Those were the words that Fed chairman Ben Bernanke used to describe the financial markets (and by extension the economy) these heady spring days when everybody else with a rostrum, it seems, has pronounced the so-called liquidity crisis contained. There's a great wish for American finance to return to business-as-usual -- raking in fantastic fees for innovating new modes of tradable paper, and engineering mergers and buy-outs that generate huge fees plus $100 million kiss-offs for corporate CEOs in the noble struggle to dismantle America's productive capacity -- but apparently events are still out of hand.
The Federal Reserve itself has been instrumental in promoting abnormality by doing everything possible to prevent the work-out of bad debts in the system. Since money is loaned into existence, and loans are debts, the work-out of bad debt suggests the discovery that a lot of money has disappeared -- which is exactly the case. The Fed has postponed the work-out by sucking up truckloads of impaired, untradable securities in exchange for loans to giant banks who don't have enough cash on hand to pay their janitors. [...]
It's hard to predict how long these institutions at the heart of our economic system can linger in the "far from normal" limbo of pretending that money has not been defaulted out of existence. Since the same process is underway in Great Britain and Spain, places beyond the control of Bernanke, Secretary Paulson, and the Boyz on Wall Street, and since actions and reactions there will affect the destiny of money here, its hard to escape the conclusion that we're at most months away from the brutal recognition that Wall Street has managed to bankrupt itself (and, by extension, the United States). This is dark heart of the matter of which no one dares speak.
Meantime, on the ground, every mook and minion in the land sees the gas pumps levitate beyond the $4 hash mark, and notes with bugged-out eyes the double-digit price stickers on common supermarket items, and feels the rush of blood from the extremities when some check-out clerk at the WalMart declares that a certain proffered credit card is maxed out, and some strangers in overalls -- the neighbors say -- managed to hot-wire the GMC Sierra in the driveway, and took it away....
The candidates for president will have a lot to talk about. I wonder if they'll dare to.
The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl by Timothy Egan
It's been over a month since I put up a book recommendation. That doesn't mean I haven't been reading. I have. The list of books to put up grows longer and longer but I just finished this one and it moved it to the head of the pack. It's the story of the greatest ecological disaster in recent times. The great praries were turned over for wheat during and after WWI. It happened at a time of rain and high wheat prices. It happened with the advent of mechanized plowing which allowed great tracts of grass land to be turned over. Then the depression came, the price of wheat dropped to below what it took to grow it, and a regular Great Plains drought cycle started. The land died and, since the grass was gone that held the land together during droughts, the wind blew the topsoil away. This resulted in the great migration of the 1930s told in The Grapes of Wrath. This book is about those that stayed. The story is told through their eyes. And it is incredibly well told. My family lived at the edge of the Dust Bowl in 1949, Wichita Falls, Texas. I must have been 4. I remember the wind, heat, and blowing dust. My mother's favorite description of this place: "God forsaken!" And that was 10 years after the drought was over. The Dust Bowl was created by greed and a short term mentality. New Deal Soil Conservation Districts and the return of rain stopped the great dust storms. That and technology progressed to allow the drilling down to the great Oglalla Aquifer. But now the Oglalla Auquifer is being emptied out. The worst may be yet to come. Read it.
How Americans love to win — or to be more precise, how they hate to fail. Maybe that's why our collective memory of the Dust Bowl, America's worst prolonged environmental disaster, is a dim one, centered on the doubtful face of film star Henry Fonda looking east one last time as his family flees west from Oklahoma in "The Grapes of Wrath."
After reading Timothy Egan's new book, "The Worst Hard Time," one could make a case that the Joads made the best of the situation. "The Worst Hard Time" is about the disaster that befell those who were left behind.
Egan's account of the Dust Bowl era is a final, terrible rebuke to the policies of America's dying days of frontier expansion — when speculators, aided by the government, sold off as farmland grasslands never meant to be turned by the plow. Farmers ripped up the prairie and the wind blew away soil that had built up over millions of years. "God didn't create this land around here to be plowed up," Melt White, who lived through the Dust Bowl as a teenager, tells Egan. "He created it for Indians and buffalo. Folks raped this land. Raped it bad."
History's usual suspects, ignorance and greed, are behind what happened in the 1930s to 100 million acres in Oklahoma, Texas, New Mexico and Colorado. The saddest part of the story: Dust Bowl settlers, the proud "yeoman farmers" of American tradition, did it to themselves.
Egan, one of the Northwest's best-known writers, is a Seattle-based national correspondent for The New York Times. His writing in books such as "The Good Rain," though restrained by journalistic objectivity, has always been driven by a passion for the environment.
Egan, one of the Northwest's best-known writers, is a Seattle-based national correspondent for The New York Times. His writing in books such as "The Good Rain," though restrained by journalistic objectivity, has always been driven by a passion for the environment.
This is one of the most famous Dust Bowl pictures. It was taken by Author Rothstein, one of the more famous FSA photographers. (All his FSA photographs are online.) Shorpy has a section of Rothstein pictures that this one was taken from.
Egan mentions this movie in The Worst Hard Time. There is a scene of a farmer running a plow through the spent dirt. It's Bam White, one of the characters in the book.
Why bother? That really is the big question facing us as individuals hoping to do something about climate change, and it’s not an easy one to answer. I don’t know about you, but for me the most upsetting moment in “An Inconvenient Truth” came long after Al Gore scared the hell out of me, constructing an utterly convincing case that the very survival of life on earth as we know it is threatened by climate change. No, the really dark moment came during the closing credits, when we are asked to . . . change our light bulbs. That’s when it got really depressing. The immense disproportion between the magnitude of the problem Gore had described and the puniness of what he was asking us to do about it was enough to sink your heart.
But the drop-in-the-bucket issue is not the only problem lurking behind the “why bother” question. Let’s say I do bother, big time. I turn my life upside-down, start biking to work, plant a big garden, turn down the thermostat so low I need the Jimmy Carter signature cardigan, forsake the clothes dryer for a laundry line across the yard, trade in the station wagon for a hybrid, get off the beef, go completely local. I could theoretically do all that, but what would be the point when I know full well that halfway around the world there lives my evil twin, some carbon-footprint doppelgänger in Shanghai or Chongqing who has just bought his first car (Chinese car ownership is where ours was back in 1918), is eager to swallow every bite of meat I forswear and who’s positively itching to replace every last pound of CO2 I’m struggling no longer to emit. So what exactly would I have to show for all my trouble?
A sense of personal virtue, you might suggest, somewhat sheepishly. But what good is that when virtue itself is quickly becoming a term of derision? And not just on the editorial pages of The Wall Street Journal or on the lips of the vice president, who famously dismissed energy conservation as a “sign of personal virtue.” No, even in the pages of The New York Times and The New Yorker, it seems the epithet “virtuous,” when applied to an act of personal environmental responsibility, may be used only ironically. Tell me: How did it come to pass that virtue — a quality that for most of history has generally been deemed, well, a virtue — became a mark of liberal softheadedness? How peculiar, that doing the right thing by the environment — buying the hybrid, eating like a locavore — should now set you up for the Ed Begley Jr. treatment.
And even if in the face of this derision I decide I am going to bother, there arises the whole vexed question of getting it right. Is eating local or walking to work really going to reduce my carbon footprint? According to one analysis, if walking to work increases your appetite and you consume more meat or milk as a result, walking might actually emit more carbon than driving. A handful of studies have recently suggested that in certain cases under certain conditions, produce from places as far away as New Zealand might account for less carbon than comparable domestic products. True, at least one of these studies was co-written by a representative of agribusiness interests in (surprise!) New Zealand, but even so, they make you wonder. If determining the carbon footprint of food is really this complicated, and I’ve got to consider not only “food miles” but also whether the food came by ship or truck and how lushly the grass grows in New Zealand, then maybe on second thought I’ll just buy the imported chops at Costco, at least until the experts get their footprints sorted out.
There are so many stories we can tell ourselves to justify doing nothing, but perhaps the most insidious is that, whatever we do manage to do, it will be too little too late. Climate change is upon us, and it has arrived well ahead of schedule. Scientists’ projections that seemed dire a decade ago turn out to have been unduly optimistic: the warming and the melting is occurring much faster than the models predicted. Now truly terrifying feedback loops threaten to boost the rate of change exponentially, as the shift from white ice to blue water in the Arctic absorbs more sunlight and warming soils everywhere become more biologically active, causing them to release their vast stores of carbon into the air. Have you looked into the eyes of a climate scientist recently? They look really scared.
So do you still want to talk about planting gardens?
Blog posts three days in a row. That's been a while! Yesterday Zoe and I went over to Katie and Colby's. Katie is my daughter. We finally had some good weather and Katie and Colby had just had a bunch of work done on their house. A good time to show it off.
The first thing we has to see was the tree house Colby is building for my grandson Mike. I love tree houses. I'm envious.
In addition to removing some old decks, Colby has been regrading the back yard. That's Colby sitting on the antique lawn tractor with the blade near the fence. Standing next to him, with hand on head, is his father Eric. It's the same Eric who is the machinist that turned my Mamiya Super 23 into a flattop 6 years ago. I hadn't met him as Colby's father until yesterday. When I reminded him about the Mamiya flattop he became quite excited. It turns out he has been wanting to build a view camera and had wanted to talk to me but didn't remember my name or how to get hold of me. When he found out I was that camera guy we had a long conversation on cameras and lenses. We will be talking. A good time was had by all. Zoe and I are pretty tired but it was a good weekend of family.
The military adventurers in the Bush administration have much in common with the corporate leaders of the defunct energy company Enron. Both groups thought that they were the "smartest guys in the room" -- the title of Alex Gibney's prize-winning film on what went wrong at Enron. The neoconservatives in the White House and the Pentagon outsmarted themselves. They failed even to address the problem of how to finance their schemes of imperialist wars and global domination.
As a result, going into 2008, the United States finds itself in the anomalous position of being unable to pay for its own elevated living standards or its wasteful, overly large military establishment. Its government no longer even attempts to reduce the ruinous expenses of maintaining huge standing armies, replacing the equipment that seven years of wars have destroyed or worn out, or preparing for a war in outer space against unknown adversaries. Instead, the Bush administration puts off these costs for future generations to pay or repudiate. This fiscal irresponsibility has been disguised through many manipulative financial schemes (causing poorer countries to lend us unprecedented sums of money), but the time of reckoning is fast approaching.
There are three broad aspects to the U.S. debt crisis. First, in the current fiscal year (2008) we are spending insane amounts of money on "defense" projects that bear no relation to the national security of the U.S. We are also keeping the income tax burdens on the richest segment of the population at strikingly low levels.
Second, we continue to believe that we can compensate for the accelerating erosion of our base and our loss of jobs to foreign countries through massive military expenditures -- "military Keynesianism" (which I discuss in detail in my book Nemesis: The Last Days of the American Republic). By that, I mean the mistaken belief that public policies focused on frequent wars, huge expenditures on weapons and munitions, and large standing armies can indefinitely sustain a wealthy capitalist economy. The opposite is actually true.
Third, in our devotion to militarism (despite our limited resources), we are failing to invest in our social infrastructure and other requirements for the long-term health of the U.S. These are what economists call opportunity costs, things not done because we spent our money on something else. Our public education system has deteriorated alarmingly. We have failed to provide health care to all our citizens and neglected our responsibilities as the world's number one polluter. Most important, we have lost our competitiveness as a manufacturer for civilian needs, an infinitely more efficient use of scarce resources than arms manufacturing.
Judy Woodruff: You write in your new book, The New Paradigm for Financial Markets,[1] that "we are in the midst of a financial crisis the likes of which we haven't seen since the Great Depression." Was this crisis avoidable?
George Soros: I think it was, but it would have required recognition that the system, as it currently operates, is built on false premises. Unfortunately, we have an idea of market fundamentalism, which is now the dominant ideology, holding that markets are self-correcting; and this is false because it's generally the intervention of the authorities that saves the markets when they get into trouble. Since 1980, we have had about five or six crises: the international banking crisis in 1982, the bankruptcy of Continental Illinois in 1984, and the failure of Long-Term Capital Management in 1998, to name only three.
Each time, it's the authorities that bail out the market, or organize companies to do so. So the regulators have precedents they should be aware of. But somehow this idea that markets tend to equilibrium and that deviations are random has gained acceptance and all of these fancy instruments for investment have been built on them.
There are now, for example, complex forms of investment such as credit-default swaps that make it possible for investors to bet on the possibility that companies will default on repaying loans. Such bets on credit defaults now make up a $45 trillion market that is entirely unregulated. It amounts to more than five times the total of the US government bond market. The large potential risks of such investments are not being acknowledged.
This is too cool! George Eastman House is selling prints from their collection at only $45 for a 10" print and they are having a 30% off sale for the month of May. Some classic images.
Nineteen years ago, the fall of the Berlin Wall effectively eliminated the Soviet Union as the world's other superpower. Yes, the USSR as a political entity stumbled on for another two years, but it was clearly an ex-superpower from the moment it lost control over its satellites in Eastern Europe.
Less than a month ago, the United States similarly lost its claim to superpower status when a barrel crude oil roared past $110 on the international market, gasoline prices crossed the $3.50 threshold at American pumps, and diesel fuel topped $4.00. As was true of the USSR following the dismantling of the Berlin Wall, the USA will no doubt continue to stumble on like the superpower it once was; but as the nation's economy continues to be eviscerated to pay for its daily oil fix, it, too, will be seen by increasing numbers of savvy observers as an ex-superpower-in-the-making.
That the fall of the Berlin Wall spelled the erasure of the Soviet Union's superpower status was obvious to international observers at the time. After all, the USSR visibly ceased to exercise dominion over an empire (and an associated military-industrial complex) encompassing nearly half of Europe and much of Central Asia. The relationship between rising oil prices and the obliteration of America's superpower status is, however, hardly as self-evident. So let's consider the connection.
Putting it simply, China is importing a smaller volume of Coal than last year, but actually spending more money doing it. Especial attention should be taken to the prices per tonne, in the order of $60 – 70.
At the same time prices in Europe are well above $100 /tonne and Indonesian Coal is expected to reach a $150 /tonne, this kind of Coal was below $50 /tonne last year.
Apparently the international Coal market is getting tight enough for a country like China to feel the pinch. While Europe and North America are still able to import their usual share with prices triple of those last year, China isn't. Volumes available for export in South East Asia, Australia and New Zealand are being diverted away from local buyers with lower purchasing power.
The visit with Zoe's mom, Gerry, went well. The unsettling behavior she exhibited last week was from her lack of sleep and not from her Alzheimer's or medication. One never knows. She was her smiling and teasing self. We still don't understand most of what she is saying but she is saying it with a smile and with animation and that is the important thing. We left around 9pm to go visit my Aunt Bobbie
Bobbie is my mom's younger sister. She is moving down to Fresno, California, to live with her son Mike. They have been packing and leave Tuesday. It's been a hard year for Bobbie. Her husband, Tommy, died about a year ago. About 6 months ago her daughter Robin, who lived in the area, died, and then a couple of months ago her 2 little dogs died. That is Michelle (her grandaughter from Florida), Mike, your humble servant, and Bobbie in front. Life has kept me from getting off island much, except for doctor appointments, it seems, and I have not been able to visit Bobbie but I didn't want to miss her before she left. It has also been too many years since I had seen Mike and it was great getting into contact with him again. We have an invitation to visit Fresno. I hope we can do it.
This afternoon we are going over to my daughter Katie's place for a barbecue. We are having the first warm weather of the year. Yesterday was over 80 degrees. In one word: toofuckinghot. Those that live in Fresno probably think we are heat sissies. They would be right.
