PDA

View Full Version : Who stole my cheesy economy? - Eric Janszen



EJ
03-16-09, 08:41 PM
http://www.itulip.com/images/cheesy.jpgWho stole my cheesy economy?

The lead economic story today is capacity utilization and output, or, more to the point, the lack thereof. Output plunged 1.4% in February after falling for four months, and five out of the past six. As usual for this depression, the February decline was far worse than most "economists" expected; the consensus view was a 0.9% drop.

Capacity utilization fell in February to the same level reached at the bottom of the second 1980s recession, 70.9% in December 1982, an all time low since the Fed started keeping records. Are we having fun yet?

Back to the US and the present. Capacity utilization for manufacturing alone fell in February 2009 to a new record post-war low of 67.4.0%.


http://www.itulip.com/images/unempVScapu1972-2009.gif
Capacity Utilization (how much manufacturing capacity is being used) versus unemployment


We have long warned that this depression will be as severe in terms of falling output and employment as the early 1980s recession. But a crucial difference between that recession and this depression bears repeating: the Fed created the early 1980s recession on purpose, and has done everything in its power to prevent the current collapse, to no avail.

Over the weekend, Bernanke did an interview for 60 Minutes. In it he opined that the recession might end in 2009, as if this were another Fed manufactured recession as in the 1980s that the Fed controlled. Let’s compare then and now and see why this line of thought is faulty.


http://www.itulip.com/images/gdpvscpivsfedfunds1975-1985.gif
GDP versus Effective Fed Funds rate versus CPI: 1975 to 1985


A: In the 1980 to 1983 recession cycle, CPI inflation peaked as the Fed cranked the Fed Funds Rate up to 16.1% in Oct. 1979, triggering a recession (shaded). Both CPI growth and the Fed Funds rate peaked in 1980 and fell ever since.

B: The Fed dropped rates to below 10% during the recession. The first recession ended and the Fed started to aggressively raise rates again, this time all the way to 22.36% in July 1981 as the CPI continued to decline, although it did make a slight upturn in 1982. The start of the second recession coincided with that peak in rates.

C: The Fed once again dropped rates fast. CPI inflation and GDP growth dropped together through the recession that ended in 1982.

D: In 1983, the Fed Funds Rate touched 8.22%.

E: The Fed Funds rate drifted back up over 10% as the economy recovered. Inflation increased modestly but the beast had been tamed. All it took was high employment, around the same levels we are seeing today.

Since we are frequently told this recession is in severity like the 1980s recession, let’s compare that scenario to our current circumstances.


http://www.itulip.com/images/gdpvscpivsfedfunds2000-2009.gif
GDP versus Effective Fed Funds rate versus CPI: 2000 to Feb. 2009


A: The Fed Funds Rate peaked at 7.03% in July 2000 as the Fed sought to reign in the stock market bubble fueled economy. GDP had declined for months and with inflation modest, a recession was guaranteed, and we forecasted one to start in January 2001. The Greenspan Fed then began its now famous aggressive rate cutting campaign to 1%.

B: Inflation briefly hit zero in 2002 as the economy expanded, lagging the end of the recession by several months before turning up. The housing bubble and other symptoms of credit expansion started to appear, as the economy expanded again and the Fed raised rates back over 5%.

C: The housing bubble economy peaked with the housing market in 2006 and housing prices started to decline.

D: The first signs of the credit and banking crisis sent the Fed into emergency rate cut mode. Within a year, the funds rate is effectively zero.

E: CPI inflation peaked six months into the current recession, as cost-push inflation caused by the weak dollar (not shown) peaked then subsided with falling demand and, later, a strengthening dollar.

F: Here we are, with GDP in steep decline along with inflation, interest rates at zero, and unemployment (not shown) rising rapidly with collapsing output.

Today is like 1983 with respect to falling GDP growth, output, capacity utilization, demand, and unemployment. But it is different in one absolutely crucial respect:

The recession and disinflation we are experiencing today were not induced intentionally by the Fed raising interest rates from 5% to 22% to create a recession to choke off inflation. Today’s declines are happening in spite of all attempts to stop debt deflation by creating inflation via low interest rates and drastic debt monetization measures to prevent a recession. The decline is global and out of control.
In the wake of the collapse of the stock market bubble in 2000, the Fed between 2001 - 2007 furiously fought the collapse of the gigantic credit bubble that began to develop in the early 1980s in the early days of the FIRE Economy (http://www.fireeconomy.com/). In the context of the FIRE Economy, the housing bubble was our modern era New New Deal. Unlike the 1934 - 1937 era, the tax cut, rate cut, inflation, and government spending program of the 2001 to 2007 era happened before the economy collapsed, and it caught the credit crisis before a self-reinforcing debt deflation set in.

The 2001 - 2007 New New Deal gave us the housing, private equity, and other bubbles, which crashed as we expected one after the other starting in mid 2006.

Where are we?

Unlike 1930, 1983, and 2001, today all of monetary, tax cut, and deficit spending bullets have been fired that won’t backfire on the US by reducing US creditworthiness. With a fiscal deficit to GDP ratio fast approaching third world levels (as high as 10% this year (http://www.itulip.com/forums/showthread.php?p=83348#post83348)), our one remaining loyal creditor, China, is becoming increasing vocal and public (http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/03/13/MNTH16EUOE.DTL) about the future value of its US Treasury bond holdings.


http://www.itulip.com/images/foreigntreasholdersOct2008-Jan2009.gif
Net increase in Treasury Securities holdings since the U.S. Q3/Q4 2008 debt crisis (http://www.itulip.com/forums/showthread.php?p=84202#post84202). Who's your buddy? Who's your pal?



Declines in net holdings in Caribbean Banking Centers and Luxembourg appears to coincide with a crack down on these nations as tax havens. Will the money the U.S. Treasury gains in tax revenue be given up in a decline in foreign borrowing?

China is having plenty of problems of its own, although you’d hardly know it by reading the state media.
China auto sales up nearly 25 pct in Feb: state media (http://www.google.com/hostednews/afp/article/ALeqM5ge5ihZM5qGCOWN8iA4PrctmxnrfA)

BEIJING (AFP) — Chinese auto sales rose nearly 25 percent last month from a year earlier, buoyed by government policies to boost the sector, state media reported Tuesday.

The figures from the China Association of Automobile Manufacturers appeared to show that the Asian giant beat the United States as the world's largest market for a second consecutive month.

February sales of domestically made autos -- which make up the vast majority of the Chinese market -- hit 827,600, up 24.7 percent from a year earlier, the Xinhua news agency reported, citing the association.
Domestic auto sales are up 25% in January 2009? Odd, because if you go to the Chinese National Bureau of Statistics web site you will see that internal combustion engine output is off 50.4% year over year in January. Unless there are thousands of Chinese buying cars without engines in them, we’ll take the China Association of Automobile Manufacturers unit sales numbers as no more reliable than the U.S. National Association of Realtors' data on home sales.

Post Housing Bubble New New Deal, starting in 2008 we are in an new kind of 1938, post credit bubble and post fiscal initial stimulus -- that stimulus that produced the housing bubble -- and with yet more fiscal stimulus beginning, albeit of a more traditional infrastructure development and jobs creation variety. However, the recently approved economic recovery plan is unlikely to create a $10 trillion fictitious value boost to the economy (http://www.harpers.org/archive/2008/02/0081908) that the the housing bubble provided, and without reducing the debt burden on businesses and households left over from the FIRE Economy era, are not likely to increase savings, net of debt repayment.

No one can say how the US and the world economies could have recovered from the failure of the old New Deal programs to re-start the post 1920s credit bubble economy if WWII had not occurred.


http://www.itulip.com/images/ww2gdp.gif
WWII grew all Allied and Axis economies except Italy's


How to halt debt deflation and induce demand creation in a world of over-capacity and over-indebtedness without war? That is the question. All other questions are irrelevant.

New Bull Market?

We hear pronouncements of a new bull market after the latest Debt Deflation Bear Market (http://www.itulip.com/forums/showthread.php?p=62889#post62889) rally.


http://www.itulip.com/images/newbullmarketMar2009.gif
Perhaps premature to be calling the start of a bull market?


We have a feeling, more than a hunch and strong enough for us to take some short positions, that this relief rally (http://www.itulip.com/forums/showthread.php?p=62889#post62889) has run out of gas.



iTulip Select (http://www.itulip.com/forums/showthread.php?t=1032): The Investment Thesis for the Next Cycle™
__________________________________________________

To receive the iTulip Newsletter or iTulip Alerts, Join our FREE Email Mailing List (http://ui.constantcontact.com/d.jsp?m=1101238839116&p=oi)

Copyright © iTulip, Inc. 1998 - 2009 All Rights Reserved

All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Nothing appearing on this website should be considered a recommendation to buy or to sell any security or related financial instrument. iTulip, Inc. is not liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. Full Disclaimer (http://www.itulip.com/forums/../GeneralDisclaimer.htm)

Jay
03-16-09, 08:59 PM
How to halt debt deflation and induce demand creation in a world of over-capacity and over-indebtedness without war? That is the question. All other questions are irrelevant.

Thank you for bringing this to light. I have been pondering this since the Marx discussions and still don't have an answer I like. Nukes make this difficult. What is the answer? Bird flu or its ilk? Proxy wars everywhere? Not good.

marvenger
03-16-09, 09:03 PM
nice. Once tranformative depression has had its effect on employment numbers negotions around debts and currencies can start to try and get a balance back?

sishya
03-16-09, 09:15 PM
EJ,
Great article to keep things in perspective when I was slowly starting to drift towards the Bull side. Facts over Emotion. Yes you are right, the second derivative of the economy is not yet positive.

Confession : After a long long period(18 months), I did move all my/Wife's 401K from Money Market to S&P Index fund recently at Dow 6800. I will have to turn it back.

don
03-16-09, 09:16 PM
Thank you for bringing this to light. I have been pondering this since the Marx discussions and still don't have an answer I like. Nukes make this difficult. What is the answer? Bird flu or its ilk? Proxy wars everywhere? Not good.

Another 'advantage' of war is it co-ops the bottom 80%+ agitation. Is a preemptive strike on China beyond a possibility? I think not. With China's fixed capital assets destroyed, it's a new ballgame.

Jay
03-16-09, 09:18 PM
Another 'advantage' of war is it co-ops the bottom 80%+ agitation. Is a preemptive strike on China beyond a possibility? I think not. With China's fixed capital assets destroyed, it's a new ballgame.
Damn bro, isn't that the end?

Jay
03-16-09, 09:19 PM
EJ,
Great article to keep things in perspective when I was slowly starting to drift towards the Bull side. Facts over Emotion. Yes you are right, the second derivative of the economy is not yet positive.

Confession : After a long long period(18 months), I did move all my/Wife's 401K from Money Market to S&P Index fund recently at Dow 6800. I will have to turn it back.
Hey, you got a nice ride along the way though, good for you!!

jiimbergin
03-16-09, 09:34 PM
We have a feeling, more than a hunch and strong enough for us to take some short positions, that this relief rally (http://www.itulip.com/forums/showthread.php?p=62889#post62889) has run out of gas.





EJ, thank you for this great article. It confirms my own beliefs. I really hoped it would not. :eek:

jk
03-16-09, 09:39 PM
another "cold" war, along with some small proxy wars, might do. i've said for some time that china will have to start banging the drum when its slowing economy combines with its huge surplus of young males to reach the boiling point. a big "defense" build-up in the u.s. would certainly ensue. i just need to think a bit more about how this plays in europe, especially vis a vis russia and its role in european energy supply. suggestions, anyone?

swgprop
03-16-09, 09:56 PM
Great information as always, thanks.

Oh and I particularly appreciate the snark factor ......:D:D

http://www.itulip.com/images/newbullmarketMar2009.gif

Jay
03-16-09, 10:05 PM
another "cold" war, along with some small proxy wars, might do. i've said for some time that china will have to start banging the drum when its slowing economy combines with its huge surplus of young males to reach the boiling point. a big "defense" build-up in the u.s. would certainly ensue. i just need to think a bit more about how this plays in europe, especially vis a vis russia and its role in european energy supply. suggestions, anyone?
JK, does another cold war and a few proxy wars approximate the destruction of WWII though? Isn't that the scope we are talking about? And what would a big defense buildup in the US look like? What else is there to build? We are already the most fearsome power the world has ever known, many times the power of every other country. I don't ask these questions to be argumentative at all. I ask them because I have asked them of myself many times over and get no good answer.

Shakespear
03-17-09, 04:36 AM
Nice one EJ :)

How did Ireland become such a big Treasury holder ?????? :eek::eek:

BiscayneSunrise
03-17-09, 06:20 AM
another "cold" war, along with some small proxy wars, might do. i've said for some time that china will have to start banging the drum when its slowing economy combines with its huge surplus of young males to reach the boiling point. a big "defense" build-up in the u.s. would certainly ensue. i just need to think a bit more about how this plays in europe, especially vis a vis russia and its role in european energy supply. suggestions, anyone?

So, from EJ's essay it looks as though the next major iTulip prediction is war is inevitable. After all, the general sense is that there is no fix for the transformational depression other than to let it runs its course. Am I getting that right from this quote?

"How to halt debt deflation and induce demand creation in a world of over-capacity and over-indebtedness without war? That is the question. All other questions are irrelevant."

Some thoughts:

The days of major set piece battles are pretty much over. Too expensive and the assets are too vulnerable.

Small proxy wars will be even smaller than they have been. They will be fought by small special forces teams and remotely by UAV drones firing highly focused weapons. Far from the days of massive bombing raids, UAV are becoming the airborne equivalent of snipers.

China has no real tradition of being hegemonic. just the opposite. During times of troubles, they have historically pulled in. China will be more engaged diplomatically with its natural resource suppliers and will add some military capabilities but their main focus will be developing themselves internally so as to avoid the social unrest jk mentions.

There is no way China will develop a blue water navy to rival the US. Yes, they will add some resources but the expense of a world wide navy is out of the question for the Chinese.

Future wars will include theaters in outer space and in cyber space. In those areas, the US still holds advantages but not nearly as great as our earth borne superiority. This is where the Chinese may cause the most mischief.

As for Europe, Angela Merkel of Germany has been cozying up to Russia to solidify energy supplies. This will make Poland increasingly nervous. Poland is becoming an outpost for the US. As Russian hegemony increases, Ukraine will likely be sacrificed but Poland may be where the US draws the line. Gotta think more about that one, myself.

Greg

GRG55
03-17-09, 09:19 AM
another "cold" war, along with some small proxy wars, might do. i've said for some time that china will have to start banging the drum when its slowing economy combines with its huge surplus of young males to reach the boiling point. a big "defense" build-up in the u.s. would certainly ensue. i just need to think a bit more about how this plays in europe, especially vis a vis russia and its role in european energy supply. suggestions, anyone?

Russia is unlikely to ever be a reliable supplier of energy to anyone. The west Europeans now know this [The Poles must be thinking "See, we told you so..."].

Spoke today with a friend of mine who is the Managing Director for the MENA region [Middle East & North Africa] of one of the largest continental European utilities. Told me his budgets were increased big time in January to fund a strategy to significantly increase MENA gas and NGL supply sources with the specific intent of first capping, and then reducing its dependence on Russian gas supplies. That his firm would view Middle East NOCs as more reliable suppliers than Gazprom would come as no surprise to anyone who has had dealings with both.

Projects of the scale that would interest his company typically take 7 to 10 years from inception to first delivery, partly because of scale and partly because...well...it's just the way things work [or not :)] in the Middle East. Still, he's under a lot of pressure now to commit large sums over multiple years...said he wished he was a newly unemployed banker with a severance package; life would be much easier. :cool:

we_are_toast
03-17-09, 09:27 AM
I think the war talk is a bit in left field.
This is not the 1930's. I think nut cases like Hitler, Mussolini, Stalin, and a whacked out Japanese imperialist culture had a lot more to do with WWII than any economic reasons.

I'm still buying a massive green solution to getting us out of this depression. China and the U.S. have a lot in common when it comes to their fossil fuel dependencies, and their lack of liquid fossil fuels. Another stimulus package with a lot more alt-E stimulus could be the signal of where the U.S. is heading. I would feel a lot more confident if the Administration were trying to pound a stake in the heart of the FIRE economy rather than giving CPR to a corpse.

jpatter666
03-17-09, 09:44 AM
While I'd agree Hitler, Imperialist Japan's culture and the rest were direct influencers of WWII, certainly the 30s economy aided in bringing them to power.

But I also do not expect major military conflict. Nuclear weapons make conflict between major powers unthinkable and unwinable. But as we have seen in Iraq (and many other smaller conflicts) technology has allowed for an individual to inflict unprecedented damage on an occupying force. Wars have become battles of attrition.

I wonder about two possible paths:
1 ) Sniping attacks as referenced above, hits on economic targets but more to force an agreement, access to resources than to gain actual territory. I view this as most likely for the major powers.
2 ) A return to savagery. Full-scale attacks with mass executions of the conquered populace.

WildspitzE
03-17-09, 09:45 AM
To put today's events in historical perspective, during December 1982 Guatemalan President Rios Montt met with U.S. President Ronald Reagan in Honduras. Reagan dismissed reports of human rights abuses in the region and lifted an arms embargo to resume sales to the nation’s military rulers. Four days later a Guatemalan government massacre wiped out the village of Dos Erres. Eighteen years later in 2000 two witnesses gave evidence that 300 men, women and children were killed, tortured and raped by specialists called “kaibiles.”

...

How to halt debt deflation and induce demand creation in a world of over-capacity and over-indebtedness without war? ...

I'm not sure how the first paragraph I quoted fits in the picture. Is it meant to show what sort of bellic initiatives we should expect to prop up our economy (ie arms deals, etc)? If so, I thought that we've been doing that ad nauseam all over the world already. As a side note, I grew up in Guatemala and El Salvador during the 80s and 90s. If you are curious about those times in such countries give me a holler EJ/Fred.

As to the second quote - I've been mulling this topic myself. My understanding of how WWII got us out of the depression is not only limited to the comparative productive advantage we developed vs. others, especially after their industrial infrastructure was blown up. This was obviously key, and most important in the post war boom. But, that during the war, the war justified the following:

- mass inflation,
- wartime wage controls (combined with patriotism, persuaded people to work at below market wages. thus, created "demand" for workers)
- draft (further reduce unemployment at home by sending 12MM of them abroad, not to mention that some would be killed)
- deficit spending on the build up of productive instrastructure

Given our ability and habit to go back to the same bag of tricks, I postulate that we should seek to analyze the different potentialities under the same broad objectives/initiatives. Namely:

- What event or initiatives will put us in a position of comparative productive capacity vs others?
- What event or initiatives would silence the critics of mass inflation (which we're getting now, but I'm sure that they believe it could be more)?
- How do we trick people into accepting lower wages and rationing/price controls at the same time mass inflation takes place?
- Is a draft politically achievable? Is it even truly necessary? Look at what happened after 9/11 (That said I understand that things were messed up afterwards from a credibility perspective, LOL).

I'm sure I'm missing some things, and perhaps fellow itulipers can add to the framework of objectives ( so that we can flesh out possible events or initiatives).

Without war, I tend to revert to things like the Green Bubble you and others propose. Creating an emergency for the world, become the leader in such technology (and production of such technology), inflate and spend [deficit spending] on infrastructure, attempt to create demand through carbon taxation, etc.

That said, I tend to believe that the US will follow a two prong approach (e.g. creating a Green Bubble & War).

don
03-17-09, 10:32 AM
A couple of ex-spooks have their say on the war question:

Will He Sell Himself Into His Own Defeat?

Obama and the Empire

By BILL and KATHLEEN CHRISTISON
Various people have asked recently, “What are the implications of the global economic crisis for US policies in the Middle East, and will Middle East countries lean more or less toward the US as they suffer their own economic crises?” Not simple questions, but here, presented very briefly, are our first shots at them.

Let’s start by discussing what US policies affecting the Middle East may emerge in coming months. A preliminary point that is necessary to make is that present policies inherited from the Bush administration are a mess. Practically everyone of every nationality who lives in the Middle East -- and elsewhere for that matter -- believes that the economic crises now moving in on the world were largely caused by the US’s own extreme version of capitalism with its massive emphasis on privatization and on elimination of regulations that might have provided some protections for ordinary people. At the minimum, there are widespread feelings of Shadenfreude over the pain the US is now suffering, and at a political level there is intense dislike of the US for policies that are seen, correctly, as arising from US and Israeli colonialism and empire-building and that are blamed for the economic woes and inequalities now affecting nations everywhere.

There are two major scenarios of how US Middle East policies may develop in the next year or so. Even now, no one knows enough about President Obama to know which scenario or variation on it might be likely.

Increasingly, though, it appears that in foreign affairs, he is not going to change very much. We hope this is wrong. At least on the central issue of Palestine-Israel, Obama made it clear from the start of his campaign, well before the election, that he will support the right-wing elements of the Israel lobby led by AIPAC. But there still is the question of how strong his support will be.

The first scenario is that Obama will just bumble along, changing as little as he can get away with from Bush’s policies, except for clearing away some of the roughest edges of Bush policies on torture. Obama is expanding the war in Afghanistan and continuing the war in Iraq longer than he said he would. Under this scenario, he will try to keep talking as long as possible over Iran and try to avoid fighting. He will try to keep supporting a civilian government in Pakistan, but would not really oppose a return to military dictatorship in that country, if Pakistan would continue supporting his Afghanistan and Iran policies.

That’s the first scenario. Although its support for empire and colonialism makes it an undesirable scenario, at least Obama would be trying to avoid a major war.

The second, much more militaristic scenario is far worse, possibly involving more wars, but it describes what Obama’s policies in the Middle East may well turn into as the remaining months of 2009 pass by.

Right now Obama is faced with domestic economic difficulties greater than he would have thought, during most of his campaign, could conceivably happen as rapidly as they did. But he is also faced with a military-industrial complex that is now pushing for ever larger military expenditures and more aggressive foreign policies, among other things as a way to help solve US economic difficulties. In addition to this, Obama is faced with the prospect of an Israeli government under Benjamin Netanyahu that is even more right-wing than the present one, supported by that portion of the Israel lobby led by AIPAC. This part of the lobby is probably the strongest ally of the military-industrial complex in supporting more wars and more aggressiveness in US Middle East policies. Obama showed his support for the lobby throughout his campaign and, most recently, did nothing to oppose the lobby’s successful trashing of Charles Freeman, a fine candidate for a senior intelligence position whom the lobby charged with being anti-Israel. Since a majority of US voters generally support Israel without thinking much about it, the disorganized justice and peace movement in the United States is not very effective in opposing either the military-industrial complex or the right-wing Israel lobby.

Obama has by now clearly shown that he does not want to be the American leader who loses the American empire. In general, most European governments, most of the Arab governments, and the Japanese government as well, will not oppose him. Public opinion in these countries, in contrast to the governments, will be somewhat stronger in opposing US policies of empire, but it is doubtful that the publics in these countries will be able to accomplish very much.

So the conclusion that one comes to if this second scenario turns out to be true is that we are facing a very dangerous period in world history. There are indeed forces in both the United States and Israel that want a clash of civilizations and are definitely not against further wars, and these forces are powerful. Obviously, the first nation to be affected by implementation of this scenario would be Iran. At this point it is impossible to know whether Obama will want to, or be able to, prevent these forces from dominating future US policies throughout the Middle East.

Bill and Kathleen Christison have been writing on the Middle East for several years and have co-authored a book, forthcoming in June from Pluto Press, on the Israeli occupation and its impact on Palestinians. Thirty years ago, they were analysts for the CIA. They can be reached at kb.christison@earthlink.net

BiscayneSunrise
03-17-09, 10:41 AM
Militarism rose out of the great depression but all the allied powers were overextended and caught flatfooted. What is the exact figure? In 1941, the US military ranked something like number 12 in the world?

Today, the the answer on how to avoid major war is:

Pax Americana

The US military is so powerful that no other nation could stage any meaningful raid anywhere in the world without worrying about US response.

Barring a sneak attack in cyberspace shutting down the US military internet and satellite capabilities long term, Every nation has to include in their calculus the reaction of the US.

Sorry for the thread drift. Back to the matter at hand.

Greg

chekre
03-17-09, 10:46 AM
Yes there will be a war but without bullets it will be a cultural war were normal people will take the leap to face the alienation of society and stand up and say I am not in your game any longer… when will you so-called intelligent people understand that culture is the problem the fed the government and its leaders are products of this culture…now a world culture that has as its preamble consume consume until you exhaust everything.

bill
03-17-09, 11:05 AM
http://www.nytimes.com/2009/03/15/washington/15military.html?_r=1

Pentagon Rethinking Old Doctrine on 2 Wars
Published: March 14, 2009
<NYT_TEXT>WASHINGTON — The protracted wars in Iraq and Afghanistan are forcing the Obama administration to rethink what for more than two decades has been a central premise of American strategy: that the nation need only prepare to fight two major wars at a time.
In an interview with National Public Radio (http://www.npr.org/templates/story/story.php?storyId=101669758) last week, Defense Secretary Robert M. Gates (http://topics.nytimes.com/top/reference/timestopics/people/g/robert_m_gates/index.html?inline=nyt-per) made it clear that the Pentagon was beginning to reconsider whether the old two-wars assumption “makes any sense in the 21st century” as a guide to planning, budgeting and weapons-buying.
The discussion is being prompted by a top-to-bottom strategy review that the Pentagon conducts every four years, as required by Congress and officially called the Quadrennial Defense Review. One question on the table for Pentagon planners is whether there is a way to reshape the armed forces to provide for more flexibility in tackling a wide range of conflicts.
Among other questions are the extent to which planning for conflicts should focus primarily on counterinsurgency wars like those in Iraq and Afghanistan, and what focus remains on well-equipped conventional adversaries like China and Iran, with which Navy (http://topics.nytimes.com/top/reference/timestopics/organizations/n/us_navy/index.html?inline=nyt-org) vessels have clashed at sea.
Thomas Donnelly, a defense policy expert with the conservative American Enterprise Institute (http://www.aei.org/), said he believed that the Obama administration would be seeking to come up with “a multiwar, multioperation, multifront, walk-and-chew-gum construct.”
“We have to do many things simultaneously if our goal is to remain the ultimate guarantor of international security,” Mr. Donnelly said. “The hedge against a rising China requires a very different kind of force than fighting an irregular war in Afghanistan or invading Iraq or building partnership capacity in Africa.”

QDR

Preparing for the 2010 Quadrennial Defense Review:
Rebalancing the U.S. Defense Portfolio

http://www.avascent.com/Files/Publications/QDR%20Publication.pdf

j4f2h0
03-17-09, 11:32 AM
Yes there will be a war but without bullets it will be a cultural war were normal people will take the leap to face the alienation of society and stand up and say I am not in your game any longer… when will you so-called intelligent people understand that culture is the problem the fed the government and its leaders are products of this culture…now a world culture that has as its preamble consume consume until you exhaust everything.

I respect what you are trying to say here, but i will answer your statement with a question. What happens to the laymen when they try to go against the status quo? The answer is the Gubment rolls out the national gaurd and squashes you. Not saying it shouldnt happen, but if u think people can take the course of action u described and there wont be blood and bullets you are mistaken!

WildspitzE
03-17-09, 11:33 AM
QDR

Preparing for the 2010 Quadrennial Defense Review:
Rebalancing the U.S. Defense Portfolio

http://www.avascent.com/Files/Publications/QDR%20Publication.pdf



Page 4, gotta love it - "green" weapon systems and platforms.

FRED
03-17-09, 11:36 AM
Page 4, gotta love it - "green" weapon systems and platforms.

Here we call it "dis-infrastructure." :)

Shakespear
03-17-09, 11:37 AM
The article above nicely meshes with the speech Mr. Brzezinski gave that is to be found here.

http://itulip.com/forums/showthread.php?t=8766

I think he makes a clearly strong point that war with Iran will not solve anything and may instead lead to serious loss of control globally. However that is only his opinion.

The "global leadership" has recently shown us that it lacks long term vision and could blunder into this mistaken venture.

Raz
03-17-09, 11:53 AM
I think the war talk is a bit in left field.
This is not the 1930's. I think nut cases like Hitler, Mussolini, Stalin, and a whacked out Japanese imperialist culture had a lot more to do with WWII than any economic reasons.

I'm still buying a massive green solution to getting us out of this depression. China and the U.S. have a lot in common when it comes to their fossil fuel dependencies, and their lack of liquid fossil fuels. Another stimulus package with a lot more alt-E stimulus could be the signal of where the U.S. is heading. I would feel a lot more confident if the Administration were trying to pound a stake in the heart of the FIRE economy rather than giving CPR to a corpse.

I agree with you. But we are in a very dangerous period because both major political parties are indebted to the same group of bankers - even though they look to different special interest groups for votes:
(Democrats: Teacher's Unions, Trial Lawyers, Abortion Industry, Ethnic Minorities, Urban Tax Consumers, Radical Egalitarians, etc.; Republicans: Multinational Corporations, Insurance Companies, Doctors, Defense related industries, Farmers, Fundamentalist Christians, etc.)

IF they can re-start the FIRE economy (I doubt it) then we are yet to witness the truly catastrophic bust of the United States.:(

goadam1
03-17-09, 12:04 PM
Be careful shorting the market this week. It is a triple witching week on options.

chekre
03-17-09, 12:11 PM
Look I am sure you have good intentions but I never said “go Against” I meant a change in culture society I.E.. consciousness…..I t seems democracy is on the verge to trip just as Marxism (Russia) did a while ago and will shortly again is in China….. we all know that China (also India) has more than enough people to sell to which means that you can understand why China is warning against a devaluation of the dollar that is until of course they can spend or borrow against our T-bills to do their infrastructure with our dollar then they will sell to their own people the crap they been selling us….so then where does that leave the U.S. when they don’t need to buy our T-bills…..bankrupt…… and guess what at that point China currency becomes the new standard (because they haven’t defaulted like us) and gold goes down again……

goadam1
03-17-09, 12:15 PM
We are in a couple of wars right now. Building a robot and drone army for use in Afghanistan and Pakistan are obvious courses. Expect to hear something like "building a 21st century defense."

Wait this is the plot of "Star Wars episode 2."

goadam1
03-17-09, 12:29 PM
War won't happen during this administration. I think the more likely scenario is Obama carries the turd bag on the depression, gets voted out by your standard FIRE backers of a populist Republican who promises the usual blood, guts and tax cuts. HOORAAY!!

metalman
03-17-09, 12:48 PM
War won't happen during this administration. I think the more likely scenario is Obama carries the turd bag on the depression, gets voted out by your standard FIRE backers of a populist Republican who promises the usual blood, guts and tax cuts. HOORAAY!!

yep. as ej's said, obama is hoover. next comes the populist head banger.

ASH
03-17-09, 12:49 PM
another "cold" war, along with some small proxy wars, might do. i've said for some time that china will have to start banging the drum when its slowing economy combines with its huge surplus of young males to reach the boiling point. a big "defense" build-up in the u.s. would certainly ensue. i just need to think a bit more about how this plays in europe, especially vis a vis russia and its role in european energy supply. suggestions, anyone?

I don't think a "cold" war would work. In a cold war, you build weapons but tend not to use them in developed countries. If the idea is that a war will sop up oversupply of capacity by using some of it to destroy the rest, then it amounts to Keynesian "digging holes and filling them in" writ large -- and even theoretically, that can only work if you actually dig the holes (or blast them). Otherwise, you just run huge budget deficits, go further into debt, and the money spent on the military goes no further than any other government "stimulus" spending or jobs program for the young and unemployed. You gots to blow shit up.

metalman
03-17-09, 12:49 PM
We are in a couple of wars right now. Building a robot and drone army for use in Afghanistan and Pakistan are obvious courses. Expect to hear something like "building a 21st century defense."

Wait this is the plot of "Star Wars episode 2."

jk posted this to a separate thread...

Russia Is Planning a ‘Large-Scale Rearming’

By CLIFFORD J. LEVY
Published: March 17, 2009

MOSCOW — President Dmitri A. Medvedev said on Tuesday that Russia would begin a “large-scale rearming” in 2011 in response to what he described as threats to the country’s security.

In a speech before generals in Moscow, Mr. Medvedev cited encroachment by NATO as a primary reason for bolstering the armed and nuclear forces.

Mr. Medvedev did not offer specifics on how much the budget would grow for the military, whose capabilities deteriorated significantly after the fall of Soviet Union.

Russia has increased military spending sharply in recent years, but with the financial crisis and the drop in the price of oil, the country’s finances are under pressure, suggesting that it would be hard to lift these expenditures further.

Even so, Mr. Medvedev’s timing was notable. He is expected to hold his first meeting with President Obama in early April in London on the sidelines of the summit of the Group of 20 industrialized and developing countries.

In recent weeks, he has said he is looking forward to the meeting, and both he and Russia’s paramount leader, Prime Minister Vladimir V. Putin, have been expressing some optimism about improving relations with the United States under the new administration.

Mr. Medvedev’s comments on Tuesday, though, indicated that Kremlin did not want the United States and its NATO allies to presume that Russia was coming to the table from a position of weakness.

“An analysis of the military-political situation in the world shows that there are a range of regions where there remain serious potential for conflicts,” Mr. Medvedev said. “Threats remain that can bring about local crises and international terrorism. NATO is not halting its efforts to widen its military infrastructure near the borders of our country. All of this demands a quality modernization of our armed forces.”

Mr. Medvedev emphasized that Russia would not be deterred in this plan by the financial crisis....

http://www.nytimes.com/2009/03/18/wo...dvedev.html?hp (http://www.nytimes.com/2009/03/18/world/europe/18medvedev.html?hp)

Serge_Tomiko
03-17-09, 12:51 PM
I think the war talk is a bit in left field.
This is not the 1930's. I think nut cases like Hitler, Mussolini, Stalin, and a whacked out Japanese imperialist culture had a lot more to do with WWII than any economic reasons.


There are many ways to characterize the leadership of Japan and Germany, but the fact remains two resource poor countries with insufficient food production capacity and small populations were able to fight three powers - the British Empire, the United States, and the Soviet Union - that controlled almost the entire world for six years and almost won. Especially in regards to Great Britain, it is nuts that an Empire of such power collapsed after their "victory".

I believe your characterization of many of these leaders as "nut cases" is inaccurate, and calling Japan imperialist in the context of British world domination is rather absurd. It's almost as absurd as American propaganda films that characterized the Japanese as creatures akin to monkeys or worse.

The London and New York powers were not very keen on any challenge to their grip on international finance, even from countries like Germany and Japan that had to play the international trade game simply to buy food for their people. Economics was the ONLY reason for World War II.

The finer details are irrelevant - desperate times result in desperate actions. Nuclear weapons obviously make conquest like the days of old impossible. My only point is that 1) we should expect the unexpected and 2) now is not the time to follow jingoistic propaganda and demean our adversaries - the leaders of almost all nations are in fact quite sane and intelligent. Respect them.

Personally, I think Obama will invade Mexico. "Peacekeeping" is the only thing the American people expect these days. The free flow of information makes true jingoism impossible. Further, bringing order to Mexico will require a very large army - a perfect solution to the coming unemployment problem.

ASH
03-17-09, 12:57 PM
War won't happen during this administration. I think the more likely scenario is Obama carries the turd bag on the depression, gets voted out by your standard FIRE backers of a populist Republican who promises the usual blood, guts and tax cuts. HOORAAY!!

War is already going on during this administration. New small wars may happen under this administration, or the next, but a major war can't happen anytime soon because the US is the only country with any significant expeditionary capability. Only a major war would take care of the over-capacity problem.

ASH
03-17-09, 01:08 PM
Thank you for bringing this to light. I have been pondering this since the Marx discussions and still don't have an answer I like. Nukes make this difficult. What is the answer? Bird flu or its ilk? Proxy wars everywhere? Not good.

As I suggested to jk below, I don't think proxy wars can help with over-capacity. For that matter -- a proxy war with whom?

rjwjr
03-17-09, 01:36 PM
We didn't get into WWII to kick start the US economy, we went in kicking and screaming, and only once attacked. As the father of a 20 year old son, I can only hope that our current political leadership doesn't see war a tool to start the economy. Growing a domestic economy should not be a priority greater than the innocent lives of US and foreign children. And I'm no tree-hugger, peace monger. I believe in peace thru strength, believe that the US MUST maintain weapons superiority, and feel that our response to unprovoked attacks on Americans or American soil should be met with swift and severe retaliation. I simply do not believe that a few more dollars in our pocket is worth pre-emptive, false-emptive, or media-emptive aggression.

And, putting aside American ego for a minute, are we attacking in an effort to export our terrific political system and economic prowess to these backward, wayward foreigners? I am steadfastly pro-American, but we need to fix our own problems before we go force-exporting them.

we have all the natural resources and brain power we need, we don't need to go stealing anything. Let's look inside our Country and ourselves, and let's find some smart people to fix these problems properly.

goadam1
03-17-09, 01:39 PM
yep. as ej's said, obama is hoover. next comes the populist head banger.

It becomes clearer every day.

serge_oc
03-17-09, 01:56 PM
A few thoughts:

1. Here is a war that fits the bill: Iran. Did anyone mention that one? Also, why is it assumed that wars have to be started by the US? Someone else can lit the match, make it bright enough so there is no choice but to join and make it brighter.

2. What happened to a massive inflation world-wide? For example, devaluating every major currency to 1/3 of previous value? Everyone else will follow suite, just look at the Swiss. Central bankers can be notoriously unified if it means something good for them. Especially if governments become similarly unified to reward them (given that such devaluation would hurt bankers initially). Self-preservation is a powerful motivator.

3. Just like financial derivatives, nuclear war never happened before. Everyone here assumes that in case of nuclear engagement action will be massive and reaction will be equally massive. If you think outside the box (so far out of the box you can't even see the box), doing tit-for-tat, smashing city-for-city is not so outrageous. US may massively respond to effectively powerless countries such as Iraq or Serbia, but may not to actions of Russia, China, Israel or India (be it friend or foe).

It's hard to think about some of these things when it's a nice day outside, birds chirping and old ladies walking their puffy dogs.

Hopefully option number 2 comes to bear, and everything else is mushroom-induced blabbering.


A bit of more of those mushrooms: given that defense spending is on the rise in Russia and China, wouldn't it be in the interest of US to start the war (or destabilizing proxy wars) sooner, rather than later?

US is the biggest debtor, and will have to (one way or the other) pilfer other countries. Isn't it better to do so while they still aren't armed to the teeth?

metalman
03-17-09, 01:57 PM
We didn't get into WWII to kick start the US economy, we went in kicking and screaming, and only once attacked. As the father of a 20 year old son, I can only hope that our current political leadership doesn't see war a tool to start the economy. Growing a domestic economy should not be a priority greater than the innocent lives of US and foreign children. And I'm no tree-hugger, peace monger. I believe in peace thru strength, believe that the US MUST maintain weapons superiority, and feel that our response to unprovoked attacks on Americans or American soil should be met with swift and severe retaliation. I simply do not believe that a few more dollars in our pocket is worth pre-emptive, fasle-emptive, or media-emptive aggression.

And, putting aside American ego for a minute, are we attacking in an effort to export our terrific political system and economic prowess to these backward, wayward foreigners? I am steadfastly pro-American, but we need to fix our own problems before we go force-exporting them.

we have all the natural resources and brain power we need, we don't need to go stealing anything. Let's look inside our Country and ourselves, and let's find some smart people to fix these problems properly.

bravo! well said. we have our answers right here in the usa, with the will and good leaders we'll do just fine.

goadam1
03-17-09, 02:03 PM
War is already going on during this administration. New small wars may happen under this administration, or the next, but a major war can't happen anytime soon because the US is the only country with any significant expeditionary capability. Only a major war would take care of the over-capacity problem.

I bet you could put gm and others to work building a whole bunch of robots. I'm not kidding.

Oh wait, this is the plot of "Terminator."

goadam1
03-17-09, 02:06 PM
bravo! well said. we have our answers right here in the usa, with the will and good leaders we'll do just fine.

We did it before and we'll do it again!

http://www.last.fm/music/Robert+Merrill/_/We+Did+It+Before+And+We+Can+Do+It+Again

jk
03-17-09, 02:07 PM
I don't think a "cold" war would work. In a cold war, you build weapons but tend not to use them in developed countries. If the idea is that a war will sop up oversupply of capacity by using some of it to destroy the rest, then it amounts to Keynesian "digging holes and filling them in" writ large -- and even theoretically, that can only work if you actually dig the holes (or blast them). Otherwise, you just run huge budget deficits, go further into debt, and the money spent on the military goes no further than any other government "stimulus" spending or jobs program for the young and unemployed. You gots to blow shit up.
i disagree re the efficacy of a "cold" war. you needn't blow up capacity, instead you use it to make weapons. just producing them is as wasteful as blowing them up. steel goes into tanks and ships instead of cars and washing machines. chips go into weapon systems instead of dvd players. big lcd's go into war rooms and little ones into war-fighting vehicles. this produces lots of defense employment, and it can't be offshored. no worry about finding consumers to take on debt for the purchase; that's the role of uncle sam.

Jay
03-17-09, 02:13 PM
As I suggested to jk below, I don't think proxy wars can help with over-capacity. For that matter -- a proxy war with whom?
I agree, plus most of the overcapacity is in China. That is where the capacity reduction needs to be. Maybe massive civil unrest there would do it. Not a happy thought mind you.

goadam1
03-17-09, 02:16 PM
Okay, what if the war is over and no one fired a shot? Devil's advocate here. Retail sales have bottom, the drop in capacity utilization has slowed, the drop in retail sales have slowed...

Now kick my ass.

Jay
03-17-09, 02:16 PM
I bet you could put gm and others to work building a whole bunch of robots. I'm not kidding.

Oh wait, this is the plot of "Terminator."
Won't effective robots eventually increase productivity and capacity?

metalman
03-17-09, 02:21 PM
Won't effective robots eventually increase productivity and capacity?

no, not that kind of robot. this kind of robot... (http://www.irobot.com/sp.cfm?pageid=150)

goadam1
03-17-09, 02:26 PM
no, not that kind of robot. this kind of robot... (http://www.irobot.com/sp.cfm?pageid=150)

Thanks Metalman. I knew a guy named Metalman would understand. But think about it, robots building robots to blow up other robots gives us all so much more time to relax and enjoy life.

goadam1
03-17-09, 02:27 PM
and these kinds of things:

http://www.nytimes.com/2009/03/17/business/17uav.html?hp

A missile fired by an American drone killed at least four people late Sunday at the house of a militant commander in northwest Pakistan, the latest use of what intelligence officials have called their most effective weapon against Al Qaeda.

Jay
03-17-09, 02:29 PM
Okay, what if the war is over and no one fired a shot? Devil's advocate here. Retail sales have bottom, the drop in capacity utilization has slowed, the drop in retail sales have slowed...

Now kick my ass.

This is a good spot to put FRED's post from the Brzezinski thread:


"It is easier for a government to kill a million people than to control a million people. It is easier for a government to kill a million people than to control a million people." (Brzezinski repeats the phrase)

In other words, it is easier for 1 million people to control their government than for their government to control them. What's wrong with that? How does the thought of government killing a million of their own people come up?

Who thinks this way? Why? He can only be talking about China.

If this is a possibiliy things could get very weird.

goadam1
03-17-09, 02:32 PM
This is a good spot to put FRED's post from the Brzezinski thread:



If this is a possibiliy things could get very weird.


When someone says, "it's easier to eat a million people, than just kill them."

GRG55
03-17-09, 02:34 PM
i disagree re the efficacy of a "cold" war. you needn't blow up capacity, instead you use it to make weapons. just producing them is as wasteful as blowing them up. steel goes into tanks and ships instead of cars and washing machines. chips go into weapon systems instead of dvd players. big lcd's go into war rooms and little ones into war-fighting vehicles. this produces lots of defense employment, and it can't be offshored. no worry about finding consumers to take on debt for the purchase; that's the role of uncle sam..

Not to mention all the funding and employment that comes from a desire, during a time of conflict, to push weapons technologies along faster and faster, which when successful results in the need to replace the now obsolete weapons cache with something "better"...all it takes is money.:)

So who exactly was the idiot that came up with the concept of "the peace dividend"??? Quick, send him back to Econ 101.

Jay
03-17-09, 02:35 PM
When someone says, "it's easier to eat a million people, than just kill them."
Soylent green is the only answer. ;)

metalman
03-17-09, 02:40 PM
and these kinds of things:

http://www.nytimes.com/2009/03/17/business/17uav.html?hp

A missile fired by an American drone killed at least four people late Sunday at the house of a militant commander in northwest Pakistan, the latest use of what intelligence officials have called their most effective weapon against Al Qaeda.

it's still robots vs humans at this stage. next the russians need to develop and sell pakistan drones to shoot down our drones. then we got an exciting new arms race going that will cost trillions and... bonus!... fewer humans die.

goadam1
03-17-09, 02:44 PM
it's still robots vs humans at this stage. next the russians need to develop and sell pakistan drones to shoot down our drones. then we got an exciting new arms race going that will cost trillions and... bonus!... fewer humans die.

Someone gets it! Believe me, there will be an economy of this kind of crap.

jk
03-17-09, 02:46 PM
it's still robots vs humans at this stage. next the russians need to develop and sell pakistan drones to shoot down our drones. then we got an exciting new arms race going that will cost trillions and... bonus!... fewer humans die.

U.S. Says It Shot Down an Iranian Drone Over Iraq

By ROD NORDLAND and ALISSA J. RUBIN
Published: March 16, 2009

BAGHDAD — The American military confirmed on Monday that it shot down an Iranian drone over Iraqi territory last month, in what is believed to be the first time that has happened.

Col. James Hutton, a spokesman for the United States military commander in Iraq, said allied aircraft shot down an “Iranian unmanned aerial vehicle” on Feb. 25, about 60 miles northeast of Baghdad.

Although that location would put the drone relatively close to the Iran-Iraq border, Colonel Hutton denied speculation that it had simply strayed across the border accidentally.

“This is not true,” he said. “It was in Iraqi airspace and tracked one hour and 10 minutes before it was engaged.” Colonel Hutton added that allied jet fighters had shot it down without causing any civilian casualties. ...

http://www.nytimes.com/2009/03/17/world/middleeast/17iraq.html?scp=1&sq=iranian%20drone&st=cse

goadam1
03-17-09, 02:59 PM
Will our droid army be defeated by their clone army?

goadam1
03-17-09, 03:00 PM
.

Not to mention all the funding and employment that comes from a desire, during a time of conflict, to push weapons technologies along faster and faster, which when successful results in the need to replace the now obsolete weapons cache with something "better"...all it takes is money.:)

So who exactly was the idiot that came up with the concept of "the peace dividend"??? Quick, send him back to Econ 101.

The question is who is the asshole who said it was "the end of history."

http://en.wikipedia.org/wiki/The_End_of_History_and_the_Last_Man

ASH
03-17-09, 03:11 PM
i disagree re the efficacy of a "cold" war. you needn't blow up capacity, instead you use it to make weapons. just producing them is as wasteful as blowing them up. steel goes into tanks and ships instead of cars and washing machines. chips go into weapon systems instead of dvd players. big lcd's go into war rooms and little ones into war-fighting vehicles. this produces lots of defense employment, and it can't be offshored. no worry about finding consumers to take on debt for the purchase; that's the role of uncle sam.

If there is no destruction of capacity (preferably the other guys'), how is government spending on military hardware any different from spending on infrastructure, or direct payment of benefits for that matter? The government doesn't need a national security justification to borrow massively anymore, and as far as I can tell, unless the weapons are used to blow up competing industrial capacity, there's not much to differentiate military spending from any other category of federal stimulus.

Are we talking 1950's buildup (~11.4% of GDP vs. 3.6% of GDP for payments to individuals in 1955) or 1980's buildup (~6.5% of GDP vs. 10.3% of GDP for payments to individuals in 1985)? (Figures from OMB (http://www.gpoaccess.gov/usbudget/fy09/pdf/hist.pdf).) I think the argument was more apropos in the 1950's when military spending dominated federal outlays. Defense spending was federal spending. Since then, the ratios have inverted, and direct payments to individuals dominate. Why go to the trouble of ginning up a security justification for the government to borrow money and distribute it in the economy when that's already the status quo?

ax
03-17-09, 03:12 PM
Be careful shorting the market this week. It is a triple witching week on options.

Not as concerned about this as the inevitable return of the "uptick rule." Any thoughts on whether that false rally will run concurrent with this one?

ASH
03-17-09, 03:20 PM
Will our droid army be defeated by their clone army?

Or, just maybe, the US government's ability to borrow money turns out to be limited, real defense spending contracts right along with entitlements and everything else, and America is forced to pull its horns in.

jk
03-17-09, 03:24 PM
Or, just maybe, the US government's ability to borrow money turns out to be limited, real defense spending contracts right along with entitlements and everything else, and America is forced to pull its horns in.
a national security justification trumps whatever mechanisms might limit borrowing.

snakela
03-17-09, 03:36 PM
bravo! well said. we have our answers right here in the usa, with the will and good leaders we'll do just fine.

In that case we're F*CKED! I wish someone would just come along and promise blood, guts and tax-cuts so I can vote for them!

snakela
03-17-09, 03:44 PM
Someone gets it! Believe me, there will be an economy of this kind of crap.

Resources dedicated to hot drone-on-drone action can't be as stupid as dedicating them to building some of the crap this country does. Spining rims come to mind....

metalman
03-17-09, 03:47 PM
In that case we're F*CKED! I wish someone would just come along and promise blood, guts and tax-cuts so I can vote for them!

that'd be our post-obama/hoover head banger. if we're lucky its blood, guts, and tax cuts. but at that point the usa indebted consumer is bled dry. it's gotta be blood, guts, and debt cuts. we've been subbing debt for taxes for decades...

Jay
03-17-09, 03:49 PM
a national security justification trumps whatever mechanisms might limit borrowing.
Who do they borrow from?

ASH
03-17-09, 03:51 PM
a national security justification trumps whatever mechanisms might limit borrowing.

Well, I hope you're right, because that's the flavor of pork upon which I subsist, and things have been lean recently in DoD-funded small business innovative research land. (Not that I'm adverse to working on other sorts of projects... or that I glory in working on the tax-payer's nickel.)

metalman
03-17-09, 03:51 PM
U.S. Says It Shot Down an Iranian Drone Over Iraq

By ROD NORDLAND and ALISSA J. RUBIN
Published: March 16, 2009

BAGHDAD — The American military confirmed on Monday that it shot down an Iranian drone over Iraqi territory last month, in what is believed to be the first time that has happened.

Col. James Hutton, a spokesman for the United States military commander in Iraq, said allied aircraft shot down an “Iranian unmanned aerial vehicle” on Feb. 25, about 60 miles northeast of Baghdad.

Although that location would put the drone relatively close to the Iran-Iraq border, Colonel Hutton denied speculation that it had simply strayed across the border accidentally.

“This is not true,” he said. “It was in Iraqi airspace and tracked one hour and 10 minutes before it was engaged.” Colonel Hutton added that allied jet fighters had shot it down without causing any civilian casualties. ...

http://www.nytimes.com/2009/03/17/world/middleeast/17iraq.html?scp=1&sq=iranian%20drone&st=cse

it's a start! don't forget the russian/iran mini mil industrial complex...


Conclusion
The material interests that drive Russian relations with Iran are strong and go beyond narrow interests of particular power groups. Iran is, in fact, an important trading partner for Russia, and one of the few larger markets for Russia’s industrial and technological output, which has been painfully insignificant in comparison with its fuel exports. Strategically, Iran is important as a neighboring power with a largely compatible structure of interests in a region vital for Russian security. It would also be a mistake to ascribe the pro-Iranian aspects of Russia’s foreign policy to anti-American sentiment and corresponding efforts to do everything it can to prevent the United States from achieving “world dominance.” That said, the prevailing nationalist mold of the Russian state today certainly reinforces material considerations.

The difficulty with addressing the issue of Russian-Iranian weapons cooperation lies with the confluence of the narrow and short-sighted material motives of power groups and the more widespread set of interests among numerous other actors, shored up with an ideology of rising geopolitical assertiveness.

All this raises questions about the efficacy of punitive and other reactive measures in addressing concerns about Russian-Iranian military cooperation. Targeting companies whose international connections are essential for their development, like Rosoboronexport and, especially, Sukhoi, is probably the most effective way for the United States to get its message across. At the same time, given the ideological undertones of Russia’s resurgent defense-industrial capacity and considerable opposition to U.S. foreign policy in many areas around the globe, a punitive approach might only strengthen the already discernible anti-U.S. logic of Russia’s weapons export policy.

Russian Weapons Sales to Iran (http://www.csis.org/media/csis/pubs/pm_0427.pdf)

WildspitzE
03-17-09, 04:24 PM
a national security justification trumps whatever mechanisms might limit borrowing.

Spot on and exactly what I was alluding to above, plus it allows the government to extract additional "sacrifices" from its citizens (if needed).

WildspitzE
03-17-09, 04:28 PM
[double post, delete]

ASH
03-17-09, 04:29 PM
a national security justification trumps whatever mechanisms might limit borrowing.


Who do they borrow from?

Actually, jk, could you follow up on that? Does that mean you don't buy into EJ's "balance of payments crisis" and the notion that we won't be able to fund our deficit?

WildspitzE
03-17-09, 04:32 PM
it's a start! don't forget the russian/iran mini mil industrial complex...

A colleague of mine and I were joking about this ~6-9 months ago. We were talking about robot wars and how such potentiality would change the landscape of war - we jokingly referrred to it as playing risk (but with robots) around natural resources. Oh shucks! you sank my battleship!

Anyway, he is a trekkie and he was talking about an episode (or movie, I don't know - sorry trekkies if I mess this up) where they show a planet where the opposing forces have a a proxy war in a computer. Once the war was over, the casualties would be tallied up. People would then be rounded up "randomly" and sent off to be killed/discarded. I guess that way, the societies got to clean out the bad blood but preserve their resources. LOL.

Fiat Currency
03-17-09, 04:38 PM
Anyway, he is a trekkie and he was talking about an episode (or movie, I don't know - sorry trekkies if I mess this up) where they show a planet where the opposing forces have a a proxy war in a computer. Once the war was over, the casualties would be tallied up. People would then be rounded up "randomly" and sent off to be killed/discarded. I guess that way, the societies got to clean out the bad blood but preserve their resources. LOL.

Yes it's called - A Taste of Armageddon

... from the first season of the original series. I'm not a trekkie but I was given the orginal series set for Christmas and have been watching them on the treadmill every morning. I just watched that one a week ago.

Perhaps the title is telling :(

WildspitzE
03-17-09, 04:59 PM
Actually, jk, could you follow up on that? Does that mean you don't buy into EJ's "balance of payments crisis" and the notion that we won't be able to fund our deficit?

Don't underestimate the power of an emergency, of "survival".

Mass monetary inflation (which I think what has happened since 9/08 is unprecedented), indentured servitude, and national rationing can go a long way.

But, what if we convince large lenders (e.g. japan, taiwan) and other allies of the same emergency?

WildspitzE
03-17-09, 05:02 PM
Yes it's called - A Taste of Armageddon

... from the first season of the original series. I'm not a trekkie but I was given the orginal series set for Christmas and have been watching them on the treadmill every morning. I just watched that one a week ago.

Perhaps the title is telling :(

I would think that watching star trek while on the treadmill makes you a trekkie, entry level one I suppose since you don't speak the alien languages yet.

Thanks for the title, I may try to dig such episode up as it peaked my interest.

Raz
03-17-09, 05:08 PM
We didn't get into WWII to kick start the US economy, we went in kicking and screaming, and only once attacked. As the father of a 20 year old son, I can only hope that our current political leadership doesn't see war a tool to start the economy. Growing a domestic economy should not be a priority greater than the innocent lives of US and foreign children. And I'm no tree-hugger, peace monger. I believe in peace thru strength, believe that the US MUST maintain weapons superiority, and feel that our response to unprovoked attacks on Americans or American soil should be met with swift and severe retaliation. I simply do not believe that a few more dollars in our pocket is worth pre-emptive, false-emptive, or media-emptive aggression.

And, putting aside American ego for a minute, are we attacking in an effort to export our terrific political system and economic prowess to these backward, wayward foreigners? I am steadfastly pro-American, but we need to fix our own problems before we go force-exporting them.

we have all the natural resources and brain power we need, we don't need to go stealing anything. Let's look inside our Country and ourselves, and let's find some smart people to fix these problems properly.

Yes, yes and yes again! Spoken like a true conservative - not the Neocon mutation.
We were founded to be a republic - NOT an empire. The Cold War left us with an unnatural "empire" which certain moneyed interests don't want us to give up.

I wonder how many of the ignoramuses in Congress - and the White House - have read the Farewell Addresses of George Washington (warning against foreign entanglements) and Dwight Eisenhower (warning against the developing rapacity of a Military-Industrial Complex) ?

ASH
03-17-09, 05:26 PM
Don't underestimate the power of an emergency, of "survival".

Mass monetary inflation (which I think what has happened since 9/08 is unprecedented), indentured servitude, and national rationing can go a long way.

But, what if we convince large lenders (e.g. japan, taiwan) and other allies of the same emergency?

The thought of this all ending up with WWII-style rationing, price controls, and other aspects of a command economy, after we blow our national credit rating and our opportunity to borrow dries up, had previously occurred to me. But at the point where you are relying upon "mass monetary inflation" or a command economy, you are no longer really "borrowing". I trust jk's judgement quite a bit, so I was wondering if he thought America's credit was actually a good deal less vulnerable than EJ thinks it is.

The issue I have with borrowing, in general, is that everybody seems to be broke at the same time. The picture I have is that although lending by exporters such as Japan helped recycle the trade surplus we ran with them, the underlying engine of that consumption and production was an expanding credit bubble (which is now kaput). Therefore, it doesn't sound to me as if our creditors will be in any position to lend us large sums of money anytime soon -- particularly if our plan is to spend that money domestically on defense products. After all, the reason they were lending to us in the first place was so that they'd be able to export. They'd really need to fear for their security, and since everybody is broke, I don't see much potential for a threat of that scale to emerge rapidly.

ASH
03-17-09, 05:42 PM
I wonder how many of the ignoramuses in Congress - and the White House - have read the Farewell Addresses of George Washington (warning against foreign entanglements) and Dwight Eisenhower (warning against the developing rapacity of a Military-Industrial Complex) ?[/COLOR]

Just an argument about historical context:

Avoiding foreign entanglements when you are a third-rate power, constantly in danger of being caught up in a world war between the two world superpowers, is more of a pragmatic survival strategy than a timeless philosophy.

Fear of the military-industrial complex when military spending accounted for around 50% of government spending made a lot of sense; does it still make sense when defense spending is more like 15% of total government expenditures? (Based on table 15.4 of the Historical Tables (http://www.gpoaccess.gov/usbudget/fy09/pdf/hist.pdf) from OMB, comparing the Korean War years to 2007.) I think it turns out that AARP has better lobbyists than Lockheed Martin.

P.S. To be clear, this is not an argument against avoiding foreign entanglements or decreasing defense spending. I just wanted to point out that Washington's advice had more to do with practical diplomacy than the big ideas of the Revolution, and that the defense-industrial complex of the 50's was quite more dominant than it is today.

jandkmeyer
03-17-09, 05:50 PM
I think the idea we, or anyone would start a war to lift themselves out of the economic crisis is silly. As a few people pointed out, we have two going on now and its not helping! The war that would actually help would be too big and scary. And why would bankers want to start a war when it would likely divert bailout money. No, the steady transfusion of money to banks from the citizenry will be enough to keep the powerful happy.

So do we need a war just to keep the sheeple distracted? Maybe, but it doesn't have to be destructive. Just put them to work in victory gardens and collecting scrap iron and have them buy "Bank" bonds. All this while TPTB figure out how to end the phrase "War on..." something. Poverty, Terrorism, Drugs, Prejudice - I really think EJ is correct with the CO2, climate change theme. Real war is just one (bad) option for spending large sums (we don't have).

goadam1
03-17-09, 06:21 PM
Yes, yes and yes again! Spoken like a true conservative - not the Neocon mutation.
We were founded to be a republic - NOT an empire. The Cold War left us with an unnatural "empire" which certain moneyed interests don't want us to give up.

I wonder how many of the ignoramuses in Congress - and the White House - have read the Farewell Addresses of George Washington (warning against foreign entanglements) and Dwight Eisenhower (warning against the developing rapacity of a Military-Industrial Complex) ?

You'll like this site:
http://www.antiwar.com/

A little on the Buchaninite side of things but some good coverage.

(Please delete if this isn't allowed)

BiscayneSunrise
03-17-09, 06:46 PM
Russia is unlikely to ever be a reliable supplier of energy to anyone. The west Europeans now know this [The Poles must be thinking "See, we told you so..."].

Spoke today with a friend of mine who is the Managing Director for the MENA region [Middle East & North Africa] of one of the largest continental European utilities. Told me his budgets were increased big time in January to fund a strategy to significantly increase MENA gas and NGL supply sources with the specific intent of first capping, and then reducing its dependence on Russian gas supplies. That his firm would view Middle East NOCs as more reliable suppliers than Gazprom would come as no surprise to anyone who has had dealings with both.

Projects of the scale that would interest his company typically take 7 to 10 years from inception to first delivery, partly because of scale and partly because...well...it's just the way things work [or not :)] in the Middle East. Still, he's under a lot of pressure now to commit large sums over multiple years...said he wished he was a newly unemployed banker with a severance package; life would be much easier. :cool:

Excellent News. The Russians, realize they are at risk of being outsourced, so to be speak. They are busy trying to solidify as many political gains as possible before the West Europeans diversify away from the Russians and before the Russian demographic time bomb implodes. The sooner Europe disengages the better.

How will the NG to Europe be supplied, LNG tankers, I assume? Through the Suez or around the Cape?

leegs
03-17-09, 07:13 PM
a national security justification trumps whatever mechanisms might limit borrowing.

I think Ash has it right. A war, hot or cold, is 'digging holes and filling them in writ large' as he says.

I read the word 'mechanism' in your statement to refer to political mechanisms. But if I understand a fraction of what I read here, it is iTulip's premise that there are 'real' constraints on these mechanisms that are leading to the economic crisis we are facing. So how can these underlying physics be trumped?

Where does the money come from? It has to be borrowed from ROW, which seems unlikely, or it has to be borrowed from the future, which seems pretty well tapped out as well.

Having said all that, just because it doesn't make sense doesn't mean it won't happen, but I guess I'm optimistic enough to put it at a very low probability.

Chris Coles
03-17-09, 07:34 PM
All this talk of war and the like brings to mind The War Of The Worlds by H.G.Wells where the mechanical monsters, (not unlike the military/industrial complex) are eventually defeated by a germ.

While most imagine the next war to be all about guns and warships and space, I believe the greatest threat is from a nobody in a tent with just a few biological materials and an absolute intent to get their own back on someone that has just blown his family to bits with a missile from a drone.

Hello! anyone getting this?

Not very long ago I was attending a conference in Washington DC where a delegate responded to a question about Smallpox with the simple statement made in a totally silent room: "The Russian stocks of Smallpox are in unknown hands".

About two years before that some researchers in Australia, trying to find a way of ridding the local farmers of a plague of mice had been playing with Mouse pox and had reported that they had, somehow, lost every mouse in the laboratory, including the controls that were nowhere near the test animals. Apparently the "Mouse pox" was so virulent, it was uncontainable. I doubt there is much difference between Mouse pox and Chicken pox.......

More recently, in the last few months, we have had a report of a terrorist group who all went down with the Plague.

I have no fear of the Chinese, every one I have met has been civilised and responded towards me as anyone else I have ever met. But I do worry about the paranoid who bring someone in to look me over because I had a letter published in the largest Sunday newspaper here in the UK; criticising them.........

We are at desperate risk, not from any war that we might as individuals contemplate, but from the actions, exactly like the ones EJ highlighted at the start of this thread, that are causing desperate actions by people that are daily watching their families being blown to pieces by missiles from drones.

The greatest risk is from a mere bug, created by a desperate single individual who will never know what they have unleashed until it is too late for perhaps all of us. We could be back to a Stone Age Earth within three months with the planet littered by the remains of all those wonderful weapons rusting away while the next surviving species takes over the planet.

goadam1
03-17-09, 07:37 PM
All this talk of war and the like brings to mind The War Of The Worlds by H.G.Wells where the mechanical monsters, (not unlike the military/industrial complex) are eventually defeated by a germ.

While most imagine the next war to be all about guns and warships and space, I believe the greatest threat is from a nobody in a tent with just a few biological materials and an absolute intent to get their own back on someone that has just blown his family to bits with a missile from a drone.

Hello! anyone getting this?

Not very long ago I was attending a conference in Washington DC where a delegate responded to a question about Smallpox with the simple statement made in a totally silent room: "The Russian stocks of Smallpox are in unknown hands".

About two years before that some researchers in Australia, trying to find a way of ridding the local farmers of a plague of mice had been playing with Mouse pox and had reported that they had, somehow, lost every mouse in the laboratory, including the controls that were nowhere near the test animals. Apparently the "Mouse pox" was so virulent, it was uncontainable. I doubt there is much difference between Mouse pox and Chicken pox.......

More recently, in the last few months, we have had a report of a terrorist group who all went down with the Plague.

I have no fear of the Chinese, every one I have met has been civilised and responded towards me as anyone else I have ever met. But I do worry about the paranoid who bring someone in to look me over because I had a letter published in the largest Sunday newspaper here in the UK; criticising them.........

We are at desperate risk, not from any war that we might as individuals contemplate, but from the actions, exactly like the ones EJ highlighted at the start of this thread, that are causing desperate actions by people that are daily watching their families being blown to pieces by missiles from drones.

The greatest risk is from a mere bug, created by a desperate single individual who will never know what they have unleashed until it is too late for perhaps all of us. We could be back to a Stone Age Earth within three months with the planet littered by the remains of all those wonderful weapons rusting away while the next surviving species takes over the planet.

You can't eat the infected.

It's sad that we have more good ideas about War than how to make a new political party.

ASH
03-17-09, 07:42 PM
It's sad that we have more good ideas about War than how to make a new political party.

With a war? :D

What about the scenario roughly suggested by iTulip: current crop of politicians fail to stop the debt deflation, unemployment rises to a socially uncomfortable level, and presto -- new politicians with a different attitude toward FIRE economy interests starting with the 2010 mid-term elections?

goadam1
03-17-09, 07:45 PM
With a war? :D

What about the scenario roughly suggested by iTulip: current crop of politicians fail to stop the debt deflation, unemployment rises to a socially uncomfortable level, and presto -- new politicians with a different attitude toward FIRE economy interests starting with the 2010 mid-term elections?

Be careful what you wish for.

Chris Coles
03-17-09, 07:46 PM
You can't eat the infected.

It's sad that we have more good ideas about War than how to make a new political party.

One of the very big problems you have inside the US is that you do not have a reliable news service.

"Sharmeen Obaid-Chinoy investigates how the war on terror is creating a generation of child terrorists who are prepared to kill both inside and outside Pakistan. Contains images of terrorist atrocities."

http://www.channel4.com/video/brandless-catchup.jsp?vodBrand=dispatches-pakistans-taliban-generation

http://www.channel4.com/programmes/dispatches

FRED
03-17-09, 07:48 PM
You can't eat the infected.

It's sad that we have more good ideas about War than how to make a new political party.

Blame it on Hollywood.


<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/L9ya6G5S8MA&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/L9ya6G5S8MA&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>

goadam1
03-17-09, 07:48 PM
One of the very big problems you have inside the US is that you do not have a reliable news service.

"Sharmeen Obaid-Chinoy investigates how the war on terror is creating a generation of child terrorists who are prepared to kill both inside and outside Pakistan. Contains images of terrorist atrocities."

http://www.channel4.com/video/brandless-catchup.jsp?vodBrand=dispatches-pakistans-taliban-generation

http://www.channel4.com/programmes/dispatches

People are as informed in the States as they want to be. There are plenty of resources. People don't care. They like being fat, happy and stupid and will take it if it is offered.

goadam1
03-17-09, 07:53 PM
Blame it on Hollywood.


<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/L9ya6G5S8MA&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/L9ya6G5S8MA&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>


Ultra-orthodox religiods feel the same way. "Why doesn't anybody see this is all Satan's game!"

audrey_girl
03-17-09, 10:24 PM
I would think that watching star trek while on the treadmill makes you a trekkie, entry level one I suppose since you don't speak the alien languages yet.

Thanks for the title, I may try to dig such episode up as it peaked my interest.

for the literate trekkies among us:

http://www.amazon.co.uk/Klingon-Hamlet-Star-Language-Institute/dp/0671035789
:)

LargoWinch
03-17-09, 10:36 PM
The don agrees with EJ.

Sell this stinking rally.

Amen.


<object width="640" height="505">


<embed src="http://www.youtube.com/v/5P05Dtp2Nwk&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="640" height="505"></object>

DaveBrown42
03-18-09, 01:18 AM
The don agrees with EJ.

Sell this stinking rally.

Amen.

<object width="640" height="505">
<embed src="http://www.youtube.com/v/5P05Dtp2Nwk&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="640" height="505"></object>
I look forward to seeing that Cramer clip on the Daily Show after the next big sell-off.

I don't know if I blame Cramer. His show format pretty much only works in a bull market. He'd probably be fired if every day he just said "Buy gold and hold it" and spent the rest of his show instructing the viewers on how to accurately paint landscapes.
His viewers would do a lot better financially, but it wouldn't be very good for ratings.

DaveBrown42
03-18-09, 01:26 AM
No one can say how the US and the world economies could have recovered from the failure of the old New Deal programs to re-start the post 1920s credit bubble economy if WWII had not occurred.

How to halt debt deflation and induce demand creation in a world of over-capacity and over-indebtedness without war? That is the question. All other questions are irrelevant.

This question is a bit offtopic, so if it doesn't belong in this thread I'll gladly ask elsewhere.

So WWII was what finally ended the Great Depression, right? But since war is the ultimate Keynesian dig-a-hole-and-fill-it, why did that actually work? I don't understand how the economy blossomed after the end of the war despite the loss of military spending. Or did we just keep all those war jobs and continue increasing military spending indefinitely? Was the seemingly prosperous "post-WWII to 1970s" era simply a long-delayed continuation of the 1920s pre-Depression bubble? If so, that's pretty depressing, since it implies that we've never truly recovered from the Great Depression at all.

c1ue
03-18-09, 02:14 AM
This question is a bit offtopic, so if it doesn't belong in this thread I'll gladly ask elsewhere.

So WWII was what finally ended the Great Depression, right? But since war is the ultimate Keynesian dig-a-hole-and-fill-it, why did that actually work? I don't understand how the economy blossomed after the end of the war despite the loss of military spending. Or did we just keep all those war jobs and continue increasing military spending indefinitely? Was the seemingly prosperous "post-WWII to 1970s" era simply a long-delayed continuation of the 1920s pre-Depression bubble? If so, that's pretty depressing, since it implies that we've never truly recovered from the Great Depression at all.

Dave,

It has been talked about obliquely in this thread as well as more directly elsewhere.

In summary it is not just the massive expenditures of the WW II effort itself, but the wartime suppression of public consumption resulting in high liquidity (wartime bond purchases) and a long term captive market supporting jobs involved with rebuilding Europe and Japan which 'created' the end of the Depression and the foundations of the '50s golden era.

Those who think that a new Cold War or shooting war can restart the economy are sadly mistaken.

For one thing, the amount of time/"savings" needed to both reverse existing debt levels and rebuild a new liquidity pool (assuming no MASSIVE inflation) is measured in the decades/tens of trillions.

Secondly a repeat of the post-Depression recovery also means Europe, Japan, AND China all receiving massive infrastructure damage WITHOUT the US also getting so damaged.

These two scenarios are both highly improbable. The former is partially possible via inflation/hyperinflation in the sense of negating existing debt, but this path does little to build future liquidity.

Chris Coles
03-18-09, 03:36 AM
This question is a bit offtopic, so if it doesn't belong in this thread I'll gladly ask elsewhere.

So WWII was what finally ended the Great Depression, right? But since war is the ultimate Keynesian dig-a-hole-and-fill-it, why did that actually work? I don't understand how the economy blossomed after the end of the war despite the loss of military spending. Or did we just keep all those war jobs and continue increasing military spending indefinitely? Was the seemingly prosperous "post-WWII to 1970s" era simply a long-delayed continuation of the 1920s pre-Depression bubble? If so, that's pretty depressing, since it implies that we've never truly recovered from the Great Depression at all.

We have all been drawn into an illusion of our own making. It was not the war that drove the engine of prosperity, it was the way the majority treated investment. if you look at the business of manufacturing, for example, B17 bombers, the bombers were in fact a very good example of what I have been trying to get across elsewhere. Take as an example, fly a hat as it were, and assume the US did not help in WW2 but instead sat it out with no involvement. The investments that resulted in the B17, and up did not happen, nor for that matter, into the nuclear bomb, aircraft carriers, everything that was produced involved investment for the creation of products that, in many circumstances were blown to bits within months of manufacture. All that investment is what created the prosperity, not the war per se.

So it was not the war as such, it was the investment.

If that is indeed the case, then the answer to EJ's question: How to halt debt deflation and induce demand creation in a world of over-capacity and over-indebtedness without war? is simple - to invest in anything.

The answer is to, instead of giving all the money to the banks, create a new institution, or use existing ones and say to everyone with an idea for the creation of..... whatever..... here, take the investment, go create prosperity.

I ask another question:

Are we so stupid that we can only think of a war to drive such investment?

santafe2
03-18-09, 08:34 AM
The lead economic story today is capacity utilization and output, or, more to the point, the lack thereof...As usual for this depression, the February decline was far worse than most "economists" expected...Capacity utilization for manufacturing alone fell in February 2009 to a new record post-war low of 67.4.0%.




http://www.itulip.com/images/capacityutil1970-2009.gif




Thanks for this chart EJ. Of interest to me is where we think we'll bottom. We can see from the previous 5 recessions that CAP-U falls sharply during a recession and "V" bottoms at the end of a recession. This begs the question, when do we think this recession will end? That is, technically, when will GDP stop contracting?

Since my estimates for GDP are quite low and I don't have time to support them here, let's just ask this question: If GDP were to drop an additional 10% before the bottom, how far would CAP-U fall? 50% does not seem out of the question.

And the follow-on question would be: If CAP-U falls to 50% how does that correlate to job loss?

Shakespear
03-18-09, 09:18 AM
The Poles must be thinking "See, we told you so..."]

The Poles are not any smarter than the rest. They are in the habit of saying a lot and doing exactly the opposite.

They had a chance to sign agreements with Norway and chose instead with that reliable ally of its ,Russia. Why? CORRUPTION and small minded thinking.

Poland is a divided house, one which the more I observe it the more I am convinced that it will not get its act together in this Century.

bart
03-18-09, 10:29 AM
More food for thought:

http://www.nowandfutures.com/images/industrial_production_short.png



http://www.nowandfutures.com/images/industrial_production.png






http://www.nowandfutures.com/images/predict_recession.png

FRED
03-18-09, 10:43 AM
Thanks for this chart EJ. Of interest to me is where we think we'll bottom. We can see from the previous 5 recessions that CAP-U falls sharply during a recession and "V" bottoms at the end of a recession. This begs the question, when do we think this recession will end? That is, technically, when will GDP stop contracting?

Since my estimates for GDP are quite low and I don't have time to support them here, let's just ask this question: If GDP were to drop an additional 10% before the bottom, how far would CAP-U fall? 50% does not seem out of the question.

And the follow-on question would be: If CAP-U falls to 50% how does that correlate to job loss?

Indeed they are strongly correlated.


http://www.itulip.com/images/unempVScapu1972-2009.gif


From Aug 2008: Unemployment by industry: Brace for Impact (http://www.itulip.com/forums/showpost.php?p=59666&postcount=1)


Total Private Sector Employment: Employs 118 million
Total US Government Employment: Employs 23 million
Goods Producing: Employs 22 million
Service: Employs 118 million

We cannot make an apples to apples comparison because the FIRE Economy didn't get going until the early 1980s to restructure the US economy, including the composition of its labor force.

Before the 1980s recessions there were 25 million Americans working in the Goods Producing sector or 32% of 77 million total Private Sector employment. Today the Goods Producing sector employs only 22 million out of 118 million Private Sector jobs, or 18%. Arguably, a large portion of those goods producing jobs are dependent on the FIRE Economy, especially real estate.

To answer your question, it's hard to say because while CAP-U and unemployment remain strongly inversely correlated, and a near 50% increase in unemployment from 6.5 million to 12.3 million occurred at the same time as a 16% decline in CAP-U, an additional 25% decline in CAP-U from 67 to 50 may produce another doubling of unemployment to 24 million, but that assumes the ratio remains proportionate.

orion
03-18-09, 10:53 AM
http://www.itulip.com/images/cheesy.jpgWho stole my cheesy economy?


How to halt debt deflation and induce demand creation in a world of over-capacity and over-indebtedness without war? That is the question. All other questions are irrelevant.


I think we need to do more research on previous panics and manias. 1930 was not the only debt deflation event in world history. Do all debt deflations lead to wars? A war (and more importantly rebuilding the capacity destroyed during the war, especially to your competitors) is a quick fix with big upside for the winner. Maybe after suffering a slow road to liquidate mal-investment we'll recognize what a weapon of mass destruction credit can be?

due_indigence
03-18-09, 11:29 AM
Cold wars don't yield infrastruture destruction. They create Pentagon bubbles. The enemy is mass market capacity and its proliferation. This move to surgical military precision and special forces is a disaster. MBA-technocrats in the McNamara/Rumsfeld mold don't understand the culling function of war. Now even WW III won't save us. What was the military industrial complex thinking? War is a potent economic tool only insofar as it indiscrimately destroys huge swathes of men, materiele and industrial capacity, preferably more of the latter. I would say the Chinese lower tech forces have a distinct competitive advantage. War has a glorious legacy of inefficiency. We need it back. The world is drowning in efficiency. We need to euthanize capacity big-time.


If large-scale war has been overtaken by efficiencies, the world needs something to sink its teeth into. Yes, green, alt-eng, something.

Maybe the Israelis need to precipitate war with Iran. I may be coming around to the economic wisdom of PNAC's Middle East Marshall Plan. I may become a convert to Zionism strictly on macroeconomic grounds.

Chris Coles
03-18-09, 11:37 AM
Will someone tell me the difference between someone dropping, say, a bomb and another arriving with a Bulldozer to do the same thing, destroy a building so that it will have to be rebuilt?

What I am trying to get across is that we do not need any form of war to create new prosperity, we only need to change our perception of what is possible. Right now, all we seem to be able to accept is that:



"we always did it that way, so we must always do it that way",
So, why not try something different?

nero3
03-18-09, 11:48 AM
Militarism rose out of the great depression but all the allied powers were overextended and caught flatfooted. What is the exact figure? In 1941, the US military ranked something like number 12 in the world?

Today, the the answer on how to avoid major war is:

Pax Americana

The US military is so powerful that no other nation could stage any meaningful raid anywhere in the world without worrying about US response.

Barring a sneak attack in cyberspace shutting down the US military internet and satellite capabilities long term, Every nation has to include in their calculus the reaction of the US.

Sorry for the thread drift. Back to the matter at hand.

Greg

I wonder who was the strongest military power before WW2. How about Germany? I think it's a scary comparison.

ThePythonicCow
03-18-09, 12:03 PM
... and a long term captive market supporting jobs involved with rebuilding Europe and Japan ...
Sometimes I suspect that our "science" of economics is too focused on modeling scarcity, whereas in the current world, we can, when focused, produce more stuff than we need. Destruction by wars and wastefulness by inefficiency and corruption are two of the ways we cope with excess productive capacity.

The opportunity to first blow up, then rebuild Europe and Japan provided a use for America's excess productive capacity for a couple of decades. Then the opportunity to build too many McMansions for American and European NINJA buyers provided a use for the Orient's excess productive capacity for another couple of decades.

I also suspect that the "science" of politics is too focused on equality of result, whereas in the current world, it is better to focus on justice, not "fairness of results", meaning you get what you deserve, be that nothing much if you're lazy, or punishment if you're bad. It should be evil to have what you didn't earn, not evil to have more than your neighbor.

ASH
03-18-09, 12:07 PM
I wonder who was the strongest military power before WW2. How about Germany? I think it's a scary comparison.

When before WWII? For most of the inter-war period after WWI, France was stronger in terms of manpower and equipment. (The fact that they got rolled by Germany had to do with the disposition of their forces and the doctrine of their employment, rather than numerical or technical weakness.)

ASH
03-18-09, 12:17 PM
We have all been drawn into an illusion of our own making. It was not the war that drove the engine of prosperity, it was the way the majority treated investment. if you look at the business of manufacturing, for example, B17 bombers, the bombers were in fact a very good example of what I have been trying to get across elsewhere. Take as an example, fly a hat as it were, and assume the US did not help in WW2 but instead sat it out with no involvement. The investments that resulted in the B17, and up did not happen, nor for that matter, into the nuclear bomb, aircraft carriers, everything that was produced involved investment for the creation of products that, in many circumstances were blown to bits within months of manufacture. All that investment is what created the prosperity, not the war per se.

So it was not the war as such, it was the investment.

If that is indeed the case, then the answer to EJ's question: How to halt debt deflation and induce demand creation in a world of over-capacity and over-indebtedness without war? is simple - to invest in anything.

The answer is to, instead of giving all the money to the banks, create a new institution, or use existing ones and say to everyone with an idea for the creation of..... whatever..... here, take the investment, go create prosperity.

I ask another question:

Are we so stupid that we can only think of a war to drive such investment?

I return to my assertion that the only thing that differentiates a big war from any other form of government "investment" or stimulus is the destruction of actual productive capacity (preferably overseas). If it were not for the aspect of destroying capacity in one place and building it in another, I would agree with your statements above. I also tend to agree with C1ue that the US can't realistically repeat the economic results of WWII today.

stockman
03-18-09, 12:22 PM
My time frame is pretty short and I've taken trades on both sides this year. But I don't want to be short right now. Not in the 'new bull market' camp but not in the 'straight to hell' camp either.

If the Fed/Treas really wants to take a stand on the asset price deflation now would be a good time to lend some support to the stock market. Lots of folks trading on charts.

Are we watching a bottoming process or are they just trying to suck us in? Per Rydex and AAII charts there is a lot of sideline money (in cash, gold/commodities, bonds and inverse ETFs) that could get sucked in if the rally continues.

1267


1268

ASH
03-18-09, 12:33 PM
Will someone tell me the difference between someone dropping, say, a bomb and another arriving with a Bulldozer to do the same thing, destroy a building so that it will have to be rebuilt?

What I am trying to get across is that we do not need any form of war to create new prosperity, we only need to change our perception of what is possible. Right now, all we seem to be able to accept is that:



"we always did it that way, so we must always do it that way",
So, why not try something different?

That's a good point, but to get an effect equivalent to WWII, America would have to ask the rest of the world to knock down their factories with bulldozers. That would be an awkward discussion.

Mind you, I do not myself believe that war is to be wished for, or would prove especially helpful in these circumstances.

FRED
03-18-09, 01:12 PM
This article is not a war forecast but asks a question. Due WWII world leaders did not have to face the question of how to end a global debt deflation by negotiated agreement. Instead, war spending destroyed capacity, increased employment and demand, and inflated away the debt.

The question is, how will we do this without war? What kind of agreement might possibly come out of the April 2, 2009 G20 summit?

ricket
03-18-09, 01:18 PM
This article is not a war forecast but asks a question. Due WWII world leaders did not have to face the question of how to end a global debt deflation by negotiated agreement. Instead, war spending destroyed capacity, increased employment and demand, and inflated away the debt.

The question is, how will we do this without war? What kind of agreement might possibly come out of the April 2, 2009 G20 summit?

Why dont we just give all the excess homes created to homeless people? Homeless problem solved. People are so greedy it's not even funny. They would rather see a house sit there unoccupied for 2+ years (Ive seen it in my own neighborhood), than to let someone who truly needs it (not the freeloaders btw, but the truly deserving) move in. What a shame our society is.

Why is war all about destroying excess capacity, when, in reality, we have *plenty* of people that that "excess capacity" could go to? Let the prices fall to where they are affordable (or even practically free) if no one wants them. Then society as a whole will "prosper" and a previously homeless person will be able to maybe finally afford vehicles and flat screen TVs. There's no point in blowing it up or killing someone for it. Just let them have it. Sheesh. It's just a TV.

bart
03-18-09, 01:26 PM
The question is, how will we do this without war? What kind of agreement might possibly come out of the April 2, 2009 G20 summit?

Who knows, but one possibility could be backing off on Basel II or at least making noises about it.

After all, it was implemented almost date coincident with the stock market peak... and it sure would answer many cries to "Do something effective!".

Raz
03-18-09, 01:35 PM
Just an argument about historical context:

Avoiding foreign entanglements when you are a third-rate power, constantly in danger of being caught up in a world war between the two world superpowers, is more of a pragmatic survival strategy than a timeless philosophy.

Fear of the military-industrial complex when military spending accounted for around 50% of government spending made a lot of sense; does it still make sense when defense spending is more like 15% of total government expenditures? (Based on table 15.4 of the Historical Tables (http://www.gpoaccess.gov/usbudget/fy09/pdf/hist.pdf) from OMB, comparing the Korean War years to 2007.) I think it turns out that AARP has better lobbyists than Lockheed Martin.

P.S. To be clear, this is not an argument against avoiding foreign entanglements or decreasing defense spending. I just wanted to point out that Washington's advice had more to do with practical diplomacy than the big ideas of the Revolution, and that the defense-industrial complex of the 50's was quite more dominant than it is today.

Excellent points, Ash. And while you are quite right in the relative, there remains an absolute as to "foreign entanglements".
I will try to explain.

If the only remaining Superpower allows defence treaties to stand unaltered when geopolitical realities have changed, said Superpower runs the risk of being dragged into wars by little powers that have NOTHING to do with the vital national interests of said Superpower. Such is the case with the insane expansion of NATO into Eastern Europe by Clinton and Bush. Should the Russians decide that they have had enough of Latvia and decide to invade it - on whatever pretext - the United States is obligated to go to war against a nuclear armed Russia. To my mind that is insane. If Latvia disappeared from the face of the earth tonight I don't see how it would have ANY bearing on the vital national interests of the United States. In The Guns of August Barbara Tuchman explained how World War I began in a similar fashion.
Another point: the European members of NATO have a combined population of over 400,000,000 (Russia's is 145,000,000) with a combined GDP many times that of Russia. Why do we need to defend them? If they are unwilling to defend themselves they deserve to be swallowed by a bear. Look at the Korean penninsula: South Korea has almost twice the population of North Korea (38 million to 21 million) and an economy that is twenty times that of the North. If they aren't concerned enough to build sufficient military forces to handle the situation without us, then why should we worry about North Korea, much less have troops on the ground there after 55 years? There is timeless wisdom in Washington's words.

As to the percentage of military spending v. other spending: you are absolutely correct. It's one reason Reagan cannot be the single source of blame for the past twenty-five years of large fiscal deficits. Almost 70% of the federal budget is made of of "Entitlements" which are politically untouchable. And who established these massive entitlements, expanded them continuously, and rendered them sacrosant and exempt from the budget ax? Why the Democrats did, under LBJ and right on through the 1980s when "Tip" O'Neil and Jim Wright pronounced every budget Reagan submitted to be "dead-on-arrival". But what we have seen over the past eight years under George W. Dumbass is the metamorphasis of former spending restraint by Republican members of Congress into the very same (or worse - until Pelosi) spendthrift insanity championed by Democrats!

EJ has a thread on Establishing a Third Political Party. I have believed since 1996 that we were doomed as a nation unless we have a viable and electable choice other than the vote-buying RepubliDems who have taken over our government.:mad:


P.S. I think we should move this particular discussion to EJ's new Thread. We don't want to hijack this one.

ASH
03-18-09, 01:50 PM
P.S. I think we should move this particular discussion to EJ's new Thread. We don't want to hijack this one.

No need to hijack further, because I agree wholeheartedly with everything you just said. :)

wayiwalk
03-18-09, 02:28 PM
A third political party? Sounds great.

I bet you'd get 80% of the independents, and 20% of the repubs and dems from either party.

This wouldn't be rocket science to come up with a platform that would include fixing the financial structure of the country that most could agree on. The bar set by the existing parties is so low.

An added benefit would be that success by a third party alone would be the magic needed to repair the confidence in the market worldwide.

There's a real need for serious people who don't have their own private agendas at work.

orion
03-18-09, 03:01 PM
This article is not a war forecast but asks a question.

The question is, how will we do this without war?


How about the plan from one of my favorite iTulip interviewee's (Steve Keen)?


This is why Japan is still mired in a Depression, 19 years after its bubble economy burst. You can’t solve a problem caused by too much debt by going into more debt. Ultimately, the only solution is to reduce debt.
There Australia is in a quandary. We don’t yet have insolvent banks–the USA on the other hand has nothing else. So drastic means of attacking the problem are possible in America, once the Yankees get over their usual pussy-footing about nationalisation. But we can’t follow that path while it still appears that our banks are solvent.
So all we can do is brace ourselves for a massive increase in unemployment, and do what we can to ameliorate the pain. Several policies are obvious there: remove the waiting period for receiving the dole, eliminate (or drastically prune) the requirements that unemployed persons exhaust their savings before they receive the dole, get rid of the punitive job application requirements, and take the stigma away from being a victim of a global financial crisis that is well beyond the control of those whose jobs will be destroyed by it.
That will necessitate a massive increase in the government deficit, but that is justified in making sure that the pain of a Depression is shared more equitably. It is also a far more sensible way of going into deficit than throwing a fistful of money at soon to be unemployed consumers.
We can also change the rules on mortgage defaults, so that a failed borrower becomes a renter from the bank or lender that extended the money, and pays a rent based on a proportion of their income. That might mean a lot less revenue for banks, but it will also mean a lot less mortgagee sales–and there will be a tsunami of those coming our way if the economy continues to shrink by 0.5% or more every quarter.
http://www.debtdeflation.com/blogs/2009/03/05/after-our-economic-dunkirk/

WDCRob
03-18-09, 03:36 PM
A third political party? Sounds great.

I bet you'd get 80% of the independents, and 20% of the repubs and dems from either party.

This wouldn't be rocket science to come up with a platform that would include fixing the financial structure of the country that most could agree on. The bar set by the existing parties is so low.

And the second such a 3rd-party platform actually started to attract voters you'd find both parties adopting portions of it and leveraging their structural/legal advantages against outsiders to eliminate the the new party.

santafe2
03-18-09, 03:39 PM
Why dont we just give all the excess homes created to homeless people? Homeless problem solved. People are so greedy it's not even funny. They would rather see a house sit there unoccupied for 2+ years (Ive seen it in my own neighborhood), than to let someone who truly needs it (not the freeloaders btw, but the truly deserving) move in. What a shame our society is.

Why is war all about destroying excess capacity, when, in reality, we have *plenty* of people that that "excess capacity" could go to? Let the prices fall to where they are affordable (or even practically free) if no one wants them. Then society as a whole will "prosper" and a previously homeless person will be able to maybe finally afford vehicles and flat screen TVs. There's no point in blowing it up or killing someone for it. Just let them have it. Sheesh. It's just a TV.

I'm not sure any of us understand how bad it's getting out there. I read this story in the NYT Magazine last weekend. To get a better feel for where we're going with the housing crisis, it's a good place to start.

The value of some housing in Cleveland is so low the bank will not foreclose. It sounds crazy but they're starting to leave homeowners in limbo because it's more expensive to foreclose than to walk away - Not the home owner, the bank.


Mayra Caraballo, a 39-year-old mother of two, appeared in court in response to code violations on her home. She explained to Pianka that she no longer owned the house. She had lost her job at a processing plant, and an adjustable rate had kicked in on her mortgage, boosting her monthly payments to $1,100, from $800. She had left after receiving a foreclosure notice. The house was quickly stripped of everything but the furnace. Pianka asked a clerk to check into the house’s ownership; he suspected that the lender had withdrawn the foreclosure at the last minute, as is becoming more common. The clerk tracked down the trustee on the mortgage, Deutsche Bank (http://topics.nytimes.com/top/news/business/companies/deutsche_bank_ag/index.html?inline=nyt-org), and confirmed that the foreclosure had indeed been withdrawn. Pianka calls these situations “toxic titles.” “You’re in limbo,” Pianka told a shocked Caraballo. “There’s no hope in your getting out of this property as a result of foreclosure. We’re seeing this more and more.”http://www.nytimes.com/2009/03/08/magazine/08Foreclosure-t.html?pagewanted=7&_r=1

If you have any trouble getting to the article you may have to register with the NYT. They've switched policies a few times so I'm not sure how it's working now.

wayiwalk
03-18-09, 04:02 PM
And the second such a 3rd-party platform actually started to attract voters you'd find both parties adopting portions of it and leveraging their structural/legal advantages against outsiders to eliminate the the new party.

True - but I'd take adoption of sound policies, such as many ideas expressed on this site any day over what we've been getting the last few decades.

As far as leveraging their structural/legal advantages, that just comes with the territory but an independent candidacy from local to federal levels may gain greater support as our present pols bumble their way through the next few years.

santafe2
03-18-09, 04:03 PM
Indeed they are strongly correlated.


http://www.itulip.com/images/unempVScapu1972-2009.gif


From Aug 2008: Unemployment by industry: Brace for Impact (http://www.itulip.com/forums/showpost.php?p=59666&postcount=1)


Total Private Sector Employment: Employs 118 million
Total US Government Employment: Employs 23 million
Goods Producing: Employs 22 million
Service: Employs 118 million

We cannot make an apples to apples comparison because the FIRE Economy didn't get going until the early 1980s to restructure the US economy, including the composition of its labor force.

Before the 1980s recessions there were 25 million Americans working in the Goods Producing sector or 32% of 77 million total Private Sector employment. Today the Goods Producing sector employs only 22 million out of 118 million Private Sector jobs, or 18%. Arguably, a large portion of those goods producing jobs are dependent on the FIRE Economy, especially real estate.

To answer your question, it's hard to say because while CAP-U and unemployment remain strongly inversely correlated, and a near 50% increase in unemployment from 6.5 million to 12.3 million occurred at the same time as a 16% decline in CAP-U, an additional 25% decline in CAP-U from 67 to 50 may produce another doubling of unemployment to 24 million, but that assumes the ratio remains proportionate.

Thanks Fred - and Bart for the additional charts and information. I just spent some time at lunch looking more deeply at the CAP-U components and there is a lot more there for us to understand. I'll find some time tonight to post a link from the Fed and some data we can drill into. There's some great trend analysis that can be done. Ha, ha...I just realized how far I just went out on the geek limb...that is, for anyone that might care about this stuff.

I've got to get back to work but here's one piece of information I've been able to gather. Our productive capacity is currently running at the same level as 1999. Since our CAP-U is ~67% today and was ~82% in 1999, we can extrapolate that ~20% capacity has been added to our system since 1999. Why it was added and where will take a lot more digging but I wouldn't be surprised to find that photovoltaic capacity in the US is way under utilized right now and that there was a lot of tax subsidized build out over the last five years.

wayiwalk
03-18-09, 04:05 PM
By the way, where's the new thread that discusses this?

ASH
03-18-09, 05:09 PM
By the way, where's the new thread that discusses this?

It is in the membership section, here (http://www.itulip.com/forums/showthread.php?t=8731).

But there's no reason those without access to iTulip Select can't start their own thread in the public fora.

Sharky
03-18-09, 05:31 PM
During WW II, the US built up massive wartime production capacity. The factories were paid for with a combination of taxes and war bonds -- forced savings and investment. Millions of new workers (women) entered the workforce. At the same time, fear from the war and forced rationing of key products like gas and rubber depressed spending.

After the war, factories were converted to peaceful uses. The sudden increase in productive capacity combined with a suspension of rationing and people who started spending again caused the boom of the 50's.

A war now wouldn't fix anything, just as it wouldn't have helped in 1932. Today, we have too much productive capacity and too much debt.

To answer the question of how to cause a similar boom without a war: first, crash the economy for a decade. Then deprive the public of key products for 4 or 5 years through artificial shortages and rationing. Force savings and investment through Draconian laws and fear-mongering. Then suddenly reverse those policies and say that everything will be OK. You'll get your boom.

D-Mack
03-18-09, 06:04 PM
A couple of ex-spooks have their say on the war question:

Will He Sell Himself Into His Own Defeat?

Obama and the Empire

By BILL and KATHLEEN CHRISTISON
Various people have asked recently, “What are the implications of the global economic crisis for US policies in the Middle East, and will Middle East countries lean more or less toward the US as they suffer their own economic crises?” Not simple questions, but here, presented very briefly, are our first shots at them.

Let’s start by discussing what US policies affecting the Middle East may emerge in coming months. A preliminary point that is necessary to make is that present policies inherited from the Bush administration are a mess. Practically everyone of every nationality who lives in the Middle East -- and elsewhere for that matter -- believes that the economic crises now moving in on the world were largely caused by the US’s own extreme version of capitalism with its massive emphasis on privatization and on elimination of regulations that might have provided some protections for ordinary people. At the minimum, there are widespread feelings of Shadenfreude over the pain the US is now suffering, and at a political level there is intense dislike of the US for policies that are seen, correctly, as arising from US and Israeli colonialism and empire-building and that are blamed for the economic woes and inequalities now affecting nations everywhere.

There are two major scenarios of how US Middle East policies may develop in the next year or so. Even now, no one knows enough about President Obama to know which scenario or variation on it might be likely.

Increasingly, though, it appears that in foreign affairs, he is not going to change very much. We hope this is wrong. At least on the central issue of Palestine-Israel, Obama made it clear from the start of his campaign, well before the election, that he will support the right-wing elements of the Israel lobby led by AIPAC. But there still is the question of how strong his support will be.

The first scenario is that Obama will just bumble along, changing as little as he can get away with from Bush’s policies, except for clearing away some of the roughest edges of Bush policies on torture. Obama is expanding the war in Afghanistan and continuing the war in Iraq longer than he said he would. Under this scenario, he will try to keep talking as long as possible over Iran and try to avoid fighting. He will try to keep supporting a civilian government in Pakistan, but would not really oppose a return to military dictatorship in that country, if Pakistan would continue supporting his Afghanistan and Iran policies.

That’s the first scenario. Although its support for empire and colonialism makes it an undesirable scenario, at least Obama would be trying to avoid a major war.

The second, much more militaristic scenario is far worse, possibly involving more wars, but it describes what Obama’s policies in the Middle East may well turn into as the remaining months of 2009 pass by.

Right now Obama is faced with domestic economic difficulties greater than he would have thought, during most of his campaign, could conceivably happen as rapidly as they did. But he is also faced with a military-industrial complex that is now pushing for ever larger military expenditures and more aggressive foreign policies, among other things as a way to help solve US economic difficulties. In addition to this, Obama is faced with the prospect of an Israeli government under Benjamin Netanyahu that is even more right-wing than the present one, supported by that portion of the Israel lobby led by AIPAC. This part of the lobby is probably the strongest ally of the military-industrial complex in supporting more wars and more aggressiveness in US Middle East policies. Obama showed his support for the lobby throughout his campaign and, most recently, did nothing to oppose the lobby’s successful trashing of Charles Freeman, a fine candidate for a senior intelligence position whom the lobby charged with being anti-Israel. Since a majority of US voters generally support Israel without thinking much about it, the disorganized justice and peace movement in the United States is not very effective in opposing either the military-industrial complex or the right-wing Israel lobby.

Obama has by now clearly shown that he does not want to be the American leader who loses the American empire. In general, most European governments, most of the Arab governments, and the Japanese government as well, will not oppose him. Public opinion in these countries, in contrast to the governments, will be somewhat stronger in opposing US policies of empire, but it is doubtful that the publics in these countries will be able to accomplish very much.

So the conclusion that one comes to if this second scenario turns out to be true is that we are facing a very dangerous period in world history. There are indeed forces in both the United States and Israel that want a clash of civilizations and are definitely not against further wars, and these forces are powerful. Obviously, the first nation to be affected by implementation of this scenario would be Iran. At this point it is impossible to know whether Obama will want to, or be able to, prevent these forces from dominating future US policies throughout the Middle East.

Bill and Kathleen Christison have been writing on the Middle East for several years and have co-authored a book, forthcoming in June from Pluto Press, on the Israeli occupation and its impact on Palestinians. Thirty years ago, they were analysts for the CIA. They can be reached at kb.christison@earthlink.net


He doesn't say much about Pakistan which has a border with China, although it looks like it's going there.

U.S. may widen strikes in Pakistan (http://iht.nytimes.com/articles/2009/03/18/asia/18terror.php)

Christison is one of the people, who doesn't accept the official 911 story so I would expect more in depth stuff of him.
http://patriotsquestion911.com/

And it still surprises me that Russia and China are playing the game and have kept quiet for so long.

Chris Coles
03-18-09, 07:36 PM
He doesn't say much about Pakistan which has a border with China, although it looks like it's going there.

U.S. may widen strikes in Pakistan (http://iht.nytimes.com/articles/2009/03/18/asia/18terror.php)

Christison is one of the people, who doesn't accept the official 911 story so I would expect more in depth stuff of him.
http://patriotsquestion911.com/

And it still surprises me that Russia and China are playing the game and have kept quiet for so long.

You also need to read this from the Times earlier this week. Rory Stewart is by far the most respected individual here in the UK.
What worked in Iraq won't help Afghanistan

Rory Stewart has witnessed both our major conflicts. Here, in an extract from a speech at Chatham House, he suggests a new way forward

http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article5920064.ece

Chris Coles
03-18-09, 07:47 PM
That's a good point, but to get an effect equivalent to WWII, America would have to ask the rest of the world to knock down their factories with bulldozers. That would be an awkward discussion.

Mind you, I do not myself believe that war is to be wished for, or would prove especially helpful in these circumstances.

Ash, you have missed my point. I am not talking about destroying capacity anywhere but here in the West. In fact, I am not talking about capacity at all either. Everything we have has a finite lifespan. The shortest product lifetime is the newspaper. Purchased in the morning, disposed of before days end. But many things we take for granted, (there for our full lifetime), can and often are replaced. Take a fundamental tenet of accountancy; depreciation. We fully depreciate buildings and plant, but in fact, do not replace the item at that point, but instead, keep the fully depreciated item in service as long as possible. The full cost of replacement is already there in the accounts. So, replace it.

What I am trying to get across is that we do not need anything other than to change our perception of what is possible to be able to generate prosperity.

In my multi-part thread, The Road Ahead from a Grass Roots Viewpoint, I used the example of an old aircraft engine and building a new business around it. It is our perception of the potential that needs retuning, not a war.

santafe2
03-18-09, 08:04 PM
More to come.

The following 5 charts paint a picture of what happens when the US consumer shuts down. We're far enough into this downturn to see how deeply this is hitting most of our basic industries. I can't say I was unhappy about the the pesticides, etc. but that's best left for another day.

1291
1292
1293
1294
1295

leegs
03-18-09, 08:06 PM
During WW II, the US built up massive wartime production capacity. The factories were paid for with a combination of taxes and war bonds -- forced savings and investment. Millions of new workers (women) entered the workforce. At the same time, fear from the war and forced rationing of key products like gas and rubber depressed spending.

After the war, factories were converted to peaceful uses. The sudden increase in productive capacity combined with a suspension of rationing and people who started spending again caused the boom of the 50's.

A war now wouldn't fix anything, just as it wouldn't have helped in 1932. Today, we have too much productive capacity and too much debt.

To answer the question of how to cause a similar boom without a war: first, crash the economy for a decade. Then deprive the public of key products for 4 or 5 years through artificial shortages and rationing. Force savings and investment through Draconian laws and fear-mongering. Then suddenly reverse those policies and say that everything will be OK. You'll get your boom.

I think that's the best explanation I've read yet as to why WWII helped then, and a war won't help now.

dloomis
03-18-09, 09:48 PM
We have a feeling, more than a hunch and strong enough for us to take some short positions, that this relief rally has run out of gas.

What do folks think EJ is shorting? Financials?

lakedaemonian
03-18-09, 10:09 PM
What do folks think EJ is shorting? Financials?

Can you short average life expectancy? :(

ThePythonicCow
03-18-09, 10:49 PM
Can you short average life expectancy? :(
If you expect average life expectancy to shorten, then you might devote more of your time and resources to your own health, so as to resist the trend.

That's what I'm doing. I trust our major medical, drug and food businesses as much as I trust our major financial, political, and media institutions. :eek:

brucec42
03-18-09, 11:42 PM
This article is not a war forecast but asks a question. Due WWII world leaders did not have to face the question of how to end a global debt deflation by negotiated agreement. Instead, war spending destroyed capacity, increased employment and demand, and inflated away the debt.

The question is, how will we do this without war? What kind of agreement might possibly come out of the April 2, 2009 G20 summit?

Maybe one "solution" is war after all. Trade war. De-globalization, or at least very limited trade (for things we simply cannot produce enough of, like oil) If the US is currently a trade debtor nation, would the net result of isolationism be

1. decreased capacity
2. increased demand due to having external sources for goods cut off
3. increased employment (required to produce all that stuff)

It would be disruptive and painful, but is it feasible?

santafe2
03-19-09, 12:55 AM
Thanks Fred - and Bart for the additional charts and information. I just spent some time at lunch looking more deeply at the CAP-U components and there is a lot more there for us to understand. I'll find some time tonight to post a link from the Fed and some data we can drill into.

So here are a few more charts I finished tonight from various CAP-U sectors. As you might imagine, food and energy are doing OK but several other more specific sectors are faring much worse. If any readers still have some doubt with regard to the iTulip depression thesis, review these charts and try to explain them in another light than a 'transformational depression'.

The chart below shows that we are producing at 1999 levels. This is hardly the right direction if we're moving toward a more productive economy. Clearly we're still unwinding.
1285

The next four charts show consumer durable goods and then various areas of consumer goods, household appliances, consumer vehicles and apparel. If you're not sitting down, you should. When the homeowners ATM shut off in 2006, so did the consumer.
1286
1287
1290
1289

More to come.

santafe2
03-19-09, 01:17 AM
Um, weird iTulip hiccup, post #2 showed up like it was posted 5 hours earlier...in any event. Here's the last group of charts from the most recent CAP-U data.

If you thought consumers had cut back, business has simply stopped buying US made vehicles.
1296

1298

Newspapers are dead. This has little to do with this downturn but I wanted to publish this to make sure everyone here understood how few people still pay for a newspaper.
1297

And just for fun, unless you happened to have worked in this industry, they don't make motor homes any longer. Since I own a VW Vanagon Westfalia Syncro I'll refrain from gloating...too much...but good ridence.
1299

santafe2
03-19-09, 01:45 AM
Missed this, here's the data link for anyone with a taste for too many numbers. All of my charts come from this link. Have fun lurking for yet more distressing data.

http://federalreserve.gov/Releases/G17/ipdisk/ip_sa.txt

Slimprofits
03-19-09, 02:40 AM
great charts thanks for posting them.

Chris Coles
03-19-09, 04:50 AM
So here are a few more charts I finished tonight from various CAP-U sectors. As you might imagine, food and energy are doing OK but several other more specific sectors are faring much worse. If any readers still have some doubt with regard to the iTulip depression thesis, review these charts and try to explain them in another light than a 'transformational depression'.

The chart below shows that we are producing at 1999 levels. This is hardly the right direction if we're moving toward a more productive economy. Clearly we're still unwinding.

The next four charts show consumer durable goods and then various areas of consumer goods, household appliances, consumer vehicles and apparel. If you're not sitting down, you should. When the homeowners ATM shut off in 2006, so did the consumer.

What we see is a result of an apparent minor change of rules regarding the investment of savings made some decades ago. Yes, it is my pet subject, but these graphs demonstrate my thesis better than anything I have seen before now. What has happened is that what I call the savings institutions, anywhere that a citizens savings were collected together to form any sort of fund, were, very effectively, barred from placing any of the savings back into direct equity investment at the grass roots of society. Ostensibly to prevent the loss of the savings. In reality taking all that investment potential into inter institutional trading and forcing the savings institutions to instead, keep by far the majority of that investment "in house" and out of the regular grass roots economy.

The law of unintended consequences has produced a result. In fact, this is going to become a prime example of that law.

The flow of new investment stopped. But the process is so very slow, as all businesses live full lives and die and as with any population, in this case, all those Mom and Pop shops and businesses were, on the face of it; irrelevant. Totally inconsequential to a top line economist or manager of a billion dollar fund......... who needs them.....

Right at this moment, while the FIRE economy lies on its deathbed, and all efforts continue to revive it, no one is going to do anything. But the facts are so clear, sooner or later, everyone is going to wake up to the fact that the economies foundations are not built from multi billion dollar businesses, but all those tiny, inconsequential, irrelevant, embryo businesses.

lurker
03-19-09, 11:12 AM
Maybe one "solution" is war after all. Trade war. De-globalization, or at least very limited trade (for things we simply cannot produce enough of, like oil) If the US is currently a trade debtor nation, would the net result of isolationism be

1. decreased capacity
2. increased demand due to having external sources for goods cut off
3. increased employment (required to produce all that stuff)

It would be disruptive and painful, but is it feasible?

A decent trade war and retreat to isolationism would at least force all trade blocks to become a little more balanced. No more US consumer-of-last-resort, and no more mercantilist export based economies.

As to how painful it would be ... that would depend on the food and fuel self-sufficiency of the trading block you live in.

The difficulty would be to have an all-out trade war (to correct the massive imbalances) without producing an all-out military war (over resources).

AD
03-19-09, 06:51 PM
About that whacked-out Imperialist culture in 1930s Japan: note they attacked Pearl Harbor largely over oil. By the end of the war, the Japanese were trying to make avgas and etc with pine needles.

Pretty desperate stuff, eh? And back in those days, the role of oil in the economy was comparatively minimal. Japanese consumption was centred on naval vessels.

Another reason to move towards cheap (externalities all in) and sustainable energy. It's certainly good to know that people like John Doerr and Jeffrey Immelt on on Obama's economic recovery advisory team.

AD

jswap
03-20-09, 02:15 AM
I haven't read all the replies to this post, so I apologize if I am repeating someone else, but I wanted to address this:
"WWII grew all Allied and Axis economies except Italy's"

I think this is erroneous. The following article makes a convincing argument (to me, at least) that WW2 did not grow the economy:

http://www.independent.org/newsroom/article.asp?id=138

My favorite quote from the article:

"War prosperity is like the prosperity that an earthquake or a plague brings."

johnw106
03-21-09, 11:20 AM
Those who think that a nuclear war is out of the question are mistaken. There have been several studies over the years that show that not only are they winnable, but they are in fact a viable option. The key is a two-pronged attack. One conventional, one bio-thermal-nuclear.

I will use the USA as an example.
First you invade Mexico and/or Canada on whatever pretext you wish to secure a base for the chosen survivors. At the same time you launch a first strike on China and Russia. You hit the military targets with hard nukes ( hydrogen bombs ) and the population centers with biological and neutron weapons. This has the net effect of leaving fertile farmlands and natural resources intact which can be captured at a later date.
Surviving the counterstrike is a simple matter of math. Losing up to two thirds of the population is acceptable as long as the third who are safeguarded are loyal citizens who have been pre-screened to weed out those with criminal backgrounds, genetic defects, etcetera.

It is absolutely vital that the first strike be overwhelmingly massive and thorough. No sizable population can be allowed to survive which will negate the possibility of insurgent activity's when ground forces are sent in later to secure resources such as farmland and oil fields. With 1/4 of the worlds population vaporized and two of the worlds powers destroyed the USA will reign supreme. Natural resources will be abundant and in our control.

Of course this scenario can be played out in several ways. It could be China nuking the USA and Russia while invading the middle east. Or it could be Russia nuking China and the USA while invading Europe.

Make no mistake. As long as there are humans on this planet a nuclear war is on the table and in the play books of all the major powers. The only deterrent to this is MAD. And with the USA's aging arsenal and the idiots who are against modernizing our nukes, or who want to dismantle all of the nuclear weapons the US has, the Chinese and Russians are edging closer to the winnable scenario parameters.

*T*
03-22-09, 06:35 AM
Those who think that a nuclear war is out of the question are mistaken. There have been several studies over the years that show that not only are they winnable, but they are in fact a viable option. The key is a two-pronged attack. One conventional, one bio-thermal-nuclear.

I will use the USA as an example.
First you invade Mexico and/or Canada on whatever pretext you wish to secure a base for the chosen survivors. At the same time you launch a first strike on China and Russia. You hit the military targets with hard nukes ( hydrogen bombs ) and the population centers with biological and neutron weapons. This has the net effect of leaving fertile farmlands and natural resources intact which can be captured at a later date.
Surviving the counterstrike is a simple matter of math. Losing up to two thirds of the population is acceptable as long as the third who are safeguarded are loyal citizens who have been pre-screened to weed out those with criminal backgrounds, genetic defects, etcetera.

It is absolutely vital that the first strike be overwhelmingly massive and thorough. No sizable population can be allowed to survive which will negate the possibility of insurgent activity's when ground forces are sent in later to secure resources such as farmland and oil fields. With 1/4 of the worlds population vaporized and two of the worlds powers destroyed the USA will reign supreme. Natural resources will be abundant and in our control.

Of course this scenario can be played out in several ways. It could be China nuking the USA and Russia while invading the middle east. Or it could be Russia nuking China and the USA while invading Europe.

Make no mistake. As long as there are humans on this planet a nuclear war is on the table and in the play books of all the major powers. The only deterrent to this is MAD. And with the USA's aging arsenal and the idiots who are against modernizing our nukes, or who want to dismantle all of the nuclear weapons the US has, the Chinese and Russians are edging closer to the winnable scenario parameters.

First thought: You are sick in the head

Second thought: You are possibly less sick in the head than those with their finger on the button

Third thought: Oh dear :(

D-Mack
03-22-09, 06:56 AM
First thought: You are sick in the head

Second thought: You are possibly less sick in the head than those with their finger on the button

Third thought: Oh dear :(


They are thinking about a first strike for a long time, it's like a wet dream.
Those missiles in Poland are stationed for a reason, and it's not really that defensive.


The official U.S. position on the use of nuclear weapons has not changed. Since the end of the Cold War, the United States has taken steps to de-emphasize the importance of its nuclear arsenal. The Bush administration has said it remains committed to reducing our nuclear stockpile while keeping a credible deterrent against other nuclear powers. Administration and military officials have stressed this continuity in testimony over the past several years before various congressional committees.

But a confluence of events, beginning with the Sept. 11, 2001 attacks and the president's forthright commitment to the idea of preemptive action to prevent future attacks, has set in motion a process that has led to a fundamental change in how the U.S. military might respond to certain possible threats. Understanding how we got to this point, and what it might mean for U.S. policy, is particularly important now -- with the renewed focus last week on Iran's nuclear intentions and on speculation that North Korea is ready to conduct its first test of a nuclear weapon.

Global strike has become one of the core missions for the Omaha-based Strategic Command, or Stratcom. Once, Stratcom oversaw only the nation's nuclear forces; now it has responsibility for overseeing a global strike plan with both conventional and nuclear options. President Bush spelled out the definition of "full-spectrum" global strike in a January 2003 classified directive, describing it as "a capability to deliver rapid, extended range, precision kinetic (nuclear and conventional) and non-kinetic (elements of space and information operations) effects in support of theater and national objectives."

This blurring of the nuclear/conventional line, wittingly or unwittingly, could heighten the risk that the nuclear option will be used. Exhibit A may be the Stratcom contingency plan for dealing with "imminent" threats from countries such as North Korea or Iran, formally known as CONPLAN 8022-02.

...

http://www.washingtonpost.com/wp-dyn/content/article/2005/05/14/AR2005051400071.html

johnw106
03-22-09, 10:57 AM
First thought: You are sick in the head

Second thought: You are possibly less sick in the head than those with their finger on the button

Third thought: Oh dear :(


In the 1970's and early 1980's I was perma-stationed in what was then Western Germany. During major war games ( you may have heard of the Reforger Series of war games? Where US and Allied troops stage a invasion of Europe?) the unit I was in was a forward support unit. We were on the front lines with the infantry and artillery units. Our mission? Save the equipment. All of our tactical nuclear warfare training revolved around decontaminating tanks, artillery, small arms and so forth.

I remember one exercise in particular. We were on a mountain not far from the Colmar pass. At the the time the gateway to Chek and Poland. It is a bottleneck where several mountains converge and makes an excellent ambush point. On the second day we were informed by an umpire that our unit had been annihilated by a nuclear strike. Friendly fire nuclear strikes.
It seems that the enemy had launched a large offensive to secure the pass. HQ decided to sacrifice not only my support company ( roughly 150 people ) but three infantry divisions. The loss of life was deemed a fair price to pay to keep from losing the pass. A day or so later decontamination units went in to save the equipment.

The top brass of the worlds military are more than willing to toss young men and women into the volcano to please the gods of war. They are much more reluctant to lose million dollar tanks and planes. Its a numbers game. Warm bodies can be replaced easily. Hardware is harder to come by.
I would pay anything and give up all I have to end the chances of war. It is an ugly, brutal business. But I am also a realist. I hope and pray that the nuclear option is never used. Yet I know first hand and have seen the war manuals with my own eyes. The tactical nuke option is high on the list.

ThePythonicCow
03-22-09, 12:42 PM
At the same time you launch a first strike on China and Russia. You hit the military targets with hard nukes ( hydrogen bombs ) and the population centers with biological and neutron weapons.What about the subs with nukes?

What about the risk of spys leaking out plans ahead of time ... only a fool would expect the United States to be able to carry out a plan this size without China and Russia leaning of it ahead of time.

Looking back through history, I don't see national leaders intentionally risking the bulk of their nation in a suicidal attack. They launch a first strike only when they "believe" they can win a major victory, with the substantial majority of their own nation surviving.

johnw106
03-22-09, 01:32 PM
It will end in one of two ways. We continue as slaves to the debt/credit machine and little will change. Or a revolution will break out resulting in a civil/class/race war that engulfs the world.
The power of the military-industrial complex that control the central banks of the world has to be broken. Until the common people face the fact that these self proclaimed Kings control us through the manipulation of worthless fiat money and credit/debt we will remain indentured servants, serfs enthralled to the super rich, pawns in a game we are not allowed to play.

The first step to freedom is doing away with the Federal Reserve and central banks along with fractional reserve lending. What do you think the chances are of that happening without some type of revolution? I give the odds at slim to none.

touchring
03-23-09, 01:02 PM
http://www.google.com/hostednews/afp/article/ALeqM5ge5ihZM5qGCOWN8iA4PrctmxnrfA

China auto sales up nearly 25 pct in Feb: state media
Mar 10, 2009


BEIJING (AFP) — Chinese auto sales rose nearly 25 percent last month from a year earlier, buoyed by government policies to boost the sector, state media reported Tuesday.


The figures from the China Association of Automobile Manufacturers appeared to show that the Asian giant beat the United States as the world's largest market for a second consecutive month.


February sales of domestically made autos -- which make up the vast majority of the Chinese market -- hit 827,600, up 24.7 percent from a year earlier, the Xinhua news agency reported, citing the association.
However, China's claim on the top spot was due also in part to plummeting US auto sales amid the economic crisis, with US light vehicle sales coming in at 688,909 units in February, industry tracker Autodata said recently.

rjwjr
03-23-09, 06:21 PM
It will end in one of two ways. We continue as slaves to the debt/credit machine and little will change. Or a revolution will break out resulting in a civil/class/race war that engulfs the world.
The power of the military-industrial complex that control the central banks of the world has to be broken. Until the common people face the fact that these self proclaimed Kings control us through the manipulation of worthless fiat money and credit/debt we will remain indentured servants, serfs enthralled to the super rich, pawns in a game we are not allowed to play.

The first step to freedom is doing away with the Federal Reserve and central banks along with fractional reserve lending. What do you think the chances are of that happening without some type of revolution? I give the odds at slim to none.

The "revolution" may very well be the effect of Smith's concept of the "invisible hand". This invisible hand revolution may simply be the average American refusing to play the game any longer. Millions of devasted consumers are already being forced out of the game (the game of keeping-up with the Jones', ad-distorted American dream consumerism) and may choose not to return, and millions more may choose to take themselves out of the game on their own terms, all in a return toward more self-sufficiency, skills-barter, family-helping-family, neighbor-helping-neighbor, post-Great Depression-style return to caution, risk-avoidance, simplification of lifestyles. Maybe the Amish model is the best model for the average citizen.

What I'm saying is, I don't expect an angry-mob type revolution like you're infering here and like we've discussed in other threads. I think the average Joe may just say "F-k it" and put all of their remaining resources into a little, self-sufficient cabin in the woods or in a small farming community with some well-stockes natural lakes and rivers. The sheeple may be too disenchanted to continue to play and feel too apathetic to assemble. They'll simply, and unknowingly bring down the FIRE economy by choosing not to participate. Now that's a revolution, invisible hand style.

cjppjc
03-23-09, 06:42 PM
What I'm saying is, I don't expect an angry-mob type revolution like you're infering here and like we've discussed in other threads. I think the average Joe may just say "F-k it" and put all of their remaining resources into a little, self-sufficient cabin in the woods or in a small farming community with some well-stockes natural lakes and rivers. The sheeple may be too disenchanted to continue to play and feel too apathetic to assemble. They'll simply, and unknowingly bring down the FIRE economy by choosing not to participate. Now that's a revolution, invisible hand style.




The average Joe is not going to drop out and buy a cabin in the woods, or live in a small farming community. Now does his spending habits change. Sure that I could see.

rjwjr
03-23-09, 07:11 PM
The average Joe is not going to drop out and buy a cabin in the woods, or live in a small farming community. Now does his spending habits change. Sure that I could see.

Yeah, I may have been caught-up in the moment, on the other hand, there are a handful of active itulip-ers that are already knee-deep in self-sufficiency and hunkering down for a potential financial and societal s%&t-storm. With each passing day. it's sounding more and more attractive to me, too.

cjppjc
03-23-09, 09:26 PM
Yeah, I may have been caught-up in the moment, on the other hand, there are a handful of active itulip-ers that are already knee-deep in self-sufficiency and hunkering down for a potential financial and societal s%&t-storm. With each passing day. it's sounding more and more attractive to me, too.

Yes. Caught up in the moment. Did you see how caught up in the moment everybody was just now in the oil thread?

Btw: There is nothing wrong with a cabin in the woods. And I certainly admire the more self sufficient among us. Wish I could be a little more self sufficient.

Chris Coles
03-24-09, 06:46 AM
Yes. Caught up in the moment. Did you see how caught up in the moment everybody was just now in the oil thread?

Btw: There is nothing wrong with a cabin in the woods. And I certainly admire the more self sufficient among us. Wish I could be a little more self sufficient.

Some years ago I remember an article in a science magazine that suggested that a little paranoia is a built in survival instinct in the human race and that it makes a compelling reason for our long term survival as a species. And just to add a little spice to add to a reason for keeping an eye on possible future events, this article in this weeks New Scientist is very well worth a read. In effect it covers in more detail a recent NASA report that echos personal advice given to me by someone here in the UK that has direct knowledge of such things. We have built a civilisation upon the notion of success with electricity grids with cheap overhead wires strung across the nation. But, if we experience a solar storm of the power of one that occurred before we had these grids, we may lose all electricity for as much as ten years. The reason being that the power surge in the overhead wires will melt the Copper windings of the several hundred transformers that link the system. Those transformers are so large and difficult to construct, they always, even in the best of times, take about two years to build and we do not have, even in the best of times, the capacity to build more than a few at a time. Now add that the entire food and water and fuel supply systems are all totally dependant upon the electricity grid to supply the power and we have the potential for a complete collapse of our entire civilisation within a period of about 90 seconds.

http://www.newscientist.com/article/mg20127001.300-space-storm-alert-90-seconds-from-catastrophe.html

cjppjc
03-24-09, 08:41 AM
Some years ago I remember an article in a science magazine that suggested that a little paranoia is a built in survival instinct in the human race and that it makes a compelling reason for our long term survival as a species. And just to add a little spice to add to a reason for keeping an eye on possible future events, this article in this weeks New Scientist is very well worth a read. In effect it covers in more detail a recent NASA report that echos personal advice given to me by someone here in the UK that has direct knowledge of such things. We have built a civilisation upon the notion of success with electricity grids with cheap overhead wires strung across the nation. But, if we experience a solar storm of the power of one that occurred before we had these grids, we may lose all electricity for as much as ten years. The reason being that the power surge in the overhead wires will melt the Copper windings of the several hundred transformers that link the system. Those transformers are so large and difficult to construct, they always, even in the best of times, take about two years to build and we do not have, even in the best of times, the capacity to build more than a few at a time. Now add that the entire food and water and fuel supply systems are all totally dependant upon the electricity grid to supply the power and we have the potential for a complete collapse of our entire civilisation within a period of about 90 seconds.

http://www.newscientist.com/article/mg20127001.300-space-storm-alert-90-seconds-from-catastrophe.html


Hard to stay happy after that:confused:

Chris Coles
03-24-09, 10:34 AM
Hard to stay happy after that:confused:

If something like that ever does occur, the people that will survive will be those that have given a few moments thought, no more, towards what will keep them alive after such an event. Others will be those that have never given up the now old fashioned idea of holding food in storage jars to see them over the winter and have access to a piece of land to grow their own food. Water you can find, but it will be only food that you otherwise need. Something we take for granted. The rest of what we call civilisation is completely irrelevant. All we need to survive is water, food and somewhere to provide a roof over our heads. Please, think about that!