NOTE ON CLIMATE CHANGE

Today CNN carried a story about a new report on Climate Change (“Climate Change Crisis ‘Catastrophic’”) by the Global Humanitarian Forum (GHF) of UK with quotes from Kofi Annan.

Bottom line: 300,000 are now dying each year and 300,000,000 – the population of the US of A – are already effected by the impacts of Climate Change.

Before anyone starts ranting about the ‘cause’ of Climate Change here is the SYNERGY position noted in TRILO-G Chapter 24 – Greed, Excess, Ignorance, Myths, Entitlements, Windfalls and Subsidies and restated in Chapter 31 – What Don’t You Understand?:

"SYNERGY’s long standing position is that it does not make ANY difference whether human action is ‘causing’ Climate Change or not.

"What Agencies, Enterprises and Institutions must do IF Global Climate Change IS caused by human action are EXACTLY the same strategies that must be implemented:

1. If Global Climate Change is NOT caused by humans, OR
2. If the Earth is not really warming at this time, OR
3. If, after warming, the Earth starts to re-cool due to some, as yet unknown cause.

"Humans must SHRINK THEIR ECOLOGICAL FOOTPRINT regardless for the direction in which the Global Climate is now tending, regardless of the level of Carbon Dioxide in the atmosphere and regardless of the size of the hole in the Ozone Layer.

"Shrinking humans ecological foot print is a prerequisite to civilization achieving a sustainable trajectory. Denial of this reality is nothing short of high treason against humanity."

Do BR Bloggers have evidence based in SCIENCE of what can be done that will make a difference?

Other than Fundamental Transformation of human settlement patterns, that is.

Are there well documented sources that question the assumptions of the GHF report?

EMR

Uncle Miltie vs John Maynard Keynes

Often, BR discussions have fluctuated about the remedies for the current financial crisis. The arguments seem endless, but then the problems are huge. And, properly, I think, they surround real concerns about massive government deficits and massive injections of liquidity.

One place for some perspective is the June 11, issue of the New York Review of Books which has discussions among seven top economists including "Dr. Doom" Nouriel Roubini of New York University and Paul Krugman, of Princeton and The New York Times.

I found some of the most insightful contributions coming from Niall Ferguson, a Harvard historian. As he puts it -- and this explains the confounding elements of the crisis as alluded to by BR bloggers -- there are two completely contradictory remedies being put in effect at the same time.

One is the free market prescription of the late Milton Friedman who might have urged massive amounts of capital from the Federal Reserve to keep the banking crisis from going Great Depressional. At the same time however, the government is going about a good old John Maynard Keynes solution -- massive fiscal deficits in excess of 12 percent of GDP to pump prime the economy.

"There is a clear contradiction between these two policies and we're trying to have it both ways," Ferguson says. "You can't be a monetarist and Keynesian simultaneously -- at least I can't see how you can, because if the aim of the monetarist policy is to keep interest rates down, to keep liquidity high, the effect of the Keynesian policy must be to drive the interest rates up."

Indeed, the negatives stemming from this two-faced recovery policy might have slunk along OK if the financial credibility of the U.S. isn't tarnished. But it is fast becoming not the case. China used to scarf up all the T-bills we could issue but, as Ferguson notes, "the marriage between China and America is coming to an end. Maybe it's going to end in a messy divorce."

Other participants in the published discussion bring on their own perspectives, but I think Ferguson nails it. Finance guru George Soros adds to the contradictions idea by saying, "The interesting thing is that what needs to be done in the short term is almost exactly the opposite of what needs to be done in the long term."

Maybe that's why I can't really tell much difference between the policies of Bush-Paulson-Bernanke and Obama-Geithner-Bernanke. I find it amusing how so many Republicans trash Obama for continuing the very same policies they voted for last fall. And I find it amusing that Democrats continue to trash Bush-Cheney when they go along with Obama's very similar approach. It could be that nobody knows the answer.

BR bloggers have gone through a litany of causes. I think it was Groveton who said, "Fed, Fed, Fed" and he's probably right, right, right. Alan Greenspan, the deity loved by all sides of the aisle, gave us tons of cheap money by pretending to fight a phantom inflation. The SEC helped by letting banks leverage themselves by three times what they were allowed to do. Fannie and Freddie played a role as did subprime, Wachovia, Countrywide, etc.

As for me, I remember when I took Econ 101 back in the early 1970s, the orthodoxy at most liberal Northeastern uni verities was that Keynes is OK, deficits don't matter. Within a decade Uncle Miltie had changed every one's tune, especially after the big, deficit-generated inflation rates of the 1970s that only Paul Volcker could cure. Now, the free market Milties have run their course. No one seems to know what's next. And we're stuck with a weird hybrid of both men's policies.

Peter Galuszka

ON WAL*MART

At a party over weekend a regular reader of BR suggested that EMR needs to go back and make sure that a failure to respond to some of Larry’s “summaries” does not suggest Larry is right or that there is no sound counter argument.

As luck would have it, even though EMR has been very busy, he has copied some of the more important ones and will re-post the comments and respond as time allows.

Here is a recent comment from Larry that was posted on Jim Bacon’s new Blog The Retirement Crisis. Jim is so prolific that if one does not respond right away the comment is buried. This post was the topic of settlement patterns, not Boomers retiring so EMR pulled it over here out of the fast lane.

In the 22 May Malls: the Ticking Time Bomb post on Empty Malls Larry said:

“I dunno EMR.. I strongly suspect when the dust clears - the WalMarts are going to still be around.”

First, what causes you to come to the conclusion that the dust will clear?

But to make sure the issue is clear:

Over the past decade Wal*Mart would not have shown a profit if all the location-variable costs were fairly allocated and Wal*Mart was not subsidized directly and indirectly. We lay this all out in PART THREE – THE PROBLEM WITH CARS – Chapter 10 – Learning from Big Boxes. There is now some good research on the issue.

That is only the start. Wal*Mart is not the cheapest place to buy a lot of items. One member of our Household recently paid 46 percent more per square foot for a product by the same manufacturer (different size package) in Wal*Mart as another member paid on the same day at Sears (nee Kmart). We use a lot of it and both knew we were getting low.

Wal*Mart is cheap on SOME things but they make it up on the items that their research shows customers will ALSO buy when they go to Wal*Mart for an advertised bargain or an item that is frequently price compared. They use package size and other factors to make things appear cheaper than they are.

Wal*Mart did not become the largest Enterprise in the US of A (for a while) by giving anything away.

For a quick confirmation go to Wegmans and check out their comparison shopping posters updated every few days – Wal*Mart, Costco, Giant, Safeway, Wegmans – milk, bread, etc.

Finally Wal*Mart us rolling out small (15,000 sq ft) shops so they can be closer to the customers because some shoppers have started to baulk at driving long distances to their super stores. Did someone say Balanced components of human settlement.

“To me.. they are like king-sized, modern-day versions of the old mom&pop country stores....”

You can only say that because you have not yet come to grips with locational and scale reality.

“We'll know that we REALLY are in trouble when WalMarts start going belly-up... right?”

One would hope most realize that humans are “in trouble” now even if Wal*Marts are still showing a profit due to subsidy.

EMR

A Love. A Lie. A Foreclosure.

BR bloggers, you know who you are. You live in economically-distressed, forlorn areas such as Great Falls, McLean or the Countryside subdivision of Henrico County. Your brains are secretly hard-wired to the platform committee of the Republican Party. You project tolerance, but well, not exactly so.

In your collective opinion, the housing crisis has been brought on by Freddie and Fannie lowering standards and giving money away to undeserving, dark-skinned Latinos or African-Americans or under-class whites. They have no right to aspire to a better way of life and a bigger house in a classier neighborhood. Who do they think they are? You?

So it is indeed revealing that today's Wall Street Journal has an intriguing book review. The author is Edmund Andrews, an economics reporter for The New York Times, who reveals all in "Busted," how he fell for another woman and got divorced, how much alimony and child support he had to pay out, how he lied to get that huge house and how it all fell apart. Somehow, his experience rings very, very true.

Like myself, Andrews is a member of the liberal news media. He was pulling down about $130,000 clams a year, not exactly BR bucks, but enough. Then, at age 50, he went through a midlife crisis.

He rediscovered a high school flame who was "brainy, regal, sexy, fiery and eclectic." The affair cost him his marriage and big payouts of alimony and child support. Still, the new wife and he had to live well. So, he bought a $460,000 house.

Problem was, the net from his $130,000, given all the messy alimony and support, meant that in real life, there was no way he could qualify for a mortgage that big. But his mortgage broker said that he could use a "liars" mortgage application in which he didn't have to list all of those painful liabilities. He didn't have to pay principal for five years and given the skyrocketing market, he could simply refinance if things didn't work out.

Well, guess what happened? Things didn't work out. Andrews started to miss the big payments. Pretty soon, he was in deep doo-doo. As for the trophy, No. 2, wife, she skeedaddled, and filed for bankruptcy (the reviewer notes that Andrews left this detail out).

The lesson learned? "This crisis would not have been possible without breathtaking cynicism on the part of the brainiest people and the biggest institutions in American finance." Everyone let themselves believe what they wanted, bottom line be damned.

It also goes to show what can happen when mid-life crisis get out of hand. Andrews had to have the big house. Some people want Corvettes. Personally, I wanted, and got, a 20-year-old center-console fishing boat which I was lucky enough to sell at a good price after I realize that no one else in my family was interested in going out in it and the damned thing was eating up about $1,000 each season in repairs.

Andrews points to a higher truth. If you want to understand the kind of greed that caused the financial crisis and the worst recession since the 1930s, don't blame dark-skinned, poor people. Look in the mirror. Fellow BR bloggers, I am not going to name any names. But you know who you are.

Peter Galuszka