Check this out. Very, very funny. Very, very true.
You gotta see it.
Posted by ecoshift on September 30, 2008
Check this out. Very, very funny. Very, very true.
You gotta see it.
Posted by ecoshift on September 30, 2008
An interesting and pragmatic read on the politics of climate policy…
The green bubble bursts – Los Angeles Times
By Ted Nordhaus and Michael Shellenberger
September 30, 2008
Amid the energy crisis, Democrats are losing the high ground on the environment to a GOP that is pushing oil drilling.
As the election enters its endgame, Democrats and their environmental allies face a political challenge they could hardly have imagined just a few months ago. America’s growing dependence on fossil fuels, once viewed as a Democratic trump card held alongside the Iraq war and the deflating economy, has become a lodestone instead. Republicans stole the energy issue from Democrats by proposing expanded drilling — particularly lifting bans on offshore oil drilling — to bring down gasoline prices. Whereas Barack Obama told Americans to properly inflate their tires, Republicans at their convention gleefully chanted “Drill, baby, drill!” Obama’s point on conservation and efficiency was lost on an electorate eager for a solution to what they perceive as a supply crisis.
Democrats and greens ended up in this predicament because they believed their own press clippings — or, perhaps more accurately, Al Gore’s. After the release of the documentary film and book “An Inconvenient Truth,” greens convinced themselves that U.S. public opinion on climate change had shifted dramatically, despite having no empirical evidence that was the case. In fact, public concern about global warming was about the same before the movie — 65% told a Gallup poll in 2007 that global warming was a somewhat or very important concern in comparison to 63% in 1989. Global warming remains a low-priority issue, hovering near the bottom of the Pew Center for People and the Press’ top 20 priorities.
By contrast, public concern about gasoline and energy prices has shifted dramatically. While liberals and environmentalists were congratulating themselves on the triumph of climate science over fossil-fuel-funded ignorance, planning inauguration parties and writing legislation for the next Democratic president and Congress, gas prices became the second-highest concern after the economy, according to Gallup.
This summer, elite opinion ran headlong into American popular opinion. The train wreck happened in the Senate and went by the name of the Climate Security Act. That bill to cap U.S. greenhouse gas emissions would have, by all accounts (even the authors’), increased gasoline and energy prices. Despite clear evidence that energy-price anxiety was rising, Democrats brought the bill to the Senate floor in June when gas prices were well over $4 a gallon in most of the country. Republicans were all too happy to join that fight.
Indeed, they so relished the opportunity to accuse Democrats of raising gasoline prices in the midst of an energy crisis, they insisted that the 500-page bill be read into the Senate record in its entirety in order to prolong the debate. Within days, Senate Democrats started jumping ship. Democratic leaders finally killed the debate to avert an embarrassing defeat, but by then they had handed Republicans a powerful political club.
Republicans have been bludgeoning Democrats with it ever since. They held dramatic “hearings,” unauthorized by the Democratic leadership, on the need for expanded oil drilling to lower gas prices. Former House Speaker Newt Gingrich quickly announced a book, “Drill Here, Drill Now, Pay Less,” a movie and a petition drive. And Republican presidential candidate John McCain stopped making speeches about his support for bipartisan climate action, which is how he had started his campaign, and attacked Obama and congressional Democrats for opposing drilling instead.
On June 9, three days after the emissions cap-and-trade bill died in the Senate, Obama led McCain by eight points, according to Gallup. By June 24, the race was in a dead heat, a shift owed in no small part to Republicans battering Democrats on energy. Seeing the writing on the wall, Obama reversed his opposition to drilling in August, and congressional Democrats quickly followed suit.
But the damage has largely been done. In following greens, Democrats allowed McCain and Republicans to cast them as the party out of touch with the pocketbook concerns of middle-class Americans and captive to special interests that prioritize remote wilderness over economic prosperity.
In a tacit acknowledgment of their defeat, some green leaders, such as the Sierra Club’s Carl Pope, have endorsed the Democrats’ pro-drilling strategy. But few of them seem to realize the political implications. The most influential environmental groups in Washington — the Natural Resources Defense Council and the Environmental Defense Fund — are continuing to bet the farm on a strategy that relies on emissions limits and other regulations aimed at making fossil fuels more expensive in order to encourage conservation, efficiency and renewable energy. But with an economic recession likely, and energy prices sure to remain high for years to come thanks to expanding demand in China and other developing countries, any strategy predicated centrally on making fossil fuels more expensive is doomed to failure.
A better approach is to make clean energy cheap through technology innovation funded directly by the federal government. In contrast to raising energy prices, investing somewhere between $30 billion and $50 billion annually in technology R&D, infrastructure and transmission lines to bring power from windy and sunny places to cities is overwhelmingly popular with voters. Instead of embracing this big investment, greens and Democrats push instead for tiny tax credits for renewable energy — nothing approaching the national commitment that’s needed.
With just six weeks before the election, the bursting of the green bubble is a wake-up call for Democrats. Environmental groups, perpetually certain that a new ecological age is about to dawn in America, have serially overestimated their strength and misread public opinion. Democrats must break once and for all from green orthodoxy that focuses primarily on making dirty energy more expensive and instead embrace a strategy to make clean energy cheap.
By continuing to hew to the green agenda, Democrats have not only put in jeopardy their chance of taking back the White House and growing their majority in Congress, they also have set back the prospects of establishing policies that might effectively address the climate and energy crises.
Ted Nordhaus and Michael Shellenberger are authors of “Break Through: From the Death of Environmentalism to the Politics of Possibility” and co-founders of the Breakthrough Institute.
Posted by ecoshift on September 29, 2008
Interesting perspective on the current crisis…
Taipei Times – archives
Is China ready to assume leadership of the globalized economy?
By Harold James
Monday, Sep 29, 2008, Page 9
Worried investors and policymakers are becoming obsessed with Great Depression analogies. But the lesson of 1931 is only in part financial or economic. The 1931 crisis was so big and so destructive because it was a financial drama that played out on a geo-political stage.
Two surprising conclusions are emerging in today’s discussions, but only one has been fully digested. First, big public sector action is needed. Second, such action is complicated because in a globalized world the need for assistance spans borders.
In the similar circumstances of a financial meltdown in 1931, there were also only a limited number of governments that could be effective. The old economic superpower, the UK, was too exhausted and strained to help anyone else. World’s reserves were massively accumulated in the US.
China is the US of this century. The initial stages of the credit crunch last year were managed so apparently painlessly because sovereign wealth funds (SWF) from the Middle East, but above all from China, were willing to step in and recapitalize the debt of US and European institutions. The pivotal moment in today’s events came when the Chinese SWF China Investment Co (CIC) was unwilling to go further in its exploration of buying Lehman Brothers. CIC’s turning back will be held up in the future as a moment when history could have turned in a different direction.
We are about to see what stake China really has in the survival of the globalized world economy. As in 1931, the political arguments are all against such an operation. Only the far-sighted will see that the case for a rescue is compelling.
Posted by ecoshift on September 29, 2008
Just watched the House vote down the bailout bill in one window with a live Dow chart in the other. Spectacular drop in Dow prices, then a bounce, then trending lower with a final drop to a 777 point loss – nearly 7%.
Without wishing any ill will on anyone’s pension funds and 401Ks, I’m not upset out about this turn of events.
This vote did not break down on party lines. It was a purple coalition of Kucinich democrats and Ron Paul republicans that scuttled the administration’s bailout of “solvent” institutions. While I’m not against government intervention on principle, I am against making a bad problem worse by rewarding the people that created it. While the term “moral hazard” has been used quite a bit lately a more accurate term might be “corruption”.
The underlying problem is that our real economy is in a shambles. A median income won’t support the payments on median priced homes. We are not competitive with foreign producers and our manufacturing capacity has been reallocated to other parts of the world. We need to give solutions to these problems some serious thought. Caving in to an ill-conceived plan drawn up over the weekend on the the back of an envelope by the masters of this disaster is not in our best interests. The plan put before the house today is not a clear strategic imperative with the sophistication to actually turn this economic crisis around. Everything about it smacks of desperation emerging from a period of deep denial — except for the corruption.
Please note that no one can explain exactly how the plan defeated today would have prevented the economic correction that now playing out on Main Street. They only “hope” that it will mitigate an even worse outcome. No promises.
Came across an interesting quote in the Calculated Risk threads today:
“Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves.”
– Andrew Jackson, 7th US President
I think we just saved ourselves quite a bit of money that we will need to rebuild the real economy. Voting for this bill, despite the FUD worked up by corrupt financiers and the media minions, would only have delayed the inevitable, and perhaps made it worse. Certainly we would find our selves with fewer resources at our disposal when we finally face up to our situation.
I’ll try to post a few proposals for a response to this crisis that may offer a more reasoned and less corrupt path to economic stability when I get more time… I collected a few, then it appeared they would be moot. It now appears that we will have some time to pursue alternative proposals. I think this is a good thing.
Meanwhile, I just looked outside. The sky is not falling. It’s just a price correction for stocks with price to earnings ratios high above historic means. No way around it — with or with out the bailout bill. It’s a good time to tighten your belt, pay down your credit cards and brace yourself for a somewhat less consumer oriented standard of living.
Posted by ecoshift on September 28, 2008
I suppose it’s always easier to figure out how to spend money than it is to figure out where it’s going to come from. I’ve got an idea, let’s assign that task to someone whose not at the meeting….
Talk about easy monthly payments and no money down…
Breakthrough Reached in Negotiations on Bailout – NYTimes.com
“Among the last sticking points was an unexpected and bitter fight over how to pay for any losses that taxpayers may experience after distressed debt has been purchased and resold.
Democrats had pushed for a fee on securities transactions, essentially a tax on financial firms, saying it was fitting that they contribute to the cost.
In the end, lawmakers and the administration opted to leave the decision to the next president, who must present a proposal to Congress to pay for any losses.”
Posted by ecoshift on September 27, 2008
Jeff Sachs says “current energy crisis will most likely worsen before it gets better”:
Why the Oil Crisis Will Persist, by Jeffrey D. Sachs, SciAm:
…[F]undamental factors of supply and demand in the world economy will keep oil costly for years to come.
… Drilling in protected areas would provide little relief, and at horrendous environmental risks. Only a concerted move to new transport and energy technologies will relieve the pressures.
The greatest irony about the Bush Administration is that it correctly focused on energy needs at the start of its first term, but then got everything wrong in the strategy. Viewing the world through the eyes of Texas oilmen, it focused on gaining concessions to Iraqi oil fields and opening U.S. protected areas to drilling, while scorning fuel economy standards, renewable energy sources, and climate change mitigation. But the simple arithmetic of oil and carbon was always against the strategy.
World demand for conventional oil is outstripping world supply. … There are few prospects for mega-discoveries that could keep up with fast-growing world demand. …
The boom in global driving is likely to be relentless. … If China attains just half of the U.S. per capita ownership of passenger vehicles, it would have … roughly twice as many as the U.S. And that prospect is not a silly scenario. Vehicle production in China has already tripled… With … massive house building on the spreading periphery of city centers, China seems intent on reproducing America’s metropolitan sprawl and commuter-based society. A similar, though still less dramatic trend, is getting underway in India. …
Conventional oil has little prospect of keeping up with this soaring demand.
What then will give? Of course a grave economic crisis—war, global depression, economic collapse of one or more major economies—would cut oil demand the hard way. There are two much better alternatives. The first is a redesigned, far more energy-efficient automobile that uses … electricity or hydrogen. Several variants of plug-in-hybrid and all-battery cars have been promised by major auto producers as early as 2010…
Many unresolved problems of cost, performance and infrastructure face these technologies, of course. Public funding for technological research, development and demonstration, and for supporting infrastructure, should certainly be deployed… Any electric or hydrogen option will require large-scale deployment of new low-emission electricity generation, such as solar, wind, nuclear, and coal plants that capture and sequester carbon dioxide.
The second alternative, equally important, is a gradual reconfiguration of city life, to reduce our dependence on automobiles… We’ve learned that sprawl is not good for energy dependence, air quality, biodiversity, human health or quality of life, including commuting time. …
The current energy crisis will most likely worsen before it gets better. … Yet it could also be the critical spur to action, prompting vital changes in technologies and lifestyles. It’s not too late to take the more productive path, but time is running out.
Posted by Mark Thoma on Saturday, September 27, 2008 at 02:16 AM
Posted by ecoshift on September 26, 2008
Found this in the comments on Calculated Risk:
Could be a good deal…
From: Minister of the Treasury Paulson
Subject: REQUEST FOR URGENT CONFIDENTIAL BUSINESS RELATIONSHIP
I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you. All is guaranteed with all confidence.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transaction is 100% safe.
This is a matter of great urgency. We need a blank check to help you.
We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred. Hurry, don’t miss this opportunity.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to firstname.lastname@example.org so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.
Minister of Treasury Paulson
Posted by ecoshift on September 25, 2008
Here’s the principles negotiators nearly hammered out an agreement on.
I’ve pasted this whole post straight out of the Calculated Risk blog. I highly recommend regular visits to Calculated Risk for those who want to stay abreast of the nuts and bolts of this crisis. CR has been way ahead on these issues for several years. But, he’s done an incredible job of tracking and analyzing for the past several weeks. If you prefer political theater you can just watch TV.
Agreement on Principles
1. Taxpayer Protection
a. Requires Treasury Secretary to set standards to prevent excessive or inappropriate executive compensation for participating companies
b. To minimize risk to the American taxpayer, requires that any transaction include equity sharing
c. Requires most profits to be used to reduce the national debt
2. Oversight and Transparency
a. Treasury Secretary is prohibited from acting in an arbitrary or capricious manner or in any way that is inconsistent with existing law
b. Establishes strong oversight board with cease and desist authority
c. Requires program transparency and public accountability through regular, detailed reports to Congress disclosing exercise of the Treasury Secretary’s authority
d. Establishes an independent Inspector General to monitor the use of the Treasury Secretary’s authority
e. Requires GAO audits to ensure proper use of funds, appropriate internal controls, and to prevent waste, fraud, and abuse
3. Homeownership Preservation
a. Maximize and coordinate efforts to modify mortgages for homeowners at risk of foreclosure
b. Requires loan modifications for mortgages owned or controlled by the Federal Government
c. Directs a percentage of future profits to the Affordable Housing Fund and the Capital Magnet Fund to meet America’s housing needs
4. Funding Authority
a. Treasury Secretary’s request for $700 billion is authorized, with $250 billion available immediately and an additional $100 billion released upon his or her certification that funds are needed
b. final $350 billion is subject to a Congressional joint resolution of disapproval
Posted by ecoshift on September 25, 2008
HOME (Home Owners’ Mortgage Enterprise): A 10 Step Plan to Resolve the Financial Crisis
Nouriel Roubini | Sep 24, 2008
Even if the Treasury TARP plan is implemented fairly and efficiently the US will not avoid a severe U-shaped18-month recession and a severe financial and banking crisis: the recession train has already left the station in Q1 and the financial/banking crisis will be severe regardless of what the Treasury and the Fed do from now on. What a proper rescue plan can do is to avoid having the US experience a multi-year L-shaped recession and extreme financial crisis like the one that led to a decade long stagnation in Japan in the 1990s after the bursting of their real estate and equity bubbles.
I have also argued that, in order to resolve this financial crisis it is not enough to take the bad/toxic assets off the balance sheet of the financial institutions (a new RTC); it is also necessary and fundamental to reduce the debt overhang of millions of insolvent households via a significant debt reduction on their mortgages (an HOLC program like the one that was implement during the Great Depression); and also recapitalize undercapitalized banks with public capital in the form of preferred shares (as the RFC did with 4000 banks during the Great Depression). An RTC scheme without an HOLC and RFC component would not resolve two fundamental problems: millions of households are insolvent and unable to service their mortgages; the financial system is vastly undercapitalized and needs capital to avoid an ugly credit crunch and to foster new credit creation that is needed for future growth.
Posted by ecoshift on September 25, 2008
As everyone paying attention is no doubt aware Treasury Secretary Paulson has floated a three page proposal asking for 700 billion dollars to purchase toxic assets at “hold to maturity” prices from failing financial institutions. His reason? Our financial system is collapsing. And everything was contained and the economy fundamentally strong just last month. Not only were there few details provided, but Paulson proposed not to reveal any details as the buyouts were executed. The last thing the holders of this debt want is price discovery as mark-to-market pricing will force real accountability.
What a scam. I’ve been searching for the right word to describe this effort. Cheeky seems to lack gravitas. Arrogant kind of goes without saying. I think I’ve settled on gall. Unmitigated gall. A three page proposal. This can’t be real.
I’m basically a progressive kind of guy. I don’t mind the government using tax money to cover social and ecological needs overlooked by the typical business plan — particularly in an emergency. But, this brings out my inner libertarian.
I was out of town for the past week and barely had time to keep up with the various rumors and outraged responses regarding this attempt by the current administration to loot the US treasury on it’s way out the door. The same people that have been trying to convince us that housing prices had bottomed, that the crises was contained to subprime, that our economy was fundamentally strong — are now spreading over-the-top fear, uncertainty and doubt in an effort to extort 700 billion+ out of the taxpayer to buy out their buddies’ bad investments. The same buddies that have been “earning” double digit returns in the market for mortgage backed securities for the past five+ years–at least up until last summer when the foundation of this house of cards began to show strain.
This is just opportunism. Free markets with no regulation on the way up. Government intervention and buyouts on the way down. WTF happened to all the Free Market rhetoric?
The only ideological, political, moral, or intellectual consistency here is “me first”. They don’t give a damn if family balance sheets go negative as housing prices fall through the floor as long they can keep up the fiction of mark-to-model hold-to-maturity pricing until they get those assets off their books. Get real. Americans can’t make their house payments and the underlying collateral supporting this house of debt is gone.
The main problem with this proposal is that it doesn’t solve the problem. It won’t stop the recession, it won’t create jobs, it won’t protect pension funds from further losses and it won’t stop the fall in housing prices. Like all the other attempts to turn this crisis around the effect of this bailout will be a temporary run up in stock market values while our real economy remains on the ropes. </rant>
It’s been quite while since I wrote a letter to my representatives in congress, but I wrote one this week.
Here it is:
I’m writing in opposition to the Treasury Secretary’s current 700 billion dollar plan to bail out financial markets and investors at taxpayer expense.
This plan will reward the very market participants that 1) profited from an egregious lack of regulatory oversight on the part of the current administration, and 2) promulgated the opaque and highly leveraged real estate investment instruments that allowed and encouraged an unprecedented misallocation of resources and capital in the housing market.
The unregulated, securitized and marketable debt instruments at the heart of this debacle provide little to no added value to the real economy. Rather than strengthen our financial system, the availability of capital and our competitiveness in the global marketplace they have increased our vulnerability to and dependence on foreign powers and threaten the value of the dollar and the credit rating of the US Treasury itself. Those who created and purchased these instruments should not remain in charge of our financial infrastructure. Housing markets must be allowed to correct and the investors who profited must be allowed to fail.
Wealthy and sophisticated investors knowingly took on market risk in exchange for substantial returns when they purchased these instruments. Purchasing these toxic assets at a mark-to-model (or “hold-to-maturity”) prices introduces significant moral hazard to accurate risk analysis and will further corrupt efficient functioning of our financial markets.
I understand that the jobs and pensions of ordinary citizens are at risk. Yet this plan offers no promise that unemployment will go down, that pension funds will be protected from further losses or even that loans and commercial paper will be made available to US businesses. I see no assurances that this plan will be any more effective in rebuilding the US economy than the ill-fated and ill-conceived Tax Rebate Stimulus Plan. Please learn from this previous mistake. Don’t invest hundreds of billions in taxpayer dollars without clear strategic objectives that add real value to the productive capacity and competitiveness of the US economy.
If there is no political alternative to this effort to strong arm the taxpayer you must insist on full and open transparency, accountability, mark-to-market pricing, an equity position for the taxpayer and returns commensurate with what private investors would receive.
Paulson’s plan lays the burden of this fiasco on those that can afford it the least. Any action taken must not be administered by the administration and the financial executives that created the ponzi scheme now unwinding.
For our children’s sake: No Bailout. No Blank Check. No Way.