Standard & Poor’s: Runaway Inequality Dampens GDP Growth, Leads to Boom/Bust Cycles and Discourages Trade, Investment and Hiring

income-inequality-yahoo

Source: Washington’s Blog

Inequality Also Dampens Social Mobility, Increases Political Pressure and Produces a Less Competitive Workforce

Standard & Poor’s released a report on inequality today, concluding:

Higher levels of income inequality increase political pressures, discouraging trade, investment, and hiring. Keynes first showed that income inequality can lead affluent households (Americans included) to increase savings and decrease consumption (1), while those with less means increase consumer borrowing to sustain consumption…until those options run out. When these imbalances can no longer be sustained, we see a boom/bust cycle such as the one that culminated in the Great Recession (2).

Aside from the extreme economic swings, such income imbalances tend to dampen social mobility and produce a less-educated workforce that can’t compete in a changing global economy. This diminishes future income prospects and potential long-term growth, becoming entrenched as political repercussions extend the problems.

Our review of the data, as well as a wealth of research on this matter, leads us to conclude that the current level of income inequality in the U.S. is dampening GDP growth, at a time when the world’s biggest economy is struggling to recover from the Great Recession and the government is in need of funds to support an aging population.

S&P joins many others in concluding that runaway inequality hurts the economy, including:

  • Former U.S. Secretary of Labor and UC Berkeley professor Robert Reich
  • Global economy and development division director at Brookings and former economy minister for Turkey, Kemal Dervi
  • Societe Generale investment strategist and former economist for the Bank of England, Albert Edwards
  • Michael Niemira, chief economist at the International Council of Shopping Centers
  • Former executive director of the Joint Economic Committee of Congress, senior policy analyst in the White House Office of Policy Development, and deputy assistant secretary for economic policy at the Treasury Department, Bruce Bartlett
  • Deputy Division Chief of the Modeling Unit in the Research Department of the IMF, Michael Kumhof

Even the father of free market economics – Adam Smith – didn’t believe that inequality should be a taboo subject.

Numerous investors and entrepreneurs agree that runaway inequality hurts the economy, including:

Indeed, extreme inequality helped cause the Great Depression, the current financial crisis … and the fall of the Roman Empire . And inequality in America today is twice as bad as in ancient Rome, worse than it was in Tsarist Russia, Gilded Age America, modern Egypt, Tunisia or Yemen, many banana republics in Latin America, and worse than experienced by slaves in 1774 colonial America. (More stunning facts.)

Bad government policy – which favors the fatcats at the expense of the average American – is largely responsible for our runaway inequality.

And yet the powers-that-be in Washington and Wall Street are accelerating the redistribution of wealth from the lower, middle and more modest members of the upper classes to the super-elite.

9 Ominous Signals Coming From The Financial Markets That We Have Not Seen In Years

Meltdown-Secret-History-of-Global-Financial-Collapse

By Michael Snyder

Source: The Economic Collapse

Is the stock market about to crash?  Hopefully not, and there definitely have been quite a few “false alarms” over the past few years.  But without a doubt we have been living through one of the greatest financial bubbles in U.S. history, and the markets are absolutely primed for a full-blown crash.  That doesn’t mean that one will happen now, but we are starting to see some ominous things happen in the financial world that we have not seen happen in a very long time.  So many of the same patterns that we witnessed just prior to the bursting of the dotcom bubble and just prior to the 2008 financial crisis are repeating themselves again.  Hopefully we still have at least a little bit more time before stocks completely crash, because when this market does implode it is going to be a doozy.

The following are 9 ominous signals coming from the financial markets that we have not seen in years…

#1 By the time the markets closed on Monday, we had witnessed the biggest three day decline for U.S. stocks since 2011.

#2 On Monday, the S&P 500 moved below its 200 day moving average for the first time in about two years.  The last time this happened after such an extended streak of success, the S&P 500 ended up declining by a total of 22 percent.

#3 This week the put-call ratio actually moved higher than it was at any point during the collapse of Lehman Brothers in 2008.  This is an indication that there is a tremendous amount of fear on Wall Street right now.

#4 Everybody is watching the VIX at the moment.  According to the Economic Policy Journal, the VIX has now risen to the highest level that it has been since the heart of the European debt crisis.  This is another indicator that there is extraordinary fear on Wall Street…

US stock market volatility has jumped to the highest since the eurozone debt crisis, according to a closely watched index, the the CBOE Vix index of implied US share price volatility.

It jumped to 24.6 late on Monday and is up again this morning. On Thursday, it was as low as 15.

That’s a very strong move, but things have been much worse. At height of the recent financial crisis – the Vix index peaked at 80.1 in November 2008.

Could we get there again? Yeah.

#5 The price of oil is crashing.  This also happened in 2008 just before the financial crisis erupted.  At this point, the price of oil is now the lowest that it has been in more than two years.

#6 As Chris Kimble has pointed out, the chart for the Dow has formed a “Doji Star topping pattern”.  We also saw this happen in 2007.  Could this be an indication that we are on the verge of another stock market crash similar to what happened in 2008?

#7 Canadian stocks are actually doing even worse than U.S. stocks.  At this point, Canadian stocks have already dropped more than 10 percent from the peak of the market.

#8 European stocks have also had a very rough month.  For example, German stocks have already dropped about 10 percent since July, and there are growing concerns about the overall health of the German economy.

#9 The wealthy are hoarding cash and precious metals right now.  In fact, one British news report stated that sales of gold bars to wealthy customers are up 243 percent so far this year.

So what comes next?

Some experts are saying that this is the perfect time to buy stocks at value prices.  For example, USA Today published a story with the following headline on Tuesday: “Time to ‘buy’ the fear? One Wall Street pro says yes“.

Other experts, however, believe that this could represent a major turning point for the financial markets.

Just consider what Abigail Doolittle recently told CNBC

Technical strategist Abigail Doolittle is holding tight to her prediction of market doom ahead, asserting that a recent move in Wall Street’s fear gauge is signaling the way.

Doolittle, founder of Peak Theories Research, has made headlines lately suggesting a market correction worse than anyone thinks is ahead. The long-term possibility, she has said, is a 60 percent collapse for the S&P 500.

In early August, Doolittle was warning both of a looming “super spike” in the CBOE Volatility Index as well as a “death cross” in the 10-year Treasury note. The former referenced a sharp move higher in the “VIX,” while the latter used Wall Street lingo for an event that already occurred in which the fixed income benchmark saw its 50-day moving average cross below its 200-day trend line.

Both, she said, served as indicators for trouble ahead.

It’s Time for Some Anti-Science Fiction

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Source: The Hipcrime Vocab

It’s Time for Some Anti-Science Fiction
Why must positive depictions of the future always be dependent upon some sort of new technology?

Neal Stephenson is a very successful and well-known science fiction writer. He’s also very upset that the pace of technological innovation has seemingly slowed down and we seem to be unable to come up with truly transformative  “big ideas” anymore. He believes this is the reason why we are so glum and pessimistic nowadays. Indeed, the science fiction genre, once identified with space exploration and utopias of post-scarcity and abundant leisure time, has come to be dominated by depictions of the future as a hellhole of extreme inequality, toxic environmental pollution, overcrowded cities, oppressive totalitarian governments, and overall political and social breakdown. Think of movies like The Hunger Games, Elysium, The Giver, and Snowpiercer.

This pessimism is destructive and corrosive, believes Stephenson. According to the BBC:

Acclaimed science-fiction writer Neal Stephenson saw this bleak trend in his own work, but didn’t give it much thought until he attended a conference on the future a couple years ago. At the time, Stephenson said that science fiction guides innovation because young readers later grow up to be scientists and engineers.

But fellow attendee Michael Crow, president of Arizona State University (ASU), “took a more sort of provocative stance, that science fiction actually needed to supply ideas that scientists and engineers could actually implement”, Stephenson says. “[He] basically told me that I needed to get off my duff and start writing science fiction in a more constructive and optimistic vein.”

“We want to create a more open, optimistic, ambitious and engaged conversation about the future,” project director Ed Finn says. According to his argument, negative visions of the future as perpetuated in pop culture are limiting people’s abilities to dream big or think outside the box. Science fiction, he says, should do more. “A good science fiction story can be very powerful,” Finn says. “It can inspire hundreds, thousands, millions of people to rally around something that they want to do.”

Basically, Stephenson wants to bring back the kind of science fiction that made us actually long for the future rather than dread it. Stephenson means to counter this techno-pessimism by inviting a number of well-known science fiction writers to come up with more positive, even utopian, visions of the future, where we once again come up with “big ideas” that inspire the scientists and engineers in their white labcoats. He apparently believes that it is the duty of science fiction authors to act as, in the words of one commentator, “the first draft of the future. ” Indeed, much of modern technology and space exploration was presaged by authors like H.G. Wells and Jules Verne. From the BBC article above, here are some of the positive future scenarios depicted in the book:

  •     Environmentalists fight to stop entrepreneurs from building the first extreme tourism destination hotel in Antarctica.
  •     People vie for citizenship on a near-zero-gravity moon of Mars, which has become a hub for innovation.
  •     Animal activists use drones to track elephant poachers.
  •     A crew crowd-funds a mission to the Moon to set up an autonomous 3D printing robot to create new building materials.
  •     A 20km tall tower spurs the US steel industry, sparks new methods of generating renewable energy and houses The First Bar in Space.

The whole idea behind Project Hieroglyph, as I understand it, is to depict more positive futures than the ones being depicted in current science fiction and media. That seems like a good idea. But my question is – why must these positive futures always involve more intensive application of technology? Why are we unable to envision a better future in any other way besides more technology, more machines, more inventions, more people, more economic growth, etc. Haven’t we already been down that road?

Or to put it another way, why must science fiction writers assume that more technological innovation will produce a better society when our modern society is the result of previous technological innovations, and is seen by many people as a dystopia (with many non-scientifically-minded people actually longing for a collapse of some sort)? Perhaps, to paraphrase former president Reagan, in the context of our current crisis, technology is not the solution to the problem, technology is the problem.

***

It’s worth pointing out that many of the increasingly dystopian elements of our present circumstances have been brought about by the application of technology.

Economists have pinpointed technology as a key driver of inequality thanks to the hollowing out of the middle class due to the automation of routine tasks that underpinned the  industrial/service economy leaving only high-end and low-end jobs remaining, as well as the “superstar effect” where a few well-paid superstars capture all the gains because technology allows them to everywhere at once. Fast supercomputers have allowed the rich to game the stock market casino where the average stock is now held for just fractions of a second, while global telecommunications has led to reassigning jobs anywhere in the world where the very cheapest workers can be found. America’s manufacturing  jobs are now done by Chinese workers and its service jobs by Indian workers half a world away even as the old Industrial heartland looks suspiciously like what is depicted in The Hunger Games. Rather than a world of abundant leisure, stressed out workers take their laptops to the beach, fearful of losing their jobs if they don’t, while millions have given up even looking for work anymore. A permanently underemployed underclass distracts itself with Netflix, smartphones and computer games, and takes expensive drugs promoted by pharmaceutical companies to deal with their depression.

Global supply chains, supertankers, the “warehouse and wheels,” and online shopping have hollowed out local main street economies and led to monopolies in every industry across the board. Small family farmers have been kicked off the land worldwide and replaced by gargantuan, fossil-fuel powered agricultural factories owned by agribusinesses churning out  bland processed food based around wheat, corn and soy causing soaring obesity rates worldwide and runaway population growth.

Banks have merged into just a handful of entities that are “too-big-to-fail” and send trillions around the world at the speed of light. Gains are privatized while loses and risk are socialized, and the public sphere is sold off to profiteers at fire sale prices. A small financial aristocracy controls the system and hamstrings the world with debt. Just eighty people control as much wealth as half of the planet’s population, and in the world’s biggest economy just three people gain as much income as half the workforce. There are now more prisoners in America than farmers.

A now global trans-national elite of owner-oligarchs criss-crosses the world in Gulfsteam jets and million-dollar yachts and  hides their money in offshore accounts beyond the reach of increasingly impotent national governments, while smaller local governments can’t keep potholes filled, streets plowed and streetlights on for ordinary citizens. Many of the world’s great cities have become “elite citadels” making it impossible for regular citizens to live there. This elite controls bond markets, funds political campaigns and owns and controls a monopolized media that normalizes this state of affairs using sophisticated propaganda tools enhanced by cutting-edge psychological research enabled by MRI scanners. The media is controlled by a small handful of corporations and panders to the lowest common demonstrator while keeping people in a constant state of fear and panic. Advertising preys on our insecurities and desire for status to make us buy more, enabled by abundant credit. The Internet, once the hope for a more democratic future, has ended up as shopping mall, entertainment delivery system and spying/tracking system rather than a force for democracy and revolution.

Security cameras peer at us from every streetcorner and store counter and shocking revelations about the power and reach of the national security state that are as fantastic as anything dreamed up by dystopian science fiction writers have become so commonplace that people hardly notice anymore. Anonymous people in gridded glass office towers read our every email, listen to our every phone call and track our every move using our cell phones. New technology promises “facial recognition” and “smart” technology promoted by corporations promises to track and permanently record literally every move you make.

Remote-control drones patrol the skies of global conflict zones and vaporize people half a world away without their pilots ever seeing their faces. High-tech fighter jets allow us to “cleanly” drop bombs without the messiness of a real war. Private mercenaries are a burgeoning industry and global arms sales continue to increase even in a stagnant global economy with arms companies often selling to both sides. By some accounts one in ten Americans is employed in some sort of “guard labor,” that is, keeping their fellow citizens in line. The number of failed states continues to increase in the Middle East and Africa and citizens in democracies are marching in the streets.

Not that there’s nothing for the national security state to fear after all – technology has enabled individual terrorists and non-state actors to produce devastating weapons capable of destroying economies and killing thousands as 9-11 demonstrated. A single “superempowered” individual can kill millions with a nuclear bomb the size of a suitcase or an engineered virus or other bioterrorism weapon. The latest concern is “cyberwarfare” which could destroy the technological infrastructure we are now utterly dependent upon and kill millions. “Non-state actors” can wreak as much havoc as armies thanks to modern technology, and there are a lot of disgruntled people out there.

And then there is the environmental devastation, of which climate change is the most overwhelming, but includes everything from burned down Amazonian rainforest, to polluted mangroves in Thailand, to collapased fish stocks, dissolving coral reefs and oceans full of jellyfish. Half the  world’s terrestrial biodiversity has been eliminated in the past fifty years and we’ve lost so much polar ice that earth’s gravity is measurably affected. In China, the world’s economic success story, the haze is so thick that people can’t see the tops of the skyscrapers they already have and there are “cancer villages.” The skies may be a bit clearer in America thanks to deindustrialization, but things like drought in the Southwest and increasinginly powerful hurricanes are reminders that no one is immune. Entire countries and major cities look to be submerged under rising oceans and the first climate refugees are already on the move from places like Africa and Southeast Asia leading to anti-immigrant backlash in developed countries.

This is not some future dystopia, by the way, this is where technology has us led right now. Today. Current headlines. Maybe the reason that dystopias are so popular is because that seems to be where technology had led us here in the first decade of the twenty-first century. I’m skeptical that Project Hieroglyph and it’s fostering of “big ideas” will do much to change that.

Thus my fundamental question is, given the above, why is it always assumed that the path to utopia goes through a widespread deployment of even more innovation and technology? Is it realistic to believe that colonies on Mars, drones, intelligent robots, skyscrapers and space elevators will solve any of this?

I’ve written before about the fact that the technology we already have in our possession today was expected to deliver a utopia by numerous writers and thinkers of the past. “The coming of the wireless era will make war impossible, because it will make war ridiculous,” declared Marconi in 1912. HG Wells, a committed socialist who lived during perhaps the greatest period of invention before or since (railroads, harnessing of electricity, radio communication, internal combustion engines, powered flight, antibiotics),  very frequently depicted utopian societies brought about through the applications of greater technology. Science fiction authors still seem to conceive utopias as being exclusively brought about by “technological progress.” But given hindsight, is that realistic anymore?

Maybe it’s time for some anti-science fiction.

***

The classic example of this is William Morris’ utopian novel News From Nowhere.

Morris was a key figure in the Arts and Crafts movement, which was a reaction to the factory-based mass production and subsequent deskilling of the workforce. People no longer collectively made the world of goods and buildings around them, rather they were now made by a small amount of people using deskilled, alienated labor in giant factories with the profits accruing to a tiny handful of capitalist owners. Morris wanted another way.

In Morris’ future London there are very little in the way of centralized institutions.  People work when they want to and do what they want to. Money is not used. Life is lived leisurely pace. Writing during the transformative changes of the Industrial Revolution, Morris’ London looks less like a World’s Fair and more like a lost bucolic pastoral London that had long since vanished under the smoke of factories. Technology plays a very small role yet people are much happier.

Morris’ work was written partially in response to a book entitled Looking Backward by Edward Bellamy, which was extraordinarily popular in the late nineteenth century, but almost forgotten today. Bellamy’s year 2000 utopia had the means of production brought under centralized control, with people serving time in an “industrial army” for twenty years and then retiring to a life of leisure and  material abundance brought about by production for use rather than capitalist profit.

Morris still felt that this subordinated workers to machines rather than depicting a society for the maximization of human well-being, including work. Here is Morris in a speech:

“Before I leave this matter of the surroundings of life, I wish to meet a possible objection. I have spoken of machinery being used freely for releasing people from the more mechanical and repulsive part of necessary labour; it is the allowing of machines to be our masters and not our servants that so injures the beauty of life nowadays. And, again, that leads me to my last claim, which is that the material surroundings of my life should be pleasant, generous, and beautiful; that I know is a large claim, but this I will say about it, that if it cannot be satisfied, if every civilised community cannot provide such surroundings for all its members, I do not want the world to go on.”

Morris’ book shows that utopias need not be high-tech. It also shows that real utopias are brought about by the underlying philosophy of a society and its corresponding social relations. It seems to me like Stephenson’s utopias are all predicated on the continuation of the philosophy and social relations of our current society – more growth, more technology, faster innovation, more debt, corporate control, trickle-down economics, private property, absentee ownership, anarchic markets, autonomous utility-maximizing consumers, etc. It is yoked to our ideas of “progress” as simply an application of more and faster technology.

By contrast, Morris’ utopia has the technological level we would  associate with a “dystopian” post collapse society, yet everyone seems a whole lot happier.

***

Now I don’t mean to suggest that any utopia should necessarily be a place where we have reverted to some sort pre-industrial level of technology. We don’t need to depict utopias as living like the Amish (although that would be an interesting avenue of exploration). I merely wish to point out that a future utopia need not be exclusively the domain of science fiction authors, and need not be predicated by some sort of new wonder technology or space exploration. For example, in an article entitled Is It Possible to Imagine Utopia Anymore? the author writes:

Recently, though, we may have finally hit Peak Dystopia…All of which suggests there might be an opening for a return to Utopian novels — if such a thing as “Utopian novels” actually existed anymore…In college, as part of a history class, I read Edward Bellamy’s Looking Backwards, a Utopian science-fiction novel published in 1888. The book — an enormous success in its time, nearly as big as Uncle Tom’s Cabin — is interesting now less as literature than as a historical document, and it’s certainly telling that, in the midst of the industrial revolution, a novel promising a future socialist landscape of increased equality and reduced labor so gripped the popular imagination. We might compare Bellamy’s book to current visions of Utopia if I could recall even a single Utopian novel or film from the past five years. Or ten years. Or 20. Wikipedia lists dozens of contemporary dystopian films and novels, yet the most recent entry in its rather sparse “List of Utopian Novels” is Island by Aldous Huxley, published in 1962*. The closest thing to a recent Utopian film I can think of is Spike Jonze’s Her, though that vision of the future — one in which human attachment to sentient computers might become something close to meaningful — hardly seems like a fate we should collectively strive for, but rather one we might all be resigned to placidly accept

Many serious contemporary authors have tackled dystopia: David Foster Wallace’s Infinite Jest, Gary Shteyngart’s Super Sad True Love Story, Cormac McCarthy’s The Road, and so on. But the closest thing we have to a contemporary Utopian novel is what we could call the retropia: books like Michael Chabon’s Telegraph Avenue (about a funky throwback Oakland record store) or Jonathan Lethem’s Fortress of Solitude (about 1970s Brooklyn) that fondly recall a bygone era, by way of illustrating what we’ve lost since —  “the lost glories of a vanished world,” as Chabon puts it. Lethem’s more recent Dissident Gardens is also concerned with utopia, but mostly in so far as it gently needles the revolutionaries of yesteryear.

Indeed, the closest things we have to utopias on TV today are shows like Mad Men which take place during the era when Star Trek was on TV rather than a utopia inspired by Star Trek itself. For many Americans, their version of utopia is not in the future but in the past – the 1950’s era of widespread prosperity, full employment, single-earner households, more leisure, guaranteed pensions, social mobility, inexpensive housing, wide open roads and spaces, and increasing living standards. As this article points out:

When I first heard about the project, my cynical heart responded skeptically. After all, much of the Golden Age science fiction Stephenson fondly remembers was written in an era when, for all its substantial problems, the U.S. enjoyed a greater degree of democratic consensus. Today, Congress can barely pass a budget, let alone agree on collective investments.

If someone asked me to depict a more positive future than the one we have, deploying more technology is just about the last thing I would do to bring it about. In fact, the future I would depict would almost certainly include less technology, or rather technology playing a smaller role in our lives. I would focus more on social relations that would make us be happy to be alive, where we eat good food, spend time doing what we want instead of what we’re forced to, and don’t have to be medicated just to make it through another day in our high-pressure classrooms and cubicles. I might even depict a future with no television inspired by Jerry Mander’s 1978 treatise Four Arguments for the Elimination of Television (hey, remember this is fiction after all!)

Rather it would depict different political, economic and social relations first, with new technology playing only a supporting, not a starring role. Organizing society around the needs of productive enterprise, growth and profits (and nothing else) is the reason, I believe, why we are feeling so depressed about the future that dystopias resonate more with a demoralized general public who rolls their collective eyes at the exhortations of science fiction writers with an agenda**. The problem of science fiction is it’s single-minded conflagration of technology with progress.

Personally my utopia would be something more like life on the Greek island of Ikaria*** according to this article from The New York Times (which reads an awful lot like News from Nowhere):

Seeking to learn more about the island’s reputation for long-lived residents, I called on Dr. Ilias Leriadis, one of Ikaria’s few physicians, in 2009. On an outdoor patio at his weekend house, he set a table with Kalamata olives, hummus, heavy Ikarian bread and wine. “People stay up late here,” Leriadis said. “We wake up late and always take naps. I don’t even open my office until 11 a.m. because no one comes before then.” He took a sip of his wine. “Have you noticed that no one wears a watch here? No clock is working correctly. When you invite someone to lunch, they might come at 10 a.m. or 6 p.m. We simply don’t care about the clock here.”

Pointing across the Aegean toward the neighboring island of Samos, he said: “Just 15 kilometers over there is a completely different world. There they are much more developed. There are high-rises and resorts and homes worth a million euros. In Samos, they care about money. Here, we don’t. For the many religious and cultural holidays, people pool their money and buy food and wine. If there is money left over, they give it to the poor. It’s not a ‘me’ place. It’s an ‘us’ place.”

Ikaria’s unusual past may explain its communal inclinations. The strong winds that buffet the island — mentioned in the “Iliad” — and the lack of natural harbors kept it outside the main shipping lanes for most of its history. This forced Ikaria to be self-sufficient. Then in the late 1940s, after the Greek Civil War, the government exiled thousands of Communists and radicals to the island. Nearly 40 percent of adults, many of them disillusioned with the high unemployment rate and the dwindling trickle of resources from Athens, still vote for the local Communist Party. About 75 percent of the population on Ikaria is under 65. The youngest adults, many of whom come home after college, often live in their parents’ home. They typically have to cobble together a living through small jobs and family support.

Leriadis also talked about local “mountain tea,” made from dried herbs endemic to the island, which is enjoyed as an end-of-the-day cocktail. He mentioned wild marjoram, sage (flaskomilia), a type of mint tea (fliskouni), rosemary and a drink made from boiling dandelion leaves and adding a little lemon. “People here think they’re drinking a comforting beverage, but they all double as medicine,” Leriadis said. Honey, too, is treated as a panacea. “They have types of honey here you won’t see anyplace else in the world,” he said. “They use it for everything from treating wounds to curing hangovers, or for treating influenza. Old people here will start their day with a spoonful of honey. They take it like medicine.”

Over the span of the next three days, I met some of Leriadis’s patients. In the area known as Raches, I met 20 people over 90 and one who claimed to be 104. I spoke to a 95-year-old man who still played the violin and a 98-year-old woman who ran a small hotel and played poker for money on the weekend.

On a trip the year before, I visited a slate-roofed house built into the slope at the top of a hill. I had come here after hearing of a couple who had been married for more than 75 years. Thanasis and Eirini Karimalis both came to the door, clapped their hands at the thrill of having a visitor and waved me in. They each stood maybe five feet tall. He wore a shapeless cotton shirt and a battered baseball cap, and she wore a housedress with her hair in a bun. Inside, there was a table, a medieval-looking fireplace heating a blackened pot, a nook of a closet that held one woolen suit coat, and fading black-and-white photographs of forebears on a soot-stained wall. The place was warm and cozy. “Sit down,” Eirini commanded. She hadn’t even asked my name or business but was already setting out teacups and a plate of cookies. Meanwhile, Thanasis scooted back and forth across the house with nervous energy, tidying up.

The couple were born in a nearby village, they told me. They married in their early 20s and raised five children on Thanasis’s pay as a lumberjack. Like that of almost all of Ikaria’s traditional folk, their daily routine unfolded much the way Leriadis had described it: Wake naturally, work in the garden, have a late lunch, take a nap. At sunset, they either visited neighbors or neighbors visited them. Their diet was also typical: a breakfast of goat’s milk, wine, sage tea or coffee, honey and bread. Lunch was almost always beans (lentils, garbanzos), potatoes, greens (fennel, dandelion or a spinachlike green called horta) and whatever seasonal vegetables their garden produced; dinner was bread and goat’s milk. At Christmas and Easter, they would slaughter the family pig and enjoy small portions of larded pork for the next several months.

During a tour of their property, Thanasis and Eirini introduced their pigs to me by name. Just after sunset, after we returned to their home to have some tea, another old couple walked in, carrying a glass amphora of homemade wine. The four nonagenarians cheek-kissed one another heartily and settled in around the table. They gossiped, drank wine and occasionally erupted into laughter.

No robot babysitters or mile-high skyscrapers required.

* No mention of Ernest Callenbach’s Ecotopia published in 1975?

** ASU is steeped in Department of Defense funding and DARPA (The Defense Research Projects Agency) was present at a conference about the book entitled “Can We Imagine Our Way to a Better Future?” held in Washington D.C. I’m guessing the event did not take place in the more run-down parts of the city. Cui Bono?

***Ironically, Icaria was used as the name of a utopian science fiction novel, Voyage to Icaria, and inspired an actual utopian community.

Ready Or Not… The unsustainable status quo is ending

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By Chris Martenson

Source: Peak Prosperity

I have to confess, it’s getting more and more difficult to find ways of writing about everything going on in the world.

Not because there’s a shortage of things to write about — wars, propaganda, fraud, Ebola — but because most of the negative news and major world events we see around us are symptoms of the disease, not the disease itself.

There are only so many times you can describe the disease, before it all becomes repetitive for both the writer and the reader. It’s far more interesting to get to the root cause, because then real solutions offering real progress can be explored.

Equally troubling, in a world where the central banks have distorted, if not utterly flattened, the all important relationship between prices, risk, and reality, what good does it do to seek some sort of meaning in the new temporary arrangement of things?

When the price of money itself is distorted, then all prices are merely derivative works of that primary distortion. Some prices will be too high, some far too low, but none accurately determined by the intersection of true demand and supply.

If risk has been taken from where it belongs and instead shuffled onto central bank balance sheets, or allowed to be hidden by new and accommodating accounting tricks, has it really disappeared? In my world, risk is like energy: it can neither be created nor destroyed, only transformed or transferred.

If reality no longer has a place at the table — such as when policy makers act as if the all-too-temporary shale oil bonanza is now a new permanent constant — then the discussions happening around that table are only accidentally useful, if ever, and always delusional.

Through all of this, the big picture as described in the Crash Course grows ever more obviously clear: we are on an unsustainable course; economically, ecologically, and — most immediately worryingly  — in our use of energy.

So let’s start there, with a simple grounding in the facts.

By The Numbers

Humans now number 7.1 billion on the planet and that number is on track to rise to 8 or 9 billion by 2050. Already ‘energy per capita’ is stagnant across the world and has been for a few decades. If the human population indeed grows by 15-25% over the next three and a half decades, then net energy production will have to grow by the same amount simply to remain constant on a per capita basis.

But can it? Specifically, can the net energy we derive from oil grow by another 15% to 25% from here?

Consider that, according to the EIA, the US shale oil miracle will be thirty years in the rear-view mirror by 2050 (currently projected to peak in 2020). And beyond just shale, all of the currently-operating conventional oil reservoirs will be far past peak and well into their decline. That means that the energy-rich oil from the giant fields of yesteryear will have to be replaced by an even larger volume of new oil from the energetically weaker unconventional plays just to hold things steady.

To advance oil net energy on a per capita basis between now and 2050, we’ll have to fight all of the forces of depletion with one hand, and somehow generate even more energy output from energetically parsimonious unconventional sources such as shale and tar sands with the other hand.

These new finds…they just aren’t the same as the old ones. They are deeper, require more effort per well to get oil out, and return far less per well than those of yesteryear. Those are just the facts as we now know them to be.

In 2013, total worldwide oil discoveries were just 20 billion barrels. That’s against a backdrop of 32 billion barrels of oil production and consumption. Since 1984, consuming more oil than we’re discovering has been a yearly ritual. To use an analogy: it’s as if we’re spending from a trust fund at a faster rate than the interest and dividends are accruing. Eventually, you eat through the principal balance and then it’s game over.

Meanwhile, even as the total net energy we receive from oil slips and our consumption wildly surpasses discoveries, the collective debt of the developed economies has surpassed the $100 trillion mark — which is a colossal bet that the future economy will not only be larger than it is currently, but exponentially larger.

These debts are showing no signs of slowing down. Indeed, the world’s central banks are doing everything in their considerable monetary power to goose them higher, even if this means printing money out of thin air and buying the debt themselves.

Along with this, the demographics of most developed economies will be drawing upon badly-underfunded pension and entitlement accounts — most of which are literally nothing more substantial than empty political promises made many years ago.

These trends in oil, debt and demographics are stark facts all on their own. But when we tie these to the obvious ecological strains of meeting the needs of just the world’s current 7.1 billion, any adherence to the status quo seems worse than merely delusional.

Here’s just one example from the ecological sphere. All over the globe we see regions in which ancient groundwater, in the form of underground aquifers, is being tapped to meet the local demand.

Many of these reservoirs have natural recharge rates that are measured in thousands, or even tens of thousands, of years.

Virtually all of them are being over-pumped. The ground water is being removed at a far faster rate than it naturally replenishes.

This math is simple. Each time an aquifer is over-pumped, the length of time left for that aquifer to serve human needs diminishes. Easy, simple math. Very direct.

And yet, we see cultures all over the globe continuing to build populations and living centers – very expensive investments, both economically and energetically – that are dependent for their food and water on these same over-pumped aquifers.

In most cases, you can calculate with excellent precision when those aquifers will be entirely gone and how many millions of people will be drastically impacted.

And yet, in virtually every case, the local ‘plan’ (if that’s the correct word to use here) is to use the underground water to foster additional economic/population growth today without any clear idea of what to do later on.

The ‘plan’ such as it is, seems to be to let the people of the future deal with the consequences of today’s decisions.

So if human organizations all over the globe seem unable to grasp the urgent significance of drawing down their water supplies to the point that they someday run out, what are the odds we’ll successfully address the more complex and less direct impacts like slowly falling net energy from oil, or steadily rising levels of debt? Pretty low, in my estimation.

Conclusion

Look, it’s really this simple: Anything that can’t go on forever, won’t.  We know, financially speaking, that a great number of nations are utterly insolvent no matter how much the accounting is distorted. Said another way: there’s really no point in worrying about the combined $100 trillion shortfall in Social Security and Medicare, because it simply won’t be paid.

Why? It can’t, so it won’t. The promised entitlements dwarf our ability to fund them many times over. There’s really not much more to say there.

But the biggest predicament we face is that steadily-eroding net energy from oil, which will someday be married to steadily-falling output as well, can’t support billions more people and our steadily growing pile of debt.

Just as there’s no plan at all for what to do when the groundwater runs out besides ‘Let the folks in the future figure that one out,’ there’s no plan at all for reconciling the forced continuation of borrowing at a faster rate than the economy can (or likely will be able to) grow.

The phrase that comes to mind is ‘winging it.’

The wonder of it all is that people still turn to the same trusted sources for guidance and as a place to put their trust. For myself, I have absolutely no faith that the mix of DC career politicians and academic wonks in the Fed have any clue at all about such things as energy or ecological realities.  Their lens only concerns itself with money, and the only tradeoff concessions they make are between various forms of economic vs. political power.

If the captains supposed to be guiding this ship are using charts that ignore what lies beneath the waterline, then you can be sure that sooner or later the ship is going to strike something hard and founder.

I’m pretty sure the Fed’s (and ECB’s and BoJ’s and BoE’s) charts resemble those of medieval times, with “Here be dragons” scrawled in the margins next to a series of charts of falling stock prices and unwinding consumer debt.

So there we are. The globe is heading from 7.1 billion to 8 or 9 billion souls, during a period of time when literally every known oil find will be well past its peak. Perhaps additional shale finds will come along on other continents to smooth things out for a bit (which is not looking likely), but it’s well past time to square up to the notion that cheap oil is gone. And with it, our prospects for the robust and widespread prosperity of times past.

Why Has Classical Capitalism Devolved to Crony-Capitalism?

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By Charles Hugh Smith

Source: OfTwoMinds.com

Here is the quote that perfectly captures our era: “People of privilege will always risk their complete destruction rather than surrender any material part of their advantage.” (John Kenneth Galbraith) The trick, of course, is to mask the unspoken second half of of that statement: everybody else gets destroyed along with the Elites when the system implodes.

Union pension funds: toast. Government employees’ pension funds: toast. 401Ks: toast. IRAs: toast. The echo-bubble in housing: toast. The Fed’s favorite PR cover to cloak the enrichment of their financier cronies, the wealth effect:toast.

The primary tool the Elites use to mask the risk of complete destruction is magical thinking–specifically, that “given enough time, the system will heal itself.”

That’s rich, considering that the Elites’ primary tool of avoiding destruction is crippling the market’s self-healing immune system: price discovery. Thanks to ceaseless interventions by central banks, the price discovery mechanism has been shattered: want to know the price of risk? It’s near-zero. Yield on sovereign bonds? Near-zero. And so on.

Prices have been so distorted (the ultimate goal of Central Planning everywhere, from China to the EU to Japan to the U.S.) that the illusion of stability is impossible without more intervention.

This leads to two self-liquidating dynamics: diminishing returns (every intervention yields less of the desired result) and the Darwinian selection of only those money managers who believe risk has been vanquished.

Everyone who pursues prudent risk management has either been fired or saw the writing on the wall and exited stage right. So the only people left at the gaming tables of the big institutional players are those individuals who are genetically incapable of responding appropriately to rising risk. Those who did have long been fired for “underperformance.”

So how did classical free-market capitalism become state-cartel crony-capitalism, a Ponzi scheme of epic proportions that is entirely dependent on ceaseless central bank perception management and interventions on a scale never before seen?

We can start with these six factors:

1. Those who control most of the wealth are willing to risk systemic collapse to retain their privileges and wealth. Due to humanity’s virtuosity with rationalization, those at the top always find ways to justify policies that maintain their dominance and downplay the distortions the policies generate. This as true in China as it is in the U.S.

2. Short-term thinking: if we fudge the numbers, lower interest rates, etc. today, we (politicians, policy-makers, money managers, etc.) will avoid being sacked tomorrow. The longer term consequences of these politically expedient policies are ignored.

3. Legitimate capital accumulation has become more difficult and risky than buying political favors. Global competition and the exhaustion of developed-world consumers has made it difficult to reap outsized profits from legitimate enterprise. In terms of return-on-investment (ROI), buying political favors is far lower risk and generates much higher returns than expanding production or risking investment in R&D.

4. The centralization of state/central bank power has increased the leverage of political contributions/lobbying. The greater the concentration of power, the more attractive it is to sociopaths and those seeking to buy state subsidies, sweetheart contracts, protection from competition, etc.

5. Any legitimate reform will require dismantling crony-capitalist/state-cartel arrangements. Since that would hurt those at the top of the wealth/power pyramid, reform is politically impossible.

6. Understood in this light, it’s clear that central bank monetary policy—zero-interest rates, asset purchases, cheap credit to banks and financiers, QE, etc.—is designed to paper over the structural problems that require real reform.

Japan is a case in point: the Powers That Be in Japan have put off real reforms of the Japanese economy and political system for 25 years, and they’ve enabled this avoidance by pursuing extremes of fiscal and monetary policy that have eroded the real economy and created long-term structural imbalances.

In this 24 minute video Gordon T. Long and Charles Hugh Smith discuss through the aid of 17 slides the rapid advancement of Crony Capitalism in America. The facts are undeniable, but why is it becoming so obvious and undeniable? Why is it accelerating without any apparent ‘checks and balances’? Where have the safeguards against this happening gone?

Podcast Roundup

9/7: On Expanding Minds, hosts Maja D’Aoust and Erik Davis have a conversation with Andy Sharp of English Heretic about death, Horror films, Hiroshima, psychogeography, and his latest release, The Underworld Service.

 
http://s50.podbean.com/pb/fd840a4721e38d3f25dd4ec01834d2c6/541340f7/data2/blogs18/276613/uploads/ExpandingMind_090714.mp3

9/8: R.U. Sirius joins hosts Chris Dancy and Klint Finley to discuss technology transhumanism, and the current social/political climate among other topics.

https://soundcloud.com/itsmweekly/pending-mindful-cyborgs-episode-37
 
9/9: Peter Null interviews Professor Andrew Kolin, a professor of political science at Hilbert College in Hamburg and Kevin Carson, researcher at the Center for a Stateless Society, on militarization of police, centralization of power, war and the military-industrial complex.


http://s53.podbean.com/pb/e788a26888199ef114360f06cc89f48c/541347f9/data1/blogs18/371244/uploads/ProgressiveCommentaryHour_090914.mp3

9/10: On the C-Realm, KMO and June Pulliam discuss and dissect the archetypes and cultural meaning of zombie apocalypse narratives.


http://c-realmpodcast.podOmatic.com/enclosure/2014-09-10T12_48_22-07_00.mp3

9/11: Christopher Knowles joins Aeon Byte Gnostic Radio to examine how Gnosticism connects to alternative cultures, politics and humanity’s existential crisis.


http://content.screencast.com/users/AeonByte/folders/AEON%20BYTE/media/7984ec1d-8363-4162-a034-0dabc54aef33/1.%20Gnosticism%20and%20Politics%20with%20Chris%20Knowles.mp3

9/12: On New World Next Week, James Corbett and James Evan Pilato report on 9/11 terror hysteria, Obama’s private CFR event with Sandy Berger (9/11 document thief) and the cryptocurrency/anti-surveillance potential of a new off-the-grid communications technology.

 
http://www.corbettreport.com/mp3/2014-09-11%20James%20Evan%20Pilato.mp3

Growing Social Inequality in America. Wealth Concentration and Decline in Living Standards

inequality-illo

New Federal Reserve report US median income has plunged, inequality has grown in Obama “recovery”

By Andre Damon

Source: Global Research

The yearly income of a typical US household dropped by a massive 12 percent, or $6,400, in the six years between 2007 and 2013. This is just one of the findings of the 2013 Federal Reserve Survey of Consumer Finances released Thursday, which documents a sharp decline in working class living standards and a further concentration of wealth in the hands of the rich and the super-rich.

The report makes clear that the drop in a typical household’s income was not merely the result of what is referred to as the 2008 recession, which officially lasted only 18 months, through June 2009. Much of the decline in workers’ incomes occurred during the so-called “economic recovery” presided over by the Obama administration.

In the three years between 2010 and 2013, the annual income of a typical household actually fell by 5 percent.

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Reserve Survey of Consumer Finances

The Fed report exposes as a fraud the efforts of the Obama administration to present itself as a defender of the “middle class”. It has systematically pursued policies to redistribute wealth from the bottom to the very top of the income ladder. These include the multi-trillion-dollar bailout of the banks, near-zero interest rates to drive up the stock market, and austerity measures and wage cutting to lift corporate profits and CEO pay to record highs.

The Federal Reserve data, based on in-person interviews, show a far larger decline in the median income of American households than indicated by earlier figures from the Census Bureau’s Current Population Survey.

In line with the figures on household income, the report shows an ever-growing concentration of wealth among the richest households. The Fed’s summary of its data notes that “the wealth share of the top 3 percent climbed from 44.8 percent in 1989 to 51.8 percent in 2007 and 54.4 percent in 2013,” while the wealth of the “next 7 highest percent of families changed very little.”

The report states that “the rising wealth share of the top 3 percent of families is mirrored by the declining share of wealth held by the bottom 90 percent,” which fell from 33.2 percent in 1989 to 24.7 percent in 2013.

income_shares

Reserve Survey of Consumer Finances

The ongoing impoverishment of the population is an indictment of capitalism. There has been no genuine recovery from the Wall Street crash of 2008, only a further plundering of the economy by the financial aristocracy. The crisis precipitated by the rapacious, criminal practices of the bankers and hedge fund speculators has been used to restructure the economy to the benefit of the rich at the expense of everyone else.

Decent-paying jobs have been wiped out and replaced by low-wage, part-time and temporary jobs, with little or no benefits. Pensions and health benefits have come under savage attack, as seen in the bankruptcy of Detroit.

Not surprisingly, the Fed report has been buried by the American media, confined to the inside pages of the major newspapers.

Measured in 2013 dollars, a typical household received an income of $53,100 in 2007. By 2010, this had fallen to $49,000. It hit $46,700 by 2013. At the same time, the average income for the wealthiest tenth of families grew by ten percent.

While median income fell between 2010 and 2013, mean (average) income grew, from $84,100 to $87,200. The report noted that, “the decline in median income coupled with the rise in mean income is consistent with a widening income distribution during this period.”

For the poorest households, the drop in income has been even more dramatic. Among the bottom quarter of households, mean income fell a full 10 percent between 2010 and 2013.

The report reveals other aspects of the social crisis. The share of young families burdened by education debt nearly doubled, from 22.4 percent to 38.8 percent, between 2001 and 2013. The share of young families with more than $100,000 in debt has grown nearly tenfold, from 0.6 percent to 5.6 percent.

These statistics reflect both a historic and insoluble crisis of the profit system and the brutal policies of the American ruling class, which is carrying out a relentless assault on working people and preparing to go even further by dismantling bedrock social programs such as Medicare and Social Security. The data undercuts the endless talk of “partisan gridlock” in Washington and the media presentation of a political system paralyzed by irreconcilable differences between the Democratic and Republican parties.

There has, in fact, been a seamless continuity between the Bush and Obama administrations in the pursuit of reactionary policies of war abroad and class war at home. The two parties have worked hand in glove to make the working class pay for the crisis of the capitalist system.

The Federal Reserve has itself played a critical role in the growth of social inequality in the US. The bailout of the banks, estimated at $7 trillion, has been followed by six years of virtually free money for the banks.

Every facet of American life is dominated by the immense concentration of wealth at the very top of society. The grotesque levels of wealth amassed by the parasites and criminals who dominate American business, and the flaunting of their fortunes before tens of millions struggling to pay their bills and keep from falling into destitution, are fueling the growth of social anger. This anger will increasingly be directed against the entire economic and political system.

The figures released by the Fed reflect a society riven by class divisions that must inevitably trigger social upheavals. The explosive state of social relations is itself a major factor in the endless recourse by the Obama administration to military aggression and war, which serve to deflect internal tensions outward.

The growth of inequality likewise underlies the relentless attack on democratic rights in the US, including the massive domestic spying exposed by Edward Snowden and the use of militarized police to crack down on social opposition, as seen most recently in Ferguson, Missouri.

A Lie That Serves the Rich — the truth about the American economy

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By Paul Craig Roberts, John Titus, and Dave Kranzler

Source: PaulCraigRoberts.org

The labor force participation rate has declined from 66.5% in 2007 prior to the last downturn to 62.7% today. This decline in the participation rate is difficult to reconcile with the alleged economic recovery that began in June 2009 and supposedly continues today. Normally a recovery from recession results in a rise in the labor force participation rate.

The Obama regime, economists, and the financial presstitutes have explained this decline in the participation rate as the result of retirements by the baby boomers, those 55 and older. In this five to six minute video, John Titus shows that in actual fact the government’s own employment data show that baby boomers have been entering the work force at record rates and are responsible for raising the labor force participation rate above where it would otherwise be. http://www.tubechop.com/watch/3544087

It is not retirees who are pushing down the participation rate, but those in the 16-19 age group whose participation rate has fallen by 10.4%, those in the 22-14 age group whose participation rate has fallen by 5.4%, and those in the 24-54 age group whose participation rate is down 2.5%.

The offshoring of US manufacturing and tradable professional service jobs has resulted in an economy that can only create new jobs in lowly paid, increasingly part-time nontradable domestic service jobs, such as waitresses, bartenders, retail clerks, and ambulatory health care workers. These are not jobs that can support an independent existence. However, these jobs can supplement retirement incomes that have been hurt by many years of the Federal Reserve’s policy of zero or negative interest rates. Those who were counting on interest earnings on their savings to supplement their retirement and Social Security incomes have reentered the labor force in order to fill the gaps in their budgets created by the Fed’s policy. Unlike the young who lack savings and retirement incomes, the baby boomers’ economic lives are not totally dependent on the lowly-paid, part-time, no-benefits domestic service jobs.

Lies are told in order to make the system look acceptable so that the status quo can be continued. Offshoring America’s jobs benefits the wealthy. The lower labor costs raise corporate profits, and shareholders’ capital gains and performance bonuses of corporate executives rise with the profits. The wealthy are benefitting from the fact that the US economy no longer can create enough livable jobs to keep up with the growth in the working age population.

The clear hard fact is that the US economy is being run for the sole benefit of a few rich people.