fluff ball economy

The US economy is in a recession. Although it has not officially been announced yet, everyone knows it. It does not look good. This recession could be a tad worse than others in recent memory. Meanwhile the US banking system is in trouble. Even the almighty dollar is not doing so well. No wonder the Federal Government had to step in and bail out Bear Stearns. It seems quite likely that before this is over, others will need to be bailed out too.

Above all, the government needs to restore confidence. Otherwise there will be widespread trouble. We have deficits galore, trade deficits, budget deficits, you name it. And more and more of that debt is held by foreigners. The budget deficit alone amounts to about $30,000 per person -that includes babies and elderly people too-. $8,000 of that is owned to foreigners. We don't want to scare these foreigners away. That would cause trouble. Major trouble.

What do you do with an economy that is based on discretionary spending? I.e. spending on things nobody needs. An economy that is made up of doctors, lawyers, nurses, nannies, gardeners, psychologists, massage therapists, family coaches, concierges, spa personnel, and other fluff? All these people do is shift wealth around.

We have an economy whose value is in churning through materials at ever faster rates. Whose collateral is huge homes in swamps and deserts. Homes that can only be sustained by the flow of copious cheap oil -and guess what? It is no longer so cheap anymore.

Fortunately we have Madison avenue to package it all and make it appear as if there is something there. And we have a great military to beat up anyone who disagrees with that view.

The American economy works as follows. Pump in vast quantities of oil, natural gas, and coal. Unfortunately, more and more of that needs to be imported from other places so that is where our military comes in: to guarantee that we keep getting it at a good rate.

Bring in tons of cheap, preferably below minimum wage labor. Labor that is free of rights. Such labor can be found in abundance in Central and Latin America, although Asian sweatshops are acceptable too. Here is another job for our brave soldiers: keep all these volatile "labor units" under control. These labor units are responsible for all the real value produced in our economy. They work the farms, mine the resources, and are essential in creating the wealth.That is why Washington has problems with the current illegal immigration debate. How do you tell working class Americans that the only reason we can live the way we do is because of the vast labor pools south of the border?

Now unleash a formidable media and advertising campaign to get the engine rolling and keep it revved up at all times. That is where Madison comes in. Hollywood plays a key role in all this too and it is the main reason why we pay these actors and actresses so much money. They fuel consumption. They drive consumption's big wheel, called fashion. Fashion makes it so that you discard good stuff that is practically new and buy other stuff. The geniuses on Madison Avenue make sure you stick to the program. Because the economy is in churn.

Another key ingredient is people. Bored people. Bored because there is nothing real for them to do. So we stoke their desire to outdo the neighbors, their unlimited greed, their hugely inflated and fundamentally insecure egos, and their inherent laziness. That makes it all work. Add to that the mind's addiction to moving images and the body's virtual unlimited capacity to store fat, and there is your recipe for success.

So what do those American's do to sustain their spending habits? They work in the services business. In the fluff ball economy. The economy of make believe. They scratch each other's backs. They help you move money around. They sell and resell housing and all the stuff in it. They advise you on finances, retirement, consumption, and other "important" matters. They do planning. They build and endlessly upgrade houses. They sell trinkets. They defend people who divorce and fight with their neighbors, they cure imaginary illnesses, and they help people reduce stress and cope with life. They teach fluff.

Despite its intricate structure and tremendous track record, this fluff ball economy is unsustainable. It won't last. Like one giant bubble it will explode. Better move out of the way when that happens.

lacking fortitude

California lawmakers caved when it came to zero emission cars. Economics comes first they say. The auto-makers say it cannot be done. And we are too wimpy to make sure it does. Why not raise gasoline prices to $5 a gallon? Why not slap a pollution tax on those SUV's? That will create some incentive. Experience shows that car makers will quickly oblige and build whatever car makes the most sense.

The core of the problem is consumers of course. They are full of green talk but won't do the obvious. They want to be green but still drive around like maniacs. They want to be green but fly around the planet. They also want their big houses heated and cooled properly. And their green lawns kept disneyland clean.

The mantra is always the same. We need to preserve jobs. Even if those jobs and that economy are digging our grave. And there is more bad news. The EPA flinched too. It postponed rulings on carbon dioxide for another year. Meanwhile voters have other concerns. The economy once again. In an election year. Politicians are falling all over themselves to lower gas prices and send checks to everyone so consumption can be at a fever pitch. All the while they talk about global warming and the environment. They criticize the war in Iraq, but where will the oil come from my friends ?

That same economy caused everyone to overspend wildly and to consume like there was no tomorrow. Taking out mortgages and home equity loans with futures as collateral. Until those futures turned out to be nothing more than wishful thinking. Now these poor Americans are hurting and they are afraid. Rather than acknowledging their mistakes and changing their self-destructive habits, they turn to the government for handouts. Encouraged by politicians and business folks alike.

Luckily, there are handouts a-plenty. Only these go to the super rich first. Are you surprised ? We always help those who need it least -or don't need it at all, first. Those rich guys made bigger mistakes so they need more help. Common sense I would say. Wouldn't you?

dementia and greenhouse gases

There is little doubt that the population is gaining weight. Being overweight is now so common -in many areas more than half the population is overweight- that normal weight people are starting to look abnormally skinny. It is not hard to find a public establishment such as a bar, coffee shop or restaurant, where everyone is overweight or obese. Apart from college towns, where a large contingent of the clientele consists of students, finding an eatery where most people are of normal weight is almost impossible to do.

Obesity is making inroads into the child-population as well. Most elementary and middle schools are now populated with fat kids and fat teens. Fat children who are driven around by fat parents so they can get home in time to play video games and watch TV. Burning more oil and more coal to keep up that waist line.

Being overweight is linked to all kinds of nasty diseases, but that does not seem to worry the fat. Now however, another health risk was added that may have some think twice -if they still can that is-, dementia. The risk of dementia goes up as people gain weight. And it seems especially well correlated with abdominal fat, or potbellies. The type of fat you get when you don't exercise enough. Given that tens of millions of Americans are predicted to become demented over the next decade, putting an undue burden on their families and the health care system, this should be a wake-up call. It is time to get out of the car.

It is not just our planet that is choking on greenhouse gases. Our bellies are choking on visceral fat. And our brains are going out the window. Idiocracy here we come.

Fortunately, the remedy for potbellies, diabetes, hypertension, a lot of cancers, dementia, and global warming are all the same. Ditch the car, turn off the TV and the video console, bypass the shopping mall, and work up a good sweat.

Don't even think of going to the gym. Gyms are consumer-oriented, energy wasting super-markets, where weight loss and conditioning are as elusive as sweat on the floor. Gyms further consumption. Not to mention that most drive to get there.

If you have been on a quest for elusive happiness through over-consumption and near-zero energy expenditure, guess what? The only way you will ever reach your goal this way is when your brain goes to mush. It now appears that your chances of getting there are actually "better" than once thought, so don't despair.

However, rather than lying around wasting precious resources, maybe you should get up and ride your bicycle. Or go for a run. Don't just save the planet, save yourself.

Today's NY Times article confirms that the runner's high is for real. I can certainly attest to that. It is hard to surpass these moments of intense pleasure and satisfaction. Plus it is good for you.

africa-why climate matters

Looking back several hundred years it seems obvious that North America was bound to become the world's superpower. Never before had Europeans, with their relatively advanced technology, found such a vast and empty continent full of natural resources. Sure there were people living in North America, but a combination of diseases and technology (germs and steel) took care of that. The North American Indians were living in an isolated stone age. Neither their weapons nor their immune systems were up to the challenge. No only were they no match for the Europeans, their level of development had left most resources untouched. American Indians had never managed to mine the vast natural resources covering the land and lying beneath the surface.

No wonder that the Europeans had a ball. Everything they needed and then some was here in quantity. And even though the continent appeared desert-like, vast underground aquifers and numerous dams would take of that. And then there was oil. America had large supplies of oil, soon to become the new currency.

Three hundred years later, signs of strain are beginning to appear. Not to worry, the country accumulated so much wealth in that time, that it will take a lot longer before real cracks will show. Many of America's forests are depleted. So are its fisheries. Its coal reserves are still vast, but it has moved past its peak oil. The aquifers that once flowed in abundance are drying out, and many of the dams in the West are silting up. In other places salt water is intruding, or reservoirs -such as Lake Mead- are drained faster than they can refill. Clearly, the party is not going to last forever. And the wilder it gets, the sooner it will end.

But the story of America begs the question why Africa avoided a similar -albeit probably earlier- fate? Why did Europeans never colonize Africa the way they did in North America ? Africa was closer and easier to reach. Most of its population was in a similar early stage of technology development. And like North America, Africa is and was very rich in natural resources, perhaps even more so. Although Africa was colonized, the Europeans never settled here, nor did they drive out the indigenous population to the same extent as was done to the American Indians.

One could argue that the Europeans did colonize Africa and that they did -and continue- to extract its riches. But the question is why did they not settle Africa and why did Africa not become an earlier version of the US ? Surely it wasn't some form of human decency that kept them back.

One answer is clearly climate. Africa is very inhospitable. And the same is true for most tropical regions. Humans do not do well in tropical regions. Although resources are abundant, competition is fierce. Apart from some isolated tropical islands, where competition and disease can be kept at bay, humans have trouble in the tropics. And that is true even today, with our much more advanced technology.

In Africa, roles were reversed. It wasn't the natives dying in high numbers because of diseases brought in from EurAsia. It was the Europeans dying of tropical diseases. That made it hard for them to gain a foothold. And European technology at the time was no match for the myriad of pests, both plant and animal, that interfere with agriculture in Africa. In essence the same happened in Latin America. The continent was discovered at nearly the same time as North America. You could argue it was slightly farther away, but given that most ships traveled on the equator to take advantage of trade winds, the difference was insignificant. It was the geography and especially the climate that was not as friendly here as up North.

That is not to say that the North American climate is easy. It isn't. To most Europeans it is quite harsh, with very cold winters and hot summers. There are tons of natural disasters, whose frequency and scope were way beyond what was common on the old Continent. But humans are better at dealing with cold than they are at dealing with heat. They do better in climates that show seasons and have a distinct winter. Such periodic changes go a long way in getting rid of nasty pests that would otherwise make our lives very hard. And that too remains true to this day.

I am sure that with abundant cheap oil, we could make it work. We could establish a colony in tropical and near tropical regions. But at great costs. It would not be very competitive with the rest of the planet.

However, the point of this story is not about Africa or North America. The point I want to make is that climate matters, and that hot climates are more problematic than cooler ones. And that should warn you about the dangers of global warming. If we turn the planet into a tropical region, we will find ourselves in ever increasing jeopardy. And we won't have the technology, or better the cheap oil, gas, and coal to keep us afloat in adversity.

stanford disconnect

There was an interesting remark in yesterday's green economy version of the Wall Street Journal. According to a Stanford professor, who monitors these things, Stanford freshmen are now more aware of the environment than ever before. At the same time, electricity use in freshman dorms keeps going up year over year. The Journal asks the rhetorical question: are freshmen like Hollywood ?

One of the themes the Journal has highlighted over the past couple of years is that Americans like to talk green but don't like acting green. This theme has been presented from a number of angles and always boils down to the fact that Americans are not willing to make sacrifices or change their life-style. At the same time, any article about the environment illustrates how you can buy green solutions. How you can consume your way into being green.

It therefore occurred to me that something else may be at stake. Americans may not know how to act green. Because Americans have been very well conditioned to spend money. Spending money used to be a sign of well-being, but since 9/11 it has been elevated to patriotic duty. You shall spend to keep our economy going. To keep America strong.

Like everything else, being green has been equated with spending more. But to add insult to injury it has also been equated with getting less. You need to buy expensive CFL light bulbs and you get less or at least inferior light. Even if the article praises CFL's it will point out that they are "almost as good as" conventional bulbs. You need to buy expensive gas-saving cars but you get less or no performance. You need to install energy-efficient appliances but you won't get your money back for decades. Plus the appliances will have all kinds of annoying characteristics. Never once is going green presented as a win-win.

Of course, the whole discourse misses the point. Going green means NOT spending. It means using what you have for as long as you can use it. And then find a secondary use for it. You don't need to buy a green car. You need to drive less. You don't need CFL's. You need to turn off your lights.

No doubt the freshmen have a funny way of thinking about the environment. It may go something like this: I always put my garbage in the trash and I always recycle my soda cans. I will use CFL bulbs, and my screen saver. Later I will build a big house with solar panels and drive a hybrid SUV and a sports car. This sort of consumer-oriented, suburbia-friendly, environmentalism is anything but. It probably never occurs to the freshmen that they should use less power. That they should turn off their lights. That they should not buy the latest cell phone gadget. That they should drive less and use their bicycles.

In short, they should rein in their consumption. Opt for smaller houses, buy only one car and rip out the suburban lawns that are the number one environmental disaster in America today. Save water when they take showers and brush their teeth and use old furniture for their dorm room. Throw out the TV.

Unfortunately, today's freshmen were raised the wrong way. They were born and raised in luxury. They were driven to school and to their many after-school activities. They were driven to play-dates with their friends, where they played video-games instead of board games. They had a computer when they were four. They had their own room and bathroom; their own stereo and TV, their iPod. All the lights stayed on round the clock. All the TV's were on day and night. All the appliances were on or in standby mode, ready to jump into action. The fridge was stocked with food and cold soda. Everything was set for a big party, any day of the year.

Servants ran the laundry through the dryer on sunny days. Everything anyone touched once was washed immediately. Nobody ever thought of conserving water. The low-flow shower heads were quickly swapped out. Everyone took luxurious 30 minute hot showers and soaked in the tub at least once a week. The kids had a cellphone when they were 10, and they received a new model every year. At 16 they had their own wheels.

In short, these kids are professional consumers. They view the world as one giant super-mall. Being green is just another, more efficient way to consume. Efficiency is key. Technology is manna from heaven and it will solve all our problems. Our concept of history is one of a straight line upward. Getting better and better. Upward toward more consumption. Things never go bad. Sure, there are some "corrections" ever once in a while, but on the whole things just get better all the time. The party lasts forever.

Stanford's best and brightest are ill prepared for the world. They are the results of yesterday's parenting. And yesterday's parenting is no longer adapted to tomorrow's world. It is bloated and out of synch. Obese and out of shape.

more nonlinearities

The Wall Street Journal today published a long story on Malthusian predictions. It is quite an interesting read and it got me thinking again about nonlinear behaviors. Even though such behaviors are all around us, many people find the concept difficult to visualize, and even more find it difficult to be concerned about. Yet all natural systems display significant nonlinearities. And there is one particular form of nonlinear behavior that we should be very worried about. And that is one where you cross an invisible threshold and things become self-sustaining. Let me give an example.

Anyone familiar with medicine knows that certain conditions are caused by toxins and that removing the toxins is essential to curing the condition. But they also know that there is often a point where this simple solution is no longer effective. Even though the toxins are removed, and the patient is no longer exposed, the damage keeps going and eventually leads to organ destruction and death. Such events are relatively rare, but they frighten both doctors and patients. More so because the point of no return is situated somewhere along the path of exposure but nobody knows exactly where or when. Such a phenomenon occurred in a small number of people as a result of a very promising anti-diabetes drug developed by Warner-Lambert, now Pfizer. That drug was subsequently withdrawn. The affected patients required a liver-transplant and many died.

A similar scenario worries climate scientists. We pollute the environment and we assume that, at all times, we will be able to stop and even reverse the damage by some technological means. You could argue that we have done so successfully in the past. There have been times where pollution in big cities was extensive and was remedied effectively by new rules and regulations. Cities like London have better air today than they did at many time periods in the past. The same has happened in Los Angeles and other metropolitan areas. So far so good. At some levels pollution is really a linear phenomenon.

The idea that we can reverse damage when we want to seems like a logical assumption to make. It is a good reason why people feel things will be alright in the end. If pollution really becomes a problem we will have a fix for it. And even if we don't, we can always do something about it then and there. But that may not always be the case. So far the episodes we had to deal with were all pretty confined and local. And the pollution had few secondary effects. It consisted of noxious gases and particles that eventually dispersed or dropped to earth. It wasn't the type of slow accumulation in the atmosphere of gases that had other significant impacts such as trapping heat.

When it comes to greenhouse gas pollution, we are dealing with extensive secondary effects and a global situation. Climate change is a global event. There are fewer remedies available for global effects. There is no place the gases can go. We can think of technological ways of trapping gas, but projects of such magnitude are very difficult to implement. The best we can hope for is to trap greenhouse gases where they are produced. Removing gases from the atmosphere in large quantities is a bit more involved. And it may not help. Once the climate changes significantly, other things happen. These in turn may sustain further warming, even if we should manage to remove all the excess CO2.

We could find ourselves in a situation where we do not know what is driving further changes. And if matters accelerate we may not be able to find a good solution quickly. Or we may run out of time trying to implement it. Such scenarios may sound far fetched, but in effect very little global change is needed to jeopardize our long term survival. You may think we are pretty robust and we are very adaptable, but you better think again. There are good indications that humans are quite fragile and that adaptations take a long time to develop. It may be far easier to change behaviors now. And more effective too.

ownership and fiduciary duty

The Wall Street mantra is very simple. A company is in business to make money for its owners. These owners are the shareholders, and often include people like you and me. The key assumption is that the shareholders are only interested in making money, to the exclusion of everything else. More about that later.

The mantra means management has to set aside all their personal judgement, emotions, feelings, and common sense and act like ruthless profit seekers. If they have to go against people's interests and cause damage so be it. It is their fiduciary duty. That is a nice word for saying they are bound to act against anything and everything that stands in the way of profits.

Such behavior has been dubbed psychopathic by at least one psychologist. He points out that although management may consist of reasonable people who display normal human traits, such as empathy and altruism, all these have to be put aside in pursuit of making money. Such antisocial behavior without remorse is exactly what psychopaths do. And all this is to done in the name of the shareholders, who are -as I pointed out- people like you and me. People who are, on the whole, normal people with feelings, sympathy and empathy. But let's deal with another point first.

If businesses have to act like psychopaths, and apparently they do, then they cannot be good corporate citizens. Despite all the PR and goodwill they try to buy, they are in essence deceiving us. Oil companies do not want to save the environment or act responsibly like their ads say, they want to stuff their pockets. Pharmaceutical companies do not want to cure illnesses or end suffering, they want to increase their margins. They have to. Their employees and managers may feel differently, but it is their fiduciary duty to act like cold psychopathic monsters and put profits first.

No person, who is immune to the suffering and plight of others can be called a good citizen. And anyone who blatantly disregards the well-being of others in the pursuit of a single-minded dream -in this case greed-can not be a member of society. And companies, true to their manager's fiduciary duty do such things. They uproot towns, they disenfranchise workers, and they destroy the environment in pursuit of money. That means their advertising is a lie. Management has a fiduciary duty to lie when they put out ads saying the company does anything but maximize profits.

So why do we tolerate such behavior and such lies ?

And why, if we are the true owners can we not agree on a different mission ? We own these corporations, in part directly through the shares we buy and indirectly through the money in our pension funds. Money that ultimately belongs to us but that is temporarily administered by professional money managers. Managers who are in a real sense our employees as we employ them to take care of our money.

Why can we not force companies to forgo profits and be good corporate citizens ? Why can we not have a balanced set of goals that includes taking care of families, taking care of the environment, and not just pursue money for the sake of money ?

But what about the original owners you say ? They were in it to make money. Assuming they are not psychopaths, I would argue, they too should have a balanced view. Furthermore, even if they were psychopaths, they get what they bargain for. When they accept new owners by selling shares in a public offering they are in effect giving away part of their company. If entrepreneurs do not want others meddling with their company they should refrain from selling stock to the public.

One could also argue that these social matters are already taken care of. That so-called socially responsible investment funds are the solution to this problem. However, that is clearly not so. These funds chose to invest in companies that are vetted for socially responsible behavior. What I propose is that we, as a society set rules on how we want companies to behave. And that all companies who want our money be forced to behave that way. Not that we go out and find some companies who happen to behave properly -and apparently in violation of their "duty" then- and give them funding instead.

You may argue that this is not feasible. But the reality is quite to the contrary. We do have a government to do this. And if that government is really by the people and for the people -and not the other way around- then this should not be a problem. We vote on how we want thing to be, including companies. We own them after all.

Then managers would no longer be in a bind and be forced to behave against their better judgement. They could take into account other values and they could truly represent what society wants for the greater good. How is that for a change ?

bailout

If you look around you can see what happens when greed festers. Consumption without restraint maybe fun for a while, but inevitably the time comes to pay the piper. In a free market economy that means a prolonged recession or even a depression. Recessions are much like storms. Most of them are easy to weather, but every once in a while you hit the perfect storm. One that leaves a trail of casualties behind. There is a high likelihood that we hit another perfect storm. Some have argued we are in a situation similar to that of the early 1930's.

The remedy for such situations is called government bailouts. This is the part the less regulation-less government crowd does not want to talk about. These guys hate the government. They like to be left alone so they can fully indulge in their endless greed. They don't want anyone to spoil the party with planning and regulation. Planning and regulation prevent them from getting scandalously rich. But when the bubble burst, they are the first to call for government help. Suddenly, the evil government turns to a saving angel. When trouble hits, the tax payer is the one footing the bill. And the really rich have already made sure they will not be the ones paying taxes.

In many ways the financial system is mimicking the real world. There are many analogies between financial systems and natural evolution. And there is something we can learn from observing this credit crisis. Absence of restraint and regulations leads to fantastic growth but also to premature death. While the bubble grows, nobody can convinced that the party will end. But it is obvious things cannot keep going the way they are. Yet the skeptics are dismissed as out of touch, old-fashioned, luddites, and what have you. And then the bubble bursts.

Unfortunately, once this happens on a global scale, there will be nobody to bail us out. So go ahead and waste resources. Drive gas-guzzling cars, fly all over, turn up the heater and the air conditioner, build those 5,000 sq foot mansions. Live it all up. Just remember, when the party ends, and it will, there will be nobody to turn to. Evolution has a nice way of dealing with such excess. It is called extinction. And it is as much part of the natural world as the creation of new species.

another war won

President Bush noted today that we won the war in Iraq. You may think he is alone in this belief, but think again. "We," meaning Bush and his close friends, did win. And they won a lot. Just take a look at Halliburton's stock price (ticker HAL). Five years ago, it stood at less than $10 per share. As the war went on, so did HAL. By the middle of 2006, it reached $40 and it has been hovering around that price ever since. You probably also noticed the exorbitant profits made by oil companies throughout this period. Like it or not, these are the real measures of success. Hard numbers that few can argue with. And real dollars to line the pocket books of the President's sponsors.

If Bush failed somewhere it was in handling the PR. He did a reasonable job selling the war, but then again, after 9-11 one could have sold virtually anything to a blood thirsty nation. No real kudos there. It is like saying I doubled my money on a stock in the midst of a large bull market. Sure you did, and so did everyone else. The real kicker in getting us to war was to get Colin Powell to go stand in front of the UN security counsel with tons of shaky, if not outright fabricated, "evidence." That took some doing and the Bush team did a superb job here.

The greatest "pure" PR stunt of this whole debacle came with the aircraft carrier landing and the speech, mission accomplished. It did work at the time, but the images have lingered and they have come back to haunt the administration. Even Bush should have known that "accomplished" was a premature term. HAL had yet to double. Even though, he and Vice President Cheney probably knew that the ball was rolling and that there was no stopping it now.

Overall, the war in Iraq is a minor issue really. It catches the public's attention but it is hardly worth a tenth of the time spent on it in the media. For the umpteenth time, we went out to bully a small country. Granted, it did not go as smoothly as we expected and it ended up costing a lot more money, but we had few alternatives. Iraq was sitting on a lot of oil and if we are to be taken seriously and protect our "economy," we needed to do something dramatic. Even though the sanctions worked, they did not make us look good. A small time dictator thumbing his nose at the world's most powerful country is not an image we can easily live down.

And don't say you didn't support the war. You did. Even most of you who voice opposition. The true measure of support is right there in your garage. That new SUV or cross-over vehicle. All the energy you waste on running your heater and air conditioner unnecessarily. All the money you spend on throw-away goods. All the gadgets and toys you buy but never look at.

If you were or are truly outraged at the war in Iraq, there is only one way to show it. Ditch that SUV. Cut your driving by at least 50%, and urge your representatives to put a high tax on gasoline. Support $5 a gallon gas so people will stop driving like maniacs. Wean yourself from indulgent overconsumption and take a stance to protect our environment by buying less. Instead of spending your weekends at the mall, go to the lake for a hike, or a run.

Otherwise you just sound like any other addict who complains that their dealer is beating up another party to secure cheap product.

nauru and the free market

The BBC ran a story recently (3/15) on the fortunes of the Republic of Nauru. Nauru is a small island in the Pacific that had the good fortune of being covered by bird droppings for centuries on end. That built up a layer of the world's purest phosphate and provided a tremendous source of income for the population. Phosphate is a key ingredient in fertilizer. Nauru quickly became very rich. So rich that the population did not know what to with all its money. In that sense it is much like America today. The Nauru spent money on sports cars even though there are few roads. You get the picture. The story is fascinating.

Nauru is also a great example of free market economy and its story clearly shows that the "market is always right" is not a smart idea. The inhabitants of the tiny island would have been much better off had they done some thinking ahead and some planning. Government regulation would have been very beneficial. No doubt some of the Nauru population got very rich and a few may have become especially rich. Those few probably would not have liked government intervention. But there is no doubt that as a whole the population would have been better off. Nauru is a microcosm of what happens when humans discover wealth.

It is also a good example of what happens when the party ends. And the more quickly and efficiently people mine their resources, the more trouble they are in for when the bubble finally collapses. You may argue this could never happen here. But it already has. The US economy is a string of bubbles, each one bigger than the previous one. And each one leaving more trouble in its wake.

For sure, we live on a much larger island. And we have many more options and more resources. But ultimately, the planet is just Nauru on a grander scale. It would behoove us to learn these lessons before it is too late. Because this planet is all we have. Unlike the Nauru, who will surely recover by relying on others, once we create a planet-wide bubble there will be no place to turn to. No alternative. Not like so many other civilizations. Take the Icelanders, who turned to the sea for a second chance, after they destroyed the land. We will not get a second chance.

And planet-sized bubbles are nearby. It is time to take the warnings seriously instead of debating the finer points of the science behind global warming. Because global warming is but one of the many problems we are faced with. Overpopulation, pollution, resource depletion, unsustainable practices, etc. It won't last. Now is the time to do something about it. And "letting the market handle it" is the dumbest thing we can do. Because that amounts to doing nothing. It is what the rich and greedy like because it fills their pockets more quickly and more efficiently. No obstacles in my way ! No need to slow down me getting richer every day !

Unfortunately, when that happens we will all lose.

consume or die

We spent our weekend at Folsom Lake. Folsom for those of you unfamiliar with California geography is near Sacramento, the state capital. To some it is an infamous place as it is the site of Folsom prison. To others it is a mecca in the middle of the Central Valley. Up until a few months ago, it was the site of booming real estate development. To many it looks indistinguishable from similar developments in Orange County. Irvinitis I call it. Now it is quickly becoming foreclosure city. Not Folsom per se, but all the communities around the lake.

Folsom Lake is very pretty, especially in Spring, before the heat sets in. Yesterday was a beautiful day to boot. A day you'd expect the lake to be very busy. However that turned out to be wrong. So, where were all those people ? No doubt a fair number had made the trek to Tahoe to take advantage of the snow. Yet, not everyone had left the area. Indeed, the parking lots at the countless malls were all filled to capacity.

From the looks of it, it appeared everyone was doing their patriotic duty. Consume or die. In an area hard hit by the lending disaster, consumerism was alive and well. Instead of taking advantage of the many recreation opportunities offered by the lake and the American River, overweight consumers were driving their SUV's to the mall. To be honest, I cannot be sure they were actually spending a lot of money. It has been said that most visitors these days look but don't buy. But what I can tell is that many were strolling or driving around eating donuts and ice cream, despite their already oversized girth.

The influence of continuous advertising is clearly visible. What compels people to spend their time in shopping centers on a sunny weekend day is beyond me. Why they would want to sit inside dark movie theaters when they could be biking, running, or walking is equally puzzling. And why they need to always be eating or drinking high fructose corn syrup (aka soda) is another mystery. Not surprisingly, Folsom Lake is an area where few if any normal-weight people live. Being overweight and obese is so prevalent here, that the normal look skinny in comparison.

Driving through these endless housing developments, with their cookie-cutter McMansions, wide four lane roads, and ubiquitous strip malls makes me wonder how long this madness will last. Here we are in the middle of a near-desert, where temperatures are oven-like for three seasons, and freezing in winter, and we see nothing but 4,000+ sq foot homes with technicolor green lawns. The amount of energy and water needed to sustain all this is staggering. Unfortunately, most of it seems to go to waste for no good reason. I wonder what it will look like a 100 years from now.

paying for antagonizing the rich and powerful

The Spitzer story proves one thing: if you decide to antagonize the rich and powerful, you better watch out. They will try very hard to get back at you. Has it occurred to anyone that Spitzer, the man who prosecuted banks and investment houses, was nailed by his own bank transactions? And did it come as a surprise to you that relatively infrequent and small transactions aroused suspicion ? Has it bothered you that the origin of the whole case remains rather murky ? Are we to believe that this all happened by accident, or through the miracles of surveillance ? The latter is an especially nice touch you might argue.

Or were you swept away by all the emotion ? Or too eager to hear all the details of illicit sex and prostitution ? You have to admit it makes a good story. The press was all over it from the beginning. Interviews with former prostitutes, escorts, and madams. A Heidi Fleiss all over. It is good for the ratings and brings sex without FCC fines into everyone's living room.

It is one of those things both you and the press can indulge in without repercussions. But maybe you are not one of those. You are simply disgusted that the man who decided to prosecute others was not without flaws himself ? Then again, who really is without sin ? If we followed the biblical prescription, nobody would get punished. Clearly that is not the case here, as the US is the first world's number one incarcerator. We believe in crime AND punishment. Self-righteousness is a virtue in this country.

The very rich are not just greedy. They also like to wield their power. And they like to do whatever they please. Unfortunately, most owe their riches to an economy that runs on waste and overconsumption. Conservation and resource protection are not part of this dream. Overall, that would not be so bad if there weren't that many of us on the planet. Given where we are today, it looks like we are set for a perfect storm.

honey, I boiled the kids

There are two new scientific studies out showing that we need to wean ourselves from carbon emissions by mid-century if we want to avoid future disaster. The studies show that not only will be temperature increases be higher than predicted, the effects will also last much longer. Even if we stopped now, the effects of our oil addiction will be here for centuries to come. Talk about a hangover. There truly is no drug like oil.

Think about that when you drive to your job where you try to make as much money as you can so junior has a future. All the money you need to put him or her in private school. All the after school activities you have to support. All the driving and flying you will need to teach junior about the world. Maybe it would be better if you stopped working altogether. That way, and if you could convince all others to follow you, junior may actually have a future.

The Washington Post interviewed a philosophy professor, Steve Gardiner to shed some light on this dilemma. He put it succinctly as follows: The argument over global warming "is a classic inter-generational debate, where the short-term benefits of emitting carbon accrue mainly to us and where the dangers of them are largely put off until future generations."

And therein lies the key. Nobody wants to miss out on these short term benefits. Even if that means they will boil their kids or grandkids.

The whole argument against global warming or resource depletion is simple. It is us versus them. We do not want to deny ourselves the luxuries that we feel we are entitled to. We do not want to cut back voluntarily. We can see that anybody who cuts back voluntarily is leaving short term benefits on the table for others to grab. Can't have that !

And ultimately this simple truth may be the solution to the famous Fermi dilemma of why there is no sign of intelligent life in the galaxy. These "intelligent" life-forms are too smart for their own good. They are too clever finding new ways of living it up. And in doing so they don't last nearly as long as other species do.

greedy 400

What better act to follow the 300 Spartans than America's "fortunate" 400 ? And what exactly makes those 400 so fortunate you may ask ? Let me give you a hint: this was published in the Wall Street Journal. You guessed it, these are the people who make the most money. The 400 or so taxpayers who report incomes of over $100 million a year. Why on earth anyone would need that much money is beyond me. Sure it is good to be richly compensated for one's efforts and to be "valued" by society. But at a rate of $100 million plus ?

One reader from Texas was quick to point out that "fortunate" is a bad adjective to use. Because it implies luck and does not recognize the "hard work and enterprise" that go into amassing that much money. The letter goes on to congratulate the drivers of the US economy, the creators of jobs, etc. etc. In short, it is a prayer of worship to the gods. The letter could not have been better if it had been written by the wizards of Madison Avenue. Although I do agree that the reader has a point. The adjective "fortunate" is clearly misplaced. Greedy would be my first choice.

No doubt one of those fortunate individuals is the former CEO of Countrywide, who convinced his company -that is to say his equally greedy board members- the he deserved 100's of millions of dollars in compensation and even more in equity for all his good work and efforts. That good work we learned recently, consisted in peddling mortgages and loans to people who could ill afford it. How is that for creating wealth ?

And then there are the CEOs of banks, investment businesses, and financial "services" companies, who also walked off with millions in wages and bonuses. These are the guys responsible for repackaging the loans into various "financial instruments" that could then be sold to unsuspecting investors. The repackaging was certainly a creative act and one that disguised the problem in a clever way.

Not to mention the famous hedge fund operators, some of whom were "leveraged" 30+ times. Gambling with upwards of $22 billion, when they only held a few hundred million. Hard work for sure. And very enterprising to boot.

These are surely the creme de la creme. The people "who are the engine that drives our capitalist society." The "creators of income and wealth for all Americans." Have another glass of kool-aid, my friends.

peak technology

We, in the West strongly believe in technology. And technology has served us well. It has enabled us to rule the world -no need to be politically correct now, we all know we won (for now) and we are proud of it- and live like kings. In many ways we are the envy of the world and everyone around us is looking up at us and trying to emulate us. The latter may not be such a great idea, but it is heady and intoxicating anyways. It appears that Coca-Cola ads work even better in the slums of the Third World.

In an opinion piece in the Wall Street Journal today, Mr. Saleri, a former head of (oil) reservoir management for Saudi Arabia says it succinctly: "Technology matters. The benefits of scientific advancement observable in the production of better mobile phones, TVs, and life-extending pharmaceuticals will not, somehow, bypass the extraction of usable oil resources." Funny how Mr. Saleri thinks better mobile phones and TVs are what it is all about. Not to mention those life-extending pharmaceuticals ! Oh, the wonders of advertising.

But Mr. Saleri's piece also highlights the main problem with technology. His article by the way is entitled "The World has Plenty of Oil," and in it he reassures us that we can keep on wasting oil for at least "till the end of the century." Why me worry ?

Let's come back to the problem Mr. Saleri exposes. It is simply this: technology enables the more successful extraction of resources. It enables us to mine and use more things. And it does so very well. We are experts at extracting stuff from the earth. We can do it very cheaply -not counting some of the labor of course- and so we treat it as such too. It is cheap so why should we treat it as valuable or precious? Why conserve it?

Humans may have technology but we are like any other species. We reproduce and fill our niche. Then we strip it and when it finally collapses, we will go extinct. But before we get there, we grow and grow. And growing we have done. The world population has increased like wildfire. All of it thanks to technology. Technology that has given us oil, water in the desert, and high yield agriculture. All of it very cheap. And we have quickly produced more humans to take advantage of it all.

Unfortunately, there is one thing we always ignored. Our waste, the materials that we leave behind because we cannot use them. Our waste is growing faster than our population. That is because every human is a little multiplier. Every single one of us creates more junk. We now produce so much junk that it is starting to affect our health, and our food and energy supplies.

Greenhouse gases are warming the planet threatening our long term survival. Reservoirs are silting up or dwindling because of over-use. Our food supplies are becoming borderline. Fisheries are at capacity or in decline. Deforestation is rampant threatening land. Fertilizer and pesticide runoffs are destroying rivers and oceans. But we do have better mobile phones and TVs ! There you go. Virtual reality. We can all starve watching movies of lush forests, tranquil pastures and fish-rich seas.

Instead of peak oil, maybe we are at peak technology. Maybe we have reached a point where the harm done by technology is outweighing its benefits. Every single new invention that makes us more efficient at extracting stuff, also makes that stuff cheaper. And that compels us to use it every more wastefully and recklessly. Until we run out.

ignorance and lies

"People lie," is what Bob Woodward said. And no better example than today's Wall Street Journal article about oil consumption. It appears Americans are cutting back on their gas guzzling habits. That is the good news. But we also read the following statement:" Economists and policy makers have puzzled for years over what it would take to curb American's ravenous appetite for fossil fuels. Now they appear to be getting an answer: sustained pain." REALLY?

Are we really to believe that economists and policy makers are that stupid ? They did not know ? They did not know that the only way to reduce gas guzzling was to raise prices ? Give me a break. Either they are morons or they think we are morons. Or they lie. Of course, the only way to get people to stop "indulging" in stuff is to raise prices. We should raise prices. Politicians, if they had any guts would peg gas prices at no less than $5 a gallon.

Unfortunately, the truth is quite the opposite: they want us to consume gas. They love our oil addiction. Because it makes some people really, really rich. It is the drug of the modern era and it serves no higher purpose than to enrich the pushers. No other drug, not crack cocaine, not heroin, not alcohol, not nicotine, causes as much damage to humanity as cheap oil.

It would be one thing if people used oil and other fossil fuels in a sensible way. If we actually derived some tangible benefit from it. But we don't. More than half of it goes wasted. Pure waste. It gets burned to sit in traffic, to heat and cool houses that stand empty, to light the night sky. These "uses" benefit nobody. Nobody derives any pleasure or well-being from it. Quite to the contrary. It pollutes the air, is responsible for high rates of asthma, eye irritation, and countless other problems.

Of the remainder, the part that we actually "use," more than half is consumed in an absolutely wasteful manner: to power oversized trucks called SUV's, to heat and cool oversized houses, to keep green lawns in the desert. To fly and drive around aimlessly, etc.

And that would not be such a big deal if only a few dozen people did it. But 300 million is no small number. Consuming a fuel supply that took millions of years to accumulate in a few centuries is not a smart thing to do. Even if we believe we can get out of this mess through innovation and technology. Given how careless and wasteful we are, casts some serious doubt on our judgement and intelligence. From the looks of it, it appears we are not that smart after all.

credit card economy

As the credit crunch continues, more people will start realizing that credit is not a good idea. Spending money you don't have is not a sustainable strategy. Yet our economy is dependent on it. It wants us to consume and consume in ever greater measure all the time. To do so, most of us need to borrow money. Even a five year old knows this cannot continue forever. But the financial gurus in Wall Street seem think it does. They call it economic growth. The better word is senseless resource destruction.

It is senseless not because humans need to live like monks. It is perfectly alright to have some fun and live well. What makes our economy senseless is that the consumption we advocate does not do anyone any good. It is wasteful. It throws away perfectly good materials to nobody's benefit -other than those who sell it and get perversely rich. Our economy is a huge wealth shifting machine. One that drains many to enrich a few. And it does so by relying on a form of brainwashing called advertising. Advertising preys on human weakness.

Advertising tells you it is OK to spend money you don't have to buy things you don't need. Life takes Visa. And with visa you can buy all the silly stuff you want. You can buy cars not for transportation, but to impress your friends and neighbors. You can ditch the car in a few years not because the car stopped working but because it went out of fashion. It is necessary to get a new car if one wants to continue to impress. You need another car. A bigger car. One that uses more gas.

The more wasteful and the less practical a car is, the better. We want it big, bulky, and ostentatious. And the same applies to everything else we buy. Big cars, big houses, big bodies. All of it driven by continuous advertising that preys on our weaknesses. If you think you are immune to advertising, dream on. Every single one of us is a victim here and there is only one escape. Turn it off. Remember tune in ? Best here is to tune out. Don't listen to it, don't watch it, avoid it at all costs. Even if it means missing your favorite show.

Unfortunately, "ethical" businesses -that is something they like to call themselves-, have become nothing more than drug pushers. President Bush had it right. We are addicted to oil and to the life-style that oil brings. Oil is our drug and like any good junkie we need ever more of it just to feel happy. We cannot possibly imagine life without it. Can you imagine ? The horror.

Much like a drug oil has distorted our perception of reality. Because of oil we think it is OK to live in the desert. Or to commute 100 miles a day. We think properties in the desert are valuable and desirable. In the 60s people often told a story about LSD users who jumped out of high windows because they thought they could fly. The story was picked up by the media and quite a few movies. The story was not real. It was meant as a warning: don't use LSD because you will be deluded and kill yourself. Think about that next time you admire that palatial estate in the desert. Green lawns, swimming pools, fountains, it is one big mirage. And it is as unreal as the notion that you can fly.

True you won't crash within seconds. But crash you will. Because properties in the desert have no value. And so it is with most of the stuff you buy and spend your hard earned cash on. It is all "air." Thin air. And we are all bloated because of it. One day that bubble will burst. Better get out of the way.