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Sunday, February 22, 2009

British Telelcom blown away

Posted by AccGURU

British Telelcom blown away

Blown away
Jonathan Leake and Joseph Dunn, The Sunday Times, 15 Feb 2009
ONE of Britain's biggest privately funded eco-projects could be on the verge of collapse. British Telecom said last week that it was preparing to pull the plug on a £250m plan to build electricity-generating wind farms because of a rule change by the Department of Energy and Climate Change (DECC).
BT, whose shares hit a record low in trading last week, planned to build 100 turbines on 20-30 sites in England and Scotland capable of generating 25% of its power needs. At a cost of £250m it represented the biggest investment in renewable energy by any British company apart from energy businesses.

But last week the scheme was in disarray, with BT and the government each blaming the other for the impending collapse. BT claims that new rules make the project unviable and that the government is now in effect discouraging companies from switching to renewable energy.

At the root of the dispute is a row over government-issued credits called Renewable Obligation Certificates (Rocs).

"Overall, we support what the government is trying to do to promote energy efficiency, but the ruling on Rocs means there is no sense in us building wind turbines," said Chris Tup-pen, BT's chief sustainability officer. "It is a perverse ruling that will also affect a number of other big businesses that are trying to act responsibly.

"We planned to build wind turbines that would generate a quarter of BT's electricity by 2016. Without the subsidy that will not go ahead."

A spokesman for the DECC blamed the problem on BT's plans to profit from the wind farms by selling electricity and reducing its CO2 footprint at the same time as claiming subsidies, thus "having its cake and eating it".

"It's an accounting thing but it's very important," a government spokesman said. "We have to be very tough on it. The Roc is not a subsidy. If you sell the energy to the National Grid it is used to offset the grid's emissions. You can't both claim the money and use it to offset the company's own emissions. That's double accounting."

Ed Miliband, the energy and climate change secretary, is expected to announce a consultation on its so-called carbon-reduction commitment (CRC) – the scheme that blocks BT from claiming credits at the same time as counting its green energy against its CO2 footprint – in late spring. BT and other firms are already lobbying to block it or change it.

Among them is Tesco, which is becoming increasingly interested in renewable-energy generation. David North, community and government director at Tesco, said: "I can see why the civil servants see this as double counting but the effect is to hold up renewable-energy initiatives. The government needs to find a way around this, perhaps by creating other incentives to help companies that are not power generators or other large fossil fuel users to switch to renewable energy."

So where did it all go wrong? Hailed as an example of how businesses and government could work together to reduce carbon emissions, BT's wind-power project was welcomed by the government when it was revealed two years ago. But the row now illustrates the fiendish complexity of the subsidy regimes devised to encourage the expansion of renewable-energy generation.

Rocs are issued by Ofgem, the energy regulator, to companies that produce green energy and can be sold on to third parties such as power generators, who have to prove – via the Rocs – that they gain a percentage of their power from renewable sources.

By selling the Roc, a company such as BT in effect gains a government subsidy on its green power. The government says BT is not entitled to that subsidy if it also exploits the fact that it produces renewable energy to reduce its overall carbon footprint.


UK's ex-science chief predicts century of 'resource' wars

Posted by AccGURU

UK's ex-science chief predicts century of 'resource' wars

UK's ex-science chief predicts century of 'resource' wars
James Randerson, The Guardian, 13 Feb 2009
The Iraq war was just the first of this century's "resource wars", in which powerful countries use force to secure valuable commodities, according to the UK government's former chief scientific adviser. Sir David King predicts that with population growth, natural resources dwindling, and seas rising due to climate change, the squeeze on the planet will lead to more conflict.
"Future historians might look back on our particular recent past and see the Iraq war as the first of the conflicts of this kind - the first of the resource wars," he told an audience of 400 in London as he delivered the British Humanist Association's Darwin Day lecture.

Implicitly rejecting the US and British governments' claim they went to war to remove Saddam Hussein and search for weapons of mass destruction, he said the US had in reality been very concerned about energy security and supply, because of its reliance on foreign oil from unstable states. "Casting its eye around the world - there was Iraq," he said.

This strategy could also be used to find and keep supplies of other essentials, such as minerals, water and fertile land, he added. "Unless we get to grips with this problem globally, we potentially are going to lead ourselves into a situation where large, powerful nations will secure resources for their own people at the expense of others."

King was the UK government's chief scientific adviser in the run-up to the start of Iraq war in March 2003, but said he did not express his view of its true motivation to Tony Blair. "It was certainly the view that I held at the time, and I think it is fair to say a view that quite a few people in government held," said King, who is now director of the Smith School of Enterprise and the Environment at Oxford University.

However, before the war loomed he had made an effort to persuade the Bush administration to adopt more climate-friendly policies. "I went into the White House in 2001 to persuade them that de-carbonising their economy was the way forward. I didn't get much shrift at that time. What I can tell you is that, if I had managed to persuade the government of America that investing (instead of going into Iraq) in de-carbonising their economy with roughly a tenth of [the estimated $3 trillion the US spent on the war], they would have managed it."

Commenting on the idea of "resource wars", Alex Evans, of the Centre for International Co-operation at New York University, who last month wrote a report on food security for the Chatham House thinktank, said he believed King was right, but overly pessimistic. "You always get conflict over the allocation of scarce resources," he said. "The question is whether it is violent conflict ... If the political system can't cope, that's when it gets violent."

King's lecture - Can British Science Rise to the Challenges of the 21st Century? - also warned politicians not to allow the financial crisis to distract them from tackling climate change. "I would like to see [in] every speech Gordon Brown makes on the fiscal crisis, that he also includes the global warming crisis," he said, but added: "It's fine for the prime minister to make a good speech on climate change, but you need all members of the cabinet, because reducing carbon by 80% by 2050 will require every part of government to respond."

King summed up by saying that with growing population and dwindling resources, fundamental changes to the global economy and society were necessary. "Consumerism has been a wonderful model for growing up economies in the 20th century. Is that model fit for purpose in the 21st century, when resource shortage is our biggest challenge?"


Saturday, February 21, 2009

U.S. Gas Production Seen Sliding for 4 Years

Posted by AccGURU

U.S. Gas Production Seen Sliding for 4 Years

U.S. Gas Production Seen Sliding for 4 Years: Chart of the Day

By Joe Carroll
Feb. 20 (Bloomberg) -- U.S. production of natural gas, the most widely used furnace fuel in the world's largest economy, may tumble through 2012 as low prices prompt producers to shut down drilling rigs from Louisiana to the Rocky Mountains.

The CHART OF THE DAY shows the relationship between reductions in drilling by U.S. energy companies and output from gas wells. The red line shows the number of rigs drilling for gas in the U.S., as tracked by Baker Hughes Inc. In 2001-02, the so-called rig count declined for nine months in a row. Gas production, shown in white, declined for the next four years and didn't return to the 2001 level until 2007.

Energy companies probably will slash onshore U.S. gas drilling to 800 or 900 rigs this year from a peak of 1,606 in 2008 after prices for the fuel plunged 70 percent from their 2008 high, said Keith Hutton, chief executive officer at Fort Worth, Texas-based producer XTO Energy Inc. As a result, gas output probably will decline by 3 percent to 5 percent in 2009, Hutton told investors on a conference call yesterday.

Idling rigs slows new discoveries and prevents companies from offsetting output declines that average 30 percent a year from established wells, Hutton said.

"If your underlying decline rate is 30 percent and you drop your rig count in half, it's hard as hell to catch back up," said Hutton, 50. "If you start picking rig count up 10 or 15 percent a year and it takes you three or four years to get back to the old rig count, you're going to decline almost the entire time. We're set for falling gas production for quite awhile here."

London-based BP Plc is the largest producer of U.S. gas, followed by Oklahoma City-based Chesapeake Energy Corp. and ConocoPhillips of Houston, according to the Natural Gas Supply Association in Washington.

To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net.


Brzezinski Warns Of Riots in US

Posted by AccGURU

Brzezinski Warns Of Riots in US

By Press TV

February 21, 2009 "Press TV" -- - -Zbigniew Brzezinski, a former national security advisor, has warned that the US could witness riots if economy continues its downward spiral.

"There's going to be growing conflict between the classes and if people are unemployed and really hurting, hell, there could be even riots!" said Brzezinski, President Jimmy Carter's national security advisor, in a recent interview with NBC.

"In 1907, when we had a massive banking crisis, when banks were beginning to collapse, there were going to be riots in the streets," he added.

At least 3.6 million jobs have been wiped out throughout the US since the recession began in December 2007. The jobless rate officially reached a 16-year high of 7.6% (11.6 million people) last month.

Earlier this week, a new Federal Reserve report said that US unemployment could increase to 8.8%, causing the economy to contract for a full calendar year for the first time since 1991, when a contraction of 0.2% was registered.

The Obama White House has put forward an array of measures, including a $787 billion stimulus package, in the hopes of reviving the flagging economy.

Brzezinski, meanwhile, made some recommendations to the young administration.

He proposed the creation of a voluntary national solidarity fund, whose contributors would be those who became wealthy in recent times.

"Where is the moneyed class today? Why aren't they doing something: the people who made billions, millions. I'm sort of thinking of Paulson, of Rubin [former treasury secretaries]. Why don't they get together, and why don't they organize a national solidarity fund in which they call on all of those who made these extraordinary amounts of money to kick some back?" he argued.

"I was worrying about it because we're going to have millions and millions of unemployed, people really facing dire straits. And we're going to be having that for some period of time before things hopefully improve," said Brzezinski.


Climate Change is about more than the mechanism

Posted by AccGURU

Climate Change is about more than the mechanism
Open for comment......

Climate Change is about more than the mechanism
Blog Post Blog of Christine Milne
Friday 20th February 2009, 4:06pm
by ChristineMilne in


After a year of rushing headlong into an ill-thought out emissions
trading scheme, the global financial meltdown has given Australia
pause for thought in how we deal with the climate meltdown.

Thus far, however, we are still having the wrong debate. With crunch
time on the emissions trading legislation fast approaching, we are
bickering over the right mechanism to use when, fundamentally, our
entire attitude must change.

Think of it on a personal level. The contestants on Australia's
Biggest Loser aren't going to win the competition and get healthy
lives back by setting themselves a meagre weight loss target and then
arguing between Atkins and Weight Watchers to achieve it. They will
only succeed if they make a determined commitment to themselves to
rebuild a healthy body, changing their whole attitude and lifestyle to
achieve that vital and realistic goal.

Instead of fighting over how little we can get away with cutting our
emissions, we need to commit to doing whatever it takes to deliver a
safe climate to our children. Instead of asking whether taxing or
trading carbon is better for achieving incremental emissions cuts, we
need to get moving fast on total decarbonisation of the economy. Until
we accept that challenge, the policy debate is largely a distraction.
Once we change our attitude, either mechanism can succeed.

The carbon tax versus emissions trading argument is a hoary old
chestnut that divides experts and non-experts the world over. Both
sides have strong arguments in their favour and both have their
drawbacks. The Australian Greens tend to support emissions trading
because trading guarantees a particular environmental outcome and lets
the market decide the price, whereas a tax sets the price and lets the
market decide the environmental outcome. Given that Lord Stern warned
us three years ago that climate change is the world's biggest market
failure, we would rather be guided by a definite climate outcome than
by the whims of the market.

Critics of emissions trading point to the mess the Rudd Government has
made of its proposed Carbon Pollution Reduction Scheme and argue that
a carbon tax would be simpler and therefore preferable, even if it
does not guarantee a specific carbon reduction and therefore climate

But the view that a tax is inherently simple can only be held by those
who have not been paying attention to what the Rudd Government has
been doing. At the urging of the big polluters, Ministers Wong and
Ferguson have bravely created complexities where no-one could have
imagined it possible, with the latest example being the ridiculously
complicated arrangements now being discussed for trade exposed
polluters to qualify for compensation.

If the Government has made such a mess of emissions trading, what
guarantee is there that they would not do the same with a carbon tax?
The moment the choice of a carbon tax is taken, you can bet that the
big polluters would be walking corridors and knocking on doors making
sure it is as weak and full of loopholes as possible. There is every
chance that the inherent simplicity of a tax would be muddied beyond
recognition by convoluted and intricate arrangements for compensation,
offsets and rebates, muting the price signal and undermining the
purpose of the exercise just as has happened with the CPRS. If the
level of the tax is geared towards the CPRS's pitifully weak 5%
emission cuts, very little will be achieved even if voluntary action
is counted.

There are signs that the Government is beginning to recognise what the
Greens have long said - that there is an abundance of cheap and easy
emissions reductions out there for the taking in an economy as energy
inefficient as our own. The first steps being taken towards home
energy efficiency in the recent stimulus package, and the rumours that
a big commercial efficiency push is coming, are positive signs. But,
with the current scheme design, they will only make it cheaper for
polluters to meet their weak obligations instead of being a reason to
aim for a stronger target.

The Government will convince no-one with their claims that the CPRS is
about transforming the economy when it is clear as day that its design
is geared to protecting existing industries at all costs. The policy
needs very significant work to make it both environmentally and
economically effective.

The Greens have been thinking about and working on these issues for
many years. We have a wealth of experience and expertise on how best
to design effective policies, garnered from best practice from around
the world, in successful economies such as Germany and California.

Our door is always open. The Government must recognise now that while
quick arrangements could be made in order to pass the stimulus
package, rushing through a deeply flawed CPRS will not be acceptable.


A lecture on the future of air travel

Posted by AccGURU

A lecture on the future of air travel
May be of interest to some Adelaide list members


Royal Aeronautical Society Adelaide Branch & Engineers Australia

The Air Transport System
of the Future

Tuesday 24th February 2009 at 5.30pm
(for a 6.00pm start)
The Gallery, National Wine Centre
Cnr Botanic & Hackney Roads, Adelaide SA

Prof. Dr.-Ing. Joachim Szodruch
Member of Executive Board, DLR,
Cologne, Germany

Air transport fulfils society's needs for mobility and is today a major
economic factor massively supporting also globalisation. After more than
100 years of powered flight we have established a rather optimised
system with dramatic performance improvements at aircraft level (fuel
burn, economy and environment) compared with any other form of
transportation. All the forecasts predict for the next 20 years that
passenger air traffic will increase on average by 5% annually.
The resulting challenges for the entire air transport system have been
within ACARE – the European Advisory Council for Aeronautics, and the
major goals are quantified in the Vision 2020.

This document is by now the most important and widely accepted strategic
guideline valid for all the aeronautical research activities in Europe.
The Vision 2020 has been further detailed in the Strategic Research
Agenda, where technological solutions for the elements of the air
transport system – the aircraft, the air traffic management and the
airports – are specifically addressed. One of the major research
establishments in Europe, the German Aerospace Center (DLR) is
addressing exactly these challenges in their broad and extensive
research activities covering the entire air transport system. Major
contributions in all relevant fields are expected for the next decade.
Still the question remains if we can fulfil the already ambitious goals
of the Vision 2020 at all and if these goals are really sufficient in
order to build a competitive and sustainable air transport system for
the longer term future.

Prof. Joachim Szodruch graduated from the Technical University Berlin in
1971 followed by a post-graduate study at Cambridge University, England.
He started his professional career in 1973 as a scientific assistant at
the Aerospace Institute of the Technical University Berlin, where he
obtained his doctorate (Dr.-Ing.). In 1978 he received an Associateship
from the National Research Council and worked for two years at the NASA
Ames Research Center in California, USA.

In 1981 he joined MBB Civil Transport Division in Bremen, where he
started in experimental aerodynamics working on Airbus A310 and future
projects. Later he became responsible manager for all aerodynamic
research and was Assistant Chief Aerodynamicist. He joined Airbus
Industrie in Toulouse 1990 as a General Manager for Research &

Returning to Germany he became Vice President Product Development and
Technology at the DaimlerChrysler Aerospace Airbus Headquarter in
With the formation of Airbus as an integrated company in mid 2001, he
was appointed Vice President Future Projects and Technology based in
Toulouse, France. Since August 2002, he has been a Member of the
Executive Board of DLR – German Aerospace Center, in Cologne,
specifically responsible for Aeronautics and Energy. Within this
function he is Member of the Supervisory Board for the two European
wind-tunnel organisations – DNW and ETW.
Joachim Szodruch is currently President of the DGLR – German Aerospace
Society, and also an Associate Fellow of American Institute of
Aeronautics and Astronautics. Furthermore, he serves as Co-Chairman of
ACARE, the Advisory Council for Aeronautical Research in Europe.

For further information contact: Andrew Clark (0421 051 328)


Friday, February 20, 2009

Latvia's government resigns amid economic crisis

Posted by AccGURU

Latvia's government resigns amid economic crisis

Latvia's government resigns amid economic crisis

Feb 20th, 2009 RIGA, Latvia -- Latvia's center-right coalition
government resigned Friday after weeks of instability brought on by
the country's economic collapse.

President Valdis Zatlers said he accepted the resignation of Prime
Minister Ivars Godmanis and his administration, which had been in
power since December 2007. Zatlers said he would begin talks with
party leaders Monday to find a new candidate for prime minister.

Earlier Friday, the two largest parties in the ruling coalition
parties had urged Godmanis to step down.

Godmanis blamed those parties -- the People's Party, and the Greens
and Farmers Union -- for the government's collapse, particularly at a
time when Latvia must carry out tough economic reforms to get a rescue
package from international creditors.

"I am ready to continue working, but I think that responsibility for
the consequences created by this government's resignation must be
taken by those parties that overturned the government," Godmanis told

International lenders, including the EU, the International Monetary
Fund and Nordic countries, have pledged euro7.5 billion (US$9.5
billion) to help the Baltic country recover from its economic predicament.


Why the Promise of Biofuels is a Lie

Posted by AccGURU

Der Spiegel Exposes the Brazilian Ethanol Madness

Why the Promise of Biofuels is a Lie

By Robert Bryce

February 20, 2009 "Counterpunch" -- For years, the US has been inundated with claims that it should follow Brazil's lead on biofuels. These arguments have largely been made by a small, but influential group of neoconservatives who claim that the US should quit using oil altogether. They claim that using more ethanol – produced from sugar cane, or corn, or some other substance – will impoverish OPEC and America will once again be returned to prosperity.

But these claims wither in the face of a story by Clemens Hoges in the January 22 issue of the German magazine Der Spiegel. Hoges writes that sugar cane "is considered an effective antidote to climate change, but hundreds of thousands of Brazilian plantation workers harvest the cane at slave wages." The story is one of several published in recent years that have exposed the brutality of the Brazilian sugar cane fields. But before looking at Der Spiegel's coverage, let's do a quick review of the Brazilian ethanol boosters.

Thomas Friedman, the Pulitzer Prize-winning columnist for the New York Times has frequently advocated the mirage of "energy independence." And he has cited Brazil as a model. In an August 2005 column, he conflated the issues of oil and terrorism "we are financing both sides in the war on terrorism: our soldiers and the fascist terrorists," he wrote. He went on to claim that many of the technologies needed for energy independence are "already here – from hybrid engines to ethanol." He then quoted Gal Luft, the neoconservative who heads the Institute for the Analysis of Global Security and created Set America Free, a group that advocates "energy independence." Luft claimed that Brazil's success in cutting its oil imports was due to the fact that the South American country was "bringing hydrocarbons and carbohydrates to live happily together in the same fuel tank." In Luft's view, ethanol has brought "Brazil close to energy independence" and insulated it from higher oil prices.

(Luft's claim completely ignores the fact that since 1980, Petrobras, Brazil's national oil company, has been growing its oil production by an average of 9 percent per year thanks to its offshore drilling prowess. Since 1998, Brazil has doubled its oil production and is now producing about 2 million barrels of oil per day. Neither Friedman nor Luft bothered to mention that fact.)

In late 2005, in a speech to the National Press Club, Pennsylvania governor Edward Rendell said that "No longer is investing in alternative fuels a fringe idea….Brazil is perhaps the world's greatest success story. Due to 30 years of hard work, research and investment, Brazil will not need one drop of imported oil this time next year. If anyone suggests to you that these ideas aren't ready for prime time and cost too much, they are living in the past."

Venture capitalist Vinod Khosla and former Senate minority leader Tom Daschle have touted Brazil's "energy independence miracle." In a May 2006 opinion piece in the New York Times, they said that ethanol "could set America free from its dependence on foreign oil" and that Brazil proves that "an aggressive strategy of investing in petroleum substitutes like ethanol can end dependence on imported oil."

In October 2006, former president Bill Clinton while in California stumping for Proposition 87 (an alternative energy initiative that later failed) declared that the initiative would "move California toward energy independence with cleaner fuels, with wind and solar power." He continued, "There are people who don't believe you can do it. I do. Look at Brazil. Don't you think you can do it if they did it? They run their cars on ethanol." Clinton later provided a sound bite for the pro-Proposition 87 forces in which he declared that "If Brazil can do it, so can California."

The biofuels madness continued with a May 6, 2008 editorial in the Chicago Tribune, titled "Food vs. fuel, a global myth." The piece, written by Set America Free's Luft, and his fellow traveler, Robert Zubrin, a right-wing zealot who advocates colonizing Mars, claimed, incredibly, that "farm commodity prices have almost no effect on retail prices." The two went on to declare that "rather than shut down biofuel programs, we need to radically augment them, to the point where we can take down" the Organization of the Petroleum Exporting Countries.

A big reality check is in order.

First and foremost, over the past two years, 14 studies have found a direct link between the ethanol scam and higher food prices.

Second, Brazil is not the epicenter of ethanol production, the US is. In 2008, the US produced about 9.1 billion gallons of the fuel, all of it from corn. Brazil produced about 6.8 billion gallons. And while sugar cane may be a far better feedstock that corn, in terms of greenhouse gas emissions and energy balance, the key issue is one of labor. While US corn is harvested mechanically, the Brazilian sugar cane is harvested almost exclusively by hand. And it is dangerous, back-breaking work.

In 2007, London's The Guardian newspaper ran a story which quoted human rights activists who said that the men who harvest sugar cane for ethanol production "are effectively slaves" and that Brazil's ethanol industry was "a shadowy world of middle men and human rights abuses." It cited figures provided by a Catholic nun, Sister Ines Facioli, who runs a support network in a small town about 200 miles west of São Paolo. She claimed that between 2004 and 2006, 17 cane workers died due to overwork or exhaustion. One laborer, Pedro Castro, told the Guardian's Tom Phillips, that the hot climate, combined with the heavy protective clothing needed to protect his body from the sharp machete blades used to cut the cane, was like working "inside a bread oven."

For their work, the average cane worker gets paid about $1 for every ton of sugar cane they cut. They often work 12-hour shifts. Their housing, according to Phillips' article, consists of "squalid, overcrowded 'guest houses' rented to them at extortionate prices by unscrupulous landlords." The average cane cutter makes less than $200 per month. And some, it appears, make nothing at all.

In July 2007, the Brazilian government freed 1,100 laborers who were found working in horrendous conditions on a sugar cane plantation in the northeastern state of Para. A story by the Associated Press said that the workers were forced to work 13-hour days and that they had no choice but to pay "exorbitant prices for food and medicine." It then cited a source in Brazil's labor ministry who claimed that many of the workers were "sick from spoiled food or unsafe water, slept in cramped quarters on hammocks and did not have proper sanitation facilities." The government-backed raid of the plantation lasted three days. The plantation in question is owned by Para Pastoril e Agricola SA, which produces about 13 million gallons of ethanol per year. The workers were caught up in a situation known as debt slavery in which poor workers are taken to remote farms where they then rack up large debts to the plantation owners who force the workers to pay high prices for everything from food to transportation.

According to Land Pastoral, a group affiliated with Brazil's Roman Catholic Church, about 25,000 workers in Brazil are living in slavery-like conditions, most of them in the Amazon, and many of them working in the sugar cane business. The 2007 raid is not the first. In 2005, 1,000 workers were found living in debt slavery on a sugar cane plantation in the Brazilian state of Mato Grosso.

The article in Der Spiegel makes it clear that little has changed over the past few years. Hoges reports that one worker he interviewed, Antonio da Silva, makes just $172 per month during the harvest season, which lasts about six months. During the rest of the year, he has to rely on charity to feed his family. Da Silva's home in the village of Araçoiaba Nova, Hoges reports, is the same as it was five years ago. "They threw plastic tarps over a handful of branches to build the hut where they still live today. The door consists of scraps of cloth nailed to a board, and boards placed around a hole in the tarp form the window. The furniture, arranged on the bare earth floor, consists of the plank beds and a cabinet."

The most compelling quote in the piece is from Father Tiago, a 66 year-old Scottish monk who has been working in Brazil for decades. The Scotsman makes clear what he thinks about the issue: "The promise of biofuel is a lie. Anyone who buys ethanol is pumping blood into his tank," he said. "Ethanol is produced by slaves."

The photos that accompany Hoges' story should be viewed by everyone who retains the misguided belief that the US should emulate Brazil's biofuels industry. Here's the link.

Alas, it doesn't appear the members of Congress are paying much attention. Last month, US Rep. Eliot Engel, a New York Democrat, announced that he would be pushing legislation aimed at eliminating the $0.54-per-gallon tariff on imported ethanol. Doing so, Engel said, "would enable U.S. refiners to purchase cheaper and more climate-friendly ethanol, no matter where it comes from. The result would be an overall increase in the supply of fuel, a decrease in its price, and a decrease in our dependency on petroleum from the Middle East."

Sound bites like the one from Engel ignore basic arithmetic: Even if the US imported all of Brazil's ethanol -- all 6.8 billion gallons per year -- that quantity would only provide the energy equivalent of about 1.4 percent of America's total oil consumption.

Despite those numbers -- despite the ongoing evidence of slavery in the Brazilian ethanol trade -- the energy discussion in America remains stuck in an absurdist fantasy about energy independence and freedom from the sticky problems of the Persian Gulf. But given what has happened in the past few months with regard to rising food prices and the myriad other problems associated with biofuels, one thing is becoming perfectly clear: Ethanol isn't the answer to our energy challenge. Ethanol makes it worse.

Robert Bryce is the author of Gusher of Lies: The Dangerous Delusions of "Energy Independence."

Edward G. Rendell, "An American Energy Harvest Plan: Jobs, Prosperity, Independence," December 1, 2005.

Tom Daschle and Vinod Khosla, "Miles Per Cob," New York Times, May 8, 2006.

California Progress Report, "President Clinton: Why I Support Proposition 87 and Why the Oil Companies are Wrong – The Complete Speech Delivered at UCLA," October 14, 2006.

Shopfloor.org, "In California, A Bad Proposition," November 3, 2006.




Tom Phillips, "Brazil's ethanol slaves: 200,000 migrant sugar cutters who prop up renewable energy boom," The Guardian, March 9, 2007.


Vivian Sequera, "Brazil Raid Frees Ethanol Plant Slaves," Associated Press, July 3, 2007.

Clemens Hoges, The High Price of Clean, Cheap Ethanol," Der Spiegel, January 22, 2009.


The stimulus bill

Posted by AccGURU

From the Belize Culture List

Shortly after class, an economics student approaches his economics
professor and says, "I don't understand this
stimulus bill. Can you explain it to me?" The professor replied, "I
don't have any time to explain it at my office, but if you come over
to my house on Saturday and help me with my weekend project, I'll be
glad to explain it to you." The student agreed.

At the agreed-upon time, the student showed up at the professors house.

The professor stated that the weekend project involved his backyard
pool. They both went out back to the pool, and the professor handed
the student a bucket. Demonstrating with his own bucket, the
professor said, "First, go over to the deep end, and fill your
bucket with as much water as you can." The student did as he was
instructed. The professor then continued, "Follow me over to the
shallow end, and then dump all the water from your bucket into it."
The student was naturally confused, but did as he was told.

The professor then explained they were going to do this many more
times, and began walking back to the deep end of the pool. The
confused student asked, "Excuse me, but why are we doing this?" The
professor matter-of-factly stated that he was trying to make the
shallow end much deeper.

The student didn't think the economics professor was serious, but
figured that he would find out the real story soon enough. However,
after the 6th trip between the shallow end and the deep end, the
student began to become worried that his economics professor had
gone mad.

The student finally replied, "All we're doing is wasting valuable
time and effort on unproductive pursuits. Even worse, when this
process is all over, everything will be at the same level it was
before, so all you'll really have accomplished is the destruction of
what could have been truly productive action!"

The professor put down his bucket and replied with a smile,
"Congratulations. You now understand the stimulus bill."

Tuh Gawd nuh, di monki dem dih run di zoo fitru!

Yay for kRudd and the Pressie**-~-->

Thursday, February 19, 2009

France sends forces to Guadeloupe

Posted by AccGURU

France has sent hundreds of police reinforcements to the French-Caribbean island of Guadeloupe, as month-long strikes over declining economic conditions have spilled over into violence.

Michele Alliot-Marie, the French interior minister, said 280 police reinforcements would be sent to the island, after holding an emergency meeting on Wednesday.

The move comes after Jacques Bino, a 50-year-old union activist, was shot dead after driving his car near a roadblock manned by armed youths in Pointe-a-Pitre, the island's largest town, officials said.

Three policemen were targeted by gunmen while attempting to reach Bino and secure the area, Hubert Vernet, a government official, told the Reuters news agency.

Vernet stressed that the police officers were in no way responsible for Bino's death.

Nicolas Sarkozy, the French president, said he would meet with elected officials from the island on Thursday, to "address the anxiety, worries and also a certain form of despair from our compatriots".

Sebastian Walker, Al Jazeera's correspondent in Pointe-a-Pitre, said: "The protesters say they have been ignored by the French government for many years.

"Unemployment here is the third highest in the European Union. Away from the luxury hotels and resorts there is a severe economic situation that has angered a lot of people."

'Spiralling' violence

Union leaders have said that the situation in Guadeloupe is spiralling out of control, and there are fears that the unrest could spread to mainland France.

Bino is the first victim of the violence on the island which has been crippled by strikes that began on January 20 over low pay and the high price of basic goods.

Earlier in the week, protesters set buildings and cars on fire, looted shops, smashed storefront windows and clashed with police in Point-a-Pitre and at least two other towns.

Thousands of tourists have also fled the island and neighbouring Martinique.

Strikers' are demanding a raise of $250 a month for low-wage workers who now make about $1,130 a month.

On Thursday, Francois Fillon, the French prime minister, said the government would make a new wage offer to strikers.

"Mediators have come up with a proposal which I am going to assess and which will be submitted to employers and the unions," he told French radio RTL.

"This allows us to get very close to the quantified financial goals of the workers."

Underlying much of the unrest in Guadeloupe and Martinique is anger within the local Afro-Caribbean community - many of whom are descendants of slaves brought to the island by France - that the vast majority of wealth and land remain in the hands of colonist descendants.


Stanford International Bank

Posted by AccGURU

Auditor asks: Stanford who?
February 20, 2009 - 7:15AM


C.A.S. Hewlett & Co, the small Antiguan firm that Texas billionaire
Allen Stanford identified as the auditors of his offshore bank, said on
Thursday it had no information about ties to the tycoon accused of

St. John's-based Hewlett has been identified by the U.S. Securities and
Exchange Commission (SEC) as the auditors of Stanford's $US8 billion
($12 billion) offshore bank, but executives there provided little
indication they even knew who Stanford was.

The current manager, Eugene Perry, at C.A.S. Hewlett in the Antiguan
capital, said Thursday the firm's former chief executive, Charlesworth
"Shelley" Hewlett, is the only person with possible knowledge of a
relationship to Stanford.

But getting any information from Shelley Hewitt is not likely. He died
January 1 at age 73.

Perry said he never met Stanford in his 10 years working at the firm. He
spoke with a Reuters reporter in the late Hewlett's personal office and
telephoned a woman he identified as the company's principal.

"We are not privy to any information about any relationship with
Stanford," said the woman, who would only identify herself as Celia.
Asked if she was aware of any files at the firm associated with
Stanford, she said she was not.

Hewlett's daughter, named Celia, took over responsibility for the
accounting firm from London after her father died. It couldn't be
determined if the Celia interviewed by telephone was the late Hewlett's

On Tuesday, the SEC accused Stanford, a brash, 58-year-old financier and
sports entrepreneur, of operating an $US8 billion fraud centered on the
sale of high-yielding certificates of deposit offered by Stanford
International Bank Ltd (SIB), his Antiguan affiliate.

The interest in Stanford has extended across the Atlantic.

Britain's Serious Fraud Office said Thursday it was monitoring a
possible link between the accounting firm and Stanford.

"It's a situation where there is the possibility there may be a UK link,
and so we are monitoring the situation," a spokesman for the SFO said.

"It's not the case that we have launched investigators at it. We are
making contact and liaising with other authorities," the spokesman

C.A.S. Hewlett has offices at several London addresses, but the phone
numbers were either disconnected, or rang unanswered.

Two people with neighboring businesses in Enfield, a residential suburb
north of London, told Reuters that C.A.S. Hewlett had had a small office
in the building on Southbury Road, but that the employees left about
four years ago.

Anybody home?

The SEC said in its court complaint that it had tried several times to
contact C.A.S. Hewlett during its investigation, but "no one ever
answered the phone."

SIB'S midyear report, released in June, identified C.A.S. Hewlett as its
auditors. The SEC also listed the firm as Stanford's auditor.

But the 10 workers in the Hewlett office in a quiet, largely residential
neighborhood in the capital, seemed an unlikely operation to manage
books for an $US8 billion enterprise.

During two visits over two days by Reuters reporters, no one staffed a
reception desk in the aquamarine building. On one visit to the reception
area that lasted nearly two hours, there was no senior manager in the
building. The occasional sound of reggae music wafted from inside the

C.A.S. Hewlett is listed on the British Commonwealth's website as a
"financial services partner" in Antigua with an offshore client
portfolio that includes banks, insurance companies and other financial
institutions and intermediaries.

Charlesworth Hewlett was born in 1936, according to the website, and
qualified as an accountant in 1970 after attending South West London
College. He also is said to have served in the Britain's Royal Air Force
and earned a medal for active service in Cyprus.


Wednesday, February 18, 2009

[roeoz] Obama Punishes Responsible Parties

Posted by AccGURU

Obama Punishes Responsible Parties


Thursday, February 19, 2009, 9:14 am, by cmartenson

This is a headline that I have long been waiting to see because
without accountability at every level, a society is a weak shadow of
what it can and should be.

Unfortunately, the responsible parties I am referring to have never
committed any crime nor do they deserve to be punished.

I am among them. Perhaps you are as well.

If you did not buy more house than you could afford, or never issued a
loan to a party that could (obviously and predictably) not repay that
loan, then you just got punished.

Here's the data:

Obama Plans $75 Billion Outlay to Fight Foreclosures

Published: February 18, 2009

Seeking to stabilize the foundering housing market, President
Obama is offering a plan to help as many as nine million families
refinance their mortgages or avoid foreclosure, according to a summary
released by the White House on Wednesday morning.

The plan, which is more ambitious than expected, would spend $75
billion to help keep as many as four million families in their homes,
and would help as many as five million more refinance their mortgages
to take advantage of lower interest rates.

Okay, there are so many beliefs and opinions wrapped into those
opening salvos that I feel I must step in and expose them. One thing
that I do in conference, and in the Crash Course, is distinguish
between facts, opinions and beliefs. This article, which comes from
the front page of the New York Times will be absorbed by many as
"fact". Let's be more careful.

1. "Seeking to stabilize the foundering housing market…", this is a
statement of opinion, not fact. While this sounds laudable and worthy
as a goal, there can be no doubt that any plan that funnels money to
homeowners is really going to end up in mortgage companies and banks
and very rapidly at that. So it could just as easily be framed as
"Seeking to stabilize the foundering mortgage and banking businesses
that made extremely foolish loans…". The difference between the way
that the NYT framed it and the way that I did does not reflect a
difference over facts, only opinion.
2. Saying, "…help as many as nine million families refinance their
mortgages or avoid foreclosure…" is also presenting something as fact
that does not even stand up to the slightest of scrutiny. The $75
billion price tag divided by 9 million gives us a value of $8,333,33
for each of the nine million homes. There is simply no possible way
that $8,333 each is going to make the difference between 9 million
people keeping or losing their homes. It might if that was applied to
this year's balance gap, but over the life of the loan? No possible way.

But it's not just the NYT that is mis-representing the issue. Obama said:

"The plan not only helps responsible homeowners on the verge of
defaulting, but prevents neighborhoods and communities from being
pulled over the edge too. It will prevent the worst consequences of
this crisis from wreaking even greater havoc on the economy. And by
bringing down the foreclosure rate, it will help to shore up housing
prices for everyone."

He can wrap this with as many words as he wants but the plain facts
are that only people in trouble with their mortgages get any handouts
here. People who are not delinquent or perhaps are renting, only get
the opportunity to pay for the mistakes of others.

Politically, this is a great plan. Good sound bites and it looks like
action. Also, roughly 9 million votes are secured for the next
election. Two thumbs up in this regard.

Economically, it stinks. This is throwing good money after bad and,
worse, by seeking to "shore up sinking house prices" it betrays a
complete ignorance of the actual root of the problem. Blaming sinking
housing prices for the fix we are in is equivalent to blaming the car
for the drunk driving wreck. If Obama were to craft a similar program
for drunk drivers it would include new cars for any that happened to
wreck their own. The problem is not that house prices are sinking,
it's that they got too high to sustain. It was a bubble for goodness
sake! That's the very definition of a bubble. Any and all attempts to
"shore up" bubble prices is a doomed effort that will assuredly
squander both additional capital and valuable time.

Morally, it is a complete disaster. The clear implication here for
every sentient person is that it pays to be reckless. Moral hazard is
written all over this one. I can easily envision millions of people
arriving at the same conclusion; "I need to stop paying my mortgage
right way so that I qualify for a handout!" It's entirely sensible and
I would seriously consider this option if I had a mortgage and little
or no equity in the house. As it is I am a prudent renter who saw the
bubble for what it was and will now pay a double price for having been
so prescient. First I will have to endure government subsidized house
prices set above market rates, and I will have to pay for the reckless
actions of house owner and lenders who behaved recklessly. This is no
way to set an example and is not how I wish my country to be run.

Taken together, these actions represent a near-total lack of vision
and leadership.

Here's one example that should illustrate exactly why this plan is DOA.

Feb. 18 (Bloomberg) -- It has taken Susan Erb just three years to
see the value of her Merced, California, home plunge by more than half
to $350,000. Next month, her mortgage payment jumps 20 percent to
$3,321 and she knows she can't afford it. Her bank won't rework the
loan unless she stops paying altogether.

Think about a house underwater by $350,000. Think about a monthly
payment of $3,321. Now join these to the total $8,333 offered by the
Obama plan. How far will that $8,333 go? About 8 months of payments is
my assessment and then the house will still be more than a third of a
million underwater.

The reason I sometimes despair at ever finding our way equitably
through this mess is captured by this quote (from same link as above):

Rina Serrano, 35, an after-school program supervisor for the
Merced County Office of Education, may lose her job next year due to
budget cuts. The value of her house, built by Calabasas,
California-based Ryland Group Inc. in the Bellevue Ranch development,
fell by at least a third since she purchased it in 2007. Her husband's
cabinetmaking business is down by half.

"Nobody has given us any options, but my feeling is there should
be some assistance," said Serrano, 35, a mother of four. The couple
took out a 30-year fixed loan and aren't behind on payments but they
are underwater by about $70,000.

Here's a person who has not yet missed a payment, but whose house is
worth less than her mortgage, who wants "some assistance". Where you
might think, "Be more careful next time!" there are many who simply
want to be lifted from the impact of their poor decisions.

And who can blame them? I too would like to have every bad decision I
ever made paid for by someone else but I am also mature enough to know
that this is not a realistic way to approach life.

So there it is. If you have been responsible, you have just been
punished. And you know what? Nobody can possibly blame you for
deciding that being responsible is for suckers.

It's not a stretch to imagine that a few folks will even come to the
conclusion that hard work and prudence are no longer the core values
of our country.

Does the current administration really want to foster this sort of a
mindset right at the outset of a nasty recession/depression?

It would seem that the answer is, "yes."


Tuesday, February 17, 2009

Fires spark a new front in the culture wars

Posted by AccGURU

Fires spark a new front in the culture wars


Professor of Public Ethics at Charles Sturt University Clive Hamilton writes:

The fierce debate over the role of fuel-reduction burning in preventing bushfires has
exposed a deep divide in Australia over attitudes to the natural environment.

Over the last three or four decades the dominant attitude to the environment has shifted
away from seeing the bush as hostile and in need of taming towards an understanding of
it as unique and deserving protection. Instead of transforming the bush for human benefit,
the new attitude privileges the natural over the modified and values biodiversity and
natural areas for their own sakes. Human impacts should therefore be minimised and
reflect an ethic of care rather than of domination.

Forty years ago if you passed a snake on the road it was almost a duty to run over it
because it posed a danger to humans; today that is seen as wanton killing of wildlife. Forty
years ago we killed sharks that came anywhere near a beach for the same reason. Today,
the father of a man taken by a shark will typically declare that he does not want the shark
hunted down and nor would his son, who loved and respected the sea and its creatures.

This huge shift has been due largely to the work of the environment movement. Landmark
campaigns over the Franklin Dam, old-growth forests, the Barrier Reef and Kakadu have
been victorious because they captured the public imagination and governments were
compelled to act. So environmentalism has brought a sweeping and irreversible cultural
change; wherever they live, most Australians now look on the landscape with new eyes.

However, at every stage the revolution in values has met staunch resistance from those
wedded to the old view. Led by an older generation of foresters, "bushies" and their
political spokespersons, the old attitudes have seen a resurgence in response to the
Victorian bushfires, especially over the vexed question of fuel-reduction burning.

Those who hold to the old view believe that it reflects the true nature of the Australian
bush, the one that the pioneers learned the hard way. To give their argument more
authenticity they even claim that the use of prescribed burning is a continuation of the
practice of Aboriginal fire-stick farming.

The old school believes that, despite its apparent foundation in the new science of
ecology, the new view is based on ignorance and softness and could be held only by latte-
sipping urbanites. But increasingly marginalised, the old school's resentment and anger
has simmered, especially among those affected by restrictions on forestry and land-

The cultural split has now boiled over under the pressures and stresses of the Victorian
bushfires. The conflagration spurred those of the old school to declare that they had been
right all along and that if the authorities had listened to them and taken control of the
bush then the devastation could have been avoided.

On the Tuesday after the worst of the fires former CSIRO bushfire expert David Packham
launched a ferocious attack on environmentalists, blaming them for the deaths because,
he said, they opposed widespread fuel-reduction burning. He wrote that the "folk of the
bush have lost their battle to live a safe life in a cared-for rural and forest environment,
all because of the environmental fantasies of outraged extremists and latte

Packham's attacks were carried in The Australian newspaper whose editors could
immediately see the opportunity presented by the fires to extend their long-running
culture war. Environmentalists had replaced communists as the principal enemy in neo-
conservative demonology after fall of the Berlin Wall in 1989.

Venting the rage felt by the old school, Packham followed up two days later with the claim
that environmentalists "are behaving like eco-terrorists waging jihad against prescribed
burning and fuel management". (Packham was one of the instigators of the much-
criticised "leave early or stay and fight" policy.)

On the same day, right-wing columnist and greenhouse sceptic Miranda Devine wrote
that it wasn't climate change that killed up to 300 people in Victoria but "the power of
green ideology over government". "It is not the arsonists who should be hanging from
lamp-posts", she fumed, "but greenies."

Roger Underwood, a former regional manager with the Forests Department in WA, also
high-lighted the folly of environmentalist resistance to widespread fuel-reduction
burning. Criticising "climate doomsdayers", he argued that governments can be held to
ransom by pressure groups such as those who oppose effective fire management in
national parks.

In 2007 Underwood had written of the wholesale destruction of remaining jarrah forests by
Alcoa's bauxite mining. Bizarrely, he did not blame this destruction on the company
carrying it out. Alcoa is "an efficient and clever organisation", he wrote, "and it is a
pleasure to see the professional way in which they have approached their operational and
research obligations."

Instead, he insisted that environmentalists are to blame for the vandalising of the jarrah
forests because they failed to campaign against it. He speculated that their passivity may
be because "they have been bought off", presumably by the company whose
professionalism he so admires. The immediacy and vehemence of the attacks on
"greenies" over fuel-reduction burning exposes the deep vein of hatred of
environmentalism that runs through segments of the community.

In fact, no-one has argued for a blanket ban on prescribed burning. But the experts are
divided on the timing and extent of it. Some fuel-reduction burns get out of control,
scarring the landscape and causing unnecessary damage.

This was cruelly illustrated by the case of Sam the koala, who last week became an
emblem of the devastation in Victoria. A photograph picked up around the world showed a
yellow-jacketed fire-fighter in a burnt-out forest giving a singed and shell-shocked koala
a drink from his water bottle. It was a touching image of human-animal unity in the face
of the terrible power of nature. The problem was that the picture had in fact been taken a
few days before the inferno in the course of a fuel-reduction burn.

It may be that the Victorian fires lead to some sort of accommodation between the old and
new understandings of the Australian landscape, a merging of respect for the bush's
natural integrity with a greater respect for its dangers.

Certainly, some tree-changers planning to leave the cities for the romance of bush-living
will have pause for thought, and greens on local councils will be on the back-foot for a
time. But it is hard to see any significant unwinding of four decades of environmental


Monday, February 16, 2009

[roeoz] Japan in Depression

Posted by AccGURU


Japan plunges into depression
Peter Martin
February 17, 2009
AUSTRALIA'S biggest and most reliable customer, Japan, has plunged
into depression, with federal Treasurer Wayne Swan now warning of the
worst global downturn "in our lifetimes".

Japan's economy shrank an annualised 12.7 per cent over the December
quarter, its worst result since the 1974 oil shock.

Japan is by far Australia's biggest export customer, accounting for
one in every five container ships that leave Australia's shores.

The new figures put it among the worst-hit casualties of the global

The annualised contraction of 12.7 per cent, or 3.3 per cent in
quarterly terms, dwarfs those of the United States and Europe and is
much worse than anything that happened to Japan during its so-
called "lost decade" of recession in the 1990s.

The collapse in growth fits the profile of a depression — a deep
recession in which annual GDP falls by 10 per cent or more.

Australia's other big customer, China, has had its growth rate almost
halved from 13 to 6.8 per cent.

"These figures reveal just how serious the global recession is
becoming," Mr Swan said. "They follow on the heels of the worst
contraction in the euro area since records began in 1980.

"The last three months of 2008 are likely to have seen the sharpest
synchronised downturn in the global economy in our lifetimes.

"It's is a sobering backdrop for Australia as we seek to do
everything we can to cushion the impact the global downturn will have
here," Mr Swan said.

A 14 per cent collapse in exports in the December quarter led Japan's

Toyota, Sony and Hitachi are forecasting losses and have begun firing
thousands of workers, heightening the risk that a slump in domestic
spending will deepen the downturn.

"At one time, it looked like Japan had escaped the brunt of the
financial crisis," said Hideo Kumano, chief economist for the Dai-
Ichi Life Research Institute. "This shows how feeble Japan's economic
fundamentals were in the first place."

Access Economics director Chris Richardson said Japan's plight showed
there was "no place for Australia to hide".

"It is true that Japan's statistics are more dodgy and more volatile
than those of other large nations, but this fits what know about the
reach of the crisis," Mr Richardson said. "It is very big and very

"It is impossible for Australia to avoid a recession; perhaps not
absolutely impossible, but it is incredibly hard for Australia to
hold against the tide, and the tide pulling us down is getting
stronger every day.

"This is confirmation of what's facing us," said ANZ chief economist
Saul Eslake. "Japan is a more important and more diversified export
market than China.

"Australian GDP per person is already running backwards. What happens
over the next few months will determine how bad things get."

The impact of the downturn in Asia was felt in Albury yesterday when
400 workers at cars parts company Drivetrain Systems International
were stood down without pay.

The business was hit hard by last month's collapse of South Korean
vehicle manufacturer SsangYong, a major customer.

Finance figures released on Monday suggest that Australians resumed
borrowing in December in the wake of a further interest rate cut and
the Government's $8.7 billion fiscal stimulus hand-outs.

New lending commitments climbed 3.5 per cent. All forms of personal
lending increased, including a solid 24 per cent lift in loans to buy
new cars. But the bulk of the new loans were for refinancing or for
debt consolidation. Lending remains 27 per cent down over the year.


Monday, February 9, 2009

The bonus racket

Posted by AccGURU

The bonus racket


"ISN'T it funny/How they never make any money/When everyone in the
racket/Cleans up such a packet." That Basil Boothroyd poem was
originally written about the movies, but it could just as well apply
to banking.

In its last three years, Bear Stearns paid $11.3 billion in
employee compensation and benefits. According to its 2007 annual
report, Lehman Brothers shelled out $21.6 billion in the three years
before, while Merrill Lynch paid staff over $45 billion during the
three years to 2007.

And what have shareholders got from all this? Lehman's got nothing
(the company went bust). Investors in Bear Stearns received around
$1.4 billion of JPMorgan Chase stock, now worth just half that after
the fall in the acquirer's share price. Merrill Lynch's shareholders
got shares in Bank of America (BofA) which are now worth just $9.6
billion, less than a fifth of the original offer value. Meanwhile,
Citigroup paid $34.4 billion to its employees in 2007 and is now
valued by the stockmarket at just $18.1 billion.

Thursday, February 5, 2009

[roeoz] Economists are the forgotten guilty men

Posted by AccGURU

"In the search for the "guilty men" responsible for the near-collapse
of the global economy, one obvious group of scapegoats has escaped
blame: the economists.

By "economists" I do not mean the talking heads (myself included)
employed by the media and financial institutions to "explain",
usually after the event, why share prices or currencies have gone up
or down. Nor do I mean the forecasters whose computers churn out
scientific-looking numbers about what will happen to growth or
inflation, but whose figures are revised so drastically whenever
something "unexpected" happens - as it always does - that their
forecasts are really nothing more than backward-looking descriptions
of recent events.

What I mean by "economists" are the academic theorists who win Nobel
prizes, or dream of winning them.

To see why these seemingly obscure academics deserve to be hauled out
of their ivory towers and put in the dock of public opinion, consider
why the bankers, politicians, accountants and regulators behaved in
the egregious ways that they have. It may be true that all bankers
are greedy, all politicians venal, all regulators blind and all
accountants stupid. But such personal failings do not explain their
behaviour in the past few years. After all, bankers do not like
losing money and politicians do not like losing power. All
these "guilty men" behaved as they did because they thought it made

And why did these greedy bankers and stupid politicians hold beliefs
that, in hindsight, seem so ludicrous and self-destructive? Why, for
example, did they think it reasonable for a bank with just $1 billion
of capital to borrow an extra $99 billion and then buy $100 billion
of speculative investments?

The answer was beautifully expressed two generations ago by John
Maynard Keynes: "Practical men, who believe themselves to be quite
exempt from any intellectual influence, are usually the slaves of
some defunct economist. Madmen in authority, who hear voices in the
air, are distilling their frenzy from some academic scribbler of a
few years back."...



Wednesday, February 4, 2009

[roeoz] How to control a herd of humans

Posted by AccGURU

How to control a herd of humans


HITLER and Mussolini both had the ability to bend millions of people
to their fascist will. Now evidence from psychology and neurology is
emerging to explain how tactics like organised marching and propaganda
can work to exert mass mind control.

Scott Wiltermuth of Stanford University in California and colleagues
have found that activities performed in unison, such as marching or
dancing, increase loyalty to the group. "It makes us feel as though
we're part of a larger entity, so we see the group's welfare as being
as important as our own," he says.

Wiltermuth's team separated 96 people into four groups who performed
these tasks together: listening to a song while silently mouthing the
words, singing along, singing and dancing, or listening to different
versions of the song so that they sang and danced out of sync. In a
later game, when asked to decide whether to stick with the group or
strive for personal gain, those in the non-synchronised group behaved
less loyally than the rest (Psychological Science, vol 20, p 1).

Psychologist Jonathan Haidt at the University of Virginia in
Charlottesville thinks this research helps explain why fascist
leaders, amongst others, use organised marching and chanting to whip
crowds into a frenzy of devotion to their cause, though these tactics
can be used just as well for peace, he stresses. Community dances and
group singing can ease local tension, for example - a theory he plans
to test experimentally (Journal of Legal Studies, DOI: 10.1086/529447).

Meanwhile, the powerful unifying effects of propaganda images are
being explored by Charles Seger at Indiana University at Bloomington.
His team primed students with pictures of their university - college
sweatshirts or the buildings themselves - then asked how highly they
scored on different emotions, such as pride or happiness. The primed
students gave a strikingly similar emotional profile, in contrast with
non-primed students (Journal of Experimental Social Psychology, DOI:

Interest in the idea of a herd mentality has been renewed by work into
mirror neurons - cells that fire when we perform an action or watch
someone perform a similar action. It suggests that our brains are
geared to mimic our peers. "We are set up for 'auto-copy'," says Haidt.
Interest in the idea of a herd mentality has been renewed by research
into mirror neurons

Neurological evidence seems to back this idea. Vasily Klucharev, at
the Donders Centre for Cognitive Neuroimaging in Nijmegen, the
Netherlands, found that the brain releases more of the reward chemical
dopamine when we fall in line with the group consensus (Neuron, vol
61, p 140). His team asked 24 women to rate more than 200 women for
attractiveness. If a participant discovered their ratings did not
tally with that of the others, they tended to readjust their scores.
When a woman realised her differing opinion, fMRI scans revealed that
her brain generated what the team dubbed an "error signal". This has a
conditioning effect, says Klucharev: it's how we learn to follow the

Insulation scheme won't reduce emissions: Australia Institute


The Australia Institute policy research centre says the Government's
initiative to fund insulation for more than 2 million homes will not
reduce Australia's carbon emissions.

The Government says the scheme will help households save energy and
cut carbon emissions by up to 49 million tonnes by 2020.

But the Australia Institute's executive director Richard Denniss says
the Government's carbon pollution reduction scheme will just
reallocate those emissions.

"The way the Emissions Trading Scheme is designed, every kilogram of
emissions saved by a household frees up an extra permit for a big
polluter," he said.

"So while it's true this scheme will help reduce households' use of
energy, it won't reduce Australia's emissions at all.

"What they do is take those permits freed up by what the individuals
have done and sell those permits to the aluminium industry or the
steel industry or anyone else who wants them.

"So effectively the carbon pollution reduction scheme is really just a
carbon pollution reallocation scheme."

Climate Change Minister Penny Wong says that is a misleading argument.

"What energy efficiency measures do is enable the Government to set
lower and more ambitious targets in years to come, what they do is
ensure is that Australian households can contribute to meeting these
ambitious targets," she said.

Opposition environment spokesman Greg Hunt says the Government needs
to prove the scheme will help the environment.

"The Government has to come clean today, if it turns out all the
Government is doing is shifting emissions from one source to another,
then there are real questions about the integrity of the Government's
insulation package," he said.



Monday, February 2, 2009

World's Biggest Garage Sale Gearing Up

Posted by AccGURU

Another great article in the "Endgame Series" by Charles Hugh Smith, from the blogspot; Of Two Minds which really brings into perspective why our happy-motoring lifestyles are gone, and never coming back. The deflation, the hollowing out of energy investment, systemic sclerosis and the massive deleveraging of the accouterments of consumerism. All culminating in the biggest god damn garage sale ever seen which may last 5 years, maybe more.

What Won't Be Changing
February 2, 2009

Government policy adjustments are feedback loops which will affect small systems,but they are incapable of changing the major trends.

Amidst the debate about whether the "stimulus" and "bad bank" plans will magicallyrestore the U.S. and thus the global economy to what once passed for "health," it'sgood to recall what can't and won't be changed by any government policy adjustments.


stimulus anyone?

Posted by AccGURU

Govt to release second stimulus package today


The Federal Government is expected to release its second economic
stimulus package today to further counter the effects of the global
economic crisis on the domestic economy.

As part of the package, expected to be in the billions, free ceiling
insulation will be provided for more than 2.5 million homes.

The Government says the move will save families about $200 a year on
their energy bills and create jobs for people to install the insulation.

The scheme will be available for 2.2 million owner-occupied homes and
another 500,000 rental properties.

The package is also expected to include infrastructure spending and
measures aimed at boosting employment.

The announcement comes after Prime Minister Kevin Rudd yesterday
revealed that the crisis had punched a $115 billion hole in government

Opposition housing spokesman Scott Morrison says the package must
ensure effective spending and says the insulation scheme is already 12
months late.

"We've already been waiting 12 months for the initial measure to be
introduced so they're largely playing catch up on their own policy on
this and they've dressed it up as a stimulus measure," he told ABC 2
News Breakfast.

"It's clear that the cash splash before Christmas did not have the
intended effect and they're going to have another go round and we're
waiting to see what the details of that package is," he said.

The Reserve Bank of Australia is also tipped act against the negative
effects of the crisis today by slashing the cash rate by 100 basis points.

Last October, the Government released a $10.4 billion economic
security strategy, which provided almost $9 billion in one-off cash
payments to pensioners and some families.


IEA Says Agency Is Likely to Cut Oil Demand Forecast (Update2)

By Fred Pals
Feb. 2 (Bloomberg) -- The International Energy Agency will probably revise its forecast for world oil demand this month because of slowing economic growth, the agency's executive director said.

"It is likely that a downwards revision happens," Nobuo Tanaka said in an interview today in The Hague. "The global economic growth projections are very pessimistic."

Tanaka said the IEA will take into account the economic forecast by the International Monetary Fund. The IMF said last month gross domestic product in the U.S. will contract 1.6 percent this year, while Japan's will fall 2.6 percent and the euro-area economy will shrink by 2 percent.

The IEA, an energy policy adviser to 28 nations, said in its Jan. 16 monthly report that world consumption in 2009 will fall by 510,000 barrels a day, or 0.6 percent, to 85.3 million barrels a day, for a second year of declining demand. The Paris-based agency is due to publish its next monthly report for Feb. 11.

Oil prices have plunged more than $100 a barrel from a record in July as the U.S., Europe and Japan face their first simultaneous recessions since World War II. The IEA's chief energy economist, Fatih Birol, said Jan. 29 that world oil demand this year may average about 300,000 to 400,000 barrels a day less than last year because of the global recession.

Rebound From December

Crude oil for March delivery fell as much as $1.67, or 4 percent, to $40.01 a barrel in electronic trading on the New York Mercantile Exchange. That's the lowest since Jan. 20. Oil was at $40.45 a barrel at 14:34 p.m. London time. Still, prices have rebounded from a four-year low of $32.40 reached Dec. 19 as the Organization of Petroleum Exporting Countries implements a record supply reduction.

OPEC, which accounts for about 40 percent of global oil supplies, agreed in December to reduce output by 2.46 million barrels a day, or 9 percent, starting Jan. 1 to stem the slide in prices. The group is due to meet March 15 in Vienna to review its oil output policy.

"If they further reduce supply, the market could be much tighter," Tanaka said. "That is a concern if we think about the health of the economy."

[roeoz] Debt and forgiveness through the ages

Posted by AccGURU

Speaking of biblical decrees, I was surprised to read this today.

There is no guarantee that the measures will succeed. The vast scale of government borrowing may exhaust the stock of global capital. Markets are already beginning to question the credit-worthiness of sovereign states. The Fed may find it harder than it thinks to disengage from colossal intervention in the bond markets.

In the end, the only way out of all this global debt may prove to be a Biblical debt Jubilee.

Jubilee is an interesting tradition that hasn't really been practiced for centuries, but for thousands of years it was an accepted part of middle east tradition. In today's world the idea of a periodic wholesale canceling of debts and the restoration of land to the poor seems utopian and anachronistic.
Unlike today's world, the ideas of morality and religion wasn't excluded from economics. In fact, unlike today, morality and religion was infinitely more important than profit and personal property.

What was radically disturbing in archaic times was the idea of unrestrained wealth-seeking. It took thousands of years for the idea of progress to become inverted, to connote freedom for the wealthy to deprive the peasantry of their lands and personal liberty.

"Land must not be sold in perpetuity, for the land belongs to me and you are only strangers and guests. You will allow a right of redemption on all your landed property."
- Lev. 25:23-28

I first got interested in the concept of Jubilee, not for religious reasons, but for economic reasons. The person who introduced me to the idea was my favorite economic historian, Michael Hudson.

"First they ignore you, then they denounce you, and then they say that they knew what you were saying all the time," said Gandhi. The same might be said of today's overhang of debts in excess of the economy's ability to pay. First the policy makers pretend that they can be paid, then they denounce the pessimists as spreading panic, and then they say that of course students have been taught for four thousand years now how the "magic of compound interest" keeps on doubling and redoubling debts faster than the economy can squeeze out an economic surplus to pay.

What has ended is the idea that "the magic of compound interest" can make economies rich without having to work and without industry. I hope we have seen the end of derivatives formula seeking to make money by playing in a zero-sum game. A debt overhang always ends either in foreclosure of the debtor's property, or in a debt annulment to preserve the economy's overall freedom and equity.

This means that the postmodern economy as we know it must end – either in financial polarization and debt peonage to a new oligarchic elite, or in a debt cancellation, a Jubilee Year to rescue society. But when the government says that it is reviewing "all" the options, this reality is not one of them.

The Federal Reserve has attacked the current financial crisis as if it were a problem of liquidity (not enough money is available to borrow and loan). In fact the problem is the levels of debt in the world today.
To put it another way, it's not the financial system is illiquid. It's that the world's banks are insolvent. Some officials recognize this to be the case.

"This biggest worldwide economic crisis arose by getting into debt," Josef Proell, Austria's new finance minister, said. "You can't fight a debt crisis by getting into more debt."

I would have more confidence in optimism if the optimists lived wisely!
A pessimist is a well informed optimist!

Sunday, February 1, 2009

The birth rate in Britain is now at its highest for 30 years
Couples who have more than two children are putting an 'irresponsible' burden on the environment, the Government's leading green advisor has warned.

Jonathon Porritt called on ministers to divert money away from curing illnesses towards contraception and abortion services to limit the country's population and help in the fight against global warming.

And he criticised fellow green campaigners for dodging the issue of population growth and its effect on the environment because it is too 'controversial'.

It came as Catholic bishops in England and Wales lambasted environmentalism as an ideology every bit as dangerous as communism.

In a booklet, they say worshippers should be deeply sceptical of claims the green movement makes on global warming.

Mr Porritt, chair of the Sustainable Development Commission, which advises the Government on green matters, said he was due to publish a report in March calling on ministers to reduce population growth through better family planning.

'We still have one of the highest rates of teenage pregnancies in Europe and we still have relatively high levels of pregnancies going to birth, often among women who are not convinced they want to become mothers,' he said.

Britain's population of 61 million is forecast to exceed 70 million by 2028. The birth rate is now at its highest for almost 30 years, largely because immigrant mothers have higher birth rates, and because teenage pregnancy rates are among the highest in Europe.

The UK's abortion rate is already one of the highest in the western world - second only to the United States.

The Optimum Population Trust, a campaign group of which Mr Porritt is a patron, says each baby born in Britain will, during his lifetime, burn the amount of carbon equivalent to two and a half acres of oak woodland - around the size of Trafalgar Square.

Mr Porritt, who has two children himself, added: 'I am unapologetic about asking people to connect up their own responsibility for their total environmental footprint and how they decide to procreate and how many children they think are appropriate.

'I think we will work our way towards a position that says having more than two children is irresponsible. It is the ghost at the table. We have all these big issues that everybody is looking at and then you don't really hear anyone say the P-word.

'Many organisations think it is not part of their business. My mission with the Friends of the Earths and the Greenpeaces of this world is to say: "You are betraying the interests of your members by refusing to address population issues and you are doing it for the wrong reasons because you think it is too controversial".'

A spokeswoman for the Pro-life Alliance said: 'Yet again we hear an expert calling for more contraception and abortion: but our high abortion figures are the fruit of that kind of approach.

'The unpleasant aspect of this statement is the idea that how many children you have should be down to the state. Wherever we have seen such policies being imposed, such as in China, we have seen a preference for male children and a rise in infanticide.'

The views expressed by Mr Porritt came under attack from the Catholic Church, which views contraception as 'intrinsically evil'.

A booklet by the London-based Catholic Truth Society, a charity under the patronage of Peter Smith, the Archbishop of Cardiff, said there was a proven tendency among the environmental lobby to exaggerate the threat of global warming to exaggerate the threat of global warming to vindicate their calls for radical Government measures to 'forcibly' move the world down a 'sustainable' path.

The book, Global Warming: How Should we Respond, says: 'Just as Marxism advocated Communism as the only solution to the world's ills, so Greens warn us of major catastrophe if we do not adopt their calls for radical change.'

It says the ideology of the Green movement ran counter to Christian beliefs, because it saw 'mankind as just one species among many'.

The book says that population programmes targeting the 'supposedly feckless breeding' of the poor, especially in developing countries, were the result of racist and unfounded prejudices.

'Environmental campaigns which demand that the natural world should be treated with greater respect imply that this is the only issue that matters, ignoring the plight of humanity or any spiritual values,' it said.


[roeoz] Violent clashes in Russia

Posted by AccGURU

Violent clashes in Russia as angry protesters call for Putin to resign
over economy


Russia was rocked today by some of its strongest protests yet as
thousands rallied across the vast country to attack the Kremlin's
response to the global economic crisis.

The marches, complete with Soviet-style red flags and banners,
pose a challenge to a government which has faced little threat from
the fragmented opposition and politically apathetic population during
the boom years fueled by oil.

Pro-government thugs beat up some of the protesters.


[roeoz] Roubini Sees Global Gloom After Davos Vindication

Posted by AccGURU

Roubini Sees Global Gloom After Davos Vindication


Jan. 30 (Bloomberg) -- At the World Economic Forum two years ago,
Nouriel Roubini warned that record profits and bonuses were obscuring
a "hard landing" to come. "I really disagree," countered Jacob
Frenkel, the American International Group Inc. vice chairman and
former Israeli central banker.

No more. "Roubini was intellectually courageous, and he called the
shots correctly," says Frenkel, whose AIG survives only on the basis
of more than $100 billion of government loans. "He gained credibility,
and he deserves it."

Even as he wins plaudits for his prescience, Roubini, 50, says
worse lies ahead. Banks face bigger credit losses than they realize,
more financial companies will require state takeovers and the world
economy will keep shrinking throughout 2009, he says.

"The consensus is catching up with me, but it's still behind,"
Roubini said in an interview in Davos. "I don't know what some people
are smoking."


As long ago as February 2007, Roubini was writing on his blog that
"the party will soon be over," and warning of "painful consequences
for the U.S. and the global economy." By last February, his tone had
become apocalyptic, raising the specter of a "catastrophic" meltdown
that central banks would fail to prevent, triggering the bankruptcy of
large banks with mortgage holdings and a "sharp drop" in equities.

The next month, Bear Stearns Cos. failed, to be taken over by
JPMorgan Chase & Co. in a government-backed deal. Then, in September,
Lehman Brothers Holdings Inc. went bankrupt, prompting banks to hoard
cash and depriving businesses and households of access to capital. The
U.S. took over AIG, Fannie Mae and Freddie Mac, and the Standard &
Poor's 500 Index suffered its worst year since 1937.

"I was intellectually vindicated," Roubini says. "But I was
vindicated by having an economic disaster which has political and
social consequences."


Roubini's predecessors in the role of economic nay-sayer include
some well-known names: Joseph Granville, publisher of the Granville
Market Letter, who forecast the stock-market declines of 1976 and
2000; Henry Kaufman, who as a managing director at Salomon Brothers
projected rising interest rates that led to a U.S. recession in the
early 1980s; Marc Faber, publisher of the Gloom, Boom & Doom Report,
who predicted the 1987 stock crash; and Yale University's Robert
Shiller, a former colleague of Roubini's, who forecast the end of the
dot-com bubble in his 2000 book "Irrational Exuberance" and said in a
second edition in 2005 that the U.S. housing market had undergone the
biggest speculative boom in U.S. history.

Granville, 85, says the key to being an outlier is not to doubt
your analysis.

"I don't have anything to do with emotion," says Granville, who's
based in Kansas City. "Keep your head, follow the numbers and ignore
the rest."

Roubini was born in Istanbul, the son of an importer- exporter of
carpets, and spent his childhood in Israel, Iran and Italy. It was
while living in Milan from 1962 to 1982, he says, that he became
attracted to economics: "Economics had the tools to understand the
world, and not just understand it but also change it for the better."

Roubini, who's now working on a book about the crisis, says he
takes no particular pleasure in his role as Dr. Doom or the attention
it brings him.

"I'm not a permanent bear," he says. "I'll be the first to call a
recovery, but I just don't see it yet, and it's getting uglier."


[roeoz] the sun is setting on a previous era

Posted by AccGURU

We are at the dawn of a new era and more importantly the sun is setting on a previous era. This previous era was a time of exponential growth in energy, population, and material resources.

The conversion of resources and labor into commodities kept up with the demands of a monetary system predicated on compound interest and fractional reserve lending. Admittedly there were some rough spots along the way, but all in all it looked like a pretty good deal.

Then something happened. The system that cranked out all those goods started to run out of markets for those goods. The solution was to buy cheaper labor to make those goods more attractive to buyers. Also, as the resource base started to degrade into lower quality ores and energy, those costs further drove the system to look for more markets and even cheaper labor. As few people had the wages to buy these goods, the system also devised a way to lend people enough money to buy all the neat stuff.

This flooded the system with a lot of new money conjured out of nowhere. Now, as the sellers and financiers of all this neat stuff ran to invest their profits in the making of more neat stuff, they found that there was no way to expand the market for neat stuff. People had about as much neat stuff as they could afford, and arguably a bit more.

But, one of the rules of the system is that money must be put to work and earn more money because of a thing called The Discount Rate. This is when the new conjured up money causes existing money to lose value by inflation. Having nothing tangible to invest in, the brokers and bankers started to invest in instruments that were based on the performance of yet more instruments. This violated the notion that money must confront commodities in a market.

Under this new scheme, money confronted other money or even just the promise of money. What happened? What happened is what happens whenever people make bad promises. Bad things happen. The chain of payments that keeps money and commodities circulating began to break down.

One of the assumptions under the system is that the quantity of money and commodities should always grow. That's what all of the contracts are based on. The system cannot cope with a decline in money or commodities. The system breaks down. The system is like a man driving a tired horse. The horse needs to have it's workload reevaluated. It needs some hay and oats and a long drink, It needs a good rest. But the system cannot stand still. It whips the horse for more work without any concern for the health of the horse. Now we see the horse stagger and fall. It may be too late for the poor horse. Will the horse get up?

If it does, will the system let the horse recover and stop trying to get more from the horse than it can deliver? If the past behavior of the system is any indication, I don't hold out much hope for the horse.

I would have more confidence in optimism if the optimists lived wisely!
A pessimist is a well informed optimist!