Archive for November, 2009

>Lies and Statistics

>by John Michael Greer

The Archdruid Report (November 25 2009)

Druid perspectives on nature, culture, and the future of industrial society

Plenty of difficulties stand in the way of making sense of the economic realities we face at the end of the age of cheap abundant energy. Some of those difficulties are inevitable, to be sure. Our methods of producing goods and services are orders of magnitude more complex than those of previous civilizations, for example, and our economy relies on treating borrowing as wealth to an extent no other society has been harebrained enough to try before; these and other differences make the task of tracing the economic dimensions of the long road of decline and fall ahead of us unavoidably more difficult than they otherwise would be.

Still, there are other sources of difficulty that are entirely voluntary, and I want to talk about some of those self-inflicted blind spots just now. An economy is a system for exchanging goods and services, with all the irreducible variability that this involves. How many potatoes are equal in value to one haircut, for example, depends a good deal on the fact that no two potatoes and no two haircuts are exactly the same, and no two people can be counted on to place quite the same value on either one. Economics, however, is mostly about numbers that measure, in abstract terms, the exchange of potatoes and haircuts (and everything else, of course).

Economists rely implicitly on the claim that those numbers have some meaningful relationship with what’s actually going on when potato farmers get their hair cut and hairdressers order potato salad for lunch. As with any abstraction, a lot gets lost in the process, and sometimes what gets left out proves to be important enough to render the abstraction hopelessly misleading. That risk is hardwired into any process of mathematical modeling, of course, but there are at least two factors that can make it much worse.

The first, of course, is that the numbers can be deliberately juggled to support some agenda that has nothing to do with accurate portrayal of the underlying reality. The second, subtler and even more misleading, is that the presuppositions underlying the model can shape the choice of what’s measured in ways that suppress what’s actually going on in the underlying reality. Combine these two and what you get might best be described as speculative fiction mislabeled as useful data – and the combination of these two is exactly what has happened to the statistics on which too many contemporary economic and political decisions are based.

I suspect most people are aware by now that there’s something seriously askew with the economic statistics cited by government officials and media pundits. Recent rhetoric about “green shoots of recovery” is a case in point. In recent months, I’ve checked in with friends across the US, and nobody seems to be seeing even the slightest suggestion of an upturn in their own businesses or regions. Quite the contrary; all the anecdotal evidence suggests that the Great Recession is tightening its grip on the country as autumn closes in.

There’s a reason for the gap between these reports and the statistics. For decades now, the US government has systematically tinkered with economic figures to make unemployment look lower, inflation milder, and the country more prosperous. The tinkerings in question are perhaps the most enthusiastically bipartisan program in recent memory, encouraged by administrations and congresspeople from both sides of the aisle, and for good reason; life is easier for politicians of every stripe if they can claim to have made the economy work better. As Bernard Gross predicted back in the 1970s, economic indicators have been turned into “economic vindicators” that subordinate information content to public relations gimmickry. These manipulations haven’t been particularly secret, either; visit and you can get the details, along with a nice set of statistics calculated the way the same numbers were done before massaging the figures turned into cosmetic surgery on a scale that would have made the late Michael Jackson gulp in disbelief.

These dubious habits have been duly pilloried in the blogosphere. Still, I’m not at all sure they are as misleading as the second set of distortions I want to discuss. When unemployment figures hold steady or sink modestly, but you and everyone you know are out of a job, it’s at least obvious that something has gone haywire. Far more subtle, because less noticeable, are the biases that creep in because people are watching the wrong set of numbers entirely.

Consider the fuss made in economic circles about productivity. When productivity goes up, politicians and executives preen themselves; when it goes down, or even when it doesn’t increase as fast as current theory says it ought, the cry goes up for more government largesse to get it rising again. Everyone wants the economy to be more productive, right? The devil, though, has his usual residence among the details, because the statistic used to measure productivity doesn’t actually measure how productive the economy is.

Check out A Concise Guide to Macroeconomics (2007) by Harvard Business School professor David A Moss: “The word [productivity] is commonly used as a shorthand for labor productivity, defined as output per worker hour (or, in some cases, as output per worker)”. Output, here as always, is measured in dollars – usually, though not always, corrected for inflation – so what “productivity” means in practice is dollars of income per worker hour. Are there ways for a business to cut down on the employee hours per dollar of income without actually becoming more productive in any more meaningful sense? Of course, and most of them have been aggressively pursued in the hope of parading the magic number of a productivity increase before stockholders and the public.

Perhaps the simplest way to increase productivity along these lines is to change over from products that require high inputs of labor per dollar of value to those that require less. As a very rough generalization, manufacturing goods requires more labor input overall than providing services, and the biggest payoff per worker hour of all is in financial services – how much labor does it take, for example, to produce a credit swap with a theoretical value of ten million dollars? An economy that produces more credit swaps and fewer potatoes is in almost any real sense less productive, since the only value credit swaps have is that they can, under certain arbitrary conditions, be converted into funds that can buy concrete goods and services, such as potatoes; by the standards of productivity universal in the industrial world these days, however, replacing potato farmers with whatever you call the people who manufacture credit swaps (other than “bunco artists”, that is) counts as an increase in productivity. I suspect this is one reason why the US auto industry got so heavily into finance in the run-up to the recent crash; GMAC’s soaring productivity, measured in terms of criminally negligent loans per broker hour, probably did a lot to mask the anemic productivity gains available from the old-fashioned business of making cars.

As important as the misinformation generated by such arbitrary statistical constructs is the void that results because other, arguably more important figures are not being collected at all. In an age that will increasingly be constrained by energy limits, for example, a more useful measure of productivity might be energy productivity – that is, output per barrel of oil equivalent (BOE) of energy consumed. An economy that produces more value with less energy input is arguably an economy better suited to the downslope of Hubbert’s peak, and the relative position of different nations, to say nothing of the trendline of their energy productivity over time, would provide useful information to governments, investors, and the general public alike. For all I know, somebody already calculates this figure, but I’m still waiting to see a politician or an executive crowing over the fact that the country now produces two percent more output per unit of energy.

Now it’s true that a simplistic measurement of energy productivity would still make the production of credit swaps look like a better deal. This is one of the many places where the distinction already made in these essays between primary, secondary, and tertiary economies becomes crucial. To recap, the primary economy is nature itself, or specifically the natural processes that provide the human economy with about three fourths of its total value; the secondary economy is the application of human labor to the production of goods and services; and the tertiary economy is the exchange of abstract units of value, such as money and credit, which serve to regulate the distribution of the goods and services produced by the secondary economy.

The economic statistics used today ignore the primary economy completely, measure the secondary economy purely in terms of the tertiary – calculating production in dollars, say, rather than potatoes and haircuts – and focus obsessively on the tertiary. This fixation means that if an economic policy boosts the tertiary economy, it looks like a good thing, even if that policy does actual harm to the secondary or the primary economies, as it very often does these days. Thus the choice of statistics to track isn’t a neutral factor, or a simple one; if it echoes inaccurate presuppositions – for example, the fantasy that the human economy is independent of nature – it can feed those presuppositions right back in as a distorting factor into every economic decision we make.

How might this be corrected? One useful option, it seems to me, is to divide up several of the most important economic statistics into primary, secondary, and tertiary factors. (Of course the first step is to get honest numbers in the first place; governments aren’t going to do this any time soon, for obvious reasons, but there’s no reason why people and organizations outside of government can’t make a start.) Consider, as a good example, what might be done with the gross domestic product.

To start with, it’s probably a good idea to consider going back to the gross national product; this was quietly dropped in favor of the current measure some years back, because it puts a politically uncomfortable spotlight on America’s economic dependence on the rest of the world. Whichever way that decision goes, the statisticians of some imaginary Bureau of Honest Figures might sort things out something like this:

The gross primary product or GPP might be the value of all unprocessed natural products at the moment they enter the economy – oil as it reaches the wellhead, coal as it leaves the mine, grain as it tumbles into the silo, and so on – minus all the costs incurred in drilling, mining, growing, and so on. (Those belong to the secondary economy.)

The gross secondary product or GSP might be the value of all goods and services in the economy, except for raw materials from nature and financial goods and services.

The gross tertiary product or GTP might be the value of all financial goods and services, and all money or money equivalents, produced by the economy.

The value of having these three separate numbers, instead of one gross domestic (or national) product, is that they can be compared to one another, and their shifts relative to one another can be tracked. If the GTP balloons and the other two products stay flat or decline, for example, that doesn’t mean the country is getting wealthier; it means that the tertiary economy is inflating, and needs to have some air let out of it before it pops. If the GSP increases while the GPP stays flat, and the cost of extracting natural resources isn’t soaring out of sight, then the economy is becoming more efficient at using natural resources, in which case the politicians and executives have good reason to preen themselves in public. Other relative shifts have other messages.

The point that has to be grasped, in this as in so many other contexts, is that the three economies, and the three kinds of wealth they produce, are not interchangeable. Trillions of dollars in credit swaps and derivatives will not keep people from starving in the streets if there’s no food being grown and no housing being built, or maintained, or offered for sale or rent. The primary economy is fundamental to survival; the secondary economy is the source of real wealth; the tertiary economy is simply a way of measuring wealth and managing its distribution; and treating these three very different things as though they are one and the same makes rank economic folly almost impossible to avoid.

Now it deserves to be said that the chance that any such statistical scheme will be adopted in the United States under current political and social arrangements is effectively nonexistent. Far too many sacred cows would have to be put out to pasture or rounded up for slaughter first. Still, current political and social arrangements may turn out to be a good deal less permanent than they sometimes seem. What might replace them, here and elsewhere, is a topic I plan on exploring in a future essay here.


John Michael Greer, The Grand Archdruid of the Ancient Order of Druids in America (AODA), has been active in the alternative spirituality movement for more than 25 years, and is the author of more than twenty books, including The Druidry Handbook (Weiser, 2006) and The Long Descent: A User’s Guide to the End of the Industrial Age (New Society, 2008). He lives in Cumberland, Maryland.

Bill Totten

Categories: Uncategorized

>Fat and scant of breath

2009/11/30 1 comment

>by Paul West

Harper’s Magazine Notebook (July 2009)

Only the other day, I had the ravaging exposure of five or six women in pursuit of my most numinous weapon: my penis, which they were intent on rescuing from the mishandling of a certain colleague of theirs, who had managed to make the creature live inside-out. My penis had fallen afoul of the device, known as the Foley catheter, and known to thousands as the last twist of the knife.

The trouble essentially was that I remain uncircumcised. Perhaps these barbaric women were eager to see me suffer the “cut”. Or they wanted to fold my foreskin back where it belonged, parallel to my penis: enclosed, ready for duty. The beefy hand of some nameless doctor had mangled it out of shape. The whole mess was finally corrected by a Dr Sanjeev Vohra, who with a goodly dose of panting and heaving made it obey reason, or as he put it, “As God intended it should be”. I shall forever be grateful for this blissful outcome. A hearty, headlong man much after my own type, he and I discussed literature in the intervals of urology. We also discussed cricket.

In my rage at having been confined yet again by Foley and his devilish works, I had gone to the John in the dark, thus leaving behind me all manner of restraints intended to bind me into place and stop me from wandering about (which I adore to do).

Into the abyssal dark of the toilet I stepped, crouched, and performed, then felt something on my right. A Foley? Yes. In a burst of reckless passion I tore it out, freeing it to catapult all over in a shower of gratified passion, leaving behind several floors’ worth of blackened blood and minute ordure. The Foley destroyer had struck again.

This habit of mine, resulting in the destruction of one or two Foleys a year, stems from a hatred of being boxed in. Other minor hindrances suffer the same fate, from the delicate tracery imposed on someone who is supposed to ring for the toilet facilities to be opened up to the nameless, glutinous mess that prevents you from speaking; the savage ropes that make a prisoner of your arms, to prevent you from scratching; and the cordlike toilet pull that does not work except to bring apostles running to see what you have been up to this time.

The background to all was bewildering and potentially lethal. I had woken on Tuesday, January 27 2009, unable to breathe normally, gasping for air in fact, and once standing erect had swiftly gotten worse. My wife, Diane, ever vigilant, summoned the 911 crash-cart or ambulance, which arrived with commendable speed. Seconds later, I was into curative sleep and en route to the hospital, but on the way my blood pressure declined from V-tach, and into oblivion, which lasted until afternoon on the next day. Diane remembers my unseeing eyes and my pallor.

I’d had a close brush with death, of which I could remember nothing at all. Apparently, some seventeen doctors and clinicians decided I was not to go into the good night awaiting me, piled every appliance into me and upon me, and successfully brought me round without knowing exactly why. My lungs were full of fatal stuff anyway, but some questioned the heart as well.

It was on the next day, feeling almost chipper, that I had the Foley encounter followed by the penis caper. I was still aware of little beyond the need “to go”, but I recognized in the ministrations of the nurses attending me the tender do-no-harm of their credo. Sure, they had to clean up after the night visitor, but that was to come afterward. The main thing was to see that I was all right, which they did with inexhaustible patience, especially Melissa. It was the same with my maltreated penis: gentle fingering with all the precise aplomb of a supersurgeon. I had never been so scrupulously treated in my life. And I thought, betimes, of Kirk Douglas, who in the putrid movie Cast a Giant Shadow declares, “I was circumcised without my permission”. Unlucky he.

Thus a rough sketch emerged: oblivion, Foley encounter, penis rectifier. What would come next? That old swimmer’s-high experience, the one I felt usually after two hours of swimming? It was a beautiful interval during which all was right with the world and I was glad to be in it. I had come through again, or so I hoped. I leaned back on my air supply and said a brief orison.

What followed this was a week in the hospital: cramped beds, cords to pull for nurses’ attention, constant interruptions for replacement drugs, egg breakfasts, and milk, milk, milk. Not bad, but a kind of wolfish demeanor to some of the younger nurses, the less educated, of course. I nominate Bonny, my supernurse. How she finds time to keep up with her reading while always hastening from pillar to post, I won’t ever know.

I’ve neglected so far to incorporate into this account the words said on this or that occasion. Some of them were significant, as when the young clergyman, whose duty was to do this favor, asked the already tearful Diane what had been my instructions for resuscitation. Try everything, she resourcefully answered, everything. When that failed, she said it again to a doctor, on whom it worked, preventing her from gazing for the last time at the sightless eyes and the green pallor peculiar to those who have been chopped off, not exactly in their prime but too soon to “go”.

I afterward complimented her on saying, “Try everything”, only to hear her saying, “It wasn’t enough”. By God, it was. Who does this kind of thing better than you?

We are not responsible, any of us, for our funeral orations. Since then, the phrase has slipped into our daily vocabulary, honorably recharged and pronounced with abstract relief: one of the phrases to savor ever afterward in lieu of something quintessentially blank.

A visiting friend, eager to do something for the nurses, brought with her one day some leftover pharmaceuticals. Look what happened when she proffered them.

SHE: Here they are.

NURSE: Thanks.

SHE: Please wipe your hands.

NURSE: Maybe I should wipe the pen I am using as well. Said with an extraordinary amount of huff, and reminding me of an old phrase: Be wary of Greeks bearing gifts. You cannot win them all over, even with gifts, this light militia of the local air.

But this was a mild one as reproofs go. More important was the authentic cry from the heart about Diane and myself, just back from the jaws of death. This nurse wrote, “She is condescending and insistent, especially about using the hand-sanitizer. Two of the most doting people of all time.” Oy vey. You cannot please everybody, even your obsequies are set in stone, like this nurse’s notes. There was another nurse hell-bent on delivering little self-serving formulas (“I know my job even if others don’t”), but she isn’t worth rebuking, not in the mainstream of buxom lasses who could not do enough to please.

Slowly, I emerged from my cocoon, resuming my baritone voice and responding to questions, as best I could, about coming back to life after being lost for two days. I felt singularly well, but I had missed all the frantic efforts to save me, apart from one photo depicting me in extremis, a cloud of prosthetic paraphernalia amid which I hung like last year’s laundry.

“I was that bad?” I asked Diane.

“And then some. You were out.”

“How come I feel so well then?”

“Inspired propaedeutics”.

“The best”. I took my offered benison to heart, and promised not to do it again. Vain promise, though. We have little enough control of our bodies at the best of times.

I next was wheeled down long, funereal corridors to the CAT-scan machine, heartened by being swathed in voluptuous wrap, which I was allowed to keep for the journey back. I knew this machine well, its creaks and juggles. The keeper of the CAT was an old familiar, and he recognized me as well, from months ago. Did he remember everyone, or was this part of his bonhomie chatter?

Back from the CAT, I soon was destined for another machine – an elaborate contraption menacingly called a chemical stress test, which an assistant prepped me for by listing the various things that could go wrong. Like vomiting up one’s lunch, like feeling scalded or scorched, like tremors, passing out, or the bone-ache, but not forgetting the overall stink of rotten fish. He was an expert, rolling out his pattern of horrors like a pro, skipping nothing, backed up by his repetitious litany of “If you ever feel it’s too much …” Who on earth, confronted with such miserable bounty, could feel so much. Get on with the vomit part, and get ready for the next abomination.

“Some, however”, he pointed out, “feel nothing untoward”. I thanked him for the delicacy of his phrasing (how many of them still used “untoward”?), which introduced an aroma both antique and festal into this doomed arena of blood flow and mishap. “Maybe you’ll be one of those”. He could already sense my revulsion at his hideous machine, tricked-out space vehicle that it seemed. Could they not have designed a Versed that put people out beforehand and awakened them asking when the test would start? As it happened, I felt nothing at all, neither scent nor ripple, neither pain nor excremental overflow. I was one of the chosen, he hummed at me, glad of a freak to bandy words with.

I left memorializing those who had suffered, the unlucky survivors of his chemical stress test who had gone on to negotiate greater horrors while this white-faced ghoul with his advanced vocabulary of hurts cringed in the foreground, waiting for the shrieking to stop.

Whatever we subject ourselves to, in the interest of something called health, we are destined to come a cropper sooner or later. Some nightmarish oaf, in his pursuit of a more efficient nostrum, is already designing it, full of radioactive strontium or of tiger sparkle. You’ll never get away from it, says the stress machine in the corner, the loitering instrument of pain hunts us all down, and only the strong survive.

My experience of yet another stress test was to be absolutely different. I had passed the previous one, extorting from the machine’s owner a tribute to my one blemish, an old scar from way back, not worth recording and maybe an artifact. No more. This one, dobutamine, required the same warning and codes of recognition as before, but, delivered by an MD, the sermon from the mount as distinguished from the simoom from the half-wit. Nothing “untoward” happened. Nothing to record. The machine ground to a halt. Interrupted in mid-flight.

They had canceled the test, for all time, at least until they discovered how to make it behave. They could not deploy the second half, in spite of valiant efforts by Claire Teeter, the lady who knew all things (yet could not make the test 100 percent). So, to the nasal bark of Dr Brand, announcing that he would not give me the dramatic, enfilading chemical after all. Half the test was perfect, with nothing to report, the other half could not be done at all. It was a matter of obtaining the correct angle, which my physiognomy refused to do.

I emerged with no test after all, whether or not something unknown was probably blocking my arteries. This left me free to explore the catheter invasion of my blood vessels, which with my history of previous strokes (two), I had been advised not to do.

Until science developed a new way of doing things, I would not risk a third stroke, but it was an open question whether or not something was occluding my vasculature. I had almost died of it, and perhaps was scheduled to do likewise at some unknown point.

Astonishingly, I felt good after my brush with the reaper. Nothing felt out of place, nothing obtruded. The specter of the route not taken haunted me as it should have, but not that much. I was already in my second week of successful breathing. No more vainly struggling to catch my breath. And we left it at that, the final decision up to me, until a new invention broke the brink of the sciences, and if I were still around to savor it. I was not the first to be in a quandary, nor the last. The only reason for my being denied a virtual angiogram is that I have a bumpy heart anyway, which ensures its own taboo. So I am denied on all fronts, like a French general in World War Two, anxious to do the right thing but barred from it by fate. Each day, several times, Diane asks how’s my breathing, and each time receives the same answer: Perfect up to now.

All the same, it was a painful novelty to pass each day thinking it would be my last, and wondering how I would respond to it. Which one of my numerous ailments would catch me out, heart or blood pressure, second stroke or first test? For a few days, I felt like one of the damned, but that soon passed (nothing had happened), giving way to an elation I had not felt since I last swam. It was a feeling of heady delight. I was alive, nobody knew for how long, but I didn’t really care about that.

I took an advanced interest in my high spirits. Was it only the relief from swimming each day, a combination of athleticism and joy, or was it something superior? I settled for the latter, being aware of its spiritual dimension. I was happy, which meant a feeling more like celebration took over from the mild-to-moderate sensation I usually had when renewing my contact with the water. This lasted an hour or so, then ebbed away, only to be renewed the next day.

Was it anything to do with swimming at all? I had grown accustomed to thinking that way, but it felt more grand than merely that. Something in these blithe sessions took me beyond water sports: high energy, an almost exciting buoyancy of spirit, the feeling that everything was going well (even if it wasn’t). So I had this exhilaration upon me, much the same as reputed among those about to die. Had I been fooling myself all along with profound misconstruction of an actual morose sensation?

The problem, if that, would bear thinking about. Quite naturally an optimist, had I been thinking in the usual way when, at the time, I should have been preoccupied with doldrums? I found it hard to believe, and soon switched to a more optimistic attitude, not far from the original one of triumph.

And this applied to my sudden uplift of spirit. With, say, a more decent dose of potassium, I should be even better. The amplified oxygen was doing well by me and so was the Lasix, which helped me pee. All was right with the world, though it behaved like a conundrum, easily misconstrued and deadly to get wrong.

In the last analysis (the one you’re bound to get wrong), you can force-feed your optimism into a simulacrum of common sense until you believe in it. As I do, daily, not willing to justify such recklessness.

I’m unwilling to bargain for a third stroke, not until one presents itself, ugly head and all. A brain doctor, surveying the detritus left in my skull after the second stroke, expressed amazement when he heard that I continued writing, as before. From such an amount of damage, and to two separate areas, he expected a gibbering idiot to come out the other end.

I am left with an old saw, sounding hollow and vainglorious: Happy days are here again. Or the watch that ends the night, either way.


Paul West is the author of more than fifty books of fiction, memoir, criticism, and verse. His memoir “Cadets” appeared in the January 2009 issue of Harper’s Magazine.

Bill Totten

Categories: Uncategorized


>How The Federal Reserve Bought The Economics Profession

by Ryan Grim (October 23 2009)

The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found.

This dominance helps explain how, even after the Fed failed to foresee the greatest economic collapse since the Great Depression, the central bank has largely escaped criticism from academic economists. In the Fed’s thrall, the economists missed it, too.

“The Fed has a lock on the economics world”, says Joshua Rosner, a Wall Street analyst who correctly called the meltdown. “There is no room for other views, which I guess is why economists got it so wrong”.

One critical way the Fed exerts control on academic economists is through its relationships with the field’s gatekeepers. For instance, at the Journal of Monetary Economics, a must-publish venue for rising economists, more than half of the editorial board members are currently on the Fed payroll – and the rest have been in the past.

The Fed failed to see the housing bubble as it happened, insisting that the rise in housing prices was normal. In 2004, after “flipping” had become a term cops and janitors were using to describe the way to get rich in real estate, then-Federal Reserve Chairman Alan Greenspan said that “a national severe price distortion [is] most unlikely”. A year later, current Chairman Ben Bernanke said that the boom “largely reflect strong economic fundamentals”.

The Fed also failed to sufficiently regulate major financial institutions, with Greenspan – and the dominant economists – believing that the banks would regulate themselves in their own self-interest.

Despite all this, Bernanke has been nominated for a second term by President Obama.

In the field of economics, the chairman remains a much-heralded figure, lauded for reaction to a crisis generated, in the first place, by the Fed itself. Congress is even considering legislation to greatly expand the powers of the Fed to systemically regulate the financial industry.

Paul Krugman, in Sunday’s New York Times magazine {0}, did his own autopsy of economics, asking “How Did Economists Get It So Wrong?” Krugman concludes that “[e]conomics, as a field, got in trouble because economists were seduced by the vision of a perfect, frictionless market system”.

So who seduced them?

The Fed did it.

Three Decades of Domination

The Fed has been dominating the profession for about three decades. “For the economics profession that came out of the [second world] war, the Federal Reserve was not a very important place as far as they were concerned, and their views on monetary policy were not framed by a working relationship with the Federal Reserve. So I would date it to maybe the mid-1970s”, says University of Texas economics professor – and Fed critic – James Galbraith. “The generation that I grew up under, which included both Milton Friedman on the right and Jim Tobin on the left, were independent of the Fed. They sent students to the Fed and they influenced the Fed, but there wasn’t a culture of consulting, and it wasn’t the same vast network of professional economists working there.”

But by 1993, when former Fed Chairman Greenspan provided the House banking committee with a breakdown of the number of economists on contract or employed by the Fed, he reported that 189 worked for the board itself and another 171 for the various regional banks. Adding in statisticians, support staff and “officers” – who are generally also economists – the total number came to 730. And then there were the contracts. Over a three-year period ending in October 1994, the Fed awarded 305 contracts to 209 professors worth a total of $3 million.

Just how dominant is the Fed today?

The Federal Reserve’s Board of Governors employs 220 PhD economists and a host of researchers and support staff, according to a Fed spokeswoman. The twelve regional banks employ scores more. (HuffPost placed calls to them but was unable to get exact numbers.) The Fed also doles out millions of dollars in contracts to economists for consulting assignments, papers, presentations, workshops, and that plum gig known as a “visiting scholarship”. A Fed spokeswoman says that exact figures for the number of economists contracted with weren’t available. But, she says, the Federal Reserve spent $389.2 million in 2008 on “monetary and economic policy”, money spent on analysis, research, data gathering, and studies on market structure; $433 million is budgeted for 2009.

That’s a lot of money for a relatively small number of economists. According to the American Economic Association, a total of only 487 economists list “monetary policy, central banking, and the supply of money and credit”, as either their primary or secondary specialty; 310 list “money and interest rates”; and 244 list “macroeconomic policy formation [and] aspects of public finance and general policy”. The National Association of Business Economists tells HuffPost that 611 of its roughly 2,400 members are part of their “Financial Roundtable”, the closest way they can approximate a focus on monetary policy and central banking.

Robert Auerbach {1}, a former investigator with the House banking committee, spent years looking into the workings of the Fed and published much of what he found in the 2008 book, Deception and Abuse at the Fed {2}. A chapter in that book, excerpted here {3}, provided the impetus for this investigation.

Auerbach found that in 1992, roughly 968 members of the AEA designated “domestic monetary and financial theory and institutions” as their primary field, and 717 designated it as their secondary field. Combining his numbers with the current ones from the AEA and NABE, it’s fair to conclude that there are something like 1,000 to 1,500 monetary economists working across the country. Add up the 220 economist jobs at the Board of Governors along with regional bank hires and contracted economists, and the Fed employs or contracts with easily 500 economists at any given time. Add in those who have previously worked for the Fed – or who hope to one day soon – and you’ve accounted for a very significant majority of the field.

Auerbach concludes {4} that the “problems associated with the Fed’s employing or contracting with large numbers of economists” arise “when these economists testify as witnesses at legislative hearings or as experts at judicial proceedings, and when they publish their research and views on Fed policies, including in Fed publications”.

Gatekeepers On The Payroll

The Fed keeps many of the influential editors of prominent academic journals on its payroll. It is common for a journal editor to review submissions dealing with Fed policy while also taking the bank’s money. A HuffPost review of seven top journals found that 84 of the 190 editorial board members were affiliated with the Federal Reserve in one way or another.

“Try to publish an article critical of the Fed with an editor who works for the Fed”, says Galbraith. And the journals, in turn, determine which economists get tenure and what ideas are considered respectable.

The pharmaceutical industry has similarly worked to control key medical journals, but that involves several companies. In the field of economics, it’s just the Fed.

Being on the Fed payroll isn’t just about the money, either. A relationship with the Fed carries prestige; invitations to Fed conferences and offers of visiting scholarships with the bank signal a rising star or an economist who has arrived.

Affiliations with the Fed have become the oxygen of academic life for monetary economists. “It’s very important, if you are tenure track and don’t have tenure, to show that you are valued by the Federal Reserve”, says Jane D’Arista, a Fed critic and an economist with the Political Economy Research Institute at the University of Massachusetts, Amherst.

Robert King, editor in chief of the Journal of Monetary Economics and a visiting scholar at the Richmond Federal Reserve Bank, dismisses the notion that his journal was influenced by its Fed connections. “I think that the suggestion is a silly one, based on my own experience at least”, he wrote in an e-mail. (His full response is at the bottom.)

Galbraith, a Fed critic, has seen the Fed’s influence on academia first hand. He and co-authors Olivier Giovannoni and Ann Russo found that in the year before a presidential election, there is a significantly tighter monetary policy coming from the Fed if a Democrat is in office and a significantly looser policy if a Republican is in office. The effects are both statistically significant, allowing for controls, and economically important.

They submitted a paper with their findings to the Review of Economics and Statistics in 2008, but the paper was rejected. “The editor assigned to it turned out to be a fellow at the Fed and that was after I requested that it not be assigned to someone affiliated with the Fed”, Galbraith says.

Publishing in top journals is, like in any discipline, the key to getting tenure. Indeed, pursuing tenure ironically requires a kind of fealty to the dominant economic ideology that is the precise opposite of the purpose of tenure, which is to protect academics who present oppositional perspectives.

And while most academic disciplines and top-tier journals are controlled by some defining paradigm, in an academic field like poetry, that situation can do no harm other than to, perhaps, a forest of trees. Economics, unfortunately, collides with reality – as it did with the Fed’s incorrect reading of the housing bubble and failure to regulate financial institutions. Neither was a matter of incompetence, but both resulted from the Fed’s unchallenged assumptions about the way the market worked.

Even the late Milton Friedman, whose monetary economic theories heavily influenced Greenspan, was concerned about the stifled nature of the debate. Friedman, in a 1993 letter to Auerbach that the author quotes in his book, argued that the Fed practice was harming objectivity: “I cannot disagree with you that having something like 500 economists is extremely unhealthy. As you say, it is not conducive to independent, objective research. You and I know there has been censorship of the material published. Equally important, the location of the economists in the Federal Reserve has had a significant influence on the kind of research they do, biasing that research toward noncontroversial technical papers on method as opposed to substantive papers on policy and results”, Friedman wrote.

Greenspan told Congress in October 2008 that he was in a state of “shocked disbelief” and that the “whole intellectual edifice” had “collapsed”. House Committee on Oversight and Government Reform Chairman Henry Waxman (Democrat, California) followed up: “In other words, you found that your view of the world, your ideology, was not right, it was not working”.

“Absolutely, precisely”, Greenspan replied. “You know, that’s precisely the reason I was shocked, because I have been going for forty years or more with very considerable evidence that it was working exceptionally well”.

But, if the intellectual edifice has collapsed, the intellectual infrastructure remains in place. The same economists who provided Greenspan his “very considerable evidence” are still running the journals and still analyzing the world using the same models that were incapable of seeing the credit boom and the coming collapse.

Rosner, the Wall Street analyst who foresaw the crash, says that the Fed’s ideological dominance of the journals hampered his attempt to warn his colleagues about what was to come. Rosner wrote a strikingly prescient paper {5} in 2001 arguing that relaxed lending standards and other factors would lead to a boom in housing prices over the next several years, but that the growth would be highly susceptible to an economic disruption because it was fundamentally unsound.

He expanded on those ideas over the next few years, connecting the dots and concluding that the coming housing collapse would wreak havoc on the collateralized debt obligation (CDO) and mortgage backed securities (MBS) markets, which would have a ripple effect on the rest of the economy. That, of course, is exactly what happened and it took the Fed and the economics field completely by surprise.

“What you’re doing is, actually, in order to get published, having to whittle down or narrow what might otherwise be oppositional or expansionary views”, says Rosner. “The only way you can actually get in a journal is by subscribing to the views of one of the journals”.

When Rosner was casting his paper on CDOs and MBSs about, he knew he needed an academic economist to co-author the paper for a journal to consider it. Seven economists turned him down.

“You don’t believe that markets are efficient?” he says they asked, telling him the paper was “outside the bounds” of what could be published. “I would say ‘Markets are efficient when there’s equal access to information, but that doesn’t exist'”, he recalls.

The CDO and MBS markets froze because, as the housing market crashed, buyers didn’t trust that they had reliable information about them – precisely the case Rosner had been making.

He eventually found a co-author, Joseph Mason, an associate Professor of Finance at Drexel University LeBow College of Business, a senior fellow at the Wharton School, and a visiting scholar at the Federal Deposit Insurance Corporation. But the pair could only land their papers with the conservative Hudson Institute. In February 2007, they published a paper called “How Resilient Are Mortgage Backed Securities to Collateralized Debt Obligation Market Disruptions?” {6} and in May posted another, “How Misapplied Bond Ratings Cause Mortgage Backed Securities and Collateralized Debt Obligation Market Disruptions” {7}.

Together, the two papers offer a better analysis of what led to the crash than the economic journals have managed to put together – and they were published by a non-PhD before the crisis.

Not As Simple As A Pay-Off

Economist Rob Johnson {8} serves on the UN Commission of Experts on Finance and International Monetary Reform and was a top economist on the Senate banking committee under both a Democratic and Republican chairman. He says that the consulting gigs shouldn’t be looked at “like it’s a payoff, like money. I think it’s more being one of, part of, a club – being respected, invited to the conferences, have a hearing with the chairman, having all the prestige dimensions, as much as a paycheck.”

The Fed’s hiring of so many economists can be looked at in several ways, Johnson says, because the institution does, of course, need talented analysts. “You can look at it from a telescope, either direction. One, you can say well they’re reaching out, they’ve got a big budget and what they’re doing, I’d say, is canvassing as broad a range of talent”, he says. “You might call that the ‘healthy hypothesis'”.

The other hypothesis, he says, “is that they’re essentially using taxpayer money to wrap their arms around everybody that’s a critic and therefore muffle or silence the debate. And I would say that probably both dimensions are operative, in reality.”

To get a mainstream take, HuffPost called monetary economists at random from the list as members of the AEA. “I think there is a pretty good number of professors of economics who want a very limited use of monetary policy and I don’t think that that necessarily has a negative impact on their careers”, said Ahmed Ehsan, reached at the economics department at James Madison University. “It’s quite possible that if they have some new ideas, that might be attractive to the Federal Reserve”.

Ehsan, reflecting on his own career and those of his students, allowed that there is, in fact, something to what the Fed critics are saying. “I don’t think [the Fed has too much influence], but then my area is monetary economics and I know my own professors, who were really well known when I was at Michigan State, my adviser, he ended up at the Saint Louis Fed”, he recalls. “He did lots of work. He was a product of the time … so there is some evidence, but it’s not an overwhelming thing.”

There’s definitely prestige in spending a few years at the Fed that can give a boost to an academic career, he added. “It’s one of the better career moves for lots of undergraduate students. It’s very competitive”.

Press officers for the Federal Reserve’s board of governors provided some background information for this article, but declined to make anyone available to comment on its substance.

The Fed’s Intolerance For Dissent

When dissent has arisen, the Fed has dealt with it like any other institution that cherishes homogeneity.

Take the case of Alan Blinder. Though he’s squarely within the mainstream and considered one of the great economic minds of his generation, he lasted a mere year and a half as vice chairman of the Fed, leaving in January 1996.

Rob Johnson, who watched the Blinder ordeal, says Blinder made the mistake of behaving as if the Fed was a place where competing ideas and assumptions were debated. “Sociologically, what was happening was the Fed staff was really afraid of Blinder. At some level, as an applied empirical economist, Alan Blinder is really brilliant”, says Johnson.

In closed-door meetings, Blinder did what so few do: challenged assumptions. “The Fed staff would come out and their ritual is: Greenspan has kind of told them what to conclude and they produce studies in which they conclude this. And Blinder treated it more like an open academic debate when he first got there and he’d come out and say, ‘Well, that’s not true. If you change this assumption and change this assumption and use this kind of assumption you get a completely different result.’ And it just created a stir inside – it was sort of like the whole pipeline of Greenspan-arriving-at-decisions was disrupted.”

It didn’t sit well with Greenspan or his staff. “A lot of senior staff … were pissed off about Blinder – how should we say? – not playing by the customs that they were accustomed to”, Johnson says.

And celebrity is no shield against Fed excommunication. Paul Krugman, in fact, has gotten rough treatment. “I’ve been blackballed from the Fed summer conference at Jackson Hole, which I used to be a regular at, ever since I criticized him”, Krugman said of Greenspan in a 2007 interview with Pacifica Radio’s Democracy Now! “Nobody really wants to cross him” {9}.

An invitation to the annual conference, or some other blessing from the Fed, is a signal to the economic profession that you’re a certified member of the club. Even Krugman seems a bit burned by the slight. “And two years ago”, he said in 2007, “the conference was devoted to a field, new economic geography, that I invented, and I wasn’t invited”.

Three years after the conference, Krugman won a Nobel Prize in 2008 for his work in economic geography.

One Journal, In Detail

The Huffington Post reviewed the mastheads of the American Journal of Economics, the Journal of Economic Perspectives, Journal of Economic Literature, the American Economic Journal: Applied Economics, American Economic Journal: Economic Policy, the Journal of Political Economy and the Journal of Monetary Economics.

HuffPost interns Googled around looking for resumes and otherwise searched for Fed connections for the 190 people on those mastheads. Of the 84 that were affiliated with the Federal Reserve at one point in their careers, 21 were on the Fed payroll even as they served as gatekeepers at prominent journals.

At the Journal of Monetary Economics, every single member of the editorial board is or has been affiliated with the Fed and fourteen of the 26 board members are presently on the Fed payroll.

After the top editor, King, comes senior associate editor Marianne Baxter, who has written papers for the Chicago and Minneapolis banks and was a visiting scholar at the Minneapolis bank in 1984, 1985, at the Richmond bank in 1997, and at the board itself in 1987. She was an advisor to the president of the New York bank from 2002 to 2005. Tim Geithner, now the Treasury Secretary, became president of the New York bank in 2003.

The senior associate editors: Janice C Eberly was a Fed visiting-scholar at Philadelphia (1994), Minneapolis (1997) and the board (1997). Martin Eichenbaum has written several papers for the Fed and is a consultant to the Chicago and Atlanta banks. Sergio Rebelo has written for and was previously a consultant to the board. Stephen Williamson has written for the Cleveland, Minneapolis and Richmond banks, he worked in the Minneapolis bank’s research department from 1985 to 1987, he’s on the editorial board of the Federal Reserve Bank of Saint Louis Review, is the co-organizer of the 2009 Saint Louis Federal Reserve Bank annual economic policy conference and the co-organizer of the same bank’s 2008 conference on Money, Credit, and Policy, and has been a visiting scholar at the Richmond bank ever since 1998.

And then there are the associate editors. Klaus Adam is a visiting scholar at the San Francisco bank. Yongsung Chang is a research associate at the Cleveland bank and has been working with the Fed in one position or another since 2001. Mario Crucini was a visiting scholar at the Federal Reserve Bank of New York in 2008 and has been a senior fellow at the Dallas bank since that year. Huberto Ennis is a senior economist at the Federal Reserve Bank of Richmond, a position he’s held since 2000. Jonathan Heathcote is a senior economist at the Minneapolis bank and has been a visiting scholar three times dating back to 2001.

Ricardo Lagos is a visiting scholar at the New York bank, a former senior economist for the Minneapolis bank and a visiting scholar at that bank and Cleveland’s. In fact, he was a visiting scholar at both the Cleveland and New York banks in 2007 and 2008. Edward Nelson was the assistant vice president of the Saint Louis bank from 2003 to 2009.

Esteban Rossi-Hansberg was a visiting scholar at the Philadelphia bank from 2005 to 2009 and similarly served at the Richmond, Minneapolis and New York banks.

Pierre-Daniel Sarte is a senior economist at the Richmond bank, a position he’s held since 1996. Frank Schorfheide has been a visiting scholar at the Philadelphia bank since 2003 and at the New York bank since 2007. He’s done four such stints at the Atlanta bank and scholared for the board in 2003. Alexander Wolman has been a senior economist at the Richmond bank since 1989.

Here is the complete response from King, the journal’s editor in chief: “I think that the suggestion is a silly one, based on my own experience at least. In a 1988 article for AEI later republished in the Federal Reserve Bank of Richmond Review, Marvin Goodfriend (then at FRB Richmond and now at Carnegie Mellon) and I argued that it was very important for the Fed to separate monetary policy decisions (setting of interest rates) and banking policy decisions (loans to banks, via the discount window and otherwise). We argued further that there was little positive case for the Fed to be involved in the latter: broadbased liquidity could always be provided by the former. We also argued that moral hazard was a cost of banking intervention.

“Ben Bernanke understands this distinction well: he and other members of the FOMC have read my perspective and sometimes use exactly this distinction between monetary and banking policies. In difficult times, Bernanke and his fellow FOMC members have chosen to involve the Fed in major financial market interventions, well beyond the traditional banking area, a position that attracts plenty of criticism and support. JME and other economics major journals would certainly publish exciting articles that fell between these two distinct perspectives: no intervention and extensive intervention. An upcoming Carnegie-Rochester conference, with its proceeding published in JME, will host a debate on ‘The Future of Central Banking’.

“You may use only the entire quotation above or no quotation at all”.

Auerbach, shown King’s e-mail, says it’s just this simple: “If you’re on the Fed payroll there’s a conflict of interest”.

UPDATE: Economists have written in weighing in on both sides of the debate. Here are two of them.

Stephen Williamson, the Robert S Brookings Distinguished Professor in Arts and Sciences at Washington University in St. Louis:

Since you mentioned me in your piece on the Federal Reserve System, I thought I would drop you a note, as you clearly don’t understand the relationship between the Fed and some of the economists on its payroll. I have had a long relationship with the Fed, and with other central banks in the world, including the Bank of Canada. Currently I have an academic position at Washington University in Saintt Louis, but I am also paid as a consultant to the Federal Reserve Banks of Richmond and Saint Louis. In the past, I was a full-time economist at the Bank of Canada and at the Federal Reserve Bank of Minneapolis.

As has perhaps become clearer in the last year, economics and the science of monetary policy is a complicated business, and the Fed needs all the help it can get. The Fed is perhaps surprisingly open to new ideas, and ideas that are sometimes in conflict with the views of its top people. One of the strengths of the Federal Reserve System is that the regional Federal Reserve Banks have a good deal of independence from the Board of Governors in Washington, and this creates a healthy competition in economic ideas within the system. Indeed, some very revolutionary ideas in macroeconomics came out of the intellectual environment at the Federal Reserve Bank of Minneapolis in the 1970s and 1980s. That intellectual environment included economists who worked full-time for the Fed, and others who were paid consultants to the Fed, but with full-time academic positions. Those economists were often sharply critical of accepted Fed policy, and they certainly never seemed to suffer for it; indeed they were rewarded.

I have never felt constrained in my interactions with Fed economists (including some Presidents of Federal Reserve Banks). They are curious, and willing to think about new ideas. I am quite willing to bite the hand that feeds me, and have often chewed away quite happily. They keep paying me, so they must be happy about the interaction too.

A former Fed economist disagreed. “I was an economist at the Fed for more than ten years and kept getting in trouble for things I’m proud of. I hear you, loud and clear”, he said, asking not to be quoted by name for, well, the reasons laid out above.













Elyse Siegel, Julian Hattem, Jeff Muskus and Jenna Staul contributed to this report.

Ryan Grim is the author of This Is Your Country On Drugs: The Secret History of Getting High in America (2009).

Bill Totten

Categories: Uncategorized

>A Thanksgiving Message

>by Dr Joseph Mercola (November 27 2009)

Let’s remember that it all started with a gaggle of moralizing and marginalized religious dissidents who feasted on fowl, and a native relish of sour red berries.

On Thursday, Americans will stop and share a meal like these long-ago Pilgrims. Thanksgiving is the holiday of hope, as well as drumsticks and football. It is also the emblem of American identity – of who we are as a people and our distinctive role in history.

Two New York Times‘ articles {1, 2} provide a powerful commentary about health care “reform”, and the true power behind the US health care system in general. They document the level of influence, corruption, and conflict of interest that affects your health.

There should be no doubt about the power the drug industry wields in shaping the US health care system.

Big pharma has been the driving force behind conventional medicine, and the beneficiaries of exploding health care costs for well over a century, and there are no signs that the current health care reform will change any of this.

Yes You, One Person, CAN Make a Difference

During this Thanksgiving season, I want to express my thanks to you for your partnership in the movement of awakening our culture to the truth about natural health and how the drug companies currently control the conventional medical system. And the best way I know to do that is to share with you how your partnership is making a difference.

This past year our partnership together has been able to FINALLY make a significant dent in the culture. We provided powerful explanations from some of the top experts in the world on these issues, and you were able to spread and share that message with MILLIONS.

You were so effective that the MAJORITY of the US population have refused the H1N1 vaccine despite the massive government propaganda and deception.

Doctors Typically Destroy Health Because It’s about Wealth, Not Health

Drug companies are not here to bring health to the population but to scam them on one level for vast amounts of money, by treating the symptoms and not addressing the cause.

Sir William Ossler, MD (1849-1919), one of the leading physicians at the turn of the twentieth century, and considered by many to be the founder of modern medicine, said that one of the first duties of the physician is to educate the masses not to take medicine.

You are Making a Difference

Most everyone reading this does not understand that when I started this newsletter I was not a natural medicine expert. I was a simple family physician seeing patients in my office, who just decided I wanted to tell the truth about health to more people.

When I first started in 1997, to educate people about natural medicine, I had less than 100 subscribers and 300 page views per month. Twelve years later we have 1.5 million subscribers from nearly every country in the world, and we have over twenty million page views per month.

Do we have a ways to go?

Absolutely, but together we are making a difference.

You need to remember the obvious. We OUTNUMBER the evil doers by thousands to one. However, they are very well organized and have loads more money, power, and influence than we do.

You need to know that their Achilles Heel is our ability to communicate with each other and learn the truth about their lies and scams.

So persistently reading our newsletter and others that share the truth, and spreading the message with those you love and care about, will ultimately unite us enough that we can defeat them. Charity Project

Many of you probably don’t realize that one-third of our staff of over 100 is based in Manila, Philippines. They are an absolutely amazing group of people, and are directly responsible for allowing us to have such a huge impact on the web.

Recently, the team decided to support the Kythe Foundation {3}. It is an organization dedicated to treating cancer in children.

Our team built the website for them, and are helping provide the infrastructure to support their efforts.

I thought you would enjoy a video of how some of the efforts have been working to date and have included it below.

My primary passion is optimal health, so I have not specifically focused on cancer treatment. However, I know many of my readers know of experts in this area. If you know of anyone that is passionate about treating cancer in children, please have them contact so we can incorporate them into our team.

Remember, this is the Philippines, so most of the crazy prohibitions that exist in the US are absent and we can go all out to provide therapies that REALLY work. With your help, we can begin to replicate the work of how health care was effectively administered before the government got involved.

We can form the equivalent of charity hospitals, and leverage the Internet to provide life saving treatment to innocent kids who are suffering with tragic cancer. At this time, my only request is that you help us provide natural health experts who can help train the volunteer physicians in the Philippines with treatments that can help save these kids’ lives.

Food for Thought

The nice thing about truth is that it never goes out of style. Here are several quotes that are as timely today, as when they were first uttered.

A government big enough to give you everything you want, is strong enough to take everything you have.
–Thomas Jefferson

A government which robs Peter to pay Paul can always depend on the support of Paul.
–George Bernard Shaw

Giving money and power to government is like giving whiskey and car keys to teenage boys.
–P J O’Rourke, Civil Libertarian

Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.
— Frederic Bastiat, French Economist (1801-1850)

If you think health care is expensive now, wait until you see what it costs when it’s free.
— P J O’Rourke

Just because you do not take an interest in politics doesn’t mean politics won’t take an interest in you.
— Pericles (430 BC)

What this country needs is more unemployed politicians.
— Edward Langley, Artist (1928-1995)






Dr Mercola about himself:

Have always been interested in health and started exercising in 1968, Went to med school to further my knowledge base and started professional life as a family doctor in 1985 . However was completely brainwashed by the system and actually was a paid lecturer by the drug companies in the 1980s.

Eventually I saw the light in the early 1990s and refined my understanding of health truths. I also have a passion for computers and combined my interest in technology and health by creating this website in the late 1990s and it is now the most visited natural health site on the Internet.

The site takes up virtually all of my time and I had to stop seeing patients in 2005 so I can pursue my passion of educating the public about health truths so hundreds of thousands of people don’t have to die prematurely every year because of multinational corporations that put profits ahead of serving their customers.

I remain convinced that through coordinated efforts it will be possible to help educate and inform people so they can choose healthier options and radically reduce the amount of unnecessary premature deaths and needless pain and suffering.

Bill Totten

Categories: Uncategorized

>The Oceans are Coming

2009/11/28 1 comment

>Part Two – Living on the Land

by Dmitry Orlov and Keith Farnish

ClubOrlov (November 13 2009)

Are you still talking about Cyclone Nargis? Have you ever heard of Cyclone Nargis? Here’s a reminder: on 1 May 2008 a weakening low-pressure system suddenly picked up energy as it approached Burma from the Bay of Bengal. By the second day of this rapid strengthening, Cyclone Nargis was blowing in excess of 135 miles per hour and made landfall on the low-lying southern coast of Burma armed with vast reserves of cyclonic energy, a storm surge beneath, and constant heavy rain from above. The Irrawaddy Delta was devastated, causing at least 140,000 human deaths. Most of us have forgotten about it.

One reason you may have heard of Cyclone Nargis at the time, is that for a short while it was the cause of a major diplomatic incident, with the Burmese Junta refusing to accept aid and assistance from the West, while continuing with a meaningless referendum. Another reason you may have heard of Cyclone Nargis is because you live near to Burma; and there’s the rub – proximity is the single most important factor in deciding whether a story is newsworthy in the mainstream media, and until Hurricane Katrina hit Louisiana in 2005, devastating coastal flooding was just something that happened to “other people” as far as the vast majority of Americans were concerned.

That’s not going to change anytime soon – it’s partly down to our natural tendency for prioritising the local and the immediate, for survival reasons; but to a large extent it is also down to the cultural conditioning that exists in most civilisations in order to only value that which benefits the system that you are deemed to be part of. If you are American then that means that anything that doesn’t affect America, doesn’t matter. You can safely repeat that mantra for any civilised nation. It’s not necessarily good, but it’s true.

In Part One of this article {1}, we examined the best available research, and, given the current best forecast of two metres and the consistent tendency of climate forecasters to undershoot their own subsequent observations, we concluded that a four metre sea level rise over the course of this century is quite likely.

In this part, we focus on two areas that are most familiar to the two authors, and also relevant to the majority of readers: Dmitry is going to look at the likely impact of future sea-level rise on the Eastern Seaboard of the USA, not just in terms of the direct effects of flooding on habitation, but the many different indirect effects that sea-level rise will have; Keith is going to do the same for the east coast of England and the Netherlands, two places that have seen their fair share of flooding in the past, and are bound to suffer in the future.

The view from New England, by Dmitry Orlov

When it comes to addressing the effects of sea level rise that is expected to occur over the course of this century, there are many ways to immerse yourself in the subject. You might do some reading and make some field trips, talk to knowledgeable people, attend some seminars, and write some research papers. Or you might take an entire year to slowly traverse the landscape in question, and get a feel for it through a lot of direct observation, which is what I did. I spent about a year sailing around the Eastern Seaboard of North America, from the submerged coastal mountain range that is the coast of Maine north of Portland to the shifting sand dunes of Saint Augustine in Florida, and most points in between, looking at both nature and historic sites along the way.

There certainly is nature to be found further inland, but rather few historic sites. It is very important to understand that, unlike the ancient and compact settlement patterns of Europe, and unlike its dense and active network of navigable rivers and canals, North America consists of a rather narrow but thickly settled coastal zone known as the Northeast Corridor, and the vast expanse of Wild West. Historically, the colonies survived through ocean trade. Until the advent of coal-fired railroads, the only parts of the interior that were economically viable were the ones that were within easy reach of a navigable waterway. Even then many inland settlers found grain to be too bulky for trade, and used it to make whiskey. The Erie Canal made Chicago a town rather than just a portage between the Great Lakes and the Mississippi River. The reason was simple: before the advent of railroads, it cost as much to transport cargo thirty or so miles overland as it did to ship it across the ocean. Until a railroad was built across Massachusetts, goods shipped from Chicago to Boston via the Erie Canal had to be loaded onto barges and floated down the Hudson River to New York, then transferred to schooners that took them up the coast.

It is also very important to understand that global trade is not, as one unfortunately often hears, only possible thanks to fossil fuels. Until the 1920s much of the shipping in Boston Harbour was by sail. Most of the ships were relatively small, with vast numbers of schooners of around sixty feet and crews of ten or fewer. The age of container ships, bulk carriers, roll-on roll-offs (ROROs), and other monstrous oil-thirsty craft is quite recent, while the history of global trade is ancient, and proceeded in one of two ways: on foot (leading caravans of pack animals) or by sail. It is also important to note that coal never became competitive with sail in transporting bulk goods, and sail-based shipping persisted until the age of the marine diesel engine, which burns bunker fuel (a slightly upgraded crude oil). This substance will most likely no longer be available in the vast quantities required just a few decades from now, and certainly well before the end of the century. It seems plausible to think that the age of fossil fuels will end as it started, with oil giving way to coal, giving way to wind.

And so, in looking at the future of North America, it makes sense to examine historical settlement patterns and patterns of trade. Even after the powerful economic stimulant of fossil fuels is no longer flowing freely, the perennial choice will remain the same: make and ship trade goods, or remain backward and poor. The transportation options will once again be largely limited to the waterways, with the vast landlocked areas of North America becoming stagnant backwaters, unable to trade, and steadily depopulating. Many people look at the end of the fossil fuel age and envision a future that is much more local; and surely it will be, but what they do not envision is the effect of a radically altered transportation topology. The current tightly interconnected transportation mesh of rail links, highways, and airports will be gone; and in its place will arise a sparse, seasonal network favouring single modes of transport for each link (pack animal, river barge, or ocean sailboat), heavily weighted in favour of water transport, and even more heavily weighted in favour of sail. Transporting a few tons of cargo per crew member across the Atlantic will require a few weeks’ worth of rations for the crew members and a bit of sailcloth for the ship, but the wind will still be free. Hauling the same amount of freight across the Appalachian mountain range, which runs the length of the Eastern Seaboard, would become something of an epic undertaking.

Looking, once again, at the historical settlement patterns along the Eastern Seaboard, it becomes clear that how prosperous and populous any given coastal settlement becomes has a lot to do with how good a harbour it has. The Carolinas present an excellent example of this: their climates and populations are broadly similar, yet North Carolina is poor while South Carolina is prosperous. The difference can be brought down to a single, overwhelming factor: South Carolina’s Charleston Harbour. This is a splendid deep-water harbour, sheltered, with a wide inlet. North Carolina is dominated by Cape Hatteras, an area of shifting shoals and wide, shallow bays. To make matters worse, the Cape brings together the warm Gulf Stream, flowing north and turning east, with the terminus of the cold Labrador Current flowing south, and the mixture of the two creates a lot of unsettled weather. To make matters worse yet, it is within reach of tropical cyclones, which shift sand dunes, close and open ocean inlets, and play havoc with coastal communities that depend on access to the ocean. While Charleston Harbour is a major asset, Cape Hatteras is a world-class hazard to navigation. And so South Carolina grew rich by importing African slaves and exporting rice, indigo, and cotton through Charleston Harbour; while North Carolina, with its many shoals and few and treacherous navigable ocean inlets, developed no major towns and subsisted largely through fishing.

I’ve looked closely at many of the successful port towns, large and small, along the Eastern Seaboard: Portland, Newburyport, Salem, Boston, Newport, New York, Charleston, and Saint Augustine, plus a few others. All of these have accumulated centuries of history, much of it connected with the sea and, hence, with faraway peoples and places, and this makes them major tourist destinations. The quality of the harbour, it turns out, had much to do with the relative success of a port: Boston’s excellent harbour, with a wide channel and ample anchorages with good holding ground in the lee of a good set of sheltering harbour islands, allowed Boston to compete with New York in transatlantic trade. But beyond geological luck, something else stands out: the quality of the transition between water and land. In every good port there are dredged and marked approaches to piers and jetties, good seawalls high enough to keep out most storm surges, and dry land beyond, which is solid and graded flat. Over its long history as a port town, a hilly town, such as Portland, Boston, or New York, slowly grows an apron of land that is just high enough to be out of reach of most waves. Although some of these shoreline reinforcements are the result of ambitious projects (the cut-stone embankment in Newburyport is a good example), many of them are the result of a slow process of accretion by generations of people plying maritime trades, adjusting the shoreline to different uses by floating in and dumping rip-rap and solid fill, building seawalls, jetties and piers, seeing them pruned back by storms, and learning their lessons. Just how close to the margin these old structures already are became apparent to me last summer: during high tide, and thanks to the extra two feet of water we got for no adequately understood reason, some of the older, abandoned piers in Salem, Massachusetts were awash.

Most of these structures have been designed with hundred-year floods in mind, presumably because having to rebuild them every century or so is not such a bad thing. But then, given the expected ocean level rise, every hundred years will become every ten, then every year, and then every neap tide, then every high tide when there is an easterly wind, and then permanently awash at high tide. Who would be up to the thankless task of piling up more rocks and driving in more pilings, just to see them washed away a decade or so later? A related problem is the silting up of channels caused by accelerated erosion. Once waves can reach a stretch of land that hitherto only had to contend with rainwater and snow melt, it often dissolves catastrophically, and what was for centuries a waterside pasture or marshland protected by a bit of rock is transformed within a season or two into a gradually sloping mud flat. The mud then gets scoured out by each tide and settles in the deepest spots, which are the navigation channels. At what point everyone will decide that all of this very temporary shoring up and dredging is just too much work is entirely unclear, but it seems likely that enough other problems will occur at the same time to make the question moot. As we prepare to say “hello” to the rising waters, we should also prepare to bid “adieu” to deep-draught dockage.

What other problems might we have? The United States Environmental Protection Agency was nice enough to publish some approximate maps, colour-coding the results of an ocean level rise of up to 1.5 metres as red and up to 3.5 metres as blue for the entire Atlantic coast of North America. Since I am particularly well-acquainted with Boston, that part of their map drew my attention first. The resolution is not very high, but sometimes precision is superfluous. If you expect to find yourself standing on the corner of Commonwealth Avenue and Massachusetts Avenue in 2050, should you expect the water be up to your navel, your nipples, or your eyeballs? Certainly, this would not be the map to consult on that particular occasion, but then would that be a time to consult a map at all? Broad brushstrokes are perfectly fine for the purposes of this discussion, just as a wrecking ball need not be swung with any great precision.

But to start with, here is a neat and tidy map of Boston within its current shoreline {2}. Entering Boston Harbour from the Atlantic, we pass between Deer Island with its sewage treatment plant on the right and Long Island on the left. We proceed down the main channel into the inner harbour, passing between City Point on our left and Logan International Airport on our right. Past that, on our left we find the port of South Boston, which handles container ships, and the World Trade Centre, where cruise ships dock, while on our right is East Boston with its one remaining shipyard and marina, but where once the mighty clipper ships for the China tea trade were built. Further down the channel, we round the downtown with its skyscraper-studded financial district on our left. To our right is Mystic River, which has a liquefied natural gas tanker terminal, a dock for scrap iron barges, and a car ferry port. Turning further left, we pass Charlestown Navy Yard and the Charles River Dam (which should have properly been called the Charles River Pumping Station). Beyond is the Charles River Basin, ringed by lovely waterside parks, which, on good days and bad, are full of bicyclists and joggers. The river itself is also normally quite full of sailing dinghies, rowing sculls, canoes, and kayaks. Three large universities – Massachusetts Institute of Technology, Harvard University and Boston University – are located right on the river, and each has a boathouse. (Northeastern University is landlocked, but has a boathouse nevertheless.)

Before the Charles River Dam was built, Charles River was brackish and tidal, and smelled rather bad. The pumping station houses several large diesel engines that drive turbines that pump down the river during high tides and heavy rains, to prevent the river from leaving its banks. I have spent a year or so living at a marina directly downstream of the dam, and have observed that the pumping station does not run very often, but when it does it is quite an impressive sight. The tidal range is about three metres, and so with a 1.5-metre rise it would have to be running over half of the time, a three metre rise would force it to run continuously, and a four metre rise would likely put it underwater for good.

And here is the map prepared by our friends at the EPA {2}. What’s red goes under at 1.5 metres rise, what’s blue goes under at 3.5 metres rise, tan is either dry or uncovers at low tide at 3.5 metres rise (distinction not shown), and light blue is currently water. As we enter the harbour, Deer Island on our right is now again an island because the dam connecting it to the town of Winthrop is gone, as is much of Winthrop. Long Island, the barrier island on our left, is mostly washed out as well. Logan International Airport still has its control tower above water, but now only caters to sea planes. Port of South Boston and World Trade Centre are no more; same with East Boston’s shipyard facilities. Downtown stands as an island, but is rather hard to reach because all the highway tunnels are underwater, as are the docks. Mystic River facilities are gone as well. Charles River Dam is out of commission, and Charles River Basin is once again brackish and tidal all the way upstream to Watertown (off the map to the left), so-called because it has another, smaller dam, and supplied all of Boston’s water before an aqueduct was built to a reservoir quite far away. Prior to closing their doors, MIT, Harvard, and Boston University have spent the remainder of their rapidly dwindling endowments on dikes, dams, and pumping stations, to no avail.

To be perfectly candid, looking at this map does not fill me with optimism for the future of our fair City on a Hill. It seems that in due course it will turn into a landscape studded with abandoned wrecks of buildings standing knee-deep in a swirling colloidal suspension of excrement and garbage. What are the chances of preserving road access, or the electric grid, or water and sewer services under such conditions? And is it worth anyone’s trouble to even try, if it is understood that another decade will bring another few centimetres of ocean level rise, and that in response the shoreline will move a few kilometres further inland? Would it not be wiser to abandon entire areas as the water comes in, understanding that once it is in, it is there to stay?

But that leaves open an important question: What about Boston as a port? The same question applies to any other port, or, for that matter, just about any stretch of shoreline, for, as we will see in Part Three, Boston’s case is quite typical. Suppose you are a planter, happily growing wheat close enough to the coast to walk it down to the waterline with the help of some mules, and you would like to exchange that wheat (baked into hard biscuits and packed in waterproof tins) with some sailors in exchange for a few bottles of wine, some chocolate, and some silk cloth for a bridal gown (life goes on, you know). You pack the tins in panniers, strap the panniers onto your mules, and walk in stately procession toward the coast (mules aren’t exactly swift animals, and one mile per hour is what they generally peg out at). With port facilities permanently submerged, where do you intersect with your sailor friends to effect the exchange?

Things are not as hopeless as they would seem. After all, we did manage to colonise the entire planet using sailboats and without any port facilities to start with. A variety of techniques, some ancient, some decidedly twenty-first century, can be brought to bear to solve this problem. The problem most people face in adapting to the rapidly transforming landscape is not technical but psychological: they will insist on attempting to run their existing systems until they crash, simply because they have so much invested in them. This will mean that most people will simply deal themselves out of the game, and that the volume of global trade will diminish, perhaps by several orders of magnitude. But it will not stop altogether, and may eventually recover somewhat.

In The European Lowlands by Keith Farnish

Walking the grassy embankment between the tidal River Orford and the dusty fields of East Suffolk, it becomes starkly clear what sea level rise would mean to this part of the English coast. As I walk northwards the brackish water laps the broken-down concrete sills and oozes through the cracks, eroding away silt from the dike that I am striding along. Marsh Samphire seems to glow in the October sun; a tasty treat, but rare enough to be a delicacy in these parts. To my left, a cloud of dust is whipped up by the breeze, helped on its way by the harrows of a tractor: it’s been a dry month, and the frail earth is easily moved by the action of the wind. Weak, exhausted soil; the result of decades of relentless tillage in a land that is dependent upon constant drainage via a highly complex system of ditches and waterways.

The land here may be flat and low, but there is enough height on Orford Ness to mean that I can’t make out the North Sea, even from the top of this dike. But I can hear it as it washes through the stones that make up this ephemeral spur of land and then pulls back, moving the shingle in eddies down the coast. Farmland to my left; seas to my right – what must the people who live here think?

Constant dread, would be one expectation; but somehow I don’t think that is the case. If we make our way 100 miles north-west to the Fenlands of Cambridgeshire and Lincolnshire, then we experience a world of sea-level denial {3}:

The Middle Level is the central and largest section of the Great Level of the Fens, reclaimed by drainage during the mid-17th Century.

Its river system consists of over 120 miles (190 kilometres) of watercourses most of which are also navigations and has a catchment of just over 170,000 acres (70,000 hectares).

The efficient operation of the system is vital to the safety and prosperity of over 100,000 people who live and work in the area. But for the operations of the Commissioners and boards, much of the fen land would be under water for much of the year, accesses from higher ground would be cut-off and many of the present land uses, which are taken for granted, would be impossible.

Stern warnings indeed, but calmed by the claims of the Middle Level Commission; something we also see for another of the large Internal Drainage Boards (IBDs), that of South Holland, a 95,000 acre part of Lincolnshire, which states {4}: “Although the entire area is at considerable theoretical risk of river flooding and inundation from the sea, the actual risk is substantially reduced by the work that we do in partnership with Local Authorities, the Environment Agency and Natural England”.

Everything will be fine if they do their job? There is a clue in the word “fine”, as the balancing act between inundation and successful drainage rests on the finest of lines; something you can easily see if you enter a very conservative two metre sea level rise into the Firetree global flood map {5}.

That’s the Fenlands gone, then, in all practical sense. Plug in something approaching the more dramatic scenarios discussed in Part One of this series, and you see what can only be described as an entirely new landscape: a five metre rise creates a larger North Sea, extending southwards to Cambridge, and taking a five mile slice off the Lincolnshire coast. No more holidays in Skegness and, probably more significantly, about ten Gigawatts of electricity generation capability (about fifteen percent of the UK total) is at or below sea level {6}. That’s just in one particular part of England; on a larger scale, given the propensity for nuclear power stations to be on the coast and coal-fired power stations {7} to be near rivers (for cooling water), a five metre rise in sea level would pretty much have the UK’s power supply bollixed. You won’t see that in any official reports.

Back to the fertile croplands of the Fens, and neither will you see this startling fact mentioned: the pumping station at Saint Germans, two miles south-west of Kings Lynn, is just about the only thing preventing the aforementioned 170,000 acres of Fenland (the Middle Level) from flooding, even without sea-level rise. It would only take a power failure during a heavy period of rain or a high spring tide, with the sluice gates down, to quickly engulf the area. With a five metre rise, the new state-of-the-art system – due to be completed in 2010 – will be underwater all the time {8}. With a storm surge, like that experienced in 1953, a mere two metre rise should suffice to flood the whole of the Middle Level, with the Saint Germans pumping station sputtering to an ungainly halt. If you want to see the one thing that lies between safety and the flooding of 265 square miles of land, click on this link {9}. Comforting, isn’t it?

Do you know what it would mean to bring marshland back to the East of England on the kind of scale envisaged with just a modest sea-level rise? Not only will the land become unstable for the majority of buildings currently in the area, and totally incapable of supporting agriculture of any kind beyond sheep grazing; the Fenlands, the Broads, and the East Suffolk, Essex and Kent coasts will experience the unwelcome return of malaria. Malaria in the UK; something that up until the urgent Canutian shoring up of the coast in the nineteenth century was tolerated as an occupational hazard by the few who lived there, but would be a scourge upon modern towns and cities. As M J Dobson writes, in a sobering paper {10} on the incidence of malaria in England:

On every count, the marshland populations recorded the highest adult and child mortality rates. Average crude death rates were as high as sixty, seventy, or eighty per thousand – levels which could be two to three times those of neighbouring non-marshland parishes. Life expectancy at birth was little more than thirty years for the sickly marshland residents and nearly half of all recorded deaths occurred at age ten years or below. Burial patterns from year to year and season to season were also extremely volatile in the marshes and there was a very close correspondence between fluctuations in summer temperatures and the level of mortality in the autumn and following spring. The hottest summers were always followed by the unhealthiest and most mortal times in the marshlands.

A marshy land experiencing rising temperatures: this could be any coastal region in the world, coming to a time near you.

Dutch Denial

Never underestimate the Dutch: apart from being a race of phenomenally linguistic people who have found an almost perfect social balance between freedom and responsibility, at least compared to the rest of the civilised world, they also manage to keep a level head when a fifth of the Netherlands is only inhabitable by humans because of thousands of miles of dikes.

I suppose when you have to squint far into the past to see the deadliest of floods experienced by your people, knowing that in the last 100 years only one flood event has taken a significant number of lives, then a feeling of safety is bound to embrace you to a certain extent. But what if you do peer back?

1717 is regarded as the year of the last great flood in the Netherlands; the Christmas Flood which is estimated to have led to the deaths of 14,000 people in a single night. Return to 1570, and the All Saints flood is said to have taken many thousands of lives. Similarly in 1530, 1421, 1404, 1287 … Saint Lucia’s Flood in 1287 washed away between fifty and eighty thousand rural lives in the low-lying central plains of Holland. Back and back, a pattern of death that should serve to haunt the cultural memories of the Dutch – it really should, regardless of how safe things may feel at the moment:

Of all the United Provinces, Frieseland and Groningen have suffered, and continue to suffer, most from these floods. Exposed to the full rage of the north, north-west, and west winds, the waters of the angry Atlantic and Polar seas rush towards these provinces, pour through the inlets of its barrier reef – the Helder, (Hels-deur – hell’s door) the Vlie, and the more northern gates – heap them up in the inland Zuyder Zee, burst or overtop its dykes, and spread themselves over the country, sometimes to the very borders of Hanover. Thousands of men and cattle perish, the gates of the barriers become widened, and the dominion of the inland sea enlarged.

This paragraph, from E and R Littell’s Living Age (1848) predates any major engineering works, apart from the piecemeal implementation of thousands of local dikes, which were only ever meant to provide temporary respite from flooding. A remarkable plan, albeit primarily motivated by the desire for more farmland and population space, appeared in Modern Mechanix in 1930 – courtesy of the Strange Maps Blog {11} – proposing the construction of a 450 mile long, thirty metre high wall across the central North Sea, with another slightly smaller one curving every which way to block off the southern end.

Absurdly impractical, as well as ecologically and politically ruinous, perhaps; but the construction of the Afsluitdijk (literally “Closure Dike”) across the mouth of the 2,000 square mile Zuiderzee between 1927 and 1933, was certainly close to the limits of engineering in that period, and is still the largest single land “reclamation” project ever completed. The word “reclamation” is quoted intentionally, for what exactly is “reclaimed” when the oceans are banished from a place where they once existed?

This assertiveness, the almost messianic approach to claiming for a nation what was never its property, is foolhardy at best, and pathological at worst. What was once ocean can never truly be land unless the cycles of the climate deem it to be so – and we are undoubtedly taking them in the opposite direction. If we wilfully claim ascendancy over the incumbent waters, as the Dutch and the British have done over the last 800 years or so in their respective lowlands, then eventually the mindset that dominates is one of impregnability.

But the waters will return, not only to the coastline of eastern England as the sluice gates fail, but also to overtop the Afsluitdijk which is just seven metres high. Remember back in Part One, when the 1953 flood reached 4.55 metres above the Normal Amsterdam Water Level? Well, the risk is increasing all the time; not only as the sea level rises, but as the energy in the oceans increases and – something that is the epitome of risk – the population grows inexorably. The denial culture that blossoms behind coastal defences is alive and well in the Netherlands, according to Maaskant, Jonkman and Bouwer:

The projected population growth in flood prone areas is higher than the average in the Netherlands between 2000 and 2040. Due to this effect the potential number of fatalities is projected to increase by 68% on average for ten different flood scenarios, not including impacts from climate change and sea level rise. Just sea level rise of 0.30 metres leads to an average twenty per cent increase in the number of fatalities. The combined impact of sea level rise and population growth leads to an estimated doubling in the potential number of fatalities. Taking into account increasing probability of flooding due to sea level rise and extreme river discharges, the expected number of fatalities could quadruple by 2040.

— “Future risk of flooding: an analysis of changes in potential loss of life in South Holland”, Environmental Science & Policy, 2009

“Reclaimed land” is an anachronism because you cannot reclaim what you never had – the sea will reclaim the land soon; sooner than you can imagine.


For a while yet, coastal destruction caused by sea level rise will be seen as something that happens to someone else, somewhere else (or to you, but then that’s just your bad luck). Social inertia will follow its usual course, causing people to insure themselves against fires and other minor accidents, sweat the little details of public health and safety, fight terrorism, while steadfastly ignoring the elephant in the room that is about to sit down on their heads. At what point will it become obvious to just about everyone that the gods saw their plans, laughed at them, and then cancelled them? Will it then be too late to do anything to prepare, or will those near the coast simply join the ranks of environmental migrants? And if you do start taking steps to prepare now, will you be viewed as a harmless eccentric, an alarmist crackpot, or a dangerous subversive?

In response to these questions, we are sure to hear a chorus of “Gloom and doom!” Ah, the “doomers” and the doomed, what beautiful music they make! Be that as it may; in Part Three of this series, we will leave questions of denial and social inertia and political climate nonsense behind, and concentrate on What Might Work.














Keith Farnish is author of Time’s Up! An Uncivilized Solution To A Global Crisis: He also writes The Earth Blog and The Unsuitablog. He enjoys being a husband and dad, walking around and growing things.

Further reading:

Climate Change Puts Trillions of Dollars in Assets at Risk Along US Coasts

Bill Totten

Categories: Uncategorized

>America’s Pending Collapse

>by Timothy V Gatto (November 20 2009)

The truth that most people realize but can’t openly talk about is that America has seen better days and that the system of capitalism has long outlived its usefulness. The last part of that sentence, that capitalism has outlived its usefulness, is thoroughly the fault of the capitalists themselves.

For many years now, transnational corporations have sent much of America’s manufacturing overseas in order to take advantage of low cost workers. About the only manufacturing this country does on a large scale is earth moving equipment (Caterpillar) and military equipment. Boeing, Northrop-Grumman, Raytheon, General Electric and firms like that are the major remnants of a once thriving industrial base that made America. Detroit is still trying to hang in there, but shortfalls in sales have left it up to the workers in these plants to take it on the chin as their pay and benefits get cut.

The Dow is trying to make a comeback but the way I see it, much of the rise of “blue-chip” stocks is really more wishful thinking than serious thought. The stocks being sold on the backs of some of these companies are being bought on speculation that the market will go higher based on the rise of the GDP. The question that I would like to ask, is how far can the GDP go when seventy percent of the GDP is based on consumer spending? Where is consumer spending going to come from when realistically over sixteen percent of the people in America aren’t working?

In an essay, written by Richard Heinberg entitled “Should We Prop-up a Dying Economy” (October 19 2009), he argues that the economists and the people who follow physical science disagree sharply about where this economy is going. Peak Oil, whether it is present now or just years away, will mean that the economy will contract. The economists state that growth can happen in any environment, yet it is apparent that when oil prices spiked in 2008, the auto industry and the airline industry almost went belly-up. Shrinkage of energy means shrinkage in the economy, we have all been under the notion that we can borrow against a growing economy. The facts are that if the economy does not grow, there will be very little in the growth of capital to repay debts that are leveraged at an average of an average of 350% of debt to GDP ratio. Where will new capital come from?

As the price of petroleum becomes higher, imported goods will become more expensive. When our government fails to repay our foreign creditors, or pays them back in hyper-inflated dollars, there will be no credit issued to this country. This can be a significant problem because we currently use 25% of the world’s oil supply and we buy that oil on credit. He says:

“We have entered a new economic era in which the former rules no longer apply. Low interest rates and government spending no longer translate to incentives for borrowing and job production. Cheap energy won’t appear just because there is demand for it. Substitutes for essential resources will in most cases not be found. Over all, the economy will continue to shrink in fits and starts until it can be maintained by the energy and material resources that Earth can supply on ongoing basis.”

That is frightening to say the least. I believe that what our government should be doing is to listen to the scientists and stop listening to the economists. We have already borrowed almost 24 billion dollars, that is $80,000 for every man, woman and child in the US. We are robbing our future to pay for an economy that is unsustainable. Without economic growth, the banks, the investment houses and the insurance companies are bound to fail anyway. We might as well let them fail and get on with the business of restoring a sustainable economy.

In a talk called “The Five Stages of Collapse”, by Dmitry Orlov, a former Russian that watched the collapse of the Soviet Union, they are:

The Five Stages of Collapse:

1. Financial Collapse
2. Commercial Collapse
3. Political Collapse
4. Social Collapse
5. Cultural Collapse

This isn’t the warning of a horror show, but unless we start to prepare for a full or partial collapse, it could be worse than it has to be. He envisions a breakdown of society gradually replaced by stronger knit communities that must depend on each other for basic needs or it could be a complete breakdown of utter anarchy.

Meanwhile the Eagle sits on its perch, fighting wars in foreign lands while spending billions of American dollars doing it. The average American will see no benefit or harm whether we win or lose against the Taliban in Afghanistan. What we will have done however, is strap Americans with more debt and more use of precious resources. The American eagle is getting a little bit wobbly on its perch and it wouldn’t surprise me to see all American soldiers taken from all overseas assignments and brought back to this country just to deal with the economic collapse, and because we can no longer afford to keep them overseas.

We need to start thinking about where we live and how we will survive an economic collapse. When the federal government can no longer function, what will we do to replace it? How are individuals to survive when essential goods and services become extinct? This isn’t a future scenario that will happen twenty or thirty years from now, no! We are already experiencing it.

We can continue to live our daily lives watching TV and the advertisements that lull us into a false sense of security that everything is well, or we can start making provisions to deal with the calamity that lies ahead. We can provision staples, use alternative energy sources to heat our homes or assist us in heating them, and we can start talking with each other and get to know the neighbor that lives across the street that we have never talked to.

I’m really not an alarmist, but I see the merit of what so many scientists are predicting. Not only will Peak Oil stop economic growth, but climate change according to a UN report will bring desertification to seventy percent of the planet by 2025. Maybe petroleum peaking out is in reality what may save our planet. Maybe a return to simpler ways to live and work will stop the carbon dioxide emissions, but I don’t think so. Third world countries are surpassing the industrialized countries in carbon emissions by burning coal. What I would like to know is who is really minding this nation’s business? What is the Federal government doing when scientific fact is thrown in their face? While Obama listens to Timothy Geitner and Ben Bernanke and other Goldman Sacks alumni, a company that produces nothing and makes money by buying low and selling high with government funds, where are the people that see what’s happening? If I can understand the ramifications of what is happening in front of my face, what about the President of the United States? Is he really ignorant or does he just not wish to deal with it? I’m curious; maybe someone in the executive branch can give us answers. It would be in everyone’s best interest to have people starting to deal with reality instead of putting their head in the sand. Maybe the American eagle should be replaced with the ostrich.


Tim Gatto’s new book Complicity to Contempt (2009) is available at Amazon, Barnes and Noble, Abe’s and other fine bookstores now. Kimchee Days, a novel about an anti-aircraft Battery (reminiscent of M*A*S*H and CATCH-22) in Korea during the years 1969 to 1971 will be out soon. He can be reached at

Tim’s blog is at

Bill Totten

Categories: Uncategorized

>The Economic Crisis

>and What Must Be Done

by Richard C Cook (November 25 2009)

The United States does not control its own destiny. Rather it is controlled by an international financial elite, of which the American branch works out of big New York banks like J P Morgan Chase, Wall Street investment firms such as Goldman Sachs, and the Federal Reserve System. They in turn control the White House, Congress, the military, the mass media, the intelligence agencies, both political parties, the universities, et cetera. No one can rise to the top in any of these institutions without the elite’s stamp of approval.

This elite has been around since the nation began, becoming increasingly dominant as the 19th century progressed. A key date was passage of the National Banking Act of 1863, when the system was put into place whereby federal government debt was used to collateralize bank lending. Since then we’ve paid the freight through our taxes for bank control of the economy. The final nails in the coffin came with the passage of the Federal Reserve Act of 1913.

In 1929 the bankers plunged the nation into the Great Depression by constricting the money supply. With Franklin D Roosevelt as president, the nation struggled through the decade of the 1930s but did not pull out of the Depression until the industrial explosion during World War Two.

After the war came the Golden Age of the US economy, when the working man, protected by strong labor unions, became a true partner in the prosperity of the industrial age. That era lasted a full generation. The bankers were largely spectators as Americans led the world in exports, standard of living, science and space exploration, and every measure of health, longevity, and culture.

Roosevelt had kept the bankers subservient to the interests of the economy at large. The Federal Reserve was part of the New Deal team, and interest rates were held at historic lows despite a large federal deficit. One main impact was the huge increase in home ownership. After World War Two, the GI Bill allowed home ownership to grow further and millions of veterans to attend college. The influx of educated graduates led to productivity growth and the emergence of new high-tech industries.

But the bankers were laying their plans. In the early 1950s they got the government to agree to allow the Federal Reserve to escape its subservience to the US Treasury Department and set interest rates on its own. Rates rose throughout the 1950s and 1960s. By the time of the interest rate hikes of 1968, the economy was slowing down. Both federal budget and trade deficits were beginning to replace the post-war surpluses. High interest rates were the likely cause.

In 1971, President Richard Nixon removed the dollar’s gold peg, allowing the huge inflation resulting from oil price increases that the international bankers engineered through control of US foreign policy when Henry Kissinger was national security adviser and secretary of state. Nixon’s opening to China resulted in early agreements, also overseen by banking interests, to begin to transfer US industry to overseas producers like China which had cheap labor costs.

By the mid-1970s, the US had been taken over by a behind the scenes coup-d’etat that included events in 1963 when President John F Kennedy was assassinated by a conspiracy that could only have been instigated by the highest levels of world financial control. In the election of 1976, David Rockefeller succeeded in placing fellow Trilateral Commission member Jimmy Carter in the White House, but Carter upset the banking community, thoroughly Zionist in orientation, by working toward peace in the Middle East and elsewhere.

I was working in the Carter White House in 1979-80. Unbeknownst to the president, Federal Reserve Chairman Paul Volcker, another Rockefeller protege, suddenly raised interest rates to fight the inflation the bankers had caused by the OPEC oil price deals, and plunged the nation into recession. Carter was made to look weak and uninformed and was defeated in the election of 1980 by Republican candidate Ronald Reagan. It was through the “Reagan Revolution” that the regulatory controls over the banking industry were lifted, mainly in allowing the banks to use their fractional reserve privileges in making mortgage loans.

Volcker’s recession shattered American manufacturing and hastened the flight of jobs abroad. Under the “Reagan Doctrine”, the US military embarked on an unprecedented mission of world conquest by attacking one small nation at a time, starting with Nicaragua. Global capitalism was also on the march, with the US armed forces its own private police force. With the invasion of Iraq under George H W Bush in 1991, mainland Asia was revealed as the principle target.

The economy was floated by productivity gains through computer automation and a huge sell-off of assets through the merger-acquisition bubble of the late 1980s which ended in a recession. This resulted in the defeat of Bush by Bill Clinton in the election of 1992. Clinton was able to create another bubble through a strong dollar policy that attracted foreign capital.

The dot-com bubble that resulted lasted all the way through to the crash of December 2000. Meanwhile, the US Air Force led the way in the destruction of the sovereign state of Yugoslavia, whereby the international bankers took over the resource wealth of the entire Balkan region, and the US military gained forward bases for further incursions into Asia.

Do we need to say that none of this was ever voted on by the American electorate? But they bought into it nevertheless, both with their silence and through participation in a generally favorable job market in the emerging service occupations, particularly finance.

By the time George W Bush was inaugurated president in January 2001, the US was facing a disaster. $4 trillion in wealth had vanished when the bubble collapsed. NAFTA caused even more American manufacturing jobs to disappear abroad. The Neocons who were moving into key jobs in the Pentagon knew they would soon have new wars to fight in the Middle East, with invasion plans for Afghanistan and Iraq ready to be pulled off the shelf.

But the US had no economic engine available to generate the tax revenues Bush would need for the planned wars. At this moment Chairman Alan Greenspan of the Federal Reserve stepped in. Over a two year period from 2001 to 2003 the Fed lowered interest rates by over 500 basis points. Meanwhile, the federal government removed all regulatory controls on mortgage lending, and the housing bubble was on. $4 trillion in new home loans were pumped into the economy, much of it through subprime loans borrowers could not afford.

The Fed began to put on the brakes in 2003, but the mighty work of re-floating a moribund economy had been accomplished. By late 2006 another recession loomed, but it would take two more years before the crisis of October 2008 brought the entire system down.

The impact on the job market was immediate and profound. By the time Barack Obama was elected president in November 2008, the US was mired in seemingly endless wars in Afghanistan and Iraq, and the worst recession since the Great Depression was picking up speed. In order to prevent total disaster, the Bush administration ended its eight years of catastrophic misrule with a flourish, by allocating over $700 billion in financial system bailouts to cover the bad loans the banks had been making since Greenspan gave the housing bubble the green light.

It is now November 2009. Since Barack Obama was inaugurated in January, unemployment has soared from 7.9 percent to 10.2 percent. A few hundred billion dollars were allocated for “stimulus” purposes, but most of that went to pay unemployment benefits and to keep state and local governments from laying off more employees.

A fraction has been distributed for highway improvements, but largely through the bank bailouts the federal deficit has been running at an annual rate of $1.5 trillion, by far the largest in history, with the national debt now topping $12 trillion. Ironically, those Americans who still have productive jobs continue to grow in efficiency, with productivity up over five percent in the last year.

So much federal money has been spent that the Obama administration has been struggling to make its health care proposals budget-neutral through a raft of new taxes, fees, and penalties, and by announcing in recent days that the government’s first priority must now shift to deficit reduction. The word “austerity” has been mentioned for the first time since the Carter administration. Yet Congress voted $655 billion in military expenditures to continue fighting in the Middle East. A US military attack on Iran, possibly in conjunction with Israel, would surprise no one.

So where do we now stand?

At present, the Federal Reserve is trying to prevent a total economic collapse. Interest rates are near-zero, to the chagrin of foreign investors in US Treasury securities, and close to half of new Treasury debt instruments have been bought by the Federal Reserve itself as a way of providing free money for federal government expenditures.

But the US economy shows no signs of coming back, with no economic driver emerging that could bring it back. For all the talk about alternative energy, there has been no significant growth of any home-grown industry that could possibly make up so much lost ground in either the short or the long-term.

The industries in the US that are holding up are the military, including arms exports, universities that are attracting large numbers of students from abroad, especially China, and health care, especially for the aging baby boomer population. But the war industry produces nothing with a long-term economic benefit, and health care exists mainly to treat sick people, not produce anything new.

None of this provides a foundation that can bring about a restoration of prosperity to 300 million people when the jobs of making articles of consumption are increasingly scarce. On top of everything else, since government inevitably looks to its own requirements first, the total tax burden continues to increase to the point where the average employee now pays close to fifty percent of his or her income on taxes of all types, including federal and state income taxes, real estate taxes, payroll taxes, excise taxes, government fees, et cetera. Plus the cost of utilities continues to rise steadily and threatens to skyrocket if cap-and-trade legislation is passed.

The Obama administration has no plans to deal with any of this. They have projected a budget for fifteen years hence that shows the budget deficit decreasing and tax revenues going way up, but it is all lies. They have no roadmap for getting us there and no plans for following the roadmap if it portrayed a realistic goal. And yet the US military is still trying to conquer Asia. It is madness.

And it is madness because the big decisions are not made by the US, by Congress, or by the Obama administration. The US has, for half-a-century, been marching to the tune played by the international financial elite, and this fact did not change with the election of 2008. The financiers have put the people of this nation $57 trillion in debt, according to the latest reports, counting debt at the federal, state, business, and household levels. Interest alone on this debt is over $3 trillion of a GDP of $14 trillion. Failure of our political leadership to deal with this tragedy over the past three decades is nothing less than treason.

But then again, at some point the decision was made that the US and its population would be discarded by history, the economic status of the nation reduced to a shadow of what it once was, but that its military machine would be used for the financial elite’s takeover of the world until it is replaced by that of some other nation. All indications are that the next country up to bat as military enforcer for the financiers is China.

There you have it. That, in my opinion, is the past, present, and future of this nation in a nutshell. Great evils have been done in the world in the last century, and there is nothing anyone can do about it.

Except … and that’s what each person caught up in these travesties must decide. What are you going to do about it?

In mulling over this question, it would be wise to recognize that the dominance of the financial elite has largely been exercised through their control of the international monetary system based on bank lending and government debt. Therefore it’s through the monetary system that change can and must be made.

The progressives are wrong to think the government should go deeper in debt to create more jobs. This will just create an even deeper hole of debt future generations will have to crawl out of.

Rather the key is monetary reform, whether at the local or national levels. People have lost control of their ability to earn a living. But change could be accomplished through sovereign control by people and nations of the monetary means of exchange.

This control has been stolen. It is time to take it back. One way would be for the federal government to make a relief payment to each adult of $1,000 a month until the crisis lifted. This money could be earmarked for goods and services produced within the US and used to capitalize a new series of community development banks. I have called this the “Cook Plan”.

The plan could be funded through direct payment from a Treasury relief account without new taxes or government borrowing. The payments would be balanced on the credit side by GDP growth or be used by individuals to pay off debt. It would be direct government spending as was done with Greenbacks before and after the Civil War without significant inflation.

Another method increasingly being used within the US today is local and regional credit clearing exchanges and the use of local currencies or “scrip”. Use of such currencies could be enhanced by legislation at the state and federal levels allowing these currencies to be used for payment of taxes and government fees as well as payment of mortgages and other forms of bank debt. The credit clearing exchanges could be organized as private non-profit regional currency co-operatives similar to credit unions.

These would be immediate emergency measures. In the longer run, sovereign control of money and credit must be returned to the public commons and treated as public utilities. This does not mean exclusive government control to replace bank control. As stated previously, it would be done in partnership between government and private trade exchanges. Nor does it mean government takeover of business, industry, or the banking system, though all should be regulated for the common good and fairly taxed.

This program would lead to a new monetary paradigm where money and credit would be available by, as, when, and where needed, to facilitate trade between and among legitimate producers of goods and services. In this way trade and commerce will come to serve human freedom, not diminish it as is done with today’s dysfunctional partnership between big government trillions of dollars in debt and big finance with the entire world in hock.

Such a change would be a true populist revolution.

Bill Totten

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