While we pause to remember the sacrifices of those who came before us, Europe is deep into their own process for understanding what Union means to them.  It has been in the works for perhaps 200 years, or 2,000 if you want to start with Rome.  The bloodshed has been grave and terrible.

Does it really come down to stark choices like this for Europe?

Some time ago I was in the little town of Burghausen, Germany.  This is a place where people are more likely to call themselves “Bavarian” or “European” than German.  Tucked just under the Alps that hover over them to the south, this is the land where the Rhine and Danube rivers come breathtakingly close together.  The ancient highways brought people and goods from the North and the East equally.  It is, in many ways, the heart of Europe.

This little town has a curious tradition every year, known as “French Week”.  People from their sister city in Fumel, France come to visit and the town is festooned with red, white, and blue flags.  The menus in the restaurants are even replaced with ones in French.  They do it up in a big way, going as completely French as they can.  I asked Herr Miterer, the owner of the Hotel Post, how people really felt about European Union and the single currency – was this really going to work?

“It has to,” he replied.  “We’ve seen the alternative.”

Across the barriers of language and a lot of very bad history, people have little choice but to talk about Union and really do it up as a big show.  In the USofA, we’ve more or less assumed it for nearly 150 years – it’s simply a matter of faith at this point, no matter how much people gripe and complain.

But there is always some complaining.  More and more Union around the world means that definitions of people and nations are bound to become bigger and necessarily out of touch with the people that make up the nation.  Perhaps new technologies might make democracy much more workable in these big structures, but that process is also still muddling its way through.

Union will come to places where it simply has to, given how terrible the alternatives are.  We learned that lesson, and so did Europe.  Their job has been a bit harder.  The single currency floated without a true Federal Union of Europe was always more of a stepping-stone.  We may have tried to forget that was the plan all along, but Helmut Kohl, the man who presided over the reunification of Germany, knew exactly what was going on.  The lines were falling everywhere and people were free to trade, travel, and simply be together.

Today, markets around the world are being wracked by the turmoil in Europe.  Will the Euro fall apart? Nearly everyone, even here in the US, has heard the story by now and has some kind of opinion on what this thing called “Europe” really is.   What will happen to it, though?

The answer is that they are in that awkward stage in their relationship where they either move forward or fall apart.  That’s what the talk of Eurobonds is all about, a hesitant step without a lot of solid commitment.  This will soon shuffle into more and more talk about a real United States of Europe.

We learned our lesson long ago, even if we’re always working on the kinks as the advantages of Union play out against the advantages of local people working together, eye to eye.  Europe learned its lesson, too, even if it’s been terribly slow to push it together.

If we think this through, we know where the story has to go.  We especially know here in the USofA because of what we honor on this Memorial Day.

This is Oakland Cemetery, Saint Paul’s municipal cemetery, founded in 1853.

We came to bring the first tulips of the year to the people that built our house 150 years ago.  The Spencers are almost like old friends to us after so many years of living in a house that, in many ways, still belongs to them. They were founders of the Republican Party and active abolitionists.  President Lincoln appointed William A. Spencer clerk of the US District Court in 1863 in return for his loyal service.  Up in the attic, the kids all carved their names, including “Charles L. Spencer, Apr. 14 ‘69”-  the fourth anniversary of Lincoln’s assassination, then a solemn holiday without school.

Civil War Veterans at Oakland Cemetery

Memorial Day comes from that time.  The hundreds of thousands of graves of soldiers killed in the Civil War seemed to deserve sprucing up once a year as a way to honor their sacrifice.  Weeds were cleared, flowers were placed, and a small flag was set to decorate the graves of those who made the ultimate sacrifice.  “Decoration Day”, as it became known, apparently started even before the war was over in some places.  The time of year was picked simply because the start of summer was when the earth itself was renewing.

The first declaration of a national holiday came in 1868.  The Grand Army of the Republic, a Union veteran’s organization that maintained a military structure, called on all its members to have a unified Decoration Day on the last Monday of May.  They had an enormous amount of political pull, so the celebrations were held across the North were often closely tied with government.  It wasn’t until after WWI that the South observed the same Decoration Day. The day and the name “Memorial Day” wasn’t officially recognized by the Federal Government until 1967.

But long ago, it was simply Decoration Day, when the weeds were pulled and fresh flowers were placed, and a family reunion of sorts was held with veterans and not all the same.  The Spencers, like all the pioneers, lived close together in the small town of Saint Paul, and now spend eternity together in a corner of Oakland Cemetery.  The trip under the oaks to see them and give them the first flowers of the season passes just long enough to put some perspective on a visit to the old pioneers who made Saint Paul what it is.

Amid the rounded old stones are new ones, many of them with pictures etched into the granite.  The graves are usually well tended and full of flowers.  The names are Xiong and Vang, not like the pioneers Ramsey and Spencer.  But just in case you doubted that these are pioneers in their own way, one of the stones has these vital facts:

Born Jan 13, 1913
USA Feb 12, 1980
Died Jan 15, 2001

Coming to America was obviously a rebirth worthy of note to all of eternity.  It made this family what they were as surely as it made Saint Paul what it is.  Among these newcomers, the flowers are fresh and the memories are bright and freshly carved.  A Styrofoam container with a meal half-eaten sits on one grave, a picnic shared through time as much as hope.  Our offering of tulips seems a bit thin, but it’s what we have.

It’s not the traditions that makes this holiday.  It’s about doing what’s right by those living and dead.  We do well to remember those who came before us and what they did to make the world the way it is. A few moments to recall that we are where we now for very good reasons, far too often soaked with blood, does more than help us to appreciate what we have.  Their spirit has gotten us through a lot, and it can get us through whatever challenges lie ahead.

It’s our turn now, and while we’re not all called on to fight in war we are called on to take our turn and serve and make the world in our own way.  Those under the white tombstones are now only stories, all any of us are in the end.  Retelling those stories as we freshen up the only physical reminders left keeps us humble but strong.  There is redemption for everyone who needs it under the shade of Oakland Cemetery.

There has been no bigger joke on Wall Street than the Facebook initial public offering (IPO).  From the beginning up through the sorry slide it’s on today, nothing has worked.  There is even a likely Securities and Exchange Commission (SEC) investigation into revised earnings information that somehow wasn’t shared with the public – but a few insiders had a peak at.

If you ever needed proof that big investment banks are nothing but leeches sucking the life out of our economy, Facebook’s IPO is it.

It’s not as if Facebook is worth nothing, given that it does have a $4 billion in sales every year with pretty low overhead and a pool of 900 million users worldwide.  The problem is that this works out to $1.21 in revenue per user, an incredibly low number.  The trick is whether or not Facebook can grow in a way that makes more off of each user, which is why it paid the insane price of about $1 billion in cash and IPO stock for instagram – they weren’t buying the product, they were buying the talent.  They need people who understand mobile apps and they need them fast.

But for all the potential for Facebook to grow and make something more from their installed base than a series of pretend farms, there is huge risk.  They haven’t done it so far and there is little reason to believe that they will really be able to cash in on what they have.  So how did Morgan Stanley and their friends at JP Morgan and Goldman Sachs handle that for the IPO?

They relied on hype.  And they apparently were so busy slapping together the hype they never released the updated revenue figures (not good looking), never figured out how shares would be allocated, never found out how it might overwhelm the NASDAQ exchange, and never tried to figure out how many shares the market could actually hold.

Was that JP Morgan, the investment bank, or Captain Henry Morgan, the notorious pirate?

You might call this a deliberate lie, a deception.  Given the way these firms operate, it seems to be something much more sinister.  It appears that they never really cared if they were selling a product with any value, the standard operation these days.  It was all, as Henry Blodgett called it on CNBC, “Muppet bait”, a reference to Greg Smith’s resignation letter from Goldman.

The technical term for when someone doesn’t even care enough to craft a decent lie is “Bullshit”.

Why should anyone care?  After all, the financial world is awash in trillions of newly printed dollars – so a few billion here and there is hardly worth worrying about.  Compared to the $700 trillion in derivatives estimated worldwide, about 14 years of the entire product of this planet, $18 billion is what a bank like JP Morgan would see fall into the cushions of the couch.  It’s on the order of 0.01% of their entire exposure.

Of course we should care because these games are being played with money that, in the right hands, could be doing amazing things that transform the economy and put people back to work.  It could feed families, rebuild neighborhoods, and instill new optimism and pride.  A few billion here and there may not be much to them, but to the rest of us it can change the world.

This time, they didn’t just lose piles of money on obscure trades no one understands.  This time, they fleeced ordinary folks with real cash that could have fueled real dreams.  This time, they crossed the line.  This time it was nothing more than a con job.

To compare Wall Street to a casino is unfair – to casinos.  An entire generation is growing up deeply sure that stocks are nothing but a con.

Too Big to Fail?  Long gone.  Too Big to Understand?  It’s been a serious problem.  What we have now is Too Big to Tolerate.

It is time to destroy the big investment houses before they destroy us.

But then along came Alexis Tsipras, who at 37 is likely to be the next leader in this odyssey of debt.  Outside of Greece he and his “Coalition of the Radical Left” are not well known, which is only reasonable.  They aren’t that well known in Greece, either.  What matters is that he is playing his hand perfectly and may well stand up to the big banks of Europe after June 17th.

Will this former youth organizer for the Communist Party be successful, not just in winning power but leading his nation away from disaster?  It seems unlikely, but if it happens it will be one Hell of a story.

Tsipras has always been a very practical leftist, an organizer who got things done.  He rose to power in the coalition of Communists and more democratically minded Socialists that split off into a harder-line Communist Party and a leftist minded uniquely Greek “Green” party of ecology and social harmony called “Synaspismós” (the coalition) in 2004.  He stayed with the coalition and has never looked back, rising quickly to lead the group as its charismatic leader and taking it to a position of real power.

Sound scary?  Then try this quote from Tsipras: “Yes, we do want Europe’s support and funding, but we don’t want the money of European taxpayers to be wasted. Two bailouts in a row went into the dustbin, into a bottomless barrel. If this continues we would need a third package in six months. Europeans and their leaders must realize this.”

If that sounds reasonable, he continues on: “We want to make use of Europe’s solidarity and funding to create the basis for our long-term reforms. But we need to know that in two-three years we’ll have escaped this downward vortex, we will have growth, and we’ll be able to pay back the money they gave us. There is no way we could pay them off if we continued this program.”

The problem the press has outside of Greece is explaining how bizarre the situation has become and how someone “radical” is exactly what’s needed – assuming they are radical in just the right way.  This is how generational change occurs.

For example, as part of the austerity package pushed through last Fall the Greek Parliament was a property tax.  It seemed like a good idea at the time.  Greeks responded to this new tax in a particularly Greek way, which is by simply not paying it.  So the government got the bright idea of putting the property tax bill on people’s electric bills.  When people stopped paying their electric bills, a court ruled that no, you couldn’t cut off power because people didn’t pay their taxes – and the electric company, ticked at being turned into tax collectors, stopped shutting off power to anyone who didn’t pay their electric bill, either.

So now the government and the power company have no money.

What has been pushed together so far is a series of gimmicks masquerading as “reforms” – little bits here and there to raise enough revenue to keep the Germans quiet and the money coming in.  A wholesale reform that would transform the economy is eluding the government – but not necessarily the next generation of Greeks who want to make this work.

That’s where Tsipras comes in.  Can this young man succeed where older, wiser men have failed?  If you look at his political skill, you have to be impressed.  The Coalition came in a surprise second place on the strength of this call for major reform and a new generation of leadership.  By deftly not playing along with the process, they forced a new election which will give them a chance to emerge on top – and probably form a government.

Much of what’s happening is obscure, and the situation in Greece is far more confusing and dire than we can understand.  It may just be a situation for a young man with new ideas.  Or, these inexperienced lefties might bring down the Euro and threaten the developed world.  You can read whatever narrative you want at this stage.

Because this could be a great story, one way or the other, it’s best to keep an open mind and just watch what happens.  And make popcorn.

I should start by asking what it was like to talk to me about who you felt you were and how difficult it was.  I know it took you some time.  Did you think I might reject you for it?  What was going through your mind?

I never once believed for a second either of my parents would reject me. The only reason I was hesitant to tell you, is the same reasoning behind straight kids not wanting to tell their parents about their significant others. I was still figuring things out myself, I felt like it was a tad personal, and I didn’t want a big deal to be made out of it because it was always just something I was.  Even we queer kids don’t like parents meddling.

This is a different world that you live in.  When I was your age two of my friends were gay, but I didn’t know until years later.  There is only so much I can say about your life and the times you are defining around you now.  The hardest thing for me at the time was worrying that it would come between us only because I could never understand your life – orientation and generation.

Yes, I understand exactly what you mean and your concern. It’s tricky, but as I said one of the most important things to remember is that kids don’t always want a big deal to be made out of these differences. Simple, non accusing, and respectful questions about our feelings surrounding these topics, as long as you aren’t demanding an answer, can be a way of bridging that difference. You also have to make sure you actually listen to our answers.

As your Dad it’s important to me to be supportive and make sure you have what you need to be successful in the world.  That means understanding as much as I can so that I can be what need to be.  Most of the important stuff still applies – a confident mind, clear open eyes, and a compassionate heart.  But yes, as you become an adult this will someday soon be your world, defined by your experiences at least as much as mine.

Yes, that is also extremely important. Your generation and the generations before you have found their own ways of understand and ultimately affecting the world. We need to make our own mistakes and create our own experiences and not let the conflicts and so on that you faced define us as well.

Hopefully you can learn from us, though.  I tell you all these stories about desegregating Dade County Schools and the race riots for a reason.  I’d like to think we are mostly past racial issues, but as you know they are still with us, bubbling up in weird ways.  So you have your own path to follow, and you’ve told me that it could be another hard one.  I at least get to worry.

Don’t worry too much! It is very true we can learn from the past mistakes of not only the GLBTQ community but also the mistakes of other equality movements, we’re not starting from square one anymore. From what I’ve seen, the instinct in the queer community seems to be dividing and splitting of the community because of the large amount diversity in our movement.  An example of what I mean by this is I often feel like there is a split between those fighting for safe schools and those fighting for equal marriage.  There doesn’t need to be those splits, though, and I feel like more and more youth are realizing they are stronger as a unified force fighting together.

At least I can see that you learned that it’s not all about you, that it’s just not that kind of party.  That’s something that most of the world doesn’t seem to understand so it still can make for a pretty hard road.  But you already have the most important thing down – not to let social “conventions” mess with you.

I think it’s important to always remember the broader implications of everything our movement is fighting for.  Our generation’s job, more than anything, is to make sure no one is left behind or trampled in the socially forward movement in the future.

And for me it’s about what was always the hard part, accepting that my kids grow up and have to make their own way in the world.  Accepting who you are is not at all hard by comparison.  You’ll always be my daughter and I love you.

Why can’t Europe get its act together?  Why is it so dependent on personalities?

That gets us to the chief personality of them all, German Chancellor Angela Merkel.  She has been the one who, with her conservative Christian Democratic Party, has insisted on “austerity”, the tightening of budgets and paying of bills even as the economy crashes.  And now Merkel stands completely alone.  Does this mark the end of austerity for Europe?

To understand the change of leadership we have to start at the beginning.  The Euro brought prosperity through most of the 2000s because sales of goods and services no longer required currency exchange from Francs to Deutschmarks to Lira.  Everyone who did business across Europe had to keep a little bit in reserve in case the various exchange rates shifted suddenly.  With one currency, all that extra reserve was no longer needed.  It saved everyone a bundle and freed up a capital everywhere.

The key to success was a rock solid, reliable Euro.  The European Central Bank (ECB) was set up to make that a reality – and absolutely nothing else.  Their mission is narrowly defined at making sure that the value of this relatively new thing is unquestioned and constant not just in the Eurozone but around the world.

So far, so good.  The capital freed up was invested throughout Europe in all kinds of great new projects, the economy boomed, and people were happy.  Technocratically oriented conservative or center-right governments, like Merkel’s, were elected across the continent.  They kept the budgets in balance as ordained by the agreements that set up the Euro.  Since no one could simply print Drachmas or Pesetas anymore, everything had to stay carefully in check.

Think of Eurozone nations as something more like US states in that sense, with limited tools at their disposal to spend their way out of a jam.

This all started to change in 2008, as it did everywhere.  Nations found tax revenues were down and deficits started to pop up.  They were told to tighten their belts and keep at it.  Greece, however, was forced to admit something that was an open secret across Europe –their supposedly balanced budget had been fudged for years.  When times were good everyone looked the other way because, after all, what harm could tiny little Greece do?  But many bond traders who were not in on the secret were burned badly by the threat of default and Europe suddenly looked sick.

Since 2009 tax revenue has withered across Europe as economic growth slowed to nothing.  The old budget requirements started to look like a straightjacket, and were quickly labeled “austerity” by the opposition.  Calls for a bit of spending to spur growth in contrast to the old regime has defined politics across Europe since.

This debate may seem strange to observers in the US because we have never had it.  Our conservatives have never favored austerity, especially not through the spendy Bush years – as Vice President Cheney famously said, “Reagan proved that deficits don’t matter.”  The closest we have come to austerity was the negotiation over the debt ceiling last August.  That process spooked everyone so badly that the net result was a tacit agreement to never talk about it again.  Even the “Super Committee” that was supposed to fashion a budget agreement quietly failed with no repercussions at all.

But not in Europe.  As this debate has moved through the streets, the media, and into the palaces of power leaders have fallen and agreements are renegotiated again and again.  The once dynamic duo of conservative austerity, Sarkozy and Merkel, is reduced to Merkel standing alone – and a state election showed that the people of Germany are not as strongly behind her.

To create a “dimension of growth”, which French President Hollande campaigned on, there may well be new “Eurobonds” backed by the member states and a release of new funds to shore up governments across the continent as they spend their way towards more growth.

It’s worked so well in the US so far, yes?  No, not so much?  Well, that’s exactly what Chancellor Merkel is worried about.  But the situation has slowly slipped out of her hands.  Austerity may be dead and the Euro may flood the world the way the US Dollar has.  What exactly that means depends entirely on how successful the new agreements are at propping everything up – and actually creating growth.

Yet our economy is still hopelessly tied to the market for oil, despite its increasing dysfunction and, more importantly, the existence of proven technologies that can give us energy independence, sustainability, and conservation.

New ideas themselves are not the answer.  Implementing them is the real skill of technology, and on that score the developed world is failing horribly.  Why and how is worth discussing, especially in light of the faith we put in this thing called “technology”.  It is, in the end, about our values.

Barataria has been focused on three technologies that would change the market for  energy in fundamental ways.  They were chosen carefully from narrow criteria.  Each dealt primarily with motor fuels, at least as described.  They have all been proven in the field and are not merely laboratory curiosities.   Each was developed or has a significant research base here in the US.  They are all simply awaiting implementation on a large scale.

Why are technologies like this not being implemented?  Certainly, a lack of money cannot be the problem.  With a billion dollars is thrown at Instagram, six billion at Groupon, and tens of billions at Facebook, there is no shortage of cash for technologies that can transform markets.  Major investment houses lose billions for no apparent reason every day.  So why can’t proven technologies waiting to make someone a tremendous amount of money get the same attention?

The people making the decisions about where to invest have little to no contact with these technologies – or, for that matter, reality.  They only know what is in front of them.  The money we have is not in the hands of people who know how to turn a wrench or are willing to get dirty and make things happen.

There is little functional difference between our capital markets and a Soviet Five Year Plan.

Implementation is a critical step in technology.  The lust for internet based applications comes largely from their ease of implementation, not their true value to the world.  Slap the code together, push it out on the ‘net, and start spinning the hype.  They don’t even have to work all that well, as the insatiable market tolerates a lot of janky little problems in something “new”.

Connections Theory is about how the existence of several new technologies creates even more through combination.  Once all the pieces are there it is a matter of someone, anyone really, taking the pieces and putting them together to make something new.  There was a time when there appeared to be no limit to what could be made in our world as each new tech became just another “trigger” for the next wave.

Where this process has failed is in implementation, the craft that has to meet the new learning before the benefits can be realized.  As Jim Clifton stated in “The Coming Jobs War“, “Innovation is not scarce. Entrepreneurship is scarce.”

The developing world does not have these same problems.  New factories are growing up around new technologies all the time as the people are put to work making things happen.  Yet many of the developing nations are not as entrepreneurial as the developed world, often favoring governments that we might call “socialist”.  They have simply done a better job of putting new resources in the hands of people who will get things done.

The failure of capital markets generally is not only at the heart of this Depression, it is what drives the K-Waves or business cycles.  The critical failure of “Supply Side” theory, or the idea that cheap investment income drives an economy, comes when that investment is in the hands of people who cannot make intelligent decisions about where to invest that money. That describes where we are now in the business cycle.  Technology remains a craft, and if the individual craftsman does not have access to what is needed for implementaton advancement is stunted.

The problem is not Big Government or Big Business – the problem is Big.

There are at least three proven technologies that can transform this failed economy into the next one that will provide jobs for Americans.  There are even more advanced solar, wind, and other technologies in various states of readiness, waiting for investment as well.  The tremendous wash of US Dollars that has gone overseas for oil can be spent here at home, providing income and capital for people with the skills to make even more new things work.

The only thing stopping us right now is our values.  Are we really a technology driven society, or are we simply playing with toys that we can slap together quickly?

There are many links in this piece reaching back through the major themes of Barataria since the very beginning.  For more information, please follow them.  Thanks!

Any drive to long-term sustainability has to include  conservation.  Even if we can make a tremendous amount of fuel from cropland we need energy for electricity and heat as well.  Consuming less will always be important, and as the price of fuel rises we are in fact using less of it all the time.  But to really drop our consumption we need new technology.  Fortunately, at least one is nearly ready for prime-time – the turbine electric hybrid.

The most advanced small turbine suitable for use in transportation, among other things, come from Capstone company.  They are called “microturbines” because they are as small as 30kW (40 hp).  With only one moving part, an electric generator is built right into the system.

The main advantage of the Capstone system is that it operates at very high temperatures and pressures, giving it 36% efficiency at full throttle.  That’s better than double what can ever be obtained by a conventional “Otto Cycle” piston engine.

The conventional car engine was first made practical in the 1880s, and despite some major improvements it remains very similar.  It’s a big block of steel with heavy pistons that have to stop and change momentum twice per engine revolution.  Between those inefficiencies and the limit set by temperature at which the metal melts, they can never get better than 16% efficiency.

What makes this microturbine technology possible is not just the ingenious Capstone design, but the advance of ceramic technology in the last 20 years.

Why hasn’t this powerplant been more widely implemented already?  The Chrysler corporation worked very hard on a turbine powered car in the 1960s, even before advanced ceramics.  The main problem is that a turbine is very slow to get up to speed, requiring it to remain at high idle even when sitting at a stoplight.  The trade-off was always incredibly sluggish acceleration in city traffic or fuel consumption that showed no benefit for the more expensive technology at all.  It was eventually abandoned.

With the advance of hybrid electric systems, however, the problem is solved.  Batteries can store enough electricity to drive electric motors as the turbine brings itself up to speed gradually, replenishing the charge.  The turbine electric engine needed two very new techs before it became practical for road transportation.

In the last six years, many road-ready vehicles have been made from Capstone microturbines in a hybrid system.   The most prominent are the buses in New York, manufactured by DesignLine of New Zealand.  At 7 miles per gallon they hardly seem fuel efficient, but that’s double what any piston-powered hybrid has been able to reach.

Cars are a bit trickier, but the Whisper Eco-Logic from the UK has shown it is possible.  Achieving 80 miles per gallon in a decent sized minivan is no small achievement, especially given that this is the first generation.  The CMT-380 “supercar” was designed to impress in a different way, reaching 60 miles per hour from a dead stop in 3.9 seconds – but still gets 45 MPG in turbine-only mode.

The improvements from a turbine electric hybrid are a doubling of fuel economy, considerably lower weight (about 500 pounds in a car) and dramatically lower maintenance.  Cost will certainly be higher, but given that these have never been mass it is unclear exactly how much more expensive the system will be.  Given the 1,200 gallons of gasoline per household per year, however, the potential savings from double the mileage is on the order of $2,400 per year, offsetting additional costs.

Given that the average over the entire US is still a shade over 20 miles per gallon as more efficient cars are still working their way into the system, our ever decreasing gasoline addiction has nowhere to go but down.  Turbine electric hybrids have the potential to dramatically improve that trend.  This technology, or really basket of technologies, is still being developed but we can expect it to be a major part of our transportation future.  The best source of energy is not renewables, but not consuming it in the first place.

The 130 year old piston based technology that we all rely on to get around may soon be obsolete.  What it will take, like all three of the proven techs discussed here, is a bit more development and investment.  And that’s what we will talk about next.

It also might very well be the future of energy around the world, especially with a few advancements and refinements.

The process of making biogas is known as “anaerobic digestion” because it digests any kind of cellulose or sugar based plant matter without air.  The work is done by bacteria that get the energy they need to survive in the process.  All that has to be done is to set up conditions that are ideal for them to thrive in a big tank and they are happy making methane.  The end result is that nearly all the carbon present is consumed, between 60-70% of it released as methane (CH4) and the rest as carbon dioxide (CO2).

Any source of “cellulosic” or woody material can be used – hay, paper, food, corn stalks, or what have you.  The bacteria are not fussy.

For a while, ethanol has been the renewable energy standard here in the US.  Growing fuel is an attractive alternative to emitting more “greenhouse gases” from carbon sources that have been dormant underground.  But biogas is much better than ethanol for the following reasons:

• The chemical energy created is about 2.7 times greater.
• Anaerobic digestion can be performed on a much smaller scale.
• Capital investment is a tiny fraction of an ethanol plant.
• All nutrients can be returned to the soil.
• Any source of cellulosic material can be used.

The advantages over ethanol are impressive.  That’s why this process is being developed by many companies around the world and at every university Agricultural / Bioengineering department in the US.  On a personal note, I was part of a project to make biogas as a cooking fuel on a small scale for Haiti when I was in High School, and my grandfather had a small biogas system operating when he ran the Delaware County, Pennsylvania, sewage treatment plant 60 years ago.

If this technology is so well known and so great, why isn’t it more widely implemented?

Biogas is a very low quality methane produced at very low pressure.  Methane, as a very small molecule, does not form a transportable liquid easily or safely.  All of the reasons why natural gas is often flared off are amplified by the impure nature of biogas.

Most of the programs making biogas use it to create electricity, which of course can be transmitted anywhere.  But the efficiency of small-scale electrical production is low.

That’s why the ability to take methane, one carbon all by itself, and combine it into a larger chain in a cheap, simple process is so valuable.  Eight carbons strung together, as octane, is gasoline – concentrated chemical energy in an easily transported liquid form.  But even smaller molecules like propane (3 carbons) or butane (4 carbons) would be a major improvement.  The new technologies described earlier for making longer carbon chains from methane could revolutionize biogas into systems something like this one:

Note that there are still issues of scale – this whole plant may not make sense on a small farm, but might need to be part of a co-op that serves a whole community.  But the potential for these two technologies working together to provide a sustainable, carbon-neutral fuel that is economical and supports farms is undeniable.

How might this work?  Each digester could make up to 88 gallons of gasoline per ton of solid input.  It could use anything, including native plants that grow like (or as) weeds as part of a “fallow” season for a plot of land.  In a nation that consumes about 140 billion gallons of gasoline each year, that implies about 1.5 billion tons of plant or wood waste is needed – which happens to be about what we have around even before we deliberately grow crops just for fuel.

Note that hay is worth around $100 per ton, but the fuel that could be made from it in this process would be worth about $300.  There is a lot of room for the cost of the process.

The liquid fuels that could be produced by combining these technologies would have nearly limitless uses through the economy.  Transportation is one thing, but it’s worth noting that in Minnesota that is about 1/3 of our energy usage – the other needs being heat (also 1/3) and electricity.

While it is possible that a system like this would enable us to grow our transportation fuel, even perhaps export some, it is always beneficial to conserve as much as we can so that it is available for other uses.  And that’s what we’ll talk about next time.

The value of this great resource is finally being tapped around the world, and with some new technologies there are processes in place which can make suitable fuels directly from natural gas.  These systems need development and refinement, which can only come from implementation.  That, and a bit more research in the lab can revolutionize gasoline – and open the market to a vital new source of supply.

Natural gas is primarily methane.  It’s not chemically all that different from oil, tar, or even the common plastics that we use.  The difference is only “molecular weight”, or the number of carbon atoms strung together in a chain with hydrogen dangling from the side.  Gasoline is primarily octane, or 8 carbons, diesel is about 10, and polyethylene plastic several million.  Methane is one carbon by itself, not joined to any others.

Crude oil out of the ground is a mix of many different lengths of chain that has to be refined and “cracked” to produce shorter chains that can be pumped and burned easily.  The commonly used process for doing this is what made the father of the legendary Koch Brothers rich when he developed it in the late 1940s.  Oil refining is nothing more than taking the mixture of big molecules, cutting them apart and separating them.

Going the other direction, building up 8 carbons in a row from one, requires different technology.  One method, the Fischer-Tropsch Process, has been around for a long time.  It’s not very efficient and requires many expensive steps to implement, but the Nazis were forced to rely on it in WWII when their supplies of oil were cut off.  It has never been economical other than to a desperate dictatorship in the process of losing a war.

Research since that time has developed several catalysts for making octane or other chained carbons directly from methane.  Several big breakthroughs have taken place in the last 20 years using some intense chemistry.  The only by-product is hydrogen gas, which can be used for many things including direct electricity production.  Big oil companies have never really been all that interested in these processes, however, because they are in the business of taking oil and running it the other way.  They don’t build up carbon chains, they break them down.

Until now, that is.  Several processes have been developed that prove this new technology works in the field and is far more economical than the Fischer-Tropsch process.  Where the value of gasoline at the refinery is about $3.50 per gallon, the input of natural gas necessary as a raw material costs about $0.90 at current prices.  There is a lot of room for the cost of the process.

The reason methane, or natural gas, is so cheap is that it is very hard to capture and use.  Methane does not liquefy easily, requiring very high pressure.  This makes it hard to transport.  Development of a process for making longer chain liquid on a very small scale, perhaps right at the well head, would make it possible to capture a tremendous amount of natural gas that is now being wasted.

Natural gas itself is not without controversy, however.  The reason the US is awash in it lately is the development of a technology called “fracking”, or hydraulic fracture.  Rocks containing natural gas are literally smashed with pressure, releasing the gas the contained.  Many horror stories have been told when methane bubbles up into aquifers, contaminating drinking water, and literally creating flames in people’s kitchen sinks.

New regulations have gone into place requiring, among other things, that all methane be captured directly at the fracking site.  That could be very expensive and difficult – unless the methane is made into a transportable liquid.

There is more work to do to develop and refine the process for making methane directly into gasoline.  This is an ideal candidate for a government challenge grant written around specific economic goals that specify practical implementation.  But the technology is there.  It could easily make the US energy independent, given the tremendous amount of methane under our land.

Yet there is much more to it than an alternative source of fuel and strategic national interests.  Once we convert from an oil based infrastructure to a methane based one there are more interesting options that open up with natural, renewable sources of methane that can plug right into the same systems started up with natural gas.  That’s the topic next time.

There is nothing more fundamental to the health of economy than energy costs, particularly the price of gasoline.  There are more important things in life, especially food, but that cost does not rise and fall as rapidly and unpredictably as the cost of the gasoline that keeps our whole system running.

The cost of gasoline is determined by a very open market that is functioning about as well as it can.  A critical analysis of this market shows that there are key trends that will constantly drive up the price in narrow bands.  The largest problems with this market are barriers to entry, in particular the available refineries, and the single source of raw material in the form of crude.  Opening up this system to new technologies and sources of energy is the only way it can be improved to produce more stable, reliable costs.

There is little doubt that the world is running low on crude oil.  That is not to say that we will run out of it tomorrow, but it does mean that the price of it will increase with time as sources become more scarce and expensive – and demand in the developing world ratchets up.  Here is the price of “West Texas Intermediate”, a benchmark oil price from the oil patch, since 1985:

Note that the price was rather stable until about 1998, when it started to take off dramatically.  The big rise has been since about 2005, which is worth highlighting in a separate chart:

Here we can see that the price rise is not a constant slope upward, but a ragged series of spikes and sudden, steep drops.  The peak, after the start of the official recession in 2007, is the brief “commodities bubble”. That was the last gasp of the stock bubble, credit bubble, housing bubble, and every other kind of bubble that worked through our economy.  It was caused largely by speculation in oil futures, a big part of the spikes.

But there is much more to it than that.  Note that recently the price has hit $110 per barrel in 2011, only to fall back to $80 before rising again.  This is explained at least in part by the fact that there are many oil wells, especially around Texas, that have had the easy oil that bubbles right out of the ground taken out of them.  What’s left behind requires advanced technology like angled drilling, high pressure steam, and so on – it’s a lot more expensive.  When oil hits $110 a barrel it’s worth it to bring these wells online, slowly, and the price drops.

Crude oil production in the US is up 24% since Obama took office.  The United States is now the third largest producer of crude oil, behind only Russia and Saudi Arabia.

Swings like this are supposed to be taken care of with oil futures, or the ability to buy tomorrow’s oil today with a long-term contract.  The fact that we have such a huge cycle shows that the futures market is not functioning as it is supposed to.  But the overall market for oil is operating about as well as can be expected, given the circumstances.

But that is not all there is to gasoline.  Crude oil has to be refined, or broken down to a chemical form easily handled and burned.  California keeps careful track of all these costs, and has found that of the $4.19 paid at the pump $2.85 is crude oil, with the refining process and profits, etc, adding about $0.68 to the cost.  The rest is distribution, retailing, and taxes.

As gasoline consumption in the US keeps dropping, now at a 15 year low, we have found ourselves with excess refining capacity for the first time anyone can remember.  Some of that is shutting down because it is not designed to handle higher sulfur oil, relying instead on more expensive grades of crude.  Refineries in the Northeast in particular have to rely on “Brent” crude from the North Sea, and they can’t compete.  Combined with sales of refined gasoline abroad, excess refinery capacity is being kept in check by market forces.

In total, the market for our motor vehicle fuel is defined by a few characteristics.  The price is constantly increasing, but subject to spikes when the price gets to a level where new resources are added.  Speculation appears to have over-run the potential evening out that the futures market should provide.  Running against these trends is improved conservation.

The market for oil is functioning about as well as can be expected, given that it all comes from one diminishing resource whose cost of production and worldwide demand are rising constantly.  The only thing that can fix this market are new sources of raw materials, provided by new technologies.  That is what we will examine next.

200 Mexican Pesos

History has been hard on Mexico.  In 1810, Spain was being ravaged by Napoleon and utterly incapable of maintaining order in its sprawling empire.  Something had to be done.  On the 16 September, Father Miguel Hidalgo celebrated Mass with a call for independence.  After a brief war New Spain was left behind and Mexico was born.  It stretched from what is now Oregon to Colombia, sprawling across the underbelly of the continent.  Shortly afterward, the southern section across the jungles of Mayaworld broke away, then fell apart into the smaller states of Central America that still tend to share the same blue/white/blue in their flags.

Unlike its eventual neighbor to the North, the United States of Mexico was founded in a need to create order in a world that was falling apart.  The conflict between a strong centralized government and local control that today tears at the Estados Unidos del Norte today has always been at the core of Mexico.

Creating order from chaos is not something that North Americans, as a people, are known for.  We are perched on a rugged continent, taking care of what we have to as we have to and making the best of opportunities.  Mexico, in particular, has shown a remarkable resilience. The French learned this the hard way when they took control of the central government in Mexico City in 1862.   They could beat Mexico, but it could not be conquered.

Before the sorry dust-up with France, there was the war between two of the brothers that make up North America.  The US-Mexican War ended with the Treaty of Guadelupe Hidalgo in 1848 in which we took about 1/3 of Mexican land for $15 million. That moment defined the border states, all once part of Mexico.  Settled later on by Anglos in from the East seeking opportunity, they now see people up from the South for the same reason.

No matter how many pieces of paper are dictated, signed, and filed the spirit of the people of North America remains the same.  When the going gets tough, the tough pack up and move on.  This is how this rugged land was settled by natives thousands of years ago, and none of us are any different.  Opportunity is what matters.

We all tend to forget the details of wars and battles regardless of which side of the border we find ourselves on.  Within 5 years from the first Cinco de Mayo the US Civil War was settled, the French were firmly kicked out of Mexico, and the UK granted Canada Dominion status (home rule).  The continent passed through adolescence into full citizenship in the world together, leaving behind the embarrassment of our fights.

Since that time, Mexico has grown and at times prospered as waves of immigrants from Germany, Ireland, and many other places came to settle there almost as much as they did further North.  It has 100 million people struggling to make sense of their history and determine what it all means to them as one people.  Like any dysfunctional family, they often want to define themselves by their older and wealthier brother who always seemed to be the favored one. “Pity poor Mexico, so far from God and so close to the United States,” is how Porfirio Diaz put it.  History may have been a little harder on Mexico, but that only makes its heart stronger and its heavy burdens that much more bearable.

For all the grand ideas that gave birth to the USofA, our younger brother came into the world with little more than determination and a spirit that cannot be crushed.  These are values at the heart of our family.  We have a lot to celebrate together because as we grow older it becomes more and more clear that we have much more to share than we might have previously thought.

What we have is North American experience, the North American family story.  It doesn’t matter if it is told in English or Spanish or French, and Cinco de Mayo is as good of a day to celebrate it as any.  ¡Salud!

That wasn’t the way Romney’s opinion piece in the New York Times came off in November 2008, however.  At the time he was adamant that there was no role for the US government to write “a blank check” to save the US auto industry.

In the end this is a bigger story of how to manage the Depression we find ourselves in, no matter how the details are massaged for the purpose of a campaign.  It’s a choice between austerity and forgiveness, the paths taken by Europe and the US respectively.  For the campaign it’s a about a level of detail that takes far too much explanation.

The auto bailout itself has proven to be such a success that it’s only reasonable that everyone wants credit at this point.  GM has paid back what they borrowed and Chrysler nearly so.  The $80B package was first put together in the Bush administration but finalized under Obama.  It probably save millions of jobs and definitely gave GM a new start to a successful path, making them profitable again.  Chrysler is still struggling as a division of Fiat, who appears to see the arrangement as a chance to open up the US market to their cars once again.

Was this Romney’s idea in the first place?  Romney did speak of a “managed bankruptcy” in 2008, but railed against giving the automaker a lot of money.  The latest twist, that what went down is exactly what he was proposing, is very hard to square with what he said in the first place.  How on earth could there be a “soft landing” for such a large company without the US Government guaranteeing the loans, at the very least?

The answer is that Romney never intended for things to go as they did, no matter how much he or his people claim it to be so.  The “managed bankruptcy” they were proposing would have certainly resulted in a much smaller company that would have had to lay off many workers – much like the end result of what Romney did to many other companies at Bain Capital.  This new GM would have been more focused on key markets and would have shed all of its legacy obligations like pensions, health care, and so on.

The term for this money-centered approach to creating efficient businesses is “austerity”.  It is what has been applied by Tory PM David Cameron, who is facing growing criticism for the lack of economic growth.  This has intensified now that the UK has tipped into a recession for the second time since 2008.  This is also a hot topic in the French elections, now in their second round, where austerity has increased the unemployment rate to near 10%.  There simply is not any growth in Europe as insistence on currency stability, for both the Pound and the Euro, has been the central focus over growth.

There has never been any real debate on this topic in the US.  Congress did make some noise about austerity in August during the budget ceiling debate, but quietly backed off as soon as the teevee lights went down.  The chosen path of the government has been inaction, leaving absolutely everything up to the Federal Reserve to sort out.  The result has been not too bad, after all, so the wise politicians have been silent – except when they get a chance to take credit for the limited (but possibly growing) success.

The real problem that the Romney has is that his approach does not appear to be pure European-style austerity but something more nuanced.  You have to read the 2008 op-ed piece several times before you get it.  He does understand that the massive cloud of debt hanging over us will have to be forgiven through bankruptcy before we can move ahead.  But he does not have much interest in the way we’ve usually dealt with too much debt in the past, which is to grow (and inflate) our way out of it.

At least, that’s what he appears to be saying.  Once again, Romney seems to be a combination of George HW Bush’s hands-off capitalism and Mike Dukkakis’ wallowing in obscure details as he tries to explain himself.  That’s not going to win him anything.

Some will blame rising gasoline prices and others will cite the sharp declines in government spending, especially at the state and local level.  Still others will refer to ongoing investor unease and unwillingness to put money into new projects.  But this is all speculation.  What we do know is that job growth has led the recovery so far and probably will have to in the next quarter if this will turn around.  And that’s exactly backwards from what you typically see in a recovery.

The problem is shown in the simple regression that we  return to often in Barataria.  There should not be any significant job growth in a recovery unless real (inflation adjusted) GDP growth exceeds about 3.3%.  That level hasn’t been reached since the start of 2010, the time when the total jobs hit the bottom and started heading back up.  You can see for yourself how anemic the economy has been for the last 12 years, even before you take out the aggressive stimuli in the form of deficits and low interest rates over the entire period.  Here is the official GDP growth figure since 2000:

Throw on top of it the net gain in jobs year over year, and you have this figure:

Note that in the last 12 years we never had sustained growth in jobs unless GDP growth was above the midpoint between 2.5 and 5.0 – until recently.  That pattern has been more or less the same since the Great Depression of 1929 (and we don’t have good data before that, so it may go back further).

The official jobs figure for March showed a drop in growth that had many people scared.  Looking at the recent GDP figure, that jobs figure appears real – but it still does not square with the ADP job count, which showed sustained growth.  The answer will come with the April jobs numbers and potential upward revision to March.

But is it possible to have any kind of sustained job growth without GDP growth quite a bit stronger than we have had so far?  Nearly anyone who follows this stuff will tell you that, no, there is no way that the decent monthly increases in the number of jobs can continue without a stronger economy.

Except me, that is.  There is one small ray of hope that I will hold out and offer as a bet to anyone who thinks that we are not in a longer-term economic restructuring that is better called a “Depression”.  One characteristic of events like this is that demand for nearly everything drops off because people do not have money to spend on anything.  That means, generally, that job growth has to lead economic growth because there is no economy without people making an income.

So I will now place my bet with the April employment figures.  If they show a solid increase in jobs, on the order of 200k, and there is an upward revision to March, we will at the very least be in a very rare situation.  Yet I think this is exactly what we will see simply because we have seen this momentum building through 2011 – and trends to have a tendency to continue.  And I think that this is characteristic of the restructuring we can expect at the end of a Depression as larger firms sit tight and even increase their layoffs while small operations create new opportunities wherever they can – because people are hungry.

That’s the bet – a solid jobs report for April and this has to be a Depression.  At the very least I hope you can see that something very strange is up if job growth does not crash back down to zero.

More to the point, I don’t see that we can have sustained GDP growth until there is significant job growth, which is probably the only thing that can fuel an increase in optimism right now.  And I’m willing to bet that’s what is going on.

Then again, we’re also at the start of another.

While there may be morbid comfort in the idea that the world might end, an emerging new world should be much more comforting.  That’s why the K-Wave concept is likely to catch on.  This theory is not only more hopeful, it’s robust enough to explain an awful lot about our world from investing to generational identification – and more.

The name “K-Wave” comes from Nikolai Kondratieff, a Russian economist who helped craft the Soviet Union’s first 5 Year Plan.  He took a long view of history and fitted his efforts for the Motherland into a grander plan.  In 1926 he published his master work, “Long Waves in Economic Life”.  Analyzing history back into biblical times, he saw cycles of growth and stagnation fitting cycles of roughly every 52 years that matched the turn of the seasons.  This appeared contrary to the revolutionary dogma of his nation.  Kondratieff was sent to the Gulag, the natural destination for free thinkers and other trouble makers, and apparently died there in 1938.

The idea caught on in the West after WWII when it became clear that his predictions were accurate, and the term K-Wave entered economic thought.  His seasons, about 13 years each, are as follows:

Spring – Inflationary Growth – a period when opportunities abound and there is no shortage of money to invest in them.
Summer – Stagflation – the new opportunities exhaust themselves but the inflation caused by a lot of cash continues.
Autumn – Deflationary Growth – everything settles down and the population lives fat and happy for a while.
Winter – Depression – The excesses of the Autumn harvest become unsustainable and everything collapses.

The most common way of reporting K-Wave theory is its most practical application, “secular market analysis”.  Secular refers to something that is so long-term it appears permanent, and the markets in question are the stock markets.  The idea is that we go from a long term Bull Market with large gains for little thought into a Bear market where everyone is so scared that even good stocks can’t get respect.  It’s also known simply as “business cycles”.  Here is a chart of the Dow Jones Industrial average since 1900, separated into secular Bull and Bear Markets:

Several features stand out immediately.  The first is that the Bull markets are the Spring and Autumn described by Kondratieff, with the Bears the Summer and Winter.  These “seasons” are also much longer than 13 years each – indeed, there was 71 years between the Depressions of 1929 and 2000-2001 in this example.  And yes, K-Wave analysis does support the idea that we now ending a Depression of sorts, the one I call a “Managed Depression”.

Why is the period longer than Kondratieff’s original analysis?  Once again, K-Wave cycles go to the start of recorded history.  It appears to be that as we are living longer, the cycles repeat themselves on roughly a human lifespan.  It appears that they are based on our ability to forget what our Grandparents were trying to tell us.  Take a look at the same chart and see how the last year of “seasons” roughly correlates with generational identification:

This is the point at which K-Wave analysis becomes tricky.  If you do your own research on the topic you’ll find many websites that are full of lengthy and dense prose and tightly annotated graphs.  It’s easy to conclude that K-Wave theory is something for nutcases.  But it is critical to note that secular market theory is generally accepted by prudent investors that have been around for a while.

The problem is that K-Waves explain so much that their acolytes tend to become mired in the details that fit their analysis.  They fit the “Life in Hell” comic strip about types of Professors, including the “Single Theory to Explain Everything Maniac” – the warning is that the theory may be correct.  The general version of the theory, taken to an extreme, does have its detractors.

What we can say is that the actual Depression is probably lifting today, although we can’t be sure where history will end it until it is catalogued and named in popular culture.  The Spring will arrive sometime later, probably around 2017 unless something awful happens in the meantime.  Hard times do not last forever.

The world isn’t ending, although to a Midwesterner it may feel that way when the blizzards arrive on a typical March.  It’s about to begin again as a new world, one where even longer cycles that take up multiple K-Wave years lift other nations into prominence.  But that is another topic altogether.

This world takes on the color of the mind observing it when it becomes a story.  Some may see this new thing and ask questions – how the bug came to like that particular leaf, how it is able to grip it, and so on.  Others may be content reporting the details of the situation, such as the shape of the legs and jaws of the bug.

Anytime new perspectives open up the difference between science and technology is revealed at its basic essence.  Science is a practice of asking questions far more than providing answers.  Technology is about rendering that new information into something practical and useful.  That difference may seem subtle, but it is critical to understanding how new information shapes our personal and public lives in a world bombarded with new ideas and observations.

Science is, at its heart, a process.  The Scientific Method is a way of asking questions in an organized and logical way that produces logical and repeatable results.  The concepts were first laid out by the fathers of logic, Plato and Aristotle, the former arguing that fundamental principles drove understanding of earthly observations and the latter the other way around.  These philosophical underpinnings were turned into a formal process 1500 years later by Alhazen, working in Fatimid Egypt, who developed a system of repeatable experiments to explain and demonstrate the principles he was studying.  It was groundbreaking stuff.

Technology also has its roots in Ancient Greece, but was always seen as something different.  The word itself means “the study of skill”, the emphasis on the craft necessary to take learning and make a new gizmo or gadget.  Where science formalized inquiry, technology formalized the development of innovation.  Technology also went through considerable development since ancient times but has never been formalized to the extent that the scientific method has.  Interest in technology as a force that shapes our world was not heavily studied until the 20th Century, with the most popularly accessible analysis of the processes arguably James Burke’s seminal “Connections” series.

It is popular to believe that science provides us with answers about our world, something as clear as 2+2=4.  This view convolutes the important differences between science and technology, which brings up an analogy by way of a joke.

One of my favorite jokes as a practicing research engineer was that 2+2=5 for large values of 2.  It’s not idle schtick. Suppose you have a molecule that you want to measure the concentration of, and the device you have for doing this shows you two forms that have to be added together – say 2.4 and 2.4.  If the accuracy of the machine that allows you to peer into the world of this molecule is a bit questionable, you may only have one “significant figure” you can say is important.  Most people would write down the two results from the machine as interim results, add them together, and then round off the total as 5.  The “correct” answer”, however, is that you should round each result before you add them, but that doesn’t always happen in an Xcel spreadsheet.

A true scientist, however, is more curious than that.  The most “correct” answer to an inquiring mind is to write down “4” but to keep the possibility of 4.8 in their head.  If time allows, the logical next step is to inquire into that next digit and wonder what it would take to improve the accuracy of the machine to two significant digits.

To a scientist every result is only another question waiting to be answered.  To an engineer or a technologist, the “right” answer is 4 and there’s no point in being silly.

This problem is much deeper than simply applying new knowledge to crafting new gadgets that improve our lives.  Science in public policy has become a political issue in very key areas such as teaching evolution and the potential for global warming.  The latter is an example where very important questions about how much humans can change the world were rendered into clearly observable data and then built into a model that makes further predictions into the future.  This points to a problem that needs to be solved.

It is much more akin to “troubleshooting”, the way of life that is the technological cousin to the insatiably curious mind of a scientist.

In public policy there is no time to run the experiments through and wait for terrible consequences.  The curiosity made into formal inquiry is not useful as the new information gained requires action.  The process of science has to be left behind to a certain extent, becoming something much more like technology.  The “skill” in this example is crafting public policy that heads off disaster.

Politics, however, can use the questioning mind of science to introduce doubt.  That devolves quickly into a different kind of political craft, one of increasing power.

What matters most is the point at which a something allows a new observation about a part of the world to be seen as never before.  A magnifier that reveals the tiny workings of a bug on a delicate leaf is new information not experienced firsthand before.  Whether this leads us naturally to ask questions or state new facts, or some combination of the two, is something that comes out of the human mind at the other end of the glass.  Both are useful in their own ways.  But each has its own formal processes and perspectives that are best understood at their essence if we are going to create a fair representation of what is going on – and not force our own perspective or opinion on the situation.

For its part, the bug was happily crawling along until some big lunkhead disturbed it.  It is always good to remember at least that.

This post summarizes a number of topics that have been dealt with in Barataria before, and links are provided as necessary.  If you have questions please leave a comment!

A year ago Barataria was focused on Unemployment Initial Claims as a good proxy for total job growth figures that would come out later in the month.  It worked for a while because in 2010 through the summer of 2011 we were at or near the bottom of job creation, picking up steam very slowly.  This figure stopped being a good indicator for reasons that suggest  large employers are still laying off people (those who are eligible for unemployment benefits) while small companies are hiring.

But it would be wrong to drop our study of Initial Claims completely, so let’s take another look.

Below is a chart from our old friends at the St Louis Fed with data on Unemployment Initial Claims since 2000.  A slightly longer view shows how useful this data still is:

Note that in the official “recession” of 2001 more people were laid off than before, hitting 480k per week.  Even in the best of times in the 2000s the level never went below about 300k every week – meaning that in our economy of about 130M jobs about 12% of all jobs are “turned over” every year.  It’s this dynamic nature of employment that makes everything so hard to predict.

But also see how the spike in 2008 hit 640k people losing their job every week – double the level of good times – and has not fallen below 360k despite being on a long slide.  You can look at the trend as good, but it’s hard to say it’s anywhere good enough.

What we do know is that the economy lately has been creating about 200k net jobs per month, on average, since the end of 2011.  That came despite losing about 1,600k jobs, meaning that somewhere every month 1,800k jobs are created – about 1.4% of the labor force are in new jobs in any given month, or about 1 in six workers every year.

That’s a dynamic economy.  We can’t be completely sure that this strong job growth is continuing, but it was the trend for a solid 6 months.

That is what makes the Initial Claims number a bit less useful now.  Every one of those 360k people will tell you that losing a paycheck is a hardship, but overall we have still have some amazing growth.  What keeps that Initial Claims number stubbornly high, though it is falling, is clearly a restructuring as we move ahead to the new economy and leave the old busted one behind.

This is an important point because tackling unemployment is hard enough when 8-10 million people do not have as much work as they want.  We also have what is apparently an ongoing loss due to restructuring that is still shaking out and will continue to do so even as new jobs are being created.

Initial Claims data was useful for predicting jobs with “real time” data collected every week only when we were on the downhill slide from 2007-2010 and into the quiescent period of slow growth in 2010-2011.  It is now a better measure of the old economy fading away underneath us, a process that is not quite over yet.  It may soon get down to the 300k level that approximates stability in the dynamic job market, but for now it is stubbornly higher than it should be at this stage of a “recovery”.

This is simply more evidence that the economic event we are in is not only more severe than anything experienced since WWII, it also has some unusual characteristics.  These characteristics are more typical of what we have seen in past eras that were labeled “Depressions”, marked by very significant restructuring.

You may not have heard of the Conch Republic, the Independent Florida Keys. To some people, that’s just as well. But the story needs to be told because it is a tale of lust, greed, power, and … well, actually, it’s just a lot of fun. You can get a lot further with a good gag than you can by being a jerk. And so it begins.

In early 1982 the southern part of Florida had become a war zone. Small planes came in low over radar and boats bobbled through the Straits of Florida carrying an amazing amount of cocaine and other drugs. The Coast Guard was getting a bum’s rush and could do nothing. The money made from this trade sustained Miami, the overbuilding of condos, and an incredible number of people who wore t-shirts with white coats all the time. Something had to be done.

The people at US Customs decided it was time to act in a way that only they could – a technicality. It turns out that anywhere within 2 miles of a border they can set up a checkpoint and search people with no regard to pesky things like “rights”. All they had to do was declare the shoreline to be the US border and viola! They could set up a checkpoint anywhere they wanted in the Florida Keys. They looked over their maps until they found the single most annoying place to put a checkpoint, which is right where US1 joined the Keys to the mainland at Card Sound.

Because this was technically a border, they didn’t have worry about silly things like “warrants” or “probable cause” or “basic decency”. Well meaning lawyers, civil libertarians, ordinary citizens, and other troublemakers would tell them that they could not search the trunk of their car and start reciting the Constitution, only to have said trunk pried open with crowbar. Tourists stayed away, crippling the only industry that can be formed around lying down doing nothing. The lines in and out of the Keys stretched on for hours, delaying critical supplies like food and beer. The situation was desperate.

When the going gets weird, the weird get going. It was a moment made for Key West.

The first shot came on April 23rd. Key West Mayor Dennis Wardlow declared that since the Keys were being treated as a foreign nation, henceforth they would be known as a sovereign nation. It was shocking because no one in the Keys ever used words as big as “henceforth” or “sovereign”. At noon they took down the US flag and raised the banner of the Conch Republic, fired a cannon, waited five minutes, surrendered to the US, and then applied for foreign aid. It was a brief but intense moment of great pride for the new nation.

The Revolution was a two-pronged strategy based on getting extremely good PR and developing a great excuse for a party. It was probably the most successful Revolution in world history. Within days the border guards left in humiliation and the Keys has held annual celebrations every year since.

It may come as a bit of a shock to some people to learn that the Conch Republic is not popular throughout the Keys. The problem is a simple one: not everyone likes Key West. It’s not homophobia or anything as grand as that, it’s simply that the old-timers of the Keys are not a people who would ever organize to do anything. It’s a culture based on the ethics of  piracy, fishing, and wrecking – scooping up the remains of ships that have wrecked on the shallow coast. The residents of the Keys, known as Conchs, not only pronounce it like “conk” but value independence, stubbornness, and being left alone. They really don’t care what you think.

Despite these political differences, the Conch Republic carries on. Posts in the government are routinely auctioned off to the highest bidder to ward off private corruption by encouraging very public corruption. Their unofficial National Anthem is Jimmy Buffet’s “Margaritaville”, which sadly has never been played at an Olympic Ceremony because they have never bothered to even try to get a team together. And every year there is another excuse for a party.

What is the point of this story? If there has to be one, it is simply that you can get a lot further with a funny story than a lot of angry ranting. It’s probably best to leave it as pointless as an April day in the Florida Keys, a way of life that you just have to be there to understand.

The role of the Fed and its chairman, Ben Bernanke, has been increasing dramatically and it rightly scares many people – especially those who think it is doing the wrong things.  But the criticism highlights a much bigger problem – in many ways, the Fed is the only institution actually doing something.  That has naturally led them into places that they should not be and would not be if our government was functioning properly.

Let’s start with what the Fed is supposed to do, which is price stability.  Our Fed, like any other central bank, exists to keep inflation in check and guarantee that the US Dollar is worth about the same tomorrow as it is today.  When prices start to rise too much interest rates go up and the economy cools down, keeping everything on an even keel.

This is especially hard for our Fed because the US Dollar is the standard currency around the world.  A stable value to the buck inside our borders, measured by the inflation rate, has to be squared with international demand for the currency as global trade increases.  It’s not a simple job.

But that is not all that the Federal Reserve does.  Since early 2008 they have increasingly propped up the financial system, keeping banks and investment houses solvent with massive injections of cash.  To date that includes about $9 trillion in loans and other arrangements.  The Fed has also forced banks to increase their assets on hand, conducting “stress tests” that evaluate the condition of investment houses and determining what they must do to be declared healthy.  Ben Bernanke and crew are now the de facto chief regulators of the financial industry.

Price stability and financial system stability are in constant conflict.  The need for cash to prop up the system does not make for a sound US dollar and has often stressed the strange relationship between the currency we use everyday inside our borders and the global system of exchange.

While that’s difficult enough, there is still more for Bernanke.  In 2011, the Fed became the largest buyer of US public debt, or treasuries – the bonds that the government issues to cover our deficit and all the accumulated debt.  All together, 61% of it was bought not by China or Brazil but by our own Fed.  This has never happened before.

The main driving force of this unprecedented role in our public debt is called “Operation Twist”, where short-term treasuries at zero interest are sold and the same amount of long-term debt is bought in order to reduce interest rates in the economy.  Even if it is successful, critics of Berananke worry that this will only magnify the “liquidity trap”, or fear that the return on investment is so low that it does not in any way justify the risk – a situation where investors sit on money rather than do anything at all with it.

The net result of all this buying of treasuries is that the Fed is now the manager of US public debt, and by extension the government finances that require so much debt to be issued.  Congress has not passed an actual budget in 3 years, relying instead on “continuing resolutions” that simply keep everything keepin’ on.  The US government keeps moving largely to the extent they can issue more debt – and by the Fed’s ability to absorb it, given that they are the largest purchaser.

If that arrangement confuses you into a headache, you probably understand it about as well as anyone ever could.

This means that the Fed now has, by default, three often conflicting roles to perform:  price stability, financial stability, and public finance management.  The idea that one agency could possibly do all of this well is ridiculous.  The fact that this agency is not elected and meets entirely behind closed doors is a serious threat to everything in our financial and political lives.

Price stability is indeed the Fed’s job.  Financial stability needs to be put into the hands of an agency chartered to save financial institutions, ideally modeled after the FDIC and manged by elected officials.  Managing our public expenditures and debt can only be done by the Congress, which has to start doing their job.  Ben Bernanke may get a lot of criticism for what he does, but a lot of it are things that have to be done – despite the fact that our government has become paralyzed to the point of uselessness.  That’s the real problem.

I, for one, am glad Bernanke is on the job.  I just wish that job was a lot less than it is.

Neighbors, that is, and their connections that become community – something beyond each and every one of us.

Not every city has organizations like the Fort Road Federation to knit together the commitments and connections into one coherent whole that can make a difference. But they should.

The Fort Road Federation is one of many District Councils throughout the city, and organized form of citizen participation in the nitty-gritty details of how the city is planned and run.  It was under Mayor Latimer that they were organized in 1976, bringing communities together to work on their own problems and help guide city planning.  It was a bold experiment in many ways, but it reflected the unique way St Paul has always been organized.  This is a city of 17 small towns but one Mayor.

Outsiders and the city staff probably know the Fort Road Federation more for what it has prevented from happening than anything else.  As the western edge of Downtown, tucked between the tall bluffs of the Cathedral and the Mississippi River, a lot of traffic is funneled through West Seventh on its way from somewhere to somewhere else.  To us, however, it is home, and massive projects like Interstate 35E, a Shepard Road interchange, or a dedicated busway down the middle of West Seventh would have turned us into little more than the gap between here and there.

But at the Annual Meeting we spend more time talking about the incredible work being done by so many people to make their neighborhoods stronger that has benefited from the organization and influence of the Federation.  The Little Bohemia Neighborhood has been tackling the ravages of bulk foreclosure and vacancy, rehabbing some houses and taking down some to make way for new development.  Marit Brock gave us all an update on how they are progressing.  It’s a process much like the successful “Brewery Breakthrough” in 1995 that changed around an entire neighborhood on the edge with 44 new or re-made units.

And then there is the old Schmidt Brewery itself, a development about to move ahead in earnest after 5 years of negotiation and planning.  261 units will be crafted by the developer Dominium and the Federation itself will rehab the Rathskeller and some commercial space around it.  It’s an impressive project that will place the soul back in the heart of the community at this great landmark old brewery, and a daring venture for a community to undertake on its own.

But these are only the big projects.  There are the community gardens of shared 12×12 plots.  The Healthy West Seventh project links United Family Medicine to smaller projects to promote wellness rather than wait for patients to show up sick at their practice on West Seventh.  The Great River Passage master plan for the Mississippi through St Paul has been guided and shaped by the great vision and care of Kent Petterson and many others.

Plus there was time out to honor our great community organizer Betty Moran for her 40 years of service in what was once a neighborhood on the edge, dotted with crime and general bad behavior, now recognized as one of the great communities of St Paul in no small part because of her tireless efforts.  As Richard Miller said, “She leads from within.”  They had to sneak the award onto the program because if Betty has always shied away from recognition, demurring to the many people of the community who make things happen.  But without her organizing, many small voices might have remained just that had she not been there to make one strong arm of action.

The Annual Meeting of the Federation is a time to catch up with what’s going on both with neighbors and with the neighborhood itself.  A pile of bricks only becomes a strong wall when mortar fills the spaces inbetween, laid down with care and skill. The strength of the Federation is in both the people and their connections, but it all starts with care and commitment.  That is what makes a great community in any city.

Statue of Sancho Panza in Madrid

Barataria has been written 3X per week, MWF, without a single miss these five years. There are now 832 posts and 7,350 comments from the community that generates over 50k pageviews per month from 27k unique visits. It is a labor of love that has come to define me, for better or worse, to the greater community of people on the ‘net that includes 4,700 in my twitter feed.

Anniversaries have usually been a time when I feel compelled to answer, “What is this blog about?” I hope most of you understand by now that Barataria is mainly whatever I am thinking about at the time, an opportunity to clear my head of things that have been rattling around so that I can free up space in my mind for things that I can make a living off of.

This community has grown in the last year, and many of you have come to rely on these musings as part of your own daily routine. I can’t thank you enough for that, and I hope that I’ve responded to you well. Your contributions have helped me keep going!

The focus of Barataria has sharpened over the last year, with much more economics and how it relates to direct or implied political action and affiliation. I have asked you through polls to help refine these offerings, and the results were interesting between the dark times last August and the considerably brighter results last week. Thank you to the 161 who responded to this poll.

First of all, 55% of you say you are Liberal or Progressive. I expect that, since this is how I identify. But 23% of you say you are Conservative and 21% Moderate, a mix that is probably not duplicated in any other personal opinion blog. I can’t thank you enough for this great honor. These results were very similar in August, when a 57/21/16 mix was found.

What has changed is that when asked about your own future, 63% say you’ll get by, 23% are scared and 13% think things are looking good. That was 37/56/5 previously, meaning that most of you are much more optimistic. I am very happy that things have improved that much!

Who do you blame for the economic situation? The top answer today is Everyone, at 36%. 27% of you think we’re in a long-term decline, 18% blame big companies or Wall Street, 11% business cycles (my answer, BTW) and 9% politicians. Previously the main target was Wall Street, which 48% of you blamed, followed by Everyone at 28% (the prospect of a long-term decline was asked in a different question, but 30% of you thought it was a description of our current situation). The change away from blaming Wall Street seems significant.

Additional questions show that you support some of the new ventures I’m working on, mainly the creation of a YouTube channel. These first efforts did not turn out well, but between my kids and I we’re still learning how to make a good video. All comments, tips, and general support are very much appreciated! But the goal is to reach an even wider audience.

This last year there has been a real hunger for popular economics growing here and across the world. The “Occupy” movements show that there is a general feeling that things have to change but little commitment to any kind of plan. Nothing can possibly come of this until a consensus is developed as to where we have to go. This is a democratic republic, after all, and a good part of our destiny comes from common action.

The most popular pieces in Barataria, in this list, show that you believe this as well. Whenever possible I have offered not just my own perspective, but some tools to understand “experts” who lapse into jargon and shorthand when they have their turn under brighter lights in popular media. I’ve offered my potential solutions where I can and asked for yours. I’ve also written a few poems and tried to have a little fun where I can along the way.

This and any other blog is part of an internet world that connects people and ideas like never before. Much of my living this last year has come from consulting businesses and nonprofits on how they can maximize their own connections and be empowered by them. If the great hopes for this medium are going to be realized that’s what we all have to do.

I can’t thank you all enough for your readership and contributions to the effort – as comments, recommendations, and the donations that I receive. I still do not have a full-time job, so the latter is very important to me.  Annual contributions of $15, or ten cents per post, is what I ask from those of you kind enough to contribute.  My dream job is to write on these topics for regular pay, but alas this has eluded me.

But I’ll stay at it here in the meantime.  Thank you again for making Barataria part of your life!

For all the hand wringing, one possibility never comes up – that the data are simply whacked.  That may seem unlikely, but given that a different labor report comes out with a potentially better method of collecting the data you never know.  Let’s be fair and call it a bit of a mystery for now.  Here’s why:

First, there is the BLS report and its methods.  This is created by a survey of 140k businesses, which is to say that an army of BLS employees does nothing but call up employers and ask, “How ya doin’?”  In March they averaged less than one job gained per phone call.  More interestingly, they say a decline in retail employment of –34k that was offset by a very big gain in manufacturing of +37k.  According to their figures, one third of the net gain in jobs came in manufacturing, a big change.

Two days before this report came out we had the monthly report from ADP, a payroll processing company.  Their methodology is complex, but the short version is that it is based on actual payrolls that they are handling, combined with a few corrections.   Their report showed a net gain in March of +210k, about the same as February.  They do not report out retail separately, but they showed a net gain of only +23k in manufacturing, its allotted 10% of the economy.  What they do separate out is the net gains by company size, with large firms (more than 500 employees) adding 22k, medium (50-499) 87k and small (>50) +100k.

Why the discrepancies between the two?  First of all, this divergence between the two reports happened last year at the same time.  A strong Winter quarter led to a weak Spring, according to the BLS, but a continuation through in the ADP report.  The chart below from the Federal Reserve of St Louis shows the monthly net change in both reports since the bottom in early 2010, BLS in red and ADP in blue:

You can see right away that both of them are a bit jumpy, but the BLS report (red) is by far the noisiest of the two.  Where the ADP report generally shows a net gain of 200k over the last 18 months, excepting last summer, the BLS figures are all over the place.

Why might this happen?  I think the answer is in the ADP data itself and the BLS methodology.  ADP shows that half of the job growth came at small businesses, exactly what you would expect during an economic restructuring at the end of a Depression.  Are these the firms that the BLS calls every month to find out how things are going?  It’s very likely that they miss a few of them, since some are probably very new.  And that’s the likely source of the noise in their data – a survey, even a very large one, is not catching as much as a big payroll run can.

This means that the net gain of a measly +120k that sent the stock market swooning and sent reporters scrambling to explain what’s up is probably just a statistical blip.  While it is possible that ADP is over-stating job growth a bit and may have its own correction coming, job growth has likely not slowed as much as everyone fears.  It’s just hard to find where the new jobs are coming from because, as you might expect, it’s not from the same places that the BLS is used to looking.

No matter what, however, we can say that job growth – even at +120k – is leading economic growth dramatically.  By any measure we should be lucky to hold even right now with a projected gain in our Gross Domestic Product of 2.0% this last quarter.  Job growth almost never leads economic growth, so it goes without saying that something unusual is happening. That fits with the observation that growth is happening in the smallest companies and away from the BLS survey’s usual cast of characters.

So what does the jobs report mean?  There is continued weakness among established employers and there could be some trouble in retail especially.  But overall we are probably still gaining through economic restructuring and growth among new companies.  It’s a good thing.

Our current world, at least in developed societies, rarely has time for such reflection anymore.  Far too often we are expected to mechanically keep going through our daily slog.  The only antidote offered is selfishness, rebellion and retreat back into our own skin for a few moments of pleasure.  Old holidays based on ghosts do not mean as much as they used to.

That system is obviously not bringing happiness to many people’s lives.  I would like to propose an alternative outlook on life which I will call “extasism”.
The word “ecstasy” has several modern meanings.  To most people, it has sexual overtones that suggest that sex is the only real source of happiness.  It’s also the name of a drug, a close cousin to methamphetamine, that literally bores holes in your brain.  But the word itself comes from the Latin term “ex stasis”, or outside the body.  The principle is that true happiness is an out-of-body experience – feeling the world as if you are floating above and apart from it.

The idea of being “ex stasis” is more than a state of joy.  Nearly all religions have some tradition of being “not of this world”, or at least the rough and tumble daily life that diverts attention away from the things that really make anyone happy.  Gnostic traditions in Christianity were present from the beginning up through the middle ages, and they have their roots in the Essene practices of Judaism.  Add in Buddhist, Hindu, Taoist, or animist traditions and you can see the common thread among nearly all people, all around the world.

To truly live outside of yourself is more than a few moments of meditation, it’s a way of life.  That’s why the concept of Extasism is necessary – a non-religious movement based on being able to step outside of your own troubles and see the world from a different perspective.  It needs a handle like Capitalism or Marxism because, as a philosophy, it has the potential to change how society and culture are organized.

Think for a moment about the problems that we see in politics, business, or any other aspect of the world we’ve come to make for ourselves.  Eventually, nearly everything comes down to selfishness – the desire for power or money or whatever it is that people think is going to make them happy.  But those who practice what our culture teaches rarely seem joyful, they only seem to want more and more all the time.  A truly happy person is, at their base, satisfied.

An active alternative to selfishness is the only way beyond this. Exstasism starts with being able to see someone else’s point of view and listen to what they are genuinely saying, but it also engages them because every perspective outside of your own is a chance to learn something new.  This curiosity is usually the first step towards being materially satisfied.

That’s not to say that Exstasism doesn’t have something to offer materially.  Any good negotiation starts with an understanding of what the other party needs and careful listening.  Two people are rarely completely at odds with each other, unable to budge, although it may take some time outside of yourself to understand where they are coming from.  While Exstasism means that happiness does not come from things, it goes without saying that we all need a few things for our own survival.

While true joy might feel like you are outside of yourself, it does not naturally follow that being outside of yourself brings you happiness in return.  The practice has to be more active than that, always trying to be decent and kind to the people around us.  While people are people, cultures are cultures – we all have different definitions of what “decency” means and how people should act in any situation.  Bringing the joy, the ecstasy, to a diverse world must always seek understanding between people and giving the benefit of the doubt whenever possible.

There is also great joy to be had in understanding how silly we all are, at least viewed from outside ourselves.  Happiness often starts with not buying our own BS.

There is much more to it than this, of course.  Exstasism is in many ways a continuation of the concept I have long advocated, taking a “Strong half-step back” from life – just far enough to gain some perspective but not so far that you can’t get your hands dirty.  But in a world where labels are important and common decency is awfully rare it seems that some kind of “movement” is necessary.  We can all develop this together, if you are up for it.  What say you to an anti-selfish movement based on understanding, decency, and ultimately bringing true happiness to the world?

Please forgive this for being a bit self-indulgent.  It is a blog, after all.

We can all learn many things from the Brazilian Way, but top among them is that a really good party takes time to plan.  Before we spend the years 2014-16 hearing about them constantly in their big coming out parties they’re taking the time to do it up right.  I think it’s about time Barataria connects to the world in different ways, too.

Inspired at least in part by Punk Economics, I will start assembling a few short videos that summarize some new perspectives on our changing world.  A few ideas stand out right away, but like everything good in Barataria it will take some help from all of you to make it shine.

First of all, there will be some expense.  If you’ve never donated before I’d very much appreciate any small contribution you can make through PayPal.  Barataria has been coming to you every MWF since 11 April 2007 without a break – a total of 156 times a year.  Adding to this the time this takes in order to craft a few videos takes me away from making a living, along with a few incidental expenses.  If you like what you see here I’d appreciate a dime a post, or $15 for the year as a suggested level.  If you’d like to help out with more or less, by all means I appreciate it all!

Many of you weigh in with comments that add tremendously to the value of Barataria.  But many more are more shy about it.  We’re getting upwards of 50k pageviews per month, meaning we never hear from most of you!  Last August a series of questions garnered about 125 responses, which was very helpful.  I’d like to ask some of the same questions again today.  If you could take a moment to answer it will help guide some of the videos that I’ll be putting together as a project with my kids.

Thank you all again and again for being part of this wonderful community, and don’t forget that you can always talk to me “on the side” as erikhare at gmail dot com.  And if you want to say more than the survey has to offer, weigh in below with your comments – we’re a friendly crowd, right?

Beyond a popular doom that seems to grip the social and traditional media in spasms lately, scholars and philosophers have been writing about the decline and fall of empires with increasing frequency lately.  Very few want to say directly that yes, this is the end of the American Empire and you better get used to it.  That would be too direct.  But many are hinting at it in loud stage whispers wended through long articles and books.  Are they on to something?

Recently, articles in the Guardian and many newspapers suggest that there are great changes afoot in the world by examining other periods of rapid development.  There is little doubt that a few simple things, such as the Dehli Declaration coming from the BRICS nations, could indeed be the small start of a very new era of global finance, for example.  The old narrative that “barbarians” rise up against the existing empire and eventually overtake it is exciting and compelling, but these stories are often told more as parables for their audience than genuine history.

There is one version of this which is refreshing for its honesty in this regard, and that is Nial Ferguson’s “Civilization: The West and the Rest”.  This work is rightly criticized for its unabashed pro-Western point of view that Western European nations dominated the entire planet from 1500 until today for some very good reasons which are deemed virtuous and good.  But the success of Western powers cannot be denied, and Ferguson credits it to the six “killer apps” developed in Europe, and outlined in a great summary for John Mauldin:

1. Competition.
2. The Scientific Revolution.
3. The Rule of Law and Representative Government.
4. Modern Medicine.
5. The Consumer Society.
6. The Work Ethic.

The point Ferguson makes by boiling European imperialist success to these “killer apps” is twofold – they can be “downloaded” by other cultures and they can be deleted from our own culture just as easily.  Ferguson traces the rapid increase in the developing world to a lot of the former and, sadly, more than a little of the latter.

It is very easy to read his argument and accept it precisely as written.  Polls consistently show that a solid majority of Americans believe that we are on “the wrong track” and have been for a very long time, so this view is likely to be popular.  Personally, however, I can’t help but think that there is something in the works that I refer to as “The Beatles Effect”.

Rock ‘n Roll came out of postwar black America, a time when the great internal migration north gave rising hope, communication, and a bit of wealth to a people long oppressed.  By the early 1960s, however, it was sanitized for white audiences and controlled by massive record companies who shoved the real stuff into a bin under the counter they called “R&B”.  But it could not be killed.  It went over to Europe, and in time the Beatles arrived back in the US playing many of the same songs that had long been banished from our own playlists.  What came back to us, however, had been polished and changed, but what was uniquely ours was saved for us until it was safe to come back in triumph.

Western civilization may be due for something more like the “Samba Effect” if the Brazilian Way becomes how the great “killer apps” come back to us one day.  They won’t be exactly the same as the ones Brazil downloaded – there will be a new generation of them with different features.  Concepts like “competition” that Ferguson trumpets are especially likely to be polished and cleaned.  We’ll all be hearing much more about “The Brazilian Way” during their two year long coming out party in 2014-16, between the World Cup and the Olympics.

Does Brazilian domination of the world sound like a joke?  Consider going back in time to a posh gentleman’s club in London circa 1890.  If you were to stand up and announce to them that they were on the verge of a great “American Century” the only reasons they would not toss you out right away would be that laughter had them pinned into their wingback chairs or they might spill their cognac.  But today we know how it turned out.

None of this means that the Empire is going to fall or that even if it did decline heavily that it would be a bad thing for us.  History never does repeat itself, but it does have a tendency to rhyme like a slam poet.  Put that to a samba beat and you never know quite what the future will hold.  It’s not the end of the world or even some kind of empire.

It’s not even an end, but the beginning – of a much more interesting party down the block.

Good thing Obama, an NCAA hoops fan, knows how to slam the buzzer-beater.  Or does he?

If the March Employment Report, due on 6 April (4 April for private ADP data) continues as it has been, we should add a bit over 200k jobs in March.  That would mean that there is a net gain in jobs during the Obama administration for the first time, a massive comeback by any measure.  The hole dug in Obama’s first year of 3.6M jobs lost was big, but the total hole since 2007 is 9M.  That doesn’t even count the young people who are coming of age and looking for work, estimated at 125k per month.

Is getting back to even since the artificial line of 20 January 2009 good enough?  We will see.  But a net gain during this administration does change the rhetoric.

What most people watch, however, is the headline unemployment rate – currently at 8.3%.  Conventional wisdom is that a President can’t be re-elected when that is over 8%, and some would say over 7.0-7.5% is dicey at best.  All of that speculation is really based on the mood of the press and how the numbers are reported, because actual unemployment is considerably higher.  All the young people entering the workforce for the first time hardly count, nor does anyone who has given up and gone back to school, retired early, and so on.  The actual net shortage of jobs is somewhere between 5M and 10M, depending on who you ask.  It’s still a very big number.

How fast can we create jobs?  If you like to guess about it, there is a handy interactive chart that you can use to estimate where we will be at any point in time.  Mike Shedlock used it to run his own estimates based on some good analysis in this article that is well worth reading.  Suffice it to say that even if we continue with good job news it’s unlikely we will be back to anything like full employment before the end of 2015 – and probably more on the order of 2018, even if trends don’t reverse.

Can we keep up the pace of job creation?  The economy grew at an annual rate of 3.0% in the fourth quarter of 2011, which is right around the point where we should expect zero net job gains.  No one knows why job growth is leading economic growth, rather than lagging as it usually does.  Many industries are starting to note significant restructuring and reorganization, however, which can explain a lot of it.  We won’t know economic growth in the first quarter of 2012 until it is released on 27 April, but it is expected to be much lower.  Consensus seems to be coming in at 1.7-2.0%, based largely on higher oil prices slowing things down.

That’s not the only reason to believe that job growth will slow.  There is always seasonal adjustment, due to kick in with lower numbers in April.  Warm weather may have brought the usual Spring increase in jobs early this year, meaning that they will seem to “disappear” when the usual corrections kick in next month.  That remains to be seen.

All together, this is a big time for data and there is a lot to watch for.  The election is likely to turn on what happens in the next few weeks, so stay tuned.  When it comes to politics, an election is a lot like a basketball game – except the last seconds playing out don’t just seem like they last months, they really do.

Florida’s history of racially motivated outbursts of violence reverberates through this tragedy.  The lack of investigation fits easily into the stories from the bad old days when there was more or less an open season on black people and justice was not even a dream.   Where that becomes more than hot rhetoric is the realization that, under current Florida law, there is a good chance that this murder was, in fact, legal.

How did that happen?  The story of the “Stand Your Ground” law which fuels the nightmares from a dark past takes many people to the American Legislative Exchange Council (ALEC), the apparent source.  The Left has long wanted to bring this group to light, and through Martin’s sanctioned murder they may have their chance.

It may seem trivial to reduce the Martin murder to politics, but the search for some sense of justice is absolutely vital in Florida.  Any small victory will be necessary to calm the very real fears that racial violence might explode once again.  Years of riots and constant violence have created an entire culture in Florida with the flashes of Post-Traumatic Stress Disorder running hot in their blood.  The law in question allows deadly force in response to a “reasonable threat to safety”, something that people boiling with fear grasp as if their own lives depend on it – as they sincerely believe they do.

What needs to be questioned are those who feed into that fear and fire the adrenaline in place of the cool ways of genuine justice.

The “Stand Your Ground” law was passed by the Florida Legislature in 2006, a few months after a nearly identical piece of “model legislation” was crafted by ALEC.  There is little doubt that this organization is the point of origin of this law, although to be fair they do deny it.  The killing of Trayvon Martin is far from the first time this law allowed open murder, too.  It has been called “The bane of prosecutors” who often have far too much to do and very few tools to do their job.  As the origin of what has become a government sanction for several murders, it is vitally important that we understand ALEC and what it does.

ALEC was founded in 1973 by our old friends the Koch Brothers.  It is officially non-partisan and not a lobbying organization, but instead models itself as a think-tank and training center for 2,000 legislators around the nation:

For more than 35 years, ALEC has been the ideal means of creating and delivering public policy ideas aimed at protecting and expanding our free society. Thanks to ALEC’s membership, the duly elected leaders of their state legislatures, Jeffersonian principles advise and inform legislative action across the country. Literally hundreds of dedicated ALEC members have worked together to create, develop, introduce and guide to enactment many of the cutting-edge, conservative policies that have now become the law in the states. The strategic knowledge and training ALEC members have received over the years has been integral to these victories.

Who is ALEC?  It started out as a corporate policy group funded heavily by the Kochs and fellow oil companies like Exxon-Mobil.  It picked up the other pieces of the Republican coalition, such as the NRA, over the years as its influence spread.  The public knew little about it before The Nation and others published leaked documents in July 2011.  It has created a furor in some circles, but in truth the concept of educating legislators and providing model bills has been around for decades.  What is new is how long this group escaped public scrutiny despite its influence.  Bills requiring groups like them to simply register as lobbyists are being introduced in many legislatures now.

This brings us back to the murder of a young man and what can be done to bring justice to his death with some sense of closure.  The Florida Legislature is very likely to at least modify, if not repeal, the “Stand Your Ground” Law very shortly.  But the lingering politics will almost certainly raise the profile of ALEC and their connection to a series of recent laws that span the breadth of the Republican coalition.  That is a good thing.

What remains to be seen is how the influence of the Koch Brothers turns ALEC into the great Bogeymen that the left needs.  Trayvon Martin’s death could become the polarizing moment that makes this happen.  Whether or not you see this is a good thing or not will almost certainly depend on your political perspective, but it will be attempted.

The caveat for the left going down this path is the same as for the right that got this bill made into law – always be very careful what you wish for.  There are places like Florida that are ready to explode when the temperature gets too hot – which it does all the damned time.

Addendum:  After further research and help from others, I have decided that blaming the “Stand Your Ground” law for the murder of Trayvon Martin is very wrong, especially in light of this interview with the author of the bill, FL Rep.  Dennis Baxley.  He states unequivocally that the law was never intended to apply to this situation and that justice was not done – and that if necessarily the law should be revised and clarified.  Baxley is an interesting guy – conservative as they come and once the head of the Florida Christian Coalition, but he also supports environmental resource protection and has spoken out against bullying.

In the follow-up on the outrage the politician in question sent a guest editorial that deflected criticism through a long, rambling discussion about “leadership” and “compromise” in the legislature.  It occurred to me that very few people understand that “compromise” itself is not an end, but a means to achieve an end – consensus, the way work is done in our system.

The word “compromise” is stained in US History by the Missouri Compromise, the agreement that allowed Missouri to be admitted as a slave state but prohibited any more slavery that far north in the territories.  It failed because it never produced a consensus in congress – if anything, it hardened the anti-slavery activists which felt it gave away too much.  It is regarded as a solid step toward the Civil War, the ultimate failure of our system to peacefully resolve differences and provide a clear path forward.

Our system is a Democratic-Republic, which means a lot more than electing leaders who run the government.  The democratic functions have their own ebb and flow among the people and the republican system of bargaining among those who are elected.  Together they represent the yin and yang of a system that is supposed to produce a cohesive nation that is capable of getting done certain critical tasks necessary to maintain a free and ordered civilized society that moves ahead as one people.

Compromise among leaders is one way of moving beyond an impasse, but it is not the end.  Through a compromise, a legislature is supposed to garner support for a bill or policy question that it could not gain otherwise.  It is nothing more than a tool for developing consensus.  Consensus itself was foisted on us in the system devised by our Founders in the Constitution for moving ahead as a single nation, E Pluribus Unum.

On the democratic side, the development of a movement through activism is how consensus is developed, gradually convincing the general population that something must be done.

Where “compromise” is often a bad word, suggesting weakness, “consensus” is often missing.  Little has been written about it and the processes for achieving it in popular media.  Both terms are active and imply that the work and progress of a certain policy is still open for debate, but all sides are committed to moving forward together.  There is no reason that the success or failure cannot be revisited after the consensus plan has been implemented, so a good compromise should have measures of success built into it whenever possible.

Consensus, or progress together as a single people with shared work, is often missing as a word because the concept underlying it appears absent.  Outrage and absolutism has become far more appealing.  For example, one side refuses to allow not just taxpayer money but any sense of “coercion” paying for abortion or contraception in health care plans.  They believe that abortion is murder and that should be that.  But among a untied people things like this happen all the time – I am forced to pay for both wars and executions that I do not support.  These are, in fact, the same thing because all are condemned by the Catholic Church in the same encyclical Evengelium Vitae (The Gospel of Life), issued by the soon to be sainted Pope John Paul II.  This was the basis for his condemnation of our Iraq War, which we are all still paying for.

The Millenial Generation tends to have taken the gravity of this problem more to heart, often favoring a consensus process of “direct democracy”.  This works well in small groups that are highly motivated, such as “Occupy” groups, but the lack of identified leaders makes it difficult to get things done and implement larger policies.  The yin and yang of a democratic-republic were given to us for a reason.  Still, the interjection of this youthful optimism in consensus is very important and, with an eye towards achieving real change, can provide a fresh perspective.  There is hope, but it is still in development.

In the meantime, leaders of all kinds need to understand what this dirty thing called “compromise” is all about.  It is not the finished product by any means.  It is a way that consensus can be found so that everyone can be a part of actually finishing the things that a government needs to accomplish – such as a budget, security for the next generation, and so on.   There is certainly a lot of work for our government to do.

All of this would be minimal and possibly wasted according to Jim Clifton, the CEO of Gallup.  His book “The Coming Jobs War” (which came out last September) outlines how good, meaningful jobs are going to be scarce around the world – and subject to intense competition at all levels.  His proposal is not expensive or even likely to be controversial, but it does require new attention and care from everyone.  It also requires very dynamic leadership, an even scarcer commodity.

The basic premise is simple:  developing nations are rapidly industrializing and their populations are seeing their standard of living increase.  China now has the majority of its population in cities for the first time, and poverty is declining in places like São Paulo.  For this to move forward, productivity will have to continue to increase all around the world and something like 1.8B new jobs will be created in the next generation.  Where will those jobs be? Who will create them?

In essence, the problem in front of us all is a very dynamic global economy that is ours to master, if we do it right.  Failure to do so will likely see us left behind.  And the centerpiece of everything is job creation.  This is critical because the most valuable resource of this or any other nation is its people – their hard work, their brains, their compassion, and their creativity.

That’s where Clifton sees three major changes that will have to occur:

1. “Innovation is not scarce. Entrepreneurship is scarce. We are spending billions and wasting years of conversations on innovation and it isn’t paying off. Great business people are more valuable and rarer than great ideas.

2. A useful way to look at any citizen is this, ‘Can she herself create jobs or does she need a job created for her?’

3. “It is wrong thinking to imagine that Washington has solutions. Job creation is a city problem. There is great variation in job creation by city in the United States. San Francisco and the greater Valley keep pumping away while Detroit isn’t. Austin’s cart works while Albany’s doesn’t. Cities need to look inwardly and say, ‘What can I do to create great economic energy, to bring new customers for all existing companies and start-ups?’”

If you read this and immediately leaped to a conclusion that involved a policy already debated such as “lower taxes” or “more job subsidy”, you are wrong.  It doesn’t matter what politics your assumption came from – an effort like this is not described by our current politics in any useful way at all.

Clifton arrived at his conclusions studying the reams of data that Gallup collects constantly on many things, including job creation.  What he found is something that nearly any of us who are always looking for work have long known – that employment is gained one networking conversation at a time.  Furthermore, the simple fact that around universities and other centers of innovation there are many good ideas languishing because there is no one who can implement them.  Connecting people to people can get them hired, but connecting the right people with good ideas can create a new company – or even a new industry.

What Clifton is proposing is an aggressive effort to redefine how we think about work modeled along the lines of what I have called Connections Theory.  While there are some critical areas where Washington can help change how tax and regulate employment, the real efforts have to come in cities – primarily from business leaders and education institutions.

I strongly recommend this book and Clifton’s way of thinking.  Follow the links to read some interviews and reviews that will shed more light on the topic.

The increase in these stories was predicted in Barataria, but that was an easy call.  The potential for this to not go the Republicans’ way was also obvious.  But this could be even more devastating as groups like Better Markets get the message out that unreasonable speculation is the real cause of the recent price spike.  It has the potential to very much change domestic politics completely.

The arguments against excessive speculation are made very well in this op-ed piece by Dennis Kelleher, the President of the adocacy group Better Markets.  What it comes down to is that when prices appear to be rising in the future more contracts are purchased for future oil delivery by people who have no need for the oil but hope to make some money off of it.  Given that there is a rather fixed supply, Iran not withstanding, the increase in demand naturally raises prices.  It has been estimated that for every million barrels of oil increase in futures contracts there is a $0.10 increase in the price of a barrel of oil – adding a net of $23.39 to the price, or about 20% of the total cost today.

That level of speculation does sound excessive by any measure, and it begs reform in the markets.  It also means that the price is likely to crash if additional sources of oil can be found to over-saturate demand, which is why President Obama and Prime Minister Cameron are talking about working together on a release from strategic reserves.  A sudden and large action would cause a lot of pain to speculators and probably make a very big difference.  A high degree of volatility in both directions would indeed prove that the problem is speculation.

Meanwhile, however, the case is being made by Better Markets and many other people and groups.  What is new about Better Markets is that it is not focused on a vague notion along the lines of “We are getting screwed!” but based on specific data and potential reforms to correct the situation.  The effort is highly focused and wonkish.  The partners listed on their site do not have actual commodities trading experience, which would be a big plus.  What they could use more than anything is an endorsement from inside that world, possibly along the lines of Greg Smith’s now famous resignation from Goldman.

Will this message catch on?  We know that the counter from the Republican side is that Obama has restricted domestic oil production.  This is completely ridiculous, given that domestic oil production has gone from 147.3 million barrels per month in February 2009 to 182.2 million barrels in December 2011 – a 24% increase. This comes at a time when our oil consumption has been falling – and for the first time in over three decades the US imports less than half the oil it consumes.

What is important in this debate is that once the numbers make it into the mainstream media the argument from the right will be shown to be baseless.  The counter on the left is not “you are wrong” but that speculators need to be reigned in.  Republicans are very likely to lose this argument – and in the process lose very big on far more issues than the “Drill here, drill now!” they push.  Once the public starts to accept that markets are in need of reform a genuine movement might be started.

As noted before, gasoline prices are not a good issue for the Republicans for many reasons and could easily hand Democrats an platform that will play much better.  As the debate has played out it seems that there is much more than a short-term political gain in the works for the left if it can continue to align itself with specific and detailed steps for market reform.  When it becomes a major movement we can expect some big changes.

Could there possibly be a downside to it?  Maybe.  It does bring up a few unrelated stories that show us that change, even when it seems to be for the better, has its own ways.

The first story of the weather is St Patrick’s Day, always big in this old railroad town.   This year, the green bacchanal collided with the great weather, no less than two hockey games at the Xcel Center, and the calendar that placed it on a Saturday.  West Seventh Street, my neighborhood, relies on this date to put the madness into March.

The eight establishments that serve alcohol along West Seventh in the two blocks from Walnut to Chestnut to Kellogg are always packed, but this year’s tent parties went huge.  By 8PM the crowd spilled over the sidewalk and was stopping traffic.  There were rumors that people were hit by cars, though I can’t confirm this.  By 8PM the last hockey game had a full arena of 24k people at one end of a street bubbling beyond capacity, perhaps already 10k people.  The St Paul Police had to act fast.

What they decided to do was not use force of any kind.  They shut West Seventh, a state highway, and turned it over to the crowd.  An informal “beergarden” was declared and open alcohol laws were temporarily ignored.  A man wandering past the barricade at Walnut was not told to ditch his beer – the police on duty asked him, “Could you please not take that past?  Thanks.”  They were cheerful, mellow, and enjoying the mild night as much as the revelers.

The contrast between this spontaneous event and the tense Republican Convention of 2008 could not be more stark.  I have never been more proud of our police.  They kept order without insisting on command, they kept peace with a smile.  What could have been a riot was turned into the biggest party we might ever throw, an instant Mardi Gras, with very few medical emergencies.  West Seventh was re-opened around 11PM when the crowds thinned.

That’s not the only strangeness that came from this weather, however.  That same night we were enjoying Sudden Spring, 36 inches of snow fell in Flagstaff, Arizona.  A massive bubble of cold air reached deep into the Rocky Mountain states, temporarily rendering the weather map of the US a longitudinal oddity.  Our strange weather is only half of the story.  What could possibly cause this?

It’s important to say that the mild weather over the US is not a simple case of global warming.  Europe was incredibly cold this Winter, with snow falling in Rome and desperate cold lingering over central Asia far deeper and longer than usual.

What could cause weather this uneven?  Those of you who know me won’t be surprised by my answer.  In 2010 we entered a period of solar activity unlike anything seen since 1850.  Sunspots, a rough measure of solar energy, stopped appearing for the first time in 60 years.  The ionized particles that jet out from the sun collapsed, lowering the earth’s magnetic shielding to levels never before measured.  A brief burst made the news recently, but the sun has been unusually quiet.

What this means is that earth is almost certainly cooling down.  It takes a long time to happen, however, because the heat capacity of this planet is large, so the effects are hitting us now.  It’s not a uniform reduction in temperature, but a great increase in chaos as the seas stay pretty even but large land masses absorb less energy.  Our Gulf of Mexico is probably protecting us, at least for now.

This is going to be one Hell of a ride for a few years.  We don’t really know how it will go.

The last strange effect of good weather over North America worthy of note comes in government statistics.  We’ve had some very good economic news lately, showing increased confidence and a big boost in construction activity.  Mild weather has made a lot of that possible.  Ups and downs through the course of the year are supposed to be evened out by “seasonal adjustment” in most of the reported figures, but those won’t kick into Spring mode for another month.  Everything could look a lot worse in April when the adjustments kick in, unless more momentum builds.  Keep your eyes open on this one.

Could this Sudden Spring get any stranger?  The answer is, of course, things can always get loopier.  But most of us are just enjoying it, like an amazingly warm St Patrick’s Day out on West Seventh.

How Iran came to be contained so tightly and so quickly may set a new precedent for dealing with rogue nations.  But the process for doing this is not what most people would ever expect.

Iran has been going back and forth for decades with the representatives of the “six powers” that have been commissioned to supervise its nuclear program – United States, China, Russia, France, Germany and Britain.  The program was originally set up with US help under the Shah in the 1950s in order to provide electric power and cancer treatments.  Since the Iranian Revolution in 1979 there has been a growing suspicion that this program is going to be used to develop nuclear weapons – the facilities have not been thoroughly inspected since.  In 1981 one of their reactors was destroyed in an Israeli airstrike.

There are few more contentious issues around the world than nuclear proliferation, and in this case there has been actual shooting in the effort to prevent it from being developed.  Tightening sanctions imposed since 2007 have seemed like a weak response to many nations.

Enter the first ever complete cutoff of a nation by Swift.

Swift, based in Belgium, is nothing more than a messaging protocol over very secure lines that allows banks to speak to each other in complete confidence.  It is up to the banks that use it to be sure that everything is square, but without these secure lines there would be no international banking system.  The majority of international transfers from one bank to another use Swift, but more importantly all of the large transfers between national banks are done on this system.  It processes 15 million messages per day, and has been called “The glue that holds the global financial system together.”

It is a very independent operation that operates largely outside of international supervision.  In 2001 it cooperated with the US to track transactions between terrorist organizations, but that was discontinued when it was deemed to be a violation of Belgian and European privacy laws.  There is a rather secretive process now in place where US authorities can obtain something like “warrants” to very selectively track some transactions.

The action that was taken against Iran was forced on Swift because the European Parliament voted to impose sanctions over the inspections standoff.  Action by the US did not cut off Iran, nor did a vote in the UN.  It takes the EU, and the EU alone, to isolate a nation from the world financial system.

Iran survives almost entirely on its ability to export oil, so this is a crippling move.  After decades of playing around their hand is being forced in a very draconian way.  Nations like China have said that they intend to keep buying oil from Iran, but without a way to pay them it is hard to imagine how this is going to happen.  No one knows just how the embargo will play out because it simply has never happened before, but it has to hurt.

Morteza Masoumzadeh, a member of the executive committee of the Iranian Business Council in Dubai and managing director of the Jumbo Line Shipping Agency, told the Reuters news agency: “If Iranian banks cannot exchange payments with banks around the world then this will cause the collapse of many banking relations and many businesses.”  The pressure on the Iranian government has intensified dramatically with this one crucial step.

What does this mean for the future?  If this becomes a standard response to EU sanctions against a nation there is little doubt that the power of Europe has increased dramatically – even as they work to keep their union together through the sovereign debt crisis.  But it certainly begs the question as to why this has not been done before and, more importantly, how this will continue to work in the future.  It is almost certainly more powerful than bombing or any of the action contemplated by the US through our State Department, on the campaign trail, or by talking heads on teevee.  And it completely out of US control, outside of our ability to leverage oil reserves.

Time will tell how effective the embargo by Swift really is, but initially it seems that it can only be devastating.  That, by itself, would be both a victory for the international community and a very new cause for concern at the same time.

You can read the entire piece here, and it’s worth the time.  There isn’t anything particularly new in it for those of us who have been watching Goldman for years, but the details are chilling all the same.  They may be what gets the world moving toward correcting the problems that are not just at Goldman, not by a longshot.

What was the final straw for Smith?  He doesn’t tell us, but he was very disturbed by the overall picture. “I can honestly say that the environment now is as toxic and destructive as I have ever seen it.”   It is all about making money, not doing what was right for the customers they apparently loathe.  “Over the last 12 months I have seen five different managing directors refer to their own clients as ‘muppets,’ sometimes over internal e-mail.”

Smith also makes reference to “Fabulous Fab”, Goldman Vice President Fabrice Tourre, who famously boasted in an internal email sent in January of 2007, just as everything was starting to fail:

“More and more leverage in the system, The whole building is about to collapse anytime now! Only potential survivor, the fabulous Fab standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstrosities!!!”

Five years on and Smith finally had his fill.  He apparently expected everything to change after 2008 or so, and it hasn’t.  It took him this long to make up his mind and he has.  We don’t know what salary he is walking away from, but you can easily guess it is not a small one – so it took him a while.  No matter.  He did it.

How will this public rebuke from the inside change anything in our financial system?  It is very hard to tell at this point, especially since this does little more than confirm what most people who watch this closely already knew.  We are far beyond “too big to fail” or even “too big to understand” – we blew through those warning signs years ago.  The biggest, baddest firm of them all is full of people who don’t care at all.

One thing does stand out from Smith’s 12 year career – he can’t be any older than his mid-30s. How does such a young man get such a high paying job with so much responsibility in a firm like Goldman?  The answer is clearly that aggressiveness and creativity are what they value the most, likely burning out execs like Smith quickly when they become a bit older and wiser.  Finance is not a career for staid men of substance, working their way up slowly.  The days when banking was boring, as it should be, are long gone.

Where does that leave those of us who are on the outside?  There is nothing that we can do to change the culture or practices at Goldman, unless of course we have a big account with them.  We might be able to propose some regulations that will make things tougher for them, but those are not likely to do anything to change the internal culture that Smith rails against.

What we can, and must do is take steps to limit the power of this organization and learn what they do.  We must never think that these people create jobs, innovate important new products, or in any way improve the lives of people around the world.  The problem at Goldman is culture, according to Smith, and the problem outside of this “toxic” firm is also culture.  Elevating finance companies to the status of Gods only gives them a way to spread their disease and infect the whole world.

Goldman exists to make money any way they can.  We should see them as a potential source of  revenue, having no other potential public good other than what we squeeze out of them.

“Goldman Sachs today has become too much about shortcuts and not enough about achievement.”  Whatever Smith was being paid, it became clear to him that he wasn’t actually earning it.  He shows in leaving that a moral, decent person can’t stand that situation forever, enticing as it is.  That’s the big lesson for all of us – inside Goldman and out.

People around the world are going to have to learn a lot more about economics and banking.  This time, however, it really is our own fault.  If we’re going to get some control over our lives in something like a democracy we better get moving.  Movements like “Occupy Everything!” are a start, but there has to be a lot more attention and education.  Fortunately, we have people like David McWilliams and his “Punk Economics” to help – teaching what’s going on with more than a little fun.

McWilliams is an Irish economist, writer, and snappy wise guy who makes a great guest on a teevee gab show.  He started his video series “Punk Economics” to fire up opposition to what he thinks is a very wrong-headed move by the European Union to contain the debt crisis.  If you have 20 minutes to watch some great viddy, here is Part 1, followed closely by Part 2.  There will likely be more.

“Punk Economics” is “based on the central idea that what is important is not complicated and what is complicated is never important.”  That’s pushing it, but there is no doubt that economics and central banking can be made to be far more complicated and technical than it needs to be when big institutions are trying to get away with something.

In this case, the European Union is becoming a “bankocracy” where a model based on something like a Dickensian debtor’s prison is being used to punish, not help, the nations that went on a borrowing spree over the last 10 years.  The problem is all about socialized risk – for banks.  The European Central Bank did, in fact, finally print a trillion Euros as we all knew they would – but sent it out to help the banks strangle the “bad” nations of the Eurozone.  McWilliams himself sees no problem with an end to the Euro if those are the terms of union.

McWilliams’ style is as light and fun as you would expect for an Irishman, but more importantly it has to be this way.  What’s going on in Europe is something that many people know in their guts is just wrong – but they don’t know exactly why.  Punk Economics bubbles that feeling up into the brain, hopefully fueling the feet and arms into action along the way.

Why is it “Punk Economics”?  It’s a folk movement, with attitude.  It’s about people getting a handle on the union that promised all kinds of brotherhood and prosperity across the continent.  It’s the next stage of a revolution – one started by well meaning liberals (in the classic sense of the word) who pretty much pitched and folded when times got bad.  It’s pretty much how reform movements always wind up when they get too far ahead of the people and bogged down in bureaucracy and detail.

This isn’t the only attempt at explaining this stuff with good humor, of course.  Here in the USofA we have the “Daily Show” and many small efforts like Barataria.  The difference is that those of us reporting on the constant ebb and flow of nooze don’t have a single message put together in one package.  I would like blatantly steal, er, be inspired by this presentation to start something like this if you all are ready for me to jump into video.  Someone has to take a look at the big picture.

“What is important is not complicated and what is complicated is never important.”  We’re all going to have to learn a lot more about how to run banks and economies in the next few years.  Anyone who wants to throw you out of a conversation can drown you in a zillion details.  What matters is when everyone knows there is a real threat to everything we believe in circling the globe. Once it was the “bleep” of a Soviet spacecraft, today it’s the web of debt working tighter around our necks.

We’ll get through this – with a little more smarts.  But we have to get up to speed on what counts fast.  Thanks, McWilliams!

Economic restructuring always occurs in a Depression as the system that crashed at the start emerges as a different arrangement that looks ahead to the future.  It’s a time of great opportunity, sometimes disguised as desperation.  That restructuring is taking place in the USofA slowly, but much more rapidly when the sun shines on the other side of the globe.  That’s why we should be careful what we wish for in the dead of the night.

The conference in question is between the Central banks of the BRICS nations – Brazil, Russia, India, China, and South Africa.  They will agree to open up their banking to each other and use their own currencies in exchanges.  It’s the first step toward a convertible Renminbi (RMB), the term for the Chinese currency (technically the Yuan).  Once it is used as an international medium of exchange it will eventually start to float versus every other currency in the world.

These five nations together are about 20% of the world’s product, but more importantly they are the fastest growing economies.  Brazil, for example, just passed the UK to become the sixth largest economy in the world, growing at an annual rate of 2.7% compared to Britain’s paltry 0.8%.  Within 10 years these nations could be easily be a quarter of everything made and consumed on the earth.

This is extremely important for many reasons.  The first is that the USofA has long been concerned that China does not “play fair”, keeping its currency relatively low in value and its products cheaper than they otherwise would be.  It has been a campaign issue as we try to boost our own manufacturing.  The only long-term solution is to have their currency traded like anything else around the world, removing the artificial barrier that has been erected between the internal Chinese economy and the rest of the world.

China is not simply leaping onto the world’s stage to play a bit part in the big show, however.  By easing out slowly in the company of friends, the RMB will take up some of the trade that is currently priced in US Dollars.  Along with their BRICS partners they will shove aside the need for a large Dollar reserve, a system that has tied the USofA and China together in ways that neither is comfortable with.  This is the most serious challenge to date to the “Dollar Standard” that has ruled the global economy since the end of WWII.

There are many reasons why China is taking this step, and not all of them are sinister.  The best way for them to relieve the internal inflation they cannot control is to project their new wealth outward into the world.  Convertibility of RMB is inevitable for this reason – but wary China has found a way to do it on their own terms.

The end of the Dollar Standard forces a tremendous reckoning that we are not at all prepared for.  It will certainly reduce the global value of the US Dollar as demand for it declines in international trade, making our exports more competitive.  However, we have built an economy based largely on sending US Dollars overseas and getting goods in return that will soon pass into the night like some kind of strange dream if the BRICS nations get their way.  Things will necessarily change as our economic influence wanes.

But this is completely inevitable as global trade is expected to rebound from the Depression lows quicker than originally thought.  Big bets are being placed on more trade as the largest containerized cargo ships ever are being built and ports are expanding to meet the demand.  The US Dollar has always strengthened as trade grew in the past through the development of containerized cargo.  But when shipments are valued in other currencies we will be left on the sidelines, trading as nothing more than another nation with hungry mouths to feed.

It’s just another agreement to be signed between nations that most people rarely think of as economic powerhouses, if they think of them at all.  But it may be the most serious challenge yet to the US Dollar yet.  We may say that we want RMB to trade like any other currency, but we should be a lot more careful about what we wish for.

Jobs:  The ADP Employment Report came out this morning, showing a very solid gain of 216k jobs in February.  This isn’t the official report, which comes out next week, but the two have been running close lately.  Manufacturing added its usual 10% of the take, 21k jobs.  One more month like this and we will be talking about net job creation during the Obama administration.

The turnaround is stunning because by most accounts job growth is leading general economic growth.  That is unheard of in a postwar recovery after a recession, but as we all know this is a very different economic event.  Part of the issue has to be pent-up demand for employees caused by a lack of hiring during the last decade.  There also appears to be solid restructuring, as the biggest net gains were in small and medium sized companies.

Republican Screwups:  Rush Limbaugh’s attack on Sandra Fluke shows that the bloodletting will only continue for the Republicans.  This is a story that will not end because it has become an emblem of so many problems for the party, inside and out.

Many commentators have noted how the disgusting remarks laid bare that the issue at hand was indeed about contraception, not religious freedom as it was carefully pitched before that.  The spin was totally blown, and that is a problem.  But the reaction, coming as it did after the Komen Foundation flap last month, has been even more galvanizing.

In both cases, the initial stories were quite blunt in nearly all news accounts that women’s reproductive choices were the main issue at hand.  What followed was a social media firestorm that kept on for days.  In both cases, this eruption caused major change – Komen reversed themselves and the controversial VP quit, and Limbaugh’s advertisers are leaving in droves.  There are three lessons being taught:  there are dark forces that really are out to challenge your reproductive rights, you are far from alone in your outrage, and activism gets results.

Take these together and you have two object lessons bound to fire women up like they have not been in a long time.  This will have an affect on the election.

Debt:  Twitter friend @sumnums took the chart showing our crushing debt as just one data point – the ability to service the debt seemed at least as important to him.  So he created this chart from Bureau of Economic Analysis data showing debt service as a share of the economy (by GDP):
There are some striking features.  Note that debt service has not been below 18% of GDP since 1980, once again a year that seems to show a big inflection.  Also note that the spikes on this chart clearly show each recession since 1960, meaning that debt service has likely been the main cause of economic slowdowns – which explains the tremendous attention the Federal Reserve has had in this time.  But what is especially interesting is that despite the large amount of debt currently owed, service costs are at a post-1980 minimum because interest rates are very low.  This is a topic worth digging into more heavily.

Speaking of 1980’s inflection point, Reagan’s famous budget director David Stockman had a thoughtful interview in the Burlington Free Press.  He also talked about private debt as a crushing problem, and declares that significant growth is impossible under these conditions.  More to the point, when it crashes he says “The carnage will be unimaginable.”  One figure he points to is that since 2000 non-residential capital investment has grown by only 0.8% – meaning that we stopped investing in our economy about when this Depression started.

I think we can see how history will describe the era we live in now – a financial bubble from 1980 on which deflated in 2000 into a Depression that all the king’s horses and all the king’s men did their level best to contain but were still unable to entirely prevent.  What this will mean socially and politically for the generation coming of age right now should be interesting.

Greece:  There is a lot of news out of Greece, and yet there is nothing new at all.  It’s been two years of solid crisis at this point and yet … it just will not fully resolve.   Faith in the EU has to be grinding down to nothing by now.

In support of the Amendment there is “Minnesota for Marriage”, a coalition of groups that lobbied the Legislature to put the question on the ballot in the first place.  Their arguments are heartfelt, clearly defined, serious – and ultimately misplaced.  It is worth taking the time to refute their position carefully so that this issue can be defined by what it is – a Civil Rights issue.

The position of Minnesota for Marriage is well summed up on their website under a tab plainly labeled “Why Marriage Matters”.  It is a lengthy essay that comes down to a very simple assertion:

Why has virtually every society throughout history defined marriage as the union of one man and one woman? The answer can be summarized in one word: children.

Protecting the interests of children is the primary reason that government regulates and licenses marriage in the first instance. After all, government does not license or regulate any other form of intimate relationship – not friendship, or dating, or cohabitation. People are free, under the law, to live as they choose, cohabitate with whomever they choose and engage in sexually intimate relationships with whomever they choose – all without any governmental recognition or regulation.

This assertion is somewhat reasonable as far as it goes.  It is very true that, under today’s laws, heterosexual marriage is the only relationship regulated by the government, at least since cohabitation and sodomy laws were struck down by the courts.  What has remained is the definition of “marriage” as we know it, the very last regulation of intimate relationships left.  But it is not entirely in the interests of children.

Heterosexual couples incapable of or lacking the desire to have children still have the protections of marriage available to them.  These include definition of joint property, control of medical decisions when incapacitated, and assumed probate (death) rights.  There is nothing about children in the vast bulk of the laws that define “marriage” as we know it – these rights are available only to one class of people and denied to another.

But if the protection of children is the main concern of this group, the concept of marriage is even more limited.  In Minnesota today, about 45% of all marriages end in divorce (excel sheet).  Roughly 28% of all children are raised by single parents.  Marriage law and the rights it gives to couples are irrelevant to the interests of many children.

More to the point, some assertions made by this group are simply naïve:

But marriage is a special relationship reserved exclusively for heterosexual unions because only the intimate relationship between men and women has the ability to produce children as a result of that sexual union.

Statistics on artificial insemination are hard to come by, but there is no doubt that it is entirely possible for a same-sex couple to have biological children.  Laws also do not restrict their ability to adopt, nor is their any restriction preventing a divorced parent from “cohabitating” with a person of the same sex who becomes a significant figure in a child’s life as a step-parent.

Marriage, as we know it, is simply not set up as a system for protecting the interests of children in today’s world.

If this group wants to craft legislation designed to protect children in today’s world they will find many strong allies in both political parties.  There is little doubt that the laws in place were written in a time when the two-parent heterosexual family was very much the standard situation for most children in Minnesota.  They could use updating in many ways.

However, the question in front of voters this November is just as silent on the interests of children as our antique laws on marriage.  What will be in front of voters is an amendment to the constitution that would make it impossible to re-define marriage without another amendment later on to repeal it.  Any possible effort to refine our laws and truly protect children would become more difficult, not more likely, should this amendment pass.  If anything, it does the opposite of what this group purports to be important, given the very real state of life in Minnesota today.

The argument in favor of this amendment based on the interests of children fails completely for very simple reasons.  There is no reason to believe that what will be in front of voters has anything to do with the case presented by Minnesota for Marriage.  Their arguments should be rejected as irrelevant at best, and harmful at their worst.

There wasn’t anything happening then, except for gasoline prices.  They went up and down in a kind of rhythm that defied just about everything, as they do today.

The normal fluctuations of something as basic as gasoline can become a partisan issue, at least to the extent that one party has something to capitalize on.  This election year, however, the constant up and down of the price of gasoline won’t make it because people don’t know who to blame, they are less dependent on gasoline, and it has the potential for serious blow-back on the Republicans.

Anyone paying attention knows that there are many things that go into the price of gasoline.  According to a recent Washington Post poll, people are indeed paying attention.  The public is confused at best, casting blame pretty far and wide.  The largest single group are those who “don’t know” why the price of gasoline is currently rising.  People understand that unrest in Syria and Iran are issues, too.  Taken as a whole, the voting public comes down the middle on this issue and understands it is complicated.

That’s not to say that the Republicans aren’t trying, however.  Gingrich has told the world that if he were President he’d have the price down to $2.50 a gallon, a claim so ludicrous it was immediately laughed down.  There are still cries of “Drill here, drill now!” which suggest that if we only produced a lot more oil in the US we would have lower prices.

This is, of course, ridiculous because the oil we have remaining tends to be in places that are more expensive to tap – why they were not tapped earlier.  As soon as the international price of oil goes down any holes sunk deep in the Gulf of Mexico, for example, will be left dry.  The free market is wonderful that way – oil will never just suddenly run out, but will gradually become more expensive.

People are reacting to that market, too.  February saw the best sales of new cars since this phase of the Depression started in 2008, and the vast majority of these cars are classed as “fuel efficient” (30 miles per gallon highway or better).  Such cars now make up 40% of those sold by GM, up from just 16% just three years ago.  The economy is not as dependent on the price of gasoline as it has been largely because individual consumers are taking action.

Even though the public understands the free market and gasoline, there is more trouble for gasoline prices as an issue.  President Obama has fired back with about as much subtlety as the Republicans, calling on an end to special tax breaks for oil companies.  The implication is that in the “blame game,” which often substitutes for actual debate, oil companies are the ultimate villains.  That may be true, but it will take a bit more effort to make it stick.

As discussed before, the decline in demand for gasoline has left US refineries with excess capacity – which is being filled by exporting refined gasoline for the first time in decades.  That only makes sense, but it opens up an examination of the refining industry and how they make money.  This leads naturally to the Koch Brothers, whose Koch Industries is the largest refiner of gasoline, entirely private and shielded from the public eye, and a gleeful backer of all things Republican.  Their “Americans for Prosperity” think-tank is the center of the Republican spin machine these days, which explains the “Drill, baby, drill!” rhetoric in the first place.

Democrats have long wanted to flush out the Koch Brothers, but they have proven difficult to pin down.  They make excellent villains, however, if they come out into the open.  Making gasoline prices a big issue is probably the best open invitation to publicly vilify the Koch Brothers and make them the symbol of not just gasoline prices but everything that is wrong in US politics now.  The potential for blow-back is amazing, if this issue is handled well.

Back in 2010 it was easy to write a piece on gasoline prices, in part because nothing else was happening.  That’s not true today as a cautious recovery may be taking shape as the economy has restructured and leads with job creation.  There are simply better stories than gasoline prices, in part because the free market has worked pretty well and fuel economy is increasing, decreasing the importance of the price of fuel.  What remains are some shadows that if the right was smart would stay in the dark as long as they can keep them there.

The appeal of Rossini goes much further than his music, which was the fluff of his day.  All of his successful works were in opera buffa, or comic opera – full of disguises, mistaken identity, and general silliness.  What set Rossini apart was the sheer delight of his bouncy scores and simple fun. The earnestness of his many catchy tunes and brilliantly orchestrated pieces is more than a sly wink, it’s a smiling nod to come and join the fun.

The memory of Rossini is only troubling because of the complete lack of trouble – he went completely against the “tortured artist” archetype of a “serious” composer.

Success came early, when at 18 years old his opera “La cambiale di matrimonio” (The Marriage Contract) was performed to great acclaim.  He was still a student at the time and pounded the entire score out in just a few days.  It led to fame and a few more contracts, and by the time he was 20 he was the toast of Italy with several operas running simultaneously in every big city.  One of them, “Il signor Bruschino”, is best known today for the overture where a the violins tap out a rhythm on their music stands – as instructed right in the score.

Rossini became known as “Mr. Cresendo” because so many of his works built excitement with simple repeated phrases gradually getting louder and louder.  His works are so simple in foundation that they earned him both scorn as being “juvenile” and praise as “The Italian Mozart”.  Both terms are difficult because they seem to take Rossini and his works far, far too seriously.

Rossini is best known today for the overtures to his operas, since these can be done in a concert setting without the big production.  This would probably pain him since he always wrote the overture last, in a day or less – supposedly he once told the servants to lock the door and not let him out until it was done, sliding sandwiches in every few hours. Many people know overtures such as “Il barbiere di Siviglia” (The Barber of Seville) from Bugs Bunny cartoons, where music directory Carl Stalling used them heavily.  “Oooooh, where do I get dat waaaaabbit?”  At least this use of the overtures would have delighted Rossini.

There are many other stories of this life of nearly instant success, such as the time when Pesaro wrote to Rossini asking if they could use his name to raise 20,000 ducats to erect a statue of him (shown above).  He replied that they could, but for that much money they should give him a pedestal and he would stand on it. There is also the “Comic Duet for Two Cats”, written as an encore piece.

Small sorrows, however, hit this gentle man hard. News of maestro Ludwig van Beethoven’s failing health reached Rossini he went to Vienna to do what he could to cheer him up, but to no avail.  “Beethoven is impossible,” he wrote, and always considered his inability to pull the great composer out of his misery his greatest failing.  Rossini also had a failed marriage, but later remarried Olympe Pélissier, who was born into a kind of slavery and known for her sharp tongue.

Rossini is also know for his exit near the height of his power.  Despite a great reputation for comic opera, Rossini wanted to write a serious work.  William Tell ran over 3 hours and disappointed audiences expecting more fluff and fun.  At the age of 36 Rossini retired, never writing again except for a few pieces he called “Sins of My Old Age”.  He became known as a gourmet cook and general man about town, living in Paris.  He died at age 74, living more than half of his life officially “retired”.

Today, Rossini is not as well known as he probably should be, at least not by name.  But that’s no reason we can’t thrown him a party and celebrate the great gifts he gave us.  We only get the chance every four years, so why not make it a big one?

(*note:  Years 1800 and 1900 were not leap years, as is every century that is not an even 400, like the year 2000, for those of you doing the math. Rossini didn’t even have a birthday when he was 8!)

Regulations changed in 1982 and pitching of products broke the fourth wall of screen – making cartoons much more valuable.  Hasbro’s “My Little Pony” was a pioneer, subsidizing a cartoon show around toys to sell.  When social media became a big part of kids’ lives in 2010, they broke more new ground with the fourth generation of “My Little Pony” by integrating social media fandom into the show itself.

It was a brilliant move that made a phenom out of a 30 year old show.   What could possibly go wrong?  Like everything else, when things are laid bare in social media any potential controversy in life and values can intervene.  And that gets us to Derpy, the little pony that messed everything up.

The new generation of “My Little Pony” was designed by Lauren Faust and team to be much more than a little kids’ show.  Dialogue was carefully constructed to be as “real” as possible, and the lead characters were classic high school personality archetypes.
It is the bit hit of Hasbro’s new teevee channel, The Hub, which launched in 2010.  It is a channel built entirely around products like “My Little Pony”.  Nothing they have launched so far matches the success of this show.

By creating an appeal that spanned many ages, fandom sprang up in social media, breaking down what was left of the fourth wall.  The fans, known as “Bronies” (Brothers in Ponydom), chat about every detail on the show, no matter how trivial.  Episodes have been shared in their entirety on YouTube without interference from The Hub.  Any lawyer could argue that they have surrendered their copyrights in the process of making this phenomenon.

Social media fandom made “My Little Pony” as the Bronies literally took it over.  One pony caught everyone’s attention.  Her shyly bent head and crossed eyes depicted her as vulnerable and … different.  This pony that appeared only in the background won the nickname Derpy in the fan world, and shirts and other items depicting her quickly became best-sellers.  The staff of the show internally accepted the name Derpy and decided to finally give her a bigger role in a plot.  The Bronies were elated as the show crossed a new frontier of interaction.

That’s when everything went wrong.

Details are hard to come by, but apparently The Hub received complaints about the name Derpy and the characterization as a klutz with a dimwitted voice.  Some said that Derpy was clearly depicted as mentally challenged, often using less kind words.  The “official” episode on iTunes then disappeared briefly, causing great anxiety among fans.  Some claim they were told it was only a glitch and would be restored.  When the episode came back, it was clearly modified to a more “normal” voice and the name Derpy removed.

Clearly, the controversy spooked Hasbro and quick action was taken.  But the fans, once elated by their influence over the creative process, were suddenly slapped down.  They are not taking it well.  Of all the nasty words spoken over a social media mis-step by a company, none are as devastating as this fan-made video of Derpy.  This show, to bridge teevee and social media from the start, crossed another frontier in integration – unintentionally, and about as gracefully as Derpy herself.

There are many stories embedded in the “My Little Pony” saga that are worthy of a great deal of analysis.  This has always been an experiment, sacrificing potential syndication and ad revenue to leverage social media, create an interactive experience, and thus sell more stuff.  But the lack of control over the product eventually caused a problem.  It was handled badly, too, and now there is damage to be mended.

The experiment of “My Little Pony” goes far beyond what anyone else has done integrating teevee with social media and is very much worth watching as they work their way through this first big controversy.  This is no longer a simple Saturday morning time-filler, this is big business with a lot of money and energy behind it.

“My Little Pony” Generation 4 will almost certainly stand as a revolution in entertainment.  Entertainment has come a long way in 30 years, but like any advance there is always a glitch.  The resolution of the “Derpy Controversy” may well be a lesson taught for many years to come.

Addendum:  Dear Bronies – welcome to Barataria!  I am a professional writer who is always looking for work (hint!) so if you like what you see please look around.  The comments are what make Barataria a place where people and ideas connect in new ways with curiousity, respect, joy, and when we can swing it a bit of love.  Much of what you see here is on politics and the economy, or how people connect in other ways.  Read the comments and follow the links if you want to know more on a topic!  How Bronies have connected and formed a community is a very natural fit, if you read the rest of this the way I intend.  And thank you for being here!

We do not know much about what is happening in Syria because the news blackout has been very effective.  What we do know is that outside of that nation things may be hardening rapidly.  This highlights the limits of what the USofA can do in a world of revolution – and also the great opportunities if we change how we do things.

The situation is a bit puzzling to most Americans because we are used to simply imposing our way on nations like Syria.  A few cruise missiles, a bombing run here and there, and soon we have a different situation.  That will not work in Syria for the same reasons we knew it would not work in Libya.  Strong action by our military will only hurt the reputation of the rebels in the long run – they have to have the commitment from other Arab states in a leadership role.  Then an international military operation might possibly start.

This is important because it highlights what we get by spending around $700 Billion every year on Defense, roughly 43% of global military spending.  We can push buttons and make things blow up hundreds of miles away, but without the commitment of the rest of the world we might only make things worse.  For far too long our very capable men and women in uniform have been asked to do things that were better left to diplomats and politicians unwilling to do their jobs.

That’s the problem with a strong military – you tend to use it, even when you shouldn’t.

Syria itself is far more than heartbreak, however.  Its longtime alliance with Iran is being strengthened and highlighted.  Once Syria breaks, Iran will be utterly alone and will have shown its hand as a dangerous force in support of despotism and disaster.  Arab states’ action against Syria is probably just a prelude to what they will feel compelled to do against Iran.  And there is considerable pressure mounting in Iran that, like Syria, is not well reported to the world.

The role of Russia ibacking al-Assad could prove to be the next domino after that, but it will take far more than embarrassment in Syria to topple Putin.  But he has his own problems.

Over the short run, we will have higher oil prices.  This situation will not be resolved quickly if it is to be resolved well, and that will cost us.  This cost is relatively unimportant, even as our economy struggles to gain momentum.  It is much harder on the people of Syria, who need relief immediately.  It may be coming soon because the world appears to have had enough.

If Syria does fall and pressure is increased on Iran for either democratic reforms or open rebellion, most of our need for a strong military deployed in forward bases around the world is greatly diminished.  We cannot go on a cutting binge now, but we may have tremendous opportunities in the near future if we do this properly.   The price of gasoline right now is an utterly trivial thing compared to the stakes for us if we have the patience to do this properly.  I think we can expect the press and the Republicans to whine relentlessly about it, however, so it will take some guts to stay the course.  A little directness and honesty from the administration asking us to be patient would be very useful.

However this plays out, we can be sure that a brutal dictatorship has been laid bare and will at least never have the influence it once had.  Their ability to cause mayhem with terror groups and proxies fighting Israel will never again be what it was.  Hopefully, they will cease to exist completely and there will be a real chance for peace in that part of the world.  But as heartbreaking as it is to watch, our role is to support, not force, the revolution that will change everything.  We’re not used to doing things this way, but there is a good chance that we won’t need anywhere near the force we’ve had if it is done well.

Bless you, people of Syria.  You have struggled for so long.

Today’s piece is a small summary of one small part of a breathtaking interview with Dr. Lacy Hunt of Hoisington Investment Management, conducted by Kate Welling and published by John Mauldin.  The original article is a must read, but it takes hours to read, digest, and re-read.  But there is one part that demands more discussion – and has a killer graph.

Below is the total debt of the US since 1870 as a share of Gross Domestic Product (GDP), compiled by Dr. Hunt.
Hunt argues that in order to understand where we are in the great cycles of the economy, you have to go back very far in the past.  This analysis is based on the “Debt Supercycle” theory that credit bubbles are what cause Depressions – and that there have been roughly five in US history.  You can see the Panic of 1873 as a small blip on the far end, with the Great Depression of 1929 as the big spike to the middle.  The mountain of debt, 382% of GDP, is where we are today.

This long view clearly shows the cycles of debt.  Total debt creeps up as investments are made in a strong economy.  When things have been humming along for a while there’s no reason to believe they won’t keep on keepin’ on.  Businesses borrow more, states build infrastructure, consumers use their credit cards, and banks don’t really worry about the risk because hardly anyone defaults.  Then, when it reaches a certain level, the economy falls back to a point where it simply can’t service that debt any longer.

The Depressions are clearly marked as spikes of debt taken on to keep the good times rollin’ when, in fact, it was all about to stop.

There are many features worth commenting on, but several stand out. Federal (and State) debt is less significant than the overall debt taken on by the economy. We also have a much more serious problem with debt than ever before.

Note that recently there is a definite inflection point about 1980, the year we keep going back to as the start of the recent trouble.  That’s when consumer credit takes off as a driving force.  Note also the final ascent to the top of the mountain that kicks in about 2000, when today’s Managed Depression began.  That is when total debt as a share of GDP roughly equaled the 1929 Great Depression peak.

The policies that got us here assumed the official “Recession” of 2001 was a typical Postwar event.  Low interest rates and a large Federal deficit were expected to “prime the pump” and get us all moving again.  While the worst effects of a depression were managed well, the main effect was to prolong the pain and make it harder for our political system to focus on the real issue that got us to this point – the large cycles of debt through our history.

This is the main “Fisherian” argument that long economic cycles can be described as “Debt Supercycles”.  Our political spectrum, or what we argue over, is usually defined by very different economic beliefs.  The left tends to look to “demand management”put forth by Keynes, stating that depressions come from a lack of demand.  The right usually argues for “supply side” expansions of investment capital to get through downturns, as argued by Friedman.  The Bush administration did a lot of both getting us through the first phase of the Managed Depression.

How will this all end?  There is little doubt that there will be default.  This is why economists like Hyman Minsky argued that banks have to be kept small – so that no one is ever “Too Big to Fail” and default can occur naturally before a big credit bubble developed.  It’s a bit late for that, but it will have to come.

The long view shows not only the Debt Supercycles, but our place in history.  It is not unique, but it is unusual.  We have some idea what will happen next because it has happened before – but it is not pretty.  Then again, once we get out of this phase of the cycle there will be good times ahead – and the sooner we learn to deal with this crushing debt the sooner they will come.

Let’s say we have a pastry shop called Danish Treat.  Hardly a topic for a heroic quest?  Every effort crafted with love and determination can be told with this simple device that slips along well-worn paths directly to the guts of those who read the backstory on a website.  These stages do not all have to be present.  This is only a guide to working through how it might be applied.

The Hero’s Journey has many elements – 17 by Joseph’s Campbell’s count, usually have at least 8.  We’ll use a version described by Phil Cousineau for brevity, but there are many ways to look at this ancient art form.

Call to Adventure – Sometimes, the hero is born to take up the quest.  Invariably, he or she has a nagging voice calling them in a way they cannot ignore.  Usually, it is refused before being reluctantly accepted, and the quest beings.

Danish Treat – “I learned how to make pastries from my Grandmother, who came from Denmark during the war.  Though we spent many long hours in the kitchen rolling and baking, I never pictured myself doing this for a living.  It wasn’t until my dear Nana passed on that I started to dream of her begging me to take her loving art to the world.”

The Trials – A hero has to be tested, but often gets through the tests with a mentor or friend.  These define the determination that comes to define the journey itself.

Danish Treat – “Many long hours in my kitchen at home making samples and perfecting recipes gave me confidence in my dream.  It wasn’t until I met Mary that I knew we could do it.  She had the business sense that complimented my baking.  Her belief in me, however, was the most important thing as we developed our pastries and business plan together.

Vision Quest / The Goddess – The trials are never complete until they are blessed by the supernatural and the vision of a better world is given to the hero.  This is the tricky part, since modernists have little faith in gods or magic, but it can be the most powerful.

Danish Treat – “Getting the resources to make it happen wasn’t easy, however.  It wasn’t until we showed up at the bank with a plate of Midnight Black Currant that we were able to convince them.  It’s always been our secret recipe that makes an ordinary day into something special!”

The Boon – Ultimately, the quest has a goal that has to be achieved.  It is more than personal, as it gives the hero power and something that simply must be shared.  The hero has moved deep into anther world and loves every moment.

Danish Treat – “We opened June 17th 2009.  That day was exciting, but I stayed in the kitchen the whole time sweating over every batch.  Mary stayed at the register for me the whole time.  Everything had to be perfect and I wasn’t going to let it go.”

Magic Flight / Rebirth – The great Boon is either jealously guarded by gods or rivals who chase the hero or who welcome the hero into their fold as one of them.  Pick one.

Danish Treat – “After a while we had customers who couldn’t start their day without a cup of our French Roast coffee and the pastry of their choice.  Their compliments and simply being there every morning convinced me that I had achieved what I set out to.  The bakery became my life, and I have enjoyed every minute of it since!”

Return – At some point, the hero comes back into the world, usually because the mentor or helper leaves.  Their position is secure.

Danish Treat – “Mary eventually left to pursue her own dream of managing venture capital projects.  It was hard at first, but getting out of the kitchen to know our customers better from the register has been just great.  Julio joined me in February 2010 direct out of pastry chef school and has been just fabulous!”

Master of Two Worlds – The hero is happy and content.  The quest is over but the hero, and their two worlds, are never the same.

Danish Treat – “Since that time I’ve been proud to give back to the community and mentor other young entrepreneurs.  I also travel around the world looking for new ideas, like our Tuscan Peach.  It’s all possible because of you, our customers.  Thank you so much!”

Naturally, this gets a bit thick in this example.  You may never want to use all the elements of a Hero’s Journey, but they are all there to be used as appropriate.

The competitive system at the core of our Democratic Republic functions to the extent that the two major parties stake out different sides of important issues and duke them out through an election, when the people of the nation get to weigh in.  But what happens when one side is wallowing in irrelevance and the other side has little to say one way or another?  Citizens who might otherwise vote are confused, angry, or simply apathetic and stay home.  When one party loses its way, it’s up to the other one to capitalize on the moment and present its platform.

That is unlikely to happen as the Republicans square off against the Not-Republicans, aka Democrats.  The vagueness of Occupy Wall Street made into a platform, of sorts – and historically pretty much what the party has usually been without strong leadership.

Most people appear to agree that we live in a time that demands action of some kind.  The world is changing around us and that will almost certainly demand new approaches in how we organize our lives and build institutions that serve whatever new era is forming.  Some changes are embraced easily by various people and others frighten the population terribly.  Sorting it all out, whether in a big corporation or in government, will take time and serious thought.  That works against the rapid change and makes tensions run high.

The Democratic Party has never been in a good position to master change unless it has a strong leader at the top of it.  Obama, love him or hate him, has not shown himself to be that kind of leader with a clear vision of where he wants to go – and neither has the rest of the Democratic leadership at any level.

This is hardly new.  The “Party of the people” was founded on activism as an alternative to the natural leadership of the landed gentry.  Thomas Jefferson was swept into power through early organizing in opposition to the bumbling and autocratic rule of John Adams.  Andrew Jackson seized power on outrage over the corrupt banking system of the day.  FDR organized a loose coalition of people laid low by the Great Depression and made them into a powerful force.

When the natural party of aristocracy fumbled, the Democrats eventually took power with two key components – an issue that forged an opposition coalition that otherwise had no business coming together and a strong leader that crystallized the organization.

Today, there is no one issue that is crafting an organization.  The Occupy Wall Street groups are close to one, opposition to rule of a rich elite, but blithely refuse to articulate exactly what needs to happen.  As a personification of whatever new coalition could rise, they deliberately refuse to anoint, follow, or even consider strong leadership of any kind.  What remains is being the Not-Republicans, a coalition of people who may not have any strong course of action but at least know what should not be done.

That isn’t likely to get people out to vote.  The first rule in elections is that political power does not come from percentages but from numbers.  Democrats may yet be able to capitalize on Republican stumbling, but immediately after the swearing-in there will be a swearing-at without a clear message that includes a distinct path out of the woods we find ourselves in now.

The various Occupy movements are not the Democratic Party, of course, but they remain the largest source of energy that could construct a new coalition of some kind.  They are worth watching because any change in the Not-Republicans is likely to at least come from that activism if not the people themselves.  There is still a lot of time for a clear message to be formed and strong leadership to emerge, but a re-election campaign rarely produces anything other than “stay the course”.  How could it be anything else?  Without clear leadership and policy at the top, what could possibly happen down the ticket?

The answer, of course, is a new Progressive movement that bubbles up from below.  That won’t crystallize this election cycle and will take a lot of time without leadership.  So for all the dramatic crashing and burning on the Republican side, the response is likely to be a lot of people standing around saying, “Wow, lookit dat.”  The irrelevance of the left today is much less spectacular than the War on Reality being conducted from the right, but its corrosive effect equally destructive to our nation.

This could be a long, strange election unless something changes soon.

What is less obvious is that, as a powerful archetype, it is also used to sell.

The Hero’s Journey is important to much advertising, especially when it comes to political campaigns.  It is worth getting to know at the gut level it springs from not just to sell people and things, but also for its effect on the narrative that shapes our world.

The Hero’s Journey has been dissected and analyzed to the point where it can almost be done in rote form.  Joseph Campbell called it the “Monomyth”, a term borrowed from Finnegan’s Wake – a classic if twisted example.  The hero is called, usually refuses at first, but takes up the cause with divine inspiration.  He or she proceeds to have a great adventure, learns a great deal, and through perseverance and valor achieves something great.  The moral is self-contained in the quest.

Modern retellings often twist the story in interesting ways – such as Ferris Bueller’s Day Off.  But the strangest adaptation comes in advertising, when a hero and their story becomes the human face or brand of a product.  Dave Thomas and Col. Harlan Sanders are the most obvious examples, with Steve Jobs being the most recent figure elevated to Hero Pitchman.  The story is never one of simple genius, but of the quest – it starts in a garage and proceeds forward to gradual greatness.  It can even be told in small vignettes 30 seconds at a pop.  A highly derivative form could even include the rabbit that never quite gets the Trix but keeps on trying.  But the most effective pitch includes the detailed backstory that slides into popular culture along the well-worn path of the hero.

Political campaigns are the most obvious place where the Hero’s Journey is critical to pitching the product.  George Washington was called to defend his new nation and was sorely tested at Valley Forge before persevering on to victory.  That archetype cemented the Hero’s Journey into Presidential politics in particular, where a strong leader is the main pitch.  We don’t always have a true Hero’s Journey on the ballot, especially in the 2000 race of Bush versus Gore – neither one could claim a quest of such epic proportions.  But when there is a Hero’s Journey the appeal is strong – and in the case of Reagan’s “renewing America” it defines an era even after the Hero has gone.

Campaigns also work best when the quest is still in progress, calling on ordinary citizens to join it – much like the peasant uprising in Marseilles that was joined by thousands on the march to Paris to become the French Revolution.  That was the appeal of Obama in 2008, but he will have to modify that for re-election into perseverance in the face of adversity – more on this later.  Mitt Romney has no chance at crafting a Hero’s Journey that I can read at this time, so a strong quest as a counter can be unstoppable.

Note that the Hero’s Journey is very different from the heroic moment, which didn’t work very well for either John Kerry or John McCain.  McCain almost had a quest as a maverick, but it strangely fell apart.

Women have a tougher time pitching themselves as being on a Hero’s Journey, but when it sticks it works. Sen. Patty Murray, the “Mom in tennis shoes,” was a classic reluctant warrior who gave up a safe middle-class life to make a difference, as the narrative went.  Any woman who can use this device to run for office can and should, but has to sell it consciously and constantly to make it work.

Away from campaigns, the Hero’s Journey is amazingly flexible and centers a product on a distinct human face that becomes the brand itself.  Setting out to make the best donuts in the city probably includes trials and tribulations that can provide a great backstory that will bring not just customers but believers.  Car salesman, always eager to humanize their beleaguered profession, usually stress humble beginnings that culminate in success.

As a storytelling narrative the archetype of the Hero’s Journey is without any doubt the most powerful.  It sells products like nothing else because it has not only built in branding but a range of powerful images deep within it.  It should be used whenever possible, but only once the classical narrative is understood as deeply as form itself.

There are many ways that the party of Reagan is screwing up right now, and any one of them would cause the Gipper to shake his head in shame.  Taken together, however, it is just about impossible to recognize the party itself – let alone a path to victory.

With nine months left until the election there is always a chance they’ll get it together, of course.  There’s also a good chance that we’re about to see nine months of unscripted slapstick passing itself off as “politics”.  Here is a list of what is going horribly wrong:

Irrelevance: When Karl Rove assaulted the Clint Eastwood Superbowl ad, it seemed reasonable that this was one old guy who has lost his touch saying something very stupid.  Not so.  The theme has been picked up and yet another fake issue has been created for the War on Reality – except the right didn’t pick it very well.  As they descend into a very Marxist belief that everything is political they have driven a wedge between themselves and reality that is very big and obvious.

Medieval Beliefs:  Are we honestly debating the availability of contraception in the year 2012? Doesn’t anyone in the party understand that women have the vote and have a tendency to show up in greater numbers than men?  This has to be the stupidest manufactured issue ever – at least the downside on Clint Eastwood is silliness, not actual harm. Besides, the arguments being used right now ultimately make the case for universal, national health care better than anything else if pushed too hard – why, indeed, should an employer get stuck for the tab?

Mitt:  People hate Mitt Romney.  No one knows exactly why, but there are many small reasons that add up to a lot of nothing.  As the joke goes, “A conservative, a moderate, and a liberal walk into a bar and the bartender says, ‘Hi, Mitt!’.”  This is a man with perfect hair who says anything people want to hear and has a record of making zillions of dollars ripping companies apart – not exactly a struggling entrepreneur or working stiff.  In many ways, he has the worst qualities of Mike Dukkakis and George HW Bush all rolled into one – a losing combo if ever there was one.

The Establishment:  Of the $67M raised by PACs so far, 22 people contributed half of it (video: Colbert).  They are the ones who are running this election – and they have apparently picked Mitt Romney to be the party’s nominee.  The actual “establishment” is probably more like 50 – 100 people in total, most of whom have been nameless.  They are in the process of being flushed out into the open by a population that is sick of feeling powerless.  The result will give us actual personalities to demonize, making it much easier to run against them.

Blowback:  Wars in Afghanistan and Iraq were fought against US  armed groups that turned on us, apparently a Republican specialty.  The “Tea Party” movement was largely created by the Koch Brothers in order to harness rank-and-file fervor – but is certainly helping to crystallize opposition to the Establishment (well personified by the Koch brothers).  This may only be starting.  Look for it to go insurgent by this summer.

The Blahs:  This might all turn around if sensible Republicans, probably the vast majority of the party, stood up and took action.  Instead, they are staying home and not bothering to show up for primaries and caucuses.  One survey suggests that 20% of them are already leaning towards re-electing Obama.

Things are Getting Better:  While a narrow majority of Americans already believe the Republicans are trying to tank the economy, it continues to turn around anyways.  Re-election campaigns for any President are largely a referendum on their performance and little else – and Obama might be in the process of bumping up his grades by getting some overdue homework done before the end of the semester.

No Plan:  This may seem trivial in light of all the other terrible screw-ups, but at some point any voter still thinking about voting Republican will probably have to answer questions from family or co-workers as to what they stand for.  Opposition to Obamacare is not a plan, and automatic budget cuts simply didn’t happen.  Republicans have come to stand for absolutely nothing lately – other than Obamaphobia.

Can this all be turned around and a credible election campaign mounted by November?  In the USofA, anything is possible. Some things, however, are pretty damned unlikely.  With this much against the Republicans, betting money is on a complete rout and catastrophic collapse. Stay tuned!

It appears to be set after the book and wonderful Chuck Jones cartoon made by Dr. Seuss himself, so they may avoid stepping on the original.  But …  but …

No.  I cannot see the craft of the great Dr. Seuss at all in the brief ads.  Let us talk about the craft of rhyme, the meter of language.

“But now,” says the Once-ler
“Now that you’re here,
the word of the Lorax seems perfectly clear.
UNLESS someone like you
Cares a whole awful lot,
Nothing is going to get better.
It’s not.”

I chose this passage from the end of The Lorax to illustrate the power of Seuss and his incredible craft.  There was much more to his books than simple children’s stories dotted with great round drawings with odd colors and patterns.  His use of language got his message into the guts in ways that generations who grew up with the meter cannot fully understand.  That is true power.

In this passage, the meter is actually a bit broken and stilted.  But that break adds emphasis to particular words.  UNLESS is in caps, but when reading it outloud, as these books must be, the meter falls on “you”.  They rub against each other, pulling the reader and the listener into the page in a dialogue, often across generations just before the world of dreams takes over.

“Should I put this speck down? …” Horton thought with alarm.
“If I do, these small persons may come to great harm.
I can’t put it down.  And I won’t! After all
A person’s a person.  No matter how small.”

The meter and rhyme are why songs get into your head, especially when they have a catchy melody.  Rap dispenses with melody and hits you with the power of pure language, which when done well is a blinding force.  You can’t ever forget it.

Most people would never say that Dr. Seuss wrote great works of literature, but that was never his intent.  He started out as an advertising man, selling Flit bug spray (“Quick Henry, the Flit!”) and other products.  And then he wanted to do something more with his talent.  The result plays out at many bedtimes every night.

Many of you have read my poems, which appear every few months or so.  They aren’t popular in particular, but they have a purpose.  All writing must have this sense of rhythm and emphasis if it is going to work.  A complete list of my humble works can be found in my portfolio if you’d like to see them.  They are as much exercises in my practice of this craft as they are small bits of entertainment.

I was not up to doing such a piece today.  I want to know what you think about Dr. Seuss, Rap, Poetry, and the use of rhyme and rhythm in ordinary prose.  What do you say when a great work like the Lorax becomes a jumping off point for something so … so terribly ordinary looking?

You won’t see the Once-ler
Don’t knock at his door
He stays in his Lerkim on top of his store
He lurks in his Lerkim, cold under the roof,
where he makes his own clothes
out of miff-muffered moof.

And then there are those words, those invented words that chuff along the bounce of the rhythm.  What is the place for them?

While writing is a craft that requires practice and critical observation to hone, not everyone can develop the level of skill practiced by Dr. Seuss.  But there is a lot to be learned from his work which can brighten and inform even the driest of subjects.  For the Lorax, it is teaching the concepts of balance and love for the world around us.  It could preach, but it found another way.

The Once-ler should have been left alone.  What should have been revitalized is the skill of Dr. Seuss.  But we can all do this if we try.

But the story of Ohio might well come down to a very simple analysis itself.  The economy of Ohio, specifically the state of jobs, may tell the whole story despite all the smoke and noise that accompanies elections.  It is a tale of a Depression, running its course through the heartland of America since at least the year 2000.

Ohio is generally part of the industrial Midwest – a state where people make stuff.  It has its big cities with two NFL teams, but it also has  smaller mill towns dotting the rolling hills.  Manufacturing jobs, as much as 18% of the total employment of Ohio in 2000, define the state’s economy and also its outlook on life.  Manufacturing jobs are a way that people can get to work right out of High School and gradually learn on the job as they work their way up the ladder.  They have always represented opportunity.

That is why this chart from the St Louis Federal Reserve explains Ohio so well as the Managed Depression has run through the state.  Total Jobs are plotted as the blue line against the left scale, Manufacturing Jobs by the red line on the right scale:

Note that the long slide from over 1M Manufacturing jobs to 600k at the bottom did not pick up at the end of the official “Recession” in 2001 (grey shaded area).  Total jobs leveled out in 2004 but did not recover substantially in 2004, then fell off a cliff in 2008.  The net loss of 400k+ Manufacturing job loss peak-to-trough is about two-thirds the total job loss of 600k.

There was no “Recovery” between the official “Recessions”. To Ohio it has been one long event that can only be called a “Depression”.

How did the people of Ohio respond to this Depression that has been in place since 2000?  The chart below shows their voting record – with their Democrat and Republican US House delegation on the left and their statewide vote for President, Senate, and Governor on the right:

Ohio came into this Depression a Republican state, but turned Democrat – cautiously at first in 2006, but solidly in 2008.  They voted out the people who were running things and tried something else.  When that didn’t appear to be working in 2010, they reversed back again in 2010 in a big way.

This is the tale of the great bellwether, a term for a neutered male sheep with the added indignity of a bell around his neck that will ring when he runs away from predators, alerting the owner of the flock. Ohio has been ringing and bleating as loudly as it can for a decade, swinging like no other “Swing State” as they vote out the bums they elected just two years ago. They apparently feel that no one has been listening.  The story of their plight is in the graph, however, for anyone to see.

What will Ohio do in 2012?  For one thing, they lose two electoral votes as their population has not kept up with the rest of the nation through this Depression.  But notice the small uptick of not quite 50k manufacturing jobs since the bottom in 2009.  If that continues, they may very well go back to voting Democrat this year.  But if it doesn’t, or that’s not enough to notice, they may stay in the Republican camp one more cycle.

Ohio is telling us a story.  It’s a story repeated in varying degrees in Michigan, Indiana, Pennsylvania, Illinois, and Wisconsin – the industrial heartland where people make stuff.  No one can look at what they have been through and not see it as a Depression – and understand why our national leadership has changed hands so rapidly lately as voters in “Swing States” desperately seek something different as nothing changes around them.

It is worth keeping an eye on – for once.

One year down, two years back up.  We’re back to even and working to get ahead.

The data are shown below from the Federal Reserve of St Louis.  It’s a chart worth getting to know for not only its curious shape, but how it shapes the election ahead:

When Obama took office (here as 1 Feb 2009) 800k jobs were being lost every month.  That loss continued until we hit the bottom in February 2010, with a total loss of 3.6M jobs in the US (2.7% of total jobs).  Since then, jobs have been increasing through a few fits and starts to where we are today – down a net 428k for the whole Obama administration.  Two more months like we just had and it’ll all be even.

Three more months like we just had and the total job creation in the Obama administration will be equal to the total net gain during the Bush administration (310k).

While this is a stunning turnaround, the work that needs to be done is far from complete.  If we back up the same graph just a little bit we can see how big the hole is, starting from the peak in total jobs in Jan 2008:

After a loss of 9M total jobs a net gain of 3.6M may not get us totally back to even, but it shows forward progress.  And that may be enough to change the mood of the nation around.

It’s always difficult to credit or blame a President for what happens in an economy, given that we are not a socialist nation (despite some of the rhetoric).  Yet that is exactly what happens during a campaign because it is an easy argument to make – and it’s something most Republicans have claimed about Obama since jobs are very much on everyone’s minds.  Getting the job count back to even through this administration so far is a huge achievement because it will set the tone for the election season still ahead of us.

We also can’t say exactly why job growth is robust and reasonably steady, since it is clearly ahead of economic growth when compared to a typical postwar Recession.  However, we are clearly in a different kind of an event, one that most people now seem to agree is a Depression.  Seeing job growth lead economic recovery makes sense when the problem is a lack of demand and dramatic decline in consumer spending.  Employers have generally been slow to hire in part because of anxiety about our economic future, so a change in mood is probably fueling this turnaround as much as anything else.

What we do know for a fact is that the first three years of the Obama administration have a story written in the first graph shown.  He inherited an economy that was dropping off a cliff, and continued to do so for a year.  Since that time, it’s turned around.

One year down, two years back up to even.

Taking the rhetoric of fear and panic out of this election may change it dramatically as we go ahead.  There are growing signs that even reasonably conservative voters have come to realize that more fundamental changes are necessary – and that the old slogans and symbols are not doing us any good at all.  Faith in “Supply Side” economics has dropped off for the simple reason that it did nothing to prevent the terrible slide shown in the second graph, and may have even helped to cause it.

Certainly, in an economy with highly liquid capital markets open to nearly everyone with some 401(k) money to invest the difference between “earned income” (wages) and investment income has become completely blurred, making arguments for different tax rates questionable at best.  Who creates jobs?  We all do, as we can see.  Job growth is leading economic growth as investment capital sits idle.

Getting back to even on jobs is a huge achievement for the Obama administration.  It’s an achievement for us all because it changes the rhetoric of this election cycle. Hopefully the theme of this election will now become gaining back the other 5.4M jobs lost to a lot of economic theories and slogans that never did deliver as promised.  That will be the way forward – a truly Progressive vision.

No longer.  Debt from large, secure nations is being sold at net negative interest rates, meaning that those with money are actually paying to lend it.  Money today is worth less than money in the future.  The implications of this are staggering.

The phenomenon has only taken off this year, starting with Germany and spreading to the UK.  As it stands right now, some investors have paid a net negative interest on US Treasuries (T-Bills) in the secondary market where they are re-sold, but our government has not benefited from this.  But sales of T-Bills at net negative rates from the outset are being contemplated, meaning that a source of revenue for the US Government might soon be how much it needs to borrow.

If that sounds like bizarro world to you … well, it is.  And it may be a sign of serious trouble to come, mainly as Deflation.

The reason this is being considered is not simply that the Treasury thinks it can get away with it.  They want to encourage investors with a lot of cash to go out and take risks in the world, investing their money in opportunities that will boost the economy, create jobs, and so on.  Investors, however, are scared and want to sit on their money and wait, hoping that some day there will be better investments than they can find now.  So they tend to park it in T-Bills, using them as big warehouses for money.  And they may have to start paying for that privilege.

Note that in days long gone this is money that would probably be stuffed into a mattress somewhere, but it is not today.  This is money that has never been in printed form, but is only a set of digits in a computer.  If it is not parked somewhere, it does not exist.

Traditionally, there are two kinds of money on any balance sheet – capital investments and expenses.  One of the great innovations recently has been creating liquid markets where money can move back and forth between these two easily, blurring the distinction – and making arguments for lower tax rates on investment a lot more dodgy than they used to be.  We are seeing something like a new category of money on balance sheets – idle money that has no place to go at all.  It is neither invested nor spent, generally liquid but set aside, simply waiting.

Manufacturing and other productive sectors of the economy used to have a fair amount of this kind of money sitting in their vaults, but it was smaller in scale, scattered, and always in support of their operations.  Farmers liked to have cash when they could as a reserve, and manufacturers typically kept a few months’ payroll on hand.  These reserves were often stripped from companies if they started to look too large by predatory “capital management” firms when the assets of an operation became larger than their net value as a going concern.  This is how Mitt Romney, among many others, made a lot of dough in the 1990s.

Today, the idle capital is not sitting in the hands of farmers, craftsmen, and manufacturers who make stuff.  It is in the hands of the financial industry, and they have no idea what to do with it.  They are actually willing to pay to keep it safe, which gives us negative interest rates.  The final innovation in finance appears to be breaking the cardinal rule of finance in order to wrest money back out of the hands of an industry that innovated itself to uselessness.

There are many reasons why negative interest is appealing to the government, but it is still a sign of financial apocalypse.  That’s why the Treasury announced they were considering the idea first – to see what happened to markets and opinion generally.  It appears likely to be implemented – timidly at first, and then who knows?  But the point remains that money tomorrow is more valuable than money today, which is to say that there is nothing deemed worthy of investment right now.  That, alone, is scary enough.