) median income has been going down since 1998 (when Summers and Geithner were already in charge).

Understanding how one got there leads to the way out.

First,  of course, between 1989 and mid-1995, the United States of America owned asset management company, the Resolution Trust Corporation nationalized 747 banks (so called “Savings and Loans”) with total assets of $394 billion. Mr. Bill Seidman was in charge  of this. The average bank was kept in US government hands from three to four months during which time it was cleaned of its bad assets, reorganized, and finally sold. This was so successful that Sweden imitated the method, and later Japan resolved its decade long crisis by putting Mr. Seidman in charge of saving its own banking sector, after a decade slump. Why Mr. Obama did not follow the same strategy on day one is, at first sight, baffling (the mystery is elucidated in the last section of the addendum).

Instead the US credit market have been left in deep freeze, causing enormous damage to the world economy. Comparable damage in the past has led to world war. In a few weeks the situation has degraded to a level that is worse, in some ways, than the Great Depression II in the 1930s, the one that brought Nazism and World War Two.

Second, it would be better if Mr. Obama, after he finishes laughing about Sweden, would take a crash course on the Scandinavian banking crisis, and learn two things:

1) The way the Swedes and other Scandinavians solved their very similar banking crisis was by being ruthlessly efficient: they wanted their economy restarted ASAP, and the best way was to bring back to life the dying banks. So they nationalized, separated the bad assets, and the banks were functioning again. Then the now profitable banks were sold. The Swedes acted way early and swiftly: the bad loans were only 13% of GDP and they acted as the banks went below their capital requirements of 8%. The present situation in the USA is way worse: the bad loans approach 40% of GDP. And the sick banks, thanks to the huge leverage they used recently, on weird derivatives that don’t really exist, are probably in way worse shape than the Swedish banks were.

2) Scandinavia has the population of Canada, and was easily pulled out of its dive by the world economic expansion. Whereas the USA is huge and in free fall, and the EU is just as enormous, and shrinking about as fast. So nothing big and strong is going to come to the rescue of those two. Moreover the USA has united political command, with Obama as Lord and Master, whereas the Europeans are divided. The whole world is waiting for Obama to make miracles, but that will not happens as long as he listens to those among his associates who are mesmerized by banks (and future rich paybacks they envision for themselves?). 

It is conventional among American bankers to have mild contempt for Sweden, but the real GDP per person is higher than in the USA. Nevertheless, careful studies have shown that, to this day, Sweden is poorer than it would have been without crisis. The same hold all countries with similar crises. Real damage is made to the economy while the bank holding companies (the plutocrats) keep most taxpayer money for themselves.

So much for the conventional part of the present problem, the excess of credit. The USA had turned from a capitalist country to a creditist country, making bankers rich, and everyone poorer (see the movie “The International” for elaboration).

But the crisis detonated in 2008 after a run-up of energy prices, which forced the subprime tribe to choose between mortgage and forage. Meanwhile, and revealingly, housing prices were still going up in France. Why? Because the French economy is much more efficient than the US economy. The CO2 emissions of France are less than a third that of the USA, per person. The impact of high energy prices in France was not as hard.

This brings in both a complicating factor in the present crisis, and a solution. The crisis is compounded by LACK OF ENERGY EFFICIENCY. If the US economy rose suddenly from its ashes on its own, energy prices would immediately flare up again, and the economy would be placated again, as it was last summer. The solution, the only way to break the cycle, is to make the US economy much more efficient, ASAP.

So all efficient technologies have to be pushed, and will provide a lot of new work. This means solar, wind, grid, trains (light rail and transcontinental very high speed), biofuels (maybe cellulosic, better from sun and algae), nuclear (safe and closed cycle), and the most efficient car and plane technologies. All this will work only if energy is made expensive when it is not. So energy taxes have to be brought up (that is counterintuitive in a recession, but it is not exactly a recession as ever seen before).

This is a very heavy industry solution, a massive reindustrialization, the ultimate war against greenhouse heating. Even relaunching the nuclear industry safely will play an important role, because it will allow to coordinate a worldwide effort to make nuclear into something strictly civil (that means extremely strict worldwide inspections and drastic cut backs in nukes). If the greenhouse heating is not fought back soon, there will be world war. So, conceptually, fighting heating, recession, and war fits together.

The USA has domineering positions in some industries: planes, nanotechnology, biotech, and should push its advantage to the maximum in these sectors, to reestablish the balance of trade. Where it is weak (trains, cars), it should purchase European technology transfers (as Russia is doing with trains, China with planes, and Chrysler with Fiat). That would be quick and efficient, the technological equivalent of nationalization of zombie banks. General motors could be making high speed trains in months.

There are ways, but there is no time, It’s all about real infrastructure, and real efficiency, not the poverty of the illusion of money.

Patrice Ayme
http://patriceayme.com/

 

Addenda: TECHNICAL DETAILS: 1) The Swedish solution was similar to the US Resolution Trust Corporation (a “bad bank” that got rid of the bad assets). Not all big banks were nationalized in Sweden: one declined the government offer, and rose private capital. All banks did great, very quickly, and the crisis was over in two years.

2) Not only does Sweden have a higher GDP per person, but the effective GDP is much higher, a lot of services Americans have to pay for, coming for free in Sweden. GDP is a blunt and distorting instrument: it goes up in traffic jams. So a lot of the high US GDP per person is just high waste per person with lipstick.

3) Some giant French banks made profits in 2008. BNP saw its profits halved, but they were still three billion Euros. Societe Generale doubled its profits to two billion Euros. Giant insurer AXA (who owns Equitable in the USA) is still profitable. And so on. One large French bank () is sick, from having gorged itself on to many US derivatives. Another French bank wants to gobble that “Caisses d’Epargne”, but the later’s management, little interested by firing itself, has been dragging its feet, and the French government gave a deadline.

4) Coal is not an acceptable technology. Carbon capture and storage, as presently proposed, would make coal prohibitively expensive, and way too complicated to use. It consists in somehow capturing and liquefying the CO2, and then carrying it far away in trains. Then it would be injected, by very deep drilling, far from any city. A lot of the explosive power of volcanoes comes from CO2, that is why care has to be taken.

There maybe a solution for coal plants in the desert, by combining enormous emissions of CO2 that coal creates, with algae. Algae not only make excellent biofuel, but they absorb CO2 like crazy.  But that avenue has not been explored.

5) Coal is subsidized, because it does not have to pay for the gigantic damage it causes (let alone the thousands dying, from breathing and mining). The USA has 600 coal plants, and gets more than half of its electricity from coal (the world average is  40%). A lot of US production has been transferred to China, which has been building like one coal plant a week, to serve that demand. The Chinese are aware of the problem, because they find difficult to breathe and see. But of course, it’s a world problem: the greenhouse heating has been accelerating, with now methane eruption from melting permafrost. 

6) The USA has an “open” nuclear cycle: fuel is “burned” once, with extremely low efficiency, creating huge amounts of nuclear waste. The “closed” nuclear cycle recovers the partially “burned” fuel, and remixes it , to create new nuclear fuel (“MOX”: Mixed OXide). That MOX is then burned again and again. France pioneered  that advanced technology and uses it on all its reactors. France even dismantled American nuclear warheads, and made fuel out of it. France also made nuclear fuel that way for Japan and Germany. France has been building a plant in the USA to transform nukes into fuel. For some obscure reason,  pertaining to the US Congress, MOX is not allowed in US reactors.

7) The French company Areva makes the EPR, an advanced nuclear reactor. A young French communist mayor is very happy that his charming town by the sea will see the construction of the newest EPR. Sarkozy wants to build more, to “export electricity”, something France already does massively (through below the sea cables going to Britain). Siemens, which has part of the consortium making the EPR, wants to pull out, obviously to make its own, and sell them worldwide. Siemens already has profited greatly by competing with the French Alsthom in constructing very high speed trains. In other words, although they cooperate, France and Germany, compete ferociously in high technology. This is even more true with cars, where the German card is the highest quality, whereas the French have chosen extremely low CO2 emission. The French go to European authorities, push for ever lower CO2 emissions, the German, and mostly Daimler-Benz, scream, the CO2 emissions go down, and so on. This is good, because very low CO2 is what the world needs.

8] Sweden had decided, for various philosophical and technological reasons to abandon nuclear technology thirty years ago. No new reactors were supposed to be built, all the old ones, closed. Due to a completely changed situation and technology, following Italy, Sweden has now reverted itself, and will follow Finland (which is building a nuclear reactor, an EPR), and build new nuclear reactors. In the end, France’s long held argument that nuclear technology is clean, and a good weapon against greenhouse heating, has been followed.

9) France builds 40% of the vehicles of the planet with CO2 emissions of less than 125 grams of CO2 per kilometer, the soon coming newest European standards. The present requirements are 160 grams per km. The present US fleet average is 330 grams per kilometer.

10) Alsthom makes the very high speed trains TGV and the new AGV (they go faster than their Japanese competition). The AGV is supposed to operate more efficiently, at the higher speed of 225 miles per hour (360 kms per hour). Siemens has operated his own trains in regular operations in Spain at up to 400 kmh (250 mph). Alsthom, having bought an Italian company that made them, makes trains that lean in turns, allowing to go at high speeds without changing the tracks. Russia is buying a lot of these (and the technology will be transferred, according to a precise schedule, so the Russians will industrialize, as they will increasingly put Russian content in the trains; a similar agreement has been made with Siemens). 

11) WHY IS THE OBAMA ADMINISTRATION SO FRIENDLY TO HEDGE FUNDS, BANK HOLDING COMPANIES, AND PRIVATE EQUITY?

As the New York Times revealed (Feb. 20), the Obama administration hopes to encourage new lending by effectively subsidizing the profits of firms that serve as bankers to the banks, such as hedge funds. Guaranteed profits would be astronomical: 20%!

Is that change one can believe in?

The day after he was elected president, Obama went to work at a hedge fund in Chicago. Unbelievable, but true, according to press reports. Many of Obama closest advisors were made rich by the financial system as it is (Emanuel being an example). Some (Summers, Geithner) were causal agents that set up the financial system as it is, more than ten years ago. It is no wonder that they have decided to spend all their energy repairing the failed system. So there they are among the debris of the crash, hoping the debris will fly again, bringing gasoline to the smoldering ruins…

Basic fairness would require that many of these gentlemen observe that they are part of, and party to the problem, and to excuse themselves from counsel. But, immense profits for the few have created a firestorm of greed that has burned all and any normal human emotion, including basic decency. All they know is that they deserve their place at the trough.

As Barack Obama put it: “we have different traditions and cultures in this country”.

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PA