Decline of the Empire

The Empire Is NOT In Decline?

The renewal of American leadership can be felt across the globe... From the coalitions we've built to secure nuclear materials, to the missions we've led against hunger and disease; from the blows we've dealt to our enemies, to the enduring power of our moral example, America is back.

Anyone who tells you otherwise, anyone who tells you that America is in decline or that our influence has waned, doesn't know what they're talking about.
   — Barack Obama, SOTU January, 2012

As I was working on yesterday's post, I overheard On Point's Tom Ashbrook talking about America's decline.

Is America in decline?  It’s become almost assumed in recent years.  China, India, Brazil, others — up. America — down. Humbled. Less than it was. Now comes the pushback. “The Myth of American Decline,” goes one headline.

And the theme becomes political just as fast as you can breathe. America in decline?  No way, said the president last week.  Not on his watch.

Well, which is it?  Are we up, down or sideways?  Is decline a myth?  Or is that idea just a kind of denial?  American dreaming?

This hour, On Point:  Truth or dare. We’re debating American decline.

The first guest was Michael Beckley, a research fellow at the Harvard Kennedy School of Government’s international security program. His recent article China's Century? Why America's Edge Will Endure in the journal International Security "contends that America is not in decline and that both its international power and hegemony are increasing." He started off like this—

I think if you just look across any of the indicators of national power, whether it's wealth, innovation, military power, you see the U.S. staying pretty much where it's been for the last 20 year or in some cases, increasing its lead. It remains the wealthiest major power, and these wealth gaps have been increasing. The average American citizen in 1990 made $20,000 more than average Chinese citizen. Today that wealth gap is $40,000...

Beckley continues in this vein. You see, America is not in decline because we stack up so well vis-a-vis the Chinese! If you look at the other sources cited by Ashbrook, a telling pattern emerges.

• Beckley, a research fellow at the Harvard Kennedy School of Government
• Not Fade Away: Against The Myth of American Decline by Robert Kagan, Senior Fellow, Foreign Policy, Center on the United States and Europe
• Whether or not America is declining is the wrong question, by Stephen M. Walt, co-chair of the editorial board of the journal International Security

What do these guys and others not mentioned have in common? They are mouthpieces for the Imperial elites. The question of America's decline is framed in terms of its foreign policy, the projection of American military power and economic interests all over the world, how we compare with China, and so on. We always to need to consider the source.

All of these clowns have what Mark Twain called corn-pone opinions—you tell me where a man gets his corn pone, and I'll tell you what his opinions are. Where do these guys get their corn pone? From places like the Harvard Kennedy School of Government and the Center on the United States and Europe. It's very likely these people have never even met an ordinary American unless that poor schmuck was serving them cocktails or cleaning their bathroom.

But if you ask one of these average Americans (who one never runs into at the Harvard Kennedy School of Government) whether this country is in decline, the answer is likely to be Yes. Here is a list of the trends these representatives of the Imperial elites fail to mention.

• very high levels of household, private (corporate) and government debt
• the peak and decline of American crude oil production
• astonishing income inequality and even more astonishing wealth inequality
• skyrocketing health care costs in a country in which over 45 million Americans have no coverage at all
• skyrocketing college tuition costs and student debt burdens
• stagnant real wages for 80% of Americans over the last 30 years, the falling median income
• the "financialization" of the economy and the rent-seeking behavior of the 6 largest banks, who are now even bigger than they were before the meltdown in 2008
• the obvious failures of the public education of "average" Americans
• the growing role of special-interest money in politics and crony capitalism (corruption)
• America's decaying infrastructure, including bridges, public transit, water and sewer lines, etc.
• the alarming downward spiral of popular culture (on the TV, on the radio, in music and movies)

Even this relatively long list is incomplete. It is disingenuous for an Imperial sycophant like Micheal Beckley to refer to the wealth of the average American. Apparently, none of this comes up very often at the Harvard Kennedy School of Government. Or if it does, it is dismissed as unimportant because the elites view these growing problems as orthogonal to Imperial interests, which are indistinguishable from their own interests.

When I talk about America's decline on this blog, I am talking about what is happening domestically, what is occurring inside the United States. America is rotting from within. We are just one big financial crisis (or severe recession) away from complete economic catastrophe in the United States. We're living on the edge. As things stand now, we can expect increasingly worse outcomes for these "average" Americans over the next decade and beyond.

I also think it is naive for those in the Imperial elites to cling to the self-serving belief that what happens within America itself will not eventually limit the Empire's foreign policy options, its ability to keep the oil flowing, it's insatiable need to kill brown people with predator drones, and it's maintenance of the so-called Pax Americana.

So when Barack Obama tells you that anyone who tells you that America is in decline or that our influence has waned doesn't know what they're talking about, you might want to keep all this in mind. And you might also remember that he is not talking about the living standards of average Americans. He is talking about the Empire, whose previous policies he has done so much to uphold and extend.

The Central Bank Versus The American People

The Federal Reserve has now committed to keeping short-term interest rates near zero for almost three more years. They have also committed to a 2% inflation target. Some say QE3 is just around the corner, but that's not my subject today. Tim Iacono took note of Ben Bernanke's disingenuous answer to a question during his latest news conference (video below). Blue shading highlights Bernanke's answer.

Basically, his answer to Gregg Robb of Marketwatch about the difficulties being experienced by fixed-income investors makes no sense as he confuses conservative investments with riskier ones in the rather disingenuous answer excerpted below:

In the case of savers, we think about all these issues and we certainly recognize that the low interest rates we’re using to try to stimulate investment and expansion of the economy also pose a cost on savers who have a lower return. And we do hear about that obviously and we do think about that.

I guess the response I would make is that the savers in our economy are dependent on a healthy economy in order to get adequate returns, in particular, people who own stocks, corporate bonds, as well as Treasury securities. And if our economy is in really bad shape, then they’re not going to get good returns on those investments.

So, I think what we need to do is, when the economy goes into a very weak situation, then low interest rates are needed to help restore the economy to something closer to full employment and increase growth and that, in turn, will lead ultimately to higher returns across all assets for savers and investors.

That’s little comfort for all the risk-averse savers out there just looking to get more than one percent on a certificate of deposit when the inflation rate is running at three or four times that amount (by government measure, your results may be much higher).

In another post, Tim quotes the Aleph Blog to further document the Central Bank's war against savers.

Bernanke Does Not Understand Savings

Twice in his press conference yesterday, Bernanke showed that he was out of touch with average Americans. He argued that average people could keep up with a 2% increase in the price level by investing in stocks and (presumably short-term) bonds.

I’m sorry, Ben, but ya gotsta come down from the uneducated ivory tower and wallow in the mud wit da restov us. There are three problems with what you said:

• It’s hard to earn 2% (after-tax) consistently when the Fed funds rate is zero.
• Only the top 20% of the wealthy have enough assets to keep themselves afloat using the asset markets. Most people would like to do something to protect themselves from inflation, but lack the means to do so.
• Average people do not invest, they save at financial intermediaries like banks, S&Ls, and life insurers. Fed policy kills rates for savers. They will not become investors, because they lack the knowledge to do so.

I am again sorry, Ben, because your policies discriminate against the poor and the lower middle class. Yes, the rich and the upper middle-class clever can escape the penalties stemming from your policies, but the lower-middle class and the poor can’t.

Think of it this way: your policies are making it more palatable for average people to buy gold, because the alternatives in savings are lousy. If there is no income, why not grab safety from inflation?

The ostensible purpose of Central Bank policy is to control the (core) inflation rate and promote full employment. Viewed from the perspective of working (and jobless) Americans, this policy has been a miserable failure. Viewed from the perspective of large investors, this policy has been "successful" in the sense that it has reflated some of the assets they typically hold (e.g. the S & P 500). Gregg Robb's question to Bernanke spoke of the criticism he is receiving from Republican candidates for president. (I assume he was referring to Ron Paul.) But this is not a partisan issue, as much as people want to make it one. The war on savers and those on fixed (or declining) incomes transcends political boundaries.

I'm going to take Ben Bernanke at his word. I will not posit yet another conspiracy on the part of the FOMC to make the rich richer and the poor poorer, although it is certainly tempting to do so because that's been the main effect of Central Bank policy. (There's nothing new in bankers helping bankers.) Barack Obama and Tim Geithner have been supportive of Federal Reserve policy, though the President does not comment on it. That's the Change You Can Believe In.

If we take Ben Bernanke at his word, then it is high time for him and many others to admit the complete failure of modern Keynesian theory and current monetary policy. As Bernanke says, this zero interest rate nonsense is meant to stimulate investment and expansion of the economy. Invest in ... what? Emerging markets? Crude oil and other commodities? The dollar and other currencies? Gold? Foreign debt? Because that's where the money has been flowing. The money always goes where the returns are highest. And what about here in the United States? Do we really need another Mall of America? More commercial real estate? Do we really need another fancy football stadium? Or more new houses in the boondocks? Of course not!

Americans need money in their pockets. Good paying jobs would be a good way to accomplish that, but the Fed's policies have created few jobs outside of Wall Street. And even there bank jobs are now disappearing. If the Fed can't create jobs, the least it can do is make it possible for ordinary Americans to get a decent return on what little money they've got instead of encouraging them to gamble it away. The least they can do is give in to the deflation (or disinflation) so inflation doesn't whittle away their savings. We've had quite enough of this paradox of thrift nonsense, thank you very much!

Official inflation, chart by Tim Iacono. As Tim says, your own inflation calculations may not jibe with this data.

And what is the Central Bank's record with respect to the moribund housing market? What have those low mortgage interest rates accomplished?

Single-family starts (data start in 1959) and permits (data start in 1960) set all-time lows in 2011, totaling 429,000 and 412,000, respectively.

Good job!

Only fiscal stimulus (additional government spending) can build public transportation systems, high-speed rail, fix sewers and water lines, repair bridges and all the rest of stuff which has been totally neglected for over 30 years now. Private investors will not touch this stuff. It is outside their purview. There's no short-term return. But the government is broke. And the government has wasted trillions of dollars over the last few decades on foreign wars and other military "expenses" while encouraging private health providers to rip-off Medicare and Medicaid. It's high time economists like Bernanke and other FOMC board members started taking a long, hard look at these realities, too.

Whether it was intended this way or not, modern Keynesian theory and current monetary policy have morphed into ... Trickle-Down Economics! But with a twist. In Trickle-Down, money predominantly flows only one way—up! But with what we've got now, money not only flows up, it also flows away from savers and those on fixed incomes while "official" inflation runs at 3% or more. That's the Giant Sucking Sound you hear when you get less than a 1% return on your savings account, or your money market account or your Treasury Bills if you've got any.

Welcome to the "Best" of Both Worlds.

In short, one of the major economic battles of our time pits The Central Bank against the American People. It's easy to see who's winning. And it's even easier to see who's losing.

Full Disclosure: I am one of the screwed people I wrote about today.

 

Jack Mackerel — Another Epic Fisheries Collapse

On several occasions I have warned you about the human-caused destruction of the world's oceans. One key aspect of this catastrophe is the collapse of various important fisheries, which has a devastating effect on ocean ecosystems. Eventually, the oceans will be all but dead, almost bereft of animal life. Honestly, marine scientists don't really know how much havoc we're wreaking by overfishing various important species, but as our knowledge grows, we'll learn in the end that the outcome of such wanton destruction is not benign. It never is.

The New York Times has come out with a report detailing the decimation of the Jack Mackerel fishery (species Trachurus murphyi) off the coasts of Chile and Peru. The indiscriminate slaughter of these fish looks just like the destruction of the cod fishery off New England and eastern Canada in the northwest Atlantic in the 1990s. From In Mackerel's Plunder, Hints of Epic Fish Collapse—

TALCAHUANO, Chile — Eric Pineda, a dock agent in this old port south of Santiago, peered deep into the Achernar’s hold at a measly 10 tons of jack mackerel — the catch after four days in waters once so rich they filled the 17-meter fishing boat in a few hours.

Mr. Pineda, like everyone here, grew up with the bony, bronze-hued fish they call jurel, which roams in schools in the southern Pacific.

“It’s going fast,” he said as he looked at the 57-foot boat. “We’ve got to fish harder before it’s all gone.” Asked what he would leave his son, he shrugged: “He’ll have to find something else.”

[My note — Did you catch that? We've got to fish harder before it's all gone.]

Jack mackerel, rich in oily protein, is manna to a hungry planet, a staple in Africa. Elsewhere, people eat it unaware; much of it is reduced to feed for aquaculture and pigs. It can take more than five kilograms, more than 11 pounds, of jack mackerel to raise a single kilogram of farmed salmon.

Stocks have dropped from an estimated 30 million metric tons to less than a tenth of that in two decades. The world’s largest trawlers, after depleting other oceans, now head south toward the edge of Antarctica to compete for what is left.

In 20 years Jack Mackerel landings have declined by over 90%. I was able to dig up this data from the Sustainable Fisheries Partnership.

Source. You can see the rapid decline in Peru and Chile (circled). The other nations are operating "pelagic trawlers" in unregulated international waters (map above).

There is also an interactive graphic at iWatch News which I can't reproduce here. You can read about subsidized overfishing and the like in the New York Times. I should point out that Trachurus murphyi has almost certainly reached commercial extinction, as opposed to existential extincton, yet governments and regulatory bodies are still arguing about quotas.

The South Pacific Regional Fisheries Management Organization (S.P.R.F.M.O)  was formed in 2006, at the initiative of Australia and New Zealand along with Chile. Its purpose was to protect fish, particularly jack mackerel. But it took almost four years for 14 countries to adopt 45 interim articles aimed at doing that. Only six countries have ratified the agreement...

In 1995 alone, Chileans fished more than four million tons. That is eight times the amount S.P.R.F.M.O. scientists said could be landed in a sustainable way in 2012. From 2000 to 2010, Chile landed 72 percent of all jack mackerel in the southern Pacific...

Eduardo Tarifeño, a marine biologist at the University of Concepción, said that Chile now had only sardines in relative abundance.

“We have no more jack mackerel or hake or anchoveta,” he said. “Fisheries that produced a million or more tons a year have simply run out from overfishing by big companies.”

He added: “If we don’t save jack mackerel today, we won’t be able to do it later. We need a total ban for at least five years.”

At the fisheries secretariat in Valparaiso, Italo Campodonico said: “As a marine biologist, I have to agree. We should have a five-year ban. But as a civil servant, I must be realistic. For economic and social reasons, it won’t happen. Outsiders can go fish in other waters. We can’t.”

Roberto Cesari, the European Union’s chief envoy to the S.P.R.F.M.O., which meets next week, said he expected ratification of its conditions only in 2013 — seven years into precipitous decline for jack mackerel. The S.P.R.F.M.O. cut voluntary quotas 40 percent for 2011, but China, among others, opted out. Beijing later agreed to reduce by 30 percent.

Mr. Cesari said the European Union tries to exert pressure, but its clout is limited. China and Russia, he noted, “are giants.”

Bill Mansfield, a New Zealand international lawyer who has chaired the S.P.R.F.M.O. since 2006, said that voluntary restraints had not protected fish stocks and that it was time to put the convention into force. The Santiago meeting must limit the 2012 catch to 390,000 metric tons or less, he said.

I last talked about overfishing of the oceans in my post Nothing Changes On New Year's Day. My point then and my point now is that the wanton destruction just goes on and on. This paragraph from the Times captures the problem perfectly.

“The slaughter was tremendous, unbelievable,” said Juan Vilches, who scouts fish for a large company. “No one had any idea of limits,” he added. “Hundreds of tons were thrown overboard if nets came up too full for the hold. Boats came in so loaded that fish were squashed, their blood so hot it actually boiled.”

No one had any idea of limits. There it is. We could use this sentence as Humanity's Epitaph once the 21st century is over.

Bonus Video — Jack Mackerel schooling. Videos like this will be like pornography to those living in 2050.

 

Remedy du Jour -- January 28, 2012

Today we feature the great Lyle Lovett, who I have neglected on the Saturday remedy heretofore. Lyle made his first albums in the 1980s, which is when I first started listening to him. I lived in Austin, Texas in the early 1980s, so I was familiar with the music scene down there. Lyle's written so many wonderful songs over the years that it's pretty damn tough to choose just four. I was going through this exercise in futility when I finally gave up. So here's one playlist from the hundreds I could have assembled. Lyle's music helped me get through some pretty rough times. So Thank You, Mr. Lovett.

• If I Had A Boat (live with John Hiatt and Joe Ely , from the 1988 album Pontiac)
• Pontiac (title song of that album, studio version)
• North Dakota (live, from the 1992 album Joshua, Judges, Ruth)
• Step Into This House (written by Guy Clark, live, playing solo, from the album 1998 album of the same name)

 

 

 

 

Newt's Moon Base! — Making It Up As He Goes Along

Reader Wanooski requested that I post on Newt Gingrich's plans for colonizing the Solar System. I am happy to oblige.

A colony on the moon? Republican Presidential candidate Newt Gingrich floated the idea before a massive audience on Florida's space coast. Thousands lost jobs there when the space shuttle quit flying, so what he told them was music to their ears — the promise of jobs once again, another space race.

Gingrich offered his vision of an ambitious new space program. "By the end of my second term," Gingrich said, "we will have the first permanent base on the moon and it will be American." The crowd erupted in applause.

 

OK, which part of this is funniest?

1. floated the idea before a massive audience on Florida's space coast (incredible pandering)
2. by the end of my second term (psychosis, grandiosity)
3. the crowd erupted in applause (there's a sucker born every minute)

And then there are America's intrepid journalists, those with a real Nose For News, asking Newt about the Moon Base and the Mars Shuttle, as though any of this were real. It is fitting that this took place in Florida, the home of Disney's Magic Kingdom, the Fantasy Capital of the World.

My colleague Bill Hicks of the Downward Spiral recently wrote a post about Newt which is worth reading. In December I wrote a post about Newt called Equal Time Bashing — Little Neuter. The main conclusion of that post, which Wanooski and everyone else should bear in mind, is that when little Newt talks, he's simply making it up as he goes along. Anything he says need not bear any relationship to Reality. The Moon Base is a case in point.

In short, Newt is The Quintessential American Politician, A Man For Our Times. If we can't fix our problems here on Earth, and here in America, and it's becoming increasingly obvious that we can not, we'll simply colonize the Solar System and create some new unsolvable problems elsewhere. But of course there will never be a Moon Base or a shuttle to Mars for reasons too numerous to list here.

Thus Newt's Moon Base is the perfect microcosm exemplifying the entire 2012 presidential campaign.

Bonus Video — The Best Moon Base Simulator. Although everything I said in this post is true, all of the above was merely an elaborate excuse which allowed me to play this video, which sums up the Moon Base idea very nicely.

 

What Would Joe Bageant Do?

When Joe Bageant wrote Lost On The Fearless Plain in May, 2010, subtitled Big Brother's got that ju-ju, Gaia's got the blues, — hologram, carry me home, he only had about 10 months to live. Joe died on March 26, 2011. The other day the question why get out of bed? arose, for if all the news is as bad as I document here on DOTE everyday, there seems little point to doing anything.

Here in the United States we live in the Age of Decay. The glory days of the Empire in the decades after World War II are over. That much is clear to most of those who do not benefit directly from the Empire's decline, with only the most delusional of optimists clinging to the hope that those glory days can return.

Joe Bageant was living in Ajijic, Mexico when he wrote Lost On The Fearless Plain. His health was deteriorating and he must of have known the end was near. Joe had no illusions about the world he was leaving. Most of the essay discusses what he called "the (media) hologram" which creates an alternate universe where none of the world's problems exist. I urge you to read the entire essay, but here's a sample in which Joe talks about the hologram.

I've spent most of this week watching American television and movies. I leave the TV on all night long. I toss and turn with my bad back, and bad lungs, catch a rerun episode of Two and a Half Men, or CSI, and conk out again. Then I awaken to the U.S. morning talk shows. It's a grueling regimen, only for the strong. Or the lonely. For periodic relief, I switch to Mexican television (be patient, I really am going somewhere with this). Mexican TV is not one iota better than US television, but is veeerrry heavy on the booty. More than heavy. Astronomical...

Ahhhh … Safely in the American national illusion, where all the world's a shopping expedition. Or a terrorist threat. No matter, as long as it is colorful and wiggles on the theater state's 400 million screens. Plug in and be lit up by the American Hologram.

This great loom of media images, and images of images, is so many layers deep that it has replaced reality. No one can remember the original imprint. If there was one. The hologram is a hermetic snow globe, a self-referential circuitry of images, and a Möbius loop from which there is no logical escape. Logic has zilch to do with what is going on. The smallest part holographically recapitulates the whole, and vice versa. No thinking required, we just cycle and recycle through an aural dimension. Not all that bad, I guess, if it were not generated by forces out to fuck every last pair of eyeballs and mind plugged into it...

There's a lot more where that came from. Joe provides a clear-eyed view of the American world he was leaving behind. You can read it yourself. Joe's "answer" to the question why get out of bed? can be found in this text near the end of Lost.

Again, what will be left after the big collapse? Perhaps after a period of terror, violence and chaos, when the undeniable on-the-ground truth becomes apparent, through ecological disaster, war and other events, a more positive national cathexis will occur. If it does, it probably will not resemble anything we can conceive of in these times. If we can get past the terror involved from our present apprehensive vantage point, it is easy to see why positive national, even global cathexis may be unavoidable.

Cause for well-reasoned optimism exists. Its way the fuck out there, but it's there. Not that it is something to cling to, or even pursue. Clinging and desire are the cause of all suffering in the first place. Doing so only prolongs suffering, personal, national or planetary. The Buddhists are right about that one. So are the Baptists when they say "The world gets right when the people get right."

The big problem at the moment though, for us as sentient beings, is:

What to do when I get out of bed each day? Give money to the Democrats? Move out of the country? Stay and fight the bastards?

Throwing money at frauds and fools doesn't work. Moving to Mexico or Canada takes money in a time when money and jobs are scarce everywhere. As for staying and fighting, really fighting, there is not one person reading this who is going to go strangle the sleazy fucks having martinis on Wall Street with their pet Senator. Nobody reading this is going to instill genuine physical fear, which is the only thing such lizards might respond to. We are left to work within the system, as per the hologram's directive. Their system. Ha!

The answer, to me at least, is to do the most obvious thing first. And I do mean obvious in the most mundane sense. Like fixing breakfast with all the contemplative awareness possible. Seriously. The tiniest right action, the action in complete unself-conscious natural awareness, connects to all the rightness in the universe. And the universe is always right. Because it owns all of our asses, plus black holes, and those teensy pinholes in time that physicist say make you an immediate neighbor of Shakespeare and mastodons -- only you don't know it. It owns the molecules of the ages. Everything.

This proposition is unappealing to Americans and just about everyone else in the western world. To be perfectly honest, a big screen TV, the Internet, and tickets to a Rams game are more accessible and immediately gratifying. Right action in the moment does not light up your neural pleasure centers like cheap sex or jalapeno Doritos. However, I am trying to do it anyway, at least until the opportunity for cheap sex presents itself. When it does, it will most likely be the right action for that moment. Funny how things work.

In any case, by the mundane right action of breakfast, I mean fixing breakfast to locate one's heart in that particular day. Then proceeding toward the least harm one can discern to do, with full knowledge that we always do harm, whether we intend to or not (the world is full of subtle unintended violence). Eliminate whatever suffering in sentient beings one encounters, whether it be in bums, dogs, kids, plants, or the rich fucker next door moaning over his enormous tax bill. To him that is suffering. There's no sliding scale about this shit. I once worked for a guy who bawled when some kid keyed his Porsche. Misery is relative.  Compassion is sublime...

Bageant's answer may not be your answer. It's not even my answer, although I share much in common with him (living alone, being lonely, a lack of opportunities for cheap sex,  not having much money, though my health is OK so far.) We also shared in common that writing was the best, most appropriate response to a world this fucked-up. But I will never be a Buddhist, although I occasionally have Buddhist-like tendencies, like making my breakfast or playing music mindfully. Compassion may be sublime as Joe says but its not my strong suit, at least most of the time. Somewhere along the way I lost patience with people who don't get what I'm up to, what I'm telling them, and I sometimes tell them to get lost in overly strong terms or banish them. Mea culpa.

Oh, by the way, that reminds me of something. A person criticized me the other day, saying "it's all Dave, all the time" on DOTE. That's funny, it is my blog, is it not? What does he think? That DOTE is a Democracy? Where every vote counts? Ha!

The greater point is that for every person, there is a way through the darkness. It may not be Joe's way, it may not be my way, but it's your way. (I may break into song here, Frank Sinatra comes to my mind.) You don't have to be a Buddhist or a Liberal Democrat or anything else. Or maybe that's your way. Who knows?

So that's what Joe Bageant would do, and did do, near the end of his life. You're probably a lot better off than Joe or me. Speaking for myself, you may have—well, I hope you do—a healthy loving relationship, or children who love you, or close friends who don't live a million miles away, or some money and the freedom of choice it buys, or something else that keeps you going. Writing this blog, and composing, arranging and playing music keep me going (and let's not forget the occasional self-medication, aka. drinking, which is also essential for the lonely guy).

Don't despair when I tell you how bad this world has become, which I'm going to keep doing. That's not the point of being alive. Not at all. Figuring out what's real and what's not, a problem I'm trying to help you with, and Joe was trying to help you with, and George Carlin was trying to help you with, is merely the gateway to something else.

This is it. Your Big Moment. Everything's riding on the choices you make. This is not the Scholastic Aptitude Test. You don't get to take this test over again in the future if you fuck it up the first time. The future is now. There are no "right" answers although I can assure you that there are wrong ones.

What would you do in a world as fucked-up as this one?

Again, this is not a test, this is as real as it gets. Good luck.

Bonus Video — Philip Glass, Truman Sleeps

 

Where Is U.S. Oil Production Going?

The Energy Information Administration (EIA) has certainly changed its tune since I wrote a post with this same title on March 6, 2011. At that time the EIA predicted that domestic crude oil production would decline last year and this year, but a new forecast indicates that oil production will grow and grow until 2020.

Domestic crude oil production has increased over the past few years, reversing a decline that began in 1986. U.S. crude oil production increased from 5.1 million barrels per day in 2007 to 5.5 million barrels per day in 2010.

Over the next 10 years, continued development of tight oil, in combination with the ongoing development of offshore resources in the Gulf of Mexico, pushes domestic crude oil production in the Reference case to 6.7 million barrels per day in 2020, a level not seen since 1994. Even with a projected decline after 2020, U.S. crude oil production remains above 6.1 million barrels per day through 2035.

Source. October, 2011 crude oil production stood at 5.784 million barrels per day (b/d).

The EIA's Annual Energy Outlook 2012 (AEO 2012) early release preview was designed to support Hopey-Changey's SOTU speech, which was laced with references to America's Bright Energy Future. Those references were meant to counter the "Drill, Baby, Drill" mantra of the Republicans. In fact, National Propaganda Radio is discussing this crucial issue even as I write this. Naturally, they have invited the wrong "experts" (like Phil Verleger) to give us (the naive public) some insight into America's limitless energy supply. (Phil just said America is a bigger oil products exporter than Iran. He thinks it matters!)

So-called "tight" oil refers to oil from shale rock reservoirs like the Bakken in North Dakota and the Eagle Ford in southwest Texas. (I describe it this way to distinguish this oil from imaginary "shale oil" from immature hydrocarbon formations in Colorado and Utah.)

How should we evaluate the EIA's forecast? One way to evaluate it is to look at this "all liquds" chart from the early AEO 2012 release. Although we are not out of January yet, I feel comfortable nominating this forecast for the Wildly Optimistic Future Estimate Prize (the WOFE, or "Woofy"), which is an award I just made up.

The term "all liquids" includes crude oil, natural gas liquids, biofuels and refinery gains. Looking at this chart, you can see the peak of liquid fuels production in the early 1970s. (That's also obvious in the first graph above, which covers only crude oil.) You can clearly see that the liquids fuels supply grows and grows after 2010, rising way beyond the 11-some million barrels-per-day we achieved in the early 1970s by 2035. Consumption remains flat, which means that our liquids imports drop to 36% of consumption by 2035. Woof, Woof, Woof!

In short, the EIA has postulated a miracle on the order of Jesus bringing Lazarus back from the dead, not to mention the resurrection of Jesus himself after the crucifixion. The EIA claims the U.S. will be producing 6.7 million b/d of crude oil by 2020. I will grant that this is possible, that there's an outside chance this could occur, given some very optimistic assumptions about the Bakken, the Eagle Ford and the Gulf of Mexico (GOM). After all, that's only some 900,000 barrels more than we produce right now.

The EIA then claims we will still be producing 6.1 million b/d by 2035, which requires a very large leap of the imagination. We simply don't know where all that crude oil is going to come from. We don't know what production profiles (like that shown in the first graph) were assumed for oil from shale reservoirs or the GOM. We don't know what decline rates were assumed for current oil production. We don't know these things and a whole lot more because the EIA didn't tell us what their assumptions were. Imagine that!

But even granting the dubious assumption that the U.S. will be producing 6.1 million b/d of crude oil by 2035, we are still entitled to ask where the hell those other 6-plus million barrels per day are going to come from. Those will be natural gas liquids barrels or biofuels barrels. Here we have entered the realm of Pure Imagination, Disney World's Magic Kingdom. We are now in Cinderella Castle.

That's Walt and Mickey welcoming visitors to The Magic Kingdom. Cinderella Castle is in the background. I first used this splendid image in America On The Move!

And so we can see how everything fits together—the President's SOTU speech, the EIA's rosy forecast issued about 24 hours prior to the speech and now a Woofie nominee, the political need to counter the "Drill, Baby, Drill" mantra of the Republicans. Taken together, these elements posit a Bright Energy Future for the United States. Given who we are in America, which is without question the Greatest Country on Earth, could it really be any other way?

I think not.

Does Anybody Care? What the F**k?

You know, yesterday's post The State Of The Union was actually an important post as far as I'm concerned.  On Monday, I wrote a plain vanilla post about how fucked up our economy is, and that post got more hits than my SOTU post yesterday. Nobody re-printed yesterday's post, and nobody in general seem to notice it. The post got three (3!) comments altogether.

That is exactly what I would expect in a society that is falling apart, in a Declining Empire. Good for you, you're running true to form! Congratulations!

Does anybody care? What the fuck?

So I'll tell you what: there will be no post tomorrow (Wednesday the 25th). I will not put myself out to explain our grim sociopolitical/energy/trashing-the-Earth Reality to you as I do every other day of the week. Perhaps some of you "know-it-alls" out there are way past what I'm telling you. Good for you! I'm sure you're a lot smarter than me! For sure, the rest of the world is not listening, which makes me feel really good every day.

I just love it that typical human belief systems and Reality are completely incompatible. Love it, love it, love it!

Thursday I'll  be back with a post concerning the Energy Information Administration's (EIA's) weirdly optimistic production projections concerning crude oil and all liquids, projections which are very politically convenient for the current President.

Until then, I am going to take 24 hours off and re-evaluate what I am doing writing this blog.

— Dave

Postscript — my comment on this post (from the comments section)

The questions become — why do any of us do what we do? Why get out of bed?

When I wrote this post, I was very frustrated. A writer writes to be read. When I make the strenuous effort required to write yesterday's post, just to be met with what certainly looks (from here) like who cares?, the silence is deafening.

But I was not only frustrated about poor put-upon me, but also for Moyers and Stockman. How many people watched that video? I wonder. Why did Moyers bother to make it if few are willing to watch it? No one commented on the Stockman interview. No one said a god damn thing about that video.

So it looks a lot like who cares? again.

Today I had a chance to read over the actual SOTU address. If it is possible to overdose on Hopium, I must have come really damn close. I was feeling a little woozy by the end, overwhelmed by just how many confusions, distortions, contradictions, lies and just general all-around bullshit there was to debunk and straighten out — if I made the effort to do so.

But why, I asked myself, would I make that great effort? Does anybody really care if I do? In this case (the SOTU) it really doesn't matter. That was just a political speech in an election year.

But what about when I talk about the oceans? The climate? The liquid fuels supply? The social inequality and lack of fairness in the human condition? Is there the same apparent apathy and ennui?

I also thought in writing DOTE that it might be helpful to many of you to point just how delusional most human beings are. At the very least, if you understood that, you wouldn't have to waste your time dealing with them.

So, as I think about all this, the question becomes why do you get out of bed?

I can see that some of you do give a damn about the world you were born into, and for that I'm grateful. The unexamined life is not worth living Socrates said. They were right. If people are not curious about life on this planet, what are they doing other than eating, breathing, breeding and taking up (ever-scarcer) resources and space?

And I didn't threaten to quit yesterday. I merely said I was taking today off. And I'm glad I did.

The State Of The Union

The State of the Union is not good. That is actually a considerable understatement. Tonight Barack Obama will no doubt propose policies to jump start the economy and aid those in America's disintegrating middle class, the very people who have been abandoned by his and every other administration since Ronald Reagan. Lip service can not be a substitute for action, yet Americans are supposed to believe over and over again that those in Washington care about them. Nothing could be further from the truth.

The poor state of our Union has far more to with this unbridgeable divide between the government and its people than with government's partisan political divides. Let us put it another way: the tiny gap between Democrats and Republicans pales in comparison with the yawning chasm separating the government's interests and the Public Interest.

If Americans could only grasp this simple fact, and drop the pretense that the government works for them instead of for itself and the special interests it caters to, they (in politics) might stop playing these insidious, duplicitous games. If the public refused to play along, the propaganda-driven soft sell would be replaced by the Iron Fist of the powerful few, which would clarify our situation in a helpful way which seems impossible now. (This was ultimately the lesson of Occupy Wall Street.) Many seemingly insurmountable barriers, like Joe Bageant's media hologram or Paul Krugman's politically partisan and very popular commentaries, preclude the clarity we seek.

This simple point was forcefully driven home in a recent interview Bill Moyers did with David Stockman, who ironically enough served as Ronald Reagan's first budget director. The story is called David Stockman on Crony Capitalism. You can read the transcript, and I've included the video below. I was struck by this exchange that occurred near the end of the interview.

Moyers — You were disaffected with the party of your youth, the Republican Party, because it has because — it’s become dogmatic on so many of these issues and no longer listens to evidence and facts. I’m disaffected with the party of my youth because that Democratic Party served the interest of the working people in this country like Ruby and Henry Moyers. And so many people feel the same way. How do we overcome this pessimism about the American future? The Wall Street Journal had a headline on an op-ed piece that said, "The End of American Optimism." A recent survey said only 15 percent of the people were satisfied about the direction of the American people. I mean, this is a serious situation, is it not?

Stockman — I think it is... But we also have to recognize the pessimism that the public reflects in the surveys and polls is warranted. In other words the public isn't being unduly pessimistic. It's not been overcome with some kind of a false wave of emotion. No. I think the American public sees very clearly the current system isn't working, that the Federal Reserve is basically working on behalf of Wall Street, not Main Street.

The Congress is owned lock, stock and barrel by one after another, after another special interest. And they logically say how can we expect ... anything good to come out of this kind of process that seems to be getting worse. So how do we turn that around? I think it's going to take, unfortunately, a real crisis before maybe the decks can be cleared.

Moyers — What would that look like?

Stockman — It will take something even more traumatic than we had in September 2008.

Moyers — But on the basis of the record, the lessons of the past, the experience you have just recounted and are writing about, do you see any early signs that we might turn the ship from the iceberg?

Stockman — No. I think we've learned no lessons. We really have not restructured our financial system. The big banks that existed then that were too big to fail are even bigger now. The top six banks then had seven trillion of assets, now they have nine or ten trillion.

Rather than go to the fundamentals which have been totally neglected-- we've simply kind of papered over the current system and continued the game of having the Federal Reserve and the Treasury, if necessary, prop up all of this leverage and speculation, which isn't helping the economy.

And when we talk about zero interest rates. That’s not helping Main Street. Our problem in this economy is not our interest rates are too high. The zero interest rates are just more fuel for leveraged speculation, for what’s called the carry trade, and that is causing windfall benefits to the few but it’s leaving the fundamental problems of our economy in worse shape than they’ve ever been.

If you read and understood my introduction to this post, you will immediately see that it makes little sense for Stockman to say "I think we've learned no lessons." Who does "we" in this statement refer to? In government, it is not as though there is a well-meaning intention to do the right thing which has been replaced by incompetence and ignorance (lessons not learned). That's a hopeful interpretation, but entrenched corruption and cynical self-interest are an entirely different kind of beast. We're not talking about selfless public service here.

If Stockman means that a majority of the people—those who vote—have learned no lessons, his statement might be more plausible. Moyers seems to contradict that in the text, saying that only 15% of Americans are satisfied with the direction the country is moving in, but it is also true that one can be dissatisfied while also believing in the fundamental goodness of the government.

I also find Stockman's statement that it will take a crisis even more traumatic than we had in September, 2008 to turn things around implausible. If an even bigger crisis occurred, we would naturally expect more of the same—government bail-outs for the largest banks, unlimited loan guarantees to corporate special interests, no Federal prosecution of financial fraud after the fact, and so on.

The Public Interest would once again take a back seat to the powerful interests which pay to play. America's middle class and poor would take it in the shorts once again. What reason do we have to believe that anything would change in the aftermath of the next crisis? None, as Stockman admits about our current circumstances. What part of the confluence of "money", "power" and "corruption" do Moyers and Stockman not understand?

I do not mean to be overly critical of Bill Moyers and David Stockman. They are good men who I have sometimes quoted on DOTE. However, I think it is imperative that we strip away all the illusions (and delusions) which prop up the sociopolitical status quo in the United States. If change is indeed possible, and that's a Big If, it will only come in the harsh glare of the light Reality casts on our predicament.

Thus we can say in January, 2012 that the state of our Union is not good. If I were a betting man, I would say it will get much, much worse as the future unwinds and our lives unravel. As things stand, I think that it a grievous mistake to believe that an even larger crisis than we had four years ago would change anything important in the way Americans are governed. Why would a second crisis achieve what the first did not? The first crisis was clarifying in the way I've explained here, but apparently not clarifying enough.

It is far more likely that another big meltdown would merely push those in the middle class and the poor into a situation so desperate that we would see the complete disintegration of American society, a process which is already well underway. There would be little left to lose. The United States would become a Failed State. Whether anything good might come out of that disaster is an open question, but I doubt it.

Bonus Video — The Moyers/Stockman interview

     

 

Raiding Savings, Surging Consumer Credit

It is hard to avoid an ominous sense of déjà vu when we read the Reuters analysis Recovery at risk as Americans raid savings.

More than four years after the United States fell into recession, many Americans have resorted to raiding their savings to get them through the stop-start economic recovery.

In an ominous sign for America's economic growth prospects, workers are paring back contributions to college funds and growing numbers are borrowing from their retirement accounts.

Some policymakers worry that a recent spike in credit card usage could mean that people, many of whom are struggling on incomes that have lagged inflation, are taking out new debt just to meet the costs of day-to-day living...

After a few years of relative frugality, the amount of money that Americans are saving has fallen back to its lowest level since December 2007 when the recession began. The personal saving rate dipped in November to 3.5 percent, down from 5.1 percent a year earlier, according to the U.S. Commerce Department.

Personal savings as a percentage of disposable income from Calculated Risk. This chart was last updated in November for data through October. Look at the plunge as 2011 wound down.

And what about the surge in consumer credit?

U.S. consumer borrowing rose by the most in a decade during November, surging 10% with Americans pulling out their credit cards as the holiday shopping season got rolling.

The level of consumer credit outstanding increased by $20.37 billion to $2.478 trillion, the Federal Reserve  said Monday. Economists surveyed by Dow Jones Newswires had forecast an $8.0 billion increase.

In percentage terms, the increase was the biggest since October 2001 and a big driver of the gain was revolving credit, which includes credit-card debt. It increased by $5.60 billion to $798.27 billion.

Nonrevolving credit also surged, rising $14.78 billion to $1.679 trillion. The increase was fueled by federal government, a category that includes student loans and has been increasing a lot over the past year–a sign high joblessness in the U.S. has led many people to go back to school.

Incomes for the vast majority of Americans are not keeping up with inflation. The "official" data shows that energy costs rose 6.6% in 2011, while food and beverage prices rose 4.5%. This latter number is not credible to anyone who did their own grocery shopping last year.

Americans are whipping out the plastic to pay for daily living expenses, or dipping into savings accounts. The overall savings rate is a misleading indicator of the actual level of distress felt by most Americans. Consider this quote from Joseph Stiglitz's The Book Of Jobs, which was published in the January, 2012 issue of Vanity Fair.

Even when we fully repair the banking system, we’ll still be in deep trouble—because we were already in deep trouble. That seeming golden age of 2007 was far from a paradise.

Yes, America had many things about which it could be proud. Companies in the information-technology field were at the leading edge of a revolution. But incomes for most working Americans still hadn’t returned to their levels prior to the previous recession. The American standard of living was sustained only by rising debt—debt so large that the U.S. savings rate had dropped to near zero.

And “zero” doesn’t really tell the story. Because the rich have always been able to save a significant percentage of their income, putting them in the positive column, an average rate of close to zero means that everyone else must be in negative numbers.

Here’s the reality: in the years leading up to the recession, according to research done by my Columbia University colleague Bruce Greenwald, the bottom 80 percent of the American population had been spending around 110 percent of its income.

What made this level of indebtedness possible was the housing bubble, which Alan Greenspan and then Ben Bernanke, chairmen of the Federal Reserve Board, helped to engineer through low interest rates and nonregulation—not even using the regulatory tools they had. As we now know, this enabled banks to lend and households to borrow on the basis of assets whose value was determined in part by mass delusion.

This time around the mass delusion brought about by the Housing Bubble is gone. There is only more and more hardship. And yet the pattern is the same—surging consumer credit demand and a sharp decline in personal savings. Let's quote Reuters again.

"When the stock market and the housing market were booming, we saw that a lot of people would take on more debt and save less. They felt the saving was being done for them," said Mark Vitner, managing director and senior economist at Wells Fargo Securities in Charlotte, North Carolina.

"Today, the saving rate is falling out of necessity. Food and energy prices have risen and folks don't have as much money to spend on the things that they would like."

Just as Americans used to borrow against the value of their homes before the property crash, now many are taking out loans from their 401(k) retirement savings plans.

Almost a third of plan participants currently have a loan outstanding, according to an upcoming survey of 150,000 holders of 401(k)s by consulting firm Aon Hewitt.

"People are at a loss, and they are struggling," said Pam Hess, director of retirement research at consulting firm Aon Hewitt.

Yes, Americans are at a loss and they are struggling. This should be Front Page News, but nowhere does it appear there. We are flooded with news about the NFL playoffs or the Republican primaries or Obama's lame tourism initiative instead.

Just because the period 2008-2012 is not like exactly like the Great Depression of the 1930s doesn't mean we aren't suffering through a depression (little "d"). Imagine if credit cards had been freely available in the 1930s. Imagine if Americans had had 401k savings plans. Those desperate people would be doing what today's desperate people are doing—raiding savings and piling up credit card debt to pay their bills. This thought experiment may seem a little farfetched, but it's not. The differences are not really as great as they first appear.

Piling up debt and drawing down savings are not substitutes for income. This will not end well.