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Daily Archives: October 24, 2013

Proof that NSA Spying Is Not Very Focused On Terrorism | Washington’s Blog

Proof that NSA Spying Is Not Very Focused On Terrorism | Washington’s Blog. (source)

Power, Money and Crushing Dissent Are Real Motives

The NSA not only spied on the leaders of GermanyBrazil and Mexico, but  on at least 35 world leaders.

The Guardian reports:

One unnamed US official handed over 200 numbers, including those of the 35 world leaders, none of whom is named. These were immediately “tasked” for monitoringby the NSA.

That’s just one incident we know about.   The NSA also spies on the European Union, the European Parliament,  the G20 summit and other allies.

The NSA asked government agencies to share their Rolodexes, so the NSA would have phone numbers for top foreign political and military leaders.

A confidential government memo admits that the spying didn’t help prevent terrorism:

The memo acknowledges that eavesdropping on the numbers had produced “little reportable intelligence”.

Because the leaders of allies such as Germany, Brazil, Mexico, the EU and G-20 have no ties to Al Qaeda terrorists, the spying was obviously done for other purposes.

The NSA conducts widespread industrial espionage on our allies. That has nothing to do with terrorism, either.

Indeed, there is no evidence that mass surveillance has prevented a single terrorist attack. On the contrary, top counter-terror experts say that mass spying actually hurts U.S. counter-terror efforts(more here and here).

If NSA spying were really focused on terrorism, our allies and companies wouldn’t be fighting back so hard against it.

And even the argument that 9/11 changed everything holds no water.  Spying started before 9/11 … andvarious excuses have been used to spy on Americans over the years.   Even NSA’s industrial espionage has been going on for many decades. And the NSA was already spying on American Senators more than40 years ago.

Governments who spy on their own population always do it to crush dissent. (Why do you think that the NSA is doing exactly the same thing which King George did to the American colonists … which led to the Revolutionary War?)

Of course, if even half of what a NSA whistleblower Russel Tice says – that  (and see this) – then things arereally out of whack.

 

The boom and bust cycle | Zero Hedge

The boom and bust cycle | Zero Hedge. (source)

This post was first published at Bawerk.net. You may also follow us on @EBawerk

As is clear to all with half a brain the production of un-backed fiat money distorts the economic system. Simply told, when an entity in society is given monopoly to manufacture medium of exchange at its own discretion they will harness this power. Slowly at first, unsure about its effects, but always testing the limits of the privilege bestowed upon them.

As always, they will overexploit the power. They will manufacture money and give it to the masters that coercively secure the continuation of the power. The masters will obviously spend the money, creating a transaction in whichnothing is payment for something. These transactions are by definition unsustainable because they violates Say`s law. We call them “bubbles”

In a free market supply is used to create its own demand. When people spend fiat money they exercise demand without providing supply. Said in other words, spending fiat money is tantamount to capital consumption and makes society poorer.

While the boom that follows money spending feels good, it must inevitably come to an end because the economic system cannot maintain the constellation that was induced by the money printing in the first place. Within the boom lays the seed for the necessary bust.

We have made a metric that sums up fiat money in its purest sense and compared that to the underlying trend growth of nominal GDC.

Our hypothesis is simple: if money growth exceeds the GDC metric a deflationary busts will inevitably come. If authorities refuse to accept reality and print more fiat money at the first sign of bust, they may “save the day” but they will “ruin tomorrow”!

For every action taken there will be an equal and opposite reaction! When the fiat masters go too far they create the set-up for an imminent deflation.

We looked at this relationship and as the chart below show, a boom-bust cycle based on monetary expansion is clearly visible..

Source: Federal Reserve of St. Louis (FRED), own calculations

Our main concern is obviously what happens when the equal, but opposite reaction comes as a consequence to the monetary experiment dubbed the “Bernanke-put”.

A secondary concern is indirectly derived from this. Money printing tears the social fabric apart and people react by taking up massive amounts of debt; debt that will never be repaid in currency units of equal purchasing power.

Now, if the equal reaction comes, that will raise the real burden of outstanding debt, which consequently will bankrupt all debtors.

The next chart looks at various sovereigns’ roll-over risk for 2014. The exceptionally large amount of debt taken on since the financial bust in 2008 will forever constitute a massive risk for the issuing country as debt is never repaid, only rolled-over, that is old debt is paid with new debt.

Source: Bloomberg, International Monetary Fund (IMF – WEO), own calculations

By this it is obvious to us that deflation simply cannot be allowed to happen! Our monetary masters will lose everything if they even flirt with the mere idea! Witness the taper scare this summer!

And since we are getting close to the next cycle low, why even bother try

Source: National Bureau of Economic Research (NBER), Bureau of Labor Statistics (BLS), own calculations

Concluding Remarks

We leave the last word to the real Maestro

“There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved.”

– Ludwig von Mises

The World Complex: Economic policy and the price of gold

The World Complex: Economic policy and the price of gold. (source)

Economic policy and the price of gold

Then the rumour circulated that at night the Fed Governors neglected their sacrifices and prayers. A great depression seized everyone. One day the President said to the Fed Chief, “When will we celebrate the return of normal unemployment rates? I would like to make a journey and return in time for the feast. How long is it until the day of the feast?” The Fed Chief was embarrassed. It had been several days since she had looked at the moon and the stars. She had learned nothing more about their courses. The Fed Chief said, “Wait one more day and I will tell you.” The President said, “Thank you. Tomorrow I will come to see you again.”

The Fed Chief gathered the Fed Governors together and asked, “Which of you lately has observed the course of the stars?” None of Fed Governors answered, because they had all stayed to listen to the stories of Fiat-do-lar. The Fed Chief asked again, “Hasn’t even one of you observed the course of the stars and the position of the moon?”

— modified from The Ruin of Kasch

Economics isn’t a science. It is a mistake to think it would be so. Science does not have schools. Only philosophies have schools.

The difference between a science and a philosophy is the difference between seeking truth while honestly admitting you don’t know it and declaring that truth is something you define.

Ideally science is described by working hypotheses, which are constantly tested, and if falsified, replaced (unless pride is involved or money). In philosophy, you begin with axioms, which are untestable statements that are defined as being true. Each school of economics has its own set of axioms. From axioms, you apply rules of inference (logic) in order to generate new statements, which are also true. These generated statements are called theorems. Thus all theorems are true (within the school of philosophy) but not necessarily applicable to the real world!

In the early days of geology, there were competing schools: the Neptunists and thePlutonists being two that come to mind immediately. The Neptunists believed that all rocks formed in the sea, either as sediments, or by crystallization as salts (this was their central axiom). The Plutonists believed that all rocks formed from magma (as their central axiom). Debates between adherents of the two schools were rowdy, fruitless affairs, because the nature of philosophy is that it cannot be overturned by mere observations.

The distinction between science and philosophy with respect to economics is important because economists have an annoying ability to set policy–policy that affects the quality of your lives. It probably doesn’t matter much to you whether some geologists can’t decide among themselves whether a particular rock formed in the sea or on a volcano (or even on a volcano in the sea). But it does make a difference if some Fed official acts on her belief thatbankrupting the elderly eliminating interest on savings is a cure for unemployment.

Application of economic policy follows the axiomatic approach. Some high priest of an obscure caste

Recently, The World Complex presented the inverse correlation between the unemployment rate in the UK and its “confidence ratio” (dollar value of public debt divided by the dollar value of gold holdings). The idea was that a high ratio could only be supported if bondholders had high confidence that the debt would be properly serviced (forget about repayment). The flip side is that a high ratio could be interpreted as a measure of a country’s ruin.

In the article I had suggested that government economists might cheer a decline in the price of gold.

So today, we look at the same relationship for the United States.

Once again we see a strong inverse relationship between confidence ratio and unemployment.

One of the goals set out for the Federal Reserve is to manage the unemployment rate. Looking at this chart, the answer is clear–to reduce unemployment, increase the confidence. Confidence (as defined above) can be increased in three ways: 1) raise debt, 2) sell gold, 3) lower the gold price.

Of course we all know that correlation does not imply causation. But it doesn’t have to in order to impact on Fed policy. That’s the beauty of politics–reality and truth don’t really matter when there are elections to be won.

There was a comment that perhaps I have too much time on my hands. I’m not sure if the intent was to say that only someone with a lot of time on his hands would notice this relationship. The economists at the Fed have far more PhD’s and time on their hands than does this corner of webspace. So I’m sure they have already seen this.

So the question becomes–even if no causation can be established, can it be used to set policy? And what policies will be followed?

Raising debt is the old standby–but as we see in the clarified chart below, it doesn’t seem to be working anymore.

Since the 2001 peak (on September 10, perhaps?), the increasing debt has been more than compensated by the rising price of gold. Don’t be fooled into thinking the US is sinking into solvency–it is creating debt faster than any time in history. But the price of gold has been rising faster still (although we shall see about 2013).

It appears that policy #2, the sale of gold, is politically untenable. Officially at least. Selling gold is for lesser countries. So that leaves option #3–hope the price of gold falls. Perhaps they do more than hope.

. . . at first the story of Fiat-do-lar was like hashish when it makes wakefulness happy. Then the story was like hashish when it makes dreams delirious. Toward morning, Fiat-do-lar raised his voice. As the Nile rises in the hearts of men, so his words swelled. To some, his words brought serenity; to others, they were as terrifying as the appearance of Azrael, the angel of death. Happiness filled the spirits of some, horror the hearts of others. The closer morning came, the mightier that voice grew and the more it resounded within the people. The hearts of men rose up against one another like clouds in the sky on a stormy night. Flashes of wrath met thunderbolts of fury. When the sun rose, the tale of Fiat-do-lar reached its end. Ineffable wonder filled the confused minds of the people. For when the living looked around, their gaze fell upon the Fed Chief and Governors. They were stretched out on the ground, dead.

— modified from The Ruin of Kasch

 

Rampant corruption, massive protests. Is Eastern Europe coming undone? – World – CBC News

Rampant corruption, massive protests. Is Eastern Europe coming undone? – World – CBC News. (source)

It’s the “Wild East” of the European Union. Here nationalism, cronyism,anti-Semitism, anti-Roma racism and corruption — above all corruption— strut and dominate the public arena.

Where to begin?

Perhaps in the Czech Republic. They’re holding parliamentary elections on the weekend. The reason? The Czech government collapsed because the prime minister, Petr Nečas, was forced to resign.

His senior aide, who was also his lover and is now his wife, had ordered the country’s security services to spy on the prime minister’s then wife and report back. The aide wanted to push through a speedy divorce.

Then there’s Romania where large street demonstrations against corruption are the order of the week, the month, the year, not to mention last year and the year before.

The demonstrations have brought down ministers and governments without ending the problem.

The added twist this fall is that the demonstrations have been against corruption AND the development of the Rosia Montana open-pit gold mine, the biggest in Europe, which is owned by a Canadian company.

Next door, in Bulgaria, things are even wilder. In February, 100,000 people stormed through the streets protesting against unemployment, corruption and high electricity prices. The government resigned.

In June, a new government appointed a so-called security czar, Delyan Peevski, a 32 year old referred to coyly as “a media mogul with dubious friends.”

He also had no experience in policing or security. Within 36 hours he was gone, the victim of a huge public backlash. The backlash continued for 40 days, with demonstrations getting bigger and bloodier.

The irony is that bringing these countries into the union in the last dozen years was supposed to be the first step to emptying the swamp of corruption.

Petr NecasFormer Czech prime minister Petr Necas shown here attending a party congress in 2012. The woman behind him is Jana Nagyova, the former aide, now his wife, who precipitated the Necas government downfall and was charged with abuse of power and bribery. (Petr Josek Snr / Reuters)

Each of these nations had to sign “governance agreements” that committed them to cleaning up their acts. That clean-up hasn’t happened.

Instead European money, rivers of it, has flowed in to build roads, restore buildings and improve a stagnant infrastructure.

Large chunks of that money has simply gone missing. In effect, Europe has magnified, not reduced, the corruption problem by putting more cash up for grabs.

Hungary, a special case

Hungary doesn’t quite fit the mould of the other three countries as it combines nationalism, corruption and the rise of the extreme right.

Once, a dozen years ago, Viktor Orban, Hungary’s prime minister, was hailed by outsiders as the best post-Communist leader the country had had.

Now, three years after his return to power in 2010 he has become a strident nationalist who denounces Brussels, the headquarters of the European Union, of which his country is a member, as the “new Moscow.”

The EU parliament returned the compliment, officially rebuking his government for working to strip the Hungarian judiciary and media of their independence and for rewriting the country’s constitution to suit its whims.

But that’s only a taste of Hungary’s current anxieties.

The country’s fastest growing party is Jobbik, an extreme right-wing group that polled 17 per cent in the 2010 elections, largely by attacking the Roma minority (roughly 800,000 in a country of 10 million) in virulent terms.

Jobbik HungarySupporters of the Hungarian far-right Jobbik party take part in an anti-Roma demonstration at the Avas apartment projects in Miskolc, about 180 km east of Budapest last year. (Bernadett Szabo / Reuters)

Roma were “Gypsy criminals,” Jobbik leader Gabor Vona, shouted from podiums. Other Jobbik leaders railed against “Jews and financiers” as well.

Jobbik created its own vigilante group, calling it the Hungarian Guard and giving it uniforms and symbols that intentionally recalled those of the pro-Nazi militia of the 1930s and ’40s.

The Orban government tolerated this and then, this spring, went further when its minister of culture awarded the country’s highest award for journalism to a man who had called the Roma “monkeys” and was known for his scarcely-veiled anti-Semitic remarks.

Oligarchs and mafia

Hungary’s position on the Roma is the most glaring, but official attitudes towards that group in all four countries are unforgiving.

It’s an ongoing headache for Brussels and for countries like France that find themselves trying, and failing, to cope with the inflow of Roma from Eastern Europe.

Just as worrying for Brussels is the continuing rampant corruption in these former Soviet satellites.

Bulgaria is the worst case. It is the poorest country in the EU and many leaders in Brussels, not to mention the legion of Bulgarian protestors, believe that much the state is beholden to “oligarchs” or “mafias.”

So glaring is the problem that when tens of thousands of protesters filled the streets of Sofia, the Bulgarian capital, this summer to denounce corruption and the government, European justice commissioner Viviane Reding went along, to meet the demonstrators, and tweeted, “Here in Sofia my sympathy is with Bulgarian citizens who are protesting against corruption.”

Alas, the tweets and weeks of protests were not enough to force the government to resign.

Roma HungaryA Roma man stands amid his wares in one of eastern Europe’s largest flea markets near Devecser, Hungary, the site of a huge anti-Roma protest last year. (Laszlo Balogh / Reuters)

Compared to Bulgaria, the Czech Republic is far richer but hardly immune from corruption and cronyism. In the two-year period before Nečas was forced to resign, a former defence minister, a former top aide to a prime minister, an MP and governor of a large province and the mayor of Prague were all charged with crimes relating to fraud, bribes and corruption.

In Romania, a report in July by the country’s National Agency for Integrity said that half the mayors should resign because of conflicts of interest. They sat on the boards of companies their cities were giving contracts to.

Throughout all of this, EU leaders look on and cluck censoriously. They do little more.

It has been less than a quarter-century since these countries cast off the Communist yoke. But whether it’s the centralization of all power, as in Hungary, or the dead hand of corrupt elites, the ways learned in the days of Soviet domination persist.

The Wild East still thrives.

 

 

 

Whistleblower lawsuit says CN is cooking its books – CBC News – Latest Canada, World, Entertainment and Business News

Whistleblower lawsuit says CN is cooking its books – CBC News – Latest Canada, World, Entertainment and Business News. (source)

A whistleblower lawsuit in the United States is accusing CN Rail of fudging its numbers to increase executive bonuses and to make it appear to be North America’s most efficient railroad for investors.

Tim Wallender, a former CN trainmaster based at the company’s Harrison Yard in Memphis, Tenn. has filed a lawsuit under the U.S. Sarbanes-Oxley Act — which was passed into law to protect whistleblowers following the Enron scandal in the early 2000s.

CN is asking that Wallender’s claims that it routinely reported fraudulent efficiency statistics to shareholders and customers be thrown out. CN claims he repeatedly reported train movements falsely and got fired for it.

Wallender, 42, does not deny fudging the numbers but insists he was ordered to by his boss.

tim-wallender.jpgTim Wallender filed a whistle-blower lawsuit against CN in August claiming he was fired trying to expose a ‘pervasive fraud’ within the company. (CBC)

He alleges in his suit that his managers made large bonuses, and the company was able to promote itself as being 20 to 25 per cent more efficient than its competitors, by creating favourable statistics that “were based on a persistent and pervasive fraud.”

None of these allegations has been proven in court.

“My (general) superintendent was always talking about how he had carte blanche to do whatever he had to do to make it work in Memphis,” Wallender told CBC News in an interview in Mobile, Ala. where he’s now working for a different railroad. “He would talk about how him and [then-CN vice president] Keith Creel were so tight and how they talked every day and he had permission to do whatever he needed to do.

“What do I do? — that’s my livelihood, this job. Without it I have no insurance, no pay, no benefits, nothing. “

Wallender outlines how to misreport ‘efficiencies’

Wallender claims he and other lower-end employees were asked to tamper with “dwell time” statistics — an industry measure of how long freight trains sit in a yard — to make it appear that trains moved quickly. The crucial reporting time was 5 a.m., and if trains arrived later their dwell time clocks would not start until the next morning.

The goal, Wallender alleges, was to get trains out of the yard just before 5 a.m., or have them arrive just after, either by moving the train so it could trigger time-stamp sensors, or by adjusting the clock in the company computers.

They also reported cars were either broken or delivered to the customers — so they would be taken off the clock — when in each case they would still be in the yard, he claims in his lawsuit.

Another trick was to move a train onto a ghost or dummy track which did not get monitored on the company’s computer, he claims.

“I’m telling you everybody knew about this,” said Wallender, who originally hails from Wisconsin. “It’s a common practice. I know it happened in Chicago, Champagne, Memphis, Jackson — it happened all over the U.S.”

According to CN documents related to the case, the company did audits of the Memphis yard — three times before Wallender’s dismissal in September 2012 — and indeed found several employees were falsifying efficiency records.

“I am extremely disappointed to learn about these reporting infractions,” wrote Creel in a February 2012 letter. The letter acknowledged other reporting scams at CN, not listed above. “It cannot and will not be tolerated. We have an obligation to our customers and shareholders to continue our pursuit of ‘service excellence.'”

But Wallender says Creel’s letter was just “lip service” to the idea that the company cared about accurately reporting its efficiency ratings to the stock market.

“The allegations in this matter are unfounded and factually incorrect,” said Creel, who is no longer with CN. “I have, and always will, hold all employees to the highest ethical standards and the facts in this case will reflect that.”

Wallender ‘disciplined’

Because of a December 2011 audit, Wallender was to be disciplined. He brought a tape recorder with him to the meeting with his boss, general superintendent Andrew Martin.

“I was supposed to be [suspended] for two days, lose two days’ pay, and [they were going to] put a letter in my file,” recalls Wallender.

CBC has obtained a copy of the recording in which Martin can be heard saying: “I’m suspending you for two days, but I’m suspending you for two days to put you on your off days… I have to draft this letter. I’m going to give you a copy of this letter. I ain’t gonna never send it” to human resources.

“He never told me to stop,” said Wallender, echoing arguments in his lawsuit.  “He just said ‘Don’t be so perfect on the report next time.'”

A complaint against Martin from another railway worker in the summer of 2012 led to the investigation that led, Wallender claims, to his demise at CN.

Wallender handed over emails of the instructions he had received to fudge CN’s numbers, and his audiotape of his discussion with Martin, to CN’s human resources investigator.

He recalls telling the investigator: “I’m done lying. If I get fired for this, which I expect to do, at least I can walk away with my head up, that I got fired for telling the truth.”

He was fired the following month, CN claims, for continuing to fudge the numbers. After his dismissal, he pointed out to his bosses how others were continuing to fudge the numbers, and his access to CN’s computers was cut off.

Wallender’s lawyer, Bill McMahon of the Chicago law firm Hoey & Farina, said Martin got a slap on the wrist after the review, “and continues to be employed at CN. The only person who got terminated, who lost his job, is the man who came forward with the concrete irrefutable evidence of the statistical manipulations of efficiency ratings in the Harrison yard.”

CN’s response

CN told CBC News yesterday, in a three-page email from spokesman Mark Hallman, that CN “collects data to make informed business and operational decisions. The notion that CN would condone any misreporting in that context is untenable.”

CN ignored many of the CBC’s requests, including a question about why their computer software is so easily manipulated to change data, but they did say that through their auditing process CN has found “only a limited number of reporting issues which did not affect the integrity of the data that the Company has reported to the rest of the rail industry.”

Although it boasts of its dwell time and train speed on its website and heralded a five-percent drop in dwell time in this week’s third quarter report to the market, CN says its “operating metrics such as yard dwell are performance indicators that are not included in any part of CN’s audited financial reports that are sent to shareholders and securities regulators.”

Hallman added that the Montreal-based company’s “decision to terminate Mr. Wallender was fully warranted given his history of misreporting, management’s repeated admonishments for such misreporting, and Mr. Wallender’s brazen disregard and continued misreporting of data even after he was ordered to cease such practices. Mr. Wallender’s termination illustrates the seriousness of CN’s approach to insure data integrity.”

Former CN employees back Wallender claims

However, two former employees of the Memphis yard have come forward to CBC to back up some of Wallender’s claims.

toby lehmanToby Lehman quit CN this past year and alleges he witnessed minor derailment cover-ups and improper manipulation of company records. (CBC)

Toby Lehman, a former CN yardmaster in Memphis, put in the aforementioned complaint about Martin because he and others were constantly being harassed to falsely report the efficiency statistics of the yard, such as by inputting false arrival and departure times. When nothing was done for three months, he sent a complaint further up the chain of command, and an investigation commenced that, he believes, led to Wallender’s dismissal.

“I apologized to Tim — he was just backing me up with his evidence,” said Lehman, who has since left CN for another company. “Even after Tim got fired,” the manipulation of the train’s arrival and departure times continued, said Lehman.

A former clerk at the Memphis yard, Sara Welch Wood, also jumped to Wallender’s defence, saying employees shouldn’t be made to choose between their jobs and doing the right thing.

She remembers the fear that went through the office if employees didn’t find a way to make cars disappear so they wouldn’t be on the 5 a.m. report.

“There were a lot of different times that I didn’t want to deal with the hassle of getting chewed out,” recalls Wood, 30, who is now a nursing student. “At 4:45 those cars were miraculously gone. There were several times I’d show them at a different yard,” though they were still at Harrison in Memphis, she said.

“I felt bad because I knew I was lying about it. So you’re in between making your supervisors happy and lying. That was one of the reasons it was such a stressful job. It never feels good to lie.”

In his lawsuit, Wallender alleges that “Creel — whose compensation substantially depends on a high price for Canadian National’s shares — protected Martin from discipline, gave a green light for Martin’s misconduct, and gave Martin carte blanche to continue the misconduct that protected and increased the value of his stock options.

Martin, who remains the general superintendent of the Harrison Yard, did not respond to messages.

Wallender’s lawyer, McMahon, said the victim in this case is just not Wallender, who suffered the indignity of being fired, losing his income and his health insurance for himself and his daughter who is suffering from a chronic illness, but all employees of CN.

McMahon said that what the U.S. has learned from the Madoff, Enron and Worldcom scandals is that the “real victims that we know from this type of corporate malfeasance are the employees, their families and the people that rely upon these corporations to accurately and professionally manage their businesses in order to provide a job.”

Wallender got a job with another railroad in the southern U.S. where he is happy to accurately report figures on the company’s efficiency, but he wishes CN well. “There are a lot of good people there. The problem I had with all the cheating is you can’t fix anything unless you know it’s broken.

“And by us hiding everything, nobody knows it’s broken.”

If you have any information or tips related to this story, contact John Nicol or Dave Seglins.

 

 

 

The REAL Reason for Saudi Arabia’s Shift Away from U.S. | Washington’s Blog

The REAL Reason for Saudi Arabia’s Shift Away from U.S. | Washington’s Blog. (source)

Last month the world witnessed a paradigm shift: China surpassed the United States as the world’s largest consumer of foreign oil, importing 6.3 million barrels per day compared to the United States’ 6.24 million. This trend is likely to continue and this gap islikely to grow, according to the EIA’s October short-term energy outlook. Wood Mackenzie, a leading global energy consultancy, echoed this prediction, estimatingChinese oil imports will rise to 9.2 million barrels per day (70% of total demand) by 2020.

World Liquid Fuels Consumption

Forget Syria, Iran and Bahrain … the stated reasons for the Saudi shift.

Those are all real … but the much bigger driver is oil. Indeed, most geopolitical policy is based upon oil(and here) and gas.

 

ClubOrlov: The Sixth Stage of Collapse

ClubOrlov: The Sixth Stage of Collapse. (source)

I admit it: in my last book, The Five Stages of Collapse, I viewed collapse through rose-colored glasses. But I feel that I should be forgiven for this; it is human nature to try to be optimistic no matter what. Also, as an engineer, I am always looking for solutions to problems. And so I almost subconsciously crafted a scenario where industrial civilization fades away quickly enough to save what’s left of the natural realm, allowing some remnant of humanity to make a fresh start.
Ideally, it would start of with a global financial collapse triggered by a catastrophic loss of confidence in the tools of globalized finance. That would swiftly morph into commercial collapse, caused by global supply chain disruption and cross-contagion. As business activity grinds to a halt and tax revenues dwindle to zero, political collapse wipes most large-scale political entities off the map, allowing small groups of people to revert to various forms of anarchic, autonomous self-governance. Those groups that have sufficient social cohesion, direct access to natural resources, and enough cultural wealth (in the form of face-to-face relationships and oral traditions) would survive while the rest swiftly perish.
Of course, there are problems even with this scenario. Take, for instance, the problem of Global Dimming. The phenomenon is well understood: sunlight reflected back into space by the atmospheric aerosols and particulates generated by burning fossil fuels reduces the average global temperature by well over a degree Celsius. (The cessation of all air traffic over the continental US in the wake of the terrorist attacks of 9/11 has allowed climate scientists to measure this effect.) If industrial activity were to suddenly cease, average global temperatures would be jolted upward toward the two degree Celsius mark which is widely considered to be very, very bad indeed. Secondly, even if all industrial activity were to cease tomorrow, global warming, 95% of which is attributed to human activity in the latest (rather conservative and cautious) IPCC report, would continue apace for the better part of the next millennium, eventually putting the Earth’s climate in a mode unprecedented during all of human existence as a species.
On such a planet, where the equatorial ocean is hotter than a hot tub and alligators thrive in the high Arctic, our survival as a species is far from assured. Still, let’s look at things optimistically. We are an adaptable lot. Yes, the seas will rise and inundate the coastal areas which over half of us currently inhabit. Yes, farmland further inland will become parched and blow away, or be washed away by the periodic torrential rains. Yes, the tropics, followed by the temperate latitudes, become so hot that everyone living there will succumb of heat stroke. But if this process takes a few centuries, then some of the surviving bands and tribes might find a way to migrate further north and learn to survive there by eking out some sort of existence in balance with what remains of the ecosystem.
We can catch glimpses of what such survival might look like by reading history. When Captain James Cook landed on the shore of Western Australia, he was the first white man to encounter aboriginal Australians, who had up to that point persisted in perfect isolation for something like 40.000 years. (They arrived in Australia at about the same time as the Cromagnons displaced the Neanderthals in Europe.) They spoke a myriad different languages and dialects, having no opportunity and no use for any sort of unity. They wore no clothes and used tiny makeshift huts for shelter. They had few tools beyond a digging stick for finding edible roots and a gig for catching fish. They had no hoards or stockpiles, and did not keep even the most basic supplies from one day to the next. They had little regard for material objects of any sort, were not interested in trade, and while they accepted clothes and other items they were given as presents, they threw them away as soon as Cook and his crew were out of sight.
They were, Cook noted in his journal, entirely inoffensive. But a few actions of Cook’s men did enrage them. They were scandalized by the sight of birds being caught and placed in cages, and demanded their immediate release. Imprisoning anyone, animal or person, was to them taboo. They were even more incensed when they saw Cook’s men catch not just one, but several turtles. Turtles are slow-breeding, and it is easy to wipe out their local population by indiscriminate poaching, which is why they only allowed the turtles to be taken one at a time, and only by a specially designated person who bore responsibility for the turtles’ welfare.
Cook thought them primitive, but he was ignorant of their situation. Knowing what we know, they seem quite advanced. Living on a huge but arid and mostly barren island with few native agriculturally useful plants and no domesticable animals, they understood that their survival was strictly by the grace of the surrounding natural realm. To them, the birds and the turtles were more important than they were, because these animals could survive without them, but they could not survive without these animals.
Speaking of being primitive, here is an example of cultural primitivism writ large. At the Age of Limits conference earlier this year, at one point the discussion turned to the question of why the natural realm is worth preserving even at the cost of human life. (For instance, is it OK to go around shooting poachers in national parks even if it means that their families starve to death?) One fellow, who rather self-importantly reclined in a chaise lounge directly in front of the podium, stated his opinion roughly as follows: “It is worth sacrificing every single animal out there in order to save even a single human life!” It took my breath away. This thought is so primitive that my brain spontaneously shut down every time I tried to formulate a response to it. After struggling with it for a bit, here is what I came up with.
Is it worth destroying the whole car for the sake of saving the steering wheel? What use is a steering wheel without a car? Well, I suppose, if you are particularly daft or juvenile, you can use it to pretend that you still have a car, running around with it and making “vroom-vroom!” noises… Let’s look at this question from an economic perspective, which is skewed by the fact that economists tend view the natural realm in terms of its economic value. This is similar to you looking at your own body in terms of its nutritional content, and whether it would make good eating. Even when viewed from this rather bizarre perspective that treats our one and only living planet as a storehouse of commodities to be plundered, it turns out that most of our economic “wealth” is made possible by “ecosystem services” which are provided free of charge.
These include water clean enough to drink, air clean enough to breathe, a temperature-controlled environment that is neither too cold nor too hot for human survival across much of the planet, forests that purify and humidify the air and moderate surface temperatures, ocean currents that moderate climate extremes making it possible to practice agriculture, oceans (formerly) full of fish, predators that keep pest populations from exploding and so on. If we were forced to provide these same services on a commercial basis, we’d be instantly bankrupt, and then, in short order, extinct. The big problem with us living on other planets is not that it’s physically impossible—though it may be—it’s that there is no way we could afford it. If we take natural wealth into account when looking at economic activity, it turns out that we consistently destroy much more wealth than we create: the economy is mostly a negative-sum game. Next, it turns out that we don’t really understand how these “ecosystem services” are maintained, beyond realizing that it’s all very complicated and highly interconnected in surprising and unexpected ways. Thus, the good fellow at the conference who was willing to sacrifice all other species for the sake of his own could never be quite sure that the species he is willing to sacrifice doesn’t include his own.
In addition, it bears remembering that we are, in fact, sacrificing our species, and have been for centuries, for the sake of something we call “progress.” Aforementioned Captain Cook sailed around the Pacific “discovering” islands that the Polynesians had discovered many centuries earlier, his randy, drunken, greedy sailors spreading venereal disease, alcoholism and corruption, and leaving ruin in their wake wherever they went. After the plague of sailors came the plague of missionaries, who made topless Tahitian women wear “Mother Hubbards” and tried to outlaw fornication. The Tahitians, being a sexually advanced culture, had a few dozen different terms for fornication, relating to a variety of sex acts. Thus the missionaries had a problem: banning any one sex act wouldn’t have made much of a dent, while a ban that enumerated them all would read like theKama Sutra. Instead the missionaries chose to promote their own brand of sex: the “missionary position,” which is best analyzed as two positions—top and bottom. The bottom position can enhance the experience by taking a cold shower, applying blue lipstick and not breathing. I doubt that it caught on much on Tahiti.
The Tahitians seem to have persevered, but many other tribes and cultures simply perished, or continue to exist in greatly diminished numbers, so depressed by their circumstances that they are not interested in doing much beyond drinking beer, smoking cigarettes and watching television. And which group is doing the best? That’s the one that’s been causing the most damage. Thus, the rhetoric about “saving our species from extinction” seems rather misplaced: we have been doing everything we can to drive it to extinction as efficiently as possible for a few centuries now, and we aren’t about to stop because that would be uncivilized.
Because, you see, that’s who we are: we are educated, literate, civilized persons. The readers of this blog especially are economically and environmentally enlightened types, their progressivism resting on the three pillars of pointing out financial Ponzi schemes, averting environmental devastation and eating delicious, organic, locally grown food. We do wish to survive collapse, provided the survival strategy includes such items as gender equality, multiculturalism, LGBT-friendiness and nonviolence. We do not wish to take off all of our clothes and wander the outback with a digging stick looking for edible tubers. We’d rather sit around discussing green technology over a glass of craft-brewed beer (local, of course) perhaps digressing once in a while to consider the obscure yet erudite opinions of one Pederasmus of Ülm on the endless, glorious ebb and flow of human history.
We don’t want to change who we are in order to live in harmony with nature; we want nature to live in harmony with us while we remain who we are. In the meantime, we are continuing to wage war on the sorry remnants of the tribes that had once lived in balance with nature, offering them “education,” “economic development” and a chance to play a minor role in our ruinous, negative-sum economic games. Given such options, their oft-observed propensity to do nothing and stay drunk seems like a perfectly rational choice. It minimizes the damage. But the damage may already have been done. I will present just two examples of it, but if you don’t like them, there are plenty of others.
For the first, you can do your own research. Buy yourself an airline ticket to a tropical paradise of your choice and check into an oceanside resort. Wake up early in the morning and go look at the beach. You will see lots of dark-skinned people with wheelbarrows, buckets, shovels and rakes scraping up the debris that the surf deposited during the night, to make the beach look clean, safe and presentable for the tourists. Now walk along the beach and beyond the cluster of resorts and hotels, where it isn’t being continuously raked clean. You will find that it is so smothered with debris as to make it nearly impassable. There will be some material of natural origin—driftwood and seaweed—but the majority of the debris will be composed of plastic. If you try to sort through it, you will find that a lot of it is composed of polypropylene and nylon mesh and rope and styrofoam floats from the fishing industry. Another large category will consist of single-use containers: suntan lotion and shampoo bottles, detergent bottles, water bottles, fast food containers and so on. Typhoons and hurricanes have an interesting organizing effect on plastic debris, and you will find piles of motor oil jugs next to piles of plastic utensils next to piles of water bottles, as if someone actually bothered to sort them. On a beach near Tulum in México I once found an entire collection of plastic baby sandals, all of different colors, styles and vintages.
Left on the beach, the plastic trash photo-degrades over time, becoming discolored and brittle, and breaking down into smaller and smaller pieces. The final result of this process is a microscopic plastic scum, which can persist in the environment for centuries. It plays havoc with the ecosystem, because a wide variety of animals mistake the plastic particles for food and swallow them. They then clog their digestive tracts, causing them to starve. This devastation will persist for many centuries, but it has started already: the ocean is dying. Over large areas of it, plastic particles outnumber plankton, which forms the basis of the oceanic food chain.
The ravages of the plastics plague also affect land. Scraped together by sanitation crews, plastic debris is usually burned, because recycling it would be far too expensive. Plastic can be incinerated relatively safely and cleanly, but this requires extremely high temperatures, and can only be done at specialized facilities. Power plants can burn plastic as fuel, but plastic trash is a diffuse energy source, takes up a lot of space and the energy and labor costs of transporting it to power plants may render it energy-negative. And so a lot of plastic trash is burned in open pits, at low temperatures, releasing into the atmosphere a wide assortment of toxic chemicals, including ones that affect the hormonal systems of animals. Effects include genital abnormalities, sterility and obesity. Obesity has now reached epidemic proportions in many parts of the world, affecting not just the humans but other species as well. Here, then, is our future: chemical plants continue to churn out synthetic materials, most of these find their way into the environment and slowly break down, releasing their payload of toxins. As this happens, people and animals alike turn into obese, sexless blobs. First they find that they are unable to give birth to fertile male offspring. This is already happening: human sperm counts are dropping throughout the developed world. Next, they will be unable to give birth to normal male babies—ones without genital abnormalities. Next, they will be unable to produce male offspring at all, as has already happened to a number of marine species. Then they go extinct.
Note that no disaster or accident is required in order for this scenario to unfold, just more business as usual. Every time you buy a bottle of shampoo or a bottle of water, or a sandwich that comes wrapped in plastic or sealed in a vinyl box, you help it unfold a little bit further. All it takes is for the petrochemical industry (which provides the feedstocks—oil and natural gas, mostly) and the chemical plants that process them into plastics, to continue functioning normally. We don’t know whether the amount of plastics, and associated toxins, now present in the environment, is already sufficient to bring about our eventual extinction.
But we certainly don’t want to give up on synthetic chemistry and go back to a pre-1950s materials science, because that, you see, would be bad for business. Now, you probably don’t want to go extinct, but if you decided that you will anyway, you would probably want to remain comfortable and civilized down to the very end. And life without modern synthetics would be uncomfortable. We want those plastic-lined diapers, for the young and the old!
This leaves those of us who are survival-minded, on an abstract, impersonal level, wishing for the global financial, commercial and political collapse to occur sooner rather than later. Our best case scenario would go something like this: a massive loss of confidence and panic in the financial markets grips the planet over the course of a single day, pancaking all the debt pyramids and halting credit creation. Commerce stops abruptly because cargos cannot be financed. In a matter of weeks, global supply chains break down. In a matter of months, commercial activity grinds to a halt and tax revenues dwindle to zero, rendering governments everywhere irrelevant. In a matter of years, the remaining few survivors become as Captain Cook saw the aboriginal Australians: almost entirely inoffensive.
One of the first victims of collapse would be the energy companies, which are among some of the most capital-intensive enterprises. Next in line are the chemical companies that manufacture plastics and other synthetic organic chemicals and materials: as their petrochemical feedstocks become unavailable, they are forced to halt production. If we are lucky, the amount of plastic that is in the environment already turns out to be insufficient to drive us all to extinction. Human population can dwindle to as few as a dozen breeding females (the number that survived one of the ice ages, as suggested by the analysis of mitochondrial DNA) but in a dozen or so millennia the climate will probably stabilize, the Earth’s ecology recover, and with it will the human population. We may never again achieve a complex technological civilization, but at least we’ll be able to sing and dance, have children and, if we are lucky, even grow old in peace.
So far so good, but our next example makes the desirability of a swift and thorough collapse questionable. Prime exhibit is the melted-down nuclear power plant in Fukushima, Japan. Contrary to what the Japanese government would want everyone to believe, the situation there is not under any kind of control. Nobody knows what happened to the nuclear fuel from the reactors that melted down. Did they go to China, à la China Syndrome? Then there is the spent nuclear fuel pool, which is full, and leaking. If the water in that pool boils away, the fuel rods burst into flames and melt down and/or explode and then, according to some nuclear experts, it would be time to evacuate the entire northern hemisphere. The site at Fukushima is so radioactive that workers cannot go anywhere near it for any length of time, making it rather fanciful to think that they’ll be able to get the situation there under control, now or ever. But we can be sure that eventually the already badly damaged building housing the spent nuclear fuel will topple, spilling its load and initiating phase two of the disaster. After that there will be no point in anyone going to Fukushima, except to die of radiation sickness.
You might think that Fukushima is an especially bad case, but plants just like Fukushima dot the landscape throughout much of the developed world. Typically, they are built near a source of water, which they use as coolant and to run the steam turbines. Many of the ones built on rivers run the risk of the rivers drying up. Many of the ones built on the ocean are at risk of inundation from rising ocean levels, storm surges and tsunamis. Typically, they have spent fuel pools that are full of hot nuclear waste, because nobody has figured out a way to dispose of it. All of them have to be supplied with energy for many decades, or they all melt just like Fukushima. If enough of them melt and blow up, then it’s curtains for animals such as ourselves, because most of us will die of cancer before reaching sexual maturity, and the ones that do will be unable to produce healthy offspring.
I once flew through the airport in Minsk, where I crossed paths with a large group of “Chernobyl children” who were on their way to Germany for medical treatment. I took a good look at them, and that picture has stayed with me forever. What shocked me was the sheer variety of developmental abnormalities that were on display.
It seems like letting global industrial civilization collapse and all the nuclear power plants cook off is not such a good option, because it will seal our fate. But the alternative is to “extend and pretend” and “kick the can down the road” while resorting to a variety of environmentally destructive, increasingly desperate means to keep industry running: hydraulic fracturing, mining tar sands, drilling in the Arctic and so on. And this isn’t such a good option either because it will seal our fate in other ways.
And so it seems that there may not be a happy end to my story of The Five Stages of Collapse, the first three of which (financial, commercial, political) are inevitable, while the last two (social, cultural) are entirely optional but have, alas, already run their course in many parts of the world. Because, you see, there is also the sixth stage which I have previously neglected to mention—environmental collapse—at the end of which we are left without a home, having rendered Earth (our home planet) uninhabitable.
This tragic outcome may not be unavoidable. And if it is not unavoidable, then that’s about the only problem left that’s worth solving. The solution can be almost arbitrarily expensive in both life and treasure. I would humbly suggest that it’s worth all the money in the world, plus a few billion lives, because if a solution isn’t found, then that treasure and those lives are forfeit anyway.
A solution for avoiding the sixth stage must be found, but I don’t know what that solution would look like. I do find it unsafe to blithely assume that collapse will simply take care of the problem for us. Some people may find this subject matter so depressing that it makes them want to lie down (in a comfortable position, on something warm and soft) and die. But there may be others, who still have some fight left in them, and who do wish to leave a survivable planet to their children and grandchildren. Let’s not expect them to use conventional, orthodox methods, to work and play well with others, or to be polite and reasonable in dealing with the rest of us. Let’s just hope that they have a plan, and that they get on with it.

 

Merkel’s ObamaPhone Scandal Escalates: US Ambassador Summoned By German Foreign Minister | Zero Hedge

Merkel’s ObamaPhone Scandal Escalates: US Ambassador Summoned By German Foreign Minister | Zero Hedge. (source)

The diplomatic farce in the aftermath of the most recent revelations that Obama had tapped not only Hollande‘s butMerkel’s cell phone as well, continued when moments ago Germany’s Foreign Ministry summoned the U.S. ambassador to explain if it was indeed true the NSA “may be spying” on Merkel, a ministry spokeswoman said. They used the word “may” loosely.  John B. Emerson, the newly appointed U.S. ambassador to Germany, will meet Foreign Minister Guido Westerwelle Thursday afternoon.

But while the latest diplomatic escalation will have zero impact whatsoever on either US spying intentions, mostly of US citizens let alone foreigners, or German-US relations, what is missing is that had this “scandal” happened four short months ago, the farce would have been truly complete as the summoned US Ambassador would be none other than former Goldman senior director and head of Goldman Germany, Philip Murphy, who alas stepped down in August. Had that been the case someone may have just put two and two together.

From the WSJ:

The German government’s position will be clearly presented to [Mr. Emerson],” the spokeswoman said. The U.S. Embassy referred questions back to the German Foreign Ministry.

Germany’s Parliamentary Control Committee, which oversees the intelligence services, will meet for an impromptu session on the cellphone scandal at 1200 GMT, said the head of the committee, Thomas Oppermann.

Ms. Merkel spoke by phone with President Barack Obama on Wednesday to discuss the claims that the U.S. monitored her communications. The chancellor made clear that surveillance among allies would be “fully unacceptable” and a “grave breach of trust,” her spokesman said in a statement released late Wednesday in Berlin.

The White House said Mr. Obama assured Ms. Merkel in the call that the U.S. “is not monitoring and will not monitor” her communications. “The United States greatly values our close cooperation with Germany on a broad range of shared security challenges,” White House spokesman Jay Carney said.

In other news, the German Parliament security committee meets today on merkel phone tap, German govt spokesman Seibert comments in text message. A text message which it goes without saying, was intercepted by the NSA.

And here is Angie herself showing just where the NSA’s bug was planted:

 

Warning: What This Dead Comedian Said About The “American Dream” Might Upset You | Zero Hedge

Warning: What This Dead Comedian Said About The “American Dream” Might Upset You | Zero Hedge. (source/link)

“The only true American value that is left… Buying Things…” There’s a reason for why education sucks and why it’s never going to be fixed, and that’s not the only hard hitting truths that George Carlin shares in this video…

 

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