Thursday, December 31, 2009

Robert F. Kennedy, "On Courage"

"On Courage"
by Robert F. Kennedy

"There are differing evils, but they are common works of man. They reflect the imperfection of human justice, the inadequacy of human compassion, our lack of sensibility toward the sufferings of our fellows. But we can perhaps remember- even if only for a time- that those who live with us are our brothers; that they share with us the same short moment in life; that they seek- as we do- nothing but the chance to live out their lives in purpose and happiness, winning what satisfaction and fulfillment they can.

Surely this bond of common faith, this bond of common goal, can begin to teach us something. Surely, we can learn, at least, to look at those around us as fellow men. And surely we can begin to work a little harder to bind up the wounds among us and to become in our hearts brothers and countrymen once again.

Our answer is to rely on youth- not a time of life but a state of mind, a temper of will, a quality of imagination, a predominance of courage over timidity, of the appetite for adventure over the love of ease. The cruelties of obstacles of this swiftly changing planet will not yield to obsolete dogmas and outworn slogans. They cannot be moved by those who cling to a present that is already dying, who prefer the illusion of security to the excitement and danger that come with even the most peaceful progress...

Some believe there is nothing one man or one woman can do against the enormous array of the world's ills- against misery, against ignorance, or injustice and violence. Yet many of the world's great movements, of thought and action, have flowed from the work of a single man. A young monk began the Protestant reformation, a young general extended an empire from Macedonia to the borders of the earth, and a young woman reclaimed the territory of France. It was a young Italian explorer who discovered the New World, and 32 year old Thomas Jefferson who proclaimed that all men are created equal. ‘Give me a place to stand,’ said Archimedes, ‘and I will move the world.’

These men moved the world, and so can we all. Few will have the greatness to bend history itself, but each of us can work to change a small portion of events, and in the total of all those acts will be written the history of this generation. It is from numberless diverse acts of courage and belief that human history is shaped. Each time a man stands up for an ideal, or acts to improve the lot of others, or strikes out against injustice, he sends forth a tiny ripple of hope, and crossing each other from a million different centers of energy and daring, those ripples build a current that can sweep down the mightiest walls of oppression and resistance.

Few are willing to brave the disapproval of their fellows, the censure of their colleagues, the wrath of their society. Moral courage is a rarer commodity than bravery in battle or great intelligence. Yet it is the one essential, vital quality for those who seek to change the world that yields most painfully to change...

Our future may lie beyond our vision, but it is not completely beyond our control. It is the shaping impulse of America that neither fate nor nature nor the irresistible tides of history, but the work of our own hands, matched to reason and principle, that will determine our destiny. There is pride in that, even arrogance, but there is also experience and truth. In any event, it is the only way we can live."
- Robert F. Kennedy, in a speech made to youths in South Africa, 1966.

Sir Walter Scott

"The race of mankind would perish did they cease to aid each other.
We cannot exist without mutual help. All therefore that need aid
have a right to ask it from their fellow-men; and no one who
has the power of granting can refuse it without guilt."
- Sir Walter Scott

Happy New Year!

Happy New Year, folks! Let's hope for the best!

CoyotePrime, Teddy Grahams

"How It Really Is"

Bill Bonner, "Camaraderie of the Damned"

"Camaraderie of the Damned"
By Bill Bonner

12/31/09 London, England – "There is not a lot of action in the markets. Most of the investment world is home for the holidays… At least, the investors are home. The pros – the bankers, for example – are celebrating the holidays in fancy resorts. They can afford it. It was a great year for the financial sector. After nearly going broke because of their reckless speculations, the bankers took money from the feds and went on to speculate some more…making huge profits. Bonuses for many of them were better than ever.

Yes, dear reader, 2009 was a strange year. It began strangely…and ended the same way. After many years of going the other way, finally, the rich were NOT getting richer. At the beginning of the year, they were getting poorer, big time, as the value of their stocks fell in half…and the value of the real estate dropped 30%. But then the government stepped in and made sure that at least the richest of the rich didn’t suffer too much. And then, thanks to a natural bounce and a very unnatural amount of money from the feds, the rest of the rich didn’t end the year too badly either. The FTSE world index closed yesterday within a few points of its high for 2009….and the US market ended very near the level it was when Lehman Bros. went broke. Of course, that still left investors a little short, if they looked back at their 2008 high. The Dow is still down about as much as houses – about 30% from the peak.

You will notice the lack of precision in our figures. Most of the financial press prefers to tell you, for example, that the Dow is down 31.8% from its 2007 peak…or that copper is up 42.5% in 2009. We avoid such precise numbers, partly because we’re no good at math and too lazy to look it up…and partly because we think precision, in our business, is a fraud. Prices move all the time. By the time the reader finds out that copper is up 42.5% the fact is history. And by the time he puts in his sell order, to take advantage of the gain…it has turned into a loss. What’s more, there is no real precision in finance…or in history…or in most other things. Stuff happens. It is always a little different than you expect and never quite measures up to precise analysis. The facts won’t stand still long enough to permit it. And often, what you think you are measuring turns out to be a complete illusion…if not a complete bamboozle.

Take another example: GDP. When the government reports GDP growth of 3.2%…what does it really mean? Well, it means that this is the number their measurement system has produced. Anything beyond that is inference, guesswork, and theoretical extrapolation. Does it mean ‘output’ has gone up? That depends on what you call ‘output?’ Does it mean the economy is growing? That depends on what you call growth.

We won’t continue on this subject. You get the idea. GDP is itself a counterfeit. It pretends to measure the health – the growth – of an economy. In fact, it measures something much different…more appropriately called ‘activity.’ Without looking much deeper, you don’t know whether the activity is making people richer…or poorer.

Well, we got that off our chest…back to the financial news…

Back to Japan for a final laugh. Is there anything so stupid that Japanese economists have not yet taken it up? And yet, after 20 years of trying to revive their economy, the islands’ output (measured by GDP) is expected to shrink 4.3% to the 12 months ending in March of 2010. Rather than give up and admit they can do the patient no good, the quacks keep at it. A new initiative by the Hatoyama government will focus on developing new markets – said to be worth $1 trillion – in the environmental, healthcare and tourism sectors.

We will ask a simple question: if these were viable markets, why doesn’t the private sector target them? And here’s another one: what makes anyone think that Japanese government economists are better at spotting investment opportunities than Japanese businessmen? We’re stumped on both questions. But government officials say these initiatives will create 4.76 million new jobs (not, 4.75 million…nor 4.77 million) by the year 2020. (Why not by March 2nd, at noon, 2020?)

The rest of the world laughed at Japanese economists in the ‘90 and early ‘00s. Here at the Daily Reckoning, however, we reckoned that they were no dumber than any others. They were just pursuing the usual claptrap policies. We went on to predict that US economists would do the same thing when their time came. Well, now their time has come; they’re doing the same thing.

So, now US economists are bowing towards their Japanese colleagues…and we laugh at them all. Bunch of morons…every one of them. But while economists followed their simpleton theories…the markets did their work. They’ve been grinding down Japanese shares for the last two decades. In fact, they’ve been knocked so low that they probably can’t go much lower. Maybe Japanese stocks are now a buy. Maybe they are what we should put on the buy side of our new Trade of the Decade. We’ve still got a day to think about it. Stay tuned…"

So, 2010. What can we expect? My 2 cents...

Back a bit earlier than thought, folks, so here we are, looking 2010 in the face. The only thing we can be sure of is that it will NOT be dull. Are there any clues as to what we might expect? "Doom and gloom?" That depends on how you react to the situation. Far better to have a clue of reality than drift along unconscious and unaware. "Truth" is anything but absolute, though some circumstantial patterns seem quite clear in their implications. What you believe you alone must decide. These are my subjective impressions of coming events, based on all the information I've been able to access and understand. Your opinion may be very different. I, of course, could be totally wrong. Time will tell the tale.

The economy is going to continue to wreak havoc on the average persons life. All this flak about "improving" economic indicators is nonsense, folks. The stock market is a big phony, artificially propped up by massive government intervention and handouts to the largest, "too big to fail" banksters, who've gotten outrageous "bonuses" at your expense. The government has effectively nationalized a number of industries, like the auto manufacturers, and continues merrily printing fiat money at an unprecedented pace. True unemployment is at 22%, according to John Williams at ShadowStats. Believe him. It will NOT get better any time soon. The Federal deficit is over $14 trillion, and there's no sign that's slowing down, quite the contrary. The massive second wave of adjustable rate mortgage resets is starting- ALL of the banks face failure. The FDIC, armed with $52 billion and the "full faith and credit of the United States Government" is "insuring" over $12 trillion dollars of customer bank accounts. How do you think that might work out? The dollar may be dropped as the world's "reserve currency," replaced by the Chinese yuan. A hyperinflationary depression looms on the horizon. Under enormous public pressure the administration may begin real investigations, and prosecutions, of the Wall Street thieves.

Look for national crime rates to sky rocket, as desperate people do what they must to survive. Civil unrest will probably break out in certain urban areas this year, expect it to be crushed violently, further inflaming the situation. The over 800 "FEMA Camps" nationwide may begin filling up as the government rounds up suspected "terrorists" and dissidents. Another false flag "terrorist" attack cannot be ruled out. The H1N1 "swine flu" pandemic may be the precursor of something far more ominous.

The wars will continue. Afghanistan is a powder keg, waiting to explode, and it will. Don't think for a second we're through with Iraq, either. Yemen, Somalia and other countries may see active US intervention. N. Korea will continue with their silly "nuclear" policies, trying to blackmail the West into granting it the aid it desperately needs. A world-wide crop failure of soybeans threatens famine in many areas, with accompanying social unrest and possible governmental change.

On the positive side, science and medicine will continue to make breakthroughs, offering new cures and amazing discoveries. The arts and literature will continue offering us new entertainment and insights. Under pressure, we may form closer bonds with others, making our communities stronger. Humanity seems to produce it's finest results while under duress; 2010 will certainly give us that, and perhaps a lot more. Let's hope for the best, while preparing for the worst. Like the Chinese blessing/curse says, these will certainly be "interesting" times.
- CoyotePrime

"Lovely to See You Again"



Wednesday, December 23, 2009

Karl Denninger, "Thou Shalt Steal"

"Thou Shalt Steal"
by Karl Denninger

"Well, well, well... Tim Jones, parish priest of St Lawrence and St Hilda, told his congregation in York, northern England: "My advice, as a Christian priest, is to shoplift." Jones, who according to the church Web site previously worked in Corinth, Mississippi, made his comments about what he regarded as acceptable behavior by those in need when they were desperate. In a transcript of his sermon published in the local newspaper, "The Press," Jones said: "I do not offer such advice because I think that stealing is a good thing, or because I think it is harmless, for it is neither. I would ask that they do not steal from small family businesses, but from large national businesses, knowing that the costs are ultimately passed on to the rest of us in the form of higher prices."

That sounds rather un-Christian. Or is it? Let's examine this a bit.

We have a society that allegedly has laws that we all must follow. They include the general premise of not screwing people: honest and fair dealing, disclosure of material facts you know would influence another's decision to do business with you - and certainly, an expectation that you would not intentionally misrepresent the truth. So what has happened over the last 20 or 30 years when it comes to business, banking and credit?

The Federal Reserve has intentionally held liquidity - that is, "excess cash" in the system, too high for extended periods, even though this was intended to and did produce multiple asset bubbles.

Officials from The Fed (and others) made statements that were reckless in their disregard for the truth. Claims that housing prices reflected "sound fundamentals" where homes were selling for two or even three times sustainable prices are just one of many examples - even when prices were taking on 20, 30, or even 50% gains in a year.

Greenspan claimed there was "irrational exuberance" in the stock market but then did absolutely nothing about it for the succeeding four years! The result was a huge stock market bubble in Nasdaq stocks that subsequently burst.

Investment and Commercial Banks willfully and intentionally made loans to people who they either knew could not pay (other than by refinancing into another loan) or worse, simply didn't give a damn if you could pay or not - because they assumed they would simply steal the house!

This wasn't limited to houses - it was found in literally every sort of lending and commercial activity. PIK/Toggle bonds, "covenant light" loans, leveraged buyout money, all of it was the same basic scam - we don't care if you can pay because we will unload this garbage on some other bagholder before it all blows up! Some borrowers got involved in the fraud machine too. Why tell the truth when you can "state" that you make $200,000 a year - cutting hair! Why if you want that million dollar house and can get an OptionARM at 2% interest-only (against a real rate of 6%) for the first two years, go for it! You can always refinance before the "teaser" expires, right?

Now if this was just some banks screwing each other, so what? If it was just speculators in the markets playing with one another, who cares? All consenting adults playing "stick that hand grenade down the other guy's pants before the fuse runs out", right?

Wrong. What happened to the price of houses? Milk? Gasoline? Steak? Health insurance? What happened to the prices that people who had no hand in the fraud had to pay - as a consequence of the fraud? What happened to all the good jobs? All these asset bubble games forced profit margins inward, which in turn created the incentives to offshore production. And offshored it was - to China, where virtual slave working conditions were and are the rule, destroying white and blue-collar jobs alike - including most especially those who had nothing to do with the frauds during these years!

So now we find ourselves with a situation where the wealth of entire nations have been looted. This wasn't an accident, it wasn't an oversight, it wasn't happenstance. It was a series of intentional acts, and along the way a literal million felonies and other improprieties occurred. From the "homeowner" who lied about incomes to the Real Estate "professional" who leaned on an appraiser to "hit a number" to the seller and buyer who colluded to kick back money and inflate a purchase to the lender who "helped" a buyer fraudulently overstate their income to the "securitizer" who had 1003s for their loans but failed to verify tax returns (and couldn't have possibly believed that a Greeter at WalMart made $200,000 a year!) to the ratings agencies that ran no scenarios in which home prices would ever decline.

Let's just take one example: AIG. How does a company write literally hundreds of billions of dollars in "credit protection" while having almost literally ZERO capital to back up those bets? Who knew that, when, and why was that "business" (of making legally binding promises they knew they could not keep) allowed to proceed? There are and were hundreds of AIGs.
NOT ONE OF THESE ACTS IS CURRENTLY UNDER INDICTMENT, NOT ONE DOLLAR HAS BEEN CLAWED BACK AND NOT ONE OF THE PEOPLE RESPONSIBLE FOR THIS IS IN PRISON.

So now as a consequence the common man loses his house, his job, and 30% or more of his retirement account. In addition the price of gasoline has doubled, his health insurance costs have gone up by 500% in the last 20 years and the food bill has gone from $100/month to $250. What is this person supposed to do?

The entire premise of a polite and law-abiding society is that while not every crime can possibly be punished vast, pervasive fraud and robbery will not stand. The government's job is, if nothing else, to prosecute such wrong-doing and put a stop to it, clawing back what can be recovered so the victims receive whatever compensation is possible and the wrong-doers are punished.

YET THEY HAVE REFUSED.

So is it, under such conditions, REALLY wrong to go take what one needs to avoid outright privation - or worse, starvation? Does the government understand the risk they are running by willfully refusing to act as the law demands?
To remove people from office, to prosecute wrong-doing, to lock these crooks up?

If the people cannot find justice within the government's apparatus, are they to sit quietly and ask "Please Sir, may I have another (beating, rape, robbery, take your pick)?" Or should we expect that at some point - perhaps not now, but perhaps not far down the road either, the people will have had enough. They will rise and take care of these matters in their own way - and there won't be much in the way of a "fair trial." I've yet to see boiled rope or guillotine blade futures listed by the CME, but is this sort of redress for grievances really that far in our future?

There are times I wonder.

Perhaps the reason we have not seen a massive uprising - and the institution of "citizen trials" - is that the American People simply don't get it. They never learned compound interest and earnings in school, as it is simply not taught. Tout TV never talks about the total systemic debt load and how it has grown (as I posted in The Ticker a few days ago) .vs. GDP. The truth about The Fed basically paying people to borrow (we have real negative interest rates right now!) as a means of trying to intentionally inflate bubbles is never discussed.

Intentional? Probably. For how long will The People remain in the dark? Are they ignorant - or stupid? Ignorance can change in a day, or a week - with catastrophic results.

To both State and Federal Government Officials: I know I have said this before, but I will repeat it - The lawless actions of the past 20 years must not be allowed to stand - you must not allow The People to discern that you are a felon rather than a cop.
To Father Jones: While I cannot square your advice with The Ten Commandments, I am reminded that The Bible tells us that even Jesus had his limits when it came to those Commandments, and the one time he exceeded those limits was with THE MONEYCHANGERS in The Temple. The very same robber barons - of the time - who were cheating the people. My, how similar the situation seems to be.

To The People: Wake the hell up. Demand prosecution. Back that demand up with your vote, and while you're at it, pray that this is enough, for if it is not, where your neighbor or countryman who has lost everything may turn is a dark place neither you or I wish to see our nation descend to."

- Karl Denninger, http://market-ticker.denninger.net/

Tuesday, December 22, 2009

Gregory David Roberts

"Looking at the people, listening to the breathing, heaving, laughing, struggling music of the slum, all around me, I remembered one of Khaderbhai's favourite phrases. “Every human heartbeat,” he'd said many times,” is a universe of possibilities.” And it seemed to me that I finally understood exactly what he'd meant. He'd been trying to tell me that every human will has the power to transform its fate. I'd always thought that fate was something unchangeable: fixed for every one of us at birth, and as constant as the circuit of the stars. But I suddenly realized that life is stranger and more beautiful than that. The truth is that, no matter what kind of game you find yourself in, no matter how good or bad the luck, you can change your life completely with a single thought or a single act of love."

- Gregory David Roberts, “Shantaram”

"A Look to the Heavens"

"How do planets form? To help find out, the Hubble Space Telescope was tasked to take a detailed look at one of the more interesting of all astronomical nebulae, the Great Nebula in Orion. The Orion nebula, visible with the unaided eye near the belt in the constellation of Orion, is an immense nearby starbirth region and probably the most famous of all astronomical nebulas.
Click image for larger size.

Insets to the above mosaic show numerous proplyds, many of which are stellar nurseries likely harboring planetary systems in formation. Some proplyds glow as close disks surrounding bright stars light up, while other proplyds contain disks further from their host star, contain cooler dust, and hence appear as dark silhouettes against brighter gas. Studying this dust, in particular, is giving insight for how planets are forming. Many proplyd images also show arcs that are shock waves - fronts where fast moving material encounters slow moving gas. The Orion Nebula lies about 1,500 light years distant and is located in the same spiral arm of our Galaxy as our Sun."

Art Buchwald


"Whether it's the best of times or the worst of times, it's the only time we've got."
- Art Buchwald

The Oscar Chronicles: "Where's the Beef?"

"Where's the Beef?"
In 1950 the Norfolk-Southern railroad track ran several hundred yards behind my grandfather Oscar's house in Colfax. Several times a year he'd feel the need to replenish his supply of fresh beef. Not wanting to spend any money, and being of a naturally devious mindset, he'd come up with an ingenious solution for "having his cake and eating it, too".

Knowing the passing trains schedules by heart, he'd wait until midnight, then take a cow and tie it to the railroad tracks. Sure enough, the train would come barreling through and hit the cow, killing it instantly. As the train stopped to see what had happened Oscar would appear, terribly distraught over his "favorite cow" being so ruthlessly slaughtered by the negligent railroad. As always, railroad personnel assured him that, of course, they would reimburse him for the cow killed by their carelessness. As soon as the train departed, Oscar and his helpers gleefully butchered the remains of the cow, filling all their freezers and smokehouses with nice, fresh beef, and in a day or two a new cow was delivered to comfort the grieving Oscar for his loss. And that's how it was...

- CoyotePrime

The Oscar Chronicles: "Oscar- Working on the Railroad"

"Oscar- Working on the Railroad"
By all accounts my grandfather Oscar had a life long aversion to employment. The very idea of “working” for someone else was totally unacceptable. So it came as a shock when he announced one day that the railroad company, Norfolk-Southern, had offered him a job at the local train depot.

His responsibility was to fill the water tender of arriving trains, since most trains at that time were still steam driven. He’d sit in the tower above the locomotive’s tender (much like the one pictured), turn on the spigot, and wait for the tank to fill up, when he’d turn it back off, a process that took all of about 10 minutes to complete. During his 8 hour shift only 2 trains were scheduled, though he was paid for the entire 8 hours. Well, Oscar managed to endure nearly 2 weeks of this ordeal, finally quitting in disgust at how "working" all those hours “just ruined” his day! There would be no further talk about another job...
- CoyotePrime

The Oscar Chronicles: "Oscar and His Donkey VS the Churchgoers"

"Oscar and His Donkey VS the Churchgoers"

In the 1940's my grandfather Oscar lived in a small town named Colfax in central Louisiana. To call it "rural" would be kind, but it provided him all the fishing, hunting and other simple pleasures he enjoyed. He harvested vegetables from his own garden, smoked meat in his smokehouse, and had many dogs and other farm animal like goats, chickens and a few milk cows. One day Oscar was offered a donkey at a very cheap price, and bought him. That's when things got interesting for Oscar, and even more so for his nearest neighbor, the Baptist church across the road.

Every Sunday for as long as folks could remember Sunday services were held at the church, with joyous singing and fellowship among the good churchgoers. That was about to change, however.

On the first Sunday after Oscar brought the donkey home, singing started as usual at the church. The donkey, for reasons known only to himself, started braying loudly. Oscar, deprived of his peace, stormed out of the house in a rage, grabbed a 2"x4" board, and began beating the donkey, demanding that he, "Shut up, you son of a bitch!", all of which only made the donkey bray more hysterically and loudly.

The combination of the donkey braying and Oscar screaming curses unnerved the congregation, but they carried on, hoping for the best. This pattern repeated itself every Sunday for a year- they'd sing, the donkey brayed, and Oscar went nuts, until finally the elders of the church begged Oscar to get rid of him. Oscars absolute refusal to even consider this left them with only one choice, and they did it: they hired a company to literally move the church to another site they owned 5 miles away, just to be rid of Oscar and his donkey. And that's a true story...

- CoyotePrime

The Daily "Near You?"

Petaluma, California, USA. Thanks for stopping by.

Albert Einstein

"In the middle of difficulty lies opportunity."
- Albert Einstein

"Afghanistan Is Iraq on Steroids"

"Afghanistan Is Iraq on Steroids"
by Jonathan S. Landay

"On a sunset patrol here in late December, U.S. Marines spotted a Taliban unit trying to steal Afghan police vehicles at a checkpoint. In a flash, the Marines turned to pursue, driving off the main road and toward the gunfire coming from the mountain a half mile away. But their six-ton vehicles were no match for the Taliban pickups. The mine-resistant vehicles and heavily armored Humvees bucked and swerved as drivers tried to maneuver them across fields that the Taliban vehicles raced across. The Afghan police trailed behind in unarmored pick-up trucks, impatient about their allies' weighty pace.

The Marines, weighted down with 60 pounds of body armor each, struggled to climb up Saradaka Mountain. Once at the top, it was clear to everyone that the Taliban would get away. Second Lt. Phil Gilreath, 23, of Kingwood, La., called off the mission. "It would be a ghost chase, and we would run the risk of the vehicles breaking down again," Gilreath said. The Marines spent the next hour trying to find their way back to the paved road.

The men of the 3rd Batallion, 8th Marine Regiment, based at Camp Lejeune, are discovering in their first few months in Afghanistan that the tactics they learned in nearly six years of combat in Iraq are of little value here — and may even inhibit their ability to fight their Taliban foes.

Their MRAP mine-resistant vehicles, which cost $1 million each, were specially developed to combat the terrible effects of roadside bombs, the single biggest killer of Americans in Iraq. But Iraq is a country of highways and paved roads, and the heavily armored vehicles are cumbersome on Afghanistan's unpaved roads and rough terrain where roadside bombs are much less of a threat.

Body armor is critical to warding off snipers in Iraq, where Sunni Muslim insurgents once made video of American soldiers falling to well-placed sniper shots a staple of recruiting efforts. But the added weight makes Marines awkward and slow when they have to dismount to chase after Taliban gunmen in Afghanistan's rough terrain.

Even the Humvees, finally carrying heavy armor after years of complaints that they did little to mitigate the impact of roadside explosives in Iraq, are proving a liability. Marines say the heavy armor added for protection in Iraq is too rough on the vehicles' transmissions in Afghanistan's much hillier terrain, and the vehicles frequently break down — so often in fact that before every patrol Marine units here designate one Humvee as the tow vehicle.

The Marines have found other differences:

In Iraq, American forces could win over remote farmlands by swaying urban centers. In Afghanistan, there's little connection between the farmlands and the mudhut villages that pass for towns.

In Iraq, armored vehicles could travel on both the roads and the desert. Here, the paved roads are mostly for outsiders - travelers, truckers and foreign troops; to reach the populace, American forces must find unmapped caravan routes that run through treacherous terrain, routes not designed for their modern military vehicles.

In Iraq, a half-hour firefight was considered a long engagement; here, Marines have fought battles that have lasted as long as eight hours against an enemy whose attacking forces have grown from platoon-size to company-size.

U.S. military leaders recognize that they need to make adjustments. During a Christmas Eve visit here, Marine Commandant Gen. James T. Conway told the troops that the Defense Department is studying how to reconfigure the bottom of its MRAPs to handle Afghanistan's rougher terrain. And Col. Duffy White, the commander of the Special Purpose Marine Air-Ground Task Force, said he anticipates that Marines will be wearing less armor by spring, when fighting season begins again. The next Marine battalion arriving here will need more troops and more helicopters. And because of terrain, patrols will change. "Hopefully we have not become wedded to the vehicles," White said, a reference to the MRAPs, which currently are required for every patrol. "We have to set the standard operation procedure for how to do this. This is not Iraq."

Just how quickly the U.S. military can shift its weapons, tactics and mindset to Afghanistan after nearly seven years of training almost exclusively for Iraq is a major question as President-elect Barack Obama takes office promising to transfer combat units out of Iraq and into Afghanistan.

Students of the Iraq war know that change came slowly and only after years of casualties made worse by inadequate equipment. As in Iraq, where the U.S. didn't increase the number of troops, despite the growing insurgency and violence until 2007, U.S. forces Afghanistan fear they are undermanned. The 3,000 troops here are in charge of an area with few city centers that is roughly the size of Vermont. In Washir, the neighboring district, the Taliban operates freely because there are not enough troops.

"They tell me that Afghanistan is Iraq on steroids," said Gilreath, who is on his first deployment and hasn't served in Iraq. But 40 percent of the 3-8 has served previously in Iraq's Anbar province. Indeed, the 3-8 was originally scheduled to deploy to the Iraqi/Syrian border and learned just two months before it shipped out that it was headed to Afghanistan instead. By then they had finished most of their training, all of it geared toward Iraq. So they are learning on the ground.

At times, Afghanistan can feel deceptively like Iraq, they say. During a patrol that found the Marines surrounded by poppy fields, they spotted two men on a motorcycle trailing them. It was the only other vehicle on an otherwise unused paved road. "You see that. They're watching us," Gilreath radioed to his fellow Marines. In Iraq, such trailing often meant an attack was imminent. But not here. Marines said it could be months before the Taliban turns that information into an attack. "The lack of attacks has me asking: Are we doing something right or wrong?" asked company commander Capt. Sven Gosnell, 36, of Torrance, Calif., an Iraqi veteran.

When the Taliban does take on the Marines, it's a different kind of fight, Marines said. For one, the Taliban'll wait until they're ready, not just when an opportunity appears. They'll clear the area of women and children, not use them as shields. And when the attack comes, it's often a full-scale attack, with flanks, trenches and a plan, said one Marine captain and Iraq veteran who asked not to be identified because he wasn't sure he was allowed to discuss tactics.

Afghans "are willing to fight to the death. They recover their wounded, just like we do," said the captain. "When I am fighting here, I am fighting a professional army. If direct fighting does not work, they will go to an IED. They plan their ammunition around poppy season. To fight them, you are pulling every play out of the playbook."

U.S. troops also are frustrated by the different rules of engagement they must operate under in Afghanistan. Until Jan. 1, U.S. forces in Iraq operated under their own rules of engagement. If they saw something suspicious, they could kick down a door, search a home or detain a suspicious person. But in Afghanistan, they operate under the rules of the NATO-led International Security Assistance Force, of which U.S. troops are part. Under those regulations, only Afghans can search buildings and detain people. Gilreath felt that frustration shortly after he spotted the trailing motorcycle. Radio chatter mentioned a local bomb-making factory, though it didn't say where. Gilreath decided to investigate two nearby homes. Trailing behind was one Afghan police truck, the only one available that day.

The Marines secured the perimeter and the handful of Afghan police officers searched one clay structure, then the other. But they moved slowly. Some Marines started peeking the windows, doing their best to honor ISAF rules and still satisfy their urge to search. As the burka-clad women huddled with their children outside, and the men tried to assure the Marines they were law abiding, a single Afghan man began walking off through a nearby field. There weren't enough Afghan police to both search the homes and stop the man. "We just need more everything," Gilreath said afterward."

The Economy: "Prepare for an Exceptional Correction"

"Prepare for an Exceptional Correction"
by Bill Bonner

"The price of gold fell $15 yesterday, to close below $1,100. We expected a correction in the gold market. But we thought it would come along with a correction in the stock market. Stocks rose 85 points on the Dow yesterday. We take this as a warning: something is going on that we don’t understand. That said, there’s a lot going on that we don’t understand.

But the broad patterns generally make sense. Boom was followed by bust. As dear readers know, the force of a correction is equal and opposite to the deception that preceded it. The deception of the Bubble Era being exceptional, the correction would be exceptional too – even under the best of circumstances. But these are not the best of circumstances. Because several other things are happening…things that need to be reckoned with, too.

• The US is losing its privileged place in the world. Americans now compete with many other people in many other places for the world’s resources – including its savings.
• The international monetary system, an experimental system built of paper dollars, may be falling apart.
• The days of cheap and bountiful energy are over.
• Governments are going broke. State governments. National governments. In Europe. In the Middle East. And in America.
• The engine of economic growth – Americans’ willingness to go into debt in order to consume more and more of the world’s output – has gone into reverse.
• And, governments are meddling on an unprecedented scale…delaying and avoiding necessary adjustments, possibly turning an ordinary depression into a Great Depression…or even a Much Greater Depression.

These are not small challenges. Any one of them would be a worthy crisis on its own. Put them together and you have the makings of a catastrophe. What will happen? Don’t know. Wish we did. A series of mini-disasters? Or one big planet-wide blow-up? Or, are the authorities so smart that they can engineer trouble-free solutions to these challenges?

If you have confidence in Obama…Bernanke…Geithner…Congress…the European Central Bank…the Bank of China…and so forth… Well, you have no business reading The Daily Reckoning! Heck…let them figure it out. Everything will be fine. Go back to the TV…

If, on the other hand, you have a sly suspicion that the authorities are headed for the rocks…"

Archaeologoy: "Venomous, Flying 'Microraptor' Discovered"

"Venomous, Flying 'Microraptor' Discovered"
by Brendan M. Lynch

"A group of University of Kansas researchers working with Chinese colleagues have discovered a venomous, birdlike raptor that thrived some 128 million years ago in China. This is the first report of venom in the lineage that leads to modern birds. "This thing is a venomous bird for all intents and purposes," said Larry Martin, KU professor and curator of vertebrate paleontology at the Natural History Museum and Biodiversity Institute. "It was a real shock to us and we made a special trip to China to work on this."
This image of fossilized Sinornithosaurus shows the raptor's long, grooved fangs.
It lived in prehistoric forests of northeastern China that were filled with
a diverse assemblage of animals including other primitive birds and dinosaurs.

The KU-China team's findings will be published in the early edition of the "Proceedings of the National Academy of Sciences" during the week of Dec. 21. "We think it's going to make a big splash," said Martin. The article's authors are Enpu Gong, geology department at Northeastern University in Shenyang, China, and researchers Martin, David Burnham and Amanda Falk at the KU Natural History Museum and Biodiversity Institute.

The dromaeosaur or raptor, Sinornithosaurus (Chinese-bird-lizard), is a close relative to Velociraptor. It lived in prehistoric forests of northeastern China that were filled with a diverse assemblage of animals including other primitive birds and dinosaurs. "This is an animal about the size of a turkey," said Martin. "It's a specialized predator of small dinosaurs and birds. It was almost certainly feathered. It's a very close relative of the four-winged glider called Microraptor." The venom most likely sent the victim into rapid shock, shrinking the odds of retaliation, escape or piracy from other predators while the raptor manipulated its prey.

"You wouldn't have seen it coming," said Burnham. "It would have swooped down behind you from a low-hanging tree branch and attacked from the back. It wanted to get its jaws around you. Once the teeth were embedded in your skin the venom could seep into the wound. The prey would rapidly go into shock, but it would still be living, and it might have seen itself being slowly devoured by this raptor."

The genus had special depressions on the side of its face thought by the investigators to have housed a poison gland, connected by a long lateral depression above the tooth row that delivered venom to a series of long, grooved teeth on the upper jaw. This arrangement is similar to the venom-delivery system in modern rear-fanged snakes and lizards. The researchers believe it to be specialized for predation on birds. "When we were looking at Sinornithosaurus, we realized that its teeth were unusual, and then we began to look at the whole structure of the teeth and jaw, and at that point, we realized it was similar to modern-day snakes," Martin said.

Sinornithosaurus is represented by at least two species. These specimens have features consistent with a primitive venom-delivery system. The KU-China research team said it was a low-pressure system similar to the modern Beaded lizard, Heloderma, however the prehistoric Sinornithosaurus had longer teeth to break through layers of feathers on its bird victims.

The discovery of features thought to be associated with a venom-delivery system in Sinornithosaurus stemmed from a study of the anatomy and ecology of Microraptor by the joint Chinese-KU team. They now are seeking to discover if Microraptor may have possessed a similar poison-delivery system."

Sir Francis Bacon


"The human understanding when it has once adopted an opinion draws all things else to support and agree with it. And though there be a greater number and weight of instances to be found on the other side, yet these it sets aside and rejects, in order that by this great and pernicious predetermination the authority of its former conclusion may remain inviolate."
- Sir Francis Bacon

"How It Really Is"

Mr. Spock


"Curious how often you humans manage to
obtain that which you do not want."
- Mr. Spock

Iraqi War Veteran Mike Prysner, "Our Real Enemy"


"Our real enemy is not the ones living in a distant land whose names or policies we don't understand; The real enemy is a system that wages war when it's profitable, the CEOs who lay us off our jobs when it's profitable, the Insurance Companies who deny us Health care when it's profitable, the Banks who take away our homes when it's profitable. Our enemies are not 5,000 miles thousands away. They are right here in front of us..."
- Mike Prysner

Oscar Wilde



“The truth is rarely pure and never simple.”
- Oscar Wilde

Global Warming? "Turning Tricks, Cashing In on Fear"

"Turning Tricks, Cashing In on Fear"
By Alexander Cockburn
Click image for larger size.

"In the early 1970s the UN spearheaded the progressive notion of a new world economic order, one that would try to level the playing field between the First World and the Third. The neoliberal onslaughts gathering strength from the mid-1970s on destroyed that project. Eventually the UN, desperate to reassert some semblance of moral leadership, regrouped behind the supposed crisis of climate change as concocted by the AGW lobby, behind which lurk huge corporate interests such as the nuclear power companies. Radicals from the United Nations Conference on Trade and Development, putting forward proposals for upping the Third World’s income from its primary commodities, were displaced by climate shills in the UN’s Intergovernmental Panel on Climate Change – the IPCC. The end consequence, as represented by Copenhagen’s money-grubbing power plays over “carbon mitigation” funding, has been a hideous travesty of that earlier vision of a global redistribution of resources.

Such is the downward swoop of our neoliberal era. In Oslo Obama went one better than Carter who, you may recall , proclaimed in 1977 that his crusade for energy conservation was “the moral equivalent of war.” Obama trumped this with his claim that war is the moral equivalent of peace. As he was proffering this absurdity, Copenhagen was hosting its global warming jamboree, surely the most outlandish foray into intellectual fantasizing since the fourth-century Christian bishops assembled for the Council of Nicaea in 325 AD to debate whether God the father was supreme or had to share equal status in the pecking order of eternity with his Son and with the Holy Ghost.

Shortly before the Copenhagen summit the proponents of anthropogenic – human-caused - global warming (AGW) were embarrassed by a whistleblower who put on the web over a thousand emails either sent from or received at the Climate Research Unit at the University of East Anglia headed by Dr Phil Jones, who has since stepped down from his post – whether temporarily or permanently remains to be seen. The CRU was founded in 1971 with funding from sources including Shell and British Petroleum. At that time the supposed menace to the planet and to mankind was global cooling, a source of interest to oil companies for obvious reasons.

Coolers transmuted into warmers in the early 80s and the CRU became one of the climate modeling grant mills supplying the tainted data from which the UN’s Intergovernmental Panel of Climate Change (IPCC ) has concocted its reports which have been since their inception – particularly the executive summaries - carefully contrived political initiatives disguised as objective science. Soon persuaded of the potential of AGW theories for their bottom line, the energy giants effortlessly recalibrated their stance, and as of 2008 the CRU included among its financial supporters Shell and BP, also the Nuclear Installations Inspectorate and UK Nirex Ltd, a company in the nuclear waste business.

After some initial dismay at what has been called, somewhat unoriginally, “Climategate” the reaction amid progressive circles – 99 per cent inhabited by True Believers in anthropogenic global warming - has been to take up defensive positions around the proposition that deceitful manipulation of data, concealment or straightforward destruction of inconvenient evidence, vindictive conspiracies to silence critics, are par for the course in all scientific debate and, although embarrassing, the CRU emails in no way compromise the core pretensions of their cause.

Scientific research is indeed saturated with exactly this sort of chicanery. But the CRU emails graphically undermine the claim of the Warmers – always absurd to those who have studied the debate in any detail – that they commanded the moral high ground. It has been a standard ploy of the Warmers to revile the skeptics as intellectual whores of the energy industry, swaddled in munificent grants and with large personal stakes in discrediting AGW. Actually, the precise opposite is true. Billions in funding and research grants sluice into the big climate modeling enterprises. There’s now a vast archipelago of research departments and “institutes of climate change” across academia, with a huge vested interest in defending the AGW model. It’s where the money is. Scepticism, particularly for a young climatologist or atmospheric physicist, can be a career breaker.

By the same token magazines and newspapers, reeling amidst the deadly challenge of the internet to their circulation and advertising base have seen proselytizing for the menace of man-made global warming, as a circulation enhancer – a vital ingredient in alluring a younger audience. Hence the abandoned advocacy of AGW by Scientific American, the New Scientist, Nature, Science, not to mention the New York Times (whose lead reporter on this topic has been Andrew Revkin, who has a personal literary investment in the AGW thesis, as a glance at his publications on Amazon will attest.)

Many of the landmines in the CRU emails tend to buttress long-standing charges by skeptics that statistical chicanery by Prof Michael Mann and others occluded the highly inconvenient Medieval Warm Period, running from 800 to 1300 AD, with temperatures in excess of the highest we saw in the twentieth century, a historical fact which made nonsense of the thesis that global warming could be attributed to the auto-industrial civilization of the twentieth century. Here’s Keith Briffa, of the CRU, letting his hair down in an email written on September 22, 1999: “I know there is pressure to present a nice tidy story as regards 'apparent unprecedented warming in a thousand years or more in the proxy data' but in reality the situation is not quite so simple…I believe that the recent warmth was probably matched about 1000 years ago."

Now, in the fall of 1999 the IPCC was squaring up to its all-important “Summary for Policy-Makers” – essentially a press release - one that eventually featured the notorious graph flatlining into non-existence the Medieval Warm Period and displaying a terrifying, supposedly unprecedented surge in twentieth century temperatures. Briffa’s reconstruction of temperature changes, one showing a mid- to late-twentieth-century decline, was regarded by Mann, in a September 22, 1999, e-mail to the CRU, as a “problem and a potential distraction/detraction.” So Mann, a lead author on this chapter of the IPCC report, simply deleted the embarrassing post-1960 portion of Briffa’s reconstruction. The CRU’s Jones happily applauded Mann’s deceptions in an e-mail in which he crowed over “Mike’s Nature trick.” Like politicians trying to recover from a racist outburst, AGW apologists say the “trick” was taken out of context. It wasn’t.

Other landmines include particularly telling emails from Kenneth Trenberth, a senior scientist and the head of the climate analysis section of the National Center for Atmospheric Research in Boulder, Colo. On October 14, 2009, he wrote to the CRU’s Tom: “How come you do not agree with a statement that says we are no where close to knowing where energy is going or whether clouds are changing to make the planet brighter. We are not close to balancing the energy budget. The fact that we can not account for what is happening in the climate system makes any consideration of geoengineering quite hopeless as we will never be able to tell if it is successful or not! It is a travesty!”

In other words, only a few weeks before the Copenhagen summit, here is a scientist in the inner AGW circle disclosing that “we are not close to knowing” whether the supposedly proven agw model of the earth’s climate actually works, and that therefore “geo-engineering” – global carbon-mitigation, for example -- is “hopeless”.

This admission edges close to acknowledgement of a huge core problem – that “greenhouse” theory and the vaunted greenhouse models violate the second law of thermodynamics which says that a cooler body cannot warm a hotter body XX. Greenhouse gasses in the cold upper atmosphere, even when warmed a bit by absorbed infrared, cannot possibly transfer heat to the warmer earth, and in fact radiate their absorbed heat into outer space. Readers interested in the science can read mathematical physicist Gerhard Gerlich’s and Ralf Tscheuchner’s detailed paper published in "The International Journal of Modern Physics," updated in January , 2009, “Falsification Of The Atmospheric CO2 Greenhouse Effects Within The Frame Of Physics”.

“For the last eleven years,” as Paul Hudson, climate correspondent of the BBC said on October 9, “we have not observed any increase in global temperatures.” In fact recent data from many monitors including the CRU, available on climate4you.com show that the average temperature of the atmosphere and the oceans near the surface of the earth has decreased significantly for the last 8 years or so. CO2 is a benign gas essential to life, occurring in past eras, long before the advent of manmade emissions, at five times present levels. Changes in atmospheric CO2 do not correlate with those emissions of CO2, the latter being entirely trivial in the global balance of carbon.

As for the nightmare of vanishing ice caps and inundating seas, the average Arctic ice coverage has essentially remained unchanged for the last 20 years, and has actually increased slightly over the last 3 years. The rate of rise of sea level has declined significantly over the last 3 years, and its average rate of rise for the last 20 years is about the same as it has been for the last 15,000 years, that is, since the last glacial cooling ended and the earth, without help from mankind, entered the current interglacial warming period. The sea rise of that still on-going interglacial warm spell, among other things, flooded the land bridge between Siberia and Alaska to form the Bering Straits—without which we might be a province of Russia today. So much for the terrors of sea rise.

The battles in Nicaea in 325 were faith-based, with no relation to science or reason. seventeen centuries later, so were the premises of the Copenhagen summit, that the planet faces catastrophe warming caused by a man-made CO2 build-up and that human intervention– geo-engineering- could avert the coming disaster. Properly speaking, the Copenhagen dogmata are a farce. In terms of distraction from cleaning up the pollutants that are actually killing people, they are a terrible tragedy."

"Wall Street's 10 Biggest Lies of 2009"

"Wall Street's 10 Biggest Lies of 2009"
by Les Leopold

"Say goodbye to 2009, the worst economic year since the Great Depression. Say hello to the billionaire bailout society in which the super-rich gamble, lose and get bailed out by the rest of us. To save the system from total collapse we poured trillions of dollars into the financial sector. The result? Banks still are refusing to lend. Thirty million Americans are looking for full-time jobs and 49 million are skipping meals including one out of four children. But Wall Street again is reaping record profits and bonuses.

Not only are we richly rewarding those who wrecked our economy, but also, we have to put up with hundreds of fabrications about how the big banks got us here. Here is my biggest, fattest lies list for 2009:

1. "Government programs for low-income home buyers caused the financial crash." Wall Street defenders were quick to blame the Community Reinvestment Act, which urges banks to loan money in minority communities. In fact, almost none of the CRA loans are sub-prime and the vast majority are doing well, thank you. Blaming government programs deflects us from the real cause: Wall Street's incredibly reckless creation, marketing, selling and trading of "innovative" new securities that supposedly removed the risk from pools of risky debt. It didn't work. Wall Street, not the poor, crashed our economy.

2. "Income inequality is good for everyone." Lord Brian Griffiths, Vice-Chairman of Goldman Sachs at least had the nerve to say what so many of the super-rich really believe: "We have to accept that inequality is a way of achieving greater opportunity and prosperity for all."

Unfortunately, the facts suggest otherwise. There is a high correlation between the mal-distribution of income and economic crashes. The last time our wealth and income distribution was as skewed as it is today was 1929, and that's not an accident. When too much money is in the hands of the few it runs out of real world investment and gravitates towards speculative investments. This inevitably creates asset bubbles and crashes. Record pay and bonuses on Wall Street and high unemployment are connected. (See The Looting of America Chapter 11).

3. "The rising number of billionaires is a sign of economic health." It's accepted media wisdom that the more billionaires the better. China with 130 billionaires now trails only the US, which has 359, according to Forbes magazine. But in our billionaire bailout society, the rising number of billionaires signals a collapsing middle class. Ponder this statistic: In 1970 the ratio of the compensation of the top 100 CEOs compared to the average production worker was 45 to 1. By 2006 it was an astounding 1,723 to one. Does that look healthy to you?

4. "Paying back TARP means banks are no longer on government welfare." Bank after bank is rushing to repay TARP funds during the worst economic year since 1937. They want to get out from under the Pay Czar (not that he's been sufficiently tough on the banks under his purview.) Banks that were insolvent only a few months ago now say they have the financial strength to refund tens of billions of dollars to the government. Where did all that money come from? Much of it comes from other government welfare programs for Wall Street (over $12 trillion worth) that aren't publicized. (See Nomi Prins's excellent accounting.) It may be the case that our banks are paying us back with our own money. Now that's financial innovation.

5. "Wall Street's freedom to innovate must be protected." Congressional leaders are tripping all over themselves to say new regulations will not discourage Wall Street innovations, something they claim is vital to our economy. Oh really? Do those "innovations" add anything useful to our country other than new casino games for the super-rich? Former Federal Reserve Chairman, Paul Volker, recently blew the whistle on this fabrication: "I hear about these wonderful innovations in the financial markets and they sure as hell need a lot of innovation. I can tell you of two - Credit Default Swaps and CDOs - which took us right to the brink of disaster: were they wonderful innovations that we want to create more of? ... I wish that somebody would give me some shred of neutral evidence about the relationship between financial innovation recently and the growth of the economy, just one shred of information.... The most important financial innovation that I have seen in the past 20 years is the automatic teller machine... How many other innovations can you tell me of that have been as important to the individual?" ("What Has Financial Innovation Done for You?")

6. "To retain critically needed talent, Wall Street must be free to pay top salaries and bonuses." Where would they flee if they just got paid like normal people rather than like gods? The British are putting in place a 50 percent tax on bonuses. Also, compensation is much, much lower in the European Union. But the real lie is that we need such "talent" in the first place. That kind of "talent" just crashed our economy. That kind of "talent" is widely overpaid - no way should bond traders receive 10 to 100 times what is earned by the best neurosurgeons in the world. Something is really wrong and it starts with the lie of banking "talent."

7. "Overpaid American workers are the real cause of unemployment." The New York Times writers who concocted this argument didn't think they were lying. But this is one of the most preposterous ideas put forth during 2009. ("American Wages out of Balance" New York Times November 11, 2009) Edward Hadas, Martin Huchinson and Antony Currie informed us that: "American manufacturing workers should take average real wage cuts of as much as 20 percent to get into global balance." They don't mention that the average non-supervisory worker has already taken an 18 percent cut in real wages between 1973 and 2007. What's worse, they claim that if workers don't take these additional cuts, these "overpaid" working stiffs will be the cause of another Great Depression.

They write: "But if American wages get stuck above global market-clearing levels, as in the 1930s, the result could well be something approaching Depression-era levels of unemployment." Not a word is mentioned about how Wall Street's gambling caused all of this unemployment and how the continued failure of Wall Street banks to lend is stalling job growth, right now.

8. "I'm doing God's Work." Lloyd Blankfein, Chairman of Goldman Sachs said what too many Wall Street leaders truly believe: that they are so privileged and entitled that it seems as if the heavens bless their work. Why else are they earning hundreds of millions of dollars? Mr. Blankfein believes he is creating a virtuous circle by raising capital for corporations who create jobs and help our society prosper. But Goldman Sachs, JP Morgan Chase, Morgan Stanley and the rest of the apostles helped to bring the entire world economy to its knees. Does that mean God likes unemployment and widespread hunger?

9. "We're out of money." Who's we? Yes, the middle class is tapped out but the super-rich haven't even begun to pay their fair share for the mess they created. Yet the top 400 richest Americans alone are sitting on $1.27 trillion or so in wealth. Here's a dangerous thought. What if we had a very steeply progressive wealth/income tax that reduced the net worth of the super-rich to "only" about $100 million each? You wouldn't be suffering if you had $100 million kicking around. Now do the math: The 400 richest x $100 million each would equal $40 billion. That would leave about $1.23 trillion to help pay back the country for the Wall Street meltdown that we, our children and their children will be subsidizing.

10. "We are becoming a socialist economy." Somewhere between 68 and 78 percent of the US GDP is private sector activity, the highest among developed nations. And much of the government expenditures go to private contractors as well. But there's a kernel of truth in the socialist scare: What do you call a society that encourages the private accumulation of wealth without limit, and then when the super-wealthy get into serious trouble, we bail them out with taxpayer funds - largely from a declining middle-class? That's not free-enterprise. That's not socialism either. It's something new and it deserves to be called the billionaire bailout society.

Here's hoping that in 2010 we can begin to undo it."

Les Leopold is the author of "The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It," Chelsea Green Publishing, June 2009.

The Archival Mogambo Guru,"The Government-Based Economy"

Sadly, the Mogambo Guru, Richard Daughty, has apparently retired from active writing. We can only hope for his return. Meanwhile, please enjoy this article from September 14, 2009.

"The Government-Based Economy"

by The Mogambo Guru

"I really got a laugh out of the report from Bloomberg that the Democratic Party of Japan (known in the parlance as DP) won an historic victory in the recent elections, coming to power for the first time in decades with “a pledge to support households battered by two decades of economic stagnation”, whatever that is supposed to mean, but which is, upon even casual inspection, Standard Political Crapola (SPC).

The interesting part is that the new prime minister, a guy named Hatoyama, said “he’ll avoid more bond sales, so new spending will depend on his success in shrinking the bureaucracy and public works programs”, which is so laughably, ludicrously impossible, especially in such a corrupt, lopsided economy that it makes me, a stupid American who really doesn’t know what in the hell he is talking about, who lives thousands of miles away, in another country and hemisphere, turn up his nose at the sheer stink coming from that idea! Phew! Of course, this valuable piece of Righteous Mogambo Scorn (RMS) is because it is obviously, obviously too, too late for that.

It is too late, just like it is too late here in the USA, and just like it is too late almost everywhere else, too, where years and years of increasing government spending and control means that government IS the economy, and shrinking the size of government obviously shrinks the economy! Hahahaha! Oops!

So, to the Japanese, I say, “Hahaha! Too late for that, you dumb Japanese chumps! Now you are going to pay a huge penalty for being such morons with your fiat money, and then especially involving the idiot Americans and their fiat money!”

Anyway, crude and rude xenophobic insults and senseless bigotry aside, an example of this is that, here in America, the birthplace of sheer stupidity in central banking (by which I mean the disastrous Federal Reserve), our economic performance as a result of the same kind of constant stimulus is that non-farm payrolls have been falling and are now about back to where they were in 2000, meaning absolutely zero (non-farm payroll) growth for 9 years!

A lot more people seeking the same number of jobs is pretty bad, especially when the number of people is still rising while the number of jobs is actually still falling! Yikes!

Meanwhile, however, the government has spent its time growing bigger and bigger, like a huge, cancerous, oozing lump that is growing on your neck and already people are being repulsed by both the sight and the smell of it, and now there are 6% more people on “government payrolls” than there were in 2001, which is only the tip of the iceberg.

And, as if to add insult to injury, they all make more money than you! Hahaha! For the first time in history, the average pay of a government employee is higher than the average wage of non-government employees! And when you add in their generous benefit packages, they make a lot more, and they are not going to take it kindly that you want them to suffer losses in pay and employment like us average morons out here.

So that is One More Big Reason (OMBR) why the government will keep borrowing more and more and spending more and more, which is why the Federal Reserve must create more and more money and credit, which expands the money supply more and more, which makes prices go up more and more, sometimes in bubbles, which must, and always do, bust back to their intrinsic value.

And such government and banking insanity as we are seeing today is the One Big Reason (OBR) – perhaps THE One Big Reason (TOBR) – why you must buy gold, silver and oil, apart from it being, you know, so easy that you squeal with girlish delight, “Whee! This investing stuff is easy!”

Richard Daughty (Mogambo Guru) is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo Guru economic newsletter, an avocational exercise to better heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in "Barron’s," "The Daily Reckoning" , and other fine publications.

Monday, December 21, 2009

"A Look to the Heavens"

"Northern Lights, or aurora borealis, haunted skies over the island of Kvaløya, near Tromsø Norway on December 13. This 30 second long exposure records their shimmering glow gently lighting the wintery coastal scene. A study in contrasts, it also captures the sudden flash of a fireball meteor from December's excellent Geminid meteor shower.
Streaking past familiar stars in the handle of the Big Dipper, the trail points back toward the constellation Gemini, off the top of the view. Both aurora and meteors occur in Earth's upper atmosphere at altitudes of 100 kilometers or so, but aurora are caused by energetic charged particles from the magnetosphere, while meteors are trails of cosmic dust."

Leo Buscaglia

"A wonderful realization will be the day you realize that you are unique in all the world. There is nothing that is an accident. You are a special combination for a purpose- and don't let them tell you otherwise, even if they tell you that purpose is an illusion. (Live an illusion if you have to). You are that combination so that you can do what is essential for you to do. Don't ever believe that you have nothing to contribute. The world is an incredible unfulfilled tapestry. And only you can fulfill that tiny space that is yours."
- Leo Buscaglia

Chet Raymo, "The Sea Around Us"


"The Sea Around Us"
by Chet Raymo

"A tidy, quiet shore this, this carbonate island in the tropics. The island itself is a fragile thing, the substance of it so soft one can nearly break it apart with one's hand. Every now and then the crumbling rocks at the back of the beach will reveal a bottle from the last century or so, a sure sign of how quickly the sand consolidates into soft stone, then crumbles again. Our tide pools are sparsely populated, I suppose, compared to the granite shores of the North Atlantic, but the reefs - ah, the reefs, glorious things those, full of colorful creatures that would have no use for their bright raiment in the dark waters of the north.

I'm reading Linda Lear's biography of Rachel Carson. She begins with Carson's testimony before a Senate committee on environmental pollution sparked by the publication of her bombshell of a book in 1962, “Silent Spring," an event that as much as anything marked the awakening of environmental consciousness around the world. As she testified, Carson was dying of cancer. Lear writes: "Carson could not be silent. She had peered into the fairy caves and tide pools of her beloved Maine coast and had seen the fragility and tenacity with which even the smallest creatures struggled for life against the relentless ocean tides. Her flashlight had captured the unforgettable spectacle of the solitary crab on the rocky beach at midnight, vulnerable yet unassailably resilient. She could not stand idly by and say nothing when all that was in jeopardy, when human existence itself was endangered."

I'm old enough to remember the aerial spraying of DDT in New England, that gentle rain of poison from the sky. When I visited my girlfriend in Florida, now my wife, trucks went up and down the streets bestowing poison on one and all, mosquitos and human babies alike. The chemical industry, of course, wasn't happy with Carson's book, any more than great segments of industry today are happy about those who warn of global warming. Just how all that works out remains to be seen, but we can thank Rachel Carson for teaching us how to have the conversation. Which prompts me to make sure to take a walk down the beach this morning, to the place where tide pools skitter and weave in their fragile vestments of living matter.”

"The Cost of War- $7 Trillion?"

"The Cost of War- $7 Trillion?"
by Philip Giraldi

"War may be hell, but it also doesn’t come cheap and it is time that the US taxpayer begin to question what he is getting for his money.  Napoleon once famously said that an army travels on its stomach.  He meant that feeding and supplying an army so that it would arrive to do battle in good condition were keys to victory.  He frequently cut costs, however, provisioning his troops by looting the food supplies of the local population. That ad hoc policy led to disaster when confronted by the Russian scorched earth response on his retreat from Moscow in 1812 when he lost most of his army.

Rudyard Kipling, a witness to British Colonial fighting against Afghan and Pakistani tribesmen, also understood the economic reality of warfare.  In his poem "Arithmetic on the Frontier," describing fighting in Afghanistan, he wrote about how a British officer possessed of a superb classical education might well be shot dead by an illiterate tribesman wielding an old musket firing a homemade bullet worth two cents:
With home-bred hordes the hillsides teem,
The troop-ships bring us one by one,
At vast expense of time and steam,
To slay Afridis where they run.
The "captives of our bow and spear"
Are cheap — alas! as we are dear.


What would Napoleon and Kipling have thought about America’s wars in Afghanistan and Iraq?  Napoleon would have been astute enough to understand immediately that the American efforts lack any clear political objective beyond supporting the status quo, but he would undoubtedly also note the vast and wasteful expense of the enterprise.  If Kipling were to tally up the new American rendition of arithmetic on the frontier he would undoubtedly be astonished and would want to double check his numbers.  Both Napoleon and Kipling would have appreciated how the insurgents have the upper hand, free to engage in asymmetrical warfare against the clumsy invader who is totally reliant on extended and vulnerable supply lines.

The fiscal year 2010 Federal government budget included $130 billion for the wars in Iraq and Afghanistan, or somewhat more than $10 billion per month.  The White House estimates that it will cost one billion dollars per year to deploy an additional 1,000 troops to Afghanistan. President Obama has made the unfortunate decision to add 34,000 soldiers, and the cost of that will be $34 billion higher, raising the total to something approaching $14 billion per month.  Exactly how the $1 billion number for each 1,000 addition is derived is not completely clear, but it appears to assume that there is complete elasticity in the supply arrangements, meaning that costs will not escalate because of increased demand or because of enemy action.  It also does not address the six hundred pound gorilla in the room, which is the legacy issue that comes from fighting a war with borrowed money.  As the Obama White House is so deep in the red that even George W. Bush appears in hindsight to have been a model of frugality, it should be assumed that Obama’s "war of necessity" will not be fully funded by Congress.  That means either borrowing from the Asians or just printing the money while watching the dollar slide down the toilet.   It has to be assumed that the US Treasury will do a bit of both.

Why are these wars so expensive?  It goes back to Napoleon: logistics.  US bases in Iraq are supplied by a 344-mile road running north from huge depots in Kuwait and by another artery running south from Turkey, both of which require convoys of trucks with armed guards dramatically raising the costs of everything being brought in.  It is similar in Afghanistan but worse. The main supply route starts in Karachi, Pakistan, and works its way up through the Khyber Pass, at which point the truck convoys are frequently attacked by insurgents.  When a convoy is destroyed the US Army assumes the loss as no one will insure such a perilous enterprise.  Sometimes the trucking companies pay off the attackers to be left alone, ironically putting US taxpayer-provided money into the hands of those seeking to kill American soldiers.

The US Army, which used to manage its own logistics, now contracts out the work of running in the military supplies as well as water, food, and fuel.  Contracting provides flexibility but it also means everything will be done for profit and therefore be more expensive.  It also guarantees a high level of corruption.  Even drinking water became a valued commodity in Iraq where summer temperatures sometimes reach 130 degrees and the country’s water purification system was destroyed by coalition bombs.  A senior CIA officer, Kyle Dusty Foggo, has gone to jail based on his reported manipulation of multimillion dollar contracts to supply water to Agency bases in Iraq.  Contractors in Kuwait paid $15 million in bribes to three US Army procurement officers between 2004 and 2007 to obtain the enormous contracts to supply bottled water to American forces.  There is even a Burger King at the US Embassy in Baghdad which trucks in all its raw materials subsidized by the government through the military’s Army and Air Force Exchange System as well as other Burger Kings and several Pizza Huts at the other large Iraqi bases and at Bagram Airfield in Afghanistan.  That $2 burger or slice of pizza might be a taste of home but it actually costs more like $20 when all the real expenses are factored in.

Think for a moment the role played by gasoline and other fuels in the current conflicts, three times greater than was the norm per soldier in Vietnam.  A modern US soldier requires 22 gallons of fuel per day.  American forces in Iraq alone are supplied by a fleet of 5,500 fuel trucks.  The Pentagon estimates that the cost of fuel delivered to the front lines in Afghanistan and Iraq averages $45 per gallon, including all expenses but excluding legacy costs like interest on borrowing money to buy the fuel in the first place.  The fuel goes into Blackhawk helicopters which use about five gallons of aviation fuel every minute they are in the air, armored Humvees which get 8 miles per gallon, Stryker combat vehicles at 3 miles per gallon, and the new generation of Mine Resistant Ambush Protected (MRAP) vehicles which are being introduced into Afghanistan in large numbers to defend against roadside bombs.  The MRAPs undeniably save lives, but they are heavily armored, weighing from fourteen and up to 52 tons depending on how they are configured.  The lightest ones get only 4 miles per gallon of fuel and the heaviest less than a mile per gallon.  Because the money is borrowed to pay for the fuel, the final true cost to the US taxpayer will likely exceed $100 per gallon when the current level of war debt is finally amortized around the year 2017.

Fuel is only one aspect of the escalating costs of the wars that America has become involved in.  A total of one trillion dollars has been spent already in Iraq and in Afghanistan but legacy costs to include paying off the money that was borrowed and medical care for the many thousands of wounded soldiers and marines will drive the total cost of the war past the $5 trillion dollar mark even if the two wars were to end tomorrow.  Harvard economist Joseph Stiglitz is now suggesting that a final figure approaching $7 trillion is not inconceivable inclusive of Obama’s early 2009 surge in Afghanistan coupled with the escalating costs of supplying US forces.  If Obama adds thousands more soldiers at the request of Generals Petraeus and McChrystal, the final tab will go higher.

The numbers don’t lie.  It is a fantasy to believe that Washington will somehow obtain a simulacrum of victory in Afghanistan and Iraq that will benefit America and its people.  Apart from any other moral or practical considerations, the United States simply cannot afford to continue feeding an insatiable war machine.  Extending the conflict to Iran will likely break the bank.  Someone should speak the truth to President Obama, who is pledging to "finish the job" in Afghanistan, explaining that the best way to finish is to end the sorry debacle.  The President should make the politically difficult but necessary decision to stop the bleeding and bring our soldiers home."

Imagine for a moment, all of our soldiers home, no more dying; and all those resources and money being spent here to feed the hungry, repair the infrastructure, provide education and health benefits for all, fund research, rebuild our manufacturing base and create jobs, fund the devastated state's budgets... A pity, that $7 trillion is destined for the pockets of the wealthy and the corporatocracy's War Machine. But it was such a wonderful dream...