[evilgenius]

A few things that run through so many threads here, as well as the national consciousness, are starting to bother me. First of all, there is a difference between the two parties. That difference is not going to go away because a person looking at the political situation has lost hope and become apathetic. Realize the parties are made up of people that have believed in a worldview, usually from a very early age. It is absolute crap to dismiss that simply because you can't see it from the couch. Second, why does everybody want to bring back relatively unskilled and low paid manufacturing jobs? Is anti-intellectualism so rampant and deeply entrenched in America that people would honestly rather carp on rather than learn something new. What the crisis seems to me to be is a crisis of self-confidence where the people don't believe in their ability to adapt intellectually to the knowledge age. That and political gamesmanship augering away at the collection of memes and stop gap measures that people have put in place. America has been hobbling around on a broken leg for a long time, but that broken leg has not had to do as much with bleeding jobs overseas or bankster fraud nearly so much as with an acceptance of the twenty first century.

The world has been changing out of the old Marxist/Capitalist paradigm for lo these many decades. Even so very many wish to see the potential for utopia somehow wrapped up in Marxist ideals, whether it is a statement in opposition of or in favor. Try post-capitalism, it fits better. The workers now own the store. The real divide is between knowledge workers and service workers in terms of social questions. The failure to even address that is preventing application of science as an organizing force in order to increase productivity. We are experiencing this dystopia because we can't let go of the twentieth century and we can't step up and blame ourselves for not being brave enough to take the promised land. This applies both to understanding ourselves and our role vis a vis capital such that we as a people did not long ago address the agency problem in corporate management which is now hemorrhaging.

It is fashionable, even here on PeakOil, to look for easy, non-chaotic answers in the face of resource depletion and other crises. Simply put, backyard chickens are not going to save you from the crisis which will develop in your life resulting from not making the right decision about adapting in a knowledge manner to the future. Backyard chickens work, but they don't cover that one.

[Pops]

I thought I'd vote for McCain because (after the campaign) I thought he'd be most "independent" and I was afraid of how the right would react to O and what Fox News would goad some psycho into doing - I became especially worried after O selected Biden. But then old-fart McCain selected Palin and I threw up my hands. It came down to the choice for VP between Jibber Jabber and Drill Baby.

In my mind there was never a question if the Dems would lose in the mid-terms, the economy was trashed and wouldn't get better, we were in two unjustified wars that we couldn't get out of easily and no one in congress was talking to independents let alone the other party. The Republicans had nothing to gain by compromising with the Dems (since of course being re-elected is what's important and not doing what's right for the country) and I soon realized that O was a nice talker but not necessarily a great leader. He had a pretty good mandate so I thought and if the opposition simply wouldn't play, he should have rammed through his agenda without them instead of dinking around pretending to build a consensus that anyone could see just isn't going to happen till the next 9/11.

[Ludi]

$this->bbcode_second_pass_quote('evilgenius', ' ')why does everybody want to bring back relatively unskilled and low paid manufacturing jobs? Is anti-intellectualism so rampant and deeply entrenched in America that people would honestly rather carp on rather than learn something new.

[Ludi]

$this->bbcode_second_pass_quote('evilgenius', '
')It is fashionable, even here on PeakOil, to look for easy, non-chaotic answers in the face of resource depletion and other crises. Simply put, backyard chickens are not going to save you from the crisis which will develop in your life resulting from not making the right decision about adapting in a knowledge manner to the future. Backyard chickens work, but they don't cover that one.

[Cloud9]

It is going to be extremely difficult to let go the twentieth century. It was built by cheap energy. The unfolding dystopia we have coming at us is going to demand ever higher inputs of labor. I fear many will not be able to successfully make the transition. In despair, people have a tendency to turn to fanaticism. There is a real yearning in this country for a messiah. Messiahs all tend to end in the same way. They are crucified and their followers are murdered and scattered to the wind. We run a real risk of voting in some guy with a funny little mustache.

[efarmer]

I find fault with the notion that Americans are against intellectualism or afraid to learn new skills as a central theme to what is taking place. More to the point is that the practical experience over the last 20 years or so, as we have seen the information economy and service economy touted as the wave to ride for response to the older industrial economy seeking the global destination of cheapest labor, least environmental regulation, least taxation / most emerging economy government subsidy, etc., a simple fact that strikes people right between the eyes in their everyday experience has become manifest.

There is often no reason for the service economy and information technology sectors not to simply seek the equivalent offshoring the industrial economy has for the exact same reasons. China builds things and more and more designs them. The contract manufacturer of the 1980's is now a turnkey design, manufacture, and more and more often a product support source with American companies providing concepts, brand names, and consumer interfaces for goods that are thin shells and simply market American consumers to Asian manufacturing and Indian (subcontinent) or alternative English speaking and well educated telephone support, or online support. American enterprises have shifted from being vertical integrations to being advertisers, order processing, and grunts in vans to install and swap modules and boxes. This is true for IT, automobiles, and on a increasing basis for a wide range of industries. The service and support aspects of this system on the American end of the global corporation are often borderline living wage affairs. Some voices tout that a national goal would be to ramp up to attempt to now maintain a vast infrastructure we implemented during the waxing our our economic prowess and then during the leveraging and derived wealth manipulation of same until it simply exploded in our faces. Does anyone have a real plan here?

As Nasim Taleb (Black Swan) pointed out on the financial industry in particular, the approach is that exceptionally large systems are built and managed by globalizing supply chains, monetary as well as material, manufactured, and increasingly service products and reducing inefficiencies to build a structure that is managed with the mathematically derived data from it's own past existence to carve away at any inefficiencies and leverage from the strengths to as great of a level as can be done and to design stability into the system from metrics acquired by intensive analysis of the past performance and upsets that have taken place within the structure. We build huge sleek global machines that can't take a punch without collapsing because they are not designed for anything unexpected. We know on this forum that resource limits and climate change will deliver great blows and unpredictable civil and social aftermaths of those blows on a rotating basis around the world, and yet our economic system is building systems without redundancy and compartments because that's how you make the fastest money possible, and in fact, the most money until the system is destroyed by a Black Swan.

This is a crippling strategy and philosophy, because in the pursuit of the efficiencies anything redundant is cut out and everything useful is pushed to it's highest performance to produce the most profit. It sounds wonderful. But in practice it is not. It is like making a large ship without individual compartments that can be damaged and flooded and sealed off to stay afloat, or like the Titanic, a ship that relies on barriers that contain flooding so pumps can be used to keep up with damage.

When a nation that is large enough to be fundamentally self sufficient, like America, pursues an approach based on highest profit and strips away it's internal compartmentalization in the vertical stack of critical industries and activities that makes it 'seaworthy' it gives away it's ability to provide for itself and it's people in return for the opportunity to return the highest profit on economic activity until such time as an accident takes place and it does not have the internal structures to stay afloat.

As we moved further and further into this vulnerability, each compartment to be abandoned railed against the notion, manufacturing, small farming, local retail, domestic technical support, etc.
The rallying cry was that we would retrain, and embrace the high technology and new technology growth areas as if they for some reason are a uniquely American niche that was immune from the pressures that felled the employment bastions that fell to globalization preceding these new great hopes. I see no reason if the global communications and transportation systems stay intact that American high technology, portions of health care, and service industries that are not actually hands on, will be immune from the forces that hold sway. I fully expect to see a brutal doubling down of the past trends to manifest as the way American corporations will seek profit at reduced overhead to recoup stock values as/if we abate from the present economic slump.

It is cynical, but I see the retraining and re-educating push being made in America as being another wealth extraction game for the higher education mills and associated finance (with auspicious Federal, State, and local taxpayer funding rolled in) to train people for jobs that will simply not emerge here, but will emerge in the cheapest place they can be accomplished globally instead.

The American government did not have a long term plan, they had a series of exploits and had fallen into lucrative military industrial and petroleum centric global strategies by simply staying at them in the 65 years since the end of WWII. They do not have a plan at compartmentalizing the nation to make it a persistent and resilient (resilience is inefficient and is slain like a vermin for profit) place that can weather the shocks that get delivered region by region globally, in such a fashion and pattern to be a
a long term global player.

I don't think the intellectual argument about the American workforce moving into the future and being retrained will find real purchase until the people promoting it have a plan for where the nation is headed, and they do not, as well as a promise for protecting the economic pursuits associated with the new field or endeavor they are imploring their citizens to educate themselves to inhabit.

Our government is sold out to corporate influence on a massive basis, corporations pursue profit and abandon national compartmentalization and resilience as an affront to global efficiency. Our government does not have a comprehensive plan, because they serve corporations that have global plans and dare not and need not formulate one.

Our national strategy is essentially that we are too big to fail and will not be allowed to because so many others need our military protection and we owe them too much to allow us to fail.

It is so obvious, we go into tribal societies as part of the terror wars and are amazed that the people in comparative abject poverty would rather be left alone that become liberated and a part of a great global enterprise and all it would take it their minerals or perhaps labor. We don't understand people who have lived locally resilient lives for thousands of years, and they understand why we are so damned interested in saving them all of a sudden.

We might try to figure out what we are going to do over the long term before we feel like our way of life is an export product of great value.

We might start with showing people where to win in America and putting in place the plan and protections required to protect the win if it can be achieved. Otherwise this whole line of challenge and bait crap is just another versions of the great wealth extraction that began with Reagan and culminated with the Necon debacle and Obama smelling salts and glucose IV line of the recent past.

This was a stream of passion rant, forgive me the typos and such.

[Ludi]

Super essay, efarmer.


$this->bbcode_second_pass_quote('efarmer', 'I')t is cynical, but I see the retraining and re-educating push

[dissident]

$this->bbcode_second_pass_quote('', 'W')hat the crisis seems to me to be is a crisis of self-confidence where the people don't believe in their ability to adapt intellectually to the knowledge age.

[Keith_McClary]

Found at patrick.net



dailybail




We need more educational material at this level.

How about Cookie Monster as the profligate consumer, Bert and Ernie as the two party system and Mr. Snuffleupagus as the national debt?

[Newfie]

Efarmer, good go!

[Pops]

Good rant ef, promoted to thefront page

[TreeFarmer]

Excellent rant efarmer and some good posts by the rest of you.

A couple of observations by me.
When people talk about retraining I have to ask; retrain into what? Like someone mentioned above, there was no long term plan that had viability in mind. This country's 'long term plan' for the past 50 years has been to kick the can down the road and pray.

As for loss of manufacturing jobs, a lot of $20/hour jobs (not counting benefits) have been lost. People tend to talk about the lost jobs as if they were all $7/hr manufacturing jobs with no benefits.

Government deficits are stimulus by another name. Our whole comsumption economy has been based on government deficits and personal debt. Obviously that is not a long-term plan unless your plan is to engineer a massive train wreck.

TF

[Keith_McClary]

Give Us All Your MoneyIf you thought the bank bailouts were over, you thought wrong
$this->bbcode_second_pass_quote('', 'Y')ou may have not noticed, but we are in the middle of the third major bailout of U.S. and European banks and their investors in as many years.
...
Now, near-zero interest rates are shifting hundreds of billions from the pockets of savers—including millions of pensioners now earning next to no interest on their investments—into the coffers of banks and their investors. This stealth bailout—effectively a giant tax on savers—is worth nearly $1 trillion annually in the U.S. alone, according to an estimate by Offit Capital Advisors. Worse, critics argue that this little-mentioned bailout isn’t just fleecing savers, it’s slowing the global recovery. By sucking money out of the real economy and into the financial sector, low interest rates are doing the opposite of what they’re supposed to do—delaying restructuring of the West’s stricken financial sector and stifling the economy instead of reigniting growth.

[evilgenius]

$this->bbcode_second_pass_quote('efarmer', '
')This is a crippling strategy and philosophy, because in the pursuit of the efficiencies anything redundant is cut out and everything useful is pushed to it's highest performance to produce the most profit. It sounds wonderful. But in practice it is not. It is like making a large ship without individual compartments that can be damaged and flooded and sealed off to stay afloat, or like the Titanic, a ship that relies on barriers that contain flooding so pumps can be used to keep up with damage.

[Ludi]

$this->bbcode_second_pass_quote('evilgenius', 'W')here we can compete is in sticking one person in where everywhere else ten people are required. We can design. We can adjust marketing and tactical corporate decisions instantly, if everyone working at a corporation functions like a soccer team rather than a baseball team

[evilgenius]

That's right, Ludi, the pace is moving faster.

[patience]

Uh, the US dollar is taking a dive, PM's have lift off for a moonshot, Japan is trying interventionism-again and again, while the European central banks just quit selling gold. Our currency is failing. Anybody notice a problem here? My point is, I think it is far too late to be planning for future careers in an economy that is so obviously so deep in the tank.

As a country, it would have been nice if we had a plan B for a future when all the manufacturing jobs were gone, but WE DID NOT. That future is now, and it is butt-ugly. On an individual basis, and probably on a national scale, it is time for damage control. Our ship of state has been hulled, and this sucker is going down. Time for lifeboats and a plan to get to dry land somewhere, IMHO.

[Ludi]

$this->bbcode_second_pass_quote('evilgenius', 'T')hat's right, Ludi, the pace is moving faster.

[efarmer]

I thoroughly enjoyed that post evil genius. I do lament the small manufacturing and farming segments that do no fit in industrial scales of national scope much less globalized scope. In some ways it is nostalgia for the lifestyles of Americans and historical familiarity, but in other ways, it displays a carelessness wherein economy of scale simply abandons the integrity of resilience it has for profit and normal times stability in almost total ignorance over the quantum fragility that is incurred.

Take and educator or a scientist and make the logical case that his craft is best done in more concentrated manners and less locations and you will at first gain logical agreement with perhaps some bargaining. Then tell him that his state or nation has no need of his educational or scientific discipline because of foreign supply and you are more likely to be told you are a fool and thinking short term.
This is what capitalism does if you allow it to put it's head down and just eat instead of taking the reins as a state or nation and guiding it via some means, with democratic consensus being an ideal.

I am still digesting some of your post, and thanks for a good one.

[Crazy_Dad]

This doesn't look too good from here in Oz. But China is playing footsie with the Yuan...
http://online.wsj.com/article/SB1000142 ... el_opinion

$this->bbcode_second_pass_quote('', 'B')y DONALD L. LUSKIN

The nearby chart is an update of one I showed on this page in early July. It depicts how the stock market over the last year and a half has followed a path eerily similar to that of 1937. This week corresponds on the chart to mid-August 1937, when the cumulative effects of massive hikes in personal and corporate tax rates, severe monetary tightening, and aggressive business-bashing by the Roosevelt administration tipped the economy into the "depression inside the Depression." From there, stocks were in for the longest and second-deepest bear market in history.
[ED-AM3308C_lusk]

Thankfully, we're not repeating all the mistakes of 1937. But Congress and the Obama administration are flirting dangerously with one of them by failing to extend the expiring low tax rates for all Americans. What's worse, we're close to repeating the mother of all policy errors, the one made not in 1937 but in 1930—the one that started the Great Depression. We're on track to resurrect the 1930 Smoot-Hawley Tariff Act.

Editorial Page Editor Paul Gigot analyzes a disturbing trend. Also, columnist Kimberley A. Strassel reviews the political prospects for the "moderate" Democrats that voted with Pelosi.

Let's start with taxes. If today's low rates expire at year-end per current law, that would at a stroke reduce after-tax income for every working American, the average reduction being 3.3% according to the Tax Policy Center. Do the math: 94% of income goes to consumption, and consumption is 70% of gross domestic product. All else being equal, if the Bush tax cuts don't get extended, that's a 2.3% hit to 2011 GDP. That means instant double-dip recession, starting at midnight, Dec. 31.

Why won't the Democrats who control both houses of Congress switch off this doomsday clock? It's because Democratic leaders and the Obama administration want to roll the dice for the sake of ideology, by giving tax relief only to the middle class while letting rates rise for higher earners. A growing number of Democratic dissidents have joined with Republicans in insisting that, in this weak economy, it's more prudent that relief be given to all Americans.

Some have even undergone a supply-side conversion. Forty-seven Democrats have sent a letter to House Speaker Nancy Pelosi citing the urgency of preserving low tax rates on dividends and capital gains for the sake of more job-creating capital formation.

Democratic leaders blocked Congress from taking up the matter before the October recess, fearing a humiliating defeat. Last Wednesday a resolution permitting the House to adjourn without dealing with the doomsday clock passed by a single vote, over unanimous Republican opposition and nays from 39 Democrats.

When a bill comes before the House in the lame-duck session later this year, the games will really begin. House rules allow Mrs. Pelosi, as speaker, to offer legislation under what's known as "suspension of the rules," which limits time for debate but requires a two-thirds majority to pass, rather than a simple majority. If Mrs. Pelosi offers a bill under suspension that excludes the highest earners, there's little chance she'll get enough GOP votes for the supermajority she needs. That way she can blame Republicans for the defeat of an already doomed bill many Democrats oppose, shaming the GOP for "voting against middle-class tax cuts."

Meanwhile, as we await New Year's Day when today's low tax rates expire, American taxpayers, already beset by crippling uncertainty, have no choice but to keep listening as the ticking of the doomsday clock gets louder and louder.
[luskinpic] Associated Press

Unemployment line in Newark, 1935

Now to protectionism. Last week the House passed the Currency Reform for Fair Trade Act. It's an amendment that gives dangerous new protectionist powers to the notorious Smoot-Hawley Tariff Act, the proximate cause of the global Great Depression, which after all these years is still on the books. Democrats—all but five of whom voted in favor of the bill last week—would do well to remember that in 1932 Franklin Delano Roosevelt ran as a free-trader, pledging to lower Smoot-Hawley's tariff walls. The 99 Republicans who voted aye should know that Herbert Hoover's name lives in infamy for erecting them. Instead, Wednesday's vote was a bipartisan move to build those walls higher using currencies as the bricks and mortar.

The bill, if passed by the Senate and signed by the president, would mandate that the Department of Commerce take a foreign country's currency interventions into account in determining whether its trading practices are unfair. In the case of China—the target at which this bill is aimed—Commerce would determine that the amount by which the yuan is allegedly undervalued. The number being thrown around now by supporters of the bill, such as the AFL-CIO and the United Auto Workers, is as much as 40%. The cost basis of Chinese-made goods exported to the U.S. would then be adjusted upward by that amount to determine whether they are being sold below cost, an unfair trade practice known as "dumping." Not a single Chinese export good could survive such a test—virtually the entire volume of China's exports to the U.S. suddenly would become subject to countervailing duties.

Surely China would retaliate. That makes the bill a nuclear threat of mutual assured economic destruction. If carried out, it would crush trade between China and the United States, which are huge export markets for each other.

Suppose China blinks and revalues the yuan to avert the nuclear threat. Even if this creates some American jobs, which is doubtful, it would do so by making all Chinese goods more expensive in the U.S.—an immediate inflationary tax on American consumers.

At the same time, it would make goods priced in dollars cheaper for China to import, supposedly a boon to U.S. exports. But an unintended consequence is that it will make China an even more voracious competitor for oil. That's because oil is priced in dollars, so a revaluation would make it cheaper in yuan terms. Remember, during the period from 2005 to 2008 when the yuan was revalued under similar political pressures from the U.S., the price of oil rose, not coincidentally, to $147 per barrel from $60. That could happen again—and it would be another inflationary tax on U.S. consumers.

Both issues—extending today's low tax rates, and protectionism against China—are animated by the coming election. Once that has passed, presumably cooler heads on both sides of the aisle will prevail, and these twin threats to our fragile economic recovery will fade away.

But sometimes such things can take on lives of their own. And sometimes in the heat of politics cooler heads do not prevail. If that happens now with issues as critical as these, then the economy and the stock market will be doomed to repeat the tragedies of the 1930s.

Mr. Luskin is chief investment officer at Trend Macrolytics LLC.