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How to Rendition An Inconvenient Economist

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Steve Keen once again explained this and other topics in an interview last week on Russia Today

I’ve said this before, but just in case: I have very little appreciation and/or patience for the field of economics and its practitioners. Labeling it "the dismal science" does it far too much honor in my view, since it’s not a science at all. No more than psychology is, or anthropology, or beer brewing. Nothing that can’t stand the falsifiability test Karl Popper left us is a science. Falsifiability is the dividing line between the real thing and a whole wide range of mere pretenders.

That said, if there’s one economist today (OK, maybe a few more) who I would be tempted to make an exception for, simply because he’s made it his goal to at least approach economics from a solid Popper-like viewpoint, it’s Steve Keen and his rigorous math. It’s therefore no coincidence that Steve is both a good friend of The Automatic Earth, and controversial.

Since about WWII at the latest, a certain group of economists, think Chicago, have tried their stinking best to best recognized as scientists, an attitude that culminated in the launch of the faux Nobel Prize in 1968. They produce serious looking formulas and graphs up the wazoo, which the media reproduce alongside interviews replete with lofty terminology, and the general public has fallen for the trick: ridiculous though it may be, the field has acquired a scientific aura.

Why did and do they want this? Because trillions of dollars worth of policies based on their ideas gain critical respectability if they can make themselves look credible and in control. So it’s no surprise that the entire effort has been carried by the support of virtually unlimited amounts of money from the finance industry, as well as 99% of the ruling political classes.

That’s how Milton Friedman and his Chicago School became so prominent. Nothing to do with science, let alone falsifiability. Just money. Credibility for sale. If you’re a politician, and you manage to get make people, your voters, believe that there’s a scientific underpinning to whatever it is you want to do economically, you got it made. And there are plenty of rich people and institutions willing to finance that fake science, since it serves their purposes.

This is to a large extent why we are where we are: stuck in a long, long crisis. If you take a simple belief system, phrase its beliefs in difficult looking formulas and graphs, and thus dress it in the veneer of some kind of a scienctific method, you can push societies to the brink of financial disaster, and it makes no difference whether you’re wrong 9 times out of 10. You just tell them that it’s all very hard to understand, and you set up an education system that teaches only the models you want it to teach. This way you create the idea that things are knowable while they are not, and all students have to do is get a degree and be the next high-priests. Any religion that poses as a science is dangerous, and economics more so than all others, because it can turn entire societies into poorhouses.

Against that backdrop, it’s not terribly surprising to hear that Steve Keen and his entire economics department at the University of Western Sydney (UWS) are under threat of extinction. The Australian government has used a nice trick to achieve this. Under the guise of creating more competition, it destroys it. Anyone who can fog a mirror can now apply to the "top" universities in Australia, no matter what their grades are coming in. This is the sort of thing that ostensibly aims for fairness, in the same way that globalization and privatization do. All hail the lowest common denominator. The result is that everyone applies at the top uni’s, and only there.

Since the University of Western Sydney, where Steve teaches, has never been promoted to the top (though its economics programs may be far better than the others’), nobody applies for its programs anymore. And though this is an entirely new situation, the government has already proposed simply closing down the economics department at UWS. Even though the situation is volatile, and many students who won’t get into the top schools will likely come to UWS later.

The measures taken by the Australian government are too broad and wide-ranging to make any sort of claim that they are aimed at any specific people, but that doesn’t mean there won’t be plenty people, read: those working in economics (certainly in Australia), who are quite happy with the fallout. Steve himself puts it like this:

A fail grade for market deregulation

The older I get, the more cynical I become about government intervention in the economy. That statement might appear to be either a recantation of everything I’ve ever argued, or a sign of the usual tale of left-wingers moving to the right, and right-wingers to the left, as life experience tempers youthful exuberance. It’s neither (well, okay, maybe it’s a bit of the latter), because my developing position reflects the complexities of a mixed economy.

The latest real world experience that has pushed me further into cynicism about government is a very personal one: an attempt by the Australian government to increase competition in education via deregulation is the direct cause of the proposal to terminate the economics program at my university. The policy change will actually reduce competition in the education marketplace in Australia: the market was more competitive with the preceding regulations in place.

Is your head spinning yet? Let me clarify the position by explaining why my university (the University of Western Sydney) is proposing to shut down its economics program.

Government regulation used to require universities to set a minimum entry standard to apply for entry to courses based on performance at the final school exam (now known as an “Australian Tertiary Admission Rank” or ATAR). Deregulation of the sector means that this is now optional, and two major universities in my region – the University of NSW and Sydney University – have responded by letting students apply for a course regardless of their anticipated performance at high school.

When a minimum ATAR was indicated, many students who thought they wouldn’t get a good enough high school result to qualify at one of the higher ranked universities would hedge their bets by also applying for entry to some of the lower ranked universities – including UWS. That then meant that at the end of one academic year, there was a reasonable spread of applicants across all universities: the top-ranked universities got the lions’ share, but there were applications too for the lower-ranked universities, from students who also expected to be more lowly ranked.

Now that open slather is permitted, students have responded by applying for courses only at the top-ranked universities. So now, as the current academic year ends, the projected intake into UWS’s economics program is catastrophically low. In previous years we had well over 100 applicants for our first year intake at this point. This year, we have just 19.

UWS management’s reaction to this has been to propose to shut the degree down completely because it is no longer economically viable. As they put it to one of the many ex-students who has complained about the decision:

"Whilst we acknowledge the tremendous achievements of our staff and students in raising the profile of economics at UWS and beyond, unfortunately, at the present time just 19 students are forecast to enter the B.Ec course in 2013, which renders the course economically unsustainable. This is largely attributable to the advent of the open market for undergraduate courses which was implemented this year."

Read more . . .    [The Automatic Earth]

 

How to Rendition An Inconvenient Economist

[The Automatic Earth]

Written by testudoetlepus

November 26th, 2012 at 10:57 pm

Juking the Stats: Our Culture of Manipulation

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Detroit Publishing Co. Beantown 1906 “Boston, Washington Street. On your left: National Fireworks”

A universal strategy of large institutions is the manipulation of their “books & records” in a positive direction – i.e. one suggesting high levels of current performance and future growth. We see this happen time and again across institutions in all sectors of developed societies, private and public. Large corporations, for example, extensively use off balance sheet vehicles riddled with leveraged products to hide their exposure to risk, or various other accounting tricks to over-state their revenues/profits and under-state their costs/liabilities.

However, this manipulative strategy is even easier to identify in the governing institutions of “democratic” nations. While the phenomenon is certainly not limited to one country (the governments of the European periphery come to mind), it is perhaps most evident and widespread in the U.S. Indeed, the structures and culture of American society can almost be defined solely in terms of data manipulation for the sake of appearances, a.k.a. “public relations” or perception management. The sheer pervasiveness and momentum of these practices has made them an integral part of what it means to be a competitive institution in America.

Beat cops and detectives in your typical American city may refer to this strategy as “juking the stats”, while Lieutenants on up would probably call it something along the lines of “criminal statistics management”. When the order comes down from the bosses at the top, the “primaries” at a crime scene could be forced to conduct their investigations and label the crimes in the least publicly embarrassing manner. If the Mayor wants to run for office in a few months on a “reduced crime rate” platform (and which mayor doesn’t?), then anything but the most obvious murders may be lightly investigated and ultimately classified as “unknown deaths” or suicides. Perhaps a few bodies near the city limits will be dumped on the neighboring county.

Read more…

Juking the Stats: Our Culture of Manipulation

[The Automatic Earth]

The Storm Surge of Decentralization

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Stoneleigh :

Happy New Year from The Automatic Earth!

One of our consistent themes at TAE has been not expecting solutions to come from the top down. Existing centralized systems depend on dwindling tax revenues, which will dry up to a tremendous extent over the next few years as economic activity falls off a cliff and property prices plummet.

We have already seen cuts to services and increases in taxes and user fees, and we can expect a great deal more of that dynamic as central authorities emulate hypothermic bodies. In other words, they will cut off the circulation to the fingers and toes in order to preserve the body temperature of the core. This is, of course, a survival strategy, from the point of view of the core. But it does nothing good for the prospects of ordinary people, who represent the fingers and toes.

Centralized systems also depend on the political legitimacy that has been conferred upon them as a result of public trust in them to serve the common interest. This trust is rapidly breaking down in an ever-expanding list of places, as ordinary people realize that their interests have been betrayed in favour of the well connected.

Those who played fraudulent ponzi games with other people’s money, and were in the best position to know what could result, have been bailed out time and time again, while the little guy has been told to expect more austerity measures. Protest is inevitable as political legitimacy fades. We are already seeing it spread like wildfire, which is exactly what one would expect given that human beings internalize, reflect and act on the emotions of others. Collective social mood that turns on a dime is very much part of what it means to be human.

The job of national and international politicians in contractionary times is typically to make a bad situation worse as expensively as possible, as they attempt to rescue the dying paradigm that has conveyed so much personal advantage in their direction. That paradigm is one of centralization – the accumulation of surpluses from a broad periphery at the centre of power.

However, the wealth conveyors of the past are breaking down, meaning that the periphery that can be drawn upon is shrinking. As the periphery shrinks, the remaining region within the grip of power can expect to be squeezed harder and harder. ‘Twas ever thus. Rome did the same thing, squeezing the peasants for tithes until they abandoned their land and threw in their lot with the surrounding barbarians.

Even if politicians were informed of what is unfolding on their watch, understood it, and were minded to act in favour of the common man as a result (which is itself unlikely), there would be nothing they could do. They are too deeply embedded in a system which is thoroughly hostage to vested interests and characterized by an extreme inertia that would drastically limit their freedom of action.

Continued here . . . .

 

January 3 2012: The Storm Surge of Decentralization

[The Automatic Earth]

Murmuration

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by James Howard Kunstler

On last week’s podcast, Duncan and I yakked about an important concept introduced by Nicole Foss at The Automatic Earth blog site. This concept was “the trust horizon,” which outlines how legitimacy is lost in the political hierarchy. That is, people stop trusting larger institutions like the federal or state government and end up vesting their interests much closer to home. Thus, life de-centralizes and becomes more local by necessity. Your own trust horizon extends only as far as other persons, businesses, institutions, and authorities immediately around you – the banker who will meet with you face-to-face, the mayor of your small town, the local food-growers. At the same time, distant ones become impotent and ludicrous – or possibly dangerous as they flounder to re-assert their vanishing influence.

It is obvious that we are in the early stages of this process in the USA (and Europe), as giant institutions such as the Federal Reserve, the Executive branch under Mr. Obama, the US Congress (the ECB), the SEC, the Department of Justice, the Treasury Department, and other engines of management all fail in one way or another to discharge their obligations.

The people of the USA, having been let down and swindled in so many ways by the people they placed their trust in, and even freely elected, appear to be in a daze of injury. Maybe this accounts for the obsession with zombies and persons drained of blood – who yet seem to carry on normal lives (at least in TV shows). This odd condition is best defined by the familiar cry from non-zombies: “where’s the outrage?” Which brings me to today’s point.

Investment guru James Dines introduced another seminal idea on Eric King’s podcast last week. Dines’s work over the years has focused much more on human mob psychology than technical market analysis – which he seems to regard as akin to augury with chicken entrails. Dines now introduces the term “murmuration” to describe the way that rapid changes occur in the realm of human activities. The word refers to behaviors also seen in other living species, such as the way a large flock of starlings will all turn in the sky at the same instant without any apparent communication. We don’t know how they do that. It seems to be some kind of collective cognitive processing beyond our understanding.

Dines goes on to suggest that the political stirrings and upheavals of the past year represent an instance of human “murmuration” that will lead to even greater epochal changes in geopolitical and economic life. Now, I’ve often said 1) history doesn’t repeat, but it rhymes [thank you, Mark Twain], and 2) that these times are like the 1850s. To be more precise today, these two concepts of “the trust horizon” and “murmuration” point to a moment in time that I believe we are now rhyming with: the revolutions of 1848 and the events that grew out of it.

The spring of that year was an inflection point when discontent over the changes sweeping through European society broke into open insurrection in France, Prussia, Austria, Italy, Poland, South America, and other places all seemingly at once – despite the absence of television and the internet. However, the upheavals of 1848 occurred not long after the first practical installation of a telegraph line from Annapolis, Maryland, to Washington, DC (and then in Europe). It was also a time when the first railroad networks were linking up.

In February that crucial year, the liberal “Citizen King” Louis-Philippe of France was driven off the throne after an 18-year-reign characterized by tranquility and prosperity compared to the decades that preceded it. In March, street protests and violence spread through the grab-bag of kingdoms, dukedoms, and obscure principalities (Prussia… Saxony… Hesse… Fulda…) that would eventually make up the super-state of greater Germany. The Austrian empire began its slide into senility as its constituent states rioted. Even the people in Switzerland went batshit. And so on. Enter, stage left, Marx and Engels with a new political theory, for the excellent reason that the industrial revolution was reaching its stride and the conditions of daily life were changing very rapidly. Country people left farms for factory jobs all over the continent, and the ill-effects of the new wage-slavery drove them into solidarity. The uproar of 1848 was widespread and left many changes in its wake. But it was short and it produced odd instances of right-wing reaction.

In France, for instance, Louis-Philippe was sent packing (to England), and a new republic was established – but the president it elected was Napoleon Bonaparte’s nephew, Louis Napoleon who, in a matter of months declared himself president-for-life, and then Emperor. He was not at all a bad ruler, as things turned out. Among other achievements, he presided over the massive physical renovation of Paris that produced the “city of light” beloved today. But he was driven off his throne twenty-odd years later from the ill effects of the opera bouffe known as the Franco-Prussian War.

In any case, the main point is that so many people across a continent got the same idea in the first weeks of a particular year, and then set about expressing themselves violently. More to my point is how things worked out in America. You have no doubt realized by now that there was no uprising in the USA in 1848 (though we did prosecute a war with Mexico). Yet, in the best Fourth Turning sense of history, a new generation had come of age and was producing the revolution in ideas that included Emerson and Thoreau’s Transcendentalism, and the abolition movement, dedicated to ending slavery. This combination of broadly-held idealistic notions boiled away for another decade and led to the “mumuration” that precipitated the biggest bloodbath of the civilized world in the 19th century: the American Civil War. The Revolution of 1848 expressed itself most horrifically in the place that thought itself most specially insulated from its effects.

Hence, when you read an idiot such as Paul Krugman in Monday’s New York Times Op-Ed kindergarten, prating on the end of hard times in the USA, swallow a good half-pound of kosher salt. James Dines is right, a great human “murmuration” is underway, vibrating like a bass chord through bodies politic all over the world. Wait until you see what breaks loose at the Democratic and Republican conventions later this year.

 

Murmuration

[Clusterfuck Nation]

The Trust Horizon

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Growing Mistrust for Government in the U.S.

KunstlerCast #190 – January 19, 2012

JHK discusses the concept of “The Trust Horizon,” which he first came across on one of his favorite blogs, The Automatic Earth blog. As the economy contracts, Americans are gazing at the “Trust Horizon” for big government. On the other hand, more people are forging their own trust networks at a very local level. Topics include: local currencies, bartering, small transport networks, basic local healthcare and permaculture initiatives.

The Storm Surge of Decentralization
The Automatic Earth – January 3, 2012

22:51 mins

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The Trust Horizon

kunstlercast.com

How Black is the Japanese Nuclear Swan?

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Pillsbury Picture Co. “The Burning of the Call” 1906
The San Francisco Call newspaper building in flames after the April 18, 1906 earthquake

Ilargi: You may not be have been aware of it until now, but The Automatic Earth has an in-house full-blown nuclear safety expert.

The subject of Stoneleigh’s master thesis at the law faculty of Warwick University in Coventry, England, where she studied International Law in Development, was nuclear safety research.

After graduating in 1997, she became a Research Fellow at the Oxford Institute for Energy Studies, where her research field was power systems, with a specific focus on nuclear safety in Eastern Europe.The monograph she wrote sets the nuclear safety debate in the political and economic context of the collapse of the Soviet Union. It looks at the technical aspects of nuclear safety, safety upgrade programs, safety culture and the human factor, regulation at all levels and bargaining over reactor closures.It was published in 1999 under the title Nuclear Safety and International Governance: Russia and Eastern Europe, and it remains available online here at Oxford Institute for Energy Studies. Here’s her analysis of the situation in Japan:


Stoneleigh:

How Black is the Japanese Nuclear Swan?

The Japanese earthquake is a tragedy of epic proportions in so many ways. The situation continues to evolve, and the full scope of the disaster will not be understood for a long time. 

One critical aspect is the effect on Japan’s nuclear industry, which provides over 30% of the country’s electricity from 54 reactors. Some of the largest nuclear plants in the world (Fukushima Dai-ichi and Fukushima Dai-ni, 4696 MW and 4400 MW, respectively) are located close to the epicentre, and on the coast, directly in the path of the resulting tsunami:

A state of emergency has been declared for five reactors, with the worst affected reactors being the forty year old Boiling Water Reactors (BWRs) at Fukushima Dai-ichi, 240 km north of Tokyo. These reactors shut down, as the control rods were automatically inserted to dampen the nuclear reaction (SCRAM). At least two reactors experienced a station blackout, which prevented the cooling system from functioning (a loss of coolant, or LOCA accident).

Without the ability to cool the core, the risk is a meltdown, with the potential for explosions resulting from steam or hydrogen. Even after the cessation of a nuclear chain reaction, heat from radioactive decay continues to be produced, and this heat needs to be dispersed in order to avoid a meltdown of the components of the core. Workers have been desperately trying to cool the reactor cores at units 1 and 3, but there has already been an explosion at Fukushima 1. Footage of the plant shows only the skeleton of the building remains. An evacuation zone has been expanded from 10km to 20km, and close to 200.000 people have been evacuated from the area.

Reactors are equipped with multiple cooling systems as part of the defence in depth design principle. The idea is that there should be redundant systems with no components in common, and therefore (theoretically) no possibility for common mode failures. Each system should be capable of independently preventing a design-basis accident.

Japan is a sophisticated country with a long history of nuclear power, and also a long history of seismic activity. One could argue that this is Japan’s Hurricane Katrina moment, in that a predictable scenario was not adequately prepared for in advance despite the potential for very severe consequences.

The design-basis accident for Fukushima did not include earthquakes of the magnitude of this event (recently upgraded to 9.0 on the Richter scale).

Company documents show that Tokyo Electric tested the Fukushima plant to withstand a maximum seismic jolt lower than Friday’s 8.9 earthquake. Tepco’s last safety test of nuclear power plant Number 1—one that is currently in danger of meltdown—was done at a seismic magnitude the company considered the highest possible, but in fact turned out to be lower than Friday’s quake. The information comes from the company’s “Fukushima No. 1 and No. 2 Updated Safety Measures” documents written in Japanese in 2010 and 2009.The documents were reviewed by Dow Jones. The company said in the documents that 7.9 was the highest magnitude for which they tested the safety for their No. 1 and No. 2 nuclear power plants in Fukushima. Simultaneous seismic activity along the three tectonic plates in the sea east of the plants—the epicenter of Friday’s quake—wouldn’t surpass 7.9, according to the company’s presentation. The company based its models partly on previous seismic activity in the area, including a 7.0 earthquake in May 1938 and two simultaneous earthquakes of 7.3 and 7.5 on November 5 of the same year.

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Fukushima 1 Before The Tsunami

Fukushima 1 After The Tsunami

The Fukushima 1 plant was equipped with 13 diesel back-up generators to power the Emergency Core Cooling System (ECCS), but all of these failed. Battery back-ups are available, but these function only for a few hours. Without the ability to cool the reactor, the outcome is a meltdown, which can occur rapidly after the failure of cooling:

  • Core uncovery. In the event of a transient, upset, emergency, or limiting fault, LWRs are designed to automatically SCRAM (a SCRAM being the immediate and full insertion of all control rods) and spin up the ECCS. This greatly reduces reactor thermal power (but does not remove it completely); this delays core “uncovery”, which is defined as the point when the fuel rods are no longer covered by coolant and can begin to heat up.

As Kuan states: “In a small-break LOCA with no emergency core coolant injection, core uncovery generally begins approximately an hour after the initiation of the break. If the reactor coolant pumps are not running, the upper part of the core will be exposed to a steam environment and heatup of the core will begin. However, if the coolant pumps are running, the core will be cooled by a two-phase mixture of steam and water, and heatup of the fuel rods will be delayed until almost all of the water in the two-phase mixture is vaporized. The TMI-2 accident showed that operation of reactor coolant pumps may be sustained for up to approximately two hours to deliver a two phase mixture that can prevent core heatup.”

  • Pre-damage heat up. ”In the absence of a two-phase mixture going through the core or of water addition to the core to compensate water boiloff, the fuel rods in a steam environment will heatup at a rate between 0.3 K/s and 1 K/s (3).”
  • Fuel ballooning and bursting. ”In less than half an hour, the peak core temperature would reach 1100 K. At this temperature, the zircaloy cladding of the fuel rods may balloon and burst. This is the first stage of core damage. Cladding ballooning may block a substantial portion of the flow area of the core and restrict the flow of coolant. However complete blockage of the core is unlikely because not all fuel rods balloon at the same axial location. In this case, sufficient water addition can cool the core and stop core damage progression.”
  • Rapid oxidation. ”The next stage of core damage, beginning at approximately 1500 K, is the rapid oxidation of the Zircaloy by steam. In the oxidation process, hydrogen is produced and a large amount of heat is released. Above 1500 K, the power from oxidation exceeds that from decay heat (4,5) unless the oxidation rate is limited by the supply of either zircaloy or steam.”
  • Debris bed formation. ”When the temperature in the core reaches about 1700 K, molten control materials [1,6] will flow to and solidify in the space between the lower parts of the fuel rods where the temperature is comparatively low. Above 1700 K, the core temperature may escalate in a few minutes to the melting point of zircaloy (2150 K) due to increased oxidation rate. When the oxidized cladding breaks, the molten zircaloy, along with dissolved UO2 [1,7] would flow downward and freeze in the cooler, lower region of the core. Together with solidified control materials from earlier down-flows, the relocated zircaloy and UO2 would form the lower crust of a developing cohesive debris bed.”
  • (Corium) Relocation to the lower plenum. ”In scenarios of small-break LOCAs, there is generally. a pool of water in the lower plenum of the vessel at the time of core relocation. Release of molten core materials into water always generates large amounts of steam. If the molten stream of core materials breaks up rapidly in water, there is also a possibility of a steam explosion. During relocation, any unoxidized zirconium in the molten material may also be oxidized by steam, and in the process hydrogen is produced. Recriticality also may be a concern if the control materials are left behind in the core and the relocated material breaks up in unborated water in the lower plenum.”
    Other aspects of defence in depth failed as well: 
    1st layer of defense is the inert, ceramic quality of the uranium oxide itself. 2nd layer is the air tight zirkonium alloy of the fuel rod. 3rd layer is the reactor pressure vessel made of steel more than a dozen centimeters thick. 4th layer is the pressure resistant, air tight containment building. 5th layer is the exclusion zone around the reactor.

    The incident is being described as a hydrogen explosion. The official line is that the outer containment building was destroyed, but that the reactor vessel itself remains intact:

    Top government officials assured the nation that an explosion that took place Saturday at one of the reactors at the Fukushima Daiichi plant merely knocked down the walls of its external concrete building, and that the reactor and the containment structure surrounding it remained intact.

    US Nuclear Regulatory Commission analysts explain the hydrogen production process under accident conditions:

    Former U.S. Nuclear Regulatory Commission (NRC) member Peter Bradford added, “The other thing that happens is that the cladding, which is just the outside of the tube, at a high enough temperature interacts with the water. It’s essentially a high-speed rusting, where the zirconium becomes zirconium oxide and the hydrogen is set free. And hydrogen at the right concentration in an atmosphere is either flammable or explosive.”

    “Hydrogen combustion would not occur necessarily in the containment building,” Bergeron pointed out, “which is inert—it doesn’t have any oxygen—but they have had to vent the containment, because this pressure is building up from all this steam. And so the hydrogen is being vented with the steam and it’s entering some area, some building, where there is oxygen, and that’s where the explosion took place.”

    A hydrogen release is very much part of a meltdown scenario, and difficult to imagine hydrogen explosion scenarios on the scale of what was seen at Fukushima 1 that would not involve compromising the reactor pressure vessel:

    If hydrogen were allowed to build up within the containment, it could lead to a deflagration event. The numerous catalytic hydrogen recombiners located within the reactor core and containment will prevent this from occurring; however, prior to the installation of these recombiners in the 1980s, the Three Mile Island containment (in 1979) suffered a massive hydrogen explosion event in the accident there.

    The containment withstood this event and no radioactivity was released by the hydrogen explosion, clearly demonstrating the level of punishment that containments can take, and validating the industry’s approach of defence in depth against all contingencies. Some, however, do not accept the Three Mile Island incident as sufficient proof that a hydrogen deflagration event will not result in containment breach.


    One speculative scenario may be alpha-mode failure. This would involve an explosion sufficient to blow the head off the reactor pressure vessel, launching it at the outer containment system, which could then be breached as a result. The odds of this are considered low, but many supposedly very low probability events have in fact occurred at nuclear installations.

    Given the detection of radioactive caesium, which could only have come from inside exposed fuel rods beginning to burn, and the subsequent violent explosion, it is difficult to imagine scenarios not involving substantial destruction of the reactor. Indeed it has been admitted that a major accident has occurred in one unit and another is at risk:

    Meltdowns may have occurred in two reactors: Japan government
    Japan’s top government spokesman Yukio Edano said Sunday that radioactive meltdowns may have occurred in two reactors of the quake-hit Fukushima nuclear plant. Asked in a press conference whether meltdowns had occurred, Edano said “we are acting on the assumption that there is a high possibility that one has occurred” in the plant’s number-one reactor. “As for the number-three reactor, we are acting on the assumption that it is possible,” he said.

    There are 6 reactors at Fukushima 1 and an additional 4 at nearby Fukushima 2. Tokyo Electric (TEPCO) is now indicating that there are cooling problems and dangerous pressure increases at several of these units:

    Tokyo Electric said Saturday another nuclear-power plant nearby, Fukushima Dai-ni, was experiencing rises of pressure inside its four reactors. A state of emergency was called and precautionary evacuations ordered. The government has ordered the utility to release “potentially radioactive vapor” from the reactors, but hasn’t confirmed any elevated radiation around the plant.

    Loss of cooling ability appears to be the common problem:

    Tokyo Electric Power Co. (TEPCO), operator and owner of Fukushima nuclear plants, said early on Sunday that a sixth reactor at the nuclear power plants has lost its ability to cool the reactor core since Friday’s quake. The No. 3 reactor at Fukushima No. 1 nuclear power plant lost the cooling function after No. 1 and No. 2 reactors at the No. 1 plant and No. 1, No. 2 and No. 4 at the No. 2 plant had suffered the same trouble.

    And:

    Kodama said the cooling system had failed at three of the four such units of the Daini plant [Fukushima 2]. Temperatures of the coolant water in that plant’s reactors soared to above 100 degrees Celsius (212 degrees Fahrenheit), Japan’s Kyodo News Agency reported, an indication that the cooling system wasn’t working.

    Containment structures are being flooded with seawater and boric acid as a desperation move to lower the temperature and poison any capacity for further nuclear reactivity. The latter is important to absorb neutrons in order to avoid incidences of potential criticality during a meltdown. Such an event would have the potential to cause much more widespread releases of radiation.

    There seems to be considerable evidence that we are closer to the beginning of this disaster than to the end, and already it is almost unprecedented in scope.

    “If this accident stops right now it will already be one of the three worst accidents we have ever had at a nuclear power plant in the history of nuclear power,” said Joseph Cirincione, an expert on nuclear materials and president of the U.S.-based Ploughshares Fund, a firm involved in security and peace funding.

    Comparisons are being made with the accident at Chernobyl, but there are a number of very important differences, notably in terms of reactor design, and therefore accident implications. Nuclear safety in the former Soviet Union was once my research field (see Nuclear Safety and International Governance: Russia and Eastern Europe), and the specifics of the accident at Chernobyl could not be replicated in Japan. The risk in Japan is primarily meltdown, not a Chernobyl-style run-away nuclear reaction.

    RBMK (Reaktor bolshoy moshchnosty kanalny [high-power channel reactor]), Chernobyl-type reactors have a very large positive void coefficient, meaning that reactivity increases as a positive feedback loop. The presence of steam from overheating increases reactivity, which increases steam production. The graphite moderator in an RBMK is flammable, and RBMKs also have no containment system. If two or three of the 1700 channels in an RBMK are breached, the steam pressure will lift the lid, introducing air, while shearing the remaining tubes. Essentially, the reactor will explode on a sharp spike of reactivity. The moderator will catch fire, and a nuclear volcano will be the result. At Chernobyl, some 50 million Curies of radiation was released over several days. 

    Like the Fukushima incident, Chernobyl began with a loss of power, undertaken in that case as a test of safety systems commissioned long after the reactor became operational (the Chernobyl reactor had been in a state of critical vulnerability to blackout for two years at the time of the accident.) It could have been worse, however. Attempts to extinguish the fire at Chernobyl 4 came very close to causing a loss of power to the other three reactors at the site, which could easily have sent four reactors into into a critical state rather than one.

    Non-technical comparisons between Fukushima and Chernobyl are more apt, specifically in terms of governance in the nuclear industry and complacency as to risk. Nuclear insiders in many jurisdictions are notorious for being an unaccountable power unto themselves, and failing to release critical information publicly.

    The Soviet nuclear bureaucracy ignored obvious risks and concealed accidents wherever possible. While nothing remotely like so serious has occurred previously in Japan, Fukushima 1 has been at the centre of transparency problems in the Japanese nuclear industry before. In 2002, the president and four executives of Tokyo Electric Power Corporation (TEPCO) were forced to resign over the falsification of repair records.

    Japan’s nuclear power operator has chequered past
    The company was suspected of 29 cases involving falsified repair records at nuclear reactors. It had to stop operations at five reactors, including the two damaged in the latest tremor, for safety inspections. A few years later it ran into trouble again over accusations of falsifying data.

    In late 2006, the government ordered TEPCO to check past data after it reported that it had found falsification of coolant water temperatures at its Fukushima Daiichi plant in 1985 and 1988, and that the tweaked data was used in mandatory inspections at the plant, which were completed in October 2005.

    In addition, the Japanese government had been repeatedly warned about seismic risks:

    [..] the real embarrassment for the Japanese government is not so much the nature of the accident but the fact it was warned long ago about the risks it faced in building nuclear plants in areas of intense seismic activity. Several years ago, the seismologist Ishibashi Katsuhiko stated, specifically, that such an accident was highly likely to occur. Nuclear power plants in Japan have a “fundamental vulnerability” to major earthquakes, Katsuhiko said in 2007. The government, the power industry and the academic community had seriously underestimated the potential risks posed by major quakes.

    Katsuhiko, who is professor of urban safety at Kobe University, has highlighted three incidents at reactors between 2005 and 2007. Atomic plants at Onagawa, Shika and Kashiwazaki-Kariwa were all struck by earthquakes that triggered tremors stronger than those to which the reactor had been designed to survive.

    In the case of the incident at the Kushiwazaki reactor in northwestern Japan, a 6.8-scale earthquake on 16 July 2007 set off a fire that blazed for two hours and allowed radioactive water to leak from the plant. However, no action was taken in the wake of any of these incidents despite Katsuhiko’s warning at the time that the nation’s reactors had “fatal flaws” in their design[..] The trouble is, says Katsuhiko, that Japan began building up its atomic energy system 40 years ago, when seismic activity in the country was comparatively low. This affected the designs of plants which were not built to robust enough standards, the seismologist argues.

    Many countries are currently looking to nuclear power to carry the load as energy production from conventional fossil fuels declines. Japan has previously unveiled very ambitious plans to expand nuclear capacity:

    The Japan Atomic Energy Agency has modelled a 54 percent reduction in CO2 emissions from 2000 levels by 2050, leading on to a 90 percent reduction by 2100. This would lead to nuclear energy contributing about 60 percent of primary energy in 2100 (compared with 10 percent now), 10 percent from renewables (now 5 percent) and 30 percent fossil fuels (now 85 percent).

    Proponents argue that the energy returned on energy invested (EROEI) for nuclear power is sufficient to power our societies, that nuclear power can be scaled up quickly enough as fossil fuel supplies decline, that there will be sufficient uranium reserves for a massive expansion of capacity, that nuclear is the only option for reducing carbon dioxide emissions, and that nuclear power can be operated with no safety concerns through probabilistic safety assessment (PSA). 

    I disagree with all these assertions. Looking at the full life-cycle energy inputs for nuclear power, it seems to be barely above the minimum EROEI for maintaining society, and the costs (in both money and energy terms) are front-loaded.Scaling up nuclear capacity takes extrordinary amounts of both money and time. While construction can be speeded up, where this has been done (as it was in Russia), the deleterious effect on construction standards was significant. Uranium reserves, especially the high-grade ores, are depleting rapidly. The reduction in carbon dioxide emissions over the full life-cycle do not impress me. In addition, nuclear authorities make risk decisions without informing the public. They have consistently made risk calculations that have grossly underestimated the potential for accidents of the kind that can have generational impacts. 

    In my view, nuclear power represents an unjustified faith in the power of human societies to control extremely complex technologies over the very long term. Any activity requiring a great deal of complex and cooperative control will do badly in difficult economic times.Also, no human society has ever lasted for as long as nuclear waste must be looked after. It needs to be held in pools on site for perhaps a hundred years in order to cool down enough for permanent disposal, assuming a form of permanent disposal could be conceived of, approved and developed. During this period, the knowledge as to how this must be done will need to be maintained, and this may be more difficult than is currently supposed.

    We need to evaluate the potential for a nuclear future in light of the disaster in Japan. This was not unpredictable, and should have been accounted for in any realistic assessment of nuclear potential. It cannot realistically be described as a black swan event. 

    Japan has few energy alternatives, as it lacks indigenous energy reserves and must import 80% of its energy requirements. It was therefore prepared to make Faustian bargains despite what should have been obvious risks. The impact of the loss of so much capacity, much of it probably permanently, on available electric power following the accident is very likely to impede Japan’s ability to recover from this disaster, potentially strengthening the parallels with America’s Hurricane Katrina.

    We need to assess the risks inherent in using nuclear power in other locations, whether or not the risk they face is seismic (see Metsamor in Armenia, for instance, or Diablo Canyon in California). There are risks in many areas, most of which are grounded in human behaviour, either at the design stage or the operational phase. Human behaviour can easily turn what should be a one in one hundred thousand reactor-year event in to something all too likely within a human lifespan. Nuclear power may allow us to cushion the coming decline in fossil fuel availability, but only at a potentially very high price.

    March 13 2011: How Black is the Japanese Nuclear Swan?

    [The Automatic Earth]

  • Financial Threats to Power

    without comments

    Ashvin Pandurangi:

    The Math is Different at the Top, Part II:

    Financial Threats to Power

    This is part 2 of a series. Part 1, “The Math is Different at the Top”, briefly discussed a simple paradigm that has governed human societies since at least the Industrial Revolution – the one which dictates that most major economic policies implemented throughout the world have benefited ever fewer and more centralized institutions of power. This straightforward logic accelerated greatly after World War II and the explosion of debt-dollar finance in the 1970s (elimination of gold standard), but was taken to its ridiculous extreme after the onset of the global financial crisis in 2007-08.

    We were repeatedly told that major financial institutions were in “deep trouble” after the American sub-prime housing meltdown, yet these very institutions reported all-time record revenues and corresponding bonuses in 2009-2010, just one year after the global economy was on the brink of collapse. Meanwhile, wealth inequality in terms of incomes, financial worth and net worth has never been greater in the developed world. Regardless of whether this phenomenal transfer of wealth was a premeditated, coordinated effort by global financial elites, or a more “natural” result of financial evolution in a capitalist system, it is undeniable that the practical effects are the same – the rich get richer and more powerful while the poor get poorer and more desperate.

    It is the latter fact that potentially poses a serious threat to the financial elites and their existing structures of power, as perhaps evidenced by the popular revolts throughout Africa and the Middle East, and to a lesser extent, the EU periphery and South Asia. This article will explore specific developments of the ongoing financial crisis from the perspective of financial elites, and their goals of maintaining the global structures of power that provide order. The financial crisis reflects a systemic, structural instability that may reverse the global trend towards increased socioeconomic complexity, which has always fed into and off of the concentration of wealth and power.

    Complexity as a function of finance, therefore, is perhaps measured best by levels of global wealth inequality, and as mentioned before, these levels are still getting worse (more unequal). However, there comes a tipping point at which an overly-complex system begins to consume itself, as the peripheral networks and central hubs become less stable and less attached to the overall structure of the system. In this sense, the more damaging a crisis is to the ability of populations around the world to maintain their relative share of the global wealth pie, meager as it may be, the more difficult it will be for existing financial elites to maintain global complexity, order and control.


    The bottom of this pyramid (~70% of world’s adult population) primarily represents the poorest regions and countries of the world, where people have lived meager existences (by material Western standards) for so long now that they simply do not expect any better, which also means that they have minimal psychological attachment to shaky promises of financial prosperity. Many segments of Africa (>90% of continent’s population), South Asia (>90% of India’s population), Latin America and the Middle East fall into this category, and the latest financial crisis has sadly made the living situation worse for them, due to increases in food/energy costs largely fueled by speculative debt.

    As discussed in Part I, it is unlikely that sociopolitical disruptions in these regions, chaotic as they may get, will significantly loosen the financial elites’ grip on the levers of power, and could even serve to tighten it (i.e. justifications for U.S. military interventions in the Middle East to secure oil reserves). Indeed, such disruptions in these regions were, in the past, intentionally orchestrated by the elites during the latter half of the 20th century in order to extract crucial resources and political concessions. Furthermore, many of the countries in these regions were dominated or manufactured by European colonialism over centuries [1], and are therefore no strangers to systematic exploitation and oppression.

    Notable exceptions to this “rule” may be Pakistan and India, as they both have nuclear arsenals and the latter is absolutely critical to the  global  telecommunications industry (these countries will be discussed more in Part III, in the context of short-term environmental crises). We must, then, turn our focus to the middle and upper segments of this pyramid, which represent 30% of the world’s adult population. China contains a full third of the people in the middle segment ($10K-$100K), and its population has become increasingly dependent on stability in global financial markets.

    An article from the Shanghai Daily News suggests that Chinese elites may actually be targeting a 30% reduction in real estate prices through higher interest rates, property taxes and more regulatory hurdles to purchasing property, in a “Thunder Attack” designed to deflate the Chinese housing bubble. [2]. While this information does not qualify as much more than a speculative rumor at this point, it suggests that high-level Chinese officials, at the very least, are fully aware of the bubble and its inevitable implosion.

    At the very most, it implies that these officials and their sponsors are going to prematurely throw the citizens of China into a deflationary recession, in which the financial winners and losers can be hand-picked, a la Lehman, and all of the remaining losses can be borne by taxpayers. It is true that, given the level of housing inflation in China (which may be extremely under-estimated by official data [3]), it would be prudent for officials to implement some measures designed to cool down speculation and help borrowers pay off their debts, but there is an inherent conflict of interest contained within such measures. Any policies that provide systemic relief to debtors will be adverse to the interests of financial elites, so we can expect that none will be undertaken, and instead Chinese officials will follow the Japan-U.S. precedent of “extend and pretend”.

    China has had the fastest rate of economic growth for years now and boasts the second-largest economy in the world, but despite or because of this fact, income inequality has gotten much worse between urban and rural segments of the population and significantly less than 10% of the population is defined as being a part of the “middle class”. [4]. Many of these people have been incentivized to invest their savings into stocks and real estate in recent years, as the interest paid on savings does not even come close to keeping pace with the rate of domestic inflation. Already, the Shanghai Stock Index has lost more than 50% from its peak in 2007, and real estate prices will follow suit soon enough. [5]. It then becomes evident that mounting instability in financial markets could generate substantial sociopolitical unrest among large swaths of the seemingly comfortable urban population, which will realize that, contrary to popular belief, they had never left their rural countrymen behind.

    Of course, China is also the largest exporter and second-largest importer of material goods in the world, which makes it extremely significant to economic trends in developed states. Europe, Japan and the U.S. alone comprise 77% of the wealth pyramid’s upper segment (net worth between $100K-$1M), and their populations hold at least half of their net worth in financial assets (bonds and equities) and have the highest levels of debt in the world. From this fact alone, we see why another crash in the real estate, equity and credit markets of these regions, fueled by the ongoing financial crisis, would obliterate much of the current and future (expected) wealth of the world, greatly reducing complexity and potentially throwing a huge monkey wrench into the schemes of global elites.

    Yet, it is undeniable that these schemes have continued on since 2007, as governments in these regions have subsidized financial losses and supported fraudulent accounting practices to hide them. The “blood funnel” of powerful financial institutions has kept them alive by draining productive capital from workers, taxpayers and gullible investors. How long can this process continue in the face of increasing market instability, rising unemployment, deteriorating public finances and corresponding sociopolitical decay?

    Perhaps the more disturbing question is whether financial and sociopolitical deterioration will sharply reduce global complexity, as reflected by wealth/power inequality, or instead will provide the elites with an opportunity to concentrate even more power in the bowels of international institutions such as the IMF and World Bank. John Perkins, in the Prologue to Confessions of an Economic Hitman, provides a stunning  example of how the latter logic has prevailed in regions such as Latin America, and describes its general mechanism of action:

    In 2003, I departed Quito [Ecuador] in a Subaru Outback and headed for Shell [named after the oil company] on a mission that was like no other I had ever accepted. I was hoping to end a war I had helped create. As is the case with so many things we EHMs [economic hit men] must take responsibility for, it is a war that is virtually unknown anywhere outside the country where it is fought. I was on my way to meet with the Shuars, the Kichwas, and their neighbors the Achuars, the Zaparos, and the Shiwiars — tribes determined to prevent our oil companies from destroying their homes, families, and lands, even if it means they must die in the process. For them, this is a war about the survival of their children and cultures, while for us it is about power, money, and natural resources. It is one part of the struggle for world domination and the dream of a few greedy men, global empire.

    That is what we EHMs do best: we build a global empire. We are an elite group of men and women who utilize international financial organizations to foment conditions that make other nations subservient to the corporatocracy running our biggest corporations, our government, and our banks. Like our counterparts in the Mafia, EHMs provide favors. These take the form of loans to develop infrastructure — electric generating plants, highways, ports, airports, or industrial parks. A condition of such loans is that engineering and construction companies from our own country must build all these projects. In essence, most of the money never leaves the United States; it is simply transferred from banking offices in Washington to engineering offices in New York, Houston, or San Francisco.

    Despite the fact that the money is returned almost immediately to corporations that are members of the corporatocracy (the creator), the recipient country is required to pay it all back, principal plus interest. If an EHM is completely successful, the loans are so large that the debtor is forced to default on its payments after a few years. When this happens, then like the Mafia, we demand our pound of flesh. This often includes one or more of the following: control over United Nations votes, the installation of military bases, or access to precious resources such as oil or the Panama Canal. Of course, the debtor still owes us the money — and another country is added to our global empire.

    In the developed world, our “favors” came in the form of high-limit credit cards, zero-down mortgages and publicly-financed entitlements. Now, the powerful banks (through their puppet politicians) have come to our doorsteps, demanding their pound of flesh, which takes the form of subsidies for the extremely rich and austerity for everyone else. Perhaps the most vivid examples of this mafioso dynamic have taken place in Europe, where many EU members (Germany, France, Italy, Spain, Greece, etc.) and the UK have hoisted “harsh” austerity plans on their citizens.

    The citizens of Ireland are currently facing an austerity plan worse than anyone else, as the ruling party agreed to tackle 40% of their proposed budget reduction (8% of GDP) in 2011 alone [6], but there has been very little popular dissent in response. Greece has experienced some extremely violent protests over the last year, but Athens is a far cry from Berlin or London. Students in the UK held a rowdy protest over tuition hikes at the end of last year, but so far none of the European protests/riots have influenced any significant changes in economic or political policies. [7]. Continued deterioration in global financial markets will lead to stronger and more frequent popular outbursts, and politicians may be forced to ease up on austerity measures as their respective elections draw near. These concessions could keep European populations relatively obedient and docile for another year or so, but they will ultimately be too few, offered way too late.

    In the U.S., President Obama’s proposed budget for 2011, which was released two months after he extended the Bush tax cuts for the wealthiest Americans (projected to increase the federal deficit by almost $900B over two years [8]), would allegedly reduce the deficit by $1.1T over the next decade. This reduction would be achieved in part by cutting financial aid and heating energy subsidies to those Americans already living below the poverty line. While the politicians have not yet mustered the courage to touch Medicare and Social Security, their financial masters are already figuring out how to manipulate public perception for their benefit (Bloomberg, Oct. 2010):

    Almost three in five say privatization of the Medicare program, with assistance for low-income seniors, should be considered when lawmakers discuss how to close the budget gap. A majority, though, oppose raising the age at which people can start receiving Medicare benefits.

    Americans are narrowly against lawmakers considering Social Security privatization as a means to reduce the deficit. Forty-eight percent say that should be off the table versus 44 percent who want the possibility looked at. Almost three in four favor lawmakers studying removal of the Social Security tax cap so wages over $107,000 a year are taxable.

    More than 55 percent of those surveyed under the age of 65 say they aren’t confident they’ll get the same benefits from Social Security and Medicare that seniors are getting today.

    There is no doubt that entitlement spending needs to and will be reduced, but it is the context in which this reduction takes place that is most important. Benefit cuts combined with privatization would be ideal for the financial elites, as that frees up money to pay interest on federal debt and provides them more funds on which to levy hefty fees and commissions. The process is even more stark at the state level, where governments are beginning to slash every part of their budgets except the one most exploitative and burdensome, interest paid on debt owed to bankers.

    In fact, the main reason why municipalities are so cash-starved right now is that banks are refusing to roll over the unproductive debt that they saddled on these communities in the first place. At the same time, they can use speculative financial instruments (i.e. CDS) to short municipal bonds and profit from deterioration in public finances. If I was a completely objective observer, who had left the ground and was floating through the upper levels of the Earth’s atmosphere, then I would be forced to remark that this controlled demolition, frustrating and chaotic up close, is simply beautiful from miles away.

    Still, the financial contract killers are not finding their hits so easy to carry out in states such as Wisconsin, Nevada, Ohio, Indiana and New Jersey. Governors and Congressmen in these states have attempted to implement legislation that would block the ability of public unions to engage in collective bargaining over their salaries and benefits, which would then make it easier to shove the elites’ austerity agenda down their throats. The protesting public union workers may still be ignorant of the economic reality they are bound to face, but they do show us that values of self-dignity and communal, organized resistance still remain active in the center of a cold and soulless financial empire.

    It is certainly premature to declare some kind of popular victory in the developed world, but, by the same token, the elites can hardly afford to ignore the new, tricky variables now incorporated into their equations. Large segments of the populations in China, Europe and the U.S. are beginning to face the very real prospect that the wealth they currently have will quickly deform into a distant memory, and the wealth they expected to have was never meant to be. Through social media, telecommunications and sheer will power, the disenchanted have an ability to share their frustrations and organize demonstrations on a meaningful scale.

    There is still a legitimate possibility that those people living in “central hubs” of our global network will remain brainwashed a bit too long, and/or their efforts to confront the financial elites will fall a hair too short. It would certainly be a mistake to underestimate the tendency of financially-enslaved people to follow their fellow lemmings right off the edge of a cliff. However, there are more fundamental, non-financial systems that pose a near-term threat to those attempting to maintain a global network of power. While financial capitalism has been a large force behind the expansion of socioeconomic complexity (and corresponding wealth/power inequality) in recent years, energy and environmental resources are ultimately the bedrock foundations of every complex system on Earth.

    The third article in this series will focus on ecosystem degradation, energy scarcity and climate change as major complications to the otherwise simple calculations of global financial elites. Any wealth that manages to survive the worst phases of the global financial crisis will only be as valuable as the Earth’s environmental and energy systems allow it to be. It will certainly be difficult to continue concentrating wealth when there is very little left to concentrate, but, at the same time, it would be naive to assume that the elites have not considered critical issues such as peak oil and climate change. Next time, we will explore the plausibility of less than 0.5% of the global human population being able to control the other 99.5% as the world burns around them.

    March 7 2011: Financial Threats to Power

    [The Automatic Earth]

    The Math is Different at the Top

    without comments

    Detroit Publishing Co. Curb market 1905
    “Broad Street exchange and curb brokers, New York City”

    Ilargi: In the past few weeks, dysfunctional societies have become a very popular theme. So what makes them dysfunctional? Is it just about physical and mental suppression, or are economic factors just as important? How about Mubabrak’s rumored $40 billion stash outside of Egypt? Or the $170 billion the US estimates Kadaffi and his family control in funds invested in foreign nations? In a Wikileaks cable on Saudi Arabia, a prince is quoted as saying “the revenues from ‘one million barrels of oil per day’ go entirely to ‘five or six princes”. At $95+ per barrel, you do that math.

    And if we can agree that things like that are factors in destabilizing societies, how can we not also look at the fast increasing inequalites in western economies? Incomes, job security, health- and other benefits, pensions, average pay, and of course jobs themselves, everything is rapidly deteriorating. While at the same time bankers and politicians are siphoning off what they can get away with from the public funds that by right belong to the same people who lose their jobs, health care access, pensions and homes. And desperately need those funds.

    Are we really to believe that the reaction in the western world to these financial atrocities will forever be different from what they are elsewhere today? How, exactly, then are Jamie Dimon and Lloyd Blankfein different from Mubarak and Ben Ali? Is it because what they do is legal? That would be too easy; they make the laws. What Mubarak did was perfectly legal in Egypt; he too made the laws. Is it because Lloyd and Jamie wear no crowns? Are we that easily fooled?

    Here’s Ashvin with the first part of this take on this.

    Ashvin Pandurangi:

    The Math is Different at the Top

    It’s Not Rocket Science.

    It’s just basic arithmetic. 2+2 = 4 …

    Privately-owned central banks + discretionary monetary policy = systemic corruption/oppression.

    If the Food & Drug Administration had 100% of its shares owned by private pharmaceutical companies, and, a few months after implementing some radical new regulatory directives, these companies began making record profits and their executives receiving record bonuses, then it wouldn’t be too difficult to understand why.

    Well, that’s not necessarily a hypothetical as much as a sad representation of reality, but the connection is even more blatant in the case of the “Federal” Reserve. It’s 100% owned by private financial institutions, which receive 6% annual dividends on their shares, and have enormous control over the selection of its Board of Governors, who in turn have enormous control over its Open Market Operations.

    After the Fed launched its “QE1″ and “QE2″ programs in 2008 and 2010, the two most aggressive monetary directives ever undertaken in America (they will combine to total ~$2.5T in debt-asset purchases [1]), the banks have posted “their two best years in investment banking and trading”.

    For the five biggest institutions (Goldman Sachs, JP Morgan, Citigroup, Morgan Stanley, Bank of America), revenues generated in 2010 were only exceeded by those of one other year in history, 2009. [2]. These two years just happened to follow the onset of the worst economic depression the world has ever experienced, which is still right on track to surpass the global financial and social turmoil caused by the Great Depression. If you think that is an irresponsible exaggeration, then just stop and reflect on the fact that Germany and Japan did not have any access to nuclear or biological weapons of mass destruction back in the 1930s.

    Moreover, the worst financial effects of the Great Depression were primarily limited to the Americas and Europe, while the latest credit bubble had stretched its tentacles to every single corner of the globe. North Africa and the Middle East have already descended into the belly of the financial beast, and it is highly likely that certain parts of Europe (i.e. Greece, Spain, Portugal, Italy) and Asia (i.e. Vietnam, Pakistan, Sri Lanka, etc.) will shortly (within the next year) follow their footsteps down the beaten path.

    We must remember that the financial elites running the Fed and IMF are not only concerned with making vast sums of money, but also retaining and expanding their grip on the global levers of power. So is it a coincidence that many of these politically unstable countries had been targets of American imperialistic (financial) domination for years now, and that their sociopolitical deterioration presents glaring opportunities for outright regional intervention by the U.S. military-industrial complex?

    Perhaps not, since the U.S. has often used economic catastrophe to direct economic and political policy in other countries and concentrate ever-more financial wealth in the hands of a few global corporations. Naomi Klein briefly outlines the dynamics of this process in the Introduction of her acclaimed book, The Shock Doctrine, under the direction of its most notorious proponent, Milton Friedman:

    Friedman first learned how to exploit a shock or crisis in the mid-70s, when he advised the dictator General Augusto Pinochet. Not only were Chileans in a state of shock after Pinochet’s violent coup, but the country was also traumatised by hyperinflation. Friedman advised Pinochet to impose a rapid-fire transformation of the economy – tax cuts, free trade, privatised services, cuts to social spending and deregulation.

    It was the most extreme capitalist makeover ever attempted anywhere, and it became known as a “Chicago School” revolution, as so many of Pinochet’s economists had studied under Friedman there. Friedman coined a phrase for this painful tactic: economic “shock treatment”. In the decades since, whenever governments have imposed sweeping free-market programs, the all-at-once shock treatment, or “shock therapy”, has been the method of choice.

    The invasion of Iraq was a more recent and brutal deployment of “shock therapy”, which was premised on the existential threat of Saddam Hussein in possession of imaginary WMD, and this time the U.S. military was directly involved (and still is). So there is no lack of credible evidence and common sense to suggest that such “shock” tactics are now being focused on both developed and developing economies in an attempt to create a new global, neo-liberal financial order. However, the scope, scale and specific consequences of the latest financial crisis are not things which can be easily controlled by a few powerful institutions such as the Fed, IMF, World Bank or even the Pentagon, if they can be controlled at all.

    Many of the existing power structures in the oil-rich Middle East are clearly targets of destabilization by the financial empire, but it is unclear whether Egypt’s revolution was a part of the plan, since Mubarak has always been a tried-and-true ally of the financial elite, and surely the same is true of the House of Saud.

    Mubarak’s departure may very well be a non-factor for the economic/political realities faced by the Egyptian people, but it can definitely be viewed as a deeply symbolic event. As I alluded to before, the once-propagandized threats of “WMD” and “terrorists” in the region appear to have manifested themselves as actual forces of disruption to be reckoned with. Libya’s Qadaffi has always been a stubborn thorn in the empire’s side, so he would not be missed, but if he were to actually blow up the country’s oil pipelines on his way out [3], the elites would probably not be very happy about it.

    Then again, such a catastrophe could provide just the economic shock needed to justify more forceful intervention in the region, if any such justification is even needed at this point. The problem is that, while the original arithmetic is simple enough to understand, complex systems of nature always have a way of introducing unexpected variables into the equation. Are we just following the simple logic which dictates that every economic policy is crafted for the benefit of financial elites, or are we manufacturing an elaborate narrative in which every single event is a stepping stone towards a final pre-conceived destination? One thing we can be certain of is the fact that no complex network can be maintained without some level of integrity in its central hubs, where most of the activity takes place.

    The major financial executives may be raking in record stacks of stolen dough, but average American and European citizens are intensely watching their wealth evaporate into thin air as they become increasingly desperate with every passing day. The same could be said of China and India, where there are enormous credit bubbles just itching to pop, and combined comprise more than 11% of the world’s GDP and almost 40% of the entire world’s population. [4], [5].

    It will be increasingly difficult for any group of human beings, no matter how powerful, to maintain a global financial order as the masses wake up from their fleeting dreams of unbridled prosperity. Seated comfortably at my computer, writing about global financial trends marked by increasing wealth inequality, I can confidently say that two plus two always equals four. Sitting atop the ivory towers of Washington and Wall Street, the math is perhaps a bit more difficult and a bit less certain.

    *Part II in this series will discuss the deterioration of ecosytems underlying the industrial/financial global economy, and how this dynamic introduces even more uncertainty for the financial elites.

    March 1 2011: The Math is Different at the Top

    [The Automatic Earth]

    Nicole Foss: We Need Freedom of Action To Confront Peak Oil

    with one comment

    January 05, 2011

    In the third video in the series “Peak Oil and a Changing Climate” from The Nation and On The Earth Productions, co-editor of The Automatic Earth, Nicole M. Foss, explains how energy relates to the economy and what our impending energy crisis will look like. Foss discusses the issues associated with peak oil in financial rather than environmental terms, because she finds that peak oil has much more to do with finance than it does with climate change.

    Foss talks about what she calls a “false positive feedback loop,” which involves optimism leading to “caution being thrown to the wind.” When this happens, Foss believes that people become angry. Succumbing to fear and anger might lead to engagement in destructive behavior, which would make it harder for society to confront peak oil and climate change.

    Reacting to former Vice President Dick Cheney, who once said “the American way of life is not negotiable,” Foss says, “That’s true because reality is not going to negotiate with you.”

    For more videos in the series visit The Nation – www.thenation.com

    | Gramercy Images |

    Written by testudoetlepus

    February 12th, 2011 at 6:48 pm

    The Illuminati’s Secret 20 Trillion Dollar Bank

    without comments

    Of all the scams, the worldwide banking system is one of the most mind-boggling. Never mind the entire false premise of fiat money and the debt system, that vast amounts of this illusory “currency” get shifted every micro-second just begs deceit and piracy.
    Trouble is, if you “buy into it” you’re already ensnared, and it’s either eat, or be eaten. That’s their design.

    Ownership by Whom?

    The estimated value of the Rothschild family’s total holdings is at 500 Trillion dollars. So what. The entire planet is supposedly “owned” by a very small percentage of people. So?
    Can anyone “own” anything? Ownership is a temporary power trip for the unenlightened–everything always gets passed on. Like the temporary unit we all live in called our body, it’s an illusion that anyone can “live forever” physically never mind truly “possess” anything if we look at things truthfully.

    However…

    That would be fine if it was just a matter of perception. Trouble is, these ultra-possessive creeps called the global elite or Illuminati impose their system of temporal power beliefs on the rest of us. Either we play the game their way, or we’re locked out of the playground and cut off from supplies by their hired thugs.
    It’s a beautiful planet with lots of beautiful people, but the world “system” is very ugly and run by non-empathetic psychopaths.

    More Here..

    So There’s This Debate Tonight . . .

    The Illuminati’s Secret 20 Trillion Dollar Bank

    [The Coming Economic Depression]

    Written by testudoetlepus

    February 10th, 2011 at 5:46 pm