Comment Archives at Keith Hazelton's Provisional Truth

Evidence of the firepower of international reserves already is registering in various commodity indices, and in our daily lives in the form of higher food and fuel prices:

But countries seeking to quell any possibility of social disorder can explain only a portion of the dramatic disruption of global commodities markets in the last 12 months. As the residential mortgage bubble began bursting a year ago, a tsunami of speculative liquidity seized on commodities markets as the next great bull market opportunity for huge profits.

Led by fast-money hedge funds, Wall Street isn't far behind as new "financial products" are rushed to market to capture the ultimate source of liquidity necessary in all bubbles: the gullible finances of Main Street. A number of commodity indexes now are widely followed, including the energy-dominated Goldman Sachs index, a Dow Jones-AIG index and the (Jim) Rogers International Commodity Index, and a couple of dozen or more Exchange Traded Notes (ETNs) have been introduced in the last year or so. (See Elements ETNs, iShares Commodity Indexed Trust, iPath DJ-AIG ETNs.)

Not to be outdone, this month Morgan Stanley is introducing its Commodities Alpha Fund to "high net worth" investors, which it describes as "an actively managed mutual fund that offers high net worth investors the opportunity to gain direct access to the potential return and portfolio diversification benefits of the commodities market and the expertise of MSIM’s Quantitative and Structured Solutions investment team."

No doubt the phrase "potential return and portfolio diversification benefits...and the expertise of MSIM’s Quantitative and Structured Solutions investment team" figured prominently in Morgan Stanley's promotional literature to clients for previous investment products such as Structured Investment Vehicles, Residential Mortgage Backed Securities (hey they're AAA-rated!) and Collateralized Debt Obligations.

Other Wall Street firms soon will follow with similar offerings to its "retail" clients, of which these firms require an abundant supply to suck up even more casino liquidity to blow this emerging bubble into stratospheric proportions.

These clients, as in the dot.com bubble fewer than 10 years ago, and the currently deflating housing bubble, will scramble en masse to throw money at the latest get-rich-quick investment opportunity, only to be burned yet again when the commodity bubble pops (and it will). " 'Deal faster,' cried the losers," I once overheard in Las Vegas. Some things will never change.

Noland concludes the world's forces of speculative finance today are focused on energy, commodities and the “emerging” economies:

And so we proceed from bubble to bubble to bubble. Now that the Federal Reserve and other central bankers have provided the illusion the impending global financial meltdown, which reached crescendo in mid-March, has been stanched and the crisis has passed, its back to business as usual as Wall Street scrambles to take advantage of this latest opportunity for big-time profits.

Wall Street cannot create more oil, gold or grain, but - watch out - in can create the paper necessary, and in vast quantities, to give its ~~dupes~~ very good clients the illusion of a new source of easy wealth.

What do I know? Send me an email. --KH

Top

I used to think that the fastest way to become worried about markets was to stare into the bowels of a monoline. No longer. A few days ago, I happened to hear Goldman Sachs discuss the state of the global financial system with European clients.

And what struck me most forcefully from this analysis - aside from the usual, horrific litany of bank woes - was just how much trouble is quietly brewing in corners of the commodities world.

Never mind that oil prices are high; that problem is already well known and reams of ink have been spilt debating that, along with the pressures in metals and mineral spheres.

Instead, what is really catching the attention of Goldman Sachs now is the outlook for agricultural prices. Or as Jeff Currie, head of commodities research at the US bank, says with disarming cheer: "We think we could go into crisis mode in many commodities sectors in the next 12 to 18 months . . . and I would argue that agriculture is key here."

Now, to some readers of the Financial Times, that observation might seem odd. After all, inhabitants of the western world typically spend far more time worrying about the price of petrol for their car, rather than the price of wheat or corn. And when western investors do think about "commodity shock", their reference point typically tends to be the 1970s oil crisis.

However, as Mr Currie observes, this is a dangerously blinkered view. Back in the 1970s, famine touched a much bigger proportion of the world's population than the energy crisis, he says. And even today, rising food prices pack a powerful political punch in the developing (or partly-developed) world, to a degree that is sometimes underappreciated by the pampered west.

Indeed, there is already ample evidence that political tensions are building: the World Food Programme, for example, now thinks a third of the world's population lives in countries with food price controls or export bans.

However, Goldman Sachs thinks this is just part of a much bigger problem of capital and resource misallocation. After all, Mr Currie argues, if the world today was a rational economic place, then regions such as the Gulf which are food-constrained ought to be investing heavily in agriculture. And since the US is the world's biggest agricultural supplier, this implies that the Saudi Arabians, say, should be snapping up farms in Wisconsin - as America secures oil in the most efficient manner by sending teams of Texans to Riyadh.

But in practice numerous investment controls prevent Saudi Arabians from buying Wisconsin farms and Americans owning Saudi oil wells. And these controls are not being dismantled now. On the contrary, mutual mistrust is now rising. Hence the fact that Gulf leaders are currently considering desalinating sea water to plant wheat in the desert - while the US and Europe are trying to turn corn into fuel. Such exercises might make sense in domestic political terms; but they are apt to be fiendishly expensive. Thus the upshot of this misallocation, Mr Currie would argue, is even more inflation - even if the world does experience some form of growth slowdown.

Now, for any investor who is long on commodities right now (and I would guess that club includes Goldman Sachs), such trends might seem to smack of good news. For anybody who is dirt poor in the developing world, however, the picture is disastrous. A WFP official, for example, recently showed me the red plastic cup that was used to dole out daily rations to starving Africans - and then explained, in graphically moving terms, that this vessel is typically now only being filled by two-thirds each day, because food prices are rising faster than the WFP budget.

But leaving aside this very real human tragedy, what should also be crystal clear for investors is that this is not a picture that points to 21st-century capital markets progress; nor is it likely to breed stability in the medium term. Anyone who thinks this decade's problems start and end with credit, in other words, may yet receive a rude shock; sadly, we live in a world where soyabeans may yet pack as painful a punch as subprime.

A head cold lasts a week if you treat it, seven days if you don´t. Chicken soup often makes one feel better, as do some medications, but they do nothing to cure an illness caused by a constantly mutating virus. A cold´s symptoms, the sneezing, runny nose and congestion which make one feel miserable, are not caused by the infecting virus, but, in fact, by the defense mechanisms employed by the body to rid itself of the infection.

The U.S. economy has caught cold, and it will last the usual amount of time, about half a year for a mild case. Symptoms only now are beginning to be evident: slowing economic growth, rising unemployment and jobless claims, a weakening dollar and falling asset prices in residential real estate and the stock market. The Federal Reserve is ladling out economic chicken soup as fast as it can in the form of liquidity injections and slashed fed funds target rates, but the economy still is starting to feel lousy.

We view the current recession as that seven-day cold (and it sure seems like we´re in a mild one now, with preliminary 4th Quarter 2007 GDP falling to +0.6%). Annoying, frustrating and to be ignored only at a greater risk of developing something far worse from a weakened immune system, but not something to be overtreated. But, of all the luck, we´re in the middle of an election year.

And so we are seeing a concerted effort to "treat" the symptoms which have
been caused by the economy´s own infection-fighting mechanism designed to wring excesses from the system. The Fed and the U.S. Treasury have run to the Congressional drug store for a strong dose of good-old-fashioned fiscal stimulus, which may mask some of these symptoms but will do nothing to cure the disorder. That the economy must do for itself. Whether it can, or lapses into something worse, is the trillion-dollar question.

The proposed $150 billion or so tax rebate, a moderate "helicopter drop" of money on the U.S. economy, won´t take effect until summer, but unless patients follow the dosage instructions exactly and spend every dime of their rebate checks instead of saving the money or paying down debt, this over-the-counter medication will have little effect.

Alternatively, it could protract the illness since all $150 billion must be borrowed, increasing the budget deficit and adding to $9.2 trillion of national debt. About half will be borrowed from foreigners, and if we buy imported merchandise, including imported oil, there is some debate as to exactly whose economy ultimately is being stimulated.

As former Fed chief Alan Greenspan observed in unusually understandable English nearly a year ago, economies are cyclical and, all things considered, given the duration of the current U.S. expansion (since early 2002) "we are in the later stages of a cycle." The "maestro of money" then gave one-in-three odds of a U.S. recession by year-end 2007, which now looks like a winning bet.

On occasion, cures may be worse than the illness, so we must be vigilant for other symptoms of a worsening condition, namely stagflation. Once thought eradicated by central bankers, as no cases have been observed since the mid-1970s, stagflation could make a virulent comeback, if commodity price increases escalate out-of-hand, affecting not only us, but other economies as well.

Some think the Fed should prescribe Dr. Volcker´s patented cold-turkey economic shock therapy, a dire treatment which calls for much higher interest rates and constricted money supply, resulting in an immediate depressionary deflation: crashing asset prices, high unemployment, a stronger dollar, widespread bankruptcies and financial sector failures. It has not been prescribed since 1980.

But as one economist recently observed, "When a man is in the middle of a heart attack, don´t lecture him about his diet. Fix him, get him on his feet again and then try to modify his habits. Mr. Bernanke´s Federal Reserve likely will not reach for Dr. Volcker´s inflation-fighting tonic, believing wholesale asset deflation to be a far more sinister malady than the present ailment.

Let´s wait and see the Fed seems to be saying. Take a tax rebate, two more rate cuts, get plenty of liquidity and call us in October. And don´t forget the trip to Disneyland after you receive your check this summer, the economy is depending upon you.

Coordinated, ongoing efforts by the Federal Reserve, the Treasury, Congress and the Administration to "do something" about the economy may mask emerging recessionary symptoms. If mild and if, in fact, it already has begun, we´ll only know it was a textbook recession officially long after the fact, perhaps closer to election day or after a new president is inaugurated.

If we are at the beginning of something more serious, say an economic heart attack, more potent medicines such as Dr. Volcker´s elixir, despite its foul taste and terrible side effects, may be necessary to shake off a quarter-century of accumulated bad fiscal habits.

It would be the unthinkable, and yet could be the first crisis of a new presidency.

What do I know? Send me an email. --KH

Top

Pop. That would be the sound of a bubble bursting. From gushing liquidity to credit crunch in two weeks.

Thursday, July 19th, Wall Street celebrated a closing Dow Jones Industrial Average above 14,000, concluding a four-month, 2,000 point run-up.

Private equity fund and hedge fund managers were riding a tsunami of global liquidity with which no takeover deal would be left behind and every opportunity would be leveraged to the hilt.

Friday, August 3rd, as the Dow was plunging 280 points in the wake of Bear Stearns' CFO proclaiming bond market turmoil the worst in 22 years, fears of a global credit crunch gained traction.

From “What, Me Worry?” in mid-July to CNBC clown prince Jim “Boo-Yah” Cramer Friday afternoon screaming the Fed had to “do something” to keep the liquidity engine from seizing.

Cramer effectively was lobbying for a federal bailout of Bear Stearns and Countrywide Financial and other lenders, and for the Fed to lower rates to lower interest rates on the ridiculous premise that lower rates would allow troubled mortgages to be refinanced, ending the sub-prime mortgage meltdown.

“If the Federal Reserve lowers rates,” according to Cramer, “people will refinance, the liquidity will come back, and not only will this problem go away, but we'll (the Dow) will go up a thousand points. (See it here.)

Please note, Mr. Cramer, sub-prime and Alt-A homeowners granted “liar loans” for overpriced real estate using dubious, or outright fraudulent, documentation will NOT be able to refinance their mortgages under any conditions which would allow them to keep their homes.

That's how the mortgage bubble was created, by tricking ordinary working people into thinking they could afford a 1,900 square foot, nothing down, $400,000 home with a payment of only $1,000 a month for the first year.

That's the essence of the sub-prime mortgage meltdown: the point at which teaser-rate mortgage payments “reset” at higher, market interest rates, which make the monthly payments unaffordable. The meltdown is the aftermath of homeowners in arrears, in default, being foreclosed, or, more likely, just returning the door keys to whichever company services their loans.

That popping sound, audible apparently only to some of us the last year or two (see anything on iTulip or Doug Nolan's Credit Bubble Bulletin as well as my own commentaries), perhaps now has become loud enough to be heard by the most disconnected, delusional bubble economy cheerleader.

Larry Kudlow heard it Friday, parroting Cramer by calling for Ben Bernanke's Fed to reaffirm its traditional role as lender of last resort and "reassure the world it is on top of the situation." (See it here.)

Are you kidding me? Wall Street, the mortgage industry and major banks made BILLIONS of dollars in the last six years on the backs of these people, providing them, if only temporarily, a seat at the table of the American Dream.

Now Cramer and Kudlow think the Fed, or worse, taxpayers – including some of who had their seats forcibly removed from the table – should shoulder the burden? I think not.

Keep in mind we only are at the beginning of what may be a long period of shocks and aftershocks including the very real likelihood of economic recession, as The Maestro, Alan Greenspan, predicted, giving one-in-three odds in March for a downturn by year-end.

As you will recall when the last bubble popped, the stock market peaked in March 2000 and didn't bottom for more than two and a half years (October 2002).

Soon it will become a issue in the 2008 presidential campaign, as candidates become forced to address the economy in debates and press conferences. Whomever is elected in November 2008 may inherit a real mess.

Bear Stearns likely will not survive the aftermath of what it, and many others, have wrought, having become the poster child for the excesses of this decade's credit intoxication bubble and Wall Street's exceedingly well-paid and lavishly bonused executives may find the next several years somewhat leaner.

Bear Stearns eventually will be the maiden sacrificed to appease this volcano, much the way Prudential-Bache/Prudential Securities became known for the excesses of the 1980s limited partnership fiasco and ultimately disappeared into Wachovia Securities after sticking parent Prudential Insurance with a many-billion dollar tab.

Bear Stearns also likely will not survive intact.

It becomes obvious once again our entire financial system is based on confidence. Confidence in prices, assets values, interest rates, solvency.

When confidence falters, as it officially now has, investors begin a rush for the exits. Until Friday, August 3rd, the move was mostly slow and orderly. Now it will be a stampede. Cramer will not see a thousand points up from here, Fed rate cut or not.

What do I know? Send me an email. --KH

Top

Those of us ensconced in "reality-based" communities, relegated to watching the actors on the stage of this administration create and define history for us and the world, often wonder who makes up that core of support for the current occupiers of the White House, and what, exactly, are they thinking?

Johann Hari, writing for UK's The Independent earlier this month, had the pleasure (?) of embarking on a fantastic voyage with 500 or so readers of The National Review for a cruise of the Pacific West Coast from San Diego to Puerto Vallarta.

The armchair Neo-cons, for whom Fox News is the only source of "fair and balanced" information - the truth, of course - in a godless liberal morass of main stream media, well-off and lily-white save one passenger of African extraction, represent that unshakable remnant of Republican allegiance that keeps the president's poll numbers above 25 percent.

On-board this cruise, the Iraq and Afghan wars and the Global War on Terrorism in general have been astonishing successes. Global warming does not exist - a "hoax" as proclaimed by Oklahoma's senior senator Jim Inhofe - and its adherents only want to use the threat of a dying planet to raise taxes and further regulate and control the private lives of the citizenry.

Read Hari's entire harrowing account here, but below are some of the more interesting and colorful comments from Hari's fellow travelers.

It goes downhill from there. Read Hari's entire account and decide for yourself. It almost would be humorous if it wasn't so frightening.

The American Empire retreated a step yesterday, if only temporarily, when the President's sweeping immigration bill failed to garner sufficient votes in the U.S. Senate. The bill, which would have provided amnesty and a path to U.S. citizenship for millions of illegal immigrants, evidently offered something for everyone to hate, conservatives and liberals alike, as it became loaded with amendments and side proposals to address the complexity of what originally was perceived to be a simple set of immigration issues.

One such proposal, entitled (apparently with little sense of irony) DREAM, the Development, Relief, and Education for Alien Minors Act, would have created America's first true mercenary element within our armed forces.

DREAM would have applied to an estimated 750,000 undocumented residents of military age, and stipulated that those who arrived in the United States before age 16, graduated from high school, and meet other qualifications could immediately enter the path to citizenship in exchange for at least two years' service in the armed forces.

The fine print, of course, being the requirement to survive two years of military service, as one can only imagine that units of immigrant-soldiers would be deployed to the hottest of global hot spots, currently Afghanistan and Iraq, but who knows where next.

And if a primary goal of illegal immigrant soldiers would be to live for those two years of military service, not necessarily to unconditionally defend America's programs to export democracy and freedom to hostile lands, how motivated would be these troops to blindly enter harm's way?

Currently about 35,000 non-citizens (permanent resident aliens - "green card" holders) serve in America's armed forces and more than a quarter of those are granted citizenship each year, but undocumented illegal immigrants are prohibited from military service.

DREAM would have changed this, taking the American Empire a step closer to imitating empires past, including everyone's favorite overworked comparison, the Roman Empire.

Yet what other analogy fits? Rome under its emperors, as meticulously documented by Edward Gibbon in his exhaustive "The Decline and Fall of the Roman Empire," began to rely extensively on mercenary recruits, mostly from conquered lands, first to supplement then to "outsource" its military units.

According to Gibbon, prior to the death of Julius Caesar in 44 BCE, the republic's military was reserved for Roman citizens who had a country to love, property to defend, and some role in enacting those laws which it was in their interest and duty to maintain. An honorable military leadership, albeit from a privileged class, commanding unyielding citizens, possessing “arms, (protective) of property, and collecting into constitutional assemblies, forms the only balance capable of preserving a free constitution,” Gibbon notes, and that “patriotism is derived from a strong sense of our own interest in the preservation and prosperity of a free government of which we are members.”

Such sentiment, which had rendered the legions of the Roman republic almost invincible, he writes, could make but a very feeble impression on the mercenary forces in the era of the emperors (27 BCE – 476 CE), during which “war was gradually improved into an art, and (then) degraded into a trade,” as the military became composed more of hired soldiers from throughout the empire in need of jobs than of Roman citizens defending a homeland.

Perhaps empires, like stars, are destined - ordained by history and physics - to follow certain stages, from birth to growth to some bright period of luminescence, only to progress in one of several variations all leading to a contracted, cold ending unrecognizable to its previous form.

As of yesterday, however, the American Empire, has retreated one step from the path of the Roman Empire and other empires past. Given the sustained interest among many to create a true mercenary element within our military, by recruiting illegal immigrants and rewarding them with American citizenship for those fortunate enough to survive the experience, DREAM will not disappear, despite the June 28, 2007 defeat of the comprehensive immigration reform bill.

Dan Gardiner is a Canadian writer whose work often appears in the Ottawa Citizen, the largest circulation newspaper of Canada's capital. This essay was his response to an April 28, 2007 editorial published in the Ottawa Citizen by Robert Sibley entitled, “The Dangers of Militant Atheism.”

Sibley's editorial focused upon a growing number of non-fiction works whose authors, the like of Richard Dawkins (The God Delusion) and Sam Harris (The End of Faith), observe our human tendency toward wholehearted and unquestioning belief in things not seen, contrasting them to religious fanatics of all stripes as their aspiritual opposites, equally zealous and unbending.

        Those Fanatical Atheists
        By Dan Gardiner
        Published May 5, 2007, The Ottawa Citizen

Yesterday was one major religion's holy day. Today is another's. Tomorrow is a third's. So I thought this is an opportune moment to say I think all three of these faiths -- these mighty institutions, these esteemed philosophies, these ancient and honoured traditions -- are ridiculous quackery. Parted seas. Walking corpses. Nocturnal visits to Heaven. For goodness sake, people, the talking wolf in Little Red Riding Hood is more plausible.

In the past, I've tried to avoid talking about religion in such sharp terms. It's not that I fear giving offence (which would be something of a limitation in my line of work). Rather, I know, as all humans do, that it's scary knowing you're going to die. And if belief in angels on high eases the existential fears of some, I won't begrudge them. Whatever gets you through the night, as a long-haired prophet once said.

But a series of books doing quite well on bestseller lists -- by Richard

Dawkins, Sam Harris and, soon, Christopher Hitchens -- argues it's time to be a lot less deferential to faith, and I have to say I find it hard to disagree. After all, we live in a time when blowing children to bits is an increasingly popular form of worship, the most powerful man on earth thinks he's got a hotline to God, and much of the electorate who gave that man his power would never consider replacing him with someone who does not believe the son of a carpenter who died 2,000 years ago sits in heaven advising presidents, fixing football games, and waiting for the day he will return to the Earth to brutally murder all unbelievers and erect a worldwide dictatorship.

Private, quiet faith is one thing. But when the guy holding the launch codes believes the end of the world could come any day and that's a good thing, those who believe lives are limited to one per customer have a problem.

Those making this case have been dubbed the "new atheists." They have also been called fanatics who are dogmatic, zealous and intolerant of other views -- the mirror image of religious extremists. As one English university dean said in the Guardian, Richard Dawkins is "just as fundamentalist as the people setting off bombs in the Tube."

Less Olympian thinkers have portrayed strident atheists as hacking away at the bonds of morality, which must inevitably lead to various forms of depravity ranging from the sexual to the genocidal.

Don't you know Stalin was an atheist? That's the way it goes. First you read Richard Dawkins. Then you have an abortion. Then you're putting a fresh coat of paint on the Gulag.

This frames the debate in a pleasingly symmetrical way. Over on that side are the insane religious fanatics who fly jets into skyscrapers and march around with signs saying "God Hates Fags." Over there are fanatical atheists. Between the two extremes are sensible moderates who take the Goldilocks approach to faith and reason. Not too hot. Not too cold. Lukewarm, please, keep it lukewarm.

The appeal is obvious. "All things to moderation," the Greeks sensibly advised, and this looks perfectly moderate. Whether it can withstand a little scrutiny is another matter.

The first problem for the moderate believer comes from those who like their faith hot. You've agreed God exists and that He mucks about in the world. You've agreed this book contains His holy commandments. So how do you respond when the mad religious zealot says, "hey, here on page 23, it says we should slice open unbelievers and use their guts for garters. And over here on page 75, it says we should bury homosexuals up to their necks and stuff olives up their noses. If God exists and these are his holy commandments, then shouldn't we get serious about the gutting and stuffing?"

One response is to make like a Philadelphia lawyer and spin plain words ("and yea, the Lord saith, the nose of the sodomite shall be stuffed with olives ...") until they don't say what they plainly say. But the more common response is to simply pretend the garters-and-olives passages don't exist and prattle on about how God is merciful and loving.

This is neither faithful nor reasonable. Still, as a practical matter, it will do in times of religious quiescence. But with religious zealotry in the ascendant, this non-answer is not going to keep the ranks of the nutters from swelling. And that's dangerous to us all.

Then there's the problem on the other side -- among the atheists such as

Richard Dawkins who have been labelled "fanatics." Now, it is absolutely true that Dawkins' tone is often as charming as fingernails dragged slowly down a chalkboard. But just what is the core of Dawkins' radical message?

Well, it goes something like this: If you claim that something is true, I will examine the evidence which supports your claim; if you have no evidence, I will not accept that what you say is true and I will think you a foolish and gullible person for believing it so.

When the Pope says that a few words and some hand-waving causes a cracker to transform into the flesh of a 2,000-year-old man, Dawkins and his fellow travellers say, well, prove it. It should be simple. Swab the Host and do a DNA analysis. If you don't, we will give your claim no more respect than we give to those who say they see the future in crystal balls or bend spoons with their minds or become werewolves at each full moon.

And for this, it is Dawkins, not the Pope, who is labelled the unreasonable fanatic on par with faith-saturated madmen who sacrifice children to an invisible spirit.

This is completely contrary to how we live the rest of our lives. We demand proof of even trivial claims ("John was the main creative force behind Sergeant Pepper") and we dismiss those who make such claims without proof. We are still more demanding when claims are made on matters that are at least temporarily important ("Saddam Hussein has weapons of mass destruction" being a notorious example).

So isn't it odd that when claims are made about matters as important as the nature of existence and our place in it we suddenly drop all expectation of proof and we respect those who make and believe claims without the slightest evidence? Why is it perfectly reasonable to roll my eyes when someone makes the bald assertion that Ringo was the greatest Beatle but it is "fundamentalist" and "fanatical" to say that, absent evidence, it is absurd to believe Muhammad was not lying or hallucinating when he claimed to have long chats with God?

Of course I realize that by asking this question I may be contributing to mass depravity and a crisis of civilization. But I thought I'd risk it. That's just the kind of fanatic I am.

It should also be obvious from this that the supposed link between Dawkinsian atheism and Stalinist butchery is pure nonsense. Yes, Stalin did not believe in God. But he believed in History, Marxism, Leninism and all sorts of Hegelian mumbo-jumbo for which he had not the slightest evidence.

Thanks to Earl Doherty at The Age of Reason for bringing Gardiner's thoughtful comments to our attention.

This story by Mark Gilbert of Bloomberg News appeared in the May 18, 2007 edition of The International Herald Tribune (Read complete story here).

Spend a worthwhile hour and view the video below courtesy of Oil, Smoke & Mirrors which may help "connect the dots" between the emerging reality of America's oil addiction, the tragic events of September 11, 2001 and the ensuing global war on terror now so devastatingly manifesting itself in the killing streets of Baghdad and throughout Iraq.

The tragedy of 9/11 clearly was used as a pretext to put into motion long-standing Iraq invasion plans. The Bush administration collectively, and quickly, realized as that day's horror unfolded it was to be that “catalyzing and catastrophic event – like a new Pearl Harbor” described in the infamous Project for a New American Century's 2000 white paper “Rebuilding America's Defenses” (p.51).

Any involvement by this administration in the planning, execution or cover-up of 9/11 is unthinkable, yet certainly not impossible, abundant alternate theories to the contrary, and despite some of the opinions expressed in this video (see comments made by the former German minister of science and technology at minute 21).

Although many have concluded the Bush administration may have been aware of an impending terrorist attack on American interests somewhere in the world in the late summer of 2001 but even they could not connect the dots sufficiently to conceive of the possibility of an attack within the U.S., a growing body of evidence points to at least tacit government acceptance of an impending terrorist attack, much in the way it is now known that the Roosevelt administration knew Japan would retaliate in some fashion after a U.S. ultimatum was rejected in November 1941, allowing our entry into World War II.

Notwithstanding the truth of 9/11, it became that catalyst that now, after two centuries of republican democracy, has America slouching toward despotism – predicted by Benjamin Franklin in 1787 – in the form of a "unitary executive."

It likely will not be the (secret, unofficial) First American Triumvirate of George Bush, Dick Cheney and Karl Rove, barring a 9/11-like incident before November 4, 2008 or January 20, 2009 which is used as a "national security" pretext to suspend the Constitution and remain in power (yes, there are contingency plans in such event as we learned after the 2004 election), but it will be helpful in the future to understand exactly how it happened while we were asleep at the wheel of "democracy."

The fascinating parallels of the present course of our American Empire to the Roman Republic's transition to dictatorship two millennia past are numerous and instructive.

From the creation of the (secret, unofficial) First Triumvirate of the Roman Republic (Julius Caesar, Pompeius Magnus and Licinius Crassus) in 60 BCE, only 17 years elapsed before an official (Second) Triumvirate was formed in 43 BCE, allying Caesar Octavianus, Marcus Antonius and Marcus Lepidus lasting a decade. Within a few years after their political alliance disintegrated and Antony committed suicide, by 27 BCE Octavianus became emperor, Caesar Augustus, and effectively ended in one generation a republic which had stood for centuries.

For citizens and subjects of the new Roman empire, however, life went on with bread and circuses until it crumbled from within, albeit nearly five centuries later.

America is our country. We cannot allow ourselves to be tempted by economic prosperity and leisure (our bread and circuses) or to be scared by vague threats from the current enemy of choice. Such excuses will only permit, and make inevitable this slouch toward despotism.

What do I know? Send me an email. --Keith Hazelton

Top

04/19/2007
April 19, 2007: Where is the Outrage?

“Plan B is to make Plan A work,” in Iraq according to Chairman of the Joint Chiefs of Staff Gen. Peter Pace, as detailed in a recent TomDispatch.com post, twistedly reminiscent of comedian George Carlin's two-step plan to become a millionaire: “First, get a million dollars...”

No doubt Plans C through Z also will be to make Plan A – “victory” – succeed in Iraq. Victory, however, is a too strong word for what has become today only a vague and nebulous concept, unlike the conclusion of the two World Wars of the last century.

Government architects of this carnage now secretly must define victory as the completion and garrisoning of at least four major, permanent military bases in Iraq and a coordinating Pentagon-like “embassy” compound within Baghdad's Green Zone, the ultimate gated community, which is to be staffed by many thousands and equipped with its own water and electricity systems and its own anti-missile defenses.

Outside this fortified embassy compound, this ultimate symbol of imperial power, and away from the Green Zone, ordinary Iraqis try only to survive each day without being exploded into fragments of bone and globs of fleshy goo or roasted alive sitting in a bus as they venture forth and return home to unpredictable, at best, water and electricity services.

(No wonder presidential candidate Senator John McCain looked so uncomfortable strolling through Baghdad's Shorja marketplace last month, despite his bullet-proof vest, 100-soldier armed escort and assault-helicopter oversight.)

In a week that began in America with the horrific murders of students and faculty at Virginia Tech, leaving 33 dead including the mentally disturbed gunman who took his own life, the civilian body count in Iraq on that Monday, April 18th was more than double at 69.

The next day 104 died in Iraq and Wednesday 312 (nearly 200 in Sadriyah market alone), rounding out a week in which 839 Iraqi civilians were senselessly murdered and a similar number injured as they went about their everyday lives, much as the 32 VT victims were attending to their mostly ordinary lives on anything but just another Monday in Blacksburg.

As near as anyone can determine, there were no stadium-filled memorial services nor candle-lit rallies for those 839 dead, nor any mass memorial services for the possibly more than 600,000 other men, women and children murdered in Iraq since March 19, 2003.

We rightly are outraged by the senseless killing in Blacksburg Monday. But where is the outrage over Iraqi deaths? Where is their memorial service?

We have – America has – unleashed these angels of death in the Middle East, and no amount of escalations, surges, “plus-ups,” extended rotations or wishful thinking may contain them in the future. No amount of fighting them “over there” may in the future prevent us fighting them “over here” as a consequence of our departure from rational thinking.

It is said the Nixon administration in 1969 considered an escalation of the Vietnam war that would deploy many more troops and include the use of nuclear weapons, but that such plans were dismissed in fear of protest reactions at home that could become so violent America's depleted military would be unable to contain it.

Apparently the current White House administration, despite a similarly stretched military, harbors no such fears.

What do I know? Send me an email. --Keith Hazelton

Source: Information Clearinghouse.

Top

02/05/2007
February 5, 2007: The Agenda Restated by James Howard Kunstler www.kunstler.com

Since discovering James Howard Kunstler's website a year or so ago, and reading his gripping book The Long Emergency, I have admired his straightforward, almost calm approach to presenting solutions to the problems of everyday life in a localized world emerging from the messy end of a hydrocarbon-based economy, quite likely in a future near you, sooner than most are aware or are willing to contemplate.

Far from the "doom and gloom" which his critics focus upon, Mr. Kunstler offers practical recommendations for change which could, in fact, result in the simpler, more meaningful life so many of us pretend to desire.

I have reproduced his commentary from February 5, 2007, which summarizes his view of a post-hydrocarbon America, and world, and the opportunities therein.

February 5, 2007 James H. Kunstler http://www.kunstler.com/mags_diary20.html

The Agenda Restated

Out in the public arena, people frequently twang on me for being "Mister Gloom'n'doom," or for "not offering any solutions." I find this bizarre because I never fail to present audiences with a long, explicit task list of projects that American society needs to take up in the face of the combined problems I have labeled The Long Emergency. That the audience never hears this, and then indignantly demands such instruction, only reinforces my sense that the cognitive dissonance in our culture has gone totally off the charts.

Insofar as I just returned from a college lecture road trip, and heard the same carping all over again, I conclude that it's necessary for me to spell it all out a'fresh. I think of this not so much as a roster of "solutions" but as a set of reasonable responses to a new set of circumstances. (Not everything we try to do will succeed, that is, be a "solution.") So, for those of you who are tired of wringing your hands, who would like to do something useful, or focus your attention in a purposeful way, here it is.

Expand your view beyond the question of how we will run all the cars by means other than gasoline. This obsession with keeping the cars running at all costs could really prove fatal. It is especially unhelpful that so many self-proclaimed "greens" and political "progressives" are hung up on this monomaniacal theme. Get this: the cars are not part of the solution (whether they run on fossil fuels, vodka, used frymax™ oil, or cow shit). They are at the heart of the problem. And trying to salvage the entire Happy Motoring system by shifting it from gasoline to other fuels will only make things much worse. The bottom line of this is: start thinking beyond the car. We have to make other arrangements for virtually all the common activities of daily life.

We have to produce food differently. The ADM / Monsanto / Cargill model of industrial agribusiness is heading toward its Waterloo. As oil and gas deplete, we will be left with sterile soils and farming organized at an unworkable scale. Many lives will depend on our ability to fix this. Farming will soon return much closer to the center of American economic life. It will necessarily have to be done more locally, at a smaller-and-finer scale, and will require more human labor. The value-added activities associated with farming -- e.g. making products like cheese, wine, oils -- will also have to be done much more locally. This situation presents excellent business and vocational opportunities for America's young people (if they can unplug their Ipods long enough to pay attention.) It also presents huge problems in land-use reform. Not to mention the fact that the knowledge and skill for doing these things has to be painstakingly retrieved from the dumpster of history. Get busy.
We have to inhabit the terrain differently. Virtually every place in our nation organized for car dependency is going to fail to some degree. Quite a few places (Phoenix, Las Vegas, Miami....) will support only a fraction of their current populations. We'll have to return to traditional human ecologies at a smaller scale: villages, towns, and cities (along with a productive rural landscape). Our small towns are waiting to be reinhabited. Our cities will have to contract. The cities that are composed proportionately more of suburban fabric (e.g. Atlanta, Houston) will pose especially tough problems. Most of that stuff will not be fixed. The loss of monetary value in suburban property will have far-reaching ramifications. The stuff we build in the decades ahead will have to be made of regional materials found in nature -- as opposed to modular, snap-together, manufactured components -- at a more modest scale. This whole process will entail enormous demographic shifts and is liable to be turbulent. Like farming, it will require the retrieval of skill-sets and methodologies that have been forsaken. The graduate schools of architecture are still tragically preoccupied with teaching Narcissism. The faculties will have to be overthrown. Our attitudes about land-use will have to change dramatically. The building codes and zoning laws will eventually be abandoned and will have to be replaced with vernacular wisdom. Get busy.
We have to move things and people differently. This is the sunset of Happy Motoring (including the entire US trucking system). Get used to it. Don't waste your society's remaining resources trying to prop up car-and-truck dependency. Moving things and people by water and rail is vastly more energy-efficient. Need something to do? Get involved in restoring public transit. Let's start with railroads, and let's make sure we electrify them so they will run on things other than fossil fuel or, if we have to run them partly on coal-fired power plants, at least scrub the emissions and sequester the CO2 at as few source-points as possible. We also have to prepare our society for moving people and things much more by water. This implies the rebuilding of infrastructure for our harbors, and also for our inland river and canal systems -- including the towns associated with them. The great harbor towns, like Baltimore, Boston, and New York, can no longer devote their waterfronts to condo sites and bikeways. We actually have to put the piers and warehouses back in place (not to mention the sleazy accommodations for sailors). Right now, programs are underway to restore maritime shipping based on wind -- yes, sailing ships. It's for real. Lots to do here. Put down your Ipod and get busy.
We have to transform retail trade. The national chains that have used the high tide of fossil fuels to contrive predatory economies-of-scale (and kill local economies) -- they are going down. WalMart and the other outfits will not survive the coming era of expensive, scarcer oil. They will not be able to run the "warehouses-on-wheels" of 18-wheel tractor-trailers incessantly circulating along the interstate highways. Their 12,000-mile supply lines to the Asian slave-factories are also endangered as the US and China contest for Middle East and African oil. The local networks of commercial interdependency which these chain stores systematically destroyed (with the public's acquiescence) will have to be rebuilt brick-by-brick and inventory-by-inventory. This will require rich, fine-grained, multi-layered networks of people who make, distribute, and sell stuff (including the much-maligned "middlemen"). Don't be fooled into thinking that the Internet will replace local retail economies. Internet shopping is totally dependent now on cheap delivery, and delivery will no longer be cheap. It also is predicated on electric power systems that are completely reliable. That is something we are unlikely to enjoy in the years ahead. Do you have a penchant for retail trade and don't want to work for a big predatory corporation? There's lots to do here in the realm of small, local business. Quit carping and get busy.
We will have to make things again in America. However, we are going to make less stuff. We will have fewer things to buy, fewer choices of things. The curtain is coming down on the endless blue-light-special shopping frenzy that has occupied the forefront of daily life in America for decades. But we will still need household goods and things to wear. As a practical matter, we are not going to re-live the 20th century. The factories from America's heyday of manufacturing (1900 - 1970) were all designed for massive inputs of fossil fuel, and many of them have already been demolished. We're going to have to make things on a smaller scale by other means. Perhaps we will have to use more water power. The truth is, we don't know yet how we're going to make anything. This is something that the younger generations can put their minds and muscles into.
The age of canned entertainment is coming to and end. It was fun for a while. We liked "Citizen Kane" and the Beatles. But we're going to have to make our own music and our own drama down the road. We're going to need playhouses and live performance halls. We're going to need violin and banjo players and playwrights and scenery-makers, and singers. We'll need theater managers and stage-hands. The Internet is not going to save canned entertainment. The Internet will not work so well if the electricity is on the fritz half the time (or more).
We'll have to reorganize the education system. The centralized secondary school systems based on the yellow school bus fleets will not survive the coming decades. The huge investments we have made in these facilities will impede the transition out of them, but they will fail anyway. Since we will be a less-affluent society, we probably won't be able to replace these centralized facilities with smaller and more equitably distributed schools, at least not right away. Personally, I believe that the next incarnation of education will grow out of the home schooling movement, as home schooling efforts aggregate locally into units of more than one family. God knows what happens beyond secondary ed. The big universities, both public and private, may not be salvageable. And the activity of higher ed itself may engender huge resentment by those foreclosed from it. But anyone who learns to do long division and write a coherent paragraph will be at a great advantage -- and, in any case, will probably out-perform today's average college graduate. One thing for sure: teaching children is not liable to become an obsolete line-of-work, as compared to public relations and sports marketing. Lots to

From the Financial Times, London: Forget credit and oil - the next crisis will be over food

From the Financial Times, London:

Forget credit and oil - the next crisis will be over food