Friday, November 6, 2009

double dipping

Unemployment hit 10.2% nationwide, a number not seen since 1983. In some states, like California and Michigan, it is much higher. And for those unfamiliar with the "US method" of calculating unemployment, or those eager to compare unemployment across different countries, it is good to point out that real unemployment in the US is much higher than 10.2%. The real number probably hovers well over 15% and in some states it may top 20%.

The discrepancies arise because the US jobless benefits are very short term compared to those of other countries. The US has the smallest safety net of any developed country. Many people do not qualify for unemployment benefits and have to make do with part-time jobs or employment that is much below their skill and competence (and pay) level. In other countries citizens are far less likely to be forced into such situations. The US also does not count people who have given up looking for jobs altogether.

Although the rate of unemployment is slowing, I predict that a pickup is to be expected. Foreclosure rates are still quite high and new foreclosures are likely now that people are losing employment. Many odious ARMs are also expected to reset leading to further foreclosures. It seems very likely that the Christmas shopping season will be another dismal failure and when that happens more retailers are expected to go out of business. At the very least new rounds of layoffs are coming.

So why is the stock market rallying? The reason is rather simple. There is tons of money sitting on the sidelines. Many have made fortunes in the bubbles and a lot of money is constantly added to retirement plans (even though it is decreasing now that jobs are lost). The money has to go somewhere and there are few palatable options. Investors have been waiting for (what they consider) a long time and so a rally was unavoidable. Unfortunately this is just more churning and it will lead to further losses which may end up damaging the "recovery" even more.

It is obvious that the stimulus package was way too small. Unfortunately the appetite for more stimulus money is gone. What that means is that the recession will last much longer. But given how destructive our economy is and how it is threatening our long term survival on the planet, that may well be a good thing in the long run. If people were rational, one could hope for a two-pronged solution, where people agree to change their destructive lifestyles in return for help from the government. That seems about as unlikely as convincing an alcoholic to stop drinking. All the money that is put in will quickly go to feed further addiction. And so it is that we, like the drug addicts that we are, will rather go down in flames, than wake up and change.

Monday, November 2, 2009

collapse in Peru

Wonderful piece on the Nazca collapse on BBC news. You may not know the Nazca - it was the first time I heard about them- but I am sure you have seen their most famous works. These were the people that lived in Peru more than 1,500 years ago and left enormous drawings on the desert floor. These drawings are many kilometers in size and they have made that particular desert very famous. A desert of the Nazca's own making, I am afraid to say. The images can be seen from very high up and they have featured prominently in books on UFO's and extraterrestrials. The German UFO man par excellence, Erich Von Daniken was very fond of the Nazca drawings.

However, perhaps more surprising is that the Nazca once lived in a fertile landscape protected by forests of the huarango tree. This rather bizarre tree is one of the few that can fix nitrogen -through a symbiosis with micro-organisms-. Even so it is a rather rare skill in nature. The huarango tree protected the land where the Nazco thrived and where they built a very sophisticated society that came to a rather sudden end about 1,500 years ago. If this sounds familiar you are absolutely right. Many advanced societies have abruptly disappeared leaving nothing but enormous deserted artifacts behind.

These great mysteries have always intrigued people and they have led to much speculation. How can an advanced society at the height of its power abruptly fall apart? Recently we have uncovered much evidence to elucidate these questions. And time and again the answer has been very simple indeed. Those very smart and advanced humans destroyed the habitat they lived in. The process often took a long time and no doubt many in those societies must have seen it coming. However, their warnings were unheeded. Worse than that, in many cases there is clear evidence that the destruction accelerated prior to the collapse. The society's prominence was often at an all time high right before it fell apart. The Nazco are a chip off the old block.

For many years the Nazco demise was attributed to a strong El Nino event that took place about 1,500 years ago. However, as you can surely imagine, sophisticated and well-run societies are rarely wiped out by a single catastrophic event, no matter how big. Unless they live on an island that blows apart and disappears, people will survive and the survivors will rebuild.

One thing humans are very good at, and have always been very good at, is dealing with catastrophes. There is ample evidence for example, that ancient Alexandria survived many disastrous floods before it finally collapsed. Even in "primitive" times, people were smart and ingenious enough to deal with such events and they would quickly manage to rebound, much like we do today.

New evidence has been presented that the Nazca brought about their own demise through deforestation. The deforestation left them very vulnerable and turned their once fertile soil into desert. It also exposed them to flooding and other destructive events. It now appears that a big El Nino became the straw that broke the camel's back.

The Nazca are yet another example of an advanced society that dug its own grave. The unfortunate fact is that we seem to learn very little from what happened in the past. As the saying goes, he who ignores history is bound to repeat it. And repeat it we will, only this time on a much larger scale.

Sunday, November 1, 2009

biology a la Economist

It always surprises me how little people know about biology and the natural world. No wonder then that nearly half of the population thinks humans and dinosaurs coexisted at one point in time. Or that the planet is less than 10,000 years old. What is truly shocking however, is that even the well-educated are so ignorant of the basics. Below is another gem from this week's Economist.

Before we go there it is perhaps good to point out that much ignorance is due to propaganda from people who have an agenda. The agenda is often religious or couched in religious terms, but in the case of the Economist it is likely to find its origin in the capitalist dogma. The capitalist dogma that says private enterprise is the only road to happiness and prosperity. Here we go.

From the Economist, on fertility: "Malthus himself thought richer people would have more children and, as any biologist will tell you, animal populations increase when there is more food." So far so good, although if you are an astute fan of Hollywood movies you can already see who is being set up for later destruction. This time it isn't just Malthus but also "the biologists."

We go on:"To understand why wealthy people differ from well-fed animals, imagine yourself..." and it continues to give the most common rationalization as to why richer people have less offspring. I am sure you heard this before. When you are poor you need children to help you work the land or take care of you when you get older. That must be the single-best example of an after-the-fact rationalization ever. Can you imagine two young people having sex and thinking about this?

First, let's point out the obvious error. The reason the world population increased so quickly starting in the 1950-60's, doubling in a mere 44 years, is clearly due to more food. Everyone knows the poorly- named "green revolution" is to blame for the rapid rise. "Improved" agriculture with better yields made the boom possible. It had a dramatic impact in Europe and the US but even more so in Asia. China grew so quickly that it felt compelled to institute a population-control measure that even the Economist acknowledges was very effective at preventing disaster.

Yes well-fed people reproduce more quickly. Not in the least because most of their offspring survive when well fed. That is no different from well-fed animals. We are -horror of horrors- animals like all the other animals. However distasteful this may sound to religious zealots and wealthy capitalists alike, we are animals and our behavior is very similar to that of other animals.

Second, only after the population started growing and overcrowding became a problem, did fertility start to drop. If you look at it closely you can also see that the more urbanized a group is, the more its fertility drops. Urban populations experience more overcrowding. Ironically enough, the very same Economist article provides ample evidence for this. It points out how many societies saw enormous drops in fertility and how cities (Tehran is used as a prime example) saw larger drops than rural communities. All places with large drops that are mentioned are urban and overcrowded.

And that too is something we see in animals. When populations are stressed and overcrowding occurs, fertility drops.

Despite all the great rationalizations presented, (if you are a poor farmer, blah blah, but if you are a wealthy city dweller, blah, blah), this is not how people behave. They don't think, I am a poor farmer, I will need kids to help me work or take care of me when I am old. As bankers should know because they often say it when peddling 401ks or IRAs, young people never think about being old or what will happen to them when they are old. Young people just love to have sex, consequences be damned.

And so it is time for an immutable law on human behavior: humans don't act rationally, they rationalize their actions.

Friday, October 30, 2009

not getting it right

This week's issue of The Economist shows a baby in free fall with the title "Falling Fertility." The subtitle is even more telling, it reads: "How the population problem is solving itself."

You guessed it, another right wing stab at Malthus and the doom sayers is here. And sure enough, in the very first sentence the editorial picks on Malthus for getting it wrong. How many times have we heard that one?

Well, there are a few problems. First, Malthus got it right: the population is growing faster than the food supply and for many people on this planet -well over 1 billion in case you wonder- food has already run out. They are starving.

"But wait a minute, not fair," you yell. We really do have enough food, we just can't get it to the right places. Or maybe we don't want to, you didn't say that but it is more like it. We prefer to eat it all ourselves and get grossly overweight (I can assure you that that problem will solve itself too!)

Whatever the story may be, I am sure it is of little consequence for those starving. To them there really isn't enough food. They have really outgrown their resources, albeit only locally.

Second, and this really goes to the crux of it all, all global problems solve themselves. The population explosion, the greenhouse gas accumulation, etc. etc. All these problems will solve themselves. It is just that we may not like the preferred solution. It may not matter so much with food as we are rich enough to shield ourselves, and it may not matter so much with pollution and climate change, at least not for a while. But eventually it will matter.

Third, the falling fertility that is "solving" the population explosion isn't much of a solution for the real problem. We all talk about the population explosion, but it isn't the sheer number of people that is the problem. It is the number of people relative the available resources. And what can we say about that? The population growth is slowing down because people use more resources. They are getting richer as the Economist says (hallelujah!)

The people in India and China are more prosperous today so like Europeans before them they need and have fewer children.

To the Economist this may sound like the angels are singing but to a smart observer that throws up red flags everywhere. Because if India and China are aspiring -and gradually coming up to -our standard of living (standard of waste would be more accurate), then 6 billion will be too many. i.e. we are already too many.

As a matter of fact, just bringing China up to our level would deplete all our resources.

I am sure this problem too will "take care of itself." ALL PROBLEMS TAKE CARE OF THEMSELVES. It is just that -as I said before- we may not like the solution. And if we are smart, we may want to think about how to avoid it from happening. Because sooner or later, the "solution" will affect us rich Americans and Europeans too ! And once it does, it will be too late to preserve our beloved standard of living.

Thursday, October 29, 2009

rejoice, the recession is over...NOT

It is all over the news. The GDP grew by 3.5% in the third quarter putting an end to longest recession in recent history. Some experts are quick to point out that the "real" number might be even higher. Wow, it is finally over? Drink the koolaid while you can.

There are a few experts who are more cautious and who do worry that the good news may be a bit premature. They point to such factors as government spending and cash for clunkers. They also see other worrisome signs. Such as the fact that 1/20 houses in Las Vegas is in foreclosure. Or that the foreclosure wave is spreading to such far out places like Biloxi, MI, or Sioux Falls, SD, or Lincoln, NE. Should that worry you?

In Merced, CA, 1 in 27 properties is in foreclosure for a total of 3,092 units. Vegas has 40,408 units receiving a notice. Despite optimistic news from the nation's realtors, the negative amortization pay-as-you-go mortgages are still not factored in. Most of these are just starting to reset to their "real" monthly payments. These "real" payments are so far out of whack that we can expect that the vast majority of home-owners won't be able to pay them. Or they won't want to pay them now that their property is so far under water.

They certainly won't be able to pay if they are losing their jobs or have lost their jobs recently.

Unemployment is still rising and a new wave of big layoffs is coming. I am sure that will do wonders for foreclosures, and consumer spending. Christmas is coming and what a Christmas it will be!

Whatever the GDP might say, don't believe it. We are not out of the woods yet. Not by a long shot!

Tuesday, October 27, 2009

population explosion

According to the US census bureau, there were an estimated 1 million people on the planet in 10,000BC. Apparently since that time the human population has increased continuously until the present day. That seems a bit suspicious to me, but so be it. The rate of growth has also increased continuously and there is only one period of significant deceleration. That happened in the 1,000 year window centered around year 1.

In 10,000BC , it took an estimated 1,000 years or 10 centuries for the population to double. There are some minor fluctuations in the estimates but these are probably due to the guesswork involved. By 1,000BC we have an estimated 50 million individuals roaming around. Then the population suddenly starts doubling in approximately 500 years or five centuries. By year 1 we have 170 million people or just 30 million shy of the projected 200 million. And here we see the only noticeable drop ever. It takes another 600 years for the population to reach 200 million.

Starting around 600 the rates accelerate once again. 650 years later we have 400M. Then 550 years later we have 800M and 105 years after that we have 1,600M or 1.6 billion. We are now in 1905 and the doubling rate keeps shrinking. 65 more years until we hit 3.2 billion, then 40 years until we hit 6.4. Luckily, the Census predicts that it will now take 44 years (a whopping 4 extra) for the rate to grow by 50%. You could say, whew, finally!

So what is behind this incredible explosion? It appears that two factors were key. Both involve access to new sources of power and energy. One is the switch from manual and horse-driven labor to machinery and the second is the discovery and wide-spread use of oil. There is little doubt that the so-called "green" revolution is responsible for the biggest boost of all. Clearly what matters most is how much food we can produce. More food equals more people.

Unfortunately our food production system is unsustainable in the long run. It is a system whereby we input almost 10 times as much energy -from oil- as we get out. We get the 10 fold extra by burning through an energy source that took hundreds of millions of years to accumulate. And we are going through it in 100's of years. Clearly something is out of whack here.

When the oil industry gleefully reassures us that we are many decades away from peak oil, we may end up feeling relief. The gas-guzzler crowds feel vindicated that once again, the doomsday prophets have failed. But ask yourself this simple question. If we are decades (or even centuries for that matter) away from reaching peak oil, shouldn't we be scared shitless? We are talking about a resource that took 100's of millions of years to get to its current state, and we have been using it for what? 100 years? And we are within a few tens or hundreds of years of depletion?

One thing is for sure, the population graph won't level off nicely like the US census predicts. It may soon start looking like the stock market of the year 2,000. Except that this time around it won't be virtual or paper losses on the way down. It will be real people.

Monday, October 26, 2009

Ford sends the wrong message

We all know Detroit is in trouble. But what are the automakers doing to resolve their problems? The short answer is nothing. They are doing business as usual and waiting for government bailouts.

Don't look to the automakers to help solve the world's problems. Quite the contrary. Ford is touting its new 365 HP Taurus SHO. Who on earth needs a 365 HP car to sit in traffic jams? But wait, that is not the whole story. The car is equipped with EcoBoost™ technology. What is that you ask? Well it sounds good doesn't it? And that is really what matters to Ford.

Whatever it is EcoBoost is doing, it is sending the wrong message. Ford claims you get a V6 engine with all the potency of a V8. Doesn't potency sound like either a sexual term or a drug property to you? No doubt Ford is hoping you will interpret it that way. A car on (sex) steroids. It is an unbeatable combination, especially if you add the feel-good EcoBoost™ to the mix. Green sex steroids for you America.

If Ford has truly devised a way to make engines more fuel efficient, they are also making it very clear why technology will NEVER solve our greenhouse gas problem. The reason is very simple: every time an innovation allows for better efficiency, the industry will use it to build bigger engines and then some. The net result is either neutral or in many cases negative.

Why would anyone need an eight cylinder car? Why do they need a six cylinder? The average commute speed is 27 mph in most areas. Cars not only pollute, they also make people lazy and fat. These fat people then develop all kinds of expensive chronic illnesses such as diabetes and hypertension. All of it to the infinite delight of big pharma, which is ever ready to supply medications to treat such life-long conditions. Can't make money if the patient dies or heals too quickly.

Ironically enough, those same healthcare costs are now cutting into Detroits margins? How is that for karma?

Take my advice. Say no to Ford and its potent dildo. Tell them to build a small fuel efficient car. And then use it as little as possible. You will be happier and live better too. Ride your bike to a breath of fresh air.