December 19, 2009

Homo Sapiens Commits Suicide in Copenhagen

Just for the record, I think life is meaningless and always have. Of course, when making such a statement, one should define what one means by "meaning." Okay, I think I can do this by contradistinction. To borrow a trick used by religious people, for example, who prove the existence of God by a kind of process of elimination: they can't think of any other way to explain the existence of the Universe, so they say someone must have created it. The psychologically-attuned will immediately recognize this as an instance of massive, teleological projection. It is typical of the arrogance of human beings to believe that anything mysterious must nevertheless be within human ken, and that absolutely nothing could be beyond our comprehension. So we're actually able to "think up" the way the Universe started.

So, by contradistinction (in this definition of "meaning"): I don't believe any of that. I don't think the human corpus has a "soul" or that this nonexistent soul has a destiny, that it's on a preconceived journey mapped out by a Supreme Being, or any other religious notion. Why such things would give life "meaning," I have no idea, but if that's what is meant by "meaning," then I disagree.

I think we're just here, like other species, and that's all we can say. Among mammals (and all other life forms on Earth) we have the most complex central nervous systems, and we have this apparently unique ability to conceptualize. Our mistake (which many make, I mean) is in believing that this limited ability to conceptualize would nevertheless be adequate to understand, or co-extensive with, the complexities of the Universe. Why should such a congruence exist? It's why I believe that Einstein's meditation, that "the most incomprehensible thing about the Universe is that it's comprehensible," was actually a subtle and ironical joke. What this greatest of all conceptual thinkers was actually saying was that the Universe is incomprehensible to us, but that we have a facility for mathematical modeling of Reality which has deceived us into reducing the Universe into a simulacrum of itself which we take for the real thing, yet that real thing remains beyond our understanding. So that the Universe, by presenting itself to our senses in such a way that it appears understandable, remains hidden from us. All we are doing is manipulating the data received by our senses and deducing, incorrectly, that this is the same thing as Reality. The so-called Copenhagen Hypothesis, which holds (I think correctly) that one cannot separate the observer from the observed, and that no "independent" reality exists which can be accurately observed by a so-called objective observer, is a metaphor for this basic impossibility.

So we return to Copenhagen to finish off the human race. It is not surprising that humans were not able to deal with climate change, because we did not evolve to deal with "conceptual" problems except as subjects for thinking. We cannot act in the face of an unseen danger. When the danger of global warming can be seen in its immediacy, it will be too late. Oddly enough, David Letterman, talk show host and insightful thinker, has been saying all along that "we're screwed" and we'll never deal with global warming. His informed and politically-motivated guests, such as Al Gore and James Hansen, took issue with this view, but Dave never varied.

Dave was right, the rest were wrong. One should take genius where we find it. Don't ask me how Dave knew, but he did. The remaining question concerns how great a tragedy this will be. The main problem I see, insofar as the ecosphere is concerned, is that the die-off of Homo Sapiens will inevitably take a lot of other "innocent" species with it. Some estimates say 50-60% of all mammals, birds and fish, for example. Still, with humans gone, the sun will still have just about as much time left in its Main Sequence as it has had since the formation of the solar system. So there is plenty of time left for evolution before the Big Finish. The PBS special entitled "After We're Gone" demonstrated how little time it will really take for all evidence of human civilization to disappear from the Earth, and for nature to reclaim a more natural state from the human artifacts currently in place. Even the Pacific Garbage Patch or Gyre will eventually degrade and stop killing marine life.

I'm not one of these people, like Kurt Vonnegut and Gore Vidal, who regard humans as a "virus" that the Earth is trying to get rid of, or "burn off." That's a little too ontological for the likes of me. We're not a "mistake." In Kurt's case, it was just the depression talking. There are many ways that a species finds its way to extinction, and global warming may be ours (disease or nuclear war being a couple of other routes). I was thinking that it's perhaps true that humans would not actually die off completely anyway, even with global warming (unless we have the runaway greenhouse effect called "going Venus"). We might just be reduced to a smaller, tropics-loving group with a rich gene pool. You know, of the kind found in East Equatorial Africa.

December 18, 2009

Fargoizing the National Debt

This was perhaps a little predictable:

"The United States cannot force foreign governments to increase their holdings of Treasuries," Zhu said, according to an audio recording of his remarks. "Double the holdings? It is definitely impossible."

"The US current account deficit is falling as residents' savings increase, so its trade turnover is falling, which means the US is supplying fewer dollars to the rest of the world," he added. "The world does not have so much money to buy more US Treasuries."

Thus spake an official of the Bank of China. This is indeed unfortunate, since our budgetary Ponzi scheme depends on a continuing supply of marks to keep the game going. The corporate/government merger known as Washington, D.C. must have overlooked one or two salient points in its drive to create a capitalist paradise:

First, while one can understand that Washington insiders would become careless about the 300 million citizens who make up the actual American populace, you can only indulge this attitude so far. If you create a country where tax incentives and free trade regimes result in the destruction of the labor market, at some point (such as right now) you will reach a juncture where the American masses who are not organically connected to the federal government cannot earn enough money to pay any taxes. When this happens, somewhere north of 50% of government revenues disappear (the elite One Percenters who get their money interest free from the Federal Reserve pay about 46% of all income taxes). We are currently on such a trajectory, since total tax revenues this year will probably just surpass $2 trillion, against expenditures of around $3.5 trillion or so (probably more, because there is still the Epic War to Eradicate Afghan Jungle Gyms to be funded). Adding to this slight noncongruence is the loathsome reality that over $3 trillion in Treasury debt will "mature" this year and will need to be rolled over.

The second problem is that the lumpen proletariat not only don't pay taxes, they don't have the money to buy Chinese cell phones, flat screen TVs and melamine-laced dog chow. Since the Wal-Martcentric "economy" was based on this dubious activity, the "current account deficit," which the Chinese (and their Amen Corner in the U.S. Congress) used to be so happy about is now disappearing. Memo to Mr. Zhu: the American worker is not "saving," per se. He's trying to stay indoors and consume food.

The question then becomes how to finesse your way past the need to auction off something on the order of $4.5 trillion in U.S. debt without having even a single failed auction. If an auction is held and nobody shows up, then for the first time in living memory a holder of U.S. Treasury securities will have to be informed that we don't have the money right now. Personally, I would recommend simply not returning phone calls from foreign central banks. A model for this kind of dodge was probably best demonstrated by William Macy in "Fargo," where he strings out the financing company for as long as possible by (a) not returning calls, (b) promising but not delivering and (c) sending unreadable fax messages. I don't see why Timothy Geithner couldn't use all of these techniques.

Scene: Office of the Secretary of the Treasurer, Washington. A secretary answers the phone.

Secretary: Mr. Secretary, Mr. Zhu is on line one. Again. He says you still haven't credited his account with that $50 billion on the maturing T-bond.

Geithner: Can you tell him I'm in the bathroom right now and I'll call him right back?

Secretary: Okay. (Murmuring into phone.) He's wondering if you're eating too much Mexican food. That's the fourth time in two days you've been...indisposed.

Geithner: Tell him I promise I'll get back to him. Get a number.

Secretary: (Murmuring.) He says he'll hold.

Geithner: Tell him the computer's been down all day and we'll probably get that transfer made by tomorrow morning.

Secretary: Okay. (murmuring). He says he still wants to talk to you because that's what you said yesterday.

Geithner: Tell him I died.

Anyway, Geithner and Bernanke (if he gets confirmed) will think of something. They're very resourceful, and they own a printing press. Money, schmoney. Let's build the B-22 after all. Our best days lie straight ahead.

December 17, 2009

Tea for Two...or Three Hundred Million

I watched a little of the Bernanke confirmation hearing this morning on C-SPAN, as the august solons on the Senate Banking Committee took turns either commending Gentle Ben for a good job in difficult times, or ripping the guy a new one. Although Bernanke is a Republican, most of the opposition to him comes from Republicans such as Jim ("No Hitter") Bunning and Jim DeMint. Being against Bernanke is a kind of code for "Main Street" advocacy, whereas support for Bernanke substitutes for a wink and nod to the Senate's benefactors on Wall Street. As to the question of whether Bernanke is doing a good job - who the hell knows? I can still get money out of my ATM, so that's a plus.

I noted that a few of the Senators have started to say openly that the United States is in a helluva financial bind. That's alarming. For example, former Texas pom-pom girl Kay Bailey Hutchison wondered out loud whether the U.S.'s credit rating is in jeopardy, and whether we aren't staring down the abyss of sovereign default. Heavy stuff. Well, the House just increased the debt limit by about $300 billion as a stopgap measure to keep the government in business. They wanted to go $1.8 trillion, to get the ceiling up to $14 trillion and leave it there through the 2010 midterm elections (so the somnambulant electorate would forget about it, in other words), but the crafty Republicans, who derive an amazing amount of juice out of being a distinct minority, wouldn't let them get away with it.

Excessive government spending is part of the "Tea Party" agenda, apparently, although it's hard to label this diffuse political "movement." The Tea Party seems more like an aggrieved, amorphous mob that is definitely aware it's hurting but only dimly cognizant of what might be causing the pain. A group like that is inherently dangerous. Sad to say, just as Bush set the table for Obama, I think Obama's capitulation to...what?... has set the stage for the Tea Party. Here's something from the Wall Street Journal:

The biggest worry for Democrats is that the findings could set the stage for gains by Republican candidates in next year's elections. Support from independents for the president and his party continues to dwindle. In addition, voters intending to back Republicans expressed far more interest in the 2010 races than those planning to vote for Democrats, illustrating how disappointment on the left over attempts by party leaders to compromise on health care and other issues is damping enthusiasm among core party voters.

But public displeasure with Democrats wasn't translating directly into warmth for Republicans. Twenty-eight percent of voters expressed positive feelings about the GOP -- a number that has remained constant through the Democrats' decline over the summer and fall. Only 5% said their feelings toward the Republicans were "very positive."

Well, that makes sense. Naturally, the Wall Street Journal would use the normal bipolar analysis: if not Democrats, then Republicans. Between now and 2012, however, things could change a lot, especially if our recent convert to fiscal austerity, Kay Bailey, is right. Naturally, her new belief in a balanced budget wasn't around when she enthusiastically voted for every war Bush&Cheney could come up with, but hey - that's so 2003. It's hip now to talk about "Obama's spending," and to direct everyone's attention to Bernanke, who's been on the job since 2006.

This is an early sign of impending doom, when the jugglers in the Capitol Clown College start aiming their seltzer bottles at each other, or sticking out their size 22-EEEE red shoes as another senator walks by. It means they're beginning to realize that this fiscal crisis probably cannot be hidden much longer. Now where would they get an idea like that? Well, that strange chart up above may give you an idea. This is one of Tyler Durden's (of Zerohedge) typically brilliant summations of just how massively screwed we are. Looks innocent, huh? Yet within its clear, elegant and horrifying details lie the sure signs of ominous portent. The UK, Japan & China, our BFF's when it comes to keeping us afloat, are beginning to peter out. This is an inauspicious moment for this to be happening, because, you see, Congress has authorized the government to "spend" about twice as much money this year as it actually "has." This is on top of the $7-8 trillion we'd piled up in previous years of keeping the world safe for democracy.

The Tea Party people use the iconography of a great patriotic rebellion, the Boston Tea Party of 1773, which protested taxation without representation. A nice heritage. The Journal, I think, is engaging in some wishful thinking in believing that: If not Dem, then Repub. Not necessarily. This is very worrisome. The Tea Party, whatever it is, does not have to know what it stands for in order to be convinced that neither of the Big Two Parties is on their side. Such dangerous stuff. They lack only a corn-pone Hitler to lead them in their fervent belief that they can be great again. And if recent history in the USA has taught us anything, it's that demagogues, in this country, are a dime a dozen.

December 16, 2009

Jake & Elwood would never break out of this Illinois prison

Obama did promise to close down Guantanamo, and damn if he isn't a man of his word. The hapless denizens of the Cuban Club Fed are moving north to the Thompson Correctional Facility in Illinois (not so far from the Blues Brothers lockup in Joliet), only about 100 miles west of the President's private residence. This major development has all the characteristics of other Obama major developments:

1. It isn't a major development at all. Of the 210 detainees in Cuba, maybe half will go north for now. This makes it look as if there is compliance with Obama's campaign promise to close Guantanamo "within one year" without actually, you know, closing Guantanamo within one year. It is that perfect Obamian compromise with the truth - halfway between doing the right thing and kowtowing to the demands of the howling Right, who believe that the very presence of a Muslim detainee on U.S. soil poses a clear and present danger to the survival of the Republic.

2. Although the transferred prisoners will reside in the American heartland, they will not see the inside of an actual American court room. Some of them will be tried before military commissions; many others will be detained indefinitely without trial, without charges and basically without hope. William Lynn of the Department of Defense has announced that the choice of forum, or the decision not to have any forum at all, is determined on the basis of the likelihood of a favorable outcome for the prosecution. Federal trials in civil court rooms are reserved for those defendants with the least chance of escaping conviction. If the case against a given prisoner is relatively weaker, then trial proceeds before a military tribunal, where the rules of evidence are relaxed in favor of the government and the tribunal itself is more likely to convict. If even this kangaroo proceeding cannot be relied upon to assure conviction, then the government plays its ace in the hole: the prisoner is just held indefinitely with no charges and no trial.

Thus, the system is set up so that the weaker the case against you, the less justice you are afforded. I think this is the Winston Smith principle of jurisprudence.

3. As a legislator and as a Democratic nominee on the campaign trail, Obama was against military tribunals altogether, and spoke out against the tyrannical practice of detention without trial. Now all of that has changed. The underlying rationale which Obama must have adopted during the last twelve months, at some point after his election was assured, is that a Muslim detainee in Guantanamo must be there for some reason, so it's logical to assume that the prisoner is guilty; that is, that a presumption of guilt exists. Whether the United States can prove it or not is somewhat beside the point, although from the viewpoint of the prisoner, I suppose, it is the point entirely. The fallacy, not often publicized (but which my membership in a legal bar compels me to point out, since I am required by the Canons of Ethics to advocate for justice even for those whom society despises), is that the right of habeas corpus, finally regained by the detainees in the Supreme Court case of Boumeddiene, has been exercised successfully by detainees in 29 out of 33 cases, or 88% of the time. The presumption of guilt which has supplanted the previous (220 year) history presuming innocence (as enshrined in the Bill of Rights), has been moved aside for purely political reasons unrelated to (a) actual danger to the United States or (b) common decency. Thus, the idea of detention without trial, in the face of such a procedural history and possibility of error, seems nothing short of tyranny.

I was watching an interview of Rep. Joe Barton (R, Tex.) yesterday as he fulminated against the grave danger of moving these awful terrorists to Illinois, where, despite the supermax conditions (from which no prisoner has ever escaped), they are likely to successully plot the total destruction of the United States. I guess that Barack Obama keeps thinking that if he splits the difference, closes Guantanamo while keeping its spirit of injustice alive, he can mollify his critics on the Right, as he has tried in so many other instances. That it never works doesn't seem to matter. But I suppose what guys like Barton have learned is that if they remain vociferous and keep complaining, even when Obama does more or less exactly what George W. Bush would have done in the same situation, that they can keep moving the President farther and farther in their direction. Until one day, in the probably not too distant future, they may have the satisfaction of thinking that things have never been so good, and that the election about a year ago, which seemed so transformative at the time, actually didn't amount to much at all.

December 15, 2009

Tin foil hats and other seasonal costumes

Sometimes I wonder whether I actually have to have some quote or news item to base one of these cognitive spasms upon. For example, one idea that occurs to me this morning (as I siphon some Peet's coffee into my synapses) is that maybe hikers should just stop climbing Mt. Hood in Oregon in the dead of winter. You know? I mean, doesn't this tragedy get a little repetitious? Is it actually surprising that blizzards would hit a mountain 11,240 feet high in the Cascade range in mid-December?

Just a thought. That's not actually the text of my sermon. I keep getting drawn back to the Economy as a subject. As I've said before, my inspiration, Henry David Thoreau, based his longest chapter in Walden on Economy for the simple reason that what we call the economy is essentially a description of the means by which humans derive their vital heat from Planet Earth in order to sustain life. For this you need food and shelter. Of course, very few Americans are actually engaged directly in these processes anymore. We eat food and we live in houses, but we don't grow the first or build the second. That's because we're "advanced," and live in the "organic" society, which is a very complicated contraption built upon hyper-specialization. Meaning, of course, that most of us are engaged in completely useless functions which can be easily discarded by society with no discernible loss to the core function of maintaining vital heat.

As part of the elaboration of our complexity, American elites thought it would be a good idea to get into a symbiotic relationship with the People's Republic of China, a Communist dictatorship, and to outsource our manufacturing jobs. Those are the jobs we built our former middle class upon. The Commies in Beijing run a command economy of the type favored by Josef Stalin, noted tyrant of the former Soviet Union. This means they can play any game they want with wages, currency fluctuations and anything else. They pegged their yuan to the dollar, which allows them to keep Chinese wages at the munificent average sum of 31 cents an hour, or about $2.50 a day. So the average annual compensation in China is about $3,000. In America, for a little while longer, the average annual earnings are $47,000. However, because of the symbiotic, and somewhat paradoxical, relationship that exists between our two great nations, one would expect that, as water seeks its own level, a gradual evening out would occur to "fix" this disparity. This is currently underway, although it won't continue.

So as I was hoovering in some of Peet's rich, oily, aromatic caffeinated brew, it occurred to me that we could forecast America's fate by simple mathematics. One cannot simply add the two income levels and divide by two, because China's population is four times larger than ours. So a weighted average makes more sense. We can take the sum of $12,000 (4 x $3,000), add that to $47,000 [$59,000], and divide by 5. So we're headed toward average annual earnings of a little under $12,000 per year. Isn't that nice of us to lever up the Chinese that way? I think so. They make stuff and export it to us; we export dollars to them; they export the dollars back to us; we make cheap loans to ourselves and inflate "assets" we can borrow against. This creates "money" that we use to buy more stuff from them.

Oh hell. Like all perpetual motion machines, this neat little setup ran afoul of the laws of thermodynamics. The contraption broke down. While this is a disaster for us, it's also a calamity for the Chinese. They have those 100,000 factories, they're up to their eyeballs in salad spinners, Snugglies, pirated CDs, flat screen TVs, poison dog food and radioactive Gerber's, and they don't have the money to buy it from themselves.

Meanwhile, back at the Ranch on Capitol Hill, certain expectations about the continuance of this neat symbiosis had taken root. We really, really need the Chinese, and other helpful Asians, to help our government with its spending problem. Lately, it's gotten somewhat out of control. In addition to rolling over the Mount Hood of debt (see: this is called "thematic unity") we had already amassed, we thought it would be a good idea this year and the last to throw on another $1.5 trillion or so of new debt, sort of like fresh powder over the frozen pack of yesteryears. So we need a lot of help with flogging about $150 billion per month (October and November indicate we're on pace for a $1.8 trillion deficit, not quite as good as we hoped) of Treasury bills, notes, bonds, you-name-it, over and above all the stuff that keeps coming due from all the previous decades of empire building and defending the world against -- well, Communists.

And dag nab it, right when we needed them most (and isn't this just like a Commie?), the Chinese became kind of disinterested in our problem. They are becoming net sellers of our Treasury IOUs. You see, the conveyor belt needs to run in a complete loop to keep the Chinese focused on our problem. If we stop buying stuff from them (and we're stopping), then they don't receive those dollars to send back to us. And do you think the Chinese are just going to come up with the money to take care of us? My sentiments exactly.

You see, here in America the idea that our standard of living should go down just because the vast majority of us are engaged in completely unproductive employment was absolutely - politically, emotionally, even morally - inadmissible. We would "stimulate" the American economy back to life, dammit.

Well, we still have a few tricks up our sleeve, you know. If the Chinese won't give us our money back (because we didn't send it to them to give us), we'll just make some more, because we are not going to settle for any 12,000 bucks a year, even if it's what we deserve. So if you're looking for a good investment play, I would suggest Lexmark. They make toner cartridges, you know.

December 13, 2009

Signs & Portents

I'm kind of bummed that Dmitry Orlov has indicated he won't write satirical pieces anymore on his blog because it's become "bad taste." By which he means, his predictions of American collapse are now on such solid footing that they are no longer controversial - indeed, it's a matter of looking out the window to verify his prescience. So, he goes on to say, in essence, satirizing America is like "cracking jokes at a wake." Reading James Joyce, however, I get the idea this is exactly what the Irish in fact do at a wake. What else are you going to do? Besides guzzle Jameson's, I mean.

I note with fatalistic alarm that the state of California is putting a whole bunch of office buildings on the market, including the whole Franchise Tax board "campus." Isn't there a little bit of irony there? Taxes themselves are insufficient, so let's sell the damn building itself. That is what you might call late-stage desperation. The idea is that the state could raise as much as $660 million by selling all this real estate. The Controller (John Chiang) is ecstatic at the prospect, and he needs things to elevate his moods, I bet. Let's say that the net/net haul on selling this stuff won't be "optimal" in this particular commercial real estate market, even though Chiang is gung-ho because the new owner gets a "Class A" tenant along with the building. I'm a man who loves a good contradiction in terms. A Class A tenant? Isn't that the very bankrupt state who was just forced to sell the place?

Anyway, let's say that Kal-ee-for-nee-yuh actually raises $500 million. Makes the math easier, and as you'll see, it doesn't make any difference. The state's budget deficit is $20 billion. Thus I can calculate (even though I was educated in California public schools) that this magnificent windfall will take care of 2-1/2% of the deficit. For one year. Now we have to figure out how to take care of the other 97.5%. Or, to round up, the other 100%, because the actual budget deficit is worse than $20 billion. That's just the number Chiang is using to keep from dousing himself with gasoline in a public square and striking a match.

Fortunately, there's a "recovery" underway. So once we retire 2.5% of the deficit this year, everything will be fine next year with our booming economy and everything, and there's no chance of an unlawful detainer action to oust the state from all those buildings it used to own but now leases. I mean, it would be humiliating for the Franchise Tax Board to get evicted and have to resort to collecting taxes from local high school gymnasiums.

One fellow on the Zero Hedge blog, who strikes me as particularly perspicacious (I think the word was on the verbal SAT), commented that he doubted the states were going to have to "secede" or "rebel" or any of that nonsense. The breakup of the USA would occur quietly, almost as a matter of course. It would happen this way: the U.S. Government is going to default on its debt. If you look over there to the right at the National Debt Clock, you'll see a number whirring by. Here's the curious thing: the National Debt Limit is $12.104 trillion. How's this one work? Oh, Geithner & Crew have ways. Anyway, they just don't care anymore. It's gotten to be too much. There's a lot of talk about "replacing" Geithner. You know, as if they'll find someone else anxious to hold auctions every frigging day in a sweat-soaked effort to keep raising all this dough. The estimate is that the U.S.A. will need to "roll" about $5 trillion next year on the public part of the debt, which will soon hit close to $8 trillion. More than half of the debt is in notes with durations of under one year, so it must constantly be rolled over to keep the game going.

Where's the money going to come from? The auctions are already beginning to look a little wobbly - the Treasury is paying more in interest on longer term bonds than it wants to pay, and the action ("bid-to-cover") is falling off. China and Japan have problems of their own, and their export market (the U.S. consumer, in other words) is not that reliably insatiable pack rat he used to be. China buys more cars and refrigerators now than we do.

In short, just as Greece, Latvia and Dubai suddenly imploded, the U.S. could have a full-fledged funding crisis on its hands in the blink of an eye, brought on by one failed auction. That's all it would take for panic to set in. At that point, the states (such as West Austria, where I live), which are already in a hopeless financial condition, are going to wonder whether it makes a lot of sense to keep pouring money into the fiscal black hole known as the U.S. Treasury. Anyway, that's the Zero Hedge guy's theory. Americans will devolve by dissolving into a piecemeal map of independent regions.

One thing has become obvious from watching Congress attempt to deal with anything: they are simply not capable of practical solutions to real problems. On this national debt thing, they plan to attach a rider to the defense spending bill increasing the debt limit to $14 trillion so the Republicans will have to vote "against the troops" to avoid increasing the debt. Pretty clever, huh? And blatantly dishonest, but they don't care about that anymore. D.C. is simply an enclave, a walled and gated community where they take care of themselves and broadcast propaganda to keep the natives calm.

For how much longer?