Tuesday, September 27, 2011

Look out. A Goldman Economist Offers A Plan To "Fix" the Economy

Sven Jari Stehn

A Goldman Sachs economist, Sven Jari Stehn, has definitely jumped the shark, or expects the US to. The audacity of this plan is exceeded only by the insanity of it. And guess who picks up the tab, via increased cost of living and devaluation of savings? You guessed it: the same wage-earners who picked up the tab for the financial industry's previous boondoggles and extortion of the middle class. Increased inflation wacks the working hardest because they expend more of their income on commodities like food and fuel, and because they lack sophisticated investments to hedge against inflation. Cheers, Sven. I hope this brilliant plan works out for you. And I hope you never have to work for a living.
But with an overload of pessimism already in the market, the Fed's "Twist" announced last week-in which it plans to swap out $400 billion of short-term government debt on its $2.8 trillion balance sheet and buy-longer-duration Treasurys-also has dampened enthusiasm for fundamental economic growth.
The Treasury market is sending the message that inflation, in particular the healthy kind that comes from growth, is dead for now as the central bank commits to a zero-interest rate policy for at least the next two years.
"One source of inflation is a healthy economy running at full tilt and companies exercising pricing power over the consumers of their goods and services," Nicholas Colas, chief market strategist at ConvergEx in New York, wrote in his daily market analysis.
"A 10-year note yielding less than 2 percent signals that Treasury buyers do not think such a scenario will play out until 2021 at the earliest," he continued. "That means little domestic earnings growth through the cycle and even less in the way of a recovery in domestic labor markets. Hard assumptions to justify owning equities, to be sure."
That idea of generating positive inflation has gained prominence recently as forecasts for gross domestic product growth come down and the Fed advances its idea to drive down borrowing costs from already near-record lows.
Over the weekend, Goldman Sachs economist Sven Jari Stehn released a bold proposal that would entail a joint effort between the Fed and Congress.
Washington, under Stehn's plan, would embark on an aggressive stimulus program using government debt. The Fed then would crank up the printing presses and simply monetize the debt away once growth has reached a desired level. 
It's a dangerous plan that risks inflation, particularly when the headline rate is at 3.6 percent and the core rate-stripping out food and energy-is at 1.8 percent, near the Fed's desired range of 2 percent. The controlling of inflation is half of the central bank's dual mandate, so the idea is representative of how desperate the market is of creating growth.
"Combining fiscal stimulus with a change in the Fed's targeting regime and further purchases of Treasury securities would be a powerful device to enhance the credibility of the Fed's commitment to push up prices," Stehn wrote in a research note. "Such cooperation would be a radical but highly effective tool: fiscal policy would accumulate additional public debt and the Fed would inflate it away."

Fed's 'Twist' Pulling Down Bond Yields-Are Stocks Next?

Thursday, September 22, 2011

Jobs, You Say, Mr. President?

Land in Alberta Befor and After Tar Sand Oil Extraction photo: Watchdog Progressive

The president will approve the Keystone XL tar sands oil pipeline, planet be damned (current "cancellation" not withstanding), I know it. I feel it. Or, maybe he has turned Republican too many times already, so I am conditioned to expect the worst. I think he fears Republican politicians, and so-called business "leaders" (who should really be called "rich-folk-leaders") calling him a "job-killer." It isn't environmental regulations (quite the contrary, such regulations create jobs), and it isn't uncertainty (business in predicated on uncertainty -- hence competition, profits, and loss!) that prevents the creation of jobs. It is impoverishment of the middle-class. And that is due solely to Republican Starve the Beast policy, and the craven and callous short term greed of "business leaders" who sold off our manufacturing base for pennies on the dollar, and became importers.

Anyway, here is a letter I have sent to the President about ten times (the XL part, the Renewable Energy Standard [RES] part I added today). You might want to send something similar, or identical. Feel free. In fact, do it right now. Here is the link to the White House: http://www.whitehouse.gov/contact

Dear Mr. President,

    I urge you to deny a permit to the Keystone XL pipeline. Tar sand oil extraction is a colossal environmental disaster. If you permit this pipeline, you will be giving the nod to the immediate destruction of vast tracts of Alberta, and ultimately to our oceans, forests, and thousands of species... not to mention the renewable energy job opportunities lost through opportunity cost and the economic impacts of a ruined US environment and reputation.
    Jim Hansen, a renowned climate scientist at NASA, condensed the message well: "Tar sands production is game over for global warming mitigation." If you stand up for nothing else during your presidency, stand up for this; stop Keystone XL, and be remembered as the only president who stood up to Big Oil. Thanks.

    Incidentally, if you are interested in creating good, long-term, domestic jobs, A Renewable Energy Standard of at least 15% (how about 25% by 2025, still an embarrassingly modest goal -- ask Mr. Chu) provides essential motivation for utilities to replace existing inefficient, toxic, capital intensive electricity generators with efficient, cost-effective, labor-intensive renewable energy.

    Replacing coal with renewable energy -- a plausible, cost-effective plan -- would create 4.5 million net jobs, and generate $4.3 trillion in job-creating economic activity. (http://completelybaked.blogspot.com/2010/08/keep-doing-what-we-been-doing-destroy.html)

    So why not support an RES (i.e. S.559.IS, as well as the REC bill, S.1291)? Because you fear energy industry propagandists will attack you. Fear. That's the only reason not to vigorously promote renewable energy. Fear that you will not be re-elected.

    Please find the courage to act in the best interest of your constituents and promote renewable energy with all the enthusiasm you can muster. It is our only hope for a viable economic and environmental future.

Thanks, again.   
Sincerely,
Jim Welke
Green Collar Jobs, via climatelab photo: Solar Richmond


Monday, September 19, 2011

#takewallstreet #occupywallstreet

Some say occupywallstreet has not articulated their complaints clearly enough. I disagree. If you listen to what occupiers talk about in their live feed, or read what is on their website, occupywallst.org, or on the adbusters page devoted to occupywallstreet, or on the Facebook page, or the NYC General Assembly page, the motives of occupywallstreet become eminently clear. Those who don't understand, need to clear the scales from their eyes, as one old book put it.


It may be presumptuous of me, but here are a few ideas I think -- or have gathered -- the occupywallstreet protesters are sacrificing their time, and risking their safety for:
  • It's about greed-blinded corporatism, not genuine, free-market commerce
  • It's about free-market capitalism, not unlawfully-fixed-market capitalism
  • It's about fair trade, not job-stealing, free-trade empty promises of prosperity
  • It's about outsourcing jobs and offshoring profits and de-unionizing wage earners
  • It's about no healthcare for working poor, but bailouts for the rich -- cheers
  • It's about tax-free private-equity takeover and liquidation of mfg jobs & knowhow
  • It's about 15% cap gain regressive tax rewards for selling out the middle class
  • It's about regressive tax law that concentrate wealth among those who destroy us
  • It's about privatizing profit for 1% and socializing loss at the expense of 99%
  • It's about trading broad, tolerant prosperity for narrow, hateful oligarchy
  • It's about commodity speculation imposing de facto taxes on trampled wage-earners
  • It's about a securities transaction tax to quench speculation and fund prosperity
  • It's about a securities transaction tax to diminish speculation induced inflation
  • It's about educating the duped who don't know they've been duped
  • It's about saving agriculture from corporatist monoculture and toxic GMO's
  • It's about squandering more on defense than the next 18 big spenders combined
  • It's about Congress, the Executive, and Judiciary bought by corporate lobbyists
  • * It's about Constitution trampling, police-state, "Patriot" Act surveillance
  • It's about the impossibility of repaying usurious student loans if no jobs exist
  • It's about Constitution trampling, police-state, surveillance of citizens
  • It's about austerity measures during a depression leading to trickle down disaster
  • It's about gambling with and losing other people's money, then demanding charity
  • It's about people who drink corporatist Kool-Aid, and the rest of US get hungover
  • It's about lazy laggards who cling to lobbied-for-and-obediently-legislated-filthy-stolen-lucre

A modest demand: before the 99% votes for them, let's insist politicians register as independents & refuse corporate $$$


Read more about this artificially concocted "economic crisis."
Peace.


Update 10-Oct:
Former Rep. Alan Grayson (D-FL) concisely summarizes what he thinks Occupy Wall Street is all about (I think he is right, and I suspect most protesters would agree):

Update 3-Oct: I don't know what to call this except a big can of whoop-ass opened up on Fox News by a guy with some serious interview game. Hoo-rah for the man on the street. I'm mad as hell, and I'm not gonna take it any-f-ing more!








Watch live streaming video from globalrevolution at livestream.com

From Flux, Media Center, OccupyWallStreet, Zucotti Park -- give it a look, it's impressive:

Monday, September 12, 2011

Coal Mine Industry Shill?

Otter Creek Coal Tracts
photo: katfranchino

Sen. Carmine Mowbray (R-MT 6th District), a first term, governor appointed, state senator in Montana's legislature, offers a fine example of how it sounds when you are bought, fully bought, in her article, "Capitol Letters — 'It's All About Business'," in the Lake County Leader, a local paper she owns in her district. She advocates strip mining Otter Creek, where the state cut land lease auction rates from $0.25 to $0.15 per ton (which is between two and six times lower than Wyoming rates) when Arch Coal said the rates were too high. Arch Coal subsequently bid on the rights to strip mine Otter Creek, and won. The land was leased to them for coal mining by the state without first performing an environmental impact statement. Earth Justice and the Sierra Club sued Montana and Arch Coal over that gesture, and in January a judge denied Montana and Arch Coal's motion to dismiss the case, saying the case had merit.

Senator Mowbray cheer leads for coal strip-mining like I've never seen coal strip-mining cheer led for before...
I jumped at the chance to join several legislators in Billings for Arch Coal’s field trip in August. We boarded our bus early for a full day of economic education. We observed Montana’s Otter Creek proposed coal tract, with the potential to provide hundreds of millions of dollars in revenue and several hundred Montana jobs. Looking over the beautiful country, I asked Senator Jim Peterson, “How would YOU feel if Arch came to your ranch and told you they were going to displace you and your neighbors for up to 20 years so they could gouge out the coal beneath your land?” 
He said, “I could temporarily relocate and they’d leave the land as good or better than they found it, or I’d take the buy-out money and go elsewhere to ranch.” 
We continued south of Gillette to the Black Thunder mine, the largest surface coal mine in North America. We entered the control house of the huge drag line, mesmerized by the garage-sized bucket, colossal pulleys and cables the diameter of fence posts.
Our guides explained their approach to responsible resource development. The mine produces roughly 81 million tons of coal per year and employs over 1,600 people. Average wage is over $77,000. In 2009 the coal industry provided over $1 billion to Wyoming’s state and local governments. After development, the disturbed land is reclaimed, which we saw as wildlife and cattle grazed. 
The pride the men and women take in these jobs was obvious. Arch has an admirable safety record, and they have no problem finding good people to fill positions. Montana stands to gain greatly by responsible coal development. 
With a healthy economy, more folks are likely to stroll through their local farmer’s markets, stimulating trade with businesses, small and large.
Senator Mowbray is just so happy about strip-mining coal. And that fellow senator, Jim Peterson, if they wanted to strip mine his land, why he'd just go elsewhere to ranch. Sure. It's that easy, I bet. These folks are leading their constituents into the abyss, and I suspect their constituents -- most anyway -- have no idea what's in the abyss.
coal strip mine
photo: Coal Power
Ms. Mowbray was appointed in 2011 to replace Senator John Brueggeman, who resigned. But, look at the money contributed by the mining industry to Montana's candidates the year Mr. Brueggeman was first elected to the senate: Montana 2004 Mining Contributions

I reckon Ms. Mowbray can expect some generous contributions from coal mine operator Arch coal, seeing how she so enthusiastically supports strip mining Otter Creek -- and permanently destroying Otter Creek.

I write about this case because it is such an egregious example of politicians working to promote the interests of industry over the interests of their constituents. They destroy public land in exchange for campaign contributions, and $250 million a year in state tax & royalty revenue. The strip mine will create a few jobs (about 250 at each of two mines for 40 years, and 500 to construct the Tongue River Railroad, for 2-3 years), but the cost of dealing with the ensuing environmental degradation will surely exceed the tax & royalty revenue, which incidentally must be used to finance state education programs. Other state money will undoubtedly be used to subsidize mines with new roads and increased road maintenance, power lines, and perpetual treatment of polluted groundwater -- and in Montana, groundwater is dear.

By the way, Arch Coal will need new rail lines along Tongue River to get the coal out. That requires rights of way and more land ruined for other uses. Ranchers are fighting this in court.

Folks in Montana won't get much for the destruction of their land. And the costs have not even been calculated since Montana didn't bother with an environmental impact study before leasing the land. Not to mention the intangible moral cost of pristine land and the animals and plants that inhabit it destroyed forever for something we do not even need -- Arch intends to export this coal. Besides, renewable energy and efficiency could easily, cost-effectively, job-intensively, immediately replace this coal, and create 4.5 million jobs, over and above those lost by coal miners, and other dirty-energy workers. And it would add $4.3 trillion of domestic revenue to our economy.

The Northern Cheyenne Tribe, just to the west of the Otter Creek tracts, will be done to by the mining companies, too. They already have mines to the north and south, and dirty, dusty, noisy, constant coal trains on all sides. So this is just one more insult added to a long list of injuries. These people, like common American wage-earners, are relegated to third class status -- "shut up and take what we give you," is the corporate party line, and Arch Coal will stick with that party line to great effect. The Cheyenne did get a settlement from the State of Montana, but the reality is that not much is settled in the Cheyennes' favor. The Cheyenne fought for redress, and their effort warrants praise, but they are aligned once again in opposition to formidable if not impervious forces. Here is a summary from the MMB FAQ:
Prior to the federal conveyance of the Otter Creek tracts, the Land Board entered into a February 19, 2002, Settlement Agreement with the Northern Cheyenne Tribe (NCT). The NCT had concerns over potential impacts to the NCT from development of a mine at Otter Creek. They filed suit against the federal government opposing the transfer, but withdrew that suit after entering into an agreement with the Land Board. Key provisions of the Settlement Agreement include:
LAND BOARD SUPPORT FOR:
  • Federal impact legislation;
  • Improvements by the state of key off-Reservation roads;
  • Cooperative enforcement agreements among the Tribe, counties and, if appropriate, the State Highway Patrol.
REQUIRED OPERATING PLANS FOR:
  • Otter Creek related training and employment opportunities for members of the Tribe and other local residents;
  • Otter Creek related contracting opportunities for the Tribe and its members;
  • Environmental monitoring of air, water and biological resources on the Northern Cheyenne Reservation which may be affected by mining operations;
  • A cultural resource program addressing Northern Cheyenne historic, cultural, religious and burial sites or items, including plants having cultural or religious significance.
If the Land Board issues any coal leases in the Otter Creek project area, these leases will expressly require the lessee to comply with the provisions of the Settlement Agreement.
One day, Montana's residents will find themselves living in a toxic wasteland, dying of mysterious ailments, and wondering why nobody warned them. Well, you've been warned.

strip mining stream pollution
photo: one penny sheet
If you want more detailed info about Otter Creek, and western coal mining, and coal exporting in general, have a look at this exceptionally well done white paper from the Northern Plains Resource Council:
Exporting Powder River Basin Coal: Risks and Costs

I'll end this with Montana's Minerals Management Bureau FAQ that can also be found here: http://dnrc.mt.gov/Trust/MMB/OtterCreek/Default.asp
Otter Creek Coal Proposal
Fact Sheet
June 25, 2009
Prepared by Montana DNRC
What is the coal leasing process? How do my comments fit into the process?
The department and Governor’s office have received significant interest in having the Otter Creek state coal tracts put forth for public bidding. In May 2008 the Land Board authorized the department to prepare a coal leasing appraisal to assist the board in its review of whether or not and upon what terms to place the state school trust coal rights up for lease. The department is now making the appraisal available for review and public comment, as provided by state statute. (77-3-312, MCA)
If the Land Board decides to solicit competitive bids on state coal leases at Otter Creek, the board will utilize the appraisal and public comments received to design a bid package to secure fair market value for the coal leases. If a bid or bids are received, the Land Board will evaluate whether to accept or reject the bids. If the Land Board determines it has received an acceptable bid, it would then direct the department to issue coal leases to the successful bidder.
How much coal exists at Otter Creek? What is its development potential?
State recoverable coal totals 616 million tons, or about one-half of the total 1.3 billion ton reserve.
Of that, 572.3 million tons of state coal is not leased.
What revenues could be generated from leasing and development of the Otter
Creek property?
State coal leases generate two types of revenue for the school trust beneficiary – rentals and
royalties. Rentals are payments made by the lessee to hold the lease. Rentals may include bonus payments, which are amounts offered through a competitive bid process over and above the first year base rental. If the coal lease is developed, royalties are paid on each ton of coal removed from the lease. Royalties represent the state’s share of the gross revenue generated when the coal is sold. Royalties constitute the overwhelming majority of gross revenue generated from a producing coal lease.
The appraisal yields the following estimated value for the state property that may be considered for lease and development.
Minimum Bonus Payment: $37.3 million ($57.2 million if rail line is separately financed)
Annual Rentals ($3/acre): $1.0 million (over 40 years)
Royalty Payments (12.5%): $1.4 billion (over 40 years)
Since the state’s Otter Creek property is school trust land, these revenues would help support K-12 education in Montana.
If a mine were developed, the state and Powder River County would receive the following additional estimated tax payments over the life of the mine:
State of Montana Severance Tax: $2.7 billion
Gross Receipts Tax: $0.9 billion
RIT Tax: $0.072 billion
Powder River County Property Tax: $1.09 billion
Why does the appraisal analyze a coal mine project both with and without railroad
development costs?
Appraisal methodology requires an estimate to consider the development costs needed to get the production from the proposed project to market. Therefore, the base appraisal does incorporate financing costs for that portion of the Tongue River Railroad from Otter Creek to Miles City. For years state Land Boards have established a policy that all transactions involving state trust land resources be valued as if access is in place. The railroad should be viewed as if it had separate financing.
Therefore, the appraisal also calculated the net present value of the proposed mine operations
without any capital investment required for railroad construction. This calculation yielded the higher forecast bonus bid of $0.10 per ton.
What is the Settlement Agreement between the Northern Cheyenne Tribe and Land
Board?
Prior to the federal conveyance of the Otter Creek tracts, the Land Board entered into a February 19, 2002, Settlement Agreement with the Northern Cheyenne Tribe (NCT). The NCT had concerns over potential impacts to the NCT from development of a mine at Otter Creek. They filed suit against the federal government opposing the transfer, but withdrew that suit after entering into an agreement with the Land Board. Key provisions of the Settlement Agreement include:
LAND BOARD SUPPORT FOR:
  • Federal impact legislation;
  • Improvements by the state of key off-Reservation roads;
  • Cooperative enforcement agreements among the Tribe, counties and, if appropriate, the State Highway Patrol.
REQUIRED OPERATING PLANS FOR:
  • Otter Creek related training and employment opportunities for members of the
  • Tribe and other local residents;
  • Otter Creek related contracting opportunities for the Tribe and its members;
  • Environmental monitoring of air, water and biological resources on the Northern Cheyenne Reservation which may be affected by mining operations;
  • A cultural resource program addressing Northern Cheyenne historic, cultural, religious and burial sites or items, including plants having cultural or religious significance.
If the Land Board issues any coal leases in the Otter Creek project area, these leases will expressly require the lessee to comply with the provisions of the Settlement Agreement.
Does the issuance of coal leases authorize a mine to be developed?
No. A coal lease establishes the operating, rental and royalty provisions that the lessee must comply with, but does not authorize mining activity. The mine lessee/operator must submit detailed operating and reclamation plans to the Department of Natural Resources and Conservation (DNRC) and the Department of Environmental Quality (DEQ) for permitting review pursuant to the Montana Environmental Policy Act (MEPA). This environmental review process includes opportunity for public review and comment. The lessee/operator cannot commence mining activities unless the DNRC and DEQ issue approvals.
Is coal mining and reclamation regulated in Montana?
Yes. The Montana Department of Environmental Quality (DEQ) is charged with regulating coal
mining operations on federal, state and private lands in Montana. The DEQ reviews proposed mine operating and reclamation plans in detail pursuant to MEPA. DEQ staff inspect and monitor all phases of exploration, mining and reclamation. DEQ also calculates and requires full reclamation bonding from the mine operator.
A significant portion of the surface estate above the coal resources owned by the
state school trust is privately owned. How are surface owners compensated for
their property ownership?
While ownership of the coal estate carries with it the right to explore and develop the coal resource, the surface estate owner is entitled to compensation for the impact to their property. It is not uncommon for the operator of a surface coal mine to either purchase or enter into a long-term lease agreement with the split-estate surface owner. Where the state owns both the coal and the surface estate, the state’s surface lessee would be entitled to compensation for lease improvements on any acreage withdrawn from the surface lease.
Is there an estimate of how many jobs this project might create?
A briefing packet prepared during the Federal process of transferring the Otter Creek tracts to the State of Montana provides the following job estimates:
• Construction of Tongue River Railroad (2-3 years): 500
• New mine 1 (40+ years): 261
• New mine 2 (40+ years): 225

there is a plan...

everyone's friend, David Koch
photo: forbes.com

Not to sound like a conspiracy theorist, but...

1. Unemployment is way up. Folks are desperate for jobs, which means they will work harder for less. And they won't clamor for unions, health care, pensions, or a minimum wage.

2. Taxes have been cut to the point of government insolvency. Local, state, and the federal government can either raise taxes, or cut programs that provide education and safety nets for the poor and middle-class: mainly education, food stamps, housing assistance, energy assistance (home heating & cooling), small business assistance, public transportation, Medicaid, Medicare, Social Security. With these programs diminishd, folks are more desperate for jobs, and more willing to work harder for less (witness the early days of the industrial revolution: 14 hour days, 7 days a week, child labor, no worker health & safety rules, no minimum wage -- a dream for corporate management).

3. The economy is barely growing, or even contracting, so raising taxes can be dismissed as "job killing." This leaves government shrinkage as the only tenable option.

All of the above suits the Republican Party's corporate campaign contributors just fine. So, Republicans continue to cut taxes, shrink government, and encourage off-shoring to keep unemployment high. And this facilitates the election of a Republican president, who will accelerate the US charge toward third-world oligarchy and concentration of wealth. Count on it. There is a plan...
WPA: unemployed shown at Volunteers of America Soup Kitchen: Washington, D.C. (Circa 1936)
(Picture from the Franklin D. Roosevelt Library, courtesy of the National Archives and Records Administration.)

Saturday, September 10, 2011

Citizens United Ruling Eats Citizens' Lunch

The Supreme Court ruling on the Citizens United case, which grants corporations "personhood" is not good for the election process in the US ...if you are merely a human being, that is. If you are a corporation with corrupt practices that need political protection, then you are in luck. In the words of B Jules, political action video producer and performer:
On January 21, 2010, the Supreme Court ruled that corporate funding of independent political broadcasts in elections cannot be limited because it is protected by the First Amendment. The ruling has enabled a flood of corporate and interest-group funded electioneering communications. It will be up to Americans to decide whether this ruling righted a previously unjust limitation or whether it creates unjust and artificial advantages for some citizens over others.
And B Jules' latest work -- watch, it's worth it:

And, now...write your congressional representatives! Tell 'em to legislate this ruling out of existence with campaign finance reform: no corporate money funneled into campaigns. None. Zero. Zip. Zilch.

If you want to know more about what money is going where, pop on over to opensecrets.org -- you'll be impressed...


Bill McKibben & Tar Sands Action: Right On!

worth watching...
Tar Sands Action: Phase I Highllights



everyone can do something to persuade the President not to approve the toxic XL Pipeline...

so do it now: call, write, show up