(I recognize this diary is redundant after JD’s, but I thought it important to promote a woman’s perspective in specific response to this odious trial balloon. Sigh. No rest for the weary, I suppose… – promoted by odum)

upon hearing Lawrence Summers’ name was, “Oh for Christ’s sake! Summers is a fucking idiot!”

Hack is too nice a word. He is a shining example of excelling past one’s Peter Principle courtesy of the privileges of unearned wealth. He is the very embodiment of the vaunted moron who achieves undeserved status simply because Daddy was able to pay full fare for his trip through the Ivy Leagues. He’s just like the rest of the extraordinary dullards whose “brilliant” financial “skills” have brought the world to its knees with the ponzi scheme to beat all ponzi schemes.

His prejudices about women and minorities got him booted from the hallowed halls of Hahvahd. His lack of ability to do even the most rudimentary critical thinking about monetary policy and the long term side effects thereof is legend.

My follow-up reaction to the short list was feeling my heart sink to the bottom of my stomach when I realized the entire list comprises such fools. They all either helped architect the financial massacre, or are sympathetic to the precepts and people who got us here.

If any one (or any combination) of them is tasked with bringing our death-spiraling world economy out of its tailspin, we, the “human element” will remain destitute for a whole lot longer than necessary – many years, in fact.

If these idiots are put in charge, we’ll probably only get out from under the train-wreck through brute force after food and fuel shortages combined with a complete lack of basic medical care kill enough people that the remainder are finally left to choose between violent death through fighting for justice and sustenance, or slow death through starvation.

I’m not kidding.

One need not look any further than any 3rd world country that has been subject to the “aid” of the economic hit men running the IMF and World Bank for examples.

The IMF has done a “Chapter 14 Consultation” for the US, and recommended austerity measures, couched in “reasonable” sounding terms: like ending “unsustainable social programs” and stabilizing the housing and financial industries.

We are deep, deep in the woods, and the wolves are circling.

If he chooses wrong, our President-elect will be handing them all a great big EZ-READ map so they can find us that much more easily.

I’ll reserve judgment … until the day my child goes to bed hungry because we can’t get or afford food, and it’s clear that that most subsequent days will be similar. Then I will sharpen up the tines on the pitchfork, light the torch, and call for their heads.

I hope the President-elect chooses a different course.

In response to the old canard that

He was making the valid scientific point that when considering explanations for how to explain the disproprotionate success of men in the sciences all possible explanations need to be on the table.

My reply:

He was asked to be provocative, but he didn’t simply make some offhand remarks, he did research and presented it. Pardon the long quote, but it’s the whole crux of his argument:

It does appear that on many, many different human attributes-height, weight, propensity for criminality, overall IQ, mathematical ability, scientific ability-there is relatively clear evidence that whatever the difference in means-which can be debated-there is a difference in the standard deviation, and variability of a male and a female population. And that is true with respect to attributes that are and are not plausibly, culturally determined. If one supposes, as I think is reasonable, that if one is talking about physicists at a top twenty-five research university, one is not talking about people who are two standard deviations above the mean. And perhaps it’s not even talking about somebody who is three standard deviations above the mean. But it’s talking about people who are three and a half, four standard deviations above the mean in the one in 5,000, one in 10,000 class. Even small differences in the standard deviation will translate into very large differences in the available pool substantially out. I did a very crude calculation, which I’m sure was wrong and certainly was unsubtle, twenty different ways. I looked at the Xie and Shauman paper-looked at the book, rather-looked at the evidence on the sex ratios in the top 5% of twelfth graders. If you look at those-they’re all over the map, depends on which test, whether it’s math, or science, and so forth-but 50% women, one woman for every two men, would be a high-end estimate from their estimates. From that, you can back out a difference in the implied standard deviations that works out to be about 20%. And from that, you can work out the difference out several standard deviations. If you do that calculation-and I have no reason to think that it couldn’t be refined in a hundred ways-you get five to one, at the high end. Now, it’s pointed out by one of the papers at this conference that these tests are not a very good measure and are not highly predictive with respect to people’s ability to do that. And that’s absolutely right. But I don’t think that resolves the issue at all. Because if my reading of the data is right-it’s something people can argue about-that there are some systematic differences in variability in different populations, then whatever the set of attributes are that are precisely defined to correlate with being an aeronautical engineer at MIT or being a chemist at Berkeley, those are probably different in their standard deviations as well. So my sense is that the unfortunate truth-I would far prefer to believe something else, because it would be easier to address what is surely a serious social problem if something else were true-is that the combination of the high-powered job hypothesis and the differing variances probably explains a fair amount of this problem.

Or in English:

He calculated that there is a 5 – 1 ratio of men to women who have the highest aptitude levels for the skills required for the math-heavy fields, such as physics, chemistry, and economics.

He outright dismisses cultural effects and biased testing, despite the research presented at the same conference showing that both were significant.

He presented lack of aptitude as one of the 3 reasons women don’t excel: Lack of willingness to work hard enough, lack of high end aptitude, and cultural influences pushing girls away from the sciences.

– He admitted that requiring insane hours for advancement (80 hrs/wk) could be considered a bad thing.

– He dismissed cultural effects and testing bias by claiming that they were really reflections of genetic abilities – outright dismissing boatloads of studies to the contrary, some of which had been presented earlier at the same conference.

– He focused his lecture on the concept that when you get further and further out from the norm (heading higher up the scale) on aptitude test results, the pool of women shrinks due to an innate genetic lack of aptitude. Once again, this is despite study after study showing that the tests were poorly designed and inaccurate.

There’s no defense.

Read the Q & A session for more, but here’s one telling bit:

Q: You know, in the spirit of speaking truth to power, I’m not an expert in this area but a lot of people in the room are, and they’ve written a lot of papers in here that address ….

LHS: I’ve read a lot of them.

Q: And, you know, a lot of us would disagree with your hypotheses and your premises…

LHS: Fair enough.

Q: So it’s not so clear.

LHS: It’s not clear at all. I think I said it wasn’t clear. I was giving you my best guess but I hope we could argue on the basis of as much evidence as we can marshal.

Q: It’s here.

LHS: No, no, no. Let me say. I have actually read that and I’m not saying there aren’t rooms to debate this in, but if somebody, but with the greatest respect-I think there’s an enormous amount one can learn from the papers in this conference and from those two books-but if somebody thinks that there is proof in these two books, that these phenomenon are caused by something else, I guess I would very respectfully have to disagree very very strongly with that. I don’t presume to have proved any view that I expressed here, but if you think there is proof for an alternative theory, I’d want you to be hesitant about that.

The response to that included:

And it does.  I’m sorry if it rankles.  I spent a lot of time really wanting to prove to myself that the differences are all cultural.  But I can’t persuade myself that it’s scientifically responsible to just assume that it’s all cultural.  When it comes to the narrow question of whether men are more likely to be mathematical geniuses, I have to say it’s entirely possible that they are.  Doesn’t mean we shouldn’t make room for the women who also happen to be mathematical geniuses.  

I responded with actual info, rather than, you know, a personal attempt to prove to myself that my wishful thinking could be true:

ONLY the SAT-M shows a difference in the tail, implying that it’s gender bias in the testing.

Long term studies of male and female children, including studies focused specifically on the high end of the tail show that there is NO difference.

Although boys outnumbered girls at the upper tail of the SAT-M, the SMPY girls got better grades in high school mathematics, as they have in less selected samples. In college, male and female SMPY veterans continued to take equally demanding classes and got equally good grades, as do college women and men generally. They also graduated at equal rates and obtained an equal number of doctoral degrees (Lubinski & Benbow, 1992; Lubinski et al., 2001; Webb et al., 2002)

In one SMPY cohort, for example, 10.3% of men and 9.7% of women received bachelor’s degrees in mathematics, and 2.2% of men and 2.1% of women went on to receive master’s degrees in mathematics (Benbow, Lubinski, Shea, & Eftekhari-Sanjani, 2000).

…

The conclusion from these findings is clear. Although most SMPY students with high scores on the SAT-M are male, male and female veterans of that program learn advanced mathematics at equal rates and with equal success. If one gauges students’ talent at mathematics by their successful mastery of the demanding material required of college mathematics majors, one will conclude that men and women have equal aptitude for mathematics, not only in the general population of college students but in selected samples of students with high talent.

…

If the genetic contribution were strong, however, then males should predominate at the upper tail of performance in all countries and at all times, and the male-female ratio should be of comparable size across different samples. Contrary to this prediction, the preponderance of high-scoring males is far smaller in some countries (e.g., Deary et al., 2003) and altogether absent in others (Feingold, 1994). Moreover, the preponderance of boys with high scores on the SAT-M has declined substantially in U.S. samples. In one sample of students selected for high talent, it declined from 10.7:1 in the 1980s to 2.8:1 in the 1990s (Goldstein & Stocking, 1994).

Just as the Bell Curve attempted to gloss over racism with pseudo science, Summers and his defenders have tried to paper over gender discrimination with the same worn out the eugenic arguments.

From the standpoint of intelligence, aptitude, etc., the female “bell” is is just as wide as the male “bell.”

I am sick and tired of people making excuses for discrimination, just because the discriminator has a “name” and likes to promote cherry-picked data to support the discriminatory claim.

Summers is a prejudiced old dolt and needs to be kept far away from any position that will influence policy.

Or maybe he went out with a bank…

A young man named Andrew Lahde decided one day that he wanted to get rich. So at the end of 2006, he set up a hedge fund whose sole purpose was to bet against the subprime mortgage market. He knew that the market was looking shaky, and it would only be a matter of time before it collapsed, so he decided to charge other people tons of money to short the mortgage industry.

When he decided he had made enough money, he shut down the fund. I’m guessing the fed shutting off short sales probably was the real impetus, but that’s not the real story.

The real story is the way he laid bare the corruption and idiocy of those who were considered the brilliant financiers who ran the entire world’s economy into the ground.

In his retirement letter, he didn’t simply burn every bridge he ever built, he blew them up in one of the most spectacular and incendiary conflagrations of all time.

The full letter is over the fold, but here’s a tasty excerpt:

I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.

I’ve seen employees go out with a bang. I’ve seen name-calling, blame-shifting, and all sorts of bad behavior on the part of people leaving their current employer, but I’ve NEVER seen anything as bold (or stupid) as this.

Luckily for Mr. Lahde, he’s got enough millions in his pocket to be able to not give a damn for the rest of his life, thus he took advantage of the opportunity to tell the emperor exactly what he can do with his new clothes:

Today I write not to gloat. Given the pain that nearly everyone is experiencing, that would be entirely inappropriate. Nor am I writing to make further predictions, as most of my forecasts in previous letters have unfolded or are in the process of unfolding. Instead, I am writing to say goodbye.

Recently, on the front page of Section C of the Wall Street Journal, a hedge fund manager who was also closing up shop (a $300 million fund), was quoted as saying, “What I have learned about the hedge fund business is that I hate it.” I could not agree more with that statement. I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.

There are far too many people for me to sincerely thank for my success. However, I do not want to sound like a Hollywood actor accepting an award. The money was reward enough. Furthermore, the endless list those deserving thanks know who they are.

I will no longer manage money for other people or institutions. I have enough of my own wealth to manage. Some people, who think they have arrived at a reasonable estimate of my net worth, might be surprised that I would call it quits with such a small war chest. That is fine; I am content with my rewards. Moreover, I will let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck. Appointments back to back, booked solid for the next three months, they look forward to their two week vacation in January during which they will likely be glued to their Blackberries or other such devices. What is the point? They will all be forgotten in fifty years anyway. Steve Balmer, Steven Cohen, and Larry Ellison will all be forgotten. I do not understand the legacy thing. Nearly everyone will be forgotten. Give up on leaving your mark. Throw the Blackberry away and enjoy life.

So this is it. With all due respect, I am dropping out. Please do not expect any type of reply to emails or voicemails within normal time frames or at all. Andy Springer and his company will be handling the dissolution of the fund. And don’t worry about my employees, they were always employed by Mr. Springer’s company and only one (who has been well-rewarded) will lose his job.

I have no interest in any deals in which anyone would like me to participate. I truly do not have a strong opinion about any market right now, other than to say that things will continue to get worse for some time, probably years. I am content sitting on the sidelines and waiting. After all, sitting and waiting is how we made money from the subprime debacle. I now have time to repair my health, which was destroyed by the stress I layered onto myself over the past two years, as well as my entire life — where I had to compete for spaces in universities and graduate schools, jobs and assets under management — with those who had all the advantages (rich parents) that I did not. May meritocracy be part of a new form of government, which needs to be established.

On the issue of the U.S. Government, I would like to make a modest proposal. First, I point out the obvious flaws, whereby legislation was repeatedly brought forth to Congress over the past eight years, which would have reigned in the predatory lending practices of now mostly defunct institutions. These institutions regularly filled the coffers of both parties in return for voting down all of this legislation designed to protect the common citizen. This is an outrage, yet no one seems to know or care about it. Since Thomas Jefferson and Adam Smith passed, I would argue that there has been a dearth of worthy philosophers in this country, at least ones focused on improving government.

Capitalism worked for two hundred years, but times change, and systems become corrupt. George Soros, a man of staggering wealth, has stated that he would like to be remembered as a philosopher. My suggestion is that this great man start and sponsor a forum for great minds to come together to create a new system of government that truly represents the common man’s interest, while at the same time creating rewards great enough to attract the best and brightest minds to serve in government roles without having to rely on corruption to further their interests or lifestyles. This forum could be similar to the one used to create the operating system, Linux, which competes with Microsoft’s near monopoly. I believe there is an answer, but for now the system is clearly broken.

Lastly, while I still have an audience, I would like to bring attention to an alternative food and energy source. You won’t see it included in BP’s, “Feel good. We are working on sustainable solutions,” television commercials, nor is it mentioned in ADM’s similar commercials. But hemp has been used for at least 5,000 years for cloth and food, as well as just about everything that is produced from petroleum products. Hemp is not marijuana and vice versa. Hemp is the male plant and it grows like a weed, hence the slang term. The original American flag was made of hemp fiber and our Constitution was printed on paper made of hemp. It was used as recently as World War II by the U.S. Government, and then promptly made illegal after the war was won. At a time when rhetoric is flying about becoming more self-sufficient in terms of energy, why is it illegal to grow this plant in this country?

Ah, the female. The evil female plant — marijuana. It gets you high, it makes you laugh, it does not produce a hangover. Unlike alcohol, it does not result in bar fights or wife beating. So, why is this innocuous plant illegal? Is it a gateway drug? No, that would be alcohol, which is so heavily advertised in this country. My only conclusion as to why it is illegal, is that Corporate America, which owns Congress, would rather sell you Paxil, Zoloft, Xanax and other additive drugs, than allow you to grow a plant in your home without some of the profits going into their coffers. This policy is ludicrous. It has surely contributed to our dependency on foreign energy sources. Our policies have other countries literally laughing at our stupidity, most notably Canada, as well as several European nations (both Eastern and Western). You would not know this by paying attention to U.S. media sources though, as they tend not to elaborate on who is laughing at the United States this week. Please people, let’s stop the rhetoric and start thinking about how we can truly become self-sufficient.

With that I say good-bye and good luck.

All the best,

Andrew Lahde

When their credit runs out, the game will stop. – Marriner Eccles, Chairman of the Federal Reserve, 1931 – 1934

I just watched the movie “Maxed Out.”

It’s worth a watch. It describes the real game behind the credit industry. The people they like most are the people who have “a taste for credit.” These are people who will run up and continue to hold a balance on their cards.

Their absolute favorite credit tasters: people who have filed bankruptcy.  They’re the best targets because they can’t declare bankruptcy again for years, so they’ll have to keep paying any credit they take on (even if it’s for something like life-saving medical procedures) until either they die or they can file again several years down the road.

Suicide isn’t entirely uncommon among those who get into serious debt.

Interviews included two women whose college-aged children hanged themselves over credit card debt.

These moms discussed the day they testified before Congress. The day they sat behind a bunch of banking industry bigwigs, who spoke of how much money they’d each donated to the very people who were conducting the hearing. The day they realized that no one would vote to ban the sales of credit cards to unemployed 18 year-old college students. Their dead children still receive solicitations for credit cards.

The title is a rhetorical question. For those who don’t know the answer: it’s not.

There are so many reasons that it couldn’t possibly work that it would take an entire encyclopedia’s worth of dead trees to describe it. I’m not even going to try right now. I’m just here to vent. We’ve been had and I’m furious, because it could have been prevented.

Oct. 6 (Bloomberg) — U.S. stocks dropped, driving the Dow Jones Industrial Average below 10,000 for the first time in four years, after bank bailouts in Europe widened and commodities companies tumbled on concern global growth is slowing.

Equities tumbled around the globe, with trading in Russia and Brazil halted due to losses. Goldman Sachs Group Inc., Morgan Stanley and Bank of America Corp. fell more than 6.3 percent after the German government led a bailout of commercial-property lender Hypo Real Estate Holding AG and BNP Paribas SA bought Fortis’s Belgium bank. ConocoPhillips slid 7.3 percent as oil traded below $90 a barrel, sending the Standard & Poor’s 500 Energy Index to a 21-month low.

More after the fold…

Last week, America blinked. Faced with one of the most terrifying crises to face our nation – and our world – in close to 100 years, we blinked.

And now, we will not only slide into economic depression, we will do so in a world where the people we elect to represent us, whose constitutional role is to handle the budget, will have NO CONTROL OVER THE MONEY.

They sat there at the poker table last week, and blinked. They went all-in, then folded.

Now the other guy’s bluff has been exposed. The entire world’s economy was as ephemeral as spider silk in a hurricane, and there’s a foul wind a-blowin’.

The thugs with the crow-bars and cement overshoes who stopped by for a “friendly” visit: “Nice economy ya’ got heyah. Be a real shame if anything was tuh happen to it…” were given unfettered control over all our money, in exchange for a false promise of protection.

Really, I’ve got to give the thugs credit. For a bunch of [expletive] idiots, they’re pretty damn clever when it comes to hoodwinking the rubes on Capitol Hill.

The sad thing is that their hoodwinking method is a wide-open “secret.”  They write up some undemocratic shit they want to pass, then either wait for, or gin up, an OMG CRISIS! and use it as an excuse to ram-rod through a policy that sounds like it would make us “safer,” but that on closer examination just rips us off – stealing our rights and/or our money.

As the kids would say, we’ve been PWNED.

In yesterday’s installment, we drove around the world on dollar bills.

Today we’re going to play 2 more games: “Barrel Full o’ Dollars” and “One of These Days, Alice!”

Let’s start with the easy one.

Go get all the money you have in your house – dollar bills, pennies, whatever. Do me a favor and bring the coins to the bank and get ’em changed into bills – they get heavy. As a matter of fact, get everything converted into singles. Get everyone in your family to do the same.

Count that money.

Let’s say you have 100 dollars. Keep $7 of it, and put the other $93 into that big red wheelbarrow I’ve conveniently placed by your front door.

OK, I’m now taking the wheelbarrow to your neighbor’s house, and waiting while he does the same thing. Then to the next house, and so on. If I pass any homeless people, I’m taking their money, too. Ditto for apartment dwellers.

Done.

I’ve now got the biggest wheelbarrow to ever grace the face of the Earth. It’s REALLY big. This wheelbarrow is more than 250 feet wide, 200 feet deep, and 450 feet tall – plus a little extra for the handles and wheel.

Being about the size of a NYC block full ‘o skyscrapers, it’s a bit tipsy. Next time I’ll get one that’s wider and not so tall, and maybe add some more wheels…

There are 300 million people in the US, and I just took almost every penny they had – $0.93 from every $1. If everyone in the your family combines what’s left (unless you’re one of the homeless folks), you may be able to squeeze a nice last dinner out of the remainder.

What I took is $700,000,000,000.

Does that number look familiar?

It’s the amount being asked for in the bailout. Ironically, it turns out that there is currently $750,000,000,000 in circulation as cash in our economy.

Of course, since that $700,000,000,000 is a moving window, I should have taken the rest of your cash – because it will be taken as soon as the treasury gets around to it after the first round of bailing.

One interesting thing to note about the chart – it’s hard to see, but between roughly 1992 and 1999 there was a little bit of a plateau in the printing of money – it slowed a bit.

Then it skyrocketed again.

This means a couple of things – the treasury is using a LOT of ink (barrels full), and the “stable” stock market has actually been losing value due to inflation (let’s pretend it didn’t take a bath last week).

The stock market has been hovering around the same level for the entire Bush administration. Sometimes it spikes higher, sometimes it drops lower, but generally it stays in the same neighborhood. Maybe it has agoraphobia?

Anyway, the Dow, for example, has been somewhere around $10,000. It’s a nice round number to work with, so let’s use it.

If on November 2, 2000, you invested $10,000 in a fund that holds all 30 stocks traded on the Dow Jones, today you’d have had roughly $10,080 with little bumps up and down for the last 8 years.

Or would you? See, the Dow’s value isn’t listed in inflation-adjusted dollars.

That $10,000 in the Dow in 2008 is worth $7,860 year 2000 dollars. You’ve lost $2,140 in purchasing power. Oops!

But enough of that. I’m ready for a new Apollo Project…

Yesterday I mentioned the $10,000,000,000,000 (ten trillion) dollars of bets known as over-the-counter derivatives. They are in trouble, because an awful lot of these bets were bets that housing values would continue to go up. Then housing prices went down. So now a very large percentage of those bets went in favor of the house, and the bettors don’t have the cash to pay off their bookies.

Well, the casino has another cool game that became all the rage in the last few years: CDSs – Credit Default Swaps. You can kind of figure out their purpose from their name: If you give someone credit, and they default, you can swap it for something else. It’s insurance on debt – if the debt goes bad, the folks you bought the insurance from will make it up to you.

So say you loan your brother $10 and he doesn’t pay you back. If you bought a CDS at the same time, then the folks you bought the CDS from will pay you something equivalent to $10. (It may not be actual dollars, it could be some bonds, or something else of equivalent value.)

So let’s say that every time anyone who knew about this “insurance” bought insurance every time they issued or purchased debt, debt like the mortgage sludge on the merry-go-round, debt like municipal bonds, debt like credit card debt or car loans. Really, any debt instrument at all.

How much money in these CDS insurance policies would be floating around out there?

I’ll give you a hint: $62,000,000,000,000 ($62 trillion).

If you took each of those dollar bills and taped them together end-to-end, you could make a dollar bill rope 31,000,000,000,000 feet long (31 trillion – note: I’ve chopped .14″ off each bill to make them an even 6″). I’ll make it double-thickness, so it’ll be nice and sturdy. Now it’s only 15,500,000,000 (15.5 trillion) feet long.

I don’t know if you recall, but a few years ago, Bush proposed sending a manned space-craft to Mars. The moon had worked out so well for Kennedy, he figured that he’d be even MORE popular if he got someone to Mars, which is much further away (120 million miles). Apparently, Bush didn’t “get” that the whole purpose of the moon mission was to perfect the ability to get a rocket out of the atmosphere and back into the atmosphere – which would be necessary for long-range warheads. Sadly for Bush, going to Mars would do exactly nothing to further any technological needs, so no one wanted to do it – not even NASA… But I digress.

Since there’s no useful technological purpose to sending a manned rocket to Mars, we may as well save the rocket fuel.

Let’s get a Mars rover to tape one end of our double-thickness $62,000,000,000,000 rope to Mars.

The only problem: the rope would be WAAAAY too long. We could make 129 ropes that stretched all the way from Earth to Mars, and have a whole bunch left over.

Back to the Credit Default Swaps:

Every time a debt goes bad, someone is owed a piece of that 15-trillion foot long double-thick rope.

The 15-trillion foot long double-thick rope is not sitting in a bank vault (or even several thousand bank vaults) ready to be paid out if something goes wrong. As a matter of fact, most of it doesn’t even exist (remember there’s only one-bailout’s worth of actual printed cash in the entire economy).

It’s just a promise. A handshake. A deal between two people.

And now a lot of debts are going bad. Houses. Car loans. Credit Cards.

People are losing their ability to pay, and they’re defaulting in record numbers. Heck, an entire city recently declared bankruptcy.

Be sure to savor that meal you bought with your last $7.

Congresswoman Marcy Kaptur took only 5 minutes to describe the administration’s shell game, propose a solution that protects the American people and call for an independent counsel to investigate the architects of this colossal economic failure:

Oddly, she seems disinclined to give the architects of failure a building permit for more failure.

I like her proposal. A lot.

These people created the “$10 trillion global over-the-counter credit derivatives market.” $10,000,000,000,000,000 is a lot of money. It’s a whole lot more than $700,000,000,000. Here, I’ll line them up so you can see the difference:

700,000,000,000

10,000,000,000,000

Notice those extra zeroes? Not really impressive when you see it that way. Hmmm…

How about this:

If you had a 4″ stack of $1 bills, you’d have a million dollars. Imagine what you could buy with a million dollars!

Now, if you had a billion dollars, that stack would be 47.35 miles high. Your arm would get really tired.

If you stood all those $1 bills on their sides and packed them together, you could drive from Burlington to Montpelier and half way back without driving over the same bill twice.

Imagine how many bridges we could replace with all those $1 bills!

Now for the bailout: if you had 700 billion dollars in $1 bills, you could do two round-trips from Burlington, VT to Washington, DC on them, and still have enough left to make a few side trips to Allentown, PA (in case you wanted to see some abandoned steel mills), or a one-way trip to Boston, MA!

That’s just for the proposed bailout’s first installment or $700 billion dollars (remember, it’s a floating window. They can keep spending, but there can only be $700 billion outstanding at one time – so they sell something, pay back a part of the $700 billion, then turn around and buy something else to bring the total back up to $700 billion – it’s like a magical refilling debit card).

Now back to that $10 trillion dollars in voodoo they call “over-the-counter derivatives.” That’s the bailout times 14.29. You could drive around the earth 19 times on those $1 bills, plus a couple dozen side trips to Montpelier.

Most of those “derivatives” are really just bets that the value of mortgages would continue to go up.

But the bets weren’t placed against actual individual mortgages. Instead they were placed on collateralized mortgages. To collateralize mortgages, you take all the mortgages held by your bank, and toss them into a giant mortgage Cuisinart.

It doesn’t matter if the mortgage is good, bad, whatever – in it goes. The output is then divided up into “bad,” “not so bad,” and “looks good to me” batches, then those batches are sold off to the highest bidder.

The derivatives folks didn’t really want to buy the things, they only wanted to place a bet on the future value. Someone else owns the actual mortgage sludge, these guys simply own the right to make a profit if a buyer pays more for the sludge than the guy who bought it before them.

The sludge is passed around from investment bank to investment bank over and over: it’s a little merry-go-round o’ sludge. And the derivatives market places bets, takes profits, and everyone’s happy.

Until the day that someone says, “Gee, I don’t think this batch of sludge is worth that much. If you want me to take it off your hands, I’m only going to pay this much.”

Now all those bettors, who were betting on the value to go up owe their bookies. But see, the bets had very long odds. So now they owe their bookies a LOT. Like kajillions of dollars.

Sadly, between the derivatives, actual mortgages, CDOs, insurance swaps, and all the other weird unregulated debt vehicles the financial industry has created over the last decade or so, the amount owed is greater than the entire value of all the treasuries on the planet.

Oops.

It might not be so bad, if the bettors were just a bunch of numb-skulls betting their own money.

But they weren’t. They were investment banks. And they bet our money. Our pension plans, our 401ks, our municipal investment accounts, our IRAs, our CDs. Just about anything that had dollar signs attached was used as the downpayment, with the expectation of large returns.

Now the returns have dried up. And the stuff that’s been promised as collateral … well it doesn’t actually belong to the bettors. And the amount owed doesn’t actually exist on the planet – even if you put every penny from every treasury on the line.

This means someone’s taking a hit.

A really big hit.

And the bettors want it to be us.

And they’ve come up with all these reasons why it’s our fault. After all, we took out the mortgages on the houses whose values kept rising, enticing them to make the bets with the money they were holding in trust for us.

So they want us to refill their pockets with a portion of the money that is owed, so they can quickly pay off their bookie and only get knee-capped instead of being fitted for cement overshoes.

And they want to do it behind closed doors, so we can’t see that even after they pay off their bookies with enough $1 bills that you could drive back and forth from Burlington to DC twice (with side trips to Allentown) without touching the same bill twice, they will still owe enough tightly-packed $1 bills standing on their sides to travel around the world roughly 18.8 times (you’d only end up 4,980 miles from home on that final trip – which is only 700 miles longer from a trip to Wasilla, Alaska!).

Buckle Up, and Enjoy the Drive!

[UPDATE: I dug up the source for the original math – they’d made a boo-boo. So I went to a school web site and downloaded this PDF File and did my own math.

I also clarified that the derivatives are only one piece of the big pile of crud that exceeds the total money actually extant on the planet. Sadly, we’re still in very, very deep doo-doo. Certainly deeper than we’re going to get out of with a silly little $700,000,000,000 bailout, even if it’s a moving window.]

[Cross Posted from DailyKos, with permission. I’m putting this here so, as we head into home heating season and the drumbeats for action increase in both intensity and speed, we’ll all have an understanding of exactly how little offshore drilling will do.

Credit to Get Energy Smart Now ]

During the Republican primaries, John McCain fell in Michigan, in part because he was living in reality when it came to Global Warming rhetoric, a reality uncomfortable for the flat-earth, reality-denying wing of the Republican party. Come this November, McCain doesn’t plan to make the same mistake. The Palin-McCain campaign’s latest ad is, not surprisingly, dishonest on multiple levels and offers ugly prospects for the future. The Palin-McCain Lying Ad is, well, despicable.

This ad is about “jobs” for Michigan, a state under great (and continuing) pressure. The ad deceptively links McCain to Obama theme like “reform” and “change”.

[more below the fold]

Let us take a moment to consider just one sentence:

“Offshore drilling to reduce the price of gas to spur truck sales.”

How many times does it need to be said? Offshore drilling is, at best, a 1 cent, 1 percent solution 20 years off to the question of gasoline prices.  According to Department of Energy analysis, offshore drilling would:

1. Lead to a 1.2 cent reduction in gasoline prices.
2. Provide 1 percent of today’s US oil demand and 0.25 percent of global demand (about 200,000 barrels per day of production compared to 20 million barrels/day of US demand and global demand (over 80 million barrels / day)
3. Do this by 2030 …

Yes, a 1 cent, 1 percent solution, 20 years from now would “spur truck sales”.

How can anyone take the Palin-McCain campaign seriously?

The Sierra Club has weighed in … strongly. This press release merits quotation in full:

“This ad is so full of lies, deceptions, and failed approaches to our energy and economic problems, it’s hard to know where to start.  Michiganders are smart enough to see through the lies and simple-minded pandering in this ad.  They know we need a real plan, real change, and that we need a candidate who understands our energy and economic crises.  This ad is further proof that John McCain just doesn’t get it and doesn’t have the kind of plan that Michigan—and America—needs.  

“The Sierra Club understand that times are tough in Michigan and that the automakers need help.  We support government loans to help the automakers if they are willing to make the kind of real, fleet-wide improvements in fuel economy that will help consumers spend less on gas and help reduce our dangerous dependence on oil.  And what the ad doesn’t tell you is that McCain opposed helping the automakers and only changed his mind once he started to slip in the polls in Michigan.

“John McCain says that the solution to Detroit’s woes is to have lower gas prices so they can sell more trucks.  Unfortunately, McCain’s drilling plan won’t lower prices and selling more trucks won’t help Detroit solve its problems in the long-run—but it will increase our addiction to oil. Michiganders know that relying too heavily on gas-guzzling trucks and SUVs is what got the auto industry into this mess in the first place and that’s why they want help building the next generation of fuel-efficient vehicles.  This is just one more example of John McCain’s backward-looking, outdated approach to America’s most pressing problems.

“Barack Obama has a real plan to invest $150 billion in the clean energy technologies we need.  That includes giving the auto industry the help they need to double fuel economy and make the next generation of fuel-efficient vehicles here in America.  

“Instead of a real plan, John McCain wants to run the economy like a game show full of misguided gimmicks like a $300 million prize for car batteries and the widely denounced gas tax holiday.  

“It’s shameful that the McCain campaign continues to repeat the completely discredited claim that more offshore drilling will lower gas prices.  This is the second ad just this week to do so.  Even the Bush administration admits that drilling won’t lower gas prices. It’s time for McCain and his campaign to start being honest with the American public about his energy plans.”

NOTE:  An excellent graphic from Architecture2030 to illustrate the volume impact. (Note that the total figures here are quite low. Current US consumption is 20 million barrels per day, not 15 …)

This is defined as “US oil consumption” and you will see that we are at about 15 million barrels / day in the chart.  The problem: The United States is using more than 20 million barrels per day.  (According to the Energy Information Administration,   “20,680,000 barrels per day” is their current statement as to US use.) It looks as if Architecture2030 used the 70% of US oil use that is dedicated to transportation rather than the total petroleum product use.  This graphic is, actually, overstating the impact of the 200,000 barrels/day since they are showing current and projected demand about 1/3rd lower than what the Energy Information Administration shows.   Even so, it clearly shows how this is about a 1 percent solution, decades into the future.

The news blackout is now being called a brownout. Some outlets are sort of covering the davastation caused by Ike, but once again, they are focused on Houston and Galveston, and are largely ignoring the places that were actually hit by the brunt of the storm.

Like Chrystal City. The AP got some good shots, like these two:

 

People have been submitting whatever photos they can find to the site http://jakeabby.com. It’s worth a look. If you want to see what people face in these smaller communities in Ike’s wake.

Google Earth turns out to be a powerful tool for determining what these communities look like pre-and post Ike:

Once again, the old media have left actual reporting to the new media. Unfortunately, not everyone knows how to find the news in the new media, and the new media isn’t dumped straight into people’s living rooms in full color and surround sound on a near-constant basis.

So people still think Ike wasn’t so bad after all.

But it was. It just wasn’t bad enough in the right places.

The “official” body count is now 22. This is DOWN by 28 from 2 days ago (I guess there’s some pretty powerful mojo down Texas-way if they’re now resurrecting the dead.) Did Sarah Palin get her witch-hunting pastor to do some laying on of the hands to a few corpses, or is someone lying?

We know that tens of thousands of people chose to ride out the storm, since it was “only” a cat 2 hurricane. Unfortunately, it was a cat 2 with a storm surge similar in height, and with greater breadth than the one that hit Sri Lanka a few years ago.

The number of missing persons is astronomical. Once quote I read somewhere (no link, sorry, I don’t remember where I saw it) was from a rescue worker surprised at how few people – living or dead – they found when they first got there.

It’s also a bit disconcerting that a lion was on the loose in all this.



[photo AP]

I’m pretty sure I would not want to find myself sharing open space with a lion under any circumstances. And I hope, deeply, that the occupant of the sleeping bag in the photo was long gone before the lion decided to amble into the church.

All the news reports say that Hurricane Ike wasn’t so bad after all. It headed a bit north and east, so it didn’t make a direct hit on Galveston and Houston, as originally feared. So, luckily, nothing bad happened. Please move along now.  Did we mention Lipstick?

Below the fold are a few videos from one town. One former town. Chrystal Beach, TX, on the northern end of the Bolivar Peninsula.

There’s a 2000ft no-fly zone, killing the news cycle from the air. Luckily, we still have the Coast Guard and small cameras. The next time, I’m sure they’ll have their cameras confiscated upon landing.

I don’t have a lot to say, because the videos really do say it all. Another community drowned. Another hurricane that may provide a clue as to what global warming has in store for us.  Another bungled aftermath by the republicans whose goal seems to be “Government that Does Less and Fails More.”

cross posted from here

Overflight, looking for people in need of rescue:

A rescue (7+ minutes long):

Damage Survey Flight Pt 1:

Damage Survey Flight Pt 2:

And the one repetetive clip that replayed forever on CNN:

As winter approaches, and we appear to be faced with more climate weirdness – this year in the form of colder, wetter weather in the north country – people around the state are starting to fill in for the failures of our republican governor and president with local community action.

One example: next month there will be an energy festival in Bradford.

“We are all becoming alarmed about the high costs of heating oil and gasoline prices, affecting both our pocket books and our environment,” said Bradford Energy Committee co-chair Sandy Price. “We know there are alternatives to petroleum out there, and interest is definitely building in our community to find other ways to meet our energy needs, in our homes, our businesses and in all areas of our daily lives,” she said.

Details are below the fold.

This is a model that can be repeated throughout the state to help ordinary Vermonters figure out how to cope this winter.

I have to call attention to one tidbit that caught my eye: there will be valet bicycle parking! How cool is that? Plus the first 50 bicyclists to arrive at the fair will receive a free tote bag.

How are other communities planning to handle the coming winter? Are there cool projects planned in your neck of the woods? Please share!

In Bradford, the energy committee, conservation committee, local residents and businesses joined together to try to help the local community face the coming winter. From their efforts, they’ve created the 1st Annual Local Energy Alternatives Festival (LEAF).

Where: The LEAF event will take place throughout downtown Bradford, VT: all along Main Street, in the Bradford Academy building, in the Old Church Community Theater, and at Denny Park.

When: Saturday, October 4, 8:30 a.m. to 4:30 p.m., rain or shine.

Free and open to the public

Organizers you will learn how to reduce your use of petroleum and increase your consumption of locally made products and food – which will save on energy costs, help family farms, and help save jobs in the local economy.

There will be workshops about the basics of solar hot water and electricity; efficient wood heating; home heating safety; sustainable living; building a greenhouse to generate heat and year-round food; and preparing and preserving natural foods. There will be a farmer’s market featuring locally grown foods and local crafts.

Debra Sachs will speak at 10:00 a.m. on the Bradford Academy stage. Sachs is the Executive Director of the Alliance for Climate Action in Burlington, Vermont; past President of the Vermont Planners Association in Montpelier; past Director of the Alliance for Climate Action in Burlington; and co-author of the 2006 Energy and Climate Action Guide. She speaks frequently around New England about energy issues and the environment.

Two “solar” tours will showcase local homes and businesses that use alternative energy sources for electricity and hot water – one tour in the morning and one in the afternoon. To save energy, visitors are encouraged to sign up for one of the two bus rides to the sites rather than driving separately.

People able to do so are encouraged to bike to the festival – the first 50 bicyclists will receive a free tote bag donated by Hills 5 & 10 of Bradford.  Valet bicycle parking will be provided by the Bradford Parks & Recreation Commission in conjunction with the Vermont Bicycle and Pedestrian Coalition.

A short movie will be shown several times in The Old Church Theater: The Story of Stuff is an entertaining, 15-minute animated film that explains why we cannot buy our way out of our environmental problems.

A complete schedule will be available at the festival.

LEAF is funded by the Bradford Conservation Commission with support from the Byrne Foundation and the Corinth Conservation Commission.  

Booth space is available for energy vendors, local artisans, and sustainability-related organizations – contact co-chair Ed Wendell at 222-4657 for more information.