SOPA

Like the Patriot Act and its offspring, SOPA appears to be a way for the US government to seem to be protecting the public while actually giving more power to government and their cronies (monied lobbies). Here's an assessment from a friend (Vince S.) who knows how Washington works.

Behind the SOPA controversy is the story of how our laws are

routinely made. Former Sen. Chris Dodd, a man of such towering integrity that he moved his family to Iowa to run for president while still representing CT in the US Senate, is now head of the Motion Picture Association of America. He presented a bill to Congress and explained that it was simply a bill to stop piracy of movies and music. It was passed unanimously in committee, as in all Republicans and all Democrats. You remember the GOP – they're the folk who think that the feds get in the way of free enterprise. You remember the Dems – they're the guys who believe so much in freedom of speech when they're the ones speaking. When the Internet hit the fan, good ole Sen. Harry Reid, a prince among men, was required to pull it from the Senate Agenda.

And this is how our laws are made. Some lobbyist writes a bill and tells Congress that it is good. Congress believes them, not us. Who can blame them? The people with the most money are obviously telling the truth, not the riff-rate electorate.

What hubris! Our elected representative continue to sell their votes to the highest bidders while hiding their real motives. 

Is Our Democracy Failing Us?

Charles Hugh Smith at the Of Two Minds blog identifies some troubling trends among our elected representatives:

Representative democracy has an enduring fatal flaw: the small body of representatives can be "captured" by highly concentrated centers of wealth and power. Ironically, the rise of mass media has had a perverse effect on the process of getting elected to public office: in order to afford the "media buys" needed to reach a mostly disinterested citizenry (less than half bother to vote in the U.S.), the candidates must raise vast sums of money.

This gives the Power Elites the lever they need to effectively "buy" the candidates' attention and loyalties.

…extreme concentrations of power act as positive feedback loops: when their power reaches a certain threshold, they are able to cancel out any counteracting forces and thus add to their power. As a result, their wealth and influence becomes more concentrated and their control of the poltical agenda and process becomes stronger, which feeds and protects their perquisites, tax breaks, income streams and political power.

As they ceaslessly work to protect their fiefdoms, then adaptation, evolution and innovation are stymied, leading to economic and institutional stagnation. Phony "reforms" which leave their power intact are trumpeted in the corporate media while armies of lobbyists craft legislative bills which run to the thousands of arcane pages, as there are now many fiefdoms, Elites and power centers to feed and protect.

That this process has become dominant shows that the state government in California is so supremely, systemically dysfunctional that the representative democracy of the Legislature has been reduced to a body whose only task is dividing up the tax revenues amongst the various fiefdoms who own the legislators.

Defenders of representative democracy claim that the citizenry is not up to the task, and that "professional" staffers, lobbyists and legislators are uniquely competent to sort out the complexities.

I think California shatters this defense completely, and offers evidence that the opposite is true: that "professional" staffers, lobbyists and legislators are uniquely qualified to destroy the state. Quite honestly, the citizenry could not do worse even if they set out to do so.

The "insoluable problem" is the capture of representative democracy by extreme concentrations of power and wealth.

The entire point is to reduce the influence of concentrations of wealth and power. Right now, legislators are beholden to small constituencies who fund their campaigns, and who hold the threat of financing an opponent's campaign next election. This system has led to dysfunction without end and the corruption of democracy.

Politicians and Temptations

Giving politicians the ability to print money has always eventually been a disaster for any nation that did so. The temptation is just too great. Down that road lies inflation (maybe hyperinflation) and currency destruction. Just as Congress had good intentions to make home ownership more attainable, the good intentions of printing money to help pay for programs that help the poor or education or whatever is just too much for politicians to resist.John Mauldin

Link: http://www.frontlinethoughts.com/article.asp?id=mwo040910

Climate Change and Politics in Copenhagen: We Won’t Get Fooled Again?

I'm so tired of being misled by our leaders that I search for people who don't sugarcoat what they see happening. This leads to inner conflict: the satisfaction of getting a somewhat realistic view of the problems that we face up the creek, and anger from realizing that how skilled our leaders are at promising to solve problems to gain power.

John Michael Greer doesn't sugarcoat what he sees. Below are some excerpts from his recent essay on the politics of climate change conference in Copenhagen. Don't read this unless you enjoy dark humor and you want to become more cynical. The realization that there are no easy solutions is always very difficult to swallow.

Link: The Archdruid Report: The Human Ecology of Collapse.

The question that has to be asked is whether a modern industrial society can exist at all without vast and rising inputs of essentially free energy, of the sort only available on this planet from fossil fuels, and the answer is no.

…will somebody please explain to me someday how a head of state got given the Nobel Peace Prize while he was enthusiastically waging two wars?

Meanwhile the socialists are insisting that it’s all capitalism’s fault and can be solved promptly by a socialist revolution, never mind the awkward little fact that the environmental records of socialist countries are by and large even worse than those of capitalist ones; other radicalisms of left and right make the same claim as the socialists, often with even less justification.

I think a great many people are beginning to realize that whatever results come out of Copenhagen, a meaningful response to the increasing instability of global climate will not be among them.

Suppose, for the sake of discussion, that Obama agreed to cut US carbon emissions far enough to make a real impact on global climate change. Would those cuts happen? No, because Congress would have to agree to implement them, and Congress – even though it is controlled by a Democratic majority – has so far been unable to pass even the most ineffectual legislation on the subject.

Suppose the improbable happened, and both Obama and Congress agreed to implement serious carbon emission cuts. What would the result be? Much more likely than not, a decisive Republican victory in the 2010 congressional elections, followed by the repeal of the laws mandating the cuts. Carbon emissions can’t be cut by waving a magic wand; the cuts will cost trillions of dollars at a time when budgets are already strained, and impose steep additional costs throughout the economy.

any nation that accepts serious carbon emission cuts will place itself at a steep economic disadvantage compared to those nations that don’t.

Business executives whose companies will bear a large share of the costs of curbing carbon emissions have funded some very dubious science, and some even more dubious publicity campaigns, in order to duck those costs; academics have either tailored their findings to climb onto the climate change bandwagon, or whored themselves out to corporate interests willing to pay handsomely for anyone in a lab coat who will repeat their party line; politicians on both sides of the aisle have distorted facts grotesquely to further their own careers.

Beneath all the yelling, though, are a set of brutal facts nobody is willing to address. Whether or not the current round of climate instability is entirely the product of anthropogenic CO2 emissions is actually not that important, because it’s even more stupid to dump greenhouse gases into a naturally unstable climate system than it would be to dump them into a stable one. Over the long run, the only level of carbon pollution that is actually sustainable is zero net emissions, and getting there any time soon would require something not far from the dismantling of industrial society and its replacement with something much less affluent.

Even if it turns out to be possible to power something like an industrial society on renewable resources, the huge energy, labor, and materials costs needed to develop renewable energy and replace most of the infrastructure of today’s society with new systems geared to new energy sources will have to be paid out of existing supplies; thus everything else would have to be cut to the bone, or beyond.

I long ago lost track of the number of global warming bumper stickers I’ve seen on the rear ends of SUVs.

Nobody, but nobody, is willing to deal with the harsh reality of what a carbon-neutral society would have to be like. This is what makes the blame game so popular, and it also provides the impetus behind meaningless gestures of the sort that are on the table at Copenhagen.

a strong case can be made that the most viable option for anyone in a leadership position is to enjoy the party while it lasts, and hope you can duck the blame when it all comes crashing down.

the immediate costs of doing something about the issue are so high, and so unendurable, that very few people in positions of influence are willing to stick their necks out, and those who do so can count on being shortened by a head by others who are more than willing to cash in on their folly.

The Two Root Problems that Plague the United States: Too Much Debt and Corporate Influence in Politics

Nathan Martin sees two major problems clouding the future of the United States.

Link: Nathan's Economic Edge: FREEDOM’S VISION – Introduction….

There are currently two ROOT PROBLEMS that plague the United States:

1. Our current money system is comprised almost entirely of debt backed money. This system is only 38 years old and yet it has already reached the limits of mathematical growth. The economy, on every level, is saturated with debt. There is not enough income to mathematically EVER repay this debt, and thus CHANGE IS GOING TO HAPPEN, whether we like it or not, or whether we believe it or not. Any system that is designed in such a manner is mathematically destined to fail from conception.

2. We have lost sight of the purpose of CORPORATIONS. The concept of a corporation first came about when Europe was exploring the new world. This was a very expensive and risk filled proposition, wealthy individuals could lose everything by losing a ship at sea and subsequently having family members of the deceased sue them. Thus the necessary capital for exploration and advancement dried up. And out of that came the concept of limited liability. Thus the Corporation was born as a way to serve mankind so that exploration could continue.

Today, corporations seem to have risen to a special place, one that is higher than man. This is because capital has concentrated so greatly that corporations use their money to influence politicians and to write laws in their favor. Yes, this is an extension of the Golden Rule, whereby those with the gold make the rules. But it is now at such an extreme that politicians on the national stage cannot get elected without massive infusions of their money – and thus there is a circle that feeds into them and makes them even larger and more powerful.

These two root problems are now intertwined as some of the largest corporations in America are the ones who are producing and controlling the quantity of our money. They use their vast money to buy BOTH SIDES of political issues thus ensuring that their interests are represented. This super representation has got to stop as it affords a few individuals power and control over the majority who do not have the same access. This is NOT how our political system is supposed to work. This is why our solution addresses BOTH of these key issues – a sustainable future will not exist unless the balance of power is restored – that political and power balance will help to bring the quantity of money back under control as well.

Quite literally, the QUANTITY OF MONEY IS OUT OF CONTROL, especially when one considers the shadow banking world of derivatives. Just look at how quickly the math of debt went from millions to billions and now on to trillions. Did YOUR income advance by a like amount? No! And that is exactly why the inflationary math of debt backed money does not work.

Bill Still’s movie, “The Secret of Oz” presents history in a fascinating way, he then picks up on author L. Frank Baum’s symbolisms and spells them all out for you – The yellow brick road, the silver slippers, the Emerald City, the mindless Scarecrow, the heartless Tin Man, the cowardly Lion. Even the witches and flying monkeys have meanings that you will find fascinating.

This brings us to Bill Still’s quote from The Secret of Oz, “It’s not WHAT backs our money, it’s WHO CONTROLS its QUANTITY!”

There are four key words in that sentence that are simple to understand:

WHAT – The problem is that our money is now backed by debt. In the past, our dollar has been backed simply by the rule of law, debt free – supported by the “good faith and credit of the United States.” Such was the case with Colonial Script or Lincoln’s Greenbacks. The dollar has also been backed by both gold and by silver. While those who support commodity backed money have the right idea in that they seek to control the quantity of money, this has proven to be much harder in practice than in reality and is why today no modern country uses commodities to back their money. Yes, it is possible to create the national money debt free AND to control the quantity of money. What most reasonable people can agree is that of all the things NOT to have behind our money, debt is it!

WHO – There are two choices here, the government who represents the collective People, or the bankers who represent themselves as individuals. Currently it is the BANKERS who issue and control the quantity of money, not the government as most are led to believe. By design, the system is backed by debt and PRIVATE central bankers collect interest payments on the debt backed money from YOU. In other words, big banks get to collect hundreds of billions of dollars annually just so we can have the “privilege” of trading for goods with their private debt-based money. We know this sounds harsh, but it is true! This system concentrates the money power into the hands of a few allowing them control over politics and works to MINIMIZE FREEDOM for the vast majority of Americans.

CONTROL – Here’s the simple truth – NO SYSTEM OF MONEY has ultimately withstood the test of time. WHY? Could it be that regardless of WHAT backs the money or WHO controls the quantity, any time that the quantity of money gets out of control CONFIDENCE will eventually be lost? Of course. But throughout history, some systems have fared better than others. Is it possible to have the advantages of flexibility and to still keep prices under control? We think so, and we’re going to spell out how.

QUANTITY – Too little quantity and the economy will suffer. Too much quantity and the economy will also suffer, just in a different way. Finding the right balance, then, is where a sustainable and productive system will be found.

Flaws in the Financial Reforms (it’s the same old song)

John Mauldin, who understands the financial markets, is outraged at the proposed financial reforms. Here are the flaws, in his view.

How can we allow banks to be too big to fail?

Where is the reinstatement of Glass-Steagall? If we are going to allow large banks to exist, then their leverage must be reduced to the point where their failure would not risk the system and require taxpayer dollars. I don't care if that makes them less profitable. They are making those large profits because they have taxpayers implicitly behind them, and I get no dividend payments from them, the last time I checked.

Where is Fannie and Freddie reform (and their breakup)?

No mention of an exchange for credit default swaps?

This bill reads as if bank lobbyists wrote it. Where is the populist outrage? We have let the fox set up the rules for running the hen house. Shame on us all if we allow this to happen.

Perhaps the bank lobbyists did write it, and our "leaders" will just sign off on it and continue to over promise and over spend. That's what they do and they're good at it. This cannot end well.

Show Us the Money

John Michael Greer explains what will eventually happen to debt-infested and overspending governments who use financial paper to pay for real goods and services. Excerpts below.

Link: The Archdruid Report: The Twilight of Money

Over the last century, with the assistance of the economic hypercomplexity made possible by fossil fuels, the world’s industrial nations have taken the process of economic abstraction further than any previous civilization. On top of the usual levels of abstraction – a commodity used to measure value (gold), receipts that could be exchanged for that commodity (paper money), and promises to pay the receipts (checks and other financial paper) – contemporary societies have built an extraordinary pyramid of additional abstractions. Unlike the pyramids of Egypt, furthermore, this one has its narrow end on the ground, in the realm of actual goods and services, and widens as it goes up.

The consequence of all this pyramid building is that there are not enough goods and services on Earth to equal, at current prices, more than a small percentage of the face value of stocks, bonds, derivatives, and other fiscal exotica now in circulation. The vast majority of economic activity in today’s world consists purely of exchanges among these representations of representations of representations of wealth. This is why the real economy of goods and services can go into a freefall like the one now under way, without having more than a modest impact so far on an increasingly hallucinatory economy of fiscal abstractions.

An economy of hallucinated wealth depends utterly on the willingness of all participants to pretend that the hallucinations have real value. When that willingness slackens, the pretense can evaporate in record time. This is how financial bubbles turn into financial panics: the collective fantasy of value that surrounds tulip bulbs, or stocks, or suburban tract housing, or any other speculative vehicle, dissolves into a mad rush for the exits. That rush has been peaceful to date; but it need not always be.

Finally, of course, bubbles always pop. When that happens, the speculative vehicle du jour comes crashing back to earth, losing the great majority of its assumed value, and the mass of amateur investors, having lost anything they made and usually a great deal more, trickle away from the market. This has not yet happened to the current money bubble. It might be a good idea to start thinking about what might happen if it does so.

The effects of a money panic would be focused uncomfortably close to home, I suspect, because the bulk of the hyperexpansion of money in recent decades has focused on a single currency, the US dollar. That bomb might have been defused if last year’s collapse of the housing bubble had been allowed to run its course, because this would have eliminated no small amount of the dollar-denominated abstractions generated by the excesses of recent years. Unfortunately the US government chose instead to try to reinflate the bubble economy by spending money it doesn’t have through an orgy of borrowing and some very dubious fiscal gimmickry. A great many foreign governments are accordingly becoming reluctant to lend the US more money, and at least one rising power – China – has been quietly cashing in its dollar reserves for commodities and other forms of far less abstract wealth.

Up until now, it has been in the best interests of other industrial nations to prop up the United States with a steady stream of credit, so that it can bankrupt itself filling its self-imposed role as global policeman. It’s been a very comfortable arrangement, since other nations haven’t had to shoulder more than a tiny fraction of the costs of dealing with rogue states, keeping the Middle East divided against itself, or maintaining economic hegemony over an increasingly restive Third World, while receiving the benefits of all these policies. The end of the age of cheap fossil fuel, however, has thrown a wild card into the game. As world petroleum production falters, it must have occurred to the leaders of other nations that if the United States no longer consumed roughly a quarter of the world’s fossil fuel supply, there would be a great deal more for everyone else to share out. The possibility that other nations might decide that this potential gain outweighs the advantages of keeping the United States solvent may make the next decade or so interesting, in the sense of the famous Chinese curse.

Over the longer term, on the other hand, it’s safe to assume that the vast majority of paper assets now in circulation, whatever the currency in which they’re denominated, will lose essentially all their value. This might happen quickly, or it might unfold over decades, but the world’s supply of abstract representations of wealth is so much vaster than its supply of concrete wealth that something has to give sooner or later. Future economic growth won’t make up the difference; the end of the age of cheap fossil fuel makes growth in the real economy of goods and services a thing of the past, outside of rare and self-limiting situations. As the limits to growth tighten, and become first barriers to growth and then drivers of contraction, shrinkage in the real economy will become the rule, heightening the mismatch between money and wealth and increasing the pressure toward depreciation of the real value of paper assets.

Once again, though, all this has happened before. Just as increasing economic abstraction is a common feature of the history of complex societies, the unraveling of that abstraction is a common feature of their decline and fall. The desperate expedients now being pursued to expand the American money supply in a rapidly contracting economy have exact equivalents in, say, the equally desperate measures taken by the Roman Empire in its last years to expand its own money supply by debasing its coinage.

Atlanta: Water + Development = Political Contributions

I'm often amazed at how politicians think about key issues. Atlanta is facing a water shortage in the near future and the key concern is how it will affect development and developer money for politicians. Didn't over-development play a key role in the financial crisis?

Maybe people will just drink Coke products and Coke can increase it's contributions to the politicians for eliminating water as an option for quenching thirst.

Link: Cherokee Tribune – Water Wars.

On July 17 [2009], Judge Paul Magnuson ruled that the metro area [Atlanta] is not authorized to withdraw water from Lake Lanier, because supplying water is not among the purposes established for the lake, a U.S. Army Corps of Engineers project. The ruling came in connection with a long-standing legal battle among the states of Georgia, Alabama and Florida with regard to use of the Chattahoochee River, which was impounded to create Lake Lanier. If the three states can't come to some agreement in three years, Magnuson's ruling calls for water withdrawals from Lanier to be cut back to 1970s levels.

That's effectively a death sentence for metropolitan Atlanta, so it's easy to see why the ruling has apparently lit a fire under the state's formerly moribund chief executive.

Practically speaking, curtailing development in Atlanta could curtail the economy of the entire state.

Politically speaking, no development in Atlanta means no Atlanta developers, or bankers, or road contractors, or other folks who profit from residential, industrial and commercial development in the metro area, writing checks to political officeholders and office-seekers in Gov. Perdue's Republican Party.