Wall Street looting US Social Security

Interesting article entitled 'Wall Street Targets the Elderly: Looting Social Security'.

It's by Paul Craig Roberts, once editor of the Wall Street Journal, not to mention Assistant Secretary of the U.S. Treasury. For an ex-WSJ editor, he has a refreshingly robust attitude to the bad guys:

Hank Paulson, the Gold Sacks bankster/US Treasury Secretary, who deregulated the financial system, caused a world crisis that wrecked the prospects of foreign banks and governments, caused millions of Americans to lose retirement savings, homes, and jobs, and left taxpayers burdened with multi-trillions of dollars of new US debt, is still not in jail.

Surely there is some application of the negligence or conspiracy laws that would allow us to put Hank and one or two (thousand) of his pals in the slammer?

James Hansen and the inexorable slide toward nuclear power.

On his Storms of My Grandchildren site, James Hansen talks about how intolerable coal-powered power stations are in any realistic future, and claims that:

in most countries, phase-out of coal emissions requires also a carbon-free source of baseload electric power that is competitive in price with coal. Until we have another way to meet 21st century energy needs while eliminating coal and carbon emissions, nuclear power appears to be the only option.

From this he infers that even nuclear power would be the lesser of these two evils, concluding that

The (“3rd generation”) nuclear technology ready to replace the aging 2nd generation reactors in the United States and other counties is inherently safer than existing nuclear power, which already has an exemplary safety record – however, it still burns less than one percent of the nuclear fuel and leaves a long-lived nuclear waste pile. Hansen recommends initiating urgent development of a fourth-generation nuclear power plant. These “fast” nuclear reactors utilize more than 99 percent of the fuel and can “burn” nuclear waste, thus solving the nuclear waste problem that concerns so many.

This doesn't seem to me to follow. Why is he so confident that these fourth-generation nuclear power plants are any less pie-in-the-sky than carbon capture? It's the first time I have heard anyone suggest that the problems of safety and spent nuclear fuel could be a thing of the past. I would very much like to hear Hansen's reasoning. Not that I would like CCS any more than him, but it doesn't make much sense to be asked to choose between two mirages.

But there's a more important assumption in Hansen's commentary. He argues that, if we are to avoid both fossil fuels and nuclear power, then we need 'a carbon-free source of baseload electric power that is competitive in price with coal'. It is certainly a most attractive option. However, my reading of the technical literature leads me to two conclusions. One, such an option will not exist for many years to come. And two, we can't afford to wait that long.

So how is it Professor Hansen can claim that the solution needs to be 'competitive in price with coal'? Given the magnitude of the potential problem - a series of disasters and creeping destruction that will dwarf any previous human experience short of, perhaps, a re-run of the global plague in the 14th century, surely this is like saying that we should have decided our strategy for the Second World War on the basis of whether it would have been as painless as peace.

Plainly this would be nonsense, and as in the case of WW2, there is little doubt what the consequences of continuing prevarication will be. Add to this the impact of ever-expanding resource depletion, ecosystems collapse and 40% more people by 2050, and waiting for another cheap energy source to come along sounds like madness. It would be nice if we were in a position to choose between cheap, friendly, familiar options, but we aren't. Meanwhile, our social, political and economic system is awash with people and interests for which an effective solution would be anathema, if not fatal.

Of course, we are not at war, and such metaphors are as likely to be misleading as helpful. But to pretend that we can reach Professor Hansen's own goals without paying a price and making preparations comparable to a war strikes me as unwarranted optimism, if not self-deception.

Al Gore, Kurt Vonnegut and the siren voices

At the very start of his 2009 book, Our Choice, Al Gore, Nobel Prize winner and darling of so much of the environmental movement, quotes the message Kurt Vonnegut suggested we should leave behind for any passing aliens who may happen upon the wreckage of planet Earth. ‘Carved in great big letters on a Grand Canyon wall’, it would read:

We probably could have saved ourselves, but were too damned lazy to try very hard… and too damned cheap.

When you have stared at our current environmental problems for long enough and marvelled at how little we seem to be willing to do to save ourselves or our children, it is tempting to go along with Vonnegut. But both he and Gore are wrong. We are not too lazy or too cheap and the solutions on offer from Mr Gore will not solve our problems. Neither the problems we face nor the solutions that will deliver us have much to do with technology or making business and governments account for the true cost of energy, manufacturing, agriculture, transport, etc., mass individual action, or any of the other things Gore advocates. Yet it is in many ways a very good book.

The real problem is not our inability to understand or act upon our present problems. It is rather that we are already committed to another way of doing things that prevents us from taking up any of the credible solutions to our environmental problems. Perhaps it’s worth quoting Aldous Huxley again here:

In the nurseries, … the voices were adapting future demand to future industrial supply. ‘I do love flying’, they whispered, ‘I do love flying, I do love having new clothes, I do love…’

The siren voices of growth, consumption, free markets, entrepreneurship and all the rest are busily pointing us in quite the wrong direction. The resources and system needed to fix our problems are under the control of processes, systems and institutions and in the hands iof nterests that would be completely undone by actually carrying the solution.

So the political powers-that-be, who have spent the last three decades abandoning the idea that the world could be a better place only if it were a different place, would have to perpetrate a genuine revolution to get us onto the right track.

Perhaps the single most important thing is to stop thinking of the problem as primarily reflecting personal selfishness (even of investment bankers). Personal actions are certainly part of both the problem and the solution, but it will only have a peripheral effect so long as we fail to also think of both problem and solution in systemic terms. Vonnegut was writing as a novelist and entitled not to be read too literally. But those who fail to understand the nature of our economic system, and the necessities and pressures it places on individuals, institutions and other systems (e.g., the entire social and political systems) are merely standing on the beach trying to bail out the ocean while the tide is coming in faster and faster.

Remember, Odysseus was forced to listen to the Sirens only because there were no other options open to him. Likewise we have few options that will in any way improve our environmental predicament - unless we change our ship and the ocean we sail. Likewise, even our most venal bankers were only following the system. Given a different system, they might not have had the option of running the ship onto the rocks (oops, different part of the Odyssey).

Consumerism, 1932

I re-read Aldous Huxley's Brave New World, and what do I find?

In the nurseries, … the voices were adapting future demand to future industrial supply. ‘I do love flying’, they whispered, ‘I do love flying, I do love having new clothes, I do love…’

£10 to the first person who can explain why this isn't true

http://www.theonion.com/content/news/u_s_economy_grinds_to_halt_as

Danny Chivers - Poet Laureate for the Environment

If you haven't already heard of him, take a listen to Danny Chivers. His poems on the environment and on business are brilliant, enthralling, funny and biting. He also knows his stuff, being (according to azclimatechange.com) a professional carbon footprinting consultant based in Oxford with two environmental Masters degrees.

For more on Danny, go to his blog, at A Daisy Through Concrete or his MySpace page. Or watch him on YouTube. And buy his new CD. We did, and it's excellent.

Get him to your children's school, to your local climate change event, to your front room. And pay him lots - we need more people like him.

Will the Volcker Rule work? No.

When the last crisis kicked off, organisations such as Goldman Sachs were not banks, and therefore would not have able to request support from the US government had the proposed Volcker Rule been in force then. In fact they weren't able to ask for government help then either.

So how did the US Government respond to the crises at Goldman, Morgan Stanley and the rest? By making them banks, even though they plainly were not. It was a fig leaf, to bend the rules so that they would not fail.

So if, in order to avoid the Volcker Rule, these same organisations ceased to be banks, and if there were a new crises that threatened them, what would the US Government do? Going by the evidence of 2008, they would allow them to be banks again.

What possible good will the Volcker Rule have done then, other than to create an illusion of safety for the government and allowing the investment banks to engage in dangerous activities until things get too hot, at which point they will be rescued just like they were last time?

Fair value? Can free markets ever value the environment?

A basic problem with markets that absolutely must be answered if we are to create an environmentally rational economy is that of deciding how to value things. Valuation failures were a key cause of the recent financial crisis, which stemmed at least in part from the policy of allowing companies to claim that their value was whatever the market would currently bear, including any number of imponderable items that had yet to demonstrate any real value, such as future prices, hypothetical values and debatable projections derived from complex financial models. As part of the general indifference to risk exhibited by regulators and accounting authorities during the last decade or so, this so-called ‘mark-to-market’ or ‘fair value’ approach accounting has been a part of US GAAP since the early 1990s and seems to have all but replaced any notion of intrinsic value. And as if all that were not enough, ‘fair value’ accounting was also central to the Enron scandal.

Mark-to-market is obviously important when it came to buying and selling stocks and shares, but it goes far beyond that. The value of company assets that can be offered as collateral is also the basis for loans, derivatives and other direct and indirect funding. So when a bull market lasts for years on end and prices kept going up regardless of any material value of the companies themselves, smart operators are provided with an environment that favours both massive speculation and spectacular frauds. From the point of view of mark-to-market accounting, a bull market amounts to a universal pyramid scheme: whatever the value of an asset or liability today, we can usually assume that it will be worth more tomorrow, so we can borrow today as though we are more wealthy than we really are.

However, when the dislocations and fantasies this situation naturally engenders go too far, the market will be seized by the bears, and the rapid falls in mark-to-market valuations that follow will mean that previous loans, bonds, asset and liability prices, interest rates and pretty much every other number the markets use will start to go the wrong way for everyone – again regardless of the underlying strengths and weaknesses of individual companies. In a bear market, mark-to-market put the pyramid onto its head, and you would be stupid to lend today, as the collateral that guarantees your loans will almost certainly be worth less – maybe a lot less – tomorrow than it is today. In extremis, markets for many items disappear altogether and the financial sector ground to a halt.

The key problem this presents if markets are to be part of the solution of our environmental problems is that the scope, scale and urgency of those problems mean we cannot allow the kind of fragility and flakiness market economies have exhibited to determine how we invest in the environment. Leaving aside the question of speculators actively manipulating environment-related markets (e.g., greenhouse gas cap-and-trade, offsets, and so on – see the final section of this), we cannot accept the risk of being plunged into years of environmental inactivity or retrenchment simply because markets were unable to value these investments appropriately.

But is there any alternative as far as markets are concerned? Is there any definition of value markets can work with that will always reflect the intrinsic social value of taking action to protect the environment? Are there any accounting principles, valuation methods or other general policies, methods or tools that will ensure that environmental investments are not caught up in speculative frenzies and then dumped as unceremoniously as the global financial system was in 2008-9?

Probably not, or at least not ones that are capable of controlling markets without considerable active intervention and constraint – which is to say, undermines their very nature as markets. After all, how are markets to price things other than in money? How am I to judge a given transaction other than in terms of the profit it offers me (which means strictly in terms of money)? And once all value is reduced to money and the only goal is more money, what other valuation method is there apart from what the market says? In other words, regardless of whether valuing assets and companies in terms of their market price is sensible, it represents what market-based investors wanted to know about a stock, because it predicted what they most wanted to know about their ultimate concern, namely profitability.

In short, the markets know the price of everything and the value of nothing. As this is Oscar Wilde’s definition of a cynic, that seems appropriate enough – the attitude of markets (and perhaps business in general) to the environment is cynical at heart, for the only question they are capable of posing is, How do we make money out of this? Not exactly a responsible attitude.

Actually there is a limit to how far this is true. In a market who basic function is to direct investment in the real economy, prices will still be determined by prices, but these prices will be linked to the material consequences of making real investments - in houses, in MP3 players, in clothes, in a million other goods and services. And that of course is what the economy is for – to ensure that society works. True, the answer is still expressed indirectly, in terms of money, prices and profits, but at least the link to real, non-financial value is there.

Or so it should be, in a socially rational economy. But when the central function of markets is perverted into speculation, and the key question is not how to distribute wealth in society but how to make a quick killing by exploiting changes in price.

But is this a real problem, or merely a theoretical stick with which to beat the markets? Unfortunately it is very, very real. For example, by 2008 the average barrel of oil was being traded 27 times before it was actually delivered for use in the real economy. This certainly contributed to the otherwise inexplicable massive price spike of that year, and is hard to account for in terms of buying oil for use in the real economy. Or again, the Tabb Group consultancy has estimated that mroe than 60% of trades in the US stock markets are controlled by automated systems that are designed to take advantage of tiny price difference within miliseconds of their arising - not really an issue for investors in the real economy. More generally, it has been estimated that perhaps 85% of stock exchange activity is speculative, with only a small minority representing genuine investment.

And so on. All in all, the speculators are clearly in charge, and as a number of scandals and exposés have demonstrated, the manipulation of prices is a fundamental of stock markets.

This is perhaps the fundamental problem of using markets to manage the environment: that markets recognise only prices, and no price generated by a pure market can reflect socially rational value (including environmentally rational values) unless forced to do so – which is the very antithesis of a market price. Markets are like severely autistic children: it’s not hard to get through to them - it’s impossible. You can constrain them with regulations and rules, but once the market has taken over control of prices, it is hard to see why just this sort of bubble should not develop.

So can markets play any part in managing the environment? Perhaps in limited ways. But the tendency to break the link with real environmental goals and consequences seems to be intrinsic to any system that measures success strictly in terms of prices and profits. If it doesn’t do that, is it a market? If it does, how can we ever trust it not to undermine every strategy for managing the environment?

Yesterday the Financial Times reported that many wealthy countries have failed to fulfil their aid pledges, given only a few years back at the G8 summit at Gleneagles (‘Wealthy countries fail to hit aid target’, FT 17/02/10).

‘The Organisation for Economic Co-operation and Development … publishes a report on Wednesday predicting that its rich member countries will collectively give a net $107bn in aid this year... But promises made in 2005 … implied a pledge of almost $130bn by this time.’

No one familiar with the sorry history of aid can be much surprised at this outcome: we practically never do do what we promise, we take back most of what we give, and people die as a result. In fact it is more surprising that we got so close to our targets, and that so many countries are likely to fulfil their individual commitments.

More interesting was the reaction of Max Lawson of campaign Oxfam, who is quoted as saying that: ‘This is a damning indictment of rich nations, who can find plenty of money to save banks but precious little to save lives’.

Obvious enough, of course. But in what sense is this really a ‘damning indictment’? Why have governments found it so easy (relatively speaking) to save the bankers and not the poor? Is it because they are so callow that their priorities are utterly wrong-headed? Quite possibly, and we should not doubt the extent to which the largesse to bankers was the product of very deliberate political manipulation (on which, see Matt Taibbi’s excellent articles here and here).

But that does not explain why the response was quite so immediate and unqualified. That takes us to the question of the relative roles played in our own societies of aid and the banks. Aid is still perceived as a matter of charity, whereas the banking system is the very core of the global economy. If we disregard the interests of the global poor and of under-developed countries, the results are likely to be seen as ‘regrettable’; but if our banking system falls, that takes the economy with it, and the economy is the system through which we produce, distribution, exchange and consume pretty much everything we need to do anything at all – from our daily bread to all that aid, of course.

Yet it is by no means obvious that this is the full answer. In particular:

1. Why is it that the centre of ‘the system’ lies in finance, which produces only money, and not the ‘real’ economy, which produces the goods and services needed to actually do anything for real people?


2. The phrase ‘the system’ implies a neutral mechanism that somehow serves us all – as does the way I described it above. But is the economy really neutral, even at that level? Or does it in fact serve on be special set of interests, even when apparently just going about its day-to-day operations?

Answer these questions and a completely different picture emerges – a picture that makes it clear not only that we will never address the problems of developing countries with any sincerity but also that that very economic system will worsen the economic and environmental plight not only of the global poor and of under-developed countries but, in quite short order, the rest of us too.

A DIY manifesto

Less than 90 days to the General Election, and everything seems a good deal less certain. A year back, a Tory landslide seemed a foregone conclusion and Gordon was indisputably headed for backbench ignominy. How different – and how uncertain – everything seems now.

Well, not quite everything. Mulling over the goods on offer, it’s hard to feel uncertain about one thing: whoever wins, the electorate will be hard pressed to have high expectations of the winner. And in a time of war, economic crisis and unearned wealth for the few and undeserved hardship for millions, that is surely the one thing we cannot afford.

Who should we take to task for this? Our uninspired, uninspiring political masters? The army of unelected, manipulating ‘special advisers’? The abything-but objective and balanced media? No. Democracy is rule of the people, by the people, for the people, so if what We the People are getting isn’t what we want, then We the People have only ourselves to blame.

But there’s the rub. Just how do we change things? The only mechanism on offer is the ballot box, through which ‘we’ supposedly send ‘them’ a ‘signal’ telling them what we think. Only it plainly doesn’t work that way. Maybe they will get the message – and maybe not. And even if they get the signal, they are all too free to interpret it to suit themselves. And while we are limited to the ballot box, it can hardly be otherwise.

So let’s not make the mistake of trying to use the system to fix the system. No, let’s turn the tables completely. Let’s decide that, here in the age of the internet, we can tell them what we want, and decide that the job of politicians is to tell us not what we can have but only how they plan carrying out our orders.

It’s a slightly bonkers idea, of course. To start with, there are plenty of things voters would never agree about in a million years, which leaves plenty of scope for the usual manifesto verbiage. It’s also pretty hard to believe that our media would make it easy for public opinion to be untainted by corporate propaganda and sectional interests.

But that still leaves all those things that plenty of voters agree on – regardless of what the lobbyists persuade politicians to think – but which stay off the political agenda for years and decades together because our political parties can’t – or won’t - fit them in?

So what do voters actually want? I’ve no idea, and it would defeat the whole point to try to decide for them. On the other hand, if anyone would like to set up the website, database and voting system, here is my personal Top 10 (oh, all right, 11) for starters:

Politics

1. Government ministers and senior civil servants should be forbidden to personally use private health or education. Yes, I know, quite a few ministers sincerely believe in the right to go private, but it’s the public system we pay them to run, and I can’t help feeling that they’d be a little less inclined to treat public services as political footballs if, as their business pals like to say, they had a little more skin in the game. Politicians need to know that, when they cut health budgets, this means them.
2. The children of all MPs who vote for war are immediately conscripted to the front line. And if, in this age of political babes-in-arms, the MPs themselves if they are 45 or under, off they go too. If a cause is worth having someone else’s kids die for, sacrifice closer to home is surely warranted - and required.
3. Replace the voting system with one that tells our representatives what we think of them –scores for each candidate – positive or negative - and if the ‘winner’ is the one we think least badly of, so be it. And instant recall if we just don’t think they’re up to it. Enough of ‘respect’ for the ‘authority’ of Parliament: MPs are our employees, and should expect to be fired if they’re not good enough.
4. And on the voters’ side? Mandatory voting. I haven’t voted in years (who was there to vote for?), but if I were voting for what the people really wanted, what right would I have to keep silent?

The media

1. Prevent any single individual or company from owning more than one television station or one national newspaper, or both a television station and a national newspaper. Enough of corporate bias and propaganda. (I’d probably extend this to state funding for Private Eye, just to make sure that the mass media also got their fair share of attention, but Ian Hislop would probably rather die than accept.)
2. Replace the Press Complaints Commission with a truly independent body with real teeth. (And an independent Independent Police Complaints Commission too, while we’re at it.)

Business

1. Stop business turning schools, hospitals and society’s other key institutions into ‘business opportunities’. There’s little that annoys me more than the commercial prostitution of everything in sight, but when it comes to my children’s education and health, advertising is straightforward pornography. (Banksy has the right idea – if an advertisement is shouting in my face, I have the right of reply – including scribbling all over it if I want. They started it.)
2. Get serious about corporate crime. Any director of a tobacco company should be tried for manslaughter. Anyone who was still a director after the tobacco companies’ own research showed that tobacco was addictive and poisonous should be tried for murder. As for the advertising agencies, the lobbyists and all the rest who prostituted their talents to help tobacco companies sell their poison, perhaps a little tar and a few feathers? (Could be worse – what I really meant to write there was ‘public stoning’.)
3. Place much firmer controls on business influence over politics. Business people are people but businesses are not, and are entitled to precisely zero representation in our political system. Put an end to lobbying of political bodies, corporate funding of political parties and all the rest of the sleaze. And if trades unions and other corporate bodies are busy doing this too, include them in the same controls.

The environment
I could go on and on about global warming and climate change, but really, after Copenhagen, does anyone really think any government has any intention of doing what is needed, no matter what the public pressure? Puh-lease…

All the same, how about:

1. Real public education on climate change. That’s what governments signed up to at Kyoto, but I haven’t seen it yet. Maybe they forgot to read the small print, but meanwhile the nutters and the lobbyists are getting the upper hand.
2. A serious plan to cut our national carbon footprint. No, we don’t have to wait for the Americans or the Chinese – even if Beijing and Washington won’t help make things right, we can at least minimise just how bad things become.

Perhaps it can’t work – a political nirvana, in which the government of people can be replaced by the administration of things, because, to quote the famous Zapatero slogan, ‘Here the people give the orders and the government obeys’. Well, perhaps it’s all a bit too un-British. But surely we can give them a few polite hints?

How do we pay for micro-generation?

I just wrote a letter to The Guardian. It said:

With the government's new electricity feed-in schemes, surely mortgage lenders could now realistically finance the installation of a nation-wide micro-generation capacity? With a pay-back period of, say, a decade, could they not receive the income from generation until the installation is paid for (at a reasonable ROI), with ownership then reverting to the homeowner? Large financial institutions would be far better at pressing the government for better returns, the homeowner would pay nothing but gain a more valuable property, and the chances of our reaching our current renewables target would be much improved.

I hope they print it. Even more, I hope someone gives the idea some thought.