Republicans Nominate Fringe Candidates & Wall Street Loves It

On Tuesday the teabaggers again showed they have virtually taken over the Republican Party. In Delaware the teabagger candidate, Christine O'Donnell, beat the candidate preferred by Republican Party leaders (and who had a much better chance of defeating the Democratic candidate). She joins Joe Miller of Alaska, Sharron Angle of Nevada, Rand Paul of Kentucky, and Marco Rubio of Florida as candidates backed by the teabaggers who beat mainstream Republicans to get the party's nomination for the Senate.

These candidates are well out on the fringes of mainstream conservative belief (in territory once inhabited by the John Birch Society -- whose members considered President Eisenhower to be a communist). Bill Clinton pointed out that these candidates make right-wing fundamentalist President George W. Bush look good by comparison, saying, "A lot of their candidates today, they make him look like a liberal."

And Wall Street is loving it. Both guests and hosts on CNBC (NBC's corporate and market slanted business channel) agreed yesterday that the nomination of these teabagger candidates is good for Wall Street because it shows that there is a movement in the country toward "business-friendly and market-friendly policies" and could result in a Congress that has "pro-growth, pro-business, anti-spend, anti-tax views."

They are right. These candidates are not just right-wing -- they are far to the right-wing fringe. It amazes me that the teabagger movement, which claims to be opposed to opposed to greed and mismanagement and was outraged over the TARP bailout proposed and signed by President Bush, could think that electing candidates such as these would be any kind of solution. All I can think is that they bought the lies funded and sold by the fringe right-wing billionaire Koch brothers (who have funded many of the teabagger groups through various organizations).

As far as I can tell from looking at pictures of teabagger gatherings, many of them are older Americans -- who are on Medicare or getting close to it. Don't they know most of these candidates would like to abolish Medicare (and throw the elderly to the wolves -- the private insurance companies)?

Don't they know that all of these candidates (except Rubio, who recently said he's changed his mind) is opposed to Social Security and would like to abolish the current program and privatize it?

Don't they know these candidates are against regulating Wall Street and the giant financial institutions and corporations (thus letting them unleash their greed on Main Street)?

Don't they know these candidates are climate change deniers and would vote to unleash the big oil and gas companies on our already fragile environment?

Don't they know these candidates are in favor of massive tax cuts for millionaires (thus shoving a huge tax burden on our children)?

Don't they know these candidates approve of corporate execs getting multi-million dollar salaries while depressing the wages of ordinary Americans (and would even eliminate the minimum wage)?

In addition, these candidates are just plain nutty. Sharron Angle is opposed to the color black (because it is the devil's color). Christine O'Donnell has campaigned against masturbation. Joe Miller thinks Social Security and unemployment insurance is unconstitutional. Rand Paul thinks the civil rights acts of the 1960s and the law making businesses and buildings more disabled-friendly are unconstitutional.

I am amazed that the teabaggers have been deluded into voting against their own financial and environmental interests. They have let their hatred for an African-American president blind them to what these candidates stand for and the destruction they would cause to this country.

The only saving grace is that these teabaggers only have power within the Republican Party. The country in general is much more moderate and middle-of-the-road, and doesn't like candidates from either political extreme -- the right or the left. In fact, in an off-year election that was looking very good for Republicans, the teabaggers may have tossed Democrats a lifeline by nominating such fringe candidates as these.

Republican Lisa Murkowski was virtually a shoo-in for re-election in Alaska. But Miller's nomination gives the Democratic candidate a real chance of getting elected (especially if Murkowski runs as a write-in candidate as she seems inclined to do).

It looked like this election would be curtains for Democrat Harry Reid. The polls showed most establishment Republicans could beat him. But the nomination of Angle has changed that, and for the first time in months Reid actually has a lead in most polls.

In Kentucky the Democrat was given no chance of winning -- until Paul was nominated, and now the race is very close.

O'Donnell's opponent in the Republican primary was polling well ahead of the Democrat their, but now that she's won O'Donnell trails that same Democrat badly in the polls (and many mainstream Republicans say they will support the Democrat).

Even Florida has turned out to be a mess with the teabagger candidate winning the nomination. It is now a three-way race that could be won by anybody.

Conventional wisdom says the teabaggers have blown the Republican's chances of winning the Senate in 2010. I think that's probably true. Even if some of these teabagger candidates can get elected, it won't be good for Republicans. It will show America just how far to the right the Republican Party has been pushed, and that will hurt them in 2012.
Posted by Ted McLaughlin

No Comment Needed

Repube Platform - SCREW THE POOR!

Thanks to the mean-spirited policies started under the administration of Ronald Reagan and accelerated under the Bush administration, this country has been in the throes of a serious and deep recession since the latter part of 2007. The country has lost somewhere between 12 and 15 million jobs in addition to the good jobs already being lost through outsourcing, and we have yet to really start replacing those jobs.

While the economic "experts" tell us the economy is getting better, it is obvious that the only people not hurting in this continuing recession are the rich. Ordinary citizens are still having a tough time and this will probably continue for some extended period of time. Consider these facts released by the United States Census Bureau:

* The overall poverty rate climbed to 14.3% of the population in 2009 (a jump of 1.1%).

* There are now 43.6 million people living below the poverty level in the United States.

* The amount of Americans without health insurance rose to 16.7% of the population in 2009 ( a jump of 1.3%).

* There are now 50.7 million people without health insurance in the United States.

* At least 6.6 million people lost their employer-based health insurance in 2009.

* The poverty rate among working-age people (18 to 64) is the highest it's been since the 1960s (before President Johnson's War on Poverty).

* The number of children living under the poverty level rose to 20.7% in 2009 (a jump of 1.7%).

* The number of Hispanics living under the poverty line rose to 25.3% in 2009 (a jump of 2.1%).

* The number of Blacks living under the poverty level rose to 25.8% in 2009 (a jump of 1.1%).

* The number of Whites living under the poverty level rose to 9.4% in 2009 (a jump of 0.8%).

* Expanded unemployment insurance kept 3.3 million people out of poverty in 2009.

These are shameful statistics and should not be tolerated in the "richest nation in the world". So far, neither party seems willing to bite the bullet and do what is necessary to end the recession and put Americans back to work (and end job outsourcing). The Democrats have made a few timid efforts, but have let the Republicans scare them out of taking enough action with talk of "deficit problems".

But while the Democrats have not done nearly enough, the Republicans want to go back to the policies that got us into this mess in the first place. The centerpiece of their economic proposal is to give the richest 2% of Americans another massive tax cut (giving lie to their talk of deficit concerns). They still can't get past a belief in the "trickle-down" theory of economics -- which is to keep giving money to rich people in the hope that someday they'll share some of it with the rest of America.

Ordinary working Americans (and those who would like to be working) should be mad at the politicians in Washington. Those politicians (of both parties) have failed them so far. But the answer is not to vote Republican in November. Putting Republicans back in power will just mean a return to the policies of Reagan and Bush -- the same policies that started the recession in the first place.

The only answer is to keep the Democrats in power, but hold their feet to the fire. We must demand they institute real solutions that will put millions of Americans back to work (with good jobs -- not minimum wage jobs). Write and/or call these Democrats and demand they stop pussyfooting around and get the job done, and keep putting pressure on them until they do.
Posted by Ted McLaughlin

Busting Myths About Photovoltaics

By John Perlin

The European Union Photovoltaic Solar Energy Conference I just attended stressed the need for public education about photovoltaics — the silicon-based solar cells that turn sunlight into usable electricity — to increase acceptance of the solar-power technology.
Myths abound about photovoltaics that hinder their growth, and I’d like to burst some of those misconceptions right here:
Myth: Because solar cells are only a few microns thick, they produce weaker electricity.
Fact: All electrons are created equal. Hence, the movement of electrons that make up electricity are no different from those generated by the sun striking “wimpy” solar cells than from those generated by huge turbines powered by steam. Our minds have become so accustomed to electricity generated by large power plants that it is hard to adjust to the concept that extremely thin material can do the same work.
Myth: Photovoltaic cells require much more area to generate power than do power plants run on fossil fuels or nuclear.
Fact: If the extraction and transportation of fossil fuels and nuclear is accounted for as well, then the area required for the production and generation of the three energy sources is about the same.
Myth: Photovoltaics, unlike other power generators, can only survive with subsidies.
Fact: While subsidies do matter, as shown in Germany, other common power sources also receive major support. Fossil fuels and nuclear receive about $500 billion in subsidies worldwide every year. If not for the Price-Anderson Act, which limits liability of nuclear power plants in the U.S., they would be unable to operate since insurance costs would be too expensive.
Editor’s Note
Our John Perlin is attending the 25th annual European Photovoltaic Solar Energy Conference in Valencia, Spain. He will be providing updates throughout the meeting. Check back with our By the Way blog to see more reports from this conference.
Myth: Photovoltaic-generated electricity is more costly than electricity generated by fossil-fueled or nuclear-powered electricity.
Fact: All economic models focus on initial investment, higher for photovoltaics and solar energy in general, than the expenses for running them. Since photovoltaic technologies work with minimal maintenance and no power requirements over many decades receiving free energy from the sun, the electricity itself eventually costs nothing (although human administration, property taxes, etc., will cost something). Also, few present economic models factor in the risk of fuel costs rising or of their diminished availability over the long term, nor do they usually include externalities such as the military cost of guaranteeing continued access to fossil fuels or America’s continued armed presence in oil- and gas-producing regions even in peacetime.
Myth: Photovoltaics require full sun to operate and therefore do not work in cloudy regions.
Fact: Photovoltaics work both with direct radiation (full sun) and diffuse sun (cloudy skies). Germany, for example, not known for its sunny climate, produces more electricity from sunlight than any other nation.
Myth: Solar cells can only work when the sun shines.
Fact: That’s true, but with the smart grid, many means of power storage exist. For example, when wind power produces excess electricity in Denmark, it goes to hydro-electric plants in Norway where they pump water uphill. When the Danes require more power than the wind machines can produce, the water stored uphill flows downward through the hydro power plants, sending the electricity produced immediately to Denmark.
Myth: Solar cells require more energy for their production than they generate.
Fact: Under the most trying conditions, it takes no more than three years of operation for solar cells to pay back the energy that goes into making them. As they will last for many decades, their energy payback is extremely short. Changes in technology, such as plastics or paint-ons, may change the time frames but not the underlying equation.

Google Checks Out The PC of Renewable Energy

Imagine you could go to Home Depot and for a few hundred dollars purchase an appliance that plugs in like a blender and generates a chunk of the energy your home needs, renewable and emissions-free. This dream may be just 12-to-18 months from stores.
Once a pioneer at RealNetworks in Seattle, Chad Maglaque was at Google HQ last week talking informally with engineers about his invention The Jellyfish. It’s a 36-inch-tall rooftop wind turbine that you can plug into a socket in your home--no fancy setup required--and generate up to 40 kWh a month, about enough to power a home-full of LEDs or a room full of CFLs. It also comes Wi-Fi and WiMax equipped. He calls it the PC of renewable energy. "We could have 10,000 of these sitting in a city, networked—it’s like a virtual utility," he told me. His idea is that the utility or the city will subsidize the $400 cost down to $199 or less with tax rebates. He estimates it’s 12-to-18 months from store shelves, provided it clears all safety inspections. The Jellyfish is a semi-finalist for the Google Project 10 to the 100th contest--$10 million for the 5 ideas that helps the most people.

ASU researchers use bacteria to generate electricity

Researchers at the Biodesign Institute of Arizona State University have come up with an alternative way of generating electricity. In a new study featured in the journal Biotechnology and Bioengineering, lead author Andrew Kato Marcus and colleagues Cesar Torres and Bruce RittmannThey mentioned that they are using the tiniest organisms on the planet-bacteria-for this purpose. They added that they are looking forward to commercialization of a promising microbial fuel cell (MFC) technology. The microbial fuel cell will generate electrical energy by using any kind of waste, such as sewage or pig manure.

But why bacteria? Marcus explains that apart from being cheap, Bacteria have such a rich diversity that researchers can find a bacterium that can handle almost any waste compound in their daily diet. By linking bacterial metabolism directly with electricity production, the MFC eliminates the extra steps necessary in other fuel cell technologies.

Let’s find out the mechanism behind this. All MFCs have a pair of battery-like terminals: an anode and cathode electrode. The electrodes are connected by an external circuit and an electrolyte solution to help conduct electricity. The difference in voltage between the anode and cathode, along with the electron flow in the circuit, generate electrical power. In the first step of the MFC, an anode respiring bacterium breaks down the organic waste to carbon dioxide and transfers the electrons released to the anode. Next, the electrons travel from the anode, through an external circuit to generate electrical energy. Finally, the electrons complete the circuit by traveling to the cathode, where they are taken up by oxygen and hydrogen ions to form water. Marcus also explains the scientific mechanism as to how the bacteria get the electrons to the anode. In this context, he goes on to explain the concept of ‘biofilm’. Because bacteria use the anode in their metabolism, they strategically position themselves on the anode surface to form a bacterial community called a biofilm. Bacteria in the biofilm produce a matrix of material so that they stick to the anode.

Scientists discover tiny solar panels that create themselves

File this one under "holy crap," but scientists at MIT have discovered molecules that spontaneously assemble themselves into a pattern that can turn light into electricity — essentially a self-creating solar panel. In a petri dish.

The researchers set out to create a synthetic process that imitates photosynthesis. Certain molecules respond to light by releasing electrons; the trick was discovering a substance that sticks them together in a consistent structure. Phospholipids do just that, and they also attach themselves to carbon nanotubes, which conduct electricity. With the nanotubes holding the phospholipids in a uniform alignment, the photoreactive molecules are all exposed to light at once, and the tube acts as a wire that then collects the resulting electrical current.

The most interesting part is that the tiny solar array can be disassembled and reassembled just by adding chemicals. Spray on an additive and the molecular components break apart into a soup; remove it with a membrane, and the system spontaneously puts itself together.

After repeatedly having the system go through disassembly and reassembly, the scientists found the system had no loss in efficiency. That could prove to be the best development of all, since losing efficiency over time can be a big problem with some solar systems. It all makes sense: if you want to build better solar panels, why not look for inspiration from the most successful solar-energy generators of all: plants.

No Comment Needed

Poverty Rate Shows Record Increase For 2009

This really shouldn't come as a surprise to anyone in this country, but it looks like when the figures are officially released next week they will show that poverty in America rose by a record percentage. The previous record was back in 1980 when poverty rose by 1.3%. It is expected that poverty will have increased by 1.8% in 2009 -- from 13.2% to 15% of the total population. This means more than 1 out of every 7 people is living in poverty in America -- about 45 million people.

Child poverty has increased from about 19% to more than 20%. This means more than 1 out of every 5 children in America is living below the poverty level. Among working age people (ages 18 thru 64) the poverty rate rose from 11.7% to 12.4%. These are shameful statistics for a country routinely touted as the richest country in the world. Hell, they would be shameful statistics for any country.

There is little doubt that the Republicans will try to blame the current administration for this record rise in the poverty rate. That is not only laughable -- it is a damnable lie! This inexorable climb in the poverty rate started back in the Reagan administration with a deregulation of Wall Street and the financial industry, and a concerted effort to bust unions and depress the wages of workers. It was a beginning of a massive transfer of wealth and income from ordinary working Americans to the richest 1-5% in this country.

This accelerated during the Bush administration with massive tax cuts for the rich and the increase in the outsourcing of good jobs overseas. This created the conditions for an unavoidable disaster which came to a head in 2007 when the greed and incompetence of the financial giants triggered the current recession, and put 12-15 million Americans out of work.

Sadly, the Republicans seem to have learned nothing from their past economic mistakes. They fought the health care bill and the bill to put regulations on the giant Wall Street financial firms -- seriously weakening both bills and preventing much of the badly needed reform. Now they want to continue the massive Bush tax cuts for the richest 2% of Americans -- further throwing the wealth and income distribution out of balance and setting the country up for a deepening and longer-lasting recession.

They opposed the extension of unemployment benefits for those their policies threw out of work, and now they say they will oppose any stimulus plan to put Americans back to work. To say the Republican policies are mean-spirited and an invitation to economic disaster is an understatement.

The Republicans may want to blame Democrats for the increasing poverty rate and the continuing recession, but if they really want to see who is at fault all they have to do is look in the mirror.
Posted by Ted McLaughlin

Military Study Warns of a Potentially Drastic Oil Crisis

By Stefan Schultz

A study by a German military think tank has analyzed how "peak oil" might change the global economy. The internal draft document -- leaked on the Internet -- shows for the first time how carefully the German government has considered a potential energy crisis.

The term "peak oil" is used by energy experts to refer to a point in time when global oil reserves pass their zenith and production gradually begins to decline. This would result in a permanent supply crisis -- and fear of it can trigger turbulence in commodity markets and on stock exchanges.

The issue is so politically explosive that it's remarkable when an institution like the Bundeswehr, the German military, uses the term "peak oil" at all. But a military study currently circulating on the German blogosphere goes even further.
The study is a product of the Future Analysis department of the Bundeswehr Transformation Center, a think tank tasked with fixing a direction for the German military. The team of authors, led by Lieutenant Colonel Thomas Will, uses sometimes-dramatic language to depict the consequences of an irreversible depletion of raw materials. It warns of shifts in the global balance of power, of the formation of new relationships based on interdependency, of a decline in importance of the western industrial nations, of the "total collapse of the markets" and of serious political and economic crises.

The study, whose authenticity was confirmed to SPIEGEL ONLINE by sources in government circles, was not meant for publication. The document is said to be in draft stage and to consist solely of scientific opinion, which has not yet been edited by the Defense Ministry and other government bodies.

The lead author, Will, has declined to comment on the study. It remains doubtful that either the Bundeswehr or the German government would have consented to publish the document in its current form. But the study does show how intensively the German government has engaged with the question of peak oil.

Parallels to activities in the UK

The leak has parallels with recent reports from the UK. Only last week the Guardian newspaper reported that the British Department of Energy and Climate Change (DECC) is keeping documents secret which show the UK government is far more concerned about an impending supply crisis than it cares to admit.
According to the Guardian, the DECC, the Bank of England and the British Ministry of Defence are working alongside industry representatives to develop a crisis plan to deal with possible shortfalls in energy supply. Inquiries made by Britain's so-called peak oil workshops to energy experts have been seen by SPIEGEL ONLINE. A DECC spokeswoman sought to play down the process, telling the Guardian the enquiries were "routine" and had no political implications.

The Bundeswehr study may not have immediate political consequences, either, but it shows that the German government fears shortages could quickly arise.
Part 2: A Litany of Market Failures

According to the German report, there is "some probability that peak oil will occur around the year 2010 and that the impact on security is expected to be felt 15 to 30 years later." The Bundeswehr prediction is consistent with those of well-known scientists who assume global oil production has either already passed its peak or will do so this year.

Market Failures and International Chain Reactions

The political and economic impacts of peak oil on Germany have now been studied for the first time in depth. The crude oil expert Steffen Bukold has evaluated and summarized the findings of the Bundeswehr study. Here is an overview of the central points:

Oil will determine power: The Bundeswehr Transformation Center writes that oil will become one decisive factor in determining the new landscape of international relations: "The relative importance of the oil-producing nations in the international system is growing. These nations are using the advantages resulting from this to expand the scope of their domestic and foreign policies and establish themselves as a new or resurgent regional, or in some cases even global leading powers."
Increasing importance of oil exporters: For importers of oil more competition for resources will mean an increase in the number of nations competing for favor with oil-producing nations. For the latter this opens up a window of opportunity which can be used to implement political, economic or ideological aims. As this window of time will only be open for a limited period, "this could result in a more aggressive assertion of national interests on the part of the oil-producing nations."
Politics in place of the market: The Bundeswehr Transformation Center expects that a supply crisis would roll back the liberalization of the energy market. "The proportion of oil traded on the global, freely accessible oil market will diminish as more oil is traded through bi-national contracts," the study states. In the long run, the study goes on, the global oil market, will only be able to follow the laws of the free market in a restricted way. "Bilateral, conditioned supply agreements and privileged partnerships, such as those seen prior to the oil crises of the 1970s, will once again come to the fore."
Market failures: The authors paint a bleak picture of the consequences resulting from a shortage of petroleum. As the transportation of goods depends on crude oil, international trade could be subject to colossal tax hikes. "Shortages in the supply of vital goods could arise" as a result, for example in food supplies. Oil is used directly or indirectly in the production of 95 percent of all industrial goods. Price shocks could therefore be seen in almost any industry and throughout all stages of the industrial supply chain. "In the medium term the global economic system and every market-oriented national economy would collapse."
Relapse into planned economy: Since virtually all economic sectors rely heavily on oil, peak oil could lead to a "partial or complete failure of markets," says the study. "A conceivable alternative would be government rationing and the allocation of important goods or the setting of production schedules and other short-term coercive measures to replace market-based mechanisms in times of crisis."
Global chain reaction: "A restructuring of oil supplies will not be equally possible in all regions before the onset of peak oil," says the study. "It is likely that a large number of states will not be in a position to make the necessary investments in time," or with "sufficient magnitude." If there were economic crashes in some regions of the world, Germany could be affected. Germany would not escape the crises of other countries, because it's so tightly integrated into the global economy.
Crisis of political legitimacy: The Bundeswehr study also raises fears for the survival of democracy itself. Parts of the population could perceive the upheaval triggered by peak oil "as a general systemic crisis." This would create "room for ideological and extremist alternatives to existing forms of government." Fragmentation of the affected population is likely and could "in extreme cases lead to open conflict."
The scenarios outlined by the Bundeswehr Transformation Center are drastic. Even more explosive politically are recommendations to the government that the energy experts have put forward based on these scenarios. They argue that "states dependent on oil imports" will be forced to "show more pragmatism toward oil-producing states in their foreign policy." Political priorities will have to be somewhat subordinated, they claim, to the overriding concern of securing energy supplies.

For example: Germany would have to be more flexible in relation toward Russia's foreign policy objectives. It would also have to show more restraint in its foreign policy toward Israel, to avoid alienating Arab oil-producing nations. Unconditional support for Israel and its right to exist is currently a cornerstone of German foreign policy.

The relationship with Russia, in particular, is of fundamental importance for German access to oil and gas, the study says. "For Germany, this involves a balancing act between stable and privileged relations with Russia and the sensitivities of (Germany's) eastern neighbors." In other words, Germany, if it wants to guarantee its own energy security, should be accommodating in relation to Moscow's foreign policy objectives, even if it means risking damage to its relations with Poland and other Eastern European states.

Peak oil would also have profound consequences for Berlin's posture toward the Middle East, according to the study. "A readjustment of Germany's Middle East policy … in favor of more intensive relations with producer countries such as Iran and Saudi Arabia, which have the largest conventional oil reserves in the region, might put a strain on German-Israeli relations, depending on the intensity of the policy change," the authors write.

When contacted by SPIEGEL ONLINE, the Defense Ministry declined to comment on the study.

ITALY TO HAVE SOLAR-POWERED HYDROGEN FUELING STATIONS

Clean energy company, Acta Group, has plans to install a network of solar-powered hydrogen fueling stations throughout Italy.

BY HARRY TOURNEMILLE
The company has created a commercial system for converting water to hydrogen using solar energy, which means it can be accessed at fueling stations across the country.

Why Hydrogen? Even though it's emissions-friendly, the components required for its conversion do not come from renewable sources and tend to be highly expensive.



Thankfully, hydrogen fuel has come a long way. Most new technology allows it to work in conjunction with batteries, making it a viable, alternative option (manufacturing concerns notwithstanding). But you won't see it widespread throughout Europe. In fact, Italy seems to be the only country trying this technology out on a mass scale.

In part, Acta is taking advantage of Italy's federal legislation, which requires any new petrol stations to install a minimum of photovoltaic generation capacity (in Tuscany it's 12 kw) and offer gaseous fuel alternatives. Obviously, a solar-hydrogen fuel pump would kill the proverbial two birds with one stone.

It could also promote new industry as well, with more hydrogen fuel cars coming into the markets.

Having entered an implicit agreement with Girelli Bruni -- one of Italy's leading service station installation companies, Acta will be supplying the photovoltaic and integrated hydrogen fuel generators for all new stations.

No Comment Needed

Development of Tiny Thorium Reactors Could Wean the World Off Oil In Just Five Years

An abundant metal with vast energy potential could quickly wean the world off oil, if only Western political leaders would muster the will to do it, a UK newspaper says today. The Telegraph makes the case for thorium reactors as the key to a fossil-fuel-free world within five years, and puts the ball firmly in President Barack Obama's court.
Thorium, named for the Norse god of thunder, is much more abundant than uranium and has 200 times that metal's energy potential. Thorium is also a more efficient fuel source -- unlike natural uranium, which must be highly refined before it can be used in nuclear reactors, all thorium is potentially usable as fuel.
The Telegraph says thorium could be used as an energy amplifier in next-generation nuclear power plants, an idea conceived by Nobel laureate Carlo Rubbia, former director of CERN.
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Science, Rebecca Boyle, nuclear power plants, nuclear reactor, power plants, radioactive isotope, thorium, uraniumKnown as an accelerator-driven system, it would use a particle accelerator to produce a proton beam and aim it at lump of heavy metal, producing excess neutrons. Thorium is a good choice because it has a high neutron yield per neutron absorbed.
Thorium nuclei would absorb the excess neutrons, resulting in uranium-233, a fissile isotope that is not found in nature. Moderated neutrons would produce fissioned U-233, which releases enough energy to power the particle accelerator, plus an excess that can drive a power plant. Rubbia says a fistful of thorium could light up London for a week.
The idea needs refining, but is so promising that at least one private firm is getting involved. The Norwegian firm Aker Solutions bought Rubbia's patent for this thorium fuel cycle, and is working on his design for a proton accelerator.
The Telegraph says this $1.8 billion (£1.2 billion) project could lead to a network of tiny underground nuclear reactors, producing about 600 MW each. Their wee size would negate the enormous security apparatus required of full-size nuclear power plants.
After a three-decade lull, nuclear power is enjoying a slow renaissance in the U.S. The 2005 energy bill included $2 billion for six new nuclear power plants, and this past February, Obama announced $8.3 billion in loan guarantees for new nuclear plants.
But nuclear plants need fuel, which means building controversial uranium mines. Thorium, on the other hand, is so abundant that it's almost an annoyance. It's considered a waste product when mining for rare-earth metals.
Thorium also solves the non-proliferation problem. Nuclear non-proliferation treaties (NPT) prohibit processes that can yield atomic bomb ingredients, making it difficult to refine highly radioactive isotopes. But thorium-based accelerator-driven plants only produce a small amount of plutonium, which could allow the U.S. and other nations to skirt NPT.
The Telegraph says Obama needs a Roosevelt moment, recalling the famous breakfast meeting when Albert Einstein convinced the president to start the Manhattan Project. A thorium stimulus could be just what the lagging economy needs.

No Comment Needed

Repubs Should Stop Sabotaging Economy

There's only two more months until the 2010 elections and the Republicans are still holding fast to their campaign strategy -- sabotage the economy and try to blame it on President Obama and the Democrats. They are convinced that if the recession is going strong and the economy is still in bad shape on election day, then Americans will vote against the party in power (regardless of who caused the recession and is voting to continue it).

This negative Republican strategy is most obvious in the Senate, where Republicans have blocked a bill aimed at helping small businesses. The bill would provide an extra $30 billion in low-interest loans for small businesses and also provide them with more than $12 billion in tax cuts. If there was a Republican in the White House Republicans would love this bill -- since it not only helps small businesses but also would not add to the deficit.

The Republicans have always claimed to be the champions of small business and have recently been whining about the deficit. That means they should be supporting this bill, especially since national business organizations like the U.S. Chamber of Commerce and the National Federation of Independent Business all support the bill. In fact, some Republicans even helped to write the bill.

There is only one reason for Republicans to block this bill. They are afraid that a bill that helps small businesses will also improve the economy and create jobs (since small businesses create the bulk of jobs in America). And they are right about that. But they don't want any improvement in the economy before election day, and they are willing to throw small businesses and the unemployed under the bus to achieve their own political aims.

But President Obama is having none of this nonsense from the "party of no". He also knows the best path to quick job creation is to make small businesses healthier and more productive. The president is asking Congress to make passing the small business aid bill its first order of business when it returns. He said, "I ask Senate Republicans to drop the blockade." This is exactly what the president should be doing -- both in getting the bill passed and pointing out to the American people that it is the Republicans who oppose helping small businesses and creating jobs.

The president went on to say, "My economic team is hard at work identifying additional measures that could make a difference in promoting growth and hiring in the short term and increasing our economy's competitiveness in the long term. Every single day, I'm pushing this economy forward repairing the damage that's been done to the middle class over the past decade and promoting the growth we need to get our people back to work."

President Obama also mentioned some other things he wants to do to improve the economy and create new jobs (and save current jobs). He wants to:

* Extend the current tax cuts for those making less than $250,000.
* Improve the infrastructure by building and repairing more roads and highways.
* Up this country's investment in clean energy.
* Give businesses tax cuts to keep jobs in this country.

These are all good initiatives and would help the economy. But don't expect the Republicans to support any of them. They decided long ago that opposing President Obama was more important than helping Americans. The only idea they have had in the last couple of years is to vote "no" on everything -- regardless of who would be helped by the legislation.

American voters need to remember this when they go to the polls in November.
Posted by Ted McLaughlin

No Comment Needed

New Report: Global Warming Threatens Jamestown, Chincoteague, Shenandoah

Human-caused climate change threatens to flood Jamestown, the first permanent European settlement in what became the American colonies and the United States, says a report Wednesday by environmental groups.

Jamestown Island, the site of the original 1607 settlement, is low enough to be inundated by rising seas and tidal waters -- even if the waters do not rise as much by 2100 as scientists predict, according to the report by Natural Resources Defense Council (NRDC) and the Colorado-based Rocky Mountain Climate Organization. [...]

"Climate change poses the greatest risk our National Parks have ever faced," says Theo Spencer, senior advocate of NRDC's Climate Center. He says Jamestown, along with two other parks, attracts six million visitors each year who spend more than $200 million and support 4,000 Virginia jobs.

The report (PDF) says the other two parks also face grave risks: Chincoteague National Wildlife Refuge could lose its beach and Shenandoah National Park could see it brilliant fall colors muted by air pollution and encroaching pine trees.
Previous reports have made similar warning about threats to Virginia's coastal communities & wildlife habitats. And that's on normal days, never mind when a hurricane threatens to bring a storm surge.

Executive Salaries Are Way Out Of Line

It should come as no surprise to anyone who has been keeping up with the economic news that corporate executive salaries and compensation are way out of line, especially when compared to the salaries of workers in the same company. And it does not seem to matter whether those executives are successful or not. Those who oversee company failures make millions of dollars -- even the ones who are forced out of their jobs (but you can bet that no ordinary company worker is given any "golden parachute").

One would think that a company that has had to lay off thousands of workers (a sure sign the company is having trouble) would also cut the salaries of the executives running those companies. But that has not happened. In fact, it's beginning to look like those workers were laid off so the executives could keep their enormous salaries.

According to the Institute for Policy Studies (IPS) in their annual report on executive compensation, the "CEOs of the 50 firms that have laid off the most workers since the onset of the economic crises took home nearly $12 million on average in 2009." These companies laid off 531,363 people while reporting a 44% average profit increase in 2009.

But whether a company is in trouble or not, corporate executive salaries have been skyrocketing while the salaries of workers have been depressed by those same executives. The IPS says:

"[A]fter adjusting for inflation, CEO pay in 2009 more than doubled the CEO pay average for the decade of the 1990s, more than quadrupled the CEO pay average for the 1980s, and ran approximately eight times the CEO average for all the decades of the mid-20th century.
American workers, by contrast, are taking home less in real weekly wages than they took home in the 1970s."

There is no logical reason for executive salaries to rise that much while worker salaries have gone down. All employees are valuable to the success of a company (or they wouldn't be working for the company). Why shouldn't worker salaries rise at the same rate as executive salaries? Shouldn't all company employees, regardless of rank, share in the company success they helped to create?

Another way of looking at the outlandish salaries of American corporate executives is to compare them to the salaries of Japanese corporate executives -- a country where corporations have been exceptionally successful. According to the IPS, American executives make 263 times the average compensation of their workers (up from 30 to 1 in the 1970's). Note that is the average compensation, not the minimum compensation of workers. In comparison, Japanese executives make only 16 times as much as their average worker.

Many American corporations would like for us to believe they have to pay these outrageous salaries to executives while laying off workers and depressing worker salaries. They claim they could not get top executive talent otherwise. That's simply a giant load of horse manure! The Japanese don't seem to have any trouble attracting good executives. Their corporations are performing at least as well (and sometimes better) than American corporations.

Don't get me wrong. Japanese executives are well paid for their efforts. But so are their workers. They simply believe that all employees should share in a corporation's success, and not just the executives. And that formula has worked well for them and created a company loyalty among all employees -- a loyalty that furthers the success of the company.

American executives have simply abandoned the idea of fair treatment of their workers. They have bought into the "greed is good" philosophy and are grabbing every dollar they can -- even if they have to abuse their own workers to do it. This is not just unfair, but has been a big contributing factor to the huge income disparity in America between the top 5% and everyone else, setting up the conditions for our current recession (and future recessions if it is not fixed).

Since it has become obvious that corporate executives and corporate boards are either unable or unwilling to rein in corporate salaries (and institute a more equitable and reasonable worker-to-executive salary ratio), the federal government should step in and place a limit on that worker-to-executive salary ratio. What that ratio should be can be debated, but it is necessary to put a limit on it. It is necessary for the health of the overall economy.

I know that many will scream that is "income redistribution" and income redistribution is bad -- some would even label it as socialism. What these people fail to realize (or are unwilling to admit) is the fact that income is being redistributed every day in America (and in all countries under all economic systems). The problem is that in our largely de-regulated capitalist system this money is being redistributed from workers and ordinary citizens to the richest among us, creating a wildly unbalanced and unhealthy income and wealth distribution.

I'm sure this limiting of worker-to-executive pay ratio will be fought by the corporate interests. That is because they are today only interested in short-term profits, and not the long-term health of the country and their companies. The truth is that the corporations would benefit from a more equitable income distribution as much as workers would. While they might have to pay their own workers more, they would reap the benefits of all the nation's workers having more money to spend -- which means more money to buy the corporate products.

"Income redistribution" is not a bad thing. It happens every day. It just needs to happen in the right way -- a way that would be positive for everyone.
Posted by Ted McLaughlin

A Message For Republicans

If the Democrats were smart this would be one of the main campaign issues. From the site of Pavlovian Obeisance.

Illegal Immigration Down Over 60%

Between March 2007 and March 2009, about 300,000 people a year entered the United States illegally. That may sound like a lot, but it's actually more than a 60% drop (actually about 64%) in the number of undocumented workers entering the country. Between March 2000 and March 2005 the number was about 850,000. The total number of undocumented workers in the U.S. has also dropped by about a million workers -- from 12 million to around 11 million.

These numbers are according to a new study released by the Pew Hispanic Center (a nonpartisan research center). But the decrease in immigration is also backed up by recent research by the Migration Research Center at the University of California in San Diego.

I'm sure right-wing politicians and hate groups would like to credit the drop to their efforts to wall off and increase police, Border Patrol (and now Army) patrols near the border. They are still trying to spread fear and further militarize our border with Mexico (although they seem fine with leaving our border with Canada open, which is longer and much easier to cross illegally).

But the truth is that the increased presence along the southern border has had little (or nothing) to do with the drop in the illegal entrance of undocumented immigrants. When people really want to get into this country they can find a way. Our immense borders, both land and sea, are far too extensive to completely block off.

No, the primary reason for the sharp drop in illegal immigration is the recession. These people are coming for only one reason -- to make enough money to decently support themselves and their families (both here and back in their country of origin). But if there are no jobs to be had in this country, then there is no reason to try and enter this country -- especially considering how difficult and expensive it is to do.

Braulio Gonzalez, a day laborer from Guatemala, says, "People don't want to come now; they know the economy is bad." Wayne Cornelius, co-director of the Migration Research Center, agrees saying, "What has changed drastically is the demand for Mexican labor in the U.S. economy." He says potential migrants today are "two times less likely" to plan a move to the U.S. than in the pre-recession year of 2006.

And it looks like the illegal immigration may continue to drop because there aren't going to be many jobs for quite a while. The Gallup organization says that the unemployment figure for August was 9.3% -- up from 8.9% in July. But the better measure, even though it doesn't count the long-term unemployed who have virtually given up, is the underemployment figure (the unemployed combined with part-time workers who can't find full-time work) which is now at 18.6% for August -- up from 18.4% for July.

Call me crazy but I much preferred the days when we had a booming economy, even if it brought many undocumented workers across the border. It's much better to have jobs for everyone (including undocumented workers) than the current mess we're in, where millions of Americans can't find jobs. The Republicans did drastically cut the number of illegal immigrants, but they did it by trashing our economy and throwing millions of Americans out of work.
Posted by Ted McLaughlin

Greenspan Calls for Repeal of All the Bush Tax Cuts

By Sewell Chan

It was not enough, it seems, for Alan Greenspan, the former Federal Reserve chairman and a self-described lifelong Republican libertarian, to call for stringent government regulation of giant banks, as he did a few months ago.

Now Mr. Greenspan is wading into the most fierce economic policy debate in Washington — what to do with the tax cuts adopted, in large part because of his implicit backing, under President George W. Bush — with a position not only contrary to Republican orthodoxy, but decidedly to the left of President Obama.

Rather than keeping tax rates steady for all but the wealthiest Americans, as the White House wants, Mr. Greenspan is calling for the complete repeal of the 2001 and 2003 tax cuts, brushing aside the arguments of Republicans and even a few Democrats that doing so could threaten the already shaky economic recovery.

“I’m in favor of tax cuts, but not with borrowed money,” Mr. Greenspan, 84, said Friday in a telephone interview. “Our choices right now are not between good and better; they’re between bad and worse. The problem we now face is the most extraordinary financial crisis that I have ever seen or read about.”

Mr. Greenspan, who led the Fed for 18 years until he retired in 2006, warns that without drastic action to increase federal revenue and reduce the long-term growth in health care costs, bond investors could make a run on Treasury securities, driving up the nation’s borrowing costs and leading to another global economic crisis. This is not the first time Mr. Greenspan has urged fiscal restraint; he warned in 2008 that the country could not afford the tax cuts proposed by Senator John McCain, the Republican presidential candidate. But his sweeping call for rescinding the Bush tax cuts, which he has articulated in a recent appearance on “Meet the Press” and an interview with The Financial Times, among other settings, has rankled former colleagues.

“Such a large tax increase in the middle of a period of sluggish economic growth would be a very bad idea,” said R. Glenn Hubbard, who as chairman of the White House Council of Economic Advisers from 2001 to 2003 was an architect of the tax cuts.

Mr. Hubbard, who teaches at Columbia Business School, said a debate over the proper size of government was needed, but would not occur until the 2010 or 2012 elections. “Calls for repealing the tax cuts are more about politics than economics,” he added.

Even liberal economists who concur with the need for higher taxes have not been eager to embrace Mr. Greenspan. “His concern about the current deficit seems to ignore the state of the economy,” said Dean Baker, co-director of the Center for Economic and Policy Research, a left-leaning organization. “It is hard not to believe that politics is playing some role in his positions.”

While Mr. Greenspan did not endorse a specific approach, his broad support for the tax cuts nearly a decade ago was pivotal in securing one of the Bush administration’s top domestic policy goals and in providing political cover for members of Congress.

Now, in response to accusations of political expediency, Mr. Greenspan says his approach has been consistent: supporting tax cuts when surpluses loomed, and endorsing revenue increases now that deficits are the leading worry. He also says his earlier endorsement of tax cuts was made with important caveats that were later ignored by policy makers and the public.

To begin with, he says he believed the tax cuts in 2001 were primarily needed to avoid the economic distortions caused by “surpluses as far as the eye could see,” as many economists at the time projected.

The dot-com boom in the late ’90s led to a surge in tax revenue, less from capital-gains taxes than from the conversions of stock-option grants. While the temporary nature of those revenue increases was perceived, Mr. Greenspan says, the combination of soaring tax receipts and long-term productivity gains led economists at the Fed, at the Office of Management and Budget and at the Congressional Budget Office to believe that the surpluses were very real.

That, in turn, caused the central bank to worry that one of its primary levers for the conduct of monetary policy — the purchase and sale of Treasury securities — would no longer be available.

“I was against deficits, but I was also equally against surpluses,” Mr. Greenspan said.

Mr. Greenspan also emphasizes that the tax cuts should have adhered to so-called pay-go rules, which require that tax cuts or new spending should not add to the federal deficit.

Pay-go rules were adopted as part of the 1990 budget deal between President George Bush and the Democratic-controlled Congress, but were scrapped in 2002, when his son, George W. Bush, was president.

“Unfortunately, the surplus disabled pay-go because pay-go implied the existence of a deficit,” Mr. Greenspan said. “When the deficit disappeared, the concept of pay-go became meaningless.”

While Mr. Greenspan’s reputation has been tarnished — given the Fed’s failures to pop the real estate bubble and to rein in subprime mortgage lending — his perspective, born of decades of data-crunching, has made him a figure revered by many in the markets. His opinion still carries considerable weight and his views on the tax cuts will reverberate in the debate next month in Congress.

“Unlike in World War II, when we knew that military spending and deficits would fall sharply, our current understanding of the future is extremely limited,” Mr. Greenspan said. “There’s an especially high level of uncertainty in forecasting Medicare.”

He said the country’s fiscal problems could not be solved by higher taxes alone. “We are going to have to confront a major surge in medical entitlement spending. Irrespective of what you say should be done on the tax side, you still have to cut some benefits on the expenditure side.”

Mr. Greenspan, who is known for his political skills and his connections in both parties, bemoaned the political gridlock in the capital.

“We have known that the tax cuts were going to expire at the end of 2010 for nearly a decade but nobody did anything to address the issue,” he said.

Asked whether higher taxes in 2011 could choke off the nascent recovery, Mr. Greenspan replied: “It is risky, but the choice of not doing it is far riskier. It is the difference between bad and worse, but in neither case do I think the evidence suggests that it would be the tipping point for the economy.”

Mr. Greenspan added that the relationship between taxation and growth was still not well understood. “I don’t think anybody can know exactly what the impact of these taxes is on G.D.P.,” he said, referring to gross domestic product, the broadest measure of output. “We put them through econometric models that have a very poor record forecasting recession. Conclusions based on such models must be suspect.”

At the Group of 20 meeting in Toronto in June, leaders of the world’s biggest economies agreed to halve their governments’ deficits by 2013. But Mr. Greenspan noted that even after debt-stricken Greece enacted emergency austerity measures, the markets remained skeptical.

“I thought that meeting was quite good, and very effective and important,” he said. “But it’s one thing to have a fiscal projection and quite another to have the markets believe it.”

Methane Hydrate Risk in our Pursuit of Energy

Here is an excerpt from Oil be Seeing You Blog.

Everyone knows business men are trustworthy. Hell, survey after survey shows that they are more trusted than the family doctor or your local banker or pharmacist or those bleeding-heart scientists writing global warming reports for the IPCC or, God forbid, that wacko environmentalist living down the street who keeps showing up at all those Greenpeace demonstrations. So, of course we can count on business men, these pillars of society, to protect the environment and do the right thing and make decisions in the best interest of "the little people", as Tony Hayward, CEO of BP, so eloquently put it.

And we can trust corporations, like BP, Exxon, Halliburton, Enron and Lehman Brothers, to monitor and police their own operations. If they find something wrong they will make sure it gets fixed, and quickly. So there is no need for us or our governments to hold them accountable. They will hold themselves accountable. After all, isn't BP voluntarily setting aside $20-billion to cover costs and claims resulting from the Gulf oil spill? And don't they have thousands of people on the beaches and on shrimp boats cleaning up the oil spill? Oh wait, they were strong-armed into all of that by President Obama. Well they would have done it anyway, right?

The reality is, in my opinion, that the inordinate faith and trust afforded business and industry leaders and executives is both misplaced and highly irrational in face of the evidence of the collateral damage of their profit-centred decisions and actions over the last several decades. The reality is that, despite the fact that in the beginning people were prone to exclaim, "what a terrible accident", this was no accident. Far from it. The disaster that befell The Deepwater Horizon was the result of very high-risk human decisions in the face of overwhelming evidence that should have caused them to turn back. But don't take my word for it.

For more click here.

Analysis: U.S. Will Default on Debt

The Coming Great Government Debt Default

By: Lew Rockwell

Congress always responds to immediate threats regarding future sanctions. Whenever Congress thinks the voters will remember a vote at the next election, and will probably impose negative sanctions on incumbents, Congress always sees the light. "When we feel the heat, we see the light" said Senator Everett Dirksen a generation ago. His observation still holds true.

Our children are not going to pay off the suckers – us – who naïvely thought they could pass on the Old Maid of government debt to them.

Here is economic reality. Taxpayers and Treasury debt buyers are paying for all of the benefits that voters enjoy as recipients of government-funded programs. Voters are not transferring these costs to future generations. Costs are inescapably the same as benefits. If we receive present benefits, someone pays for these benefits in the present. The only questions are these: Who Wins? Who loses? How soon?

Economists despair about their inability to get across this simple idea: we consume only present goods.

Economics students nod their heads in agreement with the professor. "Yes, yes; we know that." But they don't know it. As soon as they start to vote, they forget.

THE ECONOMICS OF THE COOKIE JAR

When you catch your child with his hand in the cookie jar, you can be certain of one thing: he is after a present cookie. You can also be sure of something else: he does not intend to replace that cookie. He is driven by the desire for present gratification.

When you think of "child with its hand in the cookie jar" think "Congress." The difference is, a child will not respond to being caught with these words:

"This is in the best interests of the nation."
"We are acting as an agent of the People."
"Everyone deserves a fair share."
"We owe it to ourselves."
"We promise to replace this cookie with two cookies of equal or greater value in ten years."
Think of national economic production as a cookie factory.

People are employed to produce cookies. They eat cookies, but they also make cookies.

If they made no cookies, could they eat cookies? Only those cookies already in the cookie jar.

If, because of a war, the government tells the public that from now on, "we must support the troops," this means that those at work in the cookie factory must send cookies to the troops. The troops will be consuming cookies. They will not be producing cookies.

THE COSTS OF WAR

In his radio address to the nation on December 9, 1941, President Roosevelt did his best to substitute the inspirational word "privilege" for the economically correct word, "sacrifice." This was a way to describe costs as benefits.

On the road ahead there lies hard work – grueling work – day and night, every hour and every minute.
I was about to add that ahead there lies sacrifice for all of us.

But it is not correct to use that word. The United States does not consider it a sacrifice to do all one can, to give one's best to our nation, when the nation is fighting for its existence and its future life.

It is not a sacrifice for any man, old or young, to be in the Army or the Navy of the United States. Rather it is a privilege.

It is not a sacrifice for the industrialist or the wage earner, the farmer or the shopkeeper, the trainmen or the doctor, to pay more taxes, to buy more bonds, to forego extra profits, to work longer or harder at the task for which he is best fitted. Rather it is a privilege.

It is not a sacrifice to do without many things to which we are accustomed if the national defense calls for doing without it.

A review this morning leads me to the conclusion that at present we shall not have to curtail the normal use of articles of food. There is enough food today for all of us and enough left over to send to those who are fighting on the same side with us.

But there will be a clear and definite shortage of metals for many kinds of civilian use, for the very good reason that in our increased program we shall need for war purposes more than half of that portion of the principal metals which during the past year have gone into articles for civilian use. Yes, we shall have to give up many things entirely.

And I am sure that the people in every part of the nation are prepared in their individual living to win this war. I am sure that they will cheerfully help to pay a large part of its financial cost while it goes on. I am sure they will cheerfully give up those material things that they are asked to give up.

In other words, the cookie jar would soon suffer a substantial increase in demand from people who were no longer engaged in the production and distribution of cookies.

He predicted that those Americans who were still involved in the production of cookies would cheerfully eat fewer cookies, for the sake of the troops. But, just in case this cheerfulness waned, the President oversaw the creation of the War Production Board, which came into existence on January 16, 1942. It set up a rationing system.

THE COSTS OF DESTRUCTION

When a member of the military dies in action, he pays the ultimate price. There is no deferral of payment. He is gone. He has to be replaced. Someone else must now put his life on the line.

There is no bond market for human lives. During World War II, there is no illusion among Gold Star Mothers that this cost of the war could be passed on to a future generation. A grave marked the end of that particular generation wherever the occupant had not fathered a child.

In Europe, tens of millions of civilian graves marked the reduction of the size of future generations. There was no bond market for these productive assets, either.

What voters understand clearly with respect to the most productive assets – human beings – they do not understand with respect to all other productive assets.

A crashed airplane, a burned-out tank, a demolished jeep: they are all junk. They are all finished as assets. They were paid for, but they are worthless now except as scrap metal on a battlefield. They must be replaced.

What is the difference between the productivity of a burned-out tank and the men who died in that tank? Scrap metal value. The burned-out tank may be worth more than the remains of those who died inside it. We do not like to think this way, but from the point of view of economics, it is true.

THE BOND MARKET

In a popular war, there is a war bond market. The mark of an unpopular war is the absence of any war bond market. The last American war bond market was in World War II.

The U.S. government sold war bonds in World War II. The total by the end of the program in 1946 was $186 billion – in early 1940's dollars – a gigantic amount. The War Finance Committee and the War Advertising Council spent more money on this ad campaign than any other in the history of American advertising.

But why did the government sell them? If the cost of the war in men and material was paid for by those on the battlefield who suffered and died, as well as by the folks back home who had to reduce their consumption, what did the war bond produce of economic value? A war bond could not reduce the loss of human life. It could not reduce the number of burned-out tanks. In short, a war bond could not reduce the cost of the war.

Then why sell them?

The reason was motivation. The cookie jar was being depleted, day by day. This meant that replacements were necessary. Folks back home who were engaged in war production would have to reduce their consumption. This output had to replace whatever had been lost.

Let us return to the three crucial questions. Which folks would have to cut back? Which folks wouldn't? For how long?

The war bond drives persuaded half of the folks back home to forego present income for the sake of future income. Income in what form? Pieces of paper with dead politicians' pictures on them? No. The promised future income would be America's survival as an independent nation. The appeal made by the government to buy war bonds was not the promise of personal economic gain in the future. It was to win the war by supporting the troops.

Then who were the winners? Those Americans who refused to buy war bonds and who saved their extra money to make down payments on unimproved land, especially in the Los Angeles area or in Westchester County, north of New York City.

The bond sellers never explained how buying a war bond supported the war effort. They did not say the following:

"Buy a war bond so that you will not be tempted to use your money to compete in the consumer goods market. That would drive up consumer goods prices. The government has imposed price controls on these goods. But if you will not buy war bonds, you will be tempted to spend the money in the black market. We're onto you. We know that privilege has long since turned into sacrifice, and you are tired of so much sacrificing. We are selling war bonds to re-kindle the sacrifice motivation. This will keep you out of the black market. This will in turn lower the costs of whatever the government buys."
Today, no one in government is so naïve as to try to sell war bonds. There are costs, but these costs are funded by Congress through taxes and the sale of conventional Treasury debt. Instead of war bond drives, the Treasury sells bonds to Asian central banks and American investors.

Buyers of long-term bonds are concentrated in the life insurance industry. Life insurance companies buy long-term bonds to cover long-term legal liabilities. What are these liabilities? To pay dollars. This is not a legal liability to pay dollars of constant purchasing power. Just dollars.

"TRUST US"

The government promises to pay off holders of Treasury debt. The government's debt has a AAA rating. Note: So did lots of subprime mortgages.

The government sells its debt as a way to keep from having to raise taxes to pay for government programs.

Who pays for these programs? Taxpayers and buyers of Treasury debt.

When are these costs imposed? Today.

What has been transferred to Treasury debt investors? A promise to pay dollars in the future. Not dollars of constant purchasing power. Just dollars.

Question: "What is the difference between a cashed Social Security check and crashed warplane?" Answer: "The plane does not vote."

Do present costs get transferred to future taxpayers? No; they are paid for by present taxpayers and investors.

Then what do present investors receive? IOU's. Lots and lots of IOU's. Issued by whom? Congress. As the Mogambo Guru would say, "hahahahaha."

Let's get this straight. We are not transferring present costs to future generations. We are pressuring Congress to write present IOU's for future repayment. We are transferring present costs to present investors in IOU's issued by Congress.

As to whether any future generation decides to pay off these IOU's is up to them. But if you look at a chart of the IOU's in relation to present tax revenues, it seems a bit far-fetched to imagine the future taxpayers will pay off these debts. After all, we aren't. Congress runs an official $1.8 trillion on-budget annual deficit, this sends a message: "We prefer that investors pay today's costs." Why should this change?

It will not change.

What will change is the willingness of investors to pay for today's costs in exchange for low-interest IOU's.

IOU'S OF OUR FATHERS

In Clint Eastwood's movie, Flags of Our Fathers, there is a scene that stands out as one of the most illuminating scenes in the history of America's movies on World War II.

The three surviving military personnel who were in the second Iwo Jima flag-rasing photo – the rigged one – are stateside. They are skeptical about their role as heroes. They don't see that they did anything special.

The Marines' press secretary informs them that they are there to sell war bonds. This seventh war bond drive was expected to fail before the flag photo captured Americans' hearts. He did not say, "If we can't sell bonds to the public, the Federal Reserve System will be the only buyer, and it will have to create the money out of nothing, which will produce shortages, because of higher prices in the black market," but that was the implication. The patriotism aspect of buying bonds is long gone. Today, the sales pitch is safety.

"Investors will get their money back. The market is liquid. Investors can get their money back at any time. Yes, rates are low. Yes, the Federal Reserve System doubled the monetary base in 2008 to keep alive the bond market. But this market is trustworthy. Price inflation is not a threat."
Implied message: it will never be a threat. But if it ever becomes a threat, you can sell your bonds and get your money back.

This means that the IOU's of our fathers, which were never paid off, but were merely rolled over by selling more IOU's, have set the pattern. The patriotism is gone; the market for rolled-over Treasury debt is with us still. When it comes to government debt, the World War II song that most closely matches the market is "Roll Me Over."

CONCLUSION

All costs are present costs. It is only a question of who pays them and why.

Anyone who says that we are passing on present costs to future generations does not understand economic cause and effect.

We are told that we are using politics to leave a massive debt to our children. Really? Which children? The typical taxpayer? He or she can vote. As soon as this tax burden grows too heavy, the voters will demand that it be reduced. Congress will then sell more debt, just as it always does.

At some point, that debt will not find a market. The great default will then take place. At that point, Congress's IOU's will become IOU Nothings.

The Great Default is coming. Count on it.

Morgan Stanley Analyst Says Governments to Default

(Updates with comments from Morgan Stanley analyst in third paragraph.)

Aug. 25 (Bloomberg) -- Investors face defaults on government bonds given the burden of aging populations and the difficulty of increasing tax revenue, according to a Morgan Stanley executive director.

“Governments will impose a loss on some of their stakeholders,” Arnaud Mares in the firm’s London office wrote in a research report today. “The question is not whether they will renege on their promises, but rather upon which of their promises they will renege, and what form this default will take.” The sovereign-debt crisis is global “and it is not over,” he wrote.

Rather than miss principal and interest payments, governments may choose a “soft” default in which they pay back debts with devalued currencies resulting from faster inflation or force creditors to take lower returns, Mares said in an interview.

Borrowing costs for so-called peripheral euro-region nations from Greece to Ireland surged today, resuming their ascent on concern that governments won’t be able to cut their budget deficits. Standard & Poor’s lowered Ireland’s credit rating yesterday on the rising cost of supporting nationalized banks.

Population trends may be a better predictor of the ability to meet obligations rather than debt as a percentage of gross domestic product, which doesn’t reflect governments’ available revenue and is “backward-looking,” Mares wrote.

While the U.S. government’s debt is 53 percent of GDP, one of the lowest ratios among developed nations, its debt as a percentage of revenue is 358 percent, one of the highest, the report said. Italy has one of the highest debt-to-GDP ratios, at 116 percent, yet has a debt-to-revenue ratio of 188, Mares said.

Double Dip

“Outright sovereign default in large advanced economies remains an extremely unlikely outcome, in our view,” the report said. “But current yields and break-even inflation rates provide very little protection against the credible threat of financial oppression in any form it might take.”

Mares, who didn’t identify which nations may default, once worked at the U.K.’s Debt Management Office and is a former senior vice-president at credit-rating company Moody’s Investors Service.

“Note that a double-dip recession would not invalidate this conclusion,” Mares’ report said. “It would cause yet further damage to the governments’ power to tax, pushing them further in negative equity and therefore increasing the risks that debt holders suffer a larger loss eventually.”

Investor concern that the U.S. may fall back into recession has grown in recent weeks as data missed economists’ estimates. A Citigroup Inc. index of U.S. economic data surprises fell to minus 59 last week, the least since January 2009.

Credit-Default Swaps

Yields on German and U.S. benchmark securities sank today as investors sought the safest assets. U.S. two-year Treasury yields, at a four-month high 1.18 percent on April 5, fell to a record low 0.4542 percent yesterday.

Greek Debt Yields

The yield on Greek debt rose to more than 900 basis points above that of Germany today, the most since the European Union and International Monetary Fund created a 750 billion-euro ($948 billion) bailout package in May. Greece’s so-called yield spread over German debt was at 932 basis points as of 2:18 p.m. in London, short of the 973 basis-point record set on May 7. The Irish-German yield spread rose to a record 347 basis points, from 318 points yesterday.

Credit-default swaps that insure Irish government bonds against non-payment for five years rose 21 basis points to 331 today, the most since March 2009, according to data provider CMA. Greek swaps jumped to 921.5, the most since June, from 896.

“The conflict that opposes bondholders to other government stakeholders is more intense than ever, and their interests are no longer sufficiently well-aligned with those of influential political constituencies,” such as elderly voters and their claims on pensions and health insurance, Mares wrote.

--With assistance from Abigail Moses in London. Editors: Keith Campbell, David Clarke.

To contact the reporter on this story: Matthew Brown in London at mbrown42@bloomberg.net

To contact the editor responsible for this story: Keith Campbell at k.campbell@bloomberg.net

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Brownfield and landfill sites: Perfect for renewable energy development?

by Jeff McIntire-Strasburg

Yesterday’s Boston Globe took note of Canton, Massachusetts’ negotiation to use a capped landfill as an energy production site. While many localities have discovered landfill gas as an alternative energy source, Canton plans to use about half of the 41-acre site as a solar farm.

Turns out this Boston exurb is part of a growing trend around the country: taking “unusable” landfill and brownfield space, and converting it into renewable energy generation sites. The EPA estimates that 15 million acres of “potentially contaminated properties” exist around the United States, and has developed its “RE-Powering America’s Land” around putting some of these sites to use as clean energy production facilities.

The idea makes sense: this land isn’t fit for most other kinds of development, and its contaminated status means it also isn’t appropriate for redevelopment into green space (although Fresh Kills could prove this assumption wrong). It gives large-scale renewable energy developers a way to avoid to the conflicts inherent in siting their projects on wild lands. Obviously, health and safety issues for workers would have to be addressed, but, assuming those concerns can be handled responsibly, that’s an awful lot of unwanted land available for renewable projects.

How could brownfield and landfill sites be redeveloped for renewable energy production?
A number of approaches have either been used, or are in the planning stages, for clean energy development on landfill and contaminated sites:

Solar installations: Canton isn’t the first to come up with this idea. In fact, the military seems to be taking the lead here: solar facilities are in operation at capped landfills at Nellis Air Force Base in Las Vegas, and the Army’s Fort Carson outside of Colorado Springs.
Wind farms: Ohio seems to like this concept: Wood County developed the state’s first commercial wind farm at its landfill, and Lake County may also move it that direction.
Biofuel crops: One of the more exciting concepts on this front, plants could pull double-duty as remediation agents and biofuel feedstock. Social enterprise GTECH (Growth Through Energy + Community Health) ran a successful pilot of this concept on the ALMONO brownfield site in Hazelwood, Pennsylvania, and scientists at Michigan State University have been researching the feasibility of this concept since 2006.