Checking In

   Yesterday I brought home the guitar that I put on layaway last month. We did borrow some money through our credit union to make the purchase because, as we have learned, having no debt is actually bad for your credit. (WTF?!?) Yes, it turns out that if you are not beholden to anyone the lenders don't like you. They also don't like it if you pay things off early because they don't make as much interest so, while we could pay off the small sum we borrowed in short order, we are going to make the minimum payments and drag it out for a full year to help reestablish our credit. Blood sucking bastards!

   (A quick note on the guitar -- I have yet to take it to work, but I did do a small bit of recording with it and it blew me away. I do believe it will indeed be the last performance guitar I ever need!)

   I had made a deal with the wife that, if I get another guitar (yes, I have a few, but they all do something unique. I am not a collector, each has it's utility), she gets to book a trip she's been wanting to take for some time to visit a friend overseas. Our original plan was to pay off the first loan, then take out a second for the trip, thus establishing credit. It turns out it doesn't work that way. After talking with our person at the credit union we have decided to drag the first loan out, save for the trip then take a out a second loan secured by the money we saved. Effectively, we are paying our credit union to help us show lenders that we are good little consumers (what a crazy system!). Hopefully by doing this, though, a farm will not be out of future reach!

   I got my tracks back from the studio and the project I recorded almost 17 years ago is now in my studio program on my laptop. I have plans to meet with a co-producer for the redux to listen to them and make decisions about what to keep, what can be fixed, what to re-record, and anything else later this week. It's happening!

   The move out of the old house is more-or-less complete. There is a small amount of uncut firewood, a garden cart, the compost pile (hell yes we're taking it with us!), and the pen in which we kept the chickens (which we thought could be converted into a temporary/moveable greenhouse, but we're not sure if we can carry it over in the pickup truck) still at the old place. All evidence suggests that our old landlords have defaulted on the property, so we don't feel a particular hurry to have it all removed by any deadline. We will be collecting it all soon -- we need to get a garden started here and we need that compost! Now we need to sort and organize the boxes of stuff here at the new house...

   In sad news, we lost another chicken this week. Dumpling, one of our Ameraucanas, was acting like she was sneezing at first. Then she started opening her beak and stretching out her neck and I thought she maybe had something stuck in her craw. Then she began to cough up blood and we became very concerned. I tried to see if there was anything I could do but it soon became obvious that she wasn't going to make it. I ended up having to put her out of her misery. The whole thing was awful. My son and I patrolled the backyard the next day and hopefully removed anything that might be harmful. They are not the most selective when it comes to what they'll eat. I am guessing she found a piece of something she thought was food that was instead sharp and dangerous (I was surprised to find many things in the yard that matched that description).

   The pantry is going to be much more user-friendly at this new place. I am looking forward not just to stocking it, but actually looking forward to USING it. That's going to be huge!

   I still need to complete our taxes. The move really put a wrench in things there. Hopefully I can get that done over Easter weekend.

   Lots on the plate. It's all about finding balance right now.

The True Cost of Gasoline

   Gas prices are high and I've been hearing a lot of bitching, boycott scheming, etc.

   Personally, I'm all for paying the true cost of gas at the pump. Until American consumers start paying closer to the true cost we are going to continue to put off seriously seeking alternatives.

Poor America

   How did we get here?

Thoughts on American Capitalism

   I haven't posted anything here in a little while because I've been preoccupied with the Occupy Wall Street protest. Personally, I think it's high time Americans stood up and said, "We've had enough!" and I think it's great that the movement has gone global. Thomas Jefferson said, "I hold it that a little rebellion now and then is a good thing, and as necessary in the political world as storms in the physical.", and, "The spirit of resistance to government is so valuable on certain occasions, that I wish it to be always kept alive. It will often be exercised when wrong, but better so than not to be exercised at all. I like a little rebellion now and then. It is like a storm in the Atmosphere." What's happening now is a good thing.

   I wanted to take some time today to offer some ideas on why this rebellion has risen up. I am in no way a spokesperson for any Occupy event/movement, so don't misunderstand, these are just the thoughts of one citizen.

   I believe far too many Americans believe that we have a capitalist economy. Far too many Americans believe we have a democracy. Both of these are false and I believe that the misperceptions of these two things have helped politicians to polarize party lines.

   The U.S. government was not founded as a democracy. The founding fathers did not trust the average citizen to not be taken in by a silver-tongued devil. Looking at the country and it's media today it could be argued that the founding fathers were ahead of their time. Democracies had been shown to be too chaotic to be sustainable so they set up a republic wherein we the people get to elect representatives to make decisions and run the country on our behalf. What that means for the average citizen is, if you are not satisfied with the way your representatives in government are running things, you need to communicate that to them and if they don't listen you need to elect someone who will. I know this is more work than most Americans want to do, but if you let the government run itself it will act in it's own best interest (as it has).

   (The good news is that this is much easier to do today than it has been in the past! I would recommend going to Congress.org and signing up for updates on what your representatives are voting for and against. While you're at it look up some activist sites that concern themselves with things you care about and sign up with them. Many send out petitions and letters on key issues that you can sign and follow. Get your representatives' email addresses and phone numbers and contact them directly. Tell them what you want and ask for explanations if they don't do it. Keep them accountable!)

   Capitalism. Look around. This is not what Adam Smith had in mind. Before anyone starts quoting The Wealth of Nations out of context let me just remind everyone that Smith first wrote The Theory of Moral Sentiments -- his own personally favored work -- and The Wealth of Nations was intended to be considered as the next chapter to The Theory of Moral Sentiment, not as a stand-alone piece.

   That said, do we really have a capitalist system where one person can build a business and thrive? In some cases, yes. In most cases, though, no and the odds are looking more and more like those on a lottery ticket. Assuming that one does have the resources and talent to build a business and make it successful, navigating through government regulations and personal and business litigation, that business will likely have to compete with one or more huge corporations that are likely deemed "too big to fail" by their board members in Washington D.C. The deck has been stacked and the game is not the same as it was in the late 1700's.

   I recently read an argument that if you took someone from the "rich 1%" and took away everything, they would not complain that they couldn't find a job, they would make their own job and create more jobs in the process. I feel this is oversimplified and that if you put this imaginary person into similar circumstances as the average American (i.e. school loans, children, hospital bills, auto repairs, etc.) the story might vary. But let's assume it's absolutely true. Why should we be content with a system that rewards a single talent on the backs of those with other talents? I know some people who are very good at business. I know more people who have had businesses that either failed or never fully supported them. Most of the people I know are very good at things other than owning and operating a business. Why don't we reward the people who teach the next generation or farmers who create our food supply in the same way we reward someone who can find loopholes in the tax code, has a talent for stock speculation, or is willing to neglect their health and family for the almighty dollar? Isn't the person who drives a truck or the person who builds and maintains the road an important part of the distribution system on which many businesses are built?

   The fact that our transportation and energy systems have not really changed all that much in the past one hundred years is an indicator of how we have all become complacent. The system is antiquated and it's high time for an update. Our country needs a reboot. Two hundred and some years ago when the U.S. was being established there were those who believed we should be a simple, agrarian society and not be too involved in the world's affairs. Others wanted something that looked more like England's empire. When decisions were made, guess who came to the table?

   It's time for us all to show up to the table and make our voices heard.

Declaration of the Occupation of New York City

   From: http://nycga.cc/2011/09/30/declaration-of-the-occupation-of-new-york-city/


Declaration of the Occupation of New York City
Posted on September 30, 2011 by NYCGA

As we gather together in solidarity to express a feeling of mass injustice, we must not lose sight of what brought us together. We write so that all people who feel wronged by the corporate forces of the world can know that we are your allies.

As one people, united, we acknowledge the reality: that the future of the human race requires the cooperation of its members; that our system must protect our rights, and upon corruption of that system, it is up to the individuals to protect their own rights, and those of their neighbors; that a democratic government derives its just power from the people, but corporations do not seek consent to extract wealth from the people and the Earth; and that no true democracy is attainable when the process is determined by economic power. We come to you at a time when corporations, which place profit over people, self-interest over justice, and oppression over equality, run our governments. We have peaceably assembled here, as is our right, to let these facts be known.

They have taken our houses through an illegal foreclosure process, despite not having the original mortgage.
They have taken bailouts from taxpayers with impunity, and continue to give Executives exorbitant bonuses.
They have perpetuated inequality and discrimination in the workplace based on age, the color of one’s skin, sex, gender identity and sexual orientation.
They have poisoned the food supply through negligence, and undermined the farming system through monopolization.
They have profited off of the torture, confinement, and cruel treatment of countless animals, and actively hide these practices.
They have continuously sought to strip employees of the right to negotiate for better pay and safer working conditions.
They have held students hostage with tens of thousands of dollars of debt on education, which is itself a human right.
They have consistently outsourced labor and used that outsourcing as leverage to cut workers’ healthcare and pay.
They have influenced the courts to achieve the same rights as people, with none of the culpability or responsibility.
They have spent millions of dollars on legal teams that look for ways to get them out of contracts in regards to health insurance.
They have sold our privacy as a commodity.
They have used the military and police force to prevent freedom of the press. They have deliberately declined to recall faulty products endangering lives in pursuit of profit.
They determine economic policy, despite the catastrophic failures their policies have produced and continue to produce.
They have donated large sums of money to politicians, who are responsible for regulating them.
They continue to block alternate forms of energy to keep us dependent on oil.
They continue to block generic forms of medicine that could save people’s lives or provide relief in order to protect investments that have already turned a substantial profit.
They have purposely covered up oil spills, accidents, faulty bookkeeping, and inactive ingredients in pursuit of profit.
They purposefully keep people misinformed and fearful through their control of the media.
They have accepted private contracts to murder prisoners even when presented with serious doubts about their guilt.
They have perpetuated colonialism at home and abroad. They have participated in the torture and murder of innocent civilians overseas.
They continue to create weapons of mass destruction in order to receive government contracts. *

To the people of the world,

We, the New York City General Assembly occupying Wall Street in Liberty Square, urge you to assert your power.

Exercise your right to peaceably assemble; occupy public space; create a process to address the problems we face, and generate solutions accessible to everyone.

To all communities that take action and form groups in the spirit of direct democracy, we offer support, documentation, and all of the resources at our disposal.

Join us and make your voices heard!

*These grievances are not all-inclusive.

Bill Maher On Ending Abusive Relationships - With Your Bank

Americans or Corporations?

Book Report: Eating Animals

   I just finished listening to Eating Animals by Jonathan Safran Foer on audiobook (I checked out the audiobook version for a recent trip to Portland). In summary, would I recommend the book? Yes, absolutely. I think everyone should know the information contained in this book. Do I agree with Mr. Foer? No, not entirely. Despite the author's very many attempts to bully the reader into sharing his conclusions I do not.

   I agree with most of what the book has to say. The factory farming that takes place in the U.S. is horrific, wholly unsustainable, and needs to stop. The fact that we have a food system whose economic concerns are primary and whose ecological concerns are nonexistent is not just unhealthy, it's insane. I agree that meat is not a required part of a healthy diet and Americans tend to eat too much of it. So, why did I not come to the same conclusions as Jonathan Safran Foer?

   Let me first talk some about the book itself. I am interested to look through a copy of the book to see if the way it is presented on paper makes more sense. My experience listening to the audiobook was similar to watching Pulp Fiction the first time; I spent much of the book wondering where we were, where we were going, and trying to connect the dots. The book seems to bounce around a lot, at times trying to make a point, at other times seeming to try to present a variety of ideas and opinions so as to let the reader decide for themselves, and at times preaching from so high atop a vegan soapbox it is difficult to hear the message.

   The book includes this excerpt from rancher Bill Niman, but never adequately addresses it:

   "But what about the argument that we humans should choose not to eat meat, regardless of natural norms, because meat is inherently wasteful of resources? This claim is also flawed. Those figures assume that livestock is raised in intensive confinement facilities and fed grains and soy from fertilized crop fields. Such data is inapplicable to grazing animals kept entirely on pasture, like grass-fed cattle, goats, sheep, and deer.
   "The leading scientist investigating energy usage in food production has long been David Pimentel of Cornell University. Pimentel is not an advocate of vegetarianism. He even notes that 'all available evidence suggests that humans are omnivores.' He frequently writes of livestock's important role in world food production. For example, in his seminal work Food, Energy, and Society, he notes that livestock plays 'an important role… in providing food for humans.' He goes on to elaborate as follows: 'First, the livestock effectively convert forage growing in the marginal habitat into food suitable for humans. Second, the herds serve as stored food resources. Third, the cattle can be traded for… grain during years of inadequate rainfall and poor crop yields.'
   "Moreover, asserting that animal farming is inherently bad for the environment fails to comprehend national and world food production from a holistic perspective. Plowing and planting land for crops is inherently environmentally damaging. In fact, many ecosystems have evolved with grazing animals as integral components over tens of thousands of years. Grazing animals are the most ecologically sound way to maintain the integrity of those prairies and grasslands.
   "As Wendell Berry has eloquently explained in his writings, the most ecologically sound farms raise plants and animals together. They are modeled on natural ecosystems, with their continual and complex interplay of flora and fauna. Many (probably most) organic fruit and vegetable farmers depend on manure from livestock and poultry for fertilizer."

   I agree that we (Americans, and more recently, peoples of the developed world) should generally eat less meat and I agree that we should not support factory farming in any way. Note I did not say factory ranching or feedlot operations because farming covers more than animals. Mr. Foer fails to point out the industrial mono-cropping of fruits and vegetables as being a problem to the health of us and our planet. He does not talk about genetically modified produce that raises questions of if our fruits and vegetables are really vegan at all. He doesn't talk about pest and pesticide resistant crops, the chemicals that are sprayed on them, or the resistant "super" bugs and bacteria that are being created as a result. My point is that I believe the author's intent is true, but his focus may be a little off target. I fear the book maybe missed the bigger point in favor of an emotional response.

   In the end, Eating Animals provides a lot of really good information and, as I said, I would (and will) recommend it to anyone, but with a caveat. Our entire food system in this country -- not just the meat -- is broken. What we really need is an ecological food system, not an industrial one. On that, I believe the author and I would agree.

The U.S. Government is Standing in the Way of Jobs and Health?

   I'm shocked...

Farmers Markets Could Generate Tens of Thousands of New Jobs with Modest Federal Support, New Report Finds

They’re Growing Nationally, but Federal Policies Favoring Industrial Agriculture Hold Them Back

WASHINGTON (August 4, 2011) – Over the last several decades, thousands of farmers markets have been popping up in cities and towns across the country, benefiting local farmers, consumers and economies, but they could be doing a lot better, according to a report released today by the Union of Concerned Scientists (UCS). What’s holding farmers markets back? Federal policies that favor industrial agriculture at their expense.

“On the whole, farmers markets have seen exceptional growth, providing local communities with fresh food direct from the farm,” said Jeffrey O’Hara, the author of the report and an economist with UCS’s Food and Environment Program. “But our federal food policies are working against them. If the U.S. government diverted just a small amount of the massive subsidies it lavishes on industrial agriculture to support these markets and small local farmers, it would not only improve American diets, it would generate tens of thousands of new jobs.”

UCS released the report just a few days before the 12th annual U.S. Department of Agriculture’s (USDA) National Farmers Market Week, which starts on Sunday, August 7. According to the report, “Market Forces: Creating Jobs through Public Investment in Local and Regional Food Systems,” the number of farmers markets nationwide more than doubled between 2000 and 2010 jumping from 2,863 to 6,132, and now more than 100,000 farms sell food directly to local consumers.

All that growth happened with relatively little help. Last year, for example, the USDA spent $13.725 billion in commodity, crop insurance, and supplemental disaster assistance payments mostly to support large industrial farms, according to the Congressional Budget Office. The amount the agency spent that year to support local and regional food system farmers? Less than $100 million, according to USDA data.

In 2007, the most recent USDA figure, direct agricultural product sales amounted to a $1.2 billion-a-year business, and most of that money recirculates locally. “The fact that farmers are selling directly to the people who live nearby means that sales revenue stays local,” O’Hara said. “That helps stabilize local economies.”

Keeping revenues local also can mean more job opportunities. Last summer, Agriculture Secretary Tom Vilsack asked Congress to set a goal in the 2012 Farm Bill of helping at least 100,000 Americans to become farmers by, among other things, providing entrepreneurial training and support for farmers markets. O’Hara’s report takes up Vilsack’s challenge and argues that supporting local and regional food system expansion is central to meeting that goal.

In the report, O’Hara  identified a number of initiatives the federal government could take to encourage new farmers and the growth of farmers markets in the upcoming Farm Bill. For example, the report called on Congress to:

• support the development of local food markets, including farmers markets and farm-to-school programs, which can stabilize community-supported markets and create permanent jobs. For example, the report found that the Farmers Market Promotion Program could create as many as 13,500 jobs nationally over a five-year period, if reauthorized, by providing modest funding for 100 to 500 farmers markets per year.
• level the playing field for farmers in rural regions by investing in infrastructure, such as meat-processing or dairy-bottling facilities, which would help meat, dairy and other farmers produce and market their products to consumers more efficiently. These investments could foster competition in food markets, increase product choice for consumers, and generate jobs in the community.
• allow low-income residents to redeem food nutrition subsidies at local food markets to help them afford  fresh fruits and vegetables. Currently, not all markets are able to accept Supplemental Nutrition Assistance Program benefits.

“Farmers at local markets are a new variety of innovative entrepreneurs, and we need to nurture them,” said O’Hara. “Supporting these farmers should be a Farm Bill priority.”

[READ THE ORIGINAL ARTICLE HERE]

Economists find flaws in federal estimate of climate damage

Economists find flaws in federal estimate of climate damage
July 13, 2011

A new report concludes that each ton of carbon dioxide emitted in the atmosphere inflicts as much as $900 in environmental harm - almost 45 times the amount the federal government uses when setting regulations. The gap, advocates say, disguises the true value of emissions reductions.

By Douglas Fischer

Uncle Sam's estimate of the damage caused by each ton of carbon dioxide is fundamentally flawed and "grossly understates" the potential impacts of climate change, according to an analysis released Tuesday by a group of economists.

The study found the true cost of those emissions to be far beyond the $21 per ton derived by the federal government.

The figure, commonly known as the "social cost of carbon," is used by federal agencies when weighing the costs and benefits of emissions-cutting regulations, such as air conditioner efficiency standards and greenhouse gas emissions limits for light trucks.

A truer value, according to the Economics for Equity and the Environment Network, an organization of economists who advocate for environmental protection, could be as high as $900 per ton - equivalent to adding $9 to each gallon of gas. Viewed another way, with the United States emitting the equivalent of close to 6 million tons of carbon dioxide annually, the higher figure suggests that avoiding those emissions could save the nation $5.3 trillion annually, one-third of the nation's economic output.

'Dramatic simplifications'
A second, separate report released Tuesday buttressed the argument, finding that the government routinely underestimates the benefits of avoiding climate change when conducting cost-benefit analysis on regulations aimed at reducing greenhouse gas emissions.

This second report, published jointly by the World Resources Institute, an environmental think tank, and the Environmental Law Institute, found that government models on climate impacts often contain "dramatic simplifications and assumptions" - such as when calculating the social cost of carbon - that underplay the benefits society gains by curbing emissions.

Together, the two reports suggest policy makers are looking at a distorted picture as they assess the economic impacts of climate regulations.

The issue has gained urgency as efforts to create a cap-and-trade system or impose a carbon tax have stalled in Congress and federal rules - via the U.S. Environmental Protection Agency - become the primary vehicle for reducing emissions.

"Based on what we know today, the government's current range of social costs is very likely a serious underestimation of what we think those costs will be," said Kristen Sheeran, executive director of the E3 Network.

"It does not reflect the urgency of the climate crisis," she added. "It could lead to a degree of inaction on climate change that frankly is not supported by either the economics or the science at this point."

Costly impacts missed
A lower social cost of carbon - particularly when combined with an underestimate of the benefits of reducing emissions - makes justifying expensive emissions-cutting regulations much harder, advocates say.

But how to value the cost of climate change has proven to be a contentious issue.

Computer models attempting to assess the economic impacts of climate change are, in many cases, streamlined affairs that can only look at impacts broadly - at a scale of hundreds of miles, instead of, say, at a particular watershed, township, or even state.

Economists at the E3 Network, an umbrella group of about 200 economists, contend many potentially costly impacts are missed: Sweltering inland temperatures are averaged with cooler coastal weather. Or an intense, deadly rainstorm never shows up in a monthly average rainfall tally.

That leads to considerable uncertainty about the severity of the damages. For example, a global model used in part by the federal government to derive the $21-per-ton price finds that a 4.5ºF (2.5ºC) temperature rise will cost 1.8 percent of the world GDP. But University of California, Berkeley, economist Michael Hanemann, conducting a detailed review of that estimate as it applies just to the United States, found it should be four times as large.

Inflated assumptions
The point, say E3 economists, is that when the latest science on cost of climate extremes, the pace of global change, and how to account for those damages in the future are incorporated into the federal government's mathematics, the picture changes dramatically.

"Now that we know how much we could end up paying to endure the impacts of climate change, investing in reducing our emissions is clearly the prudent option," Frank Ackerman, an economist with the Stockholm Environment Institute and one of the report's two authors, said in a statement. "It's the difference between servicing your car, or waiting for it to break down on the highway."

Officials at the EPA were unavailable for comment Tuesday evening. Michael Greenstone, the Massachusetts Institute of Technology Professor who led the federal effort to price the cost of climate impacts (pdf), was similarly unavailable.

In an interview earlier this year, however, Greenstone said the federal panel charged with pricing impacts did consider several studies that pegged the social cost of carbon closer to $3,000 per ton of carbon dioxide. But those higher values were based on unlikely assumptions, Greenstone said. When the panel held those assumptions and variables constant, the picture changed dramatically, and the federal estimate fell within the mid-range of the published literature, he said.

The federal panel published its $21-per-ton figure in February 2010 with a promise to reassess its work within two years. Sheeran noted 18 months have passed, with no evidence the estimate is being revised.

"It does not appear to be a priority within the administration," she said.

[READ THE ORIGINAL ARTICLE HERE]

It's Time To Shut Up And Do Something

   Our garden is about two months behind last year, which was a horrible growing season. Yesterday I was able to hang the laundry outside for the first time this year -- that's about two months behind the norm. It's not just the Puget Sound. While in Nebraska, every time I commented on how beautiful it was (it really is) I was told how wet and cold it had been and generations of folks would say, "It's never this green this time of year".

   There are tornadoes in Arizona, the Missouri River is experiencing record flooding, and the entire state of Texas has been declared a disaster area due to drought and wildfires. Oceans are rising. It seems pretty obvious that Ma Nature is not cooperating with human "business as usual".

   People in Canada and Australia are concerned about what we need to do about it. It was only a few years ago that the majority of Americans believed that climate change was an important issue that needed to be addressed. Then two things happened: the economy took a dive and a democrat was elected President. This is important because climatologists still insist that we need to address the causes of climate change immediately, if it's not already too late. But a handful of people have decided to use the issue to further polarize political parties and now the number of climate change deniers is going up.

   This is insane and I don't understand the reasoning.

   Okay, so a few strange weather occurrences does not necessarily mean anything. I get that and if that's what we were talking about, that'd be one thing. But we aren't. We're talking about a growing body of evidence and a majority of scientists who agree that climate change is happening and we are responsible.

   "We can't afford to do anything about it right now". The economy is in the toilet, sure, but who is going to be glad we focused on that when millions of people start getting displaced, we can't grow food, and drinking water is scarce? It's as if people don't understand we are talking about losing our basic necessities: food and shelter. We are talking about a world that can not longer sustain not just us, but the plants and animals that we rely on. I really want my 401k to take care of me when I retire, but if it's a choice between that or food, I'll find a way to make ends meet.

   I read somewhere someone called climate change a hoax and suggested that it was some kind of liberal plot to make people spend money. First of all, if you want plots, turn to the advertising companies. Marketers have gotten us all to spend so much money on crap -- much of which is bad for us -- I can't understand where anyone has the energy to spend on a conspiracy theory around climate change. Second, these are the same people bitching about the economy. Guess what? Investing in new energy sources CREATES JOBS. We should be creating new jobs in solar, wind, and hydro manufacturing and installation and putting people back to work! Why is anybody against these new jobs?

   If we really buckle down and try to deal with this problem the worst case scenario is this: the economy gets a shot in the arm with new jobs, we create cleaner energy, the air and water are cleaner, we all become a little more responsible, our children have better lives, and it was all for nothing -- either it really is too late and we can't change it, or it was all just a myth.

   Here's the other worst case scenario: droughts, floods, wildfires, hurricanes, tornadoes, and rising sea levels displace the majority of the world's population over the next decades, our agriculture and natural resources are wiped out, and you, me, and our children become part of the sharpest population decline in human history.

   Do we have our priorities straight?


   Further reading:

http://www.thesomervillenews.com/archives/16495

http://www.columbiatribune.com/news/2011/jul/08/lets-change-our-ways-before-its-too-late/

http://www.earth-policy.org/images/uploads/book_files/pb4book.pdf

How Obama Can Fix the Housing Market and the Economy

From HuffingtonPost.com, By John R. Talbott:

Right now there are millions of residential properties that have been foreclosed on and are held by the banks. In addition there are tens of millions more homes that are underwater, that is the mortgage loan balance is greater than the current market value of the home. Such a large overhang of troubled mortgages and properties prevents the housing market from properly clearing and establishing a true floor to home prices. The uncertainty in the housing market as well as this debt overhang are the prime reasons consumers aren't buying, the economy is stalled and unemployment is stuck at a seemingly permanently high level. Companies are sitting on lots of idle cash, but before they invest it or begin to hire again they have to see consumer demand return for their products and services.

And Obama needs to do something about the economy if he hopes to win reelection in 2012. The big key electoral battleground states are already shaping up as Florida, Ohio and Pennsylvania, all of which are suffering from weak economies with high unemployment. Cutting taxes or increasing government spending doesn't seem to make much sense in a country drowning in government deficits and debt, especially given that previous tax cuts and government stimuli didn't seem to help much. The Fed has lowered short term interest rates about as low as they can go and no one seems enthused about the Fed pursuing any additional asset purchases financed with newly printed money as QE1 and QE2 seemed to have done little to help the economy but certainly harmed the value of the dollar. It would probably be prudent to look at ways to lower the deficit and get the debt under control, but it is hard to see how those efforts will do much to help stimulate consumer demand in the short run. What is Obama to do?

Before the invention of mortgage securitizations and CDO's in which mortgages are packaged by banks into securities and sold upstream to investors, mortgages were typically held on the books of the bank that issued them. This made it much easier for banks to negotiate changes in the terms of a troubled mortgage because any bank loss generated by forgiving a portion of the principal or interest on the mortgage loan would be offset by the fact that a successful restructuring of the loan would move the loan off the bank's list of non-performing or delinquent loans.

Securitization has broken this link and led banks to be very slow in offering any debt forgiveness on outstanding troubled loans. The reason is quite simple really. With securitization, one mortgage may be held by hundreds of different investors who are difficult to organize and have no real incentive to get the troubled loan off their books quickly, especially if it means recognizing a loss, much less do something solely to stimulate the general economy. There is an easy solution to this dilemma, but it needs the involvement of government to organize the effort as no single party in the securitization food chain has the proper motivation to get the ball rolling.

Right now, homebuyers with good credit and proper down payments can get thirty-year fixed-rate mortgages for around 4.5%. But this rate is not available to people with troubled mortgages or who are sitting on homes that are underwater and wish to remain in their homes. The government should step in and offer a 3% fixed-rate thirty-year mortgage to any person, regardless of credit worthiness or delinquency history, who is refinancing an existing underwater mortgage or any properly qualified person with good credit buying a foreclosed property from a bank. The new mortgage could be guaranteed by the U.S. Treasury and then packaged and sold upstream so the government's debt load is not increased.

Take a simple example. Imagine Joe and Mary bought their house for $400,000 in 2004 with no money down. Assume that the house today is worth $300,000. No bank would be anxious to refinance this $400,000 loan as the home is clearly worth less than the loan balance and the bank does not want to recognize a loss that may threaten its solvency. In addition, Joe and Mary may have financed their home purchase with an ARM so they may have seen their mortgage interest costs explode from an initial teaser rate of 2% or 3% to say 8% or 10% annually and their income just can't cover this level of interest expense.

Assume the Treasury steps in and offers Joe and Mary a refinancing deal in which they pay only a 3% fixed interest cost on a new, no closing costs $400,000 loan. There is now no risk to the homeowner that this rate may increase in the future. Joe and Mary can stop worrying about making their mortgage payments and go back to focusing on their real jobs which would have to help the overall economy. The plan should limit the refinancing to the currently amortized amount of the original loan and avoid any increases to the original principal amount the bank may have added on to cover penalty fees, delinquency charges, missed interest payments, deferred rate increases, etc.

Think of the benefits of such a deal to everyone involved.

• The homeowner is given comfort that his rate will be fixed at a low affordable rate and not be subject to any future increases thus decreasing the likelihood of a possible default in the future.
• The homeowner avoids a default which can damage his or her credit rating and avoids the trauma of possibly having to claim personal bankruptcy.
• The banks and investors who hold the mortgage get out without taking a capital loss so the financial system is not further compromised. Banks, insurance companies and pension funds who hold this mortgage paper can all breathe easier.
• The government has no additional annual cost to carrying these mortgages as the 3% interest they receive on the mortgage more than adequately covers their 3% cost of borrowing. There is no increase in the current government deficit as a result of this plan.
• There is no loan forgiveness for the overaggressive homebuyer. He or she still needs to pay off the full amount of his or her original loan so other homeowners who were more conservative in their borrowing will not feel like this is a unfair giveaway to aggressive homebuyers.
• Entire neighborhoods should improve as a large number of underwater mortgages are refinanced and many foreclosed properties find new owners.
• The economy should improve as debt burdens on consumers ease substantially, the housing price decline moderates and the financial sector is strengthened as it finally deals with its bad loan exposure.

Of course, all risk has not been completely eliminated. There is still a risk that Joe and Mary may default on the new loan. This is problematic because the face value of the loan, $400,000, is still greater than the current market value of the home, $300,000. But this risk is minimized because the carrying cost to Joe and Mary has been so reduced and fixed as to make it very desirable for them to want to stay in their home. They aren't going to get this low of rate if they decide to sell the house and move.
You could lower this default risk even further by making the new loan clearly recourse to Joe and Mary's other assets in case of default or by making the new loan an interest only loan. By going the interest only route, the $400,000 repayment becomes a balloon payment due in thirty years further lowering Joe and Mary's carrying costs thus increasing its affordability and reducing the risk of default. Given any reasonable forecast of future inflation, such a repayment amount should be easily covered by the home value at that time in the future. As a matter of fact, in this example, if general inflation averages anything more than 1% a year for the next thirty years the home value catches up to the loan balance.

Qualified homebuyers with good credit who wish to buy foreclosed properties directly from the banks should be offered similar payment terms as this would help clean up the overhang of unsold and foreclosed properties on the market. Also, if Joe and Mary wanted to just get out and sell their home for less than the mortgage balance, the prospective home purchaser could be offered these attractive financing terms so long as he or she met all other credit and down payment requirements. Here, the transactions should occur at the fair market value of the home so the banks would have to recognize some loss, but much less than they otherwise would have without this plan.

This economy is not going to bounce back. We had too big a bubble in too big a sector of our economy to ever bounce back to the high prices, crazy borrowing and wild consumption that existed before the crisis. But if Obama doesn't do something to address the debt problems homeowners and the financial system face, the housing market will lie dormant for years, the economy will crawl along anemically for decades and Obama himself may join the ranks of the unemployed in 2012.

[READ THE ORIGINAL ARTICLE HERE]

Food Mill

   The food mill arrived yesterday. Today I went to the produce stand and spent most of the afternoon in the  kitchen. My taste for hot pepper sauce has been ramping up over the past year or so. I figured it was time to learn to make it myself and it would be a great project for the new food mill.

   A quick aside here... why make a condiment that I could find in a multitude of varieties in any grocery store? There are a number of reasons, but for me the primary reason is to be more connected to my own food supply. I appreciate knowing exactly what goes into what I am eating beyond a list of ingredients that include chemicals that I have to look up what they are and how to pronounce their names and can't find in any store. I like knowing (and being able to control) just how much sugar, salt, fat, etc. is going into my food (and my body, and my family's bodies). It's rewarding to learn how to make things like condiments and maybe even tweak the recipe to make it better. I am able to use fresh ingredients, know their origin, and deal with waste responsibly (i.e. chicken food and compost). On top of all of that, by doing it myself I take a lot of excess out of the equation such as the processing plant, warehousing, distribution, and advertising. Ultimately, I am able to produce a superior product that is healthier for me, my family, and the planet, and save money. The downside is that I have to take some time out every now and then and do it. It's worth it to me.

   Back to today's project: hot pepper sauce! The produce stand had approximately seven pounds of various peppers on the discount table, so I bought them all, along with a couple heads of garlic (they were 2 for $1 and I know we'll use it). At home I cleaned the peppers, cut them up, and started trying to process them through the food mill. I thought I could process them through the coarse plate and then process the mash a second time through a more refined plate. It quickly became evident that I had not properly prepared the peppers for the food mill.

   I decided to run the chopped peppers through the food processor first, then through the food mill. That worked out well, though it added a step I had hoped to eliminate. Once all the peppers (and a couple cloves of garlic) had been reduced to liquid, I added an (approximately) equal amount of vinegar and seven teaspoons of salt. After stirring the solution well, I gave the spoon a conservative taste test and was very happy with the result! I brought the sauce to a gradual boil while I sterilized some pint jars and lids.

   I ultimately ended up with five pints of hot pepper sauce. Every recipe I read said that it needs to ferment for at least two weeks, up to three months (or more). At this point the jars have cooled and the vinegar and pepper juice seems to have separated, but a quick shake appears to solve the separation.

   I'll follow up on the pepper sauce experiment as it progresses. I think I might try steaming them first next time. I am really looking forward to making spaghetti sauce when the local tomatoes start coming in!

Economic Consequences

   Two articles appeared on Market Watch today that I wanted to share.

   The first reports that the housing market is taking yet another dive, indicating no foreseeable economic recovery on the horizon:

May 31, 2011, 12:56 p.m. EDT
Housing in double-dip decline as prices fall again
S&P/Case-Shiller index shows U.S. values falling below 2009 trough
By Greg Robb, MarketWatch

WASHINGTON (MarketWatch) — U.S. home prices fell in March for the eighth straight month, confirming the beleaguered housing market has entered a double-dip recession, according to a closely followed index released Tuesday.

Home prices in 20 major U.S. cities declined 0.8% in March on a non-seasonally adjusted basis, according to the Case-Shiller home-price index released by Standard & Poor’s.

Prices fell in 18 of 20 cities in March on a monthly basis. Only Washington, D.C., and Seattle showed advances. Over the past year, only Washington, D.C., has seen prices advance.

Prices fell 3.6% on a year-over-year basis in March, compared with a 3.3% year-over-year drop in February.

The 20-city index is now below its April 2009 trough, meaning that home prices have fully retreated from gains posted from May 2009 through June 2010, putting housing in a double-dip downturn.

“Home prices continue on their downward spiral with no relief in sight,” said David Blitzer, chairman of the index committee at Standard & Poor’s.


[READ THE FULL ARTICLE HERE]

   The second article really puts the economic problem in perspective. After three years of financial ruin, seems a lot of people want to point fingers but no one wants to take blame. Worse yet, there doesn't seem to be any entity interested in holding anyone -- except for the American tax payer, that is -- responsible...

May 31, 2011, 12:01 a.m. EDT
Why no jail time for Wall Street CEOs?
Commentary: Little reason to hope that justice will be served
By David Weidner, MarketWatch

NEW YORK (MarketWatch) — It’s probably the most asked question to come out of the financial crisis: why aren’t any Wall Street CEOs in jail?

It’s asked on the message boards, over dinner, in the media, in Washington and in schools. Most people shrug and agree, someone important — Lloyd Blankfein at Goldman Sachs Group Inc. GS -.00%  , Stan O’Neill, formerly of Merrill Lynch & Co., or Dick Fuld, the former CEO of Lehman Brothers — should go to jail, right?

A lot of us have tried to answer this question. Joe Nocera at the New York Times wrote in February that prosecutions were unlikely because “delusion is an ironclad defense.”

More recently, Roger Lowenstein, writing for Bloomberg BusinessWeek, concluded “risk-taking and stupidity aren’t criminal.” Lowenstein’s argument won praise from the Times’ Andrew Ross Sorkin who tweeted that Lowenstein was “probably right.”

Finally, Bill Black, the University of Missouri at Kansas City law school professor, and one of clearest-thinking minds on culpability in the financial crisis, wrote a blistering takedown of both Lowenstein and Sorkin on The Big Picture blog by quoting their previous writing on Wall Street against them. In Sorkin’s case:

“If the government spent half the time trying to ferret out fraud at major companies that it does tracking pump-and-dump schemes, we might have been able to stop the financial crisis, or at least we’d have a fighting chance at stopping the next one.”

Taking down the ‘Don’

The upshot of these assessments of legal culpability seems to be that while a successful prosecution may have long odds, it’s probably worth doing. Indeed, the Financial Crisis Inquiry Commission and the Senate Investigations Subcommittee report on Wall Street, the Levin-Coburn report, both suggest further investigations are in order.

“It is possible for certain senior executives at major financial firms and banks to be held liable for the credit crisis,” said Michael Chester, a partner at Skarzysnki Walsh & Black. “However, putting together a successful case will likely be much more problematic than most realize.”

For one, regulators just haven’t been keeping up, Chester said.

“Traditionally, these agencies have always amassed large amounts of information to use in subsequent criminal prosecutions. However, statistics show that these agencies have referred fewer financial cases to the U.S. Department of Justice in recent years.”

Also, a ruling in the case against former Enron Chief Executive Jeff Skilling about the “honest services” statute now strictly applies to bribes and kickbacks, Chester said.

Moreover, the statute of limitations has run out on a lot of securities law claims, said Max Gardner, a consumer advocacy lawyer who’s been working in the foreclosure space. He adds that it’s difficult to pursue claims against securities sold by the banks these CEOs ran, because common-law fraud claims require a showing of intent.

“There’s also the representations and warranties in the securitization documents themselves, including that there is good title to the mortgages and that they’re not in default,” he said. “”It’s important to emphasize, however, that there could be suits against mortgage-backed securities sponsors, MBS servicers, and MBS trustees.”

But those targets are admittedly below the executive suite for which we’re aiming. It’s hard, but not impossible, to believe those CEOs didn’t know how reckless their standards had become on the mortgage and securitization front. Again, the Coburn-Levin report suggests there are some smoking guns that could link high-level executives who testified that they just didn’t know what was happening.

Even if there was evidence enough to build a case, it probably wouldn’t satisfy us.

“For those who sold financial products that misrepresented their credit worthiness, how far up the chain do you want to go?” asked Brian Greenberg, an accountant and investor based in Marlton, N.J. “Do you want to take down the ’Don’?

“In that case start with the Federal Reserve that made credit plentiful and cheap without any regard to creditworthiness of the buyer. If their excessive policy of pushing cheap money did not exist, then Wall Street would not have been able to push the ’junk’ to the kids — er, public.”

Greenberg makes a fair point. There’s a lot of blame to go around.

It’s the ability to mete out punishment that has its limits.


David Weidner covers Wall Street for MarketWatch.

[READ THE ORIGINAL ARTICLE HERE]

   We've all been much, much too complacent.

Harbinger

   Seriously? The U.S. Senate needed sixty votes to proceed with a bill to reduce the deficit by closing big oil tax loopholes and there were 48 Senators willing to vote against it?!? We are fighting two foreign wars, global climate change, an economic crisis, and we desperately need to curb the American appetite for petrol, but 48 U.S. Senators wanted to be sure big oil companies don't have to pay their fair share?!?

   This is exactly what the founders meant when they spoke of "voting the rascals out". We should be paying more for gas because the cost is high. We should be paying more for food produced with petrochemicals and being transported long distances. We need to find a balance with nature and the planet so that it will continue to sustain us, but the U.S. Senate just decided big oil's profits are more important than you, me, and our children.

   From Congress.org:

Motion to Proceed to the Consideration of S. 940; A bill to reduce the Federal budget deficit by closing big oil tax loopholes, and for other purposes

On the Motion to Proceed 05/17/2011 Senate Roll Call No. 72 112nd Congress, 1st Session Rejected: 52-48 (see complete tally)

By 52 yeas to 48 nays (Vote No. 72), Senate did not agree to the motion to proceed to consideration of the bill.

Vote Map: Senate Roll Call No. 72

Votes For :	52
Votes Against :	48

 


   I read somewhere someone wrote this:

"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.--That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed,--That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness."

   We The People need to seriously reexamine our consent!

The One Percent

   I just watched this documentary, The One Percent, on Netflix.

   It is a film that explores the gap between the rich and poor in the U.S. (and the world). The thing I found unique was the perspective -- it was made by Jamie Johnson, an heir to the Johnson & Johnson enterprise and fortune. The film is his personal exploration and he is able to use his name to get some great interviews.

   Here's part one on You Tube. Follow the links or check out the film on Netflix or your local library to see the whole thing:

Wal-Mart is Essentially the Distribution Arm of the Peoples' Republic of China

   "Wal-mart is essentially the distribution arm of the Peoples' Republic of China."

   I heard this quote the other day. I looked it up and found at least one source that attributed it to Max Fradd Wolff, economist, GPIA New School University.

   I might have to make a bumper sticker.

   I want to know what all the red-blooded, flag-waving, "My country right or wrong", Wal-Mart shoppers feel about this.

Lester Brown, Plan B 4.0

   I read Lester Brown's book, Plan B 3.0 about two years ago (as I mentioned in Backstory Part III). It's a difficult book to get through because you have to plow through a lot of doom and gloom (about two thirds of the book) before getting to any sign of hope. Brown does offer solutions to the problems, but the book is a lot of explaining exactly the what, where, why, and how of all of these global issues.

   While I wholly recommend the new book, I found this video series on You Tube that is a pretty good primer. It was recorded at the University of Chicago on November 17, 2009. This is the sort of thing that should be viral and yet part one only has 112 views, part five has less than 50 views.

   If you haven't read the book or are not familiar with Lester Brown's work, I encourage you to take the time to look at this series:

Jevons Paradox

   From Wikipedia:

In economics, the Jevons paradox, sometimes called the Jevons effect, is the proposition that technological progress that increases the efficiency with which a resource is used tends to increase (rather than decrease) the rate of consumption of that resource.^[1] In 1865, the English economist William Stanley Jevons observed that technological improvements that increased the efficiency of coal-use led to the increased consumption of coal in a wide range of industries. He argued that, contrary to common intuition, technological improvements could not be relied upon to reduce fuel consumption.^[2]

   Interesting...