The Automatic Earth — Ilargi writes: Tim Geithner and Christina Romer tried to paint another rosy economic picture in front of the House Appropriations Committee (”there’s progress, though it’s challenging”), but even their own fellow Democrats don’t buy into it anymore. American politics as a system has ceased to function, because the system has gone from representing people to representing money. And that is something that can only go well as long as the people have at least some of that money. Now that they’re increasingly shut out, the system shuts down; it’s inevitable. Which is why even rating agency Moody’s comes with an at first glance curious warning: even the credit raters now predict pitchforks.

We’ve seen tear gas in Athens recently, and that was just a little taste. As you may know, I’m spending some time in France right now, and it’s not hard to predict what will happen here if and when the government starts slashing salaries (as it must soon). The French simply won’t understand what’s happening, and mass protests will be the result, some peaceful, some violent. It’s every democratic politician’s ultimate conundrum: if you don’t tell people the truth, they’ll turn against you down the line; if you do tell them, they’ll turn against you right away. That makes it obvious to figure out which politicians actually do get elected. Where the government is left, it will swing right, and vice versa, in ever more extreme denominations.

And yet, it’s all just a prologue. There’s nothing easier for politicians than to play people against each other, in order to divert -negative- attention away from themselves. And so they will.

We have a baby boomer generation that has just about all the money that’s left in our societies. Their children, though, have nothing. Except for some hand-outs from their parents (I’m not talking individuals here). Unemployment among young people in many countries is downright scary, often in the 40%-50% range. No jobs, no money, no prospects. In times and places throughout history, this has brought populist dictators to the foreground, and pitchforks and torches into the streets, and there is no reason why it won’t now. Today’s political power is firmly in the hands of the 40-year and older crowd; they have elected incumbent politicians, and more importantly, they have the money and thus the power. The younger generation has no money and no power, but they also have nothing left to lose.

That is a dangerous combination, and how we deal with it will be what decides our futures. …

Most people are far too complacent when it comes to the consequences of a shrinking economic system. Many claim that we can easily downsize to smaller homes and smaller lives, since there’s so much we don’t really need anyway, that we will move in together and return to “good” conversations, growing our own tomatoes and all that. But that’s just not going to happen voluntarily, not on a large and wide scale. The human mind has no reverse. It doesn’t even have a steering wheel. We are built for one of two things: go forward or crash. It looks like there’s no forward left before a major crash happens first. It also looks like there’s not a whole lot of people who realize this. (03/17/10)

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BBC Animal Science/Human Behavior — Governments need to crack down on illegal tiger trading if the big cats are to be saved, the UN has warned. The Convention on International Trade in Endangered Species (CITES) meeting in Doha, Qatar heard that tiger numbers are continuing to fall.

Organised crime rings are playing an increasing part in illegal trading of tiger parts, CITES says, as they are with bears, rhinos and elephants. …

Despite attempts to protect tigers, numbers have approximately halved over the last decade, with fewer than 3,200 remaining in the wild. The decline is seen across sub-species and in most range states. Many populations are small, and are threatened by deforestation as well as poaching.

“If we use tiger numbers as a performance indicator, then we must admit that we have failed miserably and that we are continuing to fail,” said CITES secretary-general Willem Wijnstekers. …

Although China and other East Asian countries are the principal consumers of tiger parts, exports travel much further afield.

Earlier this month, Operation Tram, co-ordinated by Interpol and including enforcement authorities in 18 countries, netted medicines containing wildlife products worth an estimated $10m. Tigers, bears and rhinos were among the animals used in making the medicines. (03/16/10)

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Fortune Magazine: World’s Most Admired Companies — Goldman Sachs rose to become the 8th most admired company in this year’s rankings. …

The public at large may still see Goldman as the poster child for the greed that sparked the financial crisis, but its reputation in the business world is stronger than ever: The company shot up 7 places from No. 15 last year.

The strongest financial services firm to emerge from the recession, Goldman paid back its $10 billion TARP loan with a 23% return to taxpayers in July, and has watched its stock rise 85% in the past year, and is currently trading around to $158 a share.

Responding to criticism over extravagant executive pay, last month the bank announced that as a bonus, CEO Lloyd Blankfein would collect 58,381 shares of restricted stock — valued at $9 million — but no cash. (03/04/10)

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Creators.com — Jim Hightower writes: In 2001, Goldman’s financial alchemists formulated a scheme to allow the Greek government to hide the extent of its rising debt from the public and the European Community’s budget overseers. Under this diabolical deal, Goldman funneled new capital from super-wealthy investors into the government’s coffers.

Fine. Not so fine, though, is that, in exchange, Greek officials secretly agreed that the investors would get 20 years’ worth of the annual revenue generated by such public assets as Greece’s airports. For its part, Goldman pocketed $300 million in fees paid by the country’s unwitting taxpayers.

The financial giant dubbed its airport scheme “Aeolus,” after the ancient Greek god of the wind — and, sure enough, any long-term financial benefit for Greece was soon gone with the wind. By hiding the fact that the government’s future revenues had been consigned to secret investors, Goldman bankers made the country’s balance sheet look much rosier than it was, allowing Greek officials to keep spending like there was no tomorrow.

Last month, however, tomorrow arrived. Greece’s crushing debt has exploded into a full-blown crisis, with its leaders disgraced and the country on the precipice of the unthinkable: the default of a sovereign nation.

So, who is getting punished for the finagling of Greek politicos and Goldman profiteers? The people, of course — just like here! Greeks now face deep wage cuts, rising taxes and the elimination of public services just so their government can pay off debts the people didn’t even know it had. Meanwhile, Greece’s financial conflagration is endangering the stability of Europe’s currency and causing financial systems worldwide (including ours) to wobble again. All of this to enrich a handful of global speculators.

Thanks, Goldman Sachs. (03/03/10)

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BBC Environmental Science — Consumers around the globe are not aware that they are “eating” rainforests, says Andrew Mitchell. In this week’s Green Room, he explains how many every-day purchases are driving the destruction of the vital tropical ecosystems.

When was the last time you had a “rainforest picnic”? Or even, perhaps, an “all-day Amazon breakfast”? Next time you are in a supermarket picking up a chicken sandwich for lunch, or fancy tucking in to a hearty breakfast of eggs, sausage and bacon before setting off for work, spare a thought for the Amazon.

A new report by Forest Footprint Disclosure reveals for the first time how global business is driving rainforests to destruction in order to provide things for you and me to eat. … Consumers “eat” rainforests each day - in the form of beef-burgers, bacon and beauty products - but without knowing it. The delivery mechanism is a global supply chain with its feet in the forests and its hands in the till. Because of growing demand for beef, soy and palm oil, which are in much of what we consume, as well as timber and biofuels, rainforests are worth more cut down than standing up.

Governments, which claim to own 70% of them, create prosperity for their nations through this process, but poor forest communities need their forests for energy and food.

The report shows that the EU is the largest importer of soy in the world, much of it coming from Brazil. It also shows that after China, the EU is the biggest importer of palm oil in the world. Soy provides cheap food to fatten our pigs and chickens, while palm oil is in everything from cakes and cookies, to that fine moisturiser you gently rubbed into your cheeks this morning. I have become a bit of a bore in supermarkets, challenging my kids to hunt for soy lecithin or palm oil (often disguised as vegetable oil) on product labels. You should try it! The stuff is everywhere.

The gargantuan farms of Brazil’s Mato Grosso State can boast 50 combines abreast at harvest time, marching across monoculture prairies where once the most diverse ecosystem on Earth stood, albeit in some cases many years ago. (03/02/10)

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The Guardian / UK – Dean Baker writes:  Last week, when President Obama was asked about the $9m dollar bonus for Goldman Sachs CEO Lloyd Blankfein, he described Blankfein as a savvy businessman, adding that Americans don’t begrudge people being rewarded for success. While the White House later qualified Obama’s comment about Blankfein and his fellow bank executives, it’s worth examining more closely some of the ways in which Blankfein and the Goldman gang were “savvy”.

Perhaps the Goldman gang’s best claim to savvy was in buying up hundreds of billions of dollars of mortgages and packaging them into mortgage backed securities, and more complex derivative instruments, and selling them all over the world. Blankfein and Goldman earned tens of billions of dollars on these deals. The great trick was that many of the loans put into these securities were issued by banks filling in phony information so that borrowers could get loans that they would not be able to repay. But this was not Goldman’s concern. They made money on the packaging and the selling of the securities.

In fact, Goldman actually recognised that many of these loans would go bad. So they went to the insurance giant AIG and got them to issue credit default swaps against many of the securities it had created. In effect they were betting that their own securities were garbage. Now that is savvy. (It says something else about the highly paid executives at AIG.)

Goldman doesn’t just confine its savvy to the US economy; it shares it with the rest of the world as well. According to the New York Times it worked closely with the Greek government over the last decade to help it conceal its budget deficit. The trick was to construct complex financial arrangements that appeared on the books as “swaps”, even though they were in fact loans. Greece was adding billions of dollars to its debt, and thanks to the ingenuity of the Goldman crew, no one knew about it until now.

But Goldman’s greatest triumph was to get the government to come to its rescue when the financial sector was melting down in the fall of 2008 as the housing bubble that they had helped to fuel began to collapse. The treasury secretary and former Goldman CEO Henry Paulson rushed to Congress and demanded $700bn for the banks, no questions asked. He dragged along Federal Reserve Board chairman Ben Bernanke for support, along with Timothy Geithner, then the important head of the New York Federal Reserve Bank and now President Obama’s treasury secretary. …

No one should doubt that Blankfein is a very savvy banker. Without his ingenuity Goldman Sachs would likely be out of business, its component divisions being auctioned off to the highest bidder. Instead it is making record profits and paying out record bonuses.

But unlike the successful ballplayers to whom President Obama compared Blankfein, Goldman’s success is inherently parasitic. It comes at the expense of taxpayers and the productive economy. President Obama must decide whether he stands with the Wall Street banks or whether he stands with the workers and businesses who actually produce wealth. (02/24/10)

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BBC Pollution Science — Scientists have discovered an area of the North Atlantic Ocean where plastic debris accumulates. …

The nets dragged along were half-in and half-out of the water, picking up debris and small marine organisms from the sea surface. The researchers carried out 6,100 tows in areas of the Caribbean and the North Atlantic - off the coast of the US. More than half of these expeditions revealed floating pieces of plastic on the water surface.

These were pieces of low-density plastic that are used to make many consumer products, including plastic bags.

Dr Lavender Law said that the pieces of plastic she and her team picked up in the nets were generally very small - up to 1cm across. “We found a region fairly far north in the Atlantic Ocean where this debris appears to be concentrated and remains over long periods of time,” she explained. “More than 80% of the plastic pieces we collected in the tows were found between 22 and 38 degrees north. So we have a latitude for [where this] rubbish seems to accumulate,” she said.

The maximum “plastic density” was 200,000 pieces of debris per square kilometre.

“That’s a maximum that is comparable with the Great Pacific Garbage Patch,” said Dr Lavender Law.

But she pointed out that there was not yet a clear estimate of the size of the patches in either the Pacific or the Atlantic.

“You can think of it in a similar way [to the Pacific Garbage Patch], but I think the word ‘patch’ can be misleading. This is widely dispersed and it’s small pieces of plastic,” she said.

The impacts on the marine environment of the plastics were still unknown, added the researcher.

“But we know that many marine organisms are consuming these plastics and we know this has a bad effect on seabirds in particular,” she told BBC News. (02/24/10)

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Tom Dispatch – Tom Engelhardt writes: Explain something to me. In recent months, unless you were insensate, you couldn’t help running across someone talking, writing, speaking, or pontificating about how busted government is in the United States.  State governments are increasingly broke and getting broker.  The federal government, while running up the red ink, is, as just about everyone declares, “paralyzed” and so incapable of acting intelligently on just about anything.

Only the other day, no less a personage than Vice President Biden assured the co-anchor of the CBS Early Show, “Washington, right now, is broken.” Indiana Senator Evan Bayh used the very same word, broken, when he announced recently that he would not run for reelection and, in response to his decision, Washington Post media critic Howard Kurtz typically commented, “The system has been largely dysfunctional for nearly two decades, and everybody knows it.” Voters seem to agree.  Two words, “polarization” and “gridlock” — or hyperbolic cousins like “paralyzing hyperpartisanship” — dominate the news when the media describes that dysfunctionalism.  Foreign observers have been similarly struck, hence a spate of pieces like the one in the British magazine the Economist headlined, “America’s Democracy, A Study in Paralysis.”

Washington’s incapacity to govern now evidently seems to ever more Americans at the root of many looming problems.  As the New York Times summed up one of them in a recent headline: “Party Gridlock in Washington Feeds Fear of a Debt Crisis.” When President Obama leaves the confines of Washington for the campaign trail, he promptly attacks congressional “gridlock” and the “slash and burn politics” that have left the nation’s capital tied in knots.

And he has an obvious point since, when he had a 60-vote supermajority in the Senate, congressional Democrats and the White House still couldn’t get their act together and pass health-care reform, not even after a year of discussion, debate, and favors trading, not even as the train wreck of the Massachusetts election barreled toward them. These days the Democrats may not even be a party, which means their staggering Senate majority has really been a majority of next to nothing.

The Republicans, who ran us into this ditch in the Bush years, are now perfectly happy to be the party of “no” — and the polls seem to show that it’s a fruitful strategy for the 2010 election.  Meanwhile, special interests rule Washington and lobbying is king. …

Meanwhile, on the other side of the planet, to the tune of billions of taxpayer dollars, the U.S. military is promoting “good governance” with all its might.  In a major campaign in the modest-sized city of Marja (a place next to no one had heard of two weeks ago) in Taliban-controlled Helmand Province, Afghanistan, it’s placing a bet on its ability to “restore the credibility” of President Hamid Karzai’s government.  In the process, it plans to unfurl a functioning city administration where none existed.  According to its commanding general, Stanley McChrystal, as soon as the U.S. Army and the Marines, along with British troops and Afghan forces, have driven the Taliban out of town, he’s prepared to roll out an Afghan “government in a box,” including police, courts, and local services. …

So explain something to me: Why does the military of a country convinced it’s becoming ungovernable think itself so capable of making another ungovernable country governable?  What’s the military’s skill set here?  What lore, what body of political knowledge, are they drawing on?  Who do they think they represent, the Philadelphia of 1776 or the Washington of 2010, and if the latter, why should Americans be considered the globe’s leading experts in good government anymore?  And while we’re at it, fill me in on one other thing: Just what has convinced American officials in Afghanistan and the nation’s capital that they have the special ability to teach, prod, wheedle, bribe, or force Afghans to embark on good governance in their country if we can’t do it in Washington or Sacramento? (02/22/10)

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Cluster F%#k Nation — James Howard Kunstler writes: Future historians who try to chart the unraveling of the USA’s political tapestry might point to two events of the past week.  The obvious first one was the Tea Party convention at Nashville. It was held not accidentally at the ridiculous Opryland Hotel and resort in the city’s outer suburban asteroid belt, right next to the circumferential freeway, and next door to the defunct (1997) Opryland USA theme park, an attraction based on the cute idea that Tennessee rubes were too dumb to spell the word opera — so the symbolism was perfect.

Behind the incoherent cargo of conflicting complaints that makes up Tea Party doctrine — like “keeping the government’s hands off our medicare!” — stands the more basic dissolution of the Sunbelt’s miracle economy, along with the pain and bewilderment of the southern peckerwood political nexus that rose out of the dust after World War Two to build the suburban nirvana of universal air-conditioning, happy motoring, Jesus tub-thumping, over-eating, and Friday night football that defined Sunbelt culture. They sense now that history is about to thrust them back into the okra patch, with the hookworms and the chiggers, as the economy whirls down the drain, and the car dealerships close up, and the idle production homebuilders succumb to methedrine addiction, and the price of Reba McEntire tickets exceeds their dwindling resources, and they are none too happy about any of that.

Of course this Sunbelt political culture has tentacles and outposts all over the USA, wherever a few generations of laboring folk enjoyed debt-fueled parabolic rises in living standards during the cheap oil decades, and now find themselves in foreclosure hell, indentured to the very WalMarts that they welcomed with open arms (and allowed to destroy their local businesses) — and, of course, it’s yet another paradox that these are the same folk who will still defend the big box masters to their deaths. The America they stand for is a weird contradictory mish-mash of Confederate nostalgia, hyper-individualism that really owes allegiance to nothing, racial enmity, religious paranoia, and potemkin patriotism — especially involving anything in the constitution that allows them to wriggle out of obligations to the public interest at the same time that they get to push other groups of people around.

The Tea Party people are the corn-pone Nazis I have been warning you about. They are gathering strength in numbers as President Obama and congress fritter away their remaining legitimacy in a manner of governance that more and more resembles an endless Chinese Fire Drill. The delusional craziness of the Tea Partyists exists in direct proportion to the wimpy deceit of the government, especially in matters of money and statistics reporting. Our political leaders are resorting to wholesale deceit because the truth of our situation — comprehensive bankruptcy — is too painful to dwell on and for the most part they are too chicken too state it.

This brings me to the second telling event of last week when President Obama said, kind of off-hand, apropos of the US economic situation, “You don’t blow a bunch of cash on Vegas when you’re trying to save for college. You prioritize. You make tough choices.”  Senate Majority Leader Harry Reid (of Nevada) was all over Mr. Obama like a cheap suit for that. I’m sorry that the President didn’t slam back the craven Mr. Reid and pull his upper lip over the top of his head. Fuck Las Vegas and fuck Nevada, and fuck all the casino operators in every pulsating gambling venue around this country. The last thing we need is to continue believing that it is possible to get something for nothing, or an industry based on that false principle. I’d go a lot further and shut down legalized gambling all over the USA, send it back to the margins, to the alleys, to the berm between the WalMart and the Target Store, to the basement boiler rooms, to the public bathrooms, to wherever it will be identified as indecent, shameful, and not healthy. (02/09/10)

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CommUnity of Minds — Stoneleigh writes: People are increasingly collectively horrified at the extent of the fraud and corruption that lies at the heart of our financial and broader governance structures. They seem surprised, as if this were something new, when it has actually been growing in tandem with our credit hyper-expansion for decades. Corruption in complex systems never goes away, it merely waxes and wanes, and goes through phases where it is more or less visible.

During long manic periods, all manner of abuses occur, but no one notices while the party continues, because no one wants to notice. As long as people generally have access to easy credit and the illusory wealth effect it brings, they don’t ask hard questions and are largely oblivious to risk. Even if they lied on their own mortgage application, in order to qualify for a larger loan than they could really afford, and know others who did the same, they cannot seem to imagine what the consequences might one day be, both for themselves and for the financial system as a whole. To paraphrase one journalist who commented on the national pyramid bubble in Albania in the mid 1990s, when people feel they are operating within the bounds of properly structured criminality, they feel no personal responsibility and do not fear consequences.

Both the predators and the prey are complicit in the development of a mania. Predators lent money into existence without regard to risk, since they were selling that on to Wall Street investors through securitization. Just like those they preyed upon by actively enticing people into loans they could not afford, they turned a blind eye to the blatant lies on mortgage applications, inflated assessments and other fraudulent aspects of the developing bubble. They made their money through fees anyway, but did not contemplate the creation of systemic risk which would ultimately bring them down as well.

Both sides had an interest in the party continuing because it benefited them personally in the short term. The prey were insisting on being handed the empty bag, which is all that’s left at the height of a bubble, while the predators were only too pleased to oblige. Of the two, the predators were certainly in a better position to assess the situation and must be regarded as the more culpable party, but without the greed of the prey, the exploitation would not have been possible. (02/09/10)

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