Posts Tagged ‘Housing’

Great Cities A Must, So Tax Superrich Hard, Everywhere.

December 2, 2015

Shallowness of thinking is a sin. Many view it as a creature’s comfort., though (“Thus spoke the Tyranosopher”). OK, not a sin in the Bible (otherwise the Bible would have put itself out of business!). But it’s a dangerous consequence, and temptation from the Internet and “multitasking”. For shallow thinking one of my reference is Paul Krugman, the most respected “liberal” (USA) or “progressive” (anywhere else) in America and Europe.

Krugman wrote “Inequality and the City” an editorial, where he depicted the success of New York, and pointed, all too moderately, and somewhat disingenuously to its features. Here he goes, with a striking disinformation hook at the end:

“New York, New York, a helluva town. The rents are up, but the crime rate is down. The food is better than ever, and the cultural scene is vibrant. Truly, it’s a golden age for the town I recently moved to — if you can afford the housing. But more and more people can’t.

Rich Gets Into More Expensive Housing, Low Lives Sleep Outside

Rich Gets Into More Expensive Housing, Low Lives Sleep Outside

And it’s not just New York. The days when dystopian images of urban decline were pervasive in popular culture — remember the movie “Escape from New York”? — are long past. The story for many of our iconic cities is, instead, one of gentrification, a process that’s obvious to the naked eye, and increasingly visible in the data.

Specifically, urban America reached an inflection point around 15 years ago: after decades of decline, central cities began getting richer, more educated, and, yes, whiter. Today our urban cores are providing ever more amenities, but largely to a very affluent minority.

But why is this happening? And is there any way to spread the benefits of our urban renaissance more widely?

Let’s start by admitting that one important factor has surely been the dramatic decline in crime rates. For those of us who remember the 1970s, New York in 2015 is so safe it’s surreal. And the truth is that nobody really knows why that happened.”

Did he really say that? “Nobody really knows why” New York became safer? Really? Never heard of Mayor Giuliani? (Giuliani was several times presidential candidate.) He was tough on crime, strong on “profiling”.

The USA has the highest incarceration rate in the world (with the Seychelles islands). Eight million people are under justice supervision. Police brutality helped. This may be why nobody Politically Correct knows why New York is so much safer; nobody wants to know why. Hard thinking is always uncomfortable.

As soon as plenty of police brutality videos surfaced, and the police was reined in, crime rates exploded. That was in 2015. That is, a few months ago.

Paul Krugman does not want to praise the virtues of daily fascism as far as direct repression is concerned. Not PC. However, he dares to be a little bit, very delicately, NON PC:

“But there have been other drivers of the change: above all, the national-level surge in inequality.

It’s a familiar fact (even if the usual suspects still deny it) that the concentration of income in the hands of a small minority has soared over the past 35 years. This concentration is even higher in big metropolitan areas like New York, because those areas are both where high-skill, high-pay industries tend to locate, and where the very affluent often want to live. In general, this high-income elite gets what it wants, and what it has wanted, since 2000, has been to live near the center of big cities.”

I already mentioned this: the new young elite is less dumb and wasteful that the one which preceded it. Krugman, correctly playing psychologist:

“Still, why do high-income Americans now want to live in inner cities, as opposed to in sprawling suburban estates? Here we need to pay attention to the changing lives of the affluent — in particular, their work habits.

To get a sense of how it used to be, let me quote from a classic 1955 Fortune article titled “How Top Executives Live.” According to that article, the typical executive “gets up early — about 7 a.m.. — eats a large breakfast, and rushes to his office by train or auto. It is not unusual for him, after spending from 9 a.m. until 6 p.m. in his office, to hurry home, eat dinner, and crawl into bed with a briefcase full of homework.” Well, by the standards of today’s business elite, that’s actually a very relaxed lifestyle.

And as several recent papers have argued, the modern high earner, with his or her long hours — and, more often than not, a working partner rather than a stay-at-home wife — is willing to pay a lot more than the executives of yore for a central location that cuts commuting time. Hence gentrification. And this is a process that feeds on itself: as more high earners move into urban centers, these centers begin offering amenities: — restaurants, shopping, entertainment — that make them even more attractive.”

Notice Krugman does not mention the Darkest Side: having the rich living only among the rich… Let alone correctly colored. I have observed this many times: entire neighborhoods, cities, islands, secluded enclaves of the 1%.

On this Krugman is a bit naive:

“We’re not just talking about the superrich here, or even the 1 percent. At a guess, we might be talking about the top 10 percent. And for these people, it’s a happy story. But what about all the people, surely a large majority, who are being priced out of America’s urban revival? Does it have to be that way?

The answer, surely, is no, at least not to the extent we’re seeing now. Rising demand for urban living by the elite could be met largely by increasing supply. There’s still room to build, even in New York, especially upward. Yet while there is something of a building boom in the city, it’s far smaller than the soaring prices warrant, mainly because land use restrictions are in the way.”

It is true that land use restrictions are a huge problem (in the San Francisco Bay Area, cities which want to build skyscrapers next to train stations, have been blocked… Mostly by the superrich, who do not want the poor, mediocre and thoroughly medium to rise up in the sky. The result has been the greatest gridlock in the USA).

Here is how Krugman concludes: “But will that understanding lead to any action? That’s a subject I’ll have to return to another day. For now, let’s just say that in this age of gentrification, housing policy has become much more important than most people realize.”

Trust Krugman to be as hard as a soft-boiled egg. Krugman, or why moderation is a sin. All what Krugman said was true, but it is “non-controversial“, namely everybody knew it already. Is that what the top thinking on the left can be? With moderates like that, who needs Republicans?

Something Krugman does not say:

NO HIGH TAXES ON SUPERRICH, NO GOOD CITIES:

Housing policy, thus the built-up of infrastructure, is crucial for the economy… and for comfort: infrastructure deteriorates, and has to be worked on continuously. Let alone modernized.

Private infrastructure in a city, depends upon PUBLIC infrastructure (water, electricity, basic transportation, basic police, justice, schools, government).. Thus, because of the necessary involvement of public infrastructure, PRIVATE infrastructure requires more PUBLIC spending.

Hence a thriving PRIVATE economy requires more PUBLIC economy, hence more taxes on the wealthy (Canada’s Trudeau, the new PM, advocates just this).

An example is schools: they can be made profitable, thus private, as long as they cater to the top 10% To cater to everybody, thus make a sustainable city, taxes will have to be augmented and redistributed to public schools. So sustainable cities will require a change in the philosophy of the socio-economy.

Ah, something else: taxes cannot just be restricted to the cities, as then the superrich will escape again. So they have to be national. And even international. And “Dark Pools”, “Shadow Banking”, Tax Havens, Delaware, have to disappear.

Building thriving cities is about not destroying the planet: cities are more efficient. Most of humanity lives now in cities, and the proportion will have to go up.

Don’t trust the superrich, don’t let them call themselves “philanthropists”, as if they could tax themselves. Latest clown here is the Facebook founder, who got free advertising everywhere, for his pledge to “give 99% of his fortune away“. Meanwhile he will keep on enjoying it, while claiming he does not, before he can convert it into tax-free vehicle, for himself, his wife, and child, Bill Gates’ style. It is rather sad to see so many applauding some clowns whom I do not find funny.

Politics is named after cities, so is civilization. Cities can, and will have, to save the biosphere, as they can be made more efficient, and smarter, than any alternative. And what is cities’ greatest historical enemy? Plutocracy.

One must crush infamy, and thus plutocracy, and it’s exactly why taxes were (mostly) invented.

Patrice Ayme’

Save World, Construct

August 25, 2014

Krugman points out that the economic success of the South-West (Houston) and South (Atlanta) is caused by providing decent housing to the middle class: “Wrong Way Nation“.

Well, right, and very important. However, the problem is not restricted to the USA. It struck Japan very hard, 25 years ago: there was no more decent, affordable housing for Japanese workers in the main production centers.

And, yes, indeed. There is a housing crisis throughout most of the Western World, especially much of Europe. Massive construction programs there after World War Two promoted massive economic growth. A French saying goes:”Quand la construction va, tout va.” (When construction is OK, everything is OK.)

Instead of building increasingly better, denser cities, what happened in the last 40 years was an attitude of NIMBY (Not In My Back Yard). For example San Francisco built no skyscrapers for 30 years on the ground that they may throw shadows, sometimes (a curious idea in a city characterized by thick fog), or, horror of horrors, that San Francisco would turn into Manhattan.

The practical result has been that, not only quality of life of the middle class has gone down from Paris to San Francisco, but economies have stagnated, while lethal pollution has not been fixed (locally, or globally).

The middle class (let alone the lower class) has been increasingly unable to afford decent housing… in the most important cities. Instead an increasingly inefficient lifestyle of long range commuting ruled.

However, thanks to a new born common sense, young people are increasingly refusing the suburban, multi-car, long commute way of life, thus fleeing to live in ridiculous places such as Silicon Valley, characterized by having an affair with one’s car. Under pressure, San Francisco, I am happy to report, is Manhattanizing; youth devising new apps, prefer the City to unaffordable mansions in the woods, far from any trace of civilization.

Some of the new towers in San Francisco will provide the upper middle class with decent housing (instead of sky high rents in small, dank, mold ridden rabbit cages).

This, massive construction, is a solution for the entirely stagnating Western World: build more ecological, denser, high tech cities. Not only the economy will blossom, and society become more just, equalitarian and decent, but the biosphere outside of these more efficient centers of humanity, will be given an opportunity to recover.

Modern buildings can be not just energy efficient, but energy, and even food, producing. Especially tall skyscrapers. And to commute between city centers, 250 miles per hour electric trains are already a reality. London city center is just two hours from Paris city center, by the existing train, the Eurostar.

Off with anti-city mentality. Remember that civilization has to do with cities. Grow them right. To work!

Patrice Ayme’

No Understanding, No Empathy

February 8, 2014

Debating how to maximize empathy goes to the heart. There is no heart without soul, or soul without mind, and mind without knowledge.

I just argued in “Finance Worth: CERN, Not Plutothat the Will To Knowledge, in particular the Will To Science was the best way to undermine social injustice and inequity. It’s no coincidence that the English, American and French revolutions happened when the scientific revolution became obvious even to the plebs.

Paul Handover, a trusted and most faithful commenter on this site, author of the Learning From Dogs site, objected to my allegation that The Will To Know is a different dimension in psychological space from empathy (literally, “feeling the pain“).So I argued that funding physics was primary. Paul wrote:  Spending to alleviate, nay remove, homelessness should come way before physics despite the power of your argument. Just my two-cents worth.

I will show here that, although, in first order, physics and empathy are independent of each other, in second order, the latter depends upon the former, in our honorable genus. Actually the dependence of empathy upon cognition is central to the ferocious genius of the human genus.   

No Cognition No Communication No Civilization No Commiseration

No Cognition No Communication No Civilization No Commiseration 

The first time I met that idea, I was a child, watching a grainy TV screen. Neil Armstrong was landing on the Moon. Some French intellectuals who I saw only that day, smirked, and said it was a terrible thing. “With all the money they spent on that they could have fed the hungry instead!”

I was outraged. Being half Algerian, and having lived mostly in Black Africa, I had direct knowledge that people suffer, die and go hungry for reasons that have nothing to do with spending. Money can’t buy love, and it can’t buy hatred, either.

JFK and LBJ spent 100 billion dollars landing on the Moon. That was money splendidly and fruitfully spent. Stepping on the Moon was a better idea than a Third World War with the USSR. Arguably, if the USA and the USSR had not competed to get to the Moon first, they may have competed with direct war (instead of the indirect war in Vietnam). The race was pretty much settled when the giant Soviet N1 rocket exploded every single time a launch was attempted, producing a 7 kilotons TNT explosion (half of Hiroshima), and destroying its launch pad.

The technological fall-out of the landing on the Moon was enormous (never mind that the 100 top NASA Saturn V engineers were Nazis). The scientific fall-out is still ongoing. Some of the astronauts were geologists and brought back lots of rocks which were studied worldwide. The Moon’s geology is full of surprises: it’s a piece of Earth’s mantle!

Considering the discoveries made on the Moon, I have argued in “Life Giving EARTH NUCLEAR Reactor” that one ought to introduce a new term in the so called Drake equation: a huge fission reactor may be needed for life, and the Moon may have resulted from it. If true, this has all sorts of philosophical, not to say political, consequences.

A parallel, highly ambitious technological program was the much derided Franco-British supersonic, the Concorde (initially a French idea). Concorde was an enormous success too, and nobody knows. No, it’s not because Concorde still hold some speed records. Concorde contributed a lot to the advanced of civilization. And not just by having the French and British taking tea together.

How? When a plane flies supersonic, its center of lift goes way back. To compensate, the center of mass of the plane has to go way back too. That was done by transferring fuel. That was not done by hand. That was done, could only be done, by computers, and assorted electrical systems. With its Gothic delta wings very unstable at low speeds and its variable geometry air intakes, Concorde needed to have many other mechanisms under computer control.

One did not want the computer system to fail. An elaborated system was invented to make sure of that. Five computers, using different software systems built by different companies were put in command. One machine flew the plane while others watched and were ready to take over. Concorde was the first “fly by wire” plane (the next one, years later, was the USA Space Shuttle). Now such systems are ubiquitous, not just in aviation, but each time a driver applies the brakes, a train goes somewhere, etc.    

That empathy should be viewed as coming “way before” understanding is THE classical mistake. The Roman emperors, the top plutocrats per excellence, thus committed it again and again, for all to see and hear, until they drove Rome into the ground, below their boot.

Nothing comes before understanding. Understanding is what humans do. Many animals have empathy. Elephants certainly do. In humans, understanding has grown so much, that empathy has become a slave to understanding. (That’s the major problem with tribalism.)

After all many animals, or human populations, have empathy, but, lacking understanding, that empathy is of no effect whatsoever.

One can easily imagine that it is what befell the Mayan civilization in the super drought of the Seventh Century or all the Americas when the epidemiological and military apocalypse of the Fifteenth Century was upon them. The cataclysm was not understood, empathy had no effect.

All Aztecs had homes, but, to protect their homes, they would have needed enough knowledge of physics to make field guns to repulse the 2,000 invaders.  The Aztecs could not understand why Conquistadores climbed on Mexican volcanoes: they were fetching saltpeter to make more gun powder.

Meanwhile, paralyzed by their version of empathy, the Aztecs captured Spaniards alive to offer them, alive, to the Gods. So, when they had the struggling Cortez in their hands, literally, they tried to tie him up with ropes, and that gave enough time for his men to kill all the Aztecs swarming him, and rescue El Capitan.

Under what theory does providing a roof for everybody comes before understanding for everybody? After all, is a roof necessary for life? During most of human evolution, in most places, there were no roofs. It’s as if I said:”Oh we need to understand how to grow more food” and someone replied: ”Well build a home for the homeless, first”.

What if my neighbor does not want a home? After all, I have enjoyed bivouacs many times: I understand the charm of life in the grand outdoors, below the Milky Way.

Poverty is more than about roofs: I live in one of the world’s richest regions (the SF Bay Area) and I see people digging into garbage all the time. That did not use to be the case. It’s more so since Obama rules, with his fake empathy.

When I was a child, I saw only dogs and vultures dig into garbage. In Black Africa, a place with no intrinsic riches whatsoever. So poverty is a problem with the organization of society. Obama’s USA are the richest ever, but so is financial inequality. In other words, poverty in the USA is a question of understanding Obama and Pelosi did not understand, hopefully, that what they were doing was bound to increase inequality.

The Large Hadron Collider, the world’s largest machine, is mostly under France, and its power mostly comes from nuclear power plants in socialist France. There is absolutely no contradiction between socialism and understanding, just the opposite. That’s why the LHC and ITER sit in France. Not because France loves homelessness and treating the poor like trash, but, precisely, because empathy without understanding is self-contradictory.

The understanding approach to things is first to ask why there is homelessness, and then to address the factor therein. Some people are homeless because they scrambled their brains on drugs: ponder the factors therein. Millions of people are homeless, or poorly lodged, because the jobs are not where the houses are: that’s endemic throughout the world. Fix that through construction programs, where needed, and so on.

An important advance in Physics has been Quantum Field Theory. The useful theories therein are RENORMALIZABLE. What does that mean? Because of vacuum energy fluctuations, any Field is subject to non linear self interactions. The Fields feed backs on the Field, non linearly. When physicists can handle this, by changing the mass and the charge, in a topological way, the theory is RENORMALIZABLE: one can compute with it.

It’s obvious to me that the mathematics and methods so developed are applicable to other fields (pun not intended). Actually they have been applied in statistics. It’s only a matter of time, and enough people knowing physics, before these methods are applied to the fight against plutocracy and homelessness.

Indeed, if some people in the USA live as some African dogs and vultures used to, it’s not because there is not enough spending, or it’s going in the wrong direction. The Black Africa I knew was 1,000 times poorer than the USA is today, per capita. However the psychological situation was different. It’s psychology that made the difference, not spending. And what psychology is used for.

Plutocrats know human psychology very well. Simply, in the mood they are, the hyper exploitative mood, psychology is in the service of the hormones, the neurohormones, and the glands, in or out of the brain, in the service of the Dark Side. 

The Will To Know can ram the Dark Side, and only the Will To Know can do so. There is no empathy without understanding, because empathy itself is a form of understanding.

The housing crisis, in the USA, and throughout the West, just like the employment crisis, is, first of all, a cognition problem. There is a Will Not To Build. That needs to be re-cognized.

All these considerations will fly beyond the understanding of the presidency in Washington. Obama organized a State Visit and assorted dinner for his romantically complicated partner, President François Hollande of France. That’s the first State Dinner in two years. Last year’s dinner was cancelled by the president of Brazil, when she learned Obama was spying on her as if she were Osama Bin Laden.

The thick ivory invitations with gold embossing and the words “The President and Mrs. Obama request the pleasure of” were printed for 300 celebrities and powers of the plutocratic order. They had to be destroyed and new ones printed without Ms. Trierweiler’s name. Trierweiler was a woman endowed with extraordinary powers because she was thought to be sleeping with the French president, until it was revealed that she was not. Then her powers magically vanished.

One may wonder by which other magical powers those 300 hundred worthies are invited at the seat of power. No doubt, if she were around, a few years ago, the Obamas would have invited, in the past, the corrupt daughter of the Spanish King.

In a real democracy, should that not be unsupervised by We the People? Can there be empathy without democracy? Hell no. Hell says no, and does care about that a lot.

When Pluto plays philanthropist in a forest, do moralists want to find out what’s going on?

Patrice Aymé

Simulating Stimulus, Undervaluing Values

August 5, 2010

SIMULATING STIMULUS, SAVING SERFDOM, UNDERVALUING SKILLS.

***

OBAMA KEPT THE SERFS IN SERVITUDE:

How did the financial crisis start? By Americans having to pay more than ten trillion of mortgage debt. That was simply too much. Don’t forget that if you owe a million (say) to a bank with a 30 year mortgage, you end up paying about 3 times that.

So now we are 5 years after the crisis started. The Bush-Obama administration threw 3,700 billion dollars at the banks to save them from the crisis (said the TARP inspector, an independent government official, July 2010). The Obama administration in particular tried to preserve the value of the homes (as Obama says at every occasion).

Obama is a funny guy, very cool, that his job. The great terror of the banks was that all mortgage holders would default, and buy the house to the left. Say the house to the left was worth 30% of what it was worth before. The total sum of all mortgages in the USA would have been divided by 3. Big banks, instead of getting 600 billions annually, would get only 200 billions.

But Obama saved the value of the homes, that is the value of the mortgages, that is, the extent of the servitude to banks. 5 years after the crisis started, indeed, the total value of all home mortgages is still above ten trillion dollars. In other words, Obama did nothing, strictly nothing, to solve the housing crisis. It’s still here, just as big as it was before. But Obama kept the serfs in place, paying the same as they did before. His lenifying discourses have mesmerized Americans. Very cool, indeed.

***

SIMULATING STIMULUS WITH GAB:

As I have said many times in the past, as soon as February 2009, there was no Obama stimulus. Obama goes around saying just this, without understanding what he says: ‘I saved the states’. Saving is not stimulating.

I did the arithmetic, long ago. But then, I am not a lawyer (like Obama), or a failed journalist (like Axelrod), or a super, overnight multimillionaire banker (like Rahm Emanuel). I can add. Now finally Krugman did a graph (he has plenty of slave students to make them). Here it is:

clip_image002BEA, CBO

As Krugman says in "Hey, Small Spender!": "Feel the surge!". The far right microscopic tilt up is Obama’s stimulus. And it is entirely due to spending on unemployment benefits and the like. It goes without saying that, if you removed the military spending (which has augmented enormously under the bipartisan president), you would get a sharp hook, DOWN.

***

NO ENGINEERING, BUT TALKING UP A STORM:

Obama is a lawyer who is viewed as black. So he showed up at Harvard, was bipartisan with the conservative Law Review, and was elected president of it, just as Ulysses elected to make the gift of a horse for Troy. I wonder if it was a black horse. Anyway, in three years, Obama was done. Three years is enough to sharpen the tongue in the skill of false beliefs giving hope to the naïve, unwary and good natured.

But, whereas it is easy to form a specialist of gab, it takes more than a decade to form an engineer, or some technology specialists. Therein the pitfall of the Wall Street directed economics: as engineers get yanked about, and finance replaces thinking, engineering skills get lost. They are hard to replace.

Some will say: so what? But GM (cost 60 billion dollars to taxpayers) will fail, because it needs as good automotive technology as there is anywhere, just to survive (in spite of American nationalism, I do not see too many Americans spending giant money on the unworkable Volt car). This is caused, in part, by world overproduction of cars, and a pretty open market… in combination with an attenuation, in the USA, or, at least upper management in the USA, of thinking excellence.

***

SUPER KILLER ROBOTS STIMULATE THE ENEMY:

Now, make no mistake, the USA is still a technological leader. thanks to a government program known as the military-industrial complex. American killer robots are by far the best in the world, thanks to the war in the Middle East.

So the war in the Middle East is Obama’s true and only stimulus. It is also the USA’s high tech and engineering insurance program. However, in the meantime, the school and university systems are giving signs of stress, and they underlay engineering supremacy. Why? Money is disappearing, as it is all sucked up by the military-pharmaceutical-financial-congressional complex, leaving crumbs for the crucial parts.

***

TOO MUCH IMBALANCE, NOT ENOUGH INTELLIGENCE:

Advanced skills can be lost. Henrich has it that not enough numbers will do it, and thus he explains the Tasmanian effect (science fiction writers and Krugman have jumped on this, concluding that millions of people are needed to colonize … Mars). I have an essay on this coming. My explanation is completely different, and argues that ideas are more important than numbers: many are the ants, few are the philosophers.

In recent decades, tendentious commentators, sociologists, ethnologists, and philosophers (many of the original ones being famous French philosophers) have painted European civilization under an erroneous light, describing it first as a place of imperialism, sucking the innocent world dry. In this those advocates of "multiculturalism" strangely followed the line invented by Herder and Rousseau. That line of thought which produced Hitler.

I am extremely multicultural myself, so multicultural that I need a valuation system to order all my multicultural ideas. This is what happens when Murid, Greek, European, American, mathematical, historical, scientific and countless other value system have to cohabit together in the same brain. Multiculturalism without multivaluationism is a chicken with a thousand heads.

By overdeveloping its military skills, the USA is dangerously losing more important skills. And thinking, foremost. Not to see, not to feel that plutocracy and democracy are incompatible is exhibit number one.

***

TOO MUCH MILITARY, NOT ENOUGH INTELLIGENCE:

Pushing technology as military technology is not necessarily best for society. This is probably a difference between Britain and France during the last 600 years. As a continental land power, France had to maintain a vast, expensive, high tech army. Britain could do most of the time with little, or no army.

So, for example, the ramshackle fleet of Elizabeth I, with a handful of expert navigators (Drake, etc.), using brazen, desperate methods, and a lot of luck, were able to stop the Grand Armada. But, if the irresistible Spanish army had crossed over, it would have quickly ended in Edinburgh. Spending little on army and fleet, relative to France, Britain was able to develop a less militarized society.

Meanwhile, each time the Spanish army was entering the Netherlands to submit the recalcitrant Dutch, there would be war with France. It’s really the French army which, after 70 years or so, finished that imperialistic fascism Philip II had started. Fine, but this establishment in perpetuity of the Dutch republic cost a lot.

Later, it was more of the same, in reverse; the heirless Spanish king offered his throne to the Bourbon, uniting in some sense France and Spain. This started the War Of The Spanish Succession, where all of Europe united against France and Spain. There, again, Britain, just as in the Middle Ages, per its position as an island, was able to bring in cheaply a lot of expensive troubles to France.

It sounds all very picturesque, but these wars created enormous destructions, deaths, and lasting impoverishments on French territory.

All of plutocratic Europe would unite again against France in 1792, to try to destroy the ("French") Human Rights Revolution. The invention of new explosives for the battle of Valmy allowed the French rabble to stop the Prussian army.

Meanwhile the "nation of shopkeepers" that the dictator Napoleon underestimated, was developing its civilian industrial economy frantically, leaving France in the dust. It is not that the French were backward relative to the Brit. To a great extent, it was the other way around. The breakthrough on steam power was made by a Frenchman working in England.

A century later, in 1769, a French military program tried to develop tanks (under the good king Louis XV!). They worked, but the military lost interest. In the following century another French military program financed the first planes (built by Ader, who also invented the word "avion", "aviation", etc.).

In WWI and WWII, Great Britain declared war immediately, but, having basically no army, France was left to fight alone fascist Germany twice her size, for all too long (hence the defeat of 1940).

It’s not that Britain was nasty and treacherous. It’s simply that the British empire was run with a big Navy (a necessary condition) and a shoestring budget. That cheapness allowed British industry to dominate. As the French were busy with giant military spending, the chemistry of dies was developing in England, soon stolen by the Germans, founding the powerful German chemical industry.

Military technology programs do not improve the efficiency of the overall economy. This is a major problem, at least for the USA as old energy systems are quickly becoming too expensive on the face of it, in indirect costs and pollution costs. Although there is no doubt that plenty of robotic technology will come out of the war effort, it is probable that other countries developing robots directly for the civilian sector will come ahead. A famous example is that a Frenchman, Bear de Rochas, developed the first gasoline internal combustion engine, but forgot to patent it (1862). Daimler and Benz became what they did, by using that loophole.

***

SERIOUS STIMULUS: SUPER FAST ATOMIC TRAINS:

I have argued that the USA ought to develop advanced nuclear technology. It can be made safe, very efficient, and such that proliferation problems would be resolved. But for all this to happen, American nuclear tech has to be at the forefront, which it is not right now. It even uses a primitive, and extremely wasteful, dangerous and polluting open cycle, the same as in the 1940s. France’s atomic energy runs completely on a closed cycle, generating much smaller waste (which could be burned in more advanced reactors).

Developing and leading in nuclear arts also a moral necessity, because efforts to prevent the rise of nuclear tech in other countries is bound to fail. All what the leading countries of the West can do (including Japan) is lead the process to a safe and effective nuclear world.

Fast forward now to electric trains.

The USA, alone in the world among the most developed, significant countries with high density population corridors, which is not developing high speed rail. China, by contrast, is developing it at break neck speed (it is alleged that China uses more or less stolen German tech, but the same can be said perhaps for Bombardier and Alstom).

First of all the fastest trains are really fast. The world record has been held by French electric trains since 1954 (except for a few months in 1988 when German trains became insolent). The speed record is now 574.9 km/h. This was obtained by a TGV with AGV motorization, on the TGV Est line, which is designed and homologated for 250 miles per hour.

Most of French electricity is nuclear, and most of the rest of renewable origin. Thus the French trains are actually nuclear trains. They create not even 3% of the CO2 other transport modes create.

The magnetic levitation (maglev) record, obtained only for a second or two on a short experimental track, is only 6 kilometers per hour higher. Maglevs are not suitable, because they cannot run on conventional tracks, their magnetic fields are dangerous, and their hyper light construction makes them extremely flammable and fragile (more than 2 dozen people got killed on an experimental German maglev). Moreover, they are much more costly to operate (due in part to their unforgiving concrete tracks; fast Franco-German trains use ballast, which is elastic). And they have no advantage whatsoever.

Air is very dense close to the ground, that is why planes fly high. At sea level, maximum speed by military jets is much less than the cruise speed of Concorde (the SR71 was also flying very high).

The factor limiting the French train record speed was aerodynamics. The Alstom engineers were surprised by this. Resonances and vibrations in rail and piloted pantograph can be mastered up to 660 km/h with present technology. The AGV has better aerodynamics, but has not been tested at maximum speed yet.

Many routes in the USA are French scale. Chicago-New York and Boston-Washington, or San Francisco-LA are similar to Paris-Marseilles. London-Marseilles will beat the plane once a more direct High Speed Line is built through Picardie. At 252 miles per hour, it takes only 10 hours to go from Los Angeles to New York, arguably faster and more convenient than taking the plane. Siemens’ Velaro has reached such speeds on the Madrid-Barcelona Very High Speed line in conventional operations with a conventional train. So none of this is science-fiction. And better French and German high speed train sets are coming.

Russia, the world’s largest country, has a vast program of equipment and technology transfers from Alstom (pendular trains) and Siemens (Velaro), for the next 20 years. Pendular trains can reached very high speeds (up to 200 mph) on conventional lines. They lean in turns.

Trains can be made very safe. TGVs will stop if they are ahead, or ignore signals. It’s a system similar to the metro, with no current between the train sets. Al Qaeda bombed a TGV, with lots of explosives, destroying a cab, but the rest of the train survived untouched. TGVs are made to stay upright, even if they leave the tracks (which has happened after some collisions with trucks). The energy is absorbed by the zigzags of the train out of tracks.

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NO VISION, NO MEMORY, NO NOTHING:

The secretary of transportation said that Obama has a "vision" of high speed rail, and some lines at 110 mph are being financed (in Europe high speed is higher than that, and VHS is double that). And then there is the idea of putting high speed on slow freight lines, which is impossible (even 100mph lines .would cost a lot of money if built for freight).

Instead Obama should have spent lots of money on one true Very High Speed line, to demonstrate to all Americans how superior High Speed Train was. That is what Russia did on the Moscow-Saint Petersburg line, which is equipped with Velaro trains running at 155 mph (250kmh), covering the 400 miles in 3 hours.

Hoover had the Hoover dam (and many other large construction projects). What will the Obama administration be remembered for? For its health plan, to come on line in 2014, after the republicans have completely gutted it of any relevant meaning? For saving GM which will fail within 2 or 3 years? For the financial cover-up over the inability to put back in place the Banking Act of Roosevelt of 1933? For putting back in power the same exact people who destroyed the banking act, ten years ago? Will the Obama administration be remembered for having delayed the collapse of the insufferable enormity of the ensemble of all mortgages due? Will the Obama administration be remembered for its lack of reading on Afghanistan before deciding to move mountains there? Or for viewing Afghanistan as a proper stimulus for the USA? Will the Obama administration be remembered for having augmented enormously the already unsustainable military spending? Is this lack of anything positive to be remembered by related to the fact that only 42% of Americans think Obama is American born (August 2010)?

In any case, the Obama administration will not be remembered for having put the USA back on the rails.

Patrice Ayme

The More Serfs Owe, The Richer Their Lords.

January 29, 2010

 

WHY OBAMA WANTS HIGH HOME PRICES, AND WHY HE IS WRONG.

clip_image002 In his State of the Union Speech President Obama did not talk much about the housing market.

But what he did say speaks volumes about his political intentions and that the same old financial philosophy of his economic advisers still rules.

Obama:"Now, the price of college tuition is just one of the burdens facing the middle-class. That’s why last year I asked Vice President Biden to chair a task force on Middle-Class Families. That’s why we’re nearly doubling the child care tax credit, and making it easier to save for retirement by giving every worker access to a retirement account and expanding the tax credit for those who start a nest egg. That’s why we’re working to LIFT THE VALUE of a family’s single largest investment – their home. The steps we took last year to shore up the housing market have allowed millions of Americans to take out new loans and save an average of $1,500 on mortgage payments. This year, we will step up re-financing so that homeowners can move into more affordable mortgages. And it is precisely to relieve the burden on middle-class families that we still need health insurance reform."

"New loans"? Are not Americans over indebted as never before? And more indebted than any other free citizens on Earth? So, because education is increasingly for the rich, in the USA, the Obama government will make American richer by having them pay more to their banks (so that the banks can buy more derivatives?… which is what they did in 2009, it turns out!)

Barney Frank had already said in The New York Times:“I don’t think it’s a bad thing that the bad loans occurred…It was an effort to keep prices from falling too fast. That’s a policy.”

So you Americans shall be fleeced, so that prices don’t fall too fast: we don’t want Goldman Sachs to fail again. (Goldman actually bet that real estate was going to fail, while loudly saying the opposite, but still failed… while giving bonuses.)

One needs to think and reset here. Americans do not really own their homes as much as they think they do. They think they do, but they do not. Owning homes for real is what the French, or the Canadians, do, when they do not outright rent. The real home equity among homeowners in the USA, is well below 50% whereas in many countries such as these, it’s above 70%.

Thus the fate of Americans home "owners" is a deep mystery, an unknown condition in the rest of world. Verily, most Americans rent their home from a bank. They RENT. FROM A BANK. In a country such as France, to be a homeowner means that one has (mostly) paid cash for the home. Borrowing, in a country such as France, is reserved for income generating investment, such as buying a grocery store: this is the proper way to use the concept of using money one does not have: because it will allow oneself to EARN more, thus allowing to repay the loan.

Hence the Obama government is working to “lift home values, allowing millions of Americans to take out… new loans"… does the government remember how we got in this mess in the first place? Apparently not.

It is true that rising prices increase equity and that equity can be withdrawn and spent, because of the constant propaganda that Americans in good standing ought to withdraw and spend (Bush’s theory after 9/11!). This Mortgage Equity Withdrawal (MEW) addiction can provide a short-term boost to the economy, but the long-term results are obviously disastrous.

Why so disastrous? If for no other reason, that it was tried before. When? Well, you have to know a bit of history and realize that crushing individual debt is what happened in the HIGH MIDDLE AGES. The peasants got indebted to the rich, and their debt servitude extended over generations. In exchange the rich, thereafter called the "Lords" gave them military protection (see Obama militarily stimulated economy below).

Continuing to borrow money from banks to speculate in real estate, as real estate prices rise, hoping to sell and cash out before the inevitable collapse, is quite literally a pyramid (or Ponzi) scheme on a full national level, with the US president in the role of Mr. Bernie Madoff, who used to be president of the NASDAQ (N is for national…) This was the model of the American economy in recent decades, especially in the final bubble of real estate in 2002-2007.

That path does not lead to economic prosperity, because it violates the fundamental principle of borrowing (as I sketched above): Borrowing is only justified by increased profits.

Who benefits from high home prices?

  1. Banks – who take a greater share of people’s income.
  2. State and Local Budgets – who take a greater share of incomes, through various taxes indexed on the prices of homes.

Who is hurt by high home prices?

  1. Homebuyers – who can’t afford a decent house.
  2. Homeowners – who pay too much in interest to the banks and taxes to the governments.
  3. Every other shop or business where that extra money could have been spent.
  4. The whole economy as this excess money is wasted on taxes and interest, and attending adminstration, rather than on innovation and starting small businesses.

So…question: Why does the government want to lift up housing prices? It is well known that the economy, long term can sustain only (average, median) home prices three times the (average, median) incomes. The only sane, and economically safe way of rising home prices is through rising incomes.

Answer: well, there are actually two answers. The semi official one, and the one the government does not want people to contemplate.

The semi official answer, suggested by Obama and other worthies, is to restore enough homeowner confidence to prevent a stampede of individuals who are strategically deciding they will be better off defaulting on their loans.

The worst that could happen to them? A ding on their credit record for maybe three years (except nobody would get dinged if everybody did it!). As the Google chief economist put it a few years back, homeowners could all sell, and move to the house next door, at half the cost. In an economy built as a pyramid scheme with the base made of homeowners reduced to serfdom, that would cripple the economy. At least, the old fashion economy, the unsustainable type.

The real answer is a bit blunter: Obama and his advisors cannot think outside of the mental framework of the people who propelled him to the presidency. Why? Because they do not have interest to. They are joining the plutocracy, as their leader Clinton did before them. Before joining it financially, they have to join it in spirit, and pay their dues.

It serves their ideology just right. Remembers that during his presidential run, Obama declared to a Nevada newspaper that Reagan offered a “sense of dynamism and entrepreneurship that had been missing.” Well, Reagan offered the deindustrialization of the USA and the failure of the Savings and Loans, a thousand banks that went under because Larry Summers and his ilk had deregulated them. That Obama does not know this makes him desperately searching for his fatherly Reagan, who had been missing.

The greatest private contributor to Obama was not the little internet guy, taken individually, but the bank, Goldman Sachs, taken globally. It was even more perfidious than that: me and my family contributed more than 1,000 times more than the little Internet guy, and even more than the fat cats at Goldman Sachs, taken individually. But the worst part is that Obama and his advisers knew all too well that me, and my family, and people like us, being little guys, could never give them the big juicy jobs, with huge incomes and private jets, and influence around the world, that the Goldman Sachs types would give them. Let alone win (buy) the next elections, now that the US Supreme Court has removed all restrictions for the hyper rich to buy political positions in the USA.

So Obama and his advisers are desperately trying to save the profitability of the banking system, as it is, and the individuals that created the economic disaster that is gripping the USA and the world. Profits of American banks in 2009, have been caused by speculation, not what ought to be normal bank operations.

Sober reminder: if Obama had said that the government was working to keep our banking system solvent while the housing market continues its natural market correction, millions of underwater homeowners might have decided that it was not worth trying to fight anymore and walk away.

If Obama had wanted to help the People, he would have announced a principal reduction program that would have helped ease the debt-burden for millions of existing and future homeowners. Or, more simply, he could have announced support for bankruptcy cram-downs, allowing judges to reduce mortgages. Readjusting home values back down is the kind of help that homeowners, existing and future, actually need.

Instead, Obama proudly announced that the government will continue to spend billions to make owning a home far more expensive than it should be. Blahblah from the Bush is still blahblah for the morrow.

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Patrice Ayme

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BUSHAMA STIMULUS BEYOND ALL THE OBLAHBLAH:

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