You are viewing the community [info]the_recession

From AlterNet
By Tara Lohan, AlterNet
Posted on May 21, 2012

As our political system sputters, a wave of innovative thinking and bold experimentation is quietly sweeping away outmoded economic models. In New Economic Visions, a special five-part AlterNet series edited by economics editor Lynn Parramore in partnership with political economist Gar Alperovitz of the Democracy Collaborative, creative thinkers come together to explore the exciting ideas and projects that are shaping the philosophical and political vision of the movement that could take our economy back.

In September 2011, two Appalachian women traveled to Delaware to deliver a petition to the state's Attorney General Beau Biden. Betty Harrah and Lorelei Scarbro represented thousands who believed that the business charter for coal-mining company Massey Energy should be repealed. The company, mostly operating in Appalachia but incorporated in Delaware, has violated the Clean Water Act 60,000 times. An investigation commissioned by the governor of West Virginia found Massey could have prevented the explosion that claimed the lives of 29 miners, among them Harrah's brother, at the Upper Big Branch Mine in 2010.

Massey, they contended, was simply too dangerous to be in business. But their pleas fell on deaf ears. The company plugs along, despite its shoddy environmental and safety records, churning out profits for its parent company, Alpha Natural Resources.

To many, Massey is not simply one bad apple, but part of an economic system heavy with rotten fruit. Companies like Lehman Brothers, Bank of America, Countrywide, BP, and Walmart epitomize the relentless drive of corporations to maximize profit above everything else, including safety, fair working conditions, clean air and water, healthy communities, and common decency. In doing so, the very word "corporation" has become a dirty word.

Forget bad apples, perhaps we should just raze the entire orchard, right? 

Our economy, like our environment, is in trouble. Limitless growth that drives the profit-hungry corporate model today is ecologically impossible. We simply cannot sustain business as usual and the cracks in our system are showing.

"You look at the Arab Spring ... what looked like very stable regimes across the Arab world were suddenly shown to be completely vulnerable and brittle and I think that we may see the same kind of thing in our economy," said Marjorie Kelly, a fellow at the Tellus Institute and author of the new book Owning Our Future: The Emerging Ownership Revolution. "What looks massive and permanent and invulnerable, may show itself quite suddenly to be brittle."

Maybe this doesn't sound heartening but it should. The corporate model we have today hasn't always been around and it doesn't need to remain the dominant way we do business. There is no reason we should be swabbing the decks of a sinking ship -- alternatives already exist and they are flourishing.

"What's underway is an ownership revolution. It's about broadening economic power from the few to the many and about changing the mindset from social indifference to social benefit," Kelly writes. "We're schooled to fear this shift, to think there are only two choices for the design of an economy: capitalism and communism, private ownership and state ownership. But the alternatives being grown today defy those dusty 19th-century categories. They represent a new option of private ownership for the common good. This economic revolution is different from a political one. It's not about tearing down but about building up. It's about reconstructing the foundation of ownership on which the economy rests."

Better Business

A common complaint in today's world is one of disconnection. Our industrialized world has resulted in less contact with community -- we don't know our neighbors or who grows our food. In the same way that we've lost touch with a deeper sense of belonging and place, many of us have become disconnected from the soul of our work. The corporation-worker structure today is a master-servant relationship. We're slaves to the company, working longer hours for less wages.

"Now mass layoffs to boost profits are the norm, while the expectation of a career with one company is long gone," William Lazonick wrote. "This transformation happened because the U.S. business corporation has become in a (rather ugly) word 'financialized.' It means that executives began to base all their decisions on increasing corporate earnings for the sake of jacking up corporate stock prices. Other concerns -- economic, social and political -- took a backseat. From the 1980s, the talk in boardrooms and business schools changed. Instead of running corporations to create wealth for all, leaders should think only of 'maximizing shareholder value.'"

Our economy is dominated by a monoculture business model, Kelly says, driven largely by publicly traded corporations that have built in pressure from Wall Street for maximum short-term earnings. But a healthy, living economy needs biodiversity. We can find this if we begin to look around -- across the U.S. and the world -- where there are businesses designed not for maximum profit, but with a mission-driven social and economic architecture. One of these models is the "social enterprise."

The Social Enterprise Alliance defines these organizations as "businesses whose primary purpose is the common good. They use the methods and disciplines of business and the power of the marketplace to advance their social, environmental and human justice agendas." And one of the defining characteristics is that "The common good is its primary purpose, literally 'baked into' the organization's DNA, and trumping all others."

Here's an example. Remember Working Assets? Starting out as a progressive-minded credit card company in the '80s, it added phone service -- first long-distance in the '90s, then cellular in 2000 -- and now it has created the subsidiary CREDO Mobile. The company operates as a for-profit business, which is privately owned, with most of the employees owning the stock, so it doesn't have to bow to Wall Street pressures. They use their profits to help support causes they believe in -- so far the amount of money donated is $70 million and counting.

Social enterprises can also be nonprofits, like Goodwill Industries, which last year turned donations from 79 million people into revenue that provided job training to 4.2 million people. And by reselling donated clothing, furniture and household goods, they divert an estimated 2 billion pounds from landfills every year.

The idea of social enterprises is catching on in the business world in the U.S. with the emergence of Benefit Corporations, also known as B Corps, which are designed, "to create a new sector of the economy which uses the power of business to solve social and environmental problems." B Corps are all for-profit companies that have legal structures mandating that the company is designed to work not for maximum shareholder gain, but for the good of society and the environment.

Currently there are more than 500 companies that have become approved B Corps and legislation has been passed in seven states (Maryland, New Jersey, Vermont, Virginia, California, Hawaii and New York) making them official entities. Some are larger corporations, such as Method Products and Patagonia, but many are also smaller companies and business-to-business operations.

B Corps are similar in design to another kind of company called L3Cs. "The L3C is a hybrid between the nonprofit and for-profit models in that it is essentially a profit-generating entity with a socially beneficial mission," writes Ashley Holmes for GreenBlue. "Like an LLC corporation, L3Cs have the same liability protection and are not tax-exempt; however L3Cs have access to forms of capital that traditional corporations don't qualify for, all in order to further social and environmental goals. Americans for Community Development describe the L3C as a company that 'combines the best features of a for-profit LLC with the socially beneficial aspects of a nonprofit... the for-profit with a nonprofit soul.'"

It's About the Workers

B Corps and L3Cs create a legal foothold for a more sustainable kind of business. But other models get to the heart of the new economy as well and take up the important ideas of ownership and governance. Who gets to make decisions about how our companies are run and who gets to share in the wealth that's created?

The U.S. helped create a system in post-war Germany for works councils, where workers are elected from companies to help manage how the business is run. "That means the councils help determine core issues, like when to open and close the store or office, who gets what shift, and who gets laid off or fired," wrote Jeremy Gantz in a review of Thomas Geoghegan's book Were You Born on the Wrong Continent? How the European Model Can Help You Get a Life. Germany also has co-determined boards, which give workers a voice in governance -- companies with more than 2,000 employees have half of their boards composed of workers.

Empowering employees has proved a successful business model elsewhere. The John Lewis Partnership has been around in the UK since 1920 and has grown to over 30 department stores and more than 200 supermarkets, with a revenue of $13.4 billion. The business is employee-owned -- all workers get to share the profits and vote for the governing council and company's board.

"This firm has a written constitution, printed up and publicly available, which states that the company's purpose is to support 'the happiness of all its members,'" wrote Kelly. "Now, let me pause and note: this is the only major corporation I've found that declares its purpose is to serve employee happiness. This is so, at JLP, not because it boosts returns for shareholders. At the John Lewis Partnership, employee happiness isn't a path to some other goal. It is the goal."

Employee-owned companies aren't just a British anomaly. "In the United States, the National Center for Employee Ownership reports that there are 11,300 employee-owned firms, with some 14 million participants," Kelly found. "And in Europe, large companies have nearly 10 million employee-owners. Employee ownership has been increasing in such countries as Spain, Poland, France, Denmark, and Sweden."

Organizations can be run with employee owners or other kinds of members. The London Symphony is owned by the musicians who play in it. Barcelona FC soccer team and the Green Bay Packers football team are community-owned. Mutual insurance companies are owned by policy holders and credit unions are owned by depositors.

Employee-owned businesses and cooperatives have emerged in the green business world with great success, as well. Community-owned forests in Mexico support indigenous people, protect the environment and prevent illegal logging. In Denmark community-owned wind farms have jumpstarted wind energy, supplying 20 percent of country's power. In Minnesota, Minwind is a farmer-owned wind development company that's grown to 350 members.

A New Vision

There are different legal and social structures that can help to feed this growing new economy. In Quebec, a "solidarity" or "social economy" was created to help nonprofits and cooperatives, and it gets popular and government support. Spain is home to Mondragon Cooperative Corporation, which is a network of more than 100 cooperatives, employing 100,000 workers. This cooperative model helps support new business ventures. If a firm is struggling in its first few years, interest rates are lowered to help it instead of flagging the business as high risk and then jacking up interest rates like we do here, says Kelly.

Supporting these new ventures is important, but so is holding the companies accountable to their missions. For cooperatives and employee-owned companies, like the John Lewis Partnership, where members get a vote and can elect those who make governing decisions (or run for the positions themselves), there is more power to make sure the company is keeping its word. With privately held businesses, accountability can be much harder. The B Corp certification process is one way that helps get around the blind spots -- certified B Corps have to prove themselves to a third-party organization -- creating accountability and transparency.

So what can we do in the U.S. to spur the development of socially and ecologically conscious business? "I used to think we needed new federal legislation and corporate chartering and that we could drive change with state and federal law," Marjorie Kelly said. "And I do think we do need an articulation of what a company ought to be in law." But we have to go beyond that, she insists.

"A teacher at Schumacher College posed a question: What kind of economy is suited for living inside a living being?" Kelly said. "It's not an endlessly expanding economy, it's not an economy that's designed to serve the few, at the expense of the many, it is an economy that is generative; that is life-serving in its purposes. How do we generate the conditions for life to continue and to thrive?"

The answer will likely be not one thing, but a compilation and diversity of different business models that are consistent with supporting workers, protecting the environment, and serving the broader social good.  

Tara Lohan is a senior editor at AlterNet and editor of the new book Water Matters: Why We Need to Act Now to Save Our Most Critical Resource. You can follow her on Twitter @TaraLohan.


This recession related topic is being discussed at RecessionJournal's
The Recession community forum [info]the_recession ~ powered by LiveJournal.




The Pirate Party fits the political gap

  • May. 22nd, 2012 at 12:45 AM
Pirate Party Berlin
Piratenpartei (Pirate Party) campaigners in Kreuzberg, Berlin, in September 2011. Recent polls put them at 11% of the national vote. Photograph: Sean Gallup/Getty

It's a fairytale success: two years ago, hardly anyone knew that the Pirate Party even existed; now, all of a sudden, it has won seats in state parliaments in four successive elections, and a new poll puts them at 11% of Germany's national vote. And that's despite still not having any clear stand on important issues such as Afghanistan or the euro crisis. The German press is bewildered and horrified by turns. The Pirates are a chaotic bunch, they say, a protest party without a real political agenda. A group of internet addicts, nerds who primarily want to download music and films for free.

Anyone who wants to understand the potential of the Pirate Party must first realise that the internet is more than a technical means to an end and more than a playground for file sharers. The internet is the birthplace and living space of a communication society and therefore the key to the transformation of an era; its far-reaching effects will one day be ranked alongside those of trains, planes and automobiles.

Overcoming barriers is about freedom. This is the point that is clearly so difficult to convey. The Pirates are not an internet party but a party interested in freedom. The internet can be seen as a metaphor for what that means today: freedom through equal rights, freedom through the expression of opinion, freedom through open access to education and knowledge. Freedom through the erosion of hierarchy and authority. And freedom through participation and pluralism.

No other party in the political spectrum right now is dedicated to serving freedom in that sense of the word. The Pirates fill a gap. They are the only German party that treats freedom not just as an idealistic utopia or an economic principle but as a very real tenet of organisation. They want to protect civil rights, to increase every individual's range to take action, and to give citizens more power to take part in political decisions through electronic means.

This means that they are at odds with the traditional categories of "left" and "right". In their mistrust of the state and calls for transparency, they are reminiscent of libertarian movements of Anglo-Saxon origin, be they Ayn Rand fanatics or anarchically-minded socialists. At the same time the Pirates call for an "unconditional basic income", a financial safety net that the state should provide for every citizen. Their preoccupation with the boundaries of intellectual property has even led to some observers calling them communists. The Pirates' success is due not least to their rejection of conventional political views. But they are not a reaction to the financial crisis – instead, they profit from the fact that an increasing proportion of the electorate feel that the traditional political parties do not speak to them any longer.

Germany now has about 2.5 million self-employed people who work on their own – freelancers and owners of small businesses without any employees. Artists, freelance programmers, tilers and hairdressers number among them. These people are not from the traditional Mittelstand of medium-sized enterprises; many of them have just enough to live on. They are neither entrepreneurs nor industrial workers, so they do not find their political home with either the conservatives or with the social democrats.

As the working world has changed, so too have family structures. There are now all shades of families, from the single working parent to more complex families with more than one father to gay couples with a child.

Different ways of working and different family groupings have given rise to a growing section of society to whom the established parties can offer no answers. The self-employed fall through the health insurance and pension nets, and battle their way every year through a taxation system that is set up either for employees with regular incomes or bigger companies with accounts departments. Lack of childcare is a problem that is as well known as it is unresolved, but flexible working – job-sharing, a four-day week or switching between working in the office and at home – continues to be a distant prospect shrouded in mist.

This is the point at which the generational conflict ignites, a conflict that many assume no longer exists just because parents and children wear the same trainers these days. While younger people are completely redefining the boundaries between work and leisure, job and family, older politicians can only see their desire to live their lives more freely as creating chaos for themselves or as an expression of need.

Traditional political parties' unwillingness to adjust to the new ways of living and communicating is winning the Pirate Party popularity. It has the potential to become nothing less than Germany's new liberal social-democratic party. Whether that will happen depends on how far the Pirates succeed in drawing up convincing political demands based on their core principle of freedom.

This recession related topic is being discussed at RecessionJournal's
The Recession community forum [info]the_recession ~ powered by LiveJournal.




The Psychopaths Killed Another American

  • May. 21st, 2012 at 9:20 AM
This recession related topic is being discussed at RecessionJournal's
The Recession community forum [info]the_recession ~ powered by LiveJournal.




By Chris in Paris on 5/21/2012 11:37:00 AM

For the smartest guys ever who know risk better than any other bank, they look like the Keystone Kops. Even more disturbing is that there still are plenty of people who continue to think that the JPMorgan team is run by brilliant people.

I mean sure, besides losing badly elsewhere and launching a regulatory probe, what part didn't sound like a great hire? Add to that the label of "trader at heart" for the senior director in charge of risk and you have a real winner. Bloomberg:

Irvin Goldman, who oversaw risks in the JPMorgan Chase & Co. (JPM) unit that suffered more than $2 billion in trading losses, was fired by another Wall Street firm in 2007 for money-losing bets that prompted a regulatory probe, three people with direct knowledge of the matter said.

JPMorgan appointed Goldman in February this year as the top risk official in its chief investment office while the unit was managing trades that later spiraled into what Chief Executive Officer Jamie Dimon called “egregious,” self-inflicted mistakes. The bank knew when it picked Goldman that his earlier work at Cantor Fitzgerald LP led to regulatory sanctions against Cantor, according to a person briefed on the situation.

JPMorgan’s oversight of risk in its chief investment office has become a key issue as U.S. authorities examine the incident and lawmakers debate how to prevent banks from making wagers that might endanger depositors. Goldman was given the risk- oversight job after his brother-in-law, Barry Zubrow, 59, stepped down in January as JPMorgan’s top risk official, according to a person briefed on the matter. Less than a week after the loss became public, the bank stripped Goldman of those duties, appointing Chetan Bhargiri to succeed him.
By the way, why is Jamie Dimon still on the board of the NY Federal Reserve? Why is Elizabeth Warren the only person calling for his resignation?
This recession related topic is being discussed at RecessionJournal's
The Recession community forum [info]the_recession ~ powered by LiveJournal.




"Apocalypse fairly soon" in Europe

  • May. 21st, 2012 at 8:47 AM
By Gaius Publius on 5/21/2012 09:15:00 AM

Paul Krugman wrote a Friday column that gives us a chance to review and re-explain the current state of things in Europe. The state of the Europe is stark — poised on perhaps its last precipice.

Here's The Professor's summary (my emphasis and some reparagraphing everywhere; h/t The Stars Hollow Gazette):
Suddenly, it has become easy to see how the euro — that grand, flawed experiment in monetary union without political union — could come apart at the seams. We’re not talking about a distant prospect, either. Things could fall apart with stunning speed, in a matter of months, not years. ...

This doesn’t have to happen; the euro (or at least most of it) could still be saved. But this will require that European leaders, especially in Germany and at the European Central Bank, start acting very differently from the way they’ve acted these past few years. They need to stop moralizing and deal with reality[.]
In other words, we're at a tipping point. Krugman calls it "the moment of truth." Indeed.

Krugman offers an excellent walk through the history of this crisis — how they got to this place. I'll skip that, since we've written about it before, but do hop over if you care; it's short, concise and accurate.

Let's turn instead to where we are now. Krugman:
Greece is, for the moment, the focal point. Voters who are understandably angry at policies that have produced 22 percent unemployment — more than 50 percent among the young — turned on the parties enforcing those policies. ...

So now what? Right now, Greece is experiencing what’s being called a “bank jog” — a somewhat slow-motion bank run, as more and more depositors pull out their cash in anticipation of a possible Greek exit from the euro. Europe’s central bank is, in effect, financing this bank run by lending Greece the necessary euros; if and (probably) when the central bank decides it can lend no more, Greece will be forced to abandon the euro and issue its own currency again.
Now a look at that through our own lens:

It's sweet in a bitter way that the ECB is ultimately feeling the pain of its own policies. The ECB created the current crisis in Greece by backstopping the "bond market" — code for bankers holding bad (and uncollectable) debt — and forcing all the cost of debt recovery on nations of actual humans in the form of forced "austerity."

In effect, the ECB (proxy for Big Boy Bankers) says, "We placed bets on you. You failed. You make us whole" — where in this case, "you" is bunch of broken jobless desperate people. Nice folks, those Bigs.

This will end when the ECB decides it has felt enough pain and pulls the plug on the Greek banking system. At that point, Greece goes off the euro. The same process then plays out in Spain, Italy, and other burst-bubble countries. It's all in the hands of the ECB.

As I said, ironic — by turning the screws on the Greek public, the ECB turns the screws on itself as well. This will stop when bankers decide that their own pain is more important than the pain they're inflicting.

I'm going to call that The Sadist's Dilemma. An interesting situation if you're not involved in all that pain.

Krugman and others also call for higher inflation in Europe. Why? Because there must be an inflation differential between the collapsing economies of the eurozone periphery — Greece, Spain and others — and the more-or-less thriving economies in the core.

Why? Spain had a wage-and-price boom (bubble) when German banking money (with others) flowed into the hot Spanish economy. That bubble has now burst, and those wages and prices must fall relative to those in other countries. In other words, the collapsing Spanish economy means there is an inevitable wage-and-price differential between it and the Germanys of the world.

The question is how you get there. Let's say that a 3% differential between Spain and Germany (as proxies for the periphery and the core) is inevitable. You can get that in two ways:
  1. 2% inflation in Germany and -1% "inflation" in Spain (in other words, depressionary deflation, the current policy); OR
  2. 4% inflation in Germany and 1% inflation in Spain (in other words, slow growth).
Your call, ECB. Krugman asks what will they do, continue to back-stop the Bigs who hold now-worthless debt, in a doomed attempt to collect? Or save the euro?
I wish I could say that I was optimistic.
Apocalypse fairly soon. As I write, the euro is down to $1.27, close to its near-term low. Unless there's another cosmetic bailout attempt (which once more kicks the can down the well-trod road), this is the last round.

Real solution or a vastly different continent? Your call, ECB. Europe wasn't always a garden of peace.

Golden Dawn has 19 seats in the 300-seat Greek parliament (click here for the distribution), with new elections coming.

As I said, poised on the precipice.

GP
This recession related topic is being discussed at RecessionJournal's
The Recession community forum [info]the_recession ~ powered by LiveJournal.




Sunday May 20th, 2012

I've said several times on this blog that our leaders are aware of Peak Oil and it's implications, and that they dare not acknowledge it for the effect it would have on the general public. I came to this conclusion based on on several reasons. 1.) The embracing of austerity seems to be a tacit acknowledgement that future growth will be anemic to nonexistent; of course liquidating civil society and driving down the living standards of your citizenry will not return an economy to growth; any idiot can see that, 2.) The political class has completely merged with the investor class, and this class is increasingly aware of the reality of future resource scarcity and is attempting to profit from it, 3) Military reports have leaked from the world's leading military forces acknowledging Peak Oil and its implications; no military can survive by denying reality and these reports certainly reach the desks of the political class (and by extension, the investor class, see #2), and 4.) Many prominent people who deny Peak Oil have taken steps to mitigate its effects (c.f. diesel generators in the Hamptons, the solar panels on George W. Bush's ranch).

But this makes me wonder. the Republican Party have taken steps to ban the use of biofuels in the military in favor of fossil fuels. This is treated as just another gift to the fossil fuel industry, to whom they are completely in thrall. But surely if they are aware that fossil fuels are going to be increasingly scarce, they would not kill the very programs that would allow the U.S. military to function, and thus keep the world's dwindling resources flowing to the American homeland.

I think the Republican reactionary ideology has taken that critical step taken by both Hitler's Naziism and Soviet Communism in their final days of denying absolute reality in favor of ideology. Put another way, the Republicans have started to buy their own bullshit; their denial of reality has become so ingrained that it must be maintained at all costs. The true believers do not see the folly of fighting wars for oil, only to burn that oil in more wars to secure more resources; they must believe the cornucopian worldview fed to their followers or risk being forced out the way all the other "moderate" Republicans have been. Note that even the supposedly "conservative" U.S. military has championed the use of biofuels, and not just to develop future industries; they know full well it's their only way of functioning as fossil fuels are increasingly shuttled to uses just to prop up the status quo. It's similar to the late Roman Empire, where more and more resources had to be devoted to the military just to maintain the borders of the empire from numerous assaults, but the costs of the army ate up the very society they were defending and hollowed it out (and their rich were able to exempt themselves from taxation too). When Republican reality has become so unhinged that they are not even listening to military commanders, whether from sheer ignorance or venality to their paymasters in the fossil fuel industry, you know we've reached a truly pivotal turning point in the decline of America's empire:
Two items of news caught my eye today. The first is that Republicans in Congress are trying to stop the U.S. military from using biofuels:

    In its report on next year’s Pentagon budget, the House Armed Services Committee banned the Defense Department from making or buying an alternative fuel that costs more than a “traditional fossil fuel.”...if the measure becomes law, it would make it all-but-impossible for the Pentagon to buy the renewable fuels. It would likely scuttle one of the top priorities of Navy Secretary Ray Mabus. And it might very well suffocate the gasping biofuel industry, which was looking to the Pentagon to help it survive.

Now, this sounds like a fairly straightforward narrative: cost-conscious Republicans versus free-spending Democrats who want to push a "green" agenda and protect favored industries. But a moment's thought will reveal that it's not so simple. The "cost" of a fuel source is not entirely reflected in its spot price. Here are purely economic reasons why the military might want to buy some biofuel:

1. Research and development. If the cost of biofuel can be brought below the cost of fossil fuels, not just the U.S. military but the entire human race will massively benefit. However, energy technology must be embodied in actual economic activity - it probably takes a lot of large-scale investment and trial-and-error to advance the state of the technology. Therefore, what looks like expensive biofuel might actually be cheap to a very patient monopsonist. Already, the cost of algae-based biofuel purchased by the U.S. Navy has fallen by a factor of 16 in two years!

2. Idiosyncratic risk. The U.S. Military faces different risks than other fuel buyers. For one thing, the military's budget changes very slowly, so spikes and dips in the price of fuel can interrupt military operations. This provides an incentive for the military to diversify its fuel sources. Also, a successful operation by an enemy military power to temporaily block the international flow of fossil fuels during a war would be annoying for a business, but devastating for our military.

In fact, the Secretary of the Navy made basically these arguments:

    Mabus and his allies countered that...Of course relatively small batches of a new fuel are going to be expensive — just like the original, 5GB iPod cost $400 and held fewer songs than today’s $129 model, which holds 8 GB. That’s the nature of research and development. With development time and big enough purchases, the costs of biofuels will come down; already, the price has dropped in half since 2009...

    What’s more, Mabus added, there’s a value in a more stable, domestic supply of fuel; every time the price of oil goes up by a dollar per barrel, it costs the Navy $31 million. “We simply buy too much fossil fuels from places that are either actually or potentially volatile, from places that may or may not have our best interests at heart,” he said...

    None of those arguments managed to sway House Republicans[.] (emphasis mine)


So do Republicans just have a weak grasp of some of the more subtle points of economics? Or do they have some vested interest in blocking the adoption of non-fossil energy sources?

The other news story that caught my eye may provide some insight into that question. It's about a new campaign by conservative think tanks to block the adoption of solar and wind power...
A Pro-Fossil Fuel Industrial Policy (Noahpinion). See the article for more on that last point. And Slate makes similar points about this jaw-dropping shortsightedness:
The rationale for barring the Navy from buying the 450,000 gallons of biofuels necessary for the experiment is economic: These fuels are too expensive—about four times more costly than conventional fuels.

To hammer home the point, the committee’s Republican leaders passed an amendment barring the entire Defense Department from using any alternative fuels, for any purpose, if they’re more expensive than oil. But then, in a shameless disclosure of who’s paying the tiller, they tacked on a provision exempting coal and natural gas from this prohibition. As Noah Shachtman put it in Wired’s Danger Room blog, they “didn’t put limits on all alternative fuels—just the ones with environmental benefits.”

Even now, in its early phases, solar is a more mature technology than biofuels. In part that’s because there’s almost no market for biofuels—mainly because, as the House committee complained, they’re too expensive. But some of modern history’s most revolutionary devices started out as too expensive; and they would have stayed that way—they might never have got off the ground—had the federal government not created the market. And since, in American politics, the military and space programs have been the federal government’s only sources of manufacturing, it’s the Pentagon and NASA that have created those markets.

Take the microchip. It was first demonstrated at the radio industry’s tech show in 1959, to little fanfare because, at $35 per chip, it was too expensive for any commercial application. The equation changed in 1961, when President John F. Kennedy proclaimed his goal of sending a man to the moon by the end of the decade—and when he and his secretary of defense, Robert McNamara, decided to build the Minuteman II missile. Those acts created a market for the microchip (conventional transistors weren’t adequate for the rockets’ guidance systems); the extra production spawned economies of scale, which brought the costs down to the point where commercial products were feasible, which triggered further demand, which spawned greater economies of scale and competition from other firms, which lowered prices further … and on it went, until 1971, when the price for a chip had plunged to $1.25. (By 2000, it was down to 5 cents.)

Ditto for the computer. The first model cost hundreds of thousands of dollars. Its only customers were the nuclear-weapons labs (to perform the elaborate calculations involved in designing an H-bomb), the Selective Service system (to keep track of draft-age men), and the Social Security Administration (to pay benefits to retirees). After even a few computers were built, the price dropped to the point where large private banks and railroads could afford them, at which point the price dropped further. The rest is history.

Alternative fuels are currently in the same trap. In the long run, they are likely to save money, reduce our dependence on foreign producers (many of them with less-than-stable regimes), and do less damage to the environment. But in the short run, they are too expensive—and, in some cases, their net benefits are too uncertain—for private citizens, or very many companies, to take the plunge.
Why We Need a Greener Military: Congress banning the U.S. military from using biofuels is just plain dumb.(Slate)

Talk about penny wise and pound foolish. So much for America's leadership role in future industries. I think I was giving "conservative" leaders too much credit. The alternative theory - that austerity must be embraced because any government action to ameliorate the crisis fallout will be a camel's nose for socialism - seems to be the more true one based on the above. The good news is the fact that the idea of a system that is both repressive and sustainable, and thus can last forever, which I believe Ran speculated about on his site when discussing the Navy's use of solar and biofuels appears to no longer be as much of a threat.
Posted by escapefromwisconsin at
This recession related topic is being discussed at RecessionJournal's
The Recession community forum [info]the_recession ~ powered by LiveJournal.




By Chris in Paris on 5/20/2012 11:55:00 AM

Wow, screwing up at JPMorgan looks pretty good compared to working a normal job. The "trader at heart" who was supposed to be managing risk for JPMorgan (Ina Drew) received a very comfortable exit package. Yes, she was making millions each year and had been there for decades for let's not forget that Drew, like everyone else in that industry, never had to pay back a dime from business that was wiped off of the books during the crash.

JPMorgan may have escaped the worst of the banking crisis earlier, but they still had their fair share of bad business. Also, after a taxpayer bailout to save Wall Street's lifestyle, it's unthinkable to fire someone and see them still walk away with an exit plan that is worth millions. If Wall Street wants capitalism, for god's sake have it but this is not capitalism. The Telegraph:

One of the best paid women on Wall Street, Ms Drew last year received a remuneration package worth $15.5m.

Corporate filings show that following her resignation she is entitled to $400,000 in severance as well as a share award that was worth $16m yesterday. On top of this, she has unexercised options that were valued at the end of last year at $3.44m, a series of retirement benefits worth a further $2.63m, and a $9.87m deferred compensation pot built up over several years.

Ms Drew, who spent over 30 years at the bank, is not expected to be the only executive to depart in the wake of a loss that has damaged JP Morgan's reputation for risk management. Achilles Macris, who ran the London division of JP Morgan's chief investment office (CIO), and Javier-Martin-Artajo, a trader who worked in the unit, are also reported to be leaving.
It was reported later in the week that "The Whale" was on his way out but it doesn't look like he or the others in that team are gone yet. European and UK workers do have more legal protections and with the amount of money involved all around, negotiations are likely to be longer.

As mentioned earlier, workers can be fired in Europe or the UK but the process always takes longer. One would think that such gross negligence would be easier but the bank is in CYA mode. It is almost certain that the failed risk managers at JPMorgan will all come out of this process making much more money that anyone in any other industry.

Once again, the game is rigged and the bankers walk away laughing with pockets full of money regardless of performance. Nice work, when you can get it.

Note To Mods: looks we're gonna need a 'jp morgan' tag
This recession related topic is being discussed at RecessionJournal's
The Recession community forum [info]the_recession ~ powered by LiveJournal.




Walker's Trickle Down Austerity vs. Obama's Restrained Keyensianism





I realize that many on the right would take issue with my referring to Obama's Keynesianism as "restrained," but actually compared with past presidential responses to recessions, Obama's stimulus measures as a percent of GDP, and especially when compared to the GDP Gap created in 2008, have been roughly in line, if not even far lower (when compared with the GDP Gap), than the others.

Related Article:

Kenosha News
Austerity measures don’t help the economy
Austerity measures make things worse, not better, in the middle of a recession. They do not help to bring back the economy.

They tend to deepen the recession by increasing unemployment and causing revenues to collapse further. Thus they actually make the deficits larger.

In the process they do damage to social institutions like education, public safety and national security by cutting funds for programs and reducing the number of public employees like teachers, policemen, firemen and soldiers.

A large segment of the unemployed are public employees who have lost their jobs because of ill-advised austerity measures in states like Wisconsin. Austerity measures cause further suffering to the neediest people by cutting programs on which they rely in hard times.

We created history's largest national debt because we waged two wars and increased Medicare drug benefits without raising taxes to pay for them.

In fact, drastic tax cuts were made, dramatically raising our national deficit. A lack of regulation led to the Wall Street collapse which launched the Great Recession of 2008.

We went further into debt trying to save our economy from the damages caused by a banking system run amok. Austerity measures have made it harder for the country to drag itself out of the deep recession.

It makes no sense to reduce the water supply when you are battling a fire or to reduce government spending when you are dragging your economy out of a deep recession.
This recession related topic is being discussed at RecessionJournal's
The Recession community forum [info]the_recession ~ powered by LiveJournal.




G8 Leaders may be Grasping Reality


G8 world leaders meeting with President Obama at Camp David on Saturday found themselves agreeing that some things must be done, and soon, to turn Europe's imploding financial condition around, lest that another historic and global deep recession ensues.

The Group of Eight Summit includes the US, Japan, Britain, Germany, France, Italy, Canada and Russia.

CNBC
Obama Says Euro Zone Crisis Threatens Global Economy

Confronting an economic crisis that threatens them all, President Barack Obama and leaders of other world powers on Saturday declared that their governments must both spark growth and cut the debt that has crippled the European continent and put investors worldwide on edge.

"There's now an emerging consensus that more must be done to promote growth and job creation right now," Obama proclaimed after hosting unprecedented economic talks at Camp David, his secluded and highly secure mountaintop retreat. Seeking a second term amid hard economic times, Obama hailed a debate heading in the direction he likes, with nations now talking of ways to spark their economies instead of just slashing spending...

New York Times
World Leaders Urge Growth, Not Austerity

CAMP DAVID, Md. — Leaders of the world’s richest countries banded together on Saturday to press Germany to back more pro-growth policies to halt the deepening debt crisis in Europe, as President Obama for the first time gained widespread support for his argument that Europe, and the United States by extension, cannot afford Chancellor Angela Merkel’s one-size-fits-all approach emphasizing austerity.

Pointedly recognizing “that the right measures are not the same for each of us,” the leaders of the Group of 8 nations, at a meeting hosted by Mr. Obama at Camp David, committed to “take all necessary steps” to strengthen their economies. They said they wanted to keep Greece in the euro zone and vowed to work to promote growth in Europe, though behind the scenes distinct differences remained over what kinds of stimulus policies to pursue.

“Our imperative,” the leaders said in their statement, “is to promote growth and jobs.” ...

This recession related topic is being discussed at RecessionJournal's
The Recession community forum [info]the_recession ~ powered by LiveJournal.




Bank Runs Amok: Eurozone Edition


Contagion from Greece is now seen spreading to Spain and is feared by many to be on the cusp of also infecting Italy and possibly other European states.

This slow motion train wreck has the potential to spiral out of control, much as the slow motion financial crisis of 2007 so did back in 2008. Economists largely agree that the greatest risk to the world economy over the next 24 months continues to be the unresolved crisis in Europe.

Financial Times
Bankia hit by report of withdrawals


Jittery investors sent shares in Spain’s Bankia plunging more than a quarter on Thursday morning, on concerns that customers had withdrawn €1bn from the bank in the past week.

The shares fell 27 per cent to €1.21 after El Mundo reported the news. Spain’s stock market regulator placed the shares “under auction” by midday, a mechanism to cope with heavy trading volumes...

Reports that Moody’s was preparing downgrades across the banking sector set the tone for trading during the day. Moody’s declined to comment, but the rating agency was expected to downgrade most of Spain’s bigger banks...

Financial Times
Spain denies bank run reports


Spain has been moved to deny reports of deposit withdrawals from Bankia, the part nationalised savings bank, after its shares tumbled as much as 29 per cent on Thursday.

Following reports in the Spanish media that €1bn had been taken out by clients of Bankia, Spain’s second-largest lender by domestic depositors, in the week since it was nationalised, Fernando Jiménez Latorre, secretary of state for the economy, denied the bank was losing client money...

This recession related topic is being discussed at RecessionJournal's
The Recession community forum [info]the_recession ~ powered by LiveJournal.




Profile

[info]the_recession
█▓▒░ The Recession ░▒▓
RecessionJournal.com


economicsblogs.org
economicsblogs.org



Page Hit Counters
Page Hit Counters
Recession Journal Visitors

Welcome to
[info]the_recession!


Welcome visitors, members one and all! I hope you find this community as informative, useful and entertaining as we do!

If you haven't done so already, please take a moment to review the couple of guidelines we have in place by clicking on the community profile. From the main profile page you can also familiarize yourself with the many websites and resources members have recommended since this community started. Some of my personal favorites include Calculated Risk, Economic Cycle Research Institute & Jeffrey Frankel's Blog.

You may also want to participate in our LiveJournal Global Economic Poll - "The Economy Around The World: A Real Live Journal Global Poll" .

As the economies around the world teeter once again, with many already having slipped into "Growth Recession" if not outright technical recession, and with many more looking at the real possibility of outright recession in 2012, "the recession" in 2011 is seeming mild by way of comparison to what could be lurking just around the corner, next year.

Will "Recession 2012" look as bad as "The Great Recession" of 2007-2009? Could we skirt by this time without a full-on economic death spiral? Will the economy get better by election day? Or will Obama lose the election for economic reasons? (Presidential elections are usually won or lost for base economic reasons in this country, after all).

Stay tuned! I think it's fair to say that it is going to continue to be a pretty wild ride for the world economy for some time to come. Recession 2013? Recession 2014? Did the Great Recession ever really end in the first place? Many think not!









Give Yourself a Raise!

There are several home business tax tips that could save you money, even if you do not yet have an established home-based business.

Read more...



ECRI Weekly Leading Index

Has a moderate lead over cyclical turns in U.S. economic activity. Data begins in 1967.


Recent Data

Date Level Growth

Jan 13 '12 123.4 -7.5
Jan 06 '12 121.1 -8.6
Dec 30 '11 120.1 -8.4
Dec 23 '11 120.6 -7.8
Dec 16 '11 121.3 -7.7
Dec 09 '11 122.3 -7.5
Dec 02 '11 122.4 -7.7
Nov 25 '11 120.8 -7.8
Nov 18 '11 122.2 -7.4



ECRI Calendar

March 22, 2012
Frankfurt Conference

ECRI will participate in the Bloomberg Sovereign Debt Conference in Frankfurt on March 22, 2012.
.



Crude Oil 1Yr Chart




www.e-forecasing.com







State Coincident Index
3-Month Change



Is your state essentially in expansion or recession?
Lt Green-Dark Green: Growing-Faster.
Gray: No growth.
Pink-Dark Red: Contracting-Faster.


Call Now: 888-925-6525


What is the
definition of recession?


According to the laypress, and even many economists, a recession is defined as two consecutive quarters of negative GDP (Gross Domestic Product). While this very simple definition is usually the case during recessions, it is not always so.

Most experts now acknowledge that GDP alone is an insufficient determinant of recession.

For one, GDP is often revised several quarters - even years - later, as more complete information becomes available that changes the components of the earlier, initial GDP estimates in what can be very substantial ways.

For another, not all serious downturns exact as serious a toll on GDP. Often, the decline is much more pronounced in GDI (Gross Domestic Income) and/or employment. If the income or employment of a nation is undergoing a pronounced, pervasive and prolonged decline even if for whatever various reasons its GDP may be holding up, is it not foolish to deny that a recession is underway?

For these reasons and others, the NBER (National Bureau of Economic Research), the official arbiter of recessions and expansions in the United States, determines whether or not the US has fallen into recession using a much more holistic approach.

As the NBER explains it:
Q: The financial press often states the definition of a recession as two consecutive quarters of decline in real GDP. How does that relate to the NBER's recession dating procedure?

A:
Most of the recessions identified by our procedures do consist of two or more quarters of declining real GDP, but not all of them. In 2001, for example, the recession did not include two consecutive quarters of decline in real GDP. In the recession beginning in December 2007 and ending in June 2009, real GDP declined in the first, third, and fourth quarters of 2008 and in the first quarter of 2009. The committee places real Gross Domestic Income on an equal footing with real GDP; real GDI declined for six consecutive quarters in the recent recession.

Q: Why doesn't the committee accept the two-quarter definition?

A:
The committee's procedure for identifying turning points differs from the two-quarter rule in a number of ways. First, we do not identify economic activity solely with real GDP and real GDI, but use a range of other indicators as well. Second, we place considerable emphasis on monthly indicators in arriving at a monthly chronology. Third, we consider the depth of the decline in economic activity. Recall that our definition includes the phrase, "a significant decline in activity." Fourth, in examining the behavior of domestic production, we consider not only the conventional product-side GDP estimates, but also the conceptually equivalent income-side GDI estimates. The differences between these two sets of estimates were particularly evident in the recessions of 2001 and 2007-2009.

Q: How does the committee weight employment in determining the dates of peaks and troughs?

A.
In the 2007-2009 recession, the central indicators–real GDP and real GDI–gave mixed signals about the peak date and a clear signal about the trough date. The peak date at the end of 2007 coincided with the peak in employment. We designated June 2009 as the trough, six months before the trough in employment, which is consistent with earlier trough dates in the NBER business-cycle chronology. In the 2001 recession, we found a clear signal in employment and a mixed one in the various measures of output. Consequently, we picked the peak month based on the clear signal in employment, as well as our consideration of output and other measures. In that cycle, as well, the dating of the trough relied primarily on output measures.

Q: Isn't a recession a period of diminished economic activity?

A:
It's more accurate to say that a recession–the way we use the word–is a period of diminishing activity rather than diminished activity. We identify a month when the economy reached a peak of activity and a later month when the economy reached a trough. The time in between is a recession, a period when economic activity is contracting. The following period is an expansion. As of September 2010, when we decided that a trough had occurred in June 2009, the economy was still weak, with lingering high unemployment, but had expanded considerably from its trough 15 months earlier.









What is a
"Double Dip Recession"?


In the most general sense a Double Dip Recession occurs when an economy falls back into contraction for at least a couple of months (usually at least six) after a relatively brief expansion.

By this definition, the recession of 1981-82 which followed a year-long expansion after the very short, two quarter's long 1980 recession, seems to qualify. Also by this broad definition, the 1937 recession that occurred four years after the end of the 1929-1933 recession also qualifies. While each of those were technically "new" recessions, they happened so soon after their predecessors that many people tend to think of the separate 1980 & 1981-82 recessions as one nasty, long recession. Similarly, most people think of the 1929-1933 & 1937 recessions as encompassing "The Great Depression."

Another definition of a "Double Dip Recession" would be that of a recession which technically has not ended, and was only punctuated by a quarter or twos worth of head-fake rise in GDP. Many recessions throughout history have had such false hopes, only to swoon back down into contraction, until they finally came to an end.


Call Now: 877-883-4494


List of Recessions:
Post-1900 US Recessions

Mo/Yr Started Duration
Sep 1902 - 23 Months
May 1907 - 13 Months
Jan 1910 - 24 Months
Jan 1913 - 23 Months
Aug 1918 - 7 Months
Jan 1920 - 18 Months
May 1923 - 14 Months
Oct 1926 - 13 Months
Aug 1929 - 43 Months
May 1937 - 13 Months
Feb 1945 - 8 Months
Nov 1948 - 11 Months
Jul 1953 - 10 Months
Aug 1957 - 8 Months
Apr 1960 - 10 Months
Dec 1969 - 11 Months
Nov 1973 - 16 Months
Jan 1980 - 6 Months
Jul 1981 - 16 Months
Jul 1990 - 8 Months
Mar 2001 - 8 Months
Dec 2007 - 18 Months


Call Now: 888-651-6542

What is
Gross National Happiness (GNH)?


An alternate measure of a nation's wealth was conceptualized several decades ago as a means of cutting through the overemphasis on materialism of traditional wealth measures, and seeing the bigger picture.

According to GNHUSA.Org

  Gross National Happiness (GNH) is an indicator developed in Bhutan in the Himalayas, based on the concept elaborated in 1972 by the then King Jigme Singye Wangchuck. Since then, the kingdom of Bhutan, with the support of UNDP (UN Development Program), began to put this concept into practice, and has attracted the attention of the rest of the world with its new formula to measure the progress of a community or nation.

GNH is based on the premise that the calculation of "wealth" should consider other aspects besides economic development: the preservation of the environment and the quality of life of the people. The goal of a society should be the integration of material development with psychological, cultural, and spiritual aspects - all in harmony with the Earth.

The Four Pillars of GNH

  • the promotion of equitable and sustainable socio-economic development
  • the preservation and promotion of cultural values
  • the conservation of the natural environment, and
  • the establishment of good governance.



Tags

Latest Month

May 2012
S M T W T F S
  12345
6789101112
13141516171819
20212223242526
2728293031  

Syndicate

RSS Atom
Powered by LiveJournal.com
Sponsored by Cisco