Monday, April 25, 2011

Standard and Poor' Gets Religion

S & P, one of a handful of international rating agencies, has downgraded America’s status based on its $14 trillion national debt and $1.6 trillion 2011 deficit and the political inability to do anything about it. This is rich coming from an outfit that gave top rating to every toxic, junk-status mortgage backed security that came its way before the crash. It’s to be expected that you give a high rating to someone who’s paying you to rate them, otherwise they’ll find someone else to pay off for their Triple-A. All that aside, being craven and duplicitous most of the time doesn’t totally detract from your voice if you happen to get it right once in a while, so let’s take it from there.

Both parties objected to S &P’s downgrading, insisting they have plans to tackle the deficit. The Repugs want to save $400 billion a year by eviscerating, emasculating and slashing to the bone every federal program that has anything to do with helping anybody but the top few percent of income earners, who in fact get a tax cut. How cutting taxes for people who already have far more than they know what to do with can be part of a deficit reduction plan is something only a true believer Repug can understand. We know they are full of crazy, but that’s who the people elected, so that’s where the US is at.

Obama wants to save $360 billion a year by reinstating income tax rates for everybody earning over $250,000 that were in place before the Bush tax cuts. Either way that only deals with a quarter of the deficit. The Repug plan projects a deficit of $23 trillion in 2021, Obama’s plan about the same. Moreover, both plans are wildly optimistic in projecting a far healthier economy than anybody outside of government and in their right mind would dare to, but that’s part of the game.

Neither side wishes to deal forthrightly with the problem because nobody in politics wants to take credit for raising taxes. It’s not hard to understand why since it’s far easier to borrow to make the economy temporarily look good than tell the truth to the American people and be voted out of office at the next election. Sure, everything will look hunky-dory when you are spending borrowed money, but it’s like heroin addiction. You feel really great when you are high so that in contrast everyday life is hard to deal with so you cannot stop, you have to have more. You also build up a tolerance, so need ever increasing doses. At a certain point, the only thing that can save your life or sanity is cold turkey.

So instead of being realistic or practical it’s all left to the future to sort out. Think about that number, $23,000,000,000,000. Interest rates are relatively low now, but the US government and the Fed are making every possible move in the direction of increasing rates. That isn’t their stated purpose, but when you print shiploads of money and issue vast amounts of debt you lessen its value and increased interest rates is the only logical, possible outcome. So, figure a modest average of 5% interest on the debt and you come up with $1.25 trillion a year in debt service. If the administration’s (seeming) goal of cheapening the value of the dollar jacks up interest rates an additional two or three percent then service of the debt will amount to half of the current budget and an obviously untenable situation.

There are four, more or less equal parts to America’s $1.6 trillion budget deficit. The first is the military. Since 2000 the defense budget has doubled, amounting to about $400 billion. Obama recently announced, to great fanfare, a $78 billion reduction in military spending; except when you looked at the fine print it didn’t actually reduce the amount spent, only the projected increase was less than planned. So clearly not serious about deficit reduction.

A second part is health care spending – Medicare, Medicaid and prescription drug benefits. That one’s easy; single payer would save about $400 billion in overall health spending. Admittedly, not all of that is direct federal savings but a lot of it is.

The third part is Bush’s tax cuts. Obama wants to end the cuts for the wealthiest Americans, that’s another $400 billion. But really, there’s so much money sloshing around at the top, the entire deficit could be erased if corporations and the wealthy were obliged to pay their fair share of the tax burden. A combination of raising the top rate for millionaires and billionaires, a financial transaction tax, taxing capital gains the same as ordinary income, a corporate income tax which corporations actually paid and a wealth tax on the richest Americans would easily and painlessly completely eliminate the deficit. Considering the top 1% is sitting on assets of $19 trillion, just an 8% wealth tax alone would balance this year’s budget deficit of $1.6 trillion.

Finally, there’s the recession which has reduced tax revenue. Yes, corporate profits and the stock markets (headed for soon-to-burst bubble territory) are way up but they don’t pay much in taxes so that doesn’t help the budget much. There’s nothing on the horizon which suggests an end to the recession in the next few years, but at $400 billion that’s a deficit charge that’s relatively easy to sustain. Besides, that’s the only part of the deficit that is legitimate, the rest is all based on a lack of political will and common sense combined with cockamamie wingnut anti-tax insanity.

Instead of actually doing something to rein in the deficit, Obama and the Repugs will take a chainsaw to slash Social Security, Medicare and every program that benefits everybody below the top few percent. Why do I group Obama with the Repugs? Of the two people he chose to head his bi-partisan deficit commission, one, former senator Alan Simpson of Wyoming, positively despises Social Security, the other, Erskine Bowles, the nominal Democrat who served in the Clinton administration, is a fellow traveler. So even though SS has absolutely nothing to do with the deficit, they suggested serious cutbacks to the program. With $2 trillion in the bank, SS has all the money it needs for another 25 years and a little tweaking of tax rates will carry it decades further in the future. Obama talks about taking a stand to protect SS and other programs, but I don’t believe him for a minute. The only things he is good at are oratory and compromise.

The US is blithely and obliviously headed for a morass of its own making that could ultimately destabilize the whole world economy.

Wednesday, April 20, 2011

Fukushima Casualties

Fukushima Casualties

There are two socio-economic casualties of the Fukushima aside from the obvious spread of radiation. First a few comments on that. It’s disingenuous to compare CT scans and X-rays to atmospheric radiation since a one time zap is completely different than having a radioactive particle lodged in your body. Once ingested each different element migrates to a specific part of the body – radioactive Iodine, for instance, goes to the thyroid – and continually and cumulatively discharges its carcinogens.

We also often find exposure compared to background radiation, as if it’s no big deal. What they don’t mention is that most background radiation is a result of nuclear testing; it’s not something people have always lived with, and, as mentioned previously, there is no safe level of exposure. All radiation causes cancer; minimal exposure causes minimal cancers, but since it’s all cumulative, every little bit increases your chances of developing the disease.

One casualty of Fukushima is globalization itself. The concept of globalization encourages manufacturers to scour the globe for the cheapest and best possible location for fabricating and/or assembling each individual part of a complex whole. This has caused a lot of grief for Toyota, which has had to stop or slow production of its vehicles in plants around the world because of the earthquake/tsunami. Sometimes a part is manufactured in only one location and if that one plant gets washed away in a giant tsunami, well everything shuts down.

Toyota also pioneered just-in-time manufacturing. Instead of producing and then storing parts in warehouses for eventual use, parts are delivered to the assembly line just minutes before they are to be used. As a result there is no leeway, if any part of the supply chain breaks down the whole edifice shuts down. It’s a very efficient method of manufacturing, but as we see subject to total breakdown when things don’t go exactly according to plan.

The other casualty is the Nuclear Renaissance, the return to the purportedly ‘green’ energy source, which has been dead in the water for decades because of a multiplicity of factors. Fukushima won’t stop China and other countries, rich and poor, from building nukes but it will certainly slow the process. It will also increase dependency on fossil fuels just when we are approaching peak oil crunch time.

As we are now seeing, in the frantic attempt to sustain the endless growth paradigm, ever more delicate, difficult and dangerously placed reserves are being developed. While BP was guilty of gross negligence in the Gulf of Mexico blowout, the proliferation of drilling around the world in those marginal areas will almost certainly result in additional catastrophic pollution events. That’s in addition to the damage done in some processes even when all goes according to plan, as in the poisoning of groundwater that results from using hydraulic fracturing in extraction of gas from shale deposits.

All in all the environment is in for some serious thrashing and trashing.

Friday, April 15, 2011

Obama the Disappointer

Obama has declared his candidacy for the 2012 elections... and it’s only 18 months before the poll takes place. America’s excruciatingly long and drawn out election season is one of the tell-tale signs of American political ossification. The process is hopeless; I can’t see anything good or reasonable or logical coming out of the congress or the president today. To do it right there needs to be regional primaries so candidates can focus on one area instead of wasting time and energy jetting back and forth across the country. One per month for four months starting in May of election year would allow campaigning to start at the beginning of 2012 instead of spring of 2011. Makes too much sense so can’t happen.

Mr O has three things going for him. For one, he’s a great ambassador to the world. He’s a very calm, steady and likeable guy and, as a representative of a long exploited and repressed minority, a great testament to the potential of American democracy. Compared to Bush in this regard, he’s a minor deity.

He’ll appoint decent people to the judiciary. If a Repug gets elected, it’ll mean another generation or two of feed the rich, starve the poor decisions from the bench.

Finally, most of his competition ranges from the laughable to the risible. The ones that are halfway reasonable and/or competent will have a difficult time getting through the tea-party electoral gauntlet. If a thoughtful, charismatic, moderate Repug showed up he or she’s likely to be toast.

At this point, I can’t see many thinking progressive people voting for Obama; rather, as true of every election for decades, they’ll be voting against the fearsome and/or cartoony right-wing opposition. I can’t think of a single major political initiative or stance that Obama’s taken that meets my standard of forward looking or compassionate. After compromising and kowtowing to the opposition while slamming and slandering his base, the people who worked for and voted for him, the so-called enthusiasm gap is wider than ever. Once again, Democrats, progressives, people who care will have a choice between crap and disaster.

The epitome of Obama’s disconnect from the reality of the common folk, the people who elected him was his choice of Jeffery Imelt, CEO of General Electric, to head his commission on jobs and competitiveness. GE is good at creating jobs, only most are in other countries, not in the US. The one area they have been hiring in is accountants who jobs it is to find legal loopholes to avoid paying their fair share of taxes. And at that they’ve been doing a great job. GE enjoyed profits of over $14 billion last year – five million earned in the US - but not only isn’t pay any taxes but getting a $3 billion refund.

There are all kinds of reasons why the US government thinks it needs to subsidize one of the largest, most profitable corporations in the world, but none of them are good. All of them are based on the wholesale purchase of government by the wealthy and powerful. They have their cockamamie supply-side theories and arguments for feeding the rich – they’ll create more jobs – but that has repeatedly shown to be ridiculously off the mark. Right now the country’s wealthiest citizens are sitting on $19 trillion of assets, while the corporations have nearly $2 trillion of cash reserves. How shoveling more money at them is suddenly going to create jobs is a conundrum only a wingnut teabagger could grasp.

GE also got billions from the bailout money since at one point they were making half their profits from financial services. So, funding for food stamps, Medicaid for the poor, Pell grants to enable more people to attend college, relief for people suckered into taking out mortgages they couldn’t afford to pay back, aid to the states who are in dire financial straits? Nope, we just don’t have the cash. Welfare for the world’s richest corporations and tax breaks for the already fantastically wealthy when the government is running a deficit equal to 12% of GDP; no problem, they obviously deserve it.

If deficit reduction is one’s goal, there is no way any amount of cutbacks on programs for the people at large can make up for the wealthy and corporations not paying their fare share of the cost of government. Neither can any amount of economic growth make up the difference without raising taxes on those who can afford to pay. Moreover, it’s living in Fantasyland to think the US can continue to run huge budget and trade deficits while printing oceans of money without the bill someday coming due.

Since I began writing this post Obama has gotten populist. Just after he declares his candidacy he says we’re going to tax the rich. (Where’s he been since his election in 2008?) We’re going to reduce the deficit by $4 trillion in 12 years, he says. Why stretch it out over 12 years, you ask, why not just say $340 billion a year? Well, I guess, because $340 billion doesn’t sound like much against a $1.6 trillion deficit, not even 25%, in fact.

Obama’s not leveling with the people – he obviously thinks it’s not politically tenable to tell the truth, assuming he does understand the situation – but that’s not anywhere near enough to tackle the deficit. Concurrently, deficits are also good for politicians since they make it seem the economy is doing a lot better than it really is. I mean, if I could borrow ten thousand dollars to gild my lifestyle, I’d be feeling great... until the bill came due. At this point the bill will not only be a crushing debt burden but a wholesale crash of the economy.

The catalyst for the coming financial implosion will come from rising commodity prices. As the value of the dollar slides, the price of commodities, since they are priced in dollars, will rise and increase inflation in America. As the price of oil, the largest component of America’s trade deficit, also moves up because of instability in producing regions combined with resource depletion, those rises will be intensified and the US will run hard up against an intractable, unsustainable situation. Rising inflation, according to current economic thinking, will require rising interest rates which will then increase the burden of servicing America’s huge debt.

Obama’s now only tinkering with the problem when the situation is just dire, which only makes it worse in the long run. When the situation becomes catastrophic, because it wasn’t dealt with when only dire, nothing less than great sacrifice on everyone’s part will make a difference. For every dollar of ease gained from borrowing, there’ll be equivalent pain in paying it back.

There only alternative to repaying loans is printing money and thus cheapening its value, which then brings an inflation death spiral. 2012 will be a tough year economically and an albatross around Obama’s electoral neck, but the Repugs will only have their failed policies of the past to cling to and thus look even worse than Obama.

The one thing the Repugs are good at is stealing elections and since no prominent Dumbocrat has ever had the courage or commonsense to call them to account for their thievery, not even those who’ve had elections stolen right out from under them, you can bet if the election is close the Repug will win.

I’m not optimistic. My cynicallity quotient is in the stratosphere. I’d hardly vote for Obama because he’s a likable guy and will appoint a few judges. Better to give the whole government to the Repugs and hope for a revolutionary backlash. If the people of Yemen can rise up, why not Americans?

Monday, April 4, 2011

Fukushima Going Down

Excessive radiation has been found 50 kilometers from the plant, the exclusion zone, however, is only 20 k. If they expand to 40 k, 170,000 people will have to be evacuated, probably permanently. The exclusion Zone around Chernobyl is half the size of New Jersey. Moreover that excessive radiation found outside the Fukushima exclusion zone would be over the limit allowed inside the Chernobyl zone. In other words, they are being very lax about their citizens’ safety.

Previously Japan’s sacrificial plant workers were limited to 100 millisieverts of exposure. At that level, one in a thousand will develop cancer. At the new limit of 250, that proportion goes down to one in four hundred. That’s not bad odds, or wouldn’t be if it was the only toxin people were subject to in their daily lives. But add up all the nasties in water, food and air and give them a couple of decades to do their damage and the proportion goes down to 1 in 7. It wouldn’t be such a big deal if cancer was a quick and easy death, rather than the long drawn out and debilitatingly painful one that it is. However, the plant workers are being compensated; previously earning $100 to $200 per day, they are now receiving $4000 per day. Hopefully they’ll live long enough to enjoy their new found riches.

In the process of dousing the stricken reactors with large amounts of water, one thing they are doing is creating radioactive steam, evidently able to spread far and wide. They’ve also been creating contaminated water, part of which they need to store and somehow dispose of safely, another part is seeping into groundwater and a lot of it is draining into the sea.

Three hundred thirty meters from shore the water was, at last report, more than 4000 times over the limit and that number is growing every day. That seems very far from shore to be so contaminated and must entail a gusher of a leak. Radiation twice the limit has been found 40 kilometers from the shore so a massive contamination of the sea. No problem, the authorities say, the ocean will dilute it. Yes but how many mutant fish will emerge in the meantime?

Latest news is they found a crack in one of the containment vessels which might be the source of the leak, or maybe at least one source. They really don’t know for sure where it’s coming from. And it’s too dangerous to be able to spend the time, get up close and really find out why it’s leaking. It may go on for a long time. It may render a large part of the Japanese coast off limits to fishing on a permanent basis.

If a country wished to take a chance on permanently polluting its land, that would be their choice, but radiation knows no national boundaries. If Japan, one of the world’s most technologically advanced nations can’t keep it together, how can the world possibly be safe with a whole bevy of developing countries embracing nukes?

To me, nuclear power is emblematic of the idiocy and insanity of modern corporate life and its sway over government of all stripes. Nukes are now more expensive than wind. It takes five to ten years to bring one on line compared to one year for wind. There isn’t a single privately financed nuke in the entire world, because no deep pocket financial institution in its right mind would put up the money without 100% guarantees from government. There isn’t a single insurance company that will cover the full costs of a nuclear meltdown. There is still no way to permanently dispose of nuclear waste and though the radiation in spent fuel is just as dangerous as that in nuclear cores, the spent fuel is housed in tin sheds rather than the foot thick steel walls of the containment vessel for the nuclear core.

There’s no CO2 produced in a nuke, but a large amount is produced in the mining and processing of Uranium and the people who work in that area have a much greater risk of cancer than the general population.

It doesn’t make any sense and it never has, but still, even after Fukushima, there are a lot of people who’re still pushing for nukes and a lot of countries that’ll continue to pursue the ultimate disaster of nuclear power.