Today's post is an open invitation to readers. Please use the comment section to suggest ideas on implementing "The Alternative" (see previous post).
Some of my own...
Some of my own...
- Require by law that by 2025 at least 30% of all energy consumed in the US be generated via bona fide renewable sources, e.g. hydro, solar and wind.
- Tax carbon-based energy on a scale increasing every year.
- Require all large food producers and processors/packagers to adopt broadly sustainable methods, also on a scale increasing every year.
- Demand that China allows the free float of its currency, oherwise remove favoured nation trading status and impose heavy import duties.
- Immediately cease all bailout operations and instead raise the FDIC insurance limit to $500,000.
As for renewables, forget it. They all need some sort of storage scheme, massive storage, and none are environmentally acceptable.ReplyDelete
So back to reality. Nuclear, nuclear, nuclear. At least 100 plants in the 4 GW range by 2030. There are even small reactors coming out for portable power in basically a container. The only problem with nuclear is that the oil companies hate it and are willing to put tons of money into organizations like the Sierra club. Chevron is one of its largest contributors.
So moving right along. Screw the federal deficit. Reset the dollar to gold and back M3 100% with gold. Price it at $45,000/oz and let's move along.
Let's delever the banks to about a 30-50% fractional reserve. Let the idiots fail. There is no need to worry about having banks around. They print money and people are trying to establish new banks every day. Close the bad ones, pay off the depositors and screw the shareholders. They were printing counterfeit with a 40x fractional reserve.
That would put the mining, ag and manufacturing industries back on their feet. Oh yes, let's get rid of toll roads, build more freeways for better communications, and install higher bandwidth to the home.
Let's encourage chemistry through lessened regulation, and increase drug development by allowing physicians to prescribe drugs in development, or cut the FDA testing to a couple of years. At this point if a drug does not prove that its effective in two years, forget it. It is just another me-to and should be dumped.
As for health care, close 75% of the hospitals, increase medical transport so that those in need are quickly transported to major medical centers. Eliminate the caps on med school enrollment. Shorten the training for nurses to 6 months. Eliminate all tax deductions for health insurance. Allow 100% deductions for all out of pocket health care expenses.
In addition to what you wrote:ReplyDelete
1) Boost FDIC limit to infinite dollars per entity (person or corporation). Hopefully, this will improve faith in the banking system and increase deposits which banks sorely need (as well as incentivize saving).
2) Take that $700 billion bailout cash and put it all into the FDIC. Improving faith in the banking system again.
3) Send all the Federal Reserve and Treasury auditing SWAT teams in to evaluate every single bank protected by the FDIC (or equivalent agency). Figure out which banks are more insolvent than others. Wind down (i.e. destroy) the worst ones. Make the audits of the better banks transparent to the public so private market recapitalization can occur.
Put a $0.05 (USD) per Watt tax on incandescent light bulbs. Once they burned out and were replaced with fluorescents and LEDs, world electrical power consumption would drop by at least 10%.ReplyDelete
Standardize the little DC "wall warts" at something like 12V with a common output plug worldwide. That way each house would only need a few. That would make it practical to have more expensive ones that didn't have such a high quiescent (idle) loads.
FYI, I design circuit boards for a living.
Let's be realistic here. Smart people already crunched the numbers as far back as 1970s and nuclear power is, unfortunately, the only alternative. There were no breakthrough energy technologies developed in the past 30 years that would allow us to go renewable. Hydro, wind, and solar are all very, very expensive and bulky alternatives to nuclear.ReplyDelete
There is just one way to restore people's confidence in the baking system and it is to make sure that banks stick to their core business and don't branch off into high-risk investing and lending business. What would higher FDIC accomplish? I am not pulling out money from my savings because I think the bank will go bust. I am pulling out money to buy foreign currency and gold because dollar is losing value.
Here are some ideas, not necessarily in order of importance.ReplyDelete
1.) Create a sophisticated bimetal (silver and gold) backed currency. There is plenty of ore available in the ground in North America to make this scheme viable even if we discover that Fort Knox is empty.
Concomitant with this initiative, eliminate the Fed and return their power, as mandated by The Constitution back to Congress. Eliminate the income tax and replace it with consumption taxes
and an increase in capital gains taxes.
3.) Pull out of Iraq within one year and take the savings from that (and some portion of the money that until yesterday was all but earmarked for the friends of Paulson) and use it to develop the best of the best extant alternative energy schemes.
Imagine the Marshall Plan meets the Manhatten Project and you will have some idea of what I have in mind. Are you listening Obama. My guess is that if the U.S. really did a full court press on this, the nation could vastly exceed a 30% alternative energy usage rate target by 2025.
As part of this initiative, tax gaz guzzlers out of existence, and provide strong tax credit incentives for investment in and use of energy saving technology. Also as part of this plan, a 21st century version of the WPA could be engaged in creating a super high speed rail system that connected all of North America's major population centers. Reduce the need for air travel to only cross country jaunts since a 350 mile per hour train, is sufficiently speedy for any trip under fifteen hundred miles.
4.) Remove money almost entirely from national politics. There are various ways to do this, and the best one I can think of at the moment is by drastically shortening election seasons for major office. As part of this movement, eliminate the electoral college.
5.) Begin the process of creating a national health care system that allows for maximum choice, and ensures that every citizen has access to care.
6.) Institute an entirely new agricultural regime that follows a very different model than that of big agribusiness. We do this via changing the tax schemes and creating the proper incentives for smaller scale farming.
In machine learning a useful concept for what constitutes a good learner is one which is "probably approximately correct" (PAC).ReplyDelete
1. establish currencies which are probably approximately "worth something" (not necessarily gold/renewable energy etc)
2. protect currencies using strong encryption and global decentralization (rather than sovereign might/central banks)
3. protect the right of free local and global markets to grow around such currencies
if we really had the ability to make any decisions that matter, i'd back your Green currency model over the debt model and gold model of money any day. money should reflect the level of production in the economy and without energy, production is impossible.ReplyDelete
i might be misinformed but my readings have alluded that alternative energy is not that far away. there have been some major breakthroughs in this field. from high efficiency solar panels to possible energy storage sources like the one MIT developed. i am aware that many of them are probably scams or actual products that might eventually turn sour due to high costs or impracticality. but some of these are bound to make it right?
i am all for alternative energy as the key to America's future. as a way out of energy dependence as well as a way to rejuvenate the economy and create jobs.
Central banking is a curse upon mankind. We will never be prosperous and civilized until it's abolished. Making currencies redeemable in gold would solve most of the problems in this area, but 100% reserve banking is the compleat solution.ReplyDelete
Under 100% reserve banking no credit creation takes place at all. No credit creation means the production structure is never distorted and the business cycle dosen't occur. Commerce is funded by the actual savings of real people. The bankers have brainwashed everyone into thinking that credit is necessary to fund commerce. Credit is the SCAM by which bankers get rich charging interest on fraudulently altered bank account balances.
Recommended reading: "Money, Bank Credit,and Economic Cycles" by Jesus Huerta de Soto (Mises Institute, 2006).
Ahem. Well, I am more of on the creative side rather than the finance side or the engineering side, so I can't add much to discussions of technical things like alternative energy or alternative economies.ReplyDelete
I do believe it would be productive to start retraining people who are over 45 who already have college degrees but who have been bypassed by technology. I know a lot of people will say "But the younger generation is so much more creative" but I don't believe that. I think a lot of the older generation retain their creativity. They just don't understand all the new technology because they've never been trained in any of it. (I'm sure this isn't making much sense -- but I have a degree in Advertising and while I may be great at Advertising, I don't know how to design ads for the computer. I have all sorts of ideas -- but how do you get them on the computer? How do you get a blank page on the computer? Is HTML like Wordperfect 2.0? I don't need another 4 years in school to learn computers. I need an abbreviated quickie learning class that would show me how to do what I want to do. How hard is that? And why can't I find any school that offers that? I'm sure that others in fields like computer programming, engineering, and others ask the same questions.)
Americans have always had an amazing ability to generate new ideas and new businesses. Now that people live a lot longer, perhaps we should quit thinking of school as something you do when you are younger? Perhaps there is a time, when you've been out of school for 20+ years that there should be good refresher/expansion classes? (Colleges don't offer these and they should. You either have to sign up for all the classes, like you didn't get a degree a long time ago; or there is just nothing to take.)
Anyone who think the problem is low asset prices be ig'nant.ReplyDelete
Asset prices appear low now, simply because there is less money in the systems chasin them round than there was earlier.
The reasons there be less money chasin the assets is cause people and banks and shit can't pay they existin debts and stuff.
They can't pay they debts cause nobody dumb enough to loan them no more dough.
Nobody be lending cause only a fool loan to a bankrupt.
The problem isn't asset prices. The problem is the debt.
Everything makes sense except item number 4) which is financially impossible in current circumstances.ReplyDelete
Of course, imposing duties should be done. But targeting specifically China is overly dangerous. China is the BANKER.
Duties should be set sector-wise and deficit-wise. US has to fund its imports. And it cannot in current circumstances.
Duties are no evil. They are plain normal tools to rebalance trades when needed.
I am not comfortable with US on these issues. Let us hope and pray for some reasonable output...
Why should China freefloat the currency?ReplyDelete
It is obvious the "market" is rigged and doesn't work perfectly. Haven't the past year's turbulence taught you anything?
Any drastic reform often causes turbulence. Let's not be political naivettes here...
You may be getting your wish on yuan revaluation:
The relavent passage:
The U.S. financial crisis had taught China a lesson and that was: ``Why are we piling up these IOUs if they may default?'' China's economic expansion strategy, which emphasizes export growth that has led to trade surpluses and the accumulation of $1.81 trillion in foreign-exchange reserves, is the main problem, said Yu.
``Our export-growth strategy has run its natural course,'' he said. ``We should change course.''
China should stop intervening in the foreign currency markets and thus allow rapid appreciation of the yuan, he said. While this would cause pain for exporters, China could ease the transition by using its strong fiscal position to aid those who lose their jobs. It also should stimulate domestic demand to offset lower income from overseas sales.
Without yuan appreciation, China will continue to accumulate foreign reserves, which means further accumulating ``IOUs from the U.S.,'' said Yu. ``This is paper and it may default and it will not increase China's national welfare.''
If China doesn't allow the yuan to appreciate and continues to promote export-led growth it will lead to confrontation with the U.S. and Europe, Yu said
Declare all CDS and CDO's to be null and void.ReplyDelete
“Some people who read and comment on this blog ask what is my "solution" to the most crucial problem of our economy: too much debt vs. low earned income. I thought I had provided a broad outline, but let me now present a more comprehensive one.”ReplyDelete
I’m not quite sure which thread to put my comments in, but I’ll try this one.
I guess that this comment at least partially referred to me (the Peter from the previous thread or two). I’ve read your blog for quite a while, and seen your comments on what would count as a solution. And, at least emotionally, I agree with them completely.
My concern is whether it’s possible, and I don’t really have a handle on how to answer that question. We are in the grip of a financial crisis and we are also somewhere near a net energy cliff (as I know you know from your references and the fact that your plan addresses this issue), yet just at this time, we need to change our whole infrastructure – almost rebuild the boat whilst still at sea.
If we can do this, the state we end up in will be a lot better than our current state, but the question is, can we? In a former life, I studied chemistry, so I learnt about the distinction between whether something is thermodynamically possible as opposed to whether it is kinetically possible. So, if I remember correctly, from a thermodynamic point of view, carbon in the form of diamonds would prefer to be in the form of graphite. Luckily for the ladies of this world, it is very difficult to get carbon atoms to perform this rearrangement, and the carbon remains as diamonds.
Similarly, with your plan, it would be better to end up where it would take us than to go with wherever business-as-usual will take us. However, especially now, it would seem that the financial and energetic constraints tend to prevent going down that route. Is there enough capital/finance for a directed plans of works of this nature? Presumably it’s not now seen as financially viable compared to oil and gas etc. as an investment? I don’t have any handle on what’s really involved and how much capital it would really require and how it would be financed, and all at a time when we seem headed into a deep recession. (I suppose, as an aside, people say that we have days to get the bailout done or its financial Armageddon; if that’s true, do we even have time to look at anything different?).
Secondly, from an energetic point of view, initially such schemes are EROEI < 1 (you have to put the energy in before you get it out), do we have enough net energy to do this. My vague recollection of the Hirsch report suggests that we probably needed to start about 15 years ago. Can we do this now? Or will we end up with a job half done and the last spurt of good net energy wasted? Though I suppose that you could argue that BAU is a waste of net energy anyway, so what’s the difference? Perhaps the alternative is to plan for powerdown? though I see that as even less likely for TPTB than what you propose.
Anyway, thanks for all you’ve written,
1. Get the Japanese to raise interest rates or otherwise stop flooding the world with Yen at 0.5% interest rates. This is every bit as much a cause of the asset bubble as Greenspan's lowering rates too far, and it is still going on. This is blatant currency manipulation to boost exports. If they refuse to do it, impose duties & revoke MFN. This is also a large part of the reason the Chinese won't let the RMB float: their exports can't compete with Japan with the way the Japanese manipulate currency values.ReplyDelete
2. Repeal the 2004 SEC decision to allow infinite leverage in financial instutions. Go back to 12-to-1 for everyone. Obviously this will have to be phased in over 6-12 months.
3. Encourage savings and discourage consumption by making interest tax free. Even better, replace the income tax with a VAT (Hey! One can dream!).
4. Close at least 700 of the overseas military bases and cut defense spending in half.
The reason this problem got so big is because OTC derivatives that leveraged the heck out of the housing market. Take away this leverage and it will just be another housing bust - prices decline, and we'll start the bull run all over again. This time, it's different because banks have this illiquid and worthless paper sitting on their books and they can't get it out of their system safely.ReplyDelete
My take on this:
1. Freeze all OTC derivatives with the view of outlawing them. No more leveraging and secretive shell companies off balance sheet. Can you imagine that these crazy instruments are still being written today?? Here comes the tricky part: both counter parties have to agree to null their agreements. It will probably make most major banks broke on paper so we have to make sure point 2 gets implemented.
2. Get the government to guarantee all mundane day to day banking operations to keep businesses alive and money flowing to the public.
Eventually, the market will sort itself out. But we must ensure the basic banking functions remain.
This generation will never trust bankers again. Banks will never be the same again. Just like dot com companies will never see the heydays of 2000 again.
As for energy, I'm surprised Hellacious can think renewables are the answer to our energy crisis. I expect an engineering grad to be able to understand the physical and economic limitations of any of these renewables especially when you take into account power losses and inefficiencies. As Scotty would say, "Captain, ye cannae change the laws of physics!"
1. The gold hawks should find another hobby. The value of the dollar is actually held in check by a wide number of things like a functioning Forex and interactions with other central banks. The real cost of gold is declining except in instances like right now. That means holding precious metals is a timing game. Timing games are lousy investment schemes for almost everyone.ReplyDelete
2. I second the call for a firm 12-to-1 debt ratio for the banks. Reinstating Glass-Steigal(sp??) is in order.
3. Demanding the Chinese float their currency is never going to happen. Walmart shoppers couldn't afford anything in Walmart. It's a no-win situation.
4. Fix economic indicators. Bring them in line with global standards on measuring economic activity.
5. I would modify your energy ideas to emphasize a decentralizing energy production approach. A cattle rancher could produce a whole heck of a lot of natural gas... Houses and buildings can produce their own electricity, however the utilities aren't designed to accommodate it. The utilities in California have managed to tax solar users such that their ROI for solar is basically negative. That kind of thing should never have happened.
FDIC and fractional reserve lending is maybe the biggest reason we are in this fiasco.ReplyDelete
All your proposals are weak at best.
The following would be the best recapitalization plan:
Removing personal income tax on savings accounts and CDs.
Remove personal income and/or capital gains tax from money obtains from asset sales when transferred into a savings account or CD.
FDIC limits should be held at 100K until 2020 at which time should be limited to checking accounts only. Fractional reserve lending should be eliminated in 2020 as well.
I like the idea of the renewables.ReplyDelete
As for making "demands" on the Chinese, forget it, they will not be bullied.
Time to abolish the Fed, adopt money based on gold, and actually practice capitalism.
Good positive effort but you need a view on how to defend the State in this sustainable scenario.
Modern high tech armies are totally dependent on the availability of large quantities of oil and money.
Wich begs the question wether you should bankrupt your country to secure access to oil.
bottleneck (previous post):
Very difficult problem you have posed.ReplyDelete
1. Mega cities will collapse - have done so in the past when resources (energy, food + water) became scarce.
'Encourage' population shifts into rural areas that can support them. Cluster groups to provide supports.
2. Energy problems: fossil fuels will decline - need to have alternatives. Failure here will be catastrophic.
Nuclear is too energy-cost intensive to be sustainable. Not viable in long-term. Liquid fuels - very useful and must be rationed for essential, non-military uses. Gas is useful for cooking - not for heating, too wasteful. Solid fuels (coal and wood) - big problems with both, but if every adult citizen planted one tree each per year!
3 Fresh Water: Essential; no alternative substitute. Failure here means massive disease and death rates.
All sources must be in public control and all pollution be stopped asap. Massive clean-up task is required. Public water supply in urban areas must be upgraded. Sewage disposal is an essential adjunct to this.
4. Adequate nutrient supply: Essential, some alternatives available. Fertilizers and insecticides based on fossil fuels will not be available. Failure here means mass starvation, disease and high death rates.
Strict limitations on Industrial Farming. Return to some form of rotation - depending on the local climate and soil conditions. Failure here will significantly reduce ecological footprint and reduce food production.
5. Housing and Commercial buildings; very strict building standards, irrespective of region or location.
Energy conservation is the essential aspect here. Given the very wide variety of geography and climate this will be a significant engineering and architectural challenge.
6. Inter regional, state and local transportation. Failure here will lead to resource shortages in regions of dense population.
Rail and water highways must be upgraded asap.
6. Education; Vital to safeguard primary, secondary (high school) and trades. Free university tuition for some essential professions (medical, engineering, and teaching) rest have to pay. Failure here will mean return to subsistance agriculture.
7. Finance; Go to a 'hard' currency.
State Banks to provide interest free mortgages for personal homes only. Commercial banks provide other finance. Remove all credit cards from system.
There are many difficulties with all of the above. Needs to be systematically addressed. How about a Three Day Holiday each Spring and Autumn when all citizens have the time to discuss these issues. All business would have to close - except for local food stores and some fuel and pharmacy outlets. No exceptions. Citizens who turn up for the meetings get a food/fuel voucher.
Reduce the size and scope of the federal government, give more power to the states (federalism). Return to the principles exposed in the Constitution. Much more nuclear energy. Drastically cut military spending. Indeed increase the reserve for fractional reserve banking. Invest heavily in education. Build rail, and public transport. And above all be prepared to live locally and with much less.ReplyDelete
We need to ration.ReplyDelete
Getting rid of a lot of government is one way to ration (not the one I would chose but letting the free market decide will definitely work) OR we can openly ration as a collective with the collective's oversight (but make no mistake, the collective will have to face the ugly decisions it does not want to make- if it does not, Edwardo is correct- eventually the west will fracture or look like a banana republic or Brave New World... making tough decision does not just mean making them on Wall Street fat cats)
Fortunately (if there is such a thing as 'fortunately' when it comes to rationing), the reality of rationing in non-linear systems is that small changes on the heaviest users (abusers/needy/whatever term you want to use) within a non-linear system will have a much greater positive impact on the system as a whole than large changes will on smaller users (abusers/needy/whatever).
This means rationing on a few is often all that is necessary to fix things with little impact on the many.
An example of this is how a country can have a much larger reduction on its national oil consumption when it improves the efficiency of cars that get 12 mpg than when it improves the efficiency of cars that get 24 mpg.
1. We need to ration healthcare spending on a few (or it will continue to be done covertly as it is today whether we like it or not)
2. We need to ration education spending on a few (we really need to improve educational productivity tremendously... college in 6 years which we all pay for is just crazy)
3. We need to ration entitlement spending on a few
4. We need to ration being the world's policeman to a few
5. We need to ration energy usage by a few
6. We need to invest in basic science and technology
We can either let a capitalist free market system make the ugly choices for us, and complain we don't like the system and "want something else", or we can take on the decision as a collective and come to a universal agreement we apply across the board fairly... but it has to happen or the collective will eventually split apart into units that agree on rationing in their own particular way.
It is what it is.
"The gold hawks should find another hobby. The value of the dollar is actually held in check by a wide number of things like a functioning Forex and interactions with other central banks. The real cost of gold is declining except in instances like right now. That means holding precious metals is a timing game. Timing games are lousy investment schemes for almost everyone."
"Except in instances like right now?" What unmitigated nonsense. Since 1999 silver and gold have been a superb buy and hold. So much for the necessity of timing. And, as it so happens, I would add that today, gold made an ATH against pounds sterling.
Your post evidences poor timing wouldn't you say?
5. Immediately cease all bailout operations and instead raise the FDIC insurance limit to $500,000ReplyDelete
Good idea! Then be done with it. The underlying problem we face is that there's not enough income to service the record debt levels we built up. Let the rest of the banking system fail. What do they produce besides toxic debt and exorbitant compensations for their masters? Both are not essential to our economy. We need to start producing "real" things again instead of trying to create wealth out of thin air. An economy can not survive by selling each other happy meals, houses and "innovative financial products".
Here're some of my own ideas:
1. Impose stiff tariffs on all products made by "slave labor" or in environmentally unsustainable ways.
2. Raise gasoline tax by $3/gal and use all proceeds to beef up public transportation. Especially local rail running on electric.
3. Close one lane on all major roads (except interstates) so they can be safely used by pedestrians and bicycles. Impose a 50 mph speed limit.
4. Update building codes requiring much better insulation and more efficient heat/cooling systems (geo-sourced is the key). That will add about 15% to the construction cost.
5. Follow the Pickens plan and use nat. gas for transportation instead of electricity generation. "Green" electricity is relatively easy to generate, "green" liquid fuels are not.
6. High speed electric rail instead of air travel.
7. Put all long distance freight on ELECTRIC rail.
8. High voltage direct current infrastructure to get solar energy from the South West to where it is needed without losing most of it along the way.
9. Small scale wind and solar units for the average homeowner.
10. Spend more on education, research and health care instead of Wall Street bankers and for wars in far flung corners of the world.
11. Make it much more painful for individuals to declare bankruptcy except for serious health conditions. We need to restore personal responsibility with draconian measure. Forced labor camps if necessary.
12. Prohibit any ads for credit/"buy now pay later". Similar to the ban on tobacco ads.
13. Encourage saving money by raising interest rates to levels that are above inflation rates.
14. Imprison financial terrorists and seize their assets. Prince, Mozillo, Paulson and all the other crooks come to mind.
...of course NONE of this will happen.
The current educational system is a bubble of immense proportions that adds a significant 'dead weight' onto the backs of the majority of Americans.
While I absolutely agree on the need to advance knowledge and similarly the importance of education to improve oneself, the cost necessary to accomplish this is a totally different matter.
People MOSTLY pay for Harvard credentials as a kind of 'advertisement of the fittest' to proclaim to the rest of the world they come from 'superior stock' than everyone else.
There is little other good reason to pay those fees. And while I have no problem if people want to waste their own money doing this, the idea that it actually costs $80,000+/year to educate a Harvard student (while a local community college does it for $4,000/year) is an absurd fantasy I would prefer the tax payer avoid.
We should not subsidize this travesty- we should figure out how to improve educational productivity and get meaningful college BA and BS degrees that graduate programs and employers will accept to college kids as a cheaper alternative (or even online university at $1500/year).
In fact, some professors at places like MIT have already admitted how easy this is.
The same thing is absolutely true for things like medical school- it is absurd to beleive the claims made by medical schools in the US that educating a medical students costs $300,000-$500,000/year (again while a community college does it for $4000/year)... and of course these same schools control THE LICENSING of who gets a medical degree to practice medicine in the first place. If you need to see for yourself, I know a lot of medial school professors in real nice neighborhoods with real nice lifestyles that should have the time to answer all your questions.
On this I would say "wake up and smell the coffee".
The thieves in Wall Street took over the halls of academics long ago.
Time to choose your September Madness bracketReplyDelete
take the $700m, nationalize GM, give everyone a free option to trade in their vehicle for a Chevy Volt, IPO GM.ReplyDelete
"The only problem with nuclear is that the oil companies hate it..."ReplyDelete
If you think that's the only problem with nuclear than you are clearly ill informed.
Besides safely storing the waste products we have other challenges. High quality uranium ore is running out. The faster breeder reactor technology doesn't work as originally thought and most countries quit research on it. Yes, you van get uranium out of sea water, but you can also get oil out of oil shale. Neither being particularly efficient.
8. High voltage direct current infrastructure to get solar energy from the South West to where it is needed without losing most of it along the way.
I'm under the impression that direct current can't work for long line transmission, have there been any developments that now make it possible?
Also, not to quibble, but isn't it "fast breeder" as opposed to faster?
I think this article explains why none of your beautiful dreams will be acted upon until it will be too late:
Have each American taxpayer give me $1.00!ReplyDelete
Stop the pigmen and poli-shitents from getting away with lying and fraud.ReplyDelete
Start a super fund to bailout important and relevant institutions.
Prosecute all the lehman type fraudsters to the full extent of the law.
Build more prisons. Hire more cops. get out of Iraq.
And face the fact that America has been terrorized from within and get used to living on a lot less.
Nuclear, W speak, as a solution does nothing. Energy is not that big a problem. Big money abuse, is the problem.
Welcome to beginning of the end of the empire........
Ok. Decision time. Please concentrate on these three items:ReplyDelete
Reliable source of food and fresh water.
Reliable source of suitable clothing and access to suitable housing.
Reliable source of useful energy.
Assume the following:
1. Fossil fuels at half current levels (forget about the cost) concentrate on their availability.
2. Fossil fuel availability is declining at -5% per annum.
3. Land productivity is declining at -2% per annum.
4. Fresh water sources are showing slow, incremental pollution.
Now. Model the behaviour of the population. Get the message!
No offense folks, but you MUST attempt a meaningful intellectual engagement with the matter in hand.
History does not repeat, but it does rhyme! Other civilizations flourished, then declined. But it's different this time!!!
Consider the alternative of doing nothing.ReplyDelete
1. All the banks and brokers fail due to counterparty risk, bad mortgages, bad investments, bond defaults, etc.
2. The FDIC (the Fed, really) bails them out by printing money to pay off the insured parts of the depositors..
3. Hyperinflation wipes out essentially the entire debt of every corporation, state, local government, and individual, and most countries.
So, what is the problem? You aren't about to have a debt crisis when very few corporations, governments, or people have any debt to speak of.
Of course, some people will lose their life savings. To be precise, they already have lost their life savings. You are just going to recognise this fact.
Alternatively, you could leave every government, corporation, and individual in suspense for months while they wait to find out how much money they have, or whether they have any money at all.
Brian Woods, why does my proposal not address this?ReplyDelete
wkwillis,I don't see the hyperinflation in your thesis unless the government makes the actual choice to print and use the printed dollars to fund the banks debts, etc... And it is quite clear the markets are looking for ANY sign of this as Hell alluded to before.
Although- do you know who has Obama's ear on this stuff?
The debt load has gotten so big (and the increase is accelerating) that the interest payments will force hyper inflation once rates start to normalize. The alternative, formal default, would be more disruptive.
The only source of interest payments is going to have to be new money because additional borrowing will be increasingly impossible as lenders begin to think the unthinkable. The only other possible source of funds would be a hefty wealth tax but I'm not holding my breath.
In my household, if I have a debt problem and I don't want to default, I have to start paying it down.ReplyDelete
Why can a society not do the same?
Even if you actually confiscated property of the wealthy in some kind of wealth tax (the ultimate return to the approaches of China, Russia and Cambodia), it WOULD NOT STOP CONSUMPTION which is the problem- in fact it might encourage more.
Most things in economics are non-linear (some but only a few are fractal):
Take the case of healthcare as just one example where 1% of people SPEND 25% of the money spent by the entire system. Capping the 1% at (say) 12.5% of today's current spending still gives them vastly more than anyone else and yet it would save America 2% of it's entire GDP (again with a negligible impact on the other 99.5% of Americans). This is what most socialized systems do which is why they spend a smaller % of GDP on healthcare than Americans do.
Do the same thing in other parts of the economy and you will quickly free up the 6-7% of our GDP necessary to pay off our debt and still have MINIMAL impact on the other 97% of Americans.
I am not going to pretend it would be pretty on the 3% of people who are the heavy spenders (but to be clear, under this proposal, the would still be having vastly more spent on them than anyone else in the system so it would hardly be 'unfair').
Sometimes it is the many over the few.
It would work
@Thai - I am in the 1% of high health care spenders. I am 53 years old and have had brain surgery, two cancer operations, and a year's worth of cancer treatment. I am now working and expect to work another 15 years.ReplyDelete
I would agree that heroic measures to keep an 85 year old alive one more year is not worth it; but in my case I would like to think it was worth it even objectively given what I expect to contribute to society.
Our health care expenditures are much less efficient than most other developed nations not because of heroic measures for a few but because of the huge duplicative insurance company overheads. I suggest we nationalize the health care system. It works better in France under government control than it does here under private.
There are some really well-written, thoughtful, and intriguing ideas posted above.ReplyDelete
Lets balance them out with some shoot-from-the-hip, wild-assed, and probably irresponsible ideas below.
*Slowly disband SSA. No future benefits for anyone 40 and below (BTW, I'm 38); decreasing scale between 40 and 65. We'll still have to pay into the system which we'll never benefit from, but over the long run it will be less.
*In 10 years, Medicare ends. Big pharma forced to donate meds to those over 65 and under 18 starting now and lasting forever. Can we cope with the emotional toll of this rationing? It sucks, but yes.
*Huge database with every VIN # (we have the technology...)and gas stations can only give 500 gallons of gas to each vehicle annually.
Well I could go on about birth control, vegetarianism, and judicial reform, but I should really getting to yelling at WA's 9congressional representatives before the next bailout vote and set the TiVo for the Biden/Palin disaster.
Here is my solution - tell every current and past executive of failing financial companies, who took large bonuses in the last few years, that (a) they must return those bonuses, and (b) if the economy does not get fixed in 6 months without taking public money, they will be hanged in public - one every day - in reality show manner.ReplyDelete
If you break it, you fix it. Why the f&#k do I have to worry about fixing the mess, while Angelo Mozillo keeps his 1.5 billion he took by selling CFC stocks over last two years.
@forensic economist- I am truly sorry to hear about your cancer(s)- I recently lost my own father to brain cancer.ReplyDelete
But whatever your fear, IF you have worked all your life and still have 15 years of life expectancy in which you can expect to continue to work and pay into the system, you are not in the 1%. The system may be spending a lot on you, but you are not in the 1%.
As for saving money by moving to a single payer: while I am all for the idea, don't kid yourself. At most we can expect to save ONLY 5% of all healthcare spending (certainly a lot of money but nowhere near as much as we would save by rationing 1/2 on the top 1%).
The myth of the massive admin savings is one of those liberal 'El Dorado' legends that is simply not born out by research. There is savings in admin, but again, only 5%.
As the Cassandra of the last topic, I would like to reassure people reading this blog that I am not a pure doom and gloom person.ReplyDelete
But before, a few comments :
Any operations that suggest to the American public that we will be able to continue doing business as usual after this crisis, are a pure bunch of bullshit.
Necessity is the mother of invention, as some inspired anonymous person said a long time ago.
A lot of frills are going to fall along the way, because they are just not viable (like Hummer cars, etc.). Waking up is going to be very very painful. And a lot of people are going to die, unfortunately.
Sorry to keep harping on my return trip to the States this summer after a 12 year absence, but that absence permitted me to see that... EVERYTHING HANGS TOGETHER. That means that a few, isolated amputations will not radically change a society which is in need of a TOTAL OVERHAUL (and I think that Brian Woods will agree with me on this one, although we come from totally different vantage points).
An example of what hangs together, and shocked me the most :
1) the food chain : nothing in the U.S. even basically resembling the fruit and vegetables that COME OUT OF THE EARTH (i.e., with some dirt still around them to suggest where they come from.) Individual fruits like apples packaged under plastic wrap to PROTECT the consumer from possible bacterial contamination. Bag lunches prepared with "whole grain bread sandwiches", accompanied with potatoe chips and APPLES, where the latter were carelessly tossed into the trash without the least consideration.
2) Massive waste of electricity, and WATER. Massive waste of everything, as a matter of fact.
3) An incredible drive to control any and all aspects of human and animal behavior, in all situations.
4) A degree of cynicism and angst that takes my breath away.
5) A deadening of all the senses, a destruction of the joy in being alive.
I have told my children, and I tell them with feeling and while unconditionnally believing what I tell them : a society that shits upon Nature's capacity to selflessly give, year after year FREE GIFTS (and not the free samples that we get while going into the grocery store), where people throw away apples, and do not even bother to pick the fruit that is on the trees in their garden, is a society that has condemned itself to death and destruction. WARNING : that death and destruction are not some kind of infantile punishment inflicted for being bad, how hopelessly childish, but the CONSEQUENCES OF UNJUSTIFIABLE ACTS.
When I say that this hangs together, I am firmly convinced of it, although I decry any attempts at conspiracy theory.
Why don't we see the fruits and vegetables in their natural state (and not all polished and shining under brilliant plastic ?) Why don't we see that carcasses of the animals we slaughter to get our meat, that way that we used to ?
Is it because the idea of being dependant on nature, on what she freely gives us (more if we are good stewards of the earth) is intolerable to us ? Because we want to be able to say to ourselves that we are not dependant, that we control all of this, that WE call the shots ? Doesn't this hypothesis shed a great deal of light on the denial of global warming ?
Comments : the major "return" (yuk... awful word which is the whole of the problem) of my totally aristocratic, non productive liberal arts education is to have given me the capacity to think, to reflect, and to feel that enables me to SEE all of this, and to FEEL great sadness in it.
I firmly believe that this capacity is priceless, even if my society feels that it can shit all over the liberal arts, and anything that is not PRODUCTIVE, i.e. the lilies of the field, to go way back to a prophet who could already see the writing on the wall (Jesus Christ)
I will offer some positive solutions to these problems on my next post.
It has taken me many years, and several major breakdowns to at last find hope.ReplyDelete
Different people helped me :
William Shakespeare in the Merchant of Venice who helped me to understand that "economy" comes from "the life of the home", which means that if I want to live in a home, I must be interested in it.
Concrete suggestions :
Get rid of industrial farming. It's a catastrophe.
The ultimate priority it to get people to FEEL that they are a part of Nature, that we are animals, that we should feel, and that we need to be connected to nature in order to feel meaning in our lives.
I think that this means that our large cities are condemned, that they are a great part of the problem.
I firmly believe that we must look at alternatives to currency. That it, too, is a great part of the problem. Man is an animal who can't live without meaning and a sense of purpose. We need to keep that continually in mind in looking for solutions.
And, above all, we must fight tooth and nail against everything that turns us into SPECTATORS : we need to get our hands dirty. We need to be composting, and returning to the soil what we have been recklessly pillaging for way too long.
WE KNOW ALL OF THIS, unconsciously at least. And it is destroying our souls.
So, to those who accuse me of being apragmatic, if they are there, I will say : but who knows what will happen if we get people to compost their waste (hell, I'm going to be a real dreamer, and dare to dream that we might actually get back in touch with our SHIT, and stop flushing it down the toilet where we don't have to think about it any more, meanwhile using perfectly good drinking water.)
I vote for doing small practical things to change the world. Not for relying on our governments to do this, because, we are in the last throes of democracy with all its evils, and it will not work.
Debra. I agree with you on many of your talking points, but not this one:ReplyDelete
"my society feels that it can shit all over the liberal arts, and anything that is not PRODUCTIVE"
I have one of those useless Liberal Arts degrees. I feel empathy towards humanity. But. When it comes to contemporary art, who's shitting on who...?
Hell called for a, "fundamental structural shift in our SOCIO-economic structure". He's right. But, in order to change that structure, the "Cultural Value System" must be changed!
The SOCIO or ECONOMIC systems have been put in place to feed a Cultural Value System which is rooted in self interest and perverse individualism. Changing people's mentality to a more free-thinking individualism rooted in a "COMMUNITY", is more difficult than merely outlining a new economic system and imposing it on the people.
Besides, it doesn't matter how good the economic system is, if it's built on top of a cracked cultural foundation, the whole things still gonna collapse eventually. All you're doing is buying time.
Fortunately, an economic solution steeped in alternative energies will help to change Cultural attitudes.
Environmentalism is as good as religion when it comes to social cohesion. If a culture values the environment in which it exists, it could serve to limit an individual's self interested decision making. A self interested decision which isn't mutually beneficial to society would disrupt the social cohesion. That individual would lose cultural capital. And without cultural capital (TRUST), they would lose any power to hurt society in the future.
It's self regulating. That's why religion worked as the social glue so well and for so long.
So now the states are saying they don't know how to ration either.ReplyDelete
So a federal government which is borrowing as it does not know how to ration, will borrow some more to loan to states which are saying they do not know how to ration.
At this point even if we ration by completely stopping ALL military activities in BOTH Iraq and Afghanistan AND ignore ALL future obligations to veterans (which I would completely oppose, I am only illustrating a point)- the most the US government can save is about $15 billion a month or $180-200 billion/year.
But if you read the CBO's own data from their website and put two and two together- the United States WILL NOT be able to meet its ongoing fiscal obligations EVEN if we assume immediate withdrawal from Iraq- $180 billion/year is not enough savings... notice that CBO has made the assumption in its model that tax receipts will INCREASE every year. California is already showing how unlikely that is as is the reality that federal receipts are shrinking.
Again, economic and social systems are non-linear, a few spend the most and some spend the most AND contribute the least. Rationing does not need to be so painful on everyone in society- but it will be VERY painful on a few, I cannot deny this- but again the collective will be safe.
We can pretend this issues does not exist and let it happen whether we want it to or not, or we can discuss the issue as a collective and try and achieve outcomes that are closer to our values as a society- in my experience the American people are overwhelmingly moral and good and can be trusted when they understand these issues.
I think the majority of people will be much happier with the outcome if we have the ugly discussion openly than if we ignore it. A few will be unhappy, but fortunately only a few.
Could you please stop 'talking' and pay heed.
The USofA and most of the rest of us depend on a reliable supply of fossil fuels for our continued existence.
We have an absolute need for fresh water, food, clothing and shelter. We have a relative need for a medium of exchange. Humans have existed on this planet for approx 1 millon years; we have only being using money for approx 3500 years!
Please get a hold of the article written by Albert Bartlett relating the supply of energy to the exponential function. It's only 12th grade math. Just be sure you are sitting down as you read the article: it's the one in Am J Phys. 46. Sept '78. 876-888.
Within a generation most 'western' economies will be in permanent regression - we will not be able to find sufficient energy to supply the energy we need to continue our current economic states. This regression is 100% guaranteed!
Please carry out a thought experiment as to the possible reactions of populations to an incremental decline in fossil fuel supply. It will scare the bejasus out of you - realy!!!
Think: water, fuel, food, shelter.
Put the money and banks and bailouts aside for a while.
And why does my proposal not address this? You do not answer my question?ReplyDelete
nothing will change in the USA until the political campaign finance system is fixed.ReplyDelete
Thai, My comment was not aimed at you. Often a general blast causes unintended collateral damage!ReplyDelete
To the others.
I am NOT a Greenie, I am NOT a Peak Oiler. I am a scientist/economist.
I believe in the second law of thermodyamics and the absolutely true assertion that using a finite resource will absolutely result in it's eventual depletion to zero.
I do not consider the money costs of energy supply but instead I focus on the energy units needed to supply the energy units needed to (a) maintain a modern economy, and (b) grow an economy.
You can print as much paper money as you have resources to do so. Finite energy sources are another matter entirely.
To keep the matter somewhat less complex I focus on fossil fuels (liquids, gases and solids). All three have absolute limits. All three are absolutely subject to the second law of thermodynamics. All three are absolutely subject to the 'law' of exponential depletion. That's it, QED.
Now please get going on that thought experiment I suggested and reflect on the possible outcomes.
You once asked for dirt on Prescott and I mentioned him trading with Germany during WW2 and I might have mentioned that he is suspected of stealing Geronimo's skull in 1904 or so (the Apaches are still trying to get it back) but this article has more dirt on him particpating in an attempted coup against FDR in 1934. If you're not familiar with this episode of Depression history (not to mention the parallels to today's crises) it's more than well your time to take a look; it's not that long either. If you ever want an excuse to start drinking, this is it:
A medical journalist whose name I forgot (Laurie??) wrote a book comparing health care systems form all over the world. He said one of the problems of the US system was it was geared against prevention.
People without prenatal care, for instance, could end up with severely handicapped children costing society fortunes, not to mention the human cost.
It seems your 1% could be reduced by adequate (and much cheaper) prevention, but somehow the system doesn't know how to deliver this.
Free choice means not everyone understands the importance of prevention, or is able to afford it.
The system's other big problem was its inability to prepare itself for epidemics.
Commenter BlackSwan on Mish's blog had this take on Fed funding thru the Treas:
MethodMan, I don’t think you understand. The Fed no longer has a balance sheet. It’s keeping two sets of books. It has reserve limits on the original balance sheet of between $800 and $900 billion. In its “U.S. Treasury, supplementary financing account”, it has no reserve limits. How else could the Fed run close to going over its $800 billion limit in the original account, and still come up with another $620 billion for European IBs and $138 billion for JPM?
Brad Sester's take:
To answer your question — the fed has effectively expanded its balance sheet via the supplementary financing program. Not so long ago the fed had $800-900b in assets. all those and some have effectively been lent out. So it needed more funds to act as the lender of last resort, and the treasury supplementary financing program provided the funds.
you can think of it as sterilizing the fed’s lending, or as funding the fed as a lender of last resort now that it has lent out its assets. it works out to the same thing.
the key macro point is that a lot of financial intermediation in the US has come to halt. confidence in money market funds plummeted post Lehman. Money that previously was lent to the banks/ other borrowers is now being parked in treasuries. and buy issuing tbills to meet this demand, depositing funds at the fed and allowing the fed to lend to the banks/ brokers who previously borrowed in the money markets, the treasury and the fed are effectively acting to avoid a complete breakdown.
as i noted in my post, they are taking the risk of providing short-term financing to the banks — something private investors don’t want to do.
I think B.Sester's explanation is a more fleshed out version of the answer I gave you a few days ago on LB's blog.
and buy issuing tbills to meet this demand,ReplyDelete
the above should read:
and by issuing tbills to meet this demand,
"dirt on Prescott"
Genetic sociopathy. Some endocrinologist needs to isolate the missing or excessive hormone that is causing these people's behaviors.
"and still come up with another $620 billion for European IBs and $138 billion for JPM?"
I'm embarrasingly lost on what's happening. But gut instinct feels like it does when you're about to crash while skiing (i.e. positive feedback loop, every correction causing more problems than it solves, speed unintentionally increasing).
I have a rough idea of what the Fed is doing but it would be nice if Hel would attempt mapping the Fed's posture (and the banking system's reserve status) if he understands it any better than we do.
The way I see it, four points stand out:
1)The Fed has drawn down its inventory of Treasury debt to dangerously low levels and can't draw it down any further
2)The Fed doesn't want to print too much new money to buy more Treasury debt ("monetizing the debt") because of inflation expectations
3)The Treasury is selling excess bonds and lending the proceeds to the Fed; this has the effect of pre-sterilizing the money before the Fed lends it out (no increase in the money supply even if the Fed's balance sheet shows an increase in assets and liabilites)
4)The Fed IS expanding the money supply with respect to the supply of $ overseas by swapping new $ for either foreign currencies or securities with FCBs; I'm assuming that the Fed thinks the need for $liquidity overseas is so great that little of that money will find its way back here, otherwise the amounts are gargantuan.
Brad Sester keeps a close eye on the Fed and money supply but his writing is not always that easy to understand.
WRT prescott, if you didn't see the article please check it out; who said there's no such thing as conspiracies.
"WRT prescott, if you didn't see the article please check it out"
I don't know how you knew that I hadn't actually read it yet, but I find it amusing/frightening that you could. So the coup was stopped by an ethical military man. From what I understand, today's military is under a lot of pressure to conform to Evangical Christianity/Republicanism. I hope there are still enough rebels...
Also, here's a really cute chart regarding the Fed:
Sorry if I was being a nag; thanks for the chart, I'd be curious to see what the latest chart of Non-Borrowed Reserves would look like if you ever come across it. Enjoy the rest of your weekend.
I wonder if Hel knows anything about the $138B from the Fed to JPMorgan and the Lehman failure, sounds really juicy:ReplyDelete
Do any of you know if they pay for this by printing?ReplyDelete
Where does the FED come up with the actual cash for this? Is it borrowed from Treasury or does it come from somewhere else?
@Betty- I truly wish the prevention idea were true, but it is not. The basic fallacy of the idea lies with the fact that it fails to recognize we are all going to die and by preventing a disease today you are simply pushing off for a disease tomorrow.
This means your TOTAL usage of medical services per person over the course of your life GOES UP (look up how the Scandinavian's have discovered this big time- their healthy thin non-smoking little old ladies that live forever take out far more from the system than they ever put in while their fat smokers who die young- to put it a little bluntly- do the opposite and subsidize the healthy).
Further, as we age, the cost and complexity of treating any particular illness increases since we are also more likely to have additional co-morbidities and our body become much less tolerate of stress (this is a property called scalability and it is a hallmark of non-linear and fractal networks).
Screening may reduce one disease but since we are all going to die, you simply push that first disease off for a second disease which will be even more expensive to treat. Although the good news is that since most of the costs are loaded just before death, aging is not necessarily as big an issue as it might otherwise seem. Aging per say is not the reason healthcare costs are skyrocketing (probably accounts for less than 3% of the increasing cost).
And while this is not necessarily an economic problem to the collective (i.e. you, me and everyone else in society) IF the amount of contribution by the individual also increases in a scalable fashion, IF the individual's contribution does not scale up accordingly (say the elderly become a higher % of non-working or disabled individuals or want to retire and or simply become less productive from (say) senility and frailty, etc...), then the system will starts spending more than it takes in.
And IF this spending represents more than it is growing by, then the system will eventually start contracting and eventually the whole thing will collapse. This is one of the reasons complexity scientists say it is harder and harder to keep more and more complex information structures together as the complexity grows.
Make no mistake, the reason other countries are spending less than America is because they ration on their big spenders and everyone simply 'looks the other way'. People may pretend it is because of 'socialized medicine' (it is not- in fact the socialized systems are monumentally unproductive) but ANY system can ration if it allowed to. Rationing is a completely different issues than whether something is free market or socialist (there is no reason we can not do the same under a private system, only we do not in America because we do not want to talk about these issues).
This is where issues of social trust and diversity, for all its wonders, becomes so significant (imo)-diversity clearly reduces social trust and cooperation.
About that first suggestion i heard that google is planning to do something like this but a little more than 30 %ReplyDelete
USA City LOS ANGELES - Page 767 - Opt-In Email Lead Sample
What about arresting all the CEOs and top executives of the failed companies like Fannie Mae, Freddy Mac, Lehman Brothers, AIG, and half of Congress and the Senate who supported the subprime deregulations laws - and actively resisted attempts by the FHEO to investigate accounting irregularities?? Throw the whole damn lot in jail - or better yet, tar and feather the bastards including Greenspan, Maxine Waters, Barney Frank, Franklin Raines etc.ReplyDelete