Going Green for Life

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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!