Can You Believe it? David Dollar Tapped to Instruct China

By BOB DAVIS

WASHINGTON -- The U.S. Treasury chose World Bank economist David Dollar as economic emissary to China despite sharp criticism of his economic research.

Mr. Dollar co-authored several influential studies that argued for the effectiveness of aid and the importance of tariff cuts in liberalizing economies and reducing poverty.

But in 2006, a detailed review of World Bank research led by Princeton economist Angus Deaton called the aid paper "unconvincing" because of methodological problems. The paper's results "provide only the weakest of evidence for their central contention, that aid is effective when policies are sound," the review said. The reviewers said the work on trade and growth raised "serious questions about whether the review is really supported by the evidence."

The Bank defended Mr. Dollar's work on trade and said that Mr. Dollar's work "stimulated a useful and ongoing debate."

Mr. Dollar is now the World Bank's country director for China. He will remain in Beijing for his Treasury job. Mr. Dollar didn't respond for comment.

Treasury Secretary Timothy Geithner called Mr. Dollar and David Loevinger, who was appointed as the Washington-based senior coordinator for China affairs, "uniquely qualified to serve in these roles because of their deep expertise and extended experience" in U.S.-China economic issues.

"David Dollar has been involved in some of the most important debates in economic policy for developing countries and the debates have been lively and important. And those at the center of this debate and whose views are taken seriously should expect to be criticized," a senior Treasury official said.

Write to Bob Davis at bob.davis@wsj.com

http://online.wsj.com/article/SB124389754251074257.html#mod=testMod

Jazz is Art and Art Was Jazz

A nice piece in the WSJ about my favorite jazz pianist, and one of the greatest musicians of all time, Art Tatum:

http://online.wsj.com/article/SB124286060905541009.html

North Korea's Real Crime

I don't like nuclear weapons, but for all the outrage regarding North Korea's nuclear explosion, nobody seems to have noticed that this week the U.S. celebrated the opening of the $3.5 billion National Ignition Facility. The New York Times described project without mentioning its military purpose, except quoting the project director who "compared the project to feats like going to the Moon, building the atom bomb and inventing the airplane."

http://www.nytimes.com/2009/05/26/science/26fusi.html?_r=1&ref=science

The NIF is supposed to simulate weapons tests without having to do anything as crude as exploding a bomb underground. Presumably North Korea should be condemned for being too poor to produce this cathedral of death near Berkeley, California.

p.s. I know that the authorities also wish NIF to create fusion power, but I doubt that it would have funding without its military "benefits."

My Therapeutic Rant on the Current Economic Madness

During the Vietnam War, a U.S. soldier seems to have anticipated the spirit of the current economic policy, explaining: "we had to destroy the village in order to save it." The difference today is that while the government destroys villages of the working classes, it is devoting enormous to improve the castles of the rich.

Anyone can see the care and feeding of bankers and financiers, while treating much of the rest of the economy with an iron fist.

The problem is compounded because alongside the federal stimulus, funding for state and local government is falling off the cliff, in effect, neutralizing much of the stimulus. This contradiction in economic policy is nothing new. A half century ago, E. Cary Brown showed him austerity in state and local governments undid much of the New Deal.

Brown, E. Cary. 1956. "Fiscal Policy in the 'Thirties: A Reappraisal." The American Economic Review, Vol. 46, no. 5 (December): pp. 863-66.

Nowhere is that policy divergence clearer than in California. A Republican minority blocks all tax increases. The budget deficit seems to increase by a few billions every few weeks. The answer is to eliminate welfare, slash payment to home healthcare workers, and decimate education.

I have been looking at papers by Greg Duncan showing the devastating effect of child poverty on children's productive capacity as they mature. In my forthcoming book, The Invisible Handcuffs, I discuss literature that compares the consequences of child poverty on brain development, an effect that resembles the impact of a stroke.

Conservatives worry about future tax costs, but what if the losses in the capacity to pay costs exceeds the presumed future burdens of public debt.

60% of Chinese exports to the US are from foreign-owned corporations

Foreign owned global corporations account for 60% of Chinese exports to the US.[1]

Did you know this? How many people understand that this means that non-Chinese corporations are responsible for the trade imbalance between the US and China.

Who does know this?

Not Bernanke and Greenspan who are reported to be blaming the "high-savings countries in East Asia" for "the immense pool of [global] liquidity" (particularly in the US). [2]

But who is creating this gigantic pool of liquidity? Economist Enzio von Pfeil has pointed to problems with the official [US] Treasury records that detail the owners of US 'foreign' debt - "there appear to be no data available on how much U.S. Treasury debt is held by U.S. MNCs". What, he says, do U.S. MNCs do with at least a portion of all of that money they are making in their fabulously successful overseas operations? [3]

Not Barry Eichengreen who holds the title of the George C. Pardee and Helen N. Pardee Professor of Economics and Political Science at the University of California, Berkeley, where he has taught since 1987.[2], [4]. He says that "Whether [or not] there is a permanent reduction in global imbalances will depend mainly on decisions taken outside the US, specifically in countries like China." [2] Well, how can that be? If China, itself, is not responsible for the great outflow of goods to the US?

Not economist Mark Thoma at Economist's View. Nor any other people who have posted comments to the Eichengreen article he linked there.[5]

Which is all VERY strange because the folks at the US Federal Reserve, like Greenspan and Bernanke, have worked closely with former Kissinger Associate Timothy Geithner [6] as well Roger Corbett who is a director of Wal-Mart Stores Inc and who is also a board member of the Reserve Bank of Australia. [7] Kissinger Associates and Walmart folks know all about the true nature of US trade with China, after all. Walmart is China's fifth-largest export market, ahead of Germany and Britain. [8] and is responsible for approximately 10 percent of the United States' trade deficit with China.[9] And it was Kissinger's wheeler-dealing, backed up by US military aggression in Vietnam, Indonesia, Korea and elsewhere that led the Chinese Government to surrender its borders to western global corporations in 1971. [10]

As for the economists, how could they not know the pivotal role of western global corporations in world trade? What should the general public expect from this professional body?

Or is this just another exercise in 'preferred nomenclature' suited to U.S. interests? Much akin to the language used by the former Reagan administration.[11]
Terms were employed to create the reality which that aggessive administration wanted. The frightening thing is that all subsequent US administrations, including the present Obama-led one, are following this same atrocious template.

How important is it to get the facts of world trade right? Is trade between subsidiaries of the same transnational corporations trade at all? Think about it. Because the achievement of clarity on this topic may be, in my humble opinion, a key way to avoid a global nuclear conflict! (The current Chinese military build-up is another story).

"The contemplation of things as they are, without substitution or imposture, without error and confusion, is in itself a nobler thing than a whole harvest of invention."

Francis Bacon, 1620.



[1] Undue Influence: Corporations Gain Ground in Battle over China's New Labor Law
2008-11-03 01:33:53
http://blog.ifeng.com/article/1822505.html

[2] By Barry Eichengreen /Beijing
http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=292693&version=1&template_id=46&parent_id=26

[3] Is it true that foreigners finance American debt? - Update 2. Brenda Rosser. Monday, December 1, 2008
http://econospeak.blogspot.com/2008/12/is-it-true-that-foreigners-finance.html

[4] Barry Eichengreen
From Wikipedia, ON 30TH MAY 2009
http://en.wikipedia.org/wiki/Barry_Eichengreen

[5] Mark Thoma
http://economistsview.typepad.com/economistsview/2009/05/global-imbalances-and-future-crises.html

[6] http://www.dollarsandsense.org/blog/2008/11/geithner-and-kissinger-associates-pt-1.html

[7] Sowing the seeds of a northern farm stampede
Matthew Stevens | October 27, 2007
Article from: The Australian
http://www.theaustralian.news.com.au/story/0,25197,22655071-5001641,00.html

[8] The Economic Crisis: A Wal-Mart Economy Dimension. Michael Perelman. Econospeak 18th October 2008

[9] U.S.-China Trade, 1989-2003 - Impact on jobs and industries, nationally and state-by-state
A Research Report Prepared for the U.S.-China Economic and Security Review Commission
By Dr. Robert E. Scott, Director of International Programs, Economic Policy Institute. January 2005
EPI Working Paper #270
http://epi.3cdn.net/c523ff01bec5bc1c25_7nm6i278j.pdf
..\..\..\Economics\China\China-US\China-US-trade-1989-2003.PDF

[10] China's trade policy was not an economic one. Brenda Rosser. May 2009
http://econospeak.blogspot.com/2009/05/chinas-trade-policy-was-not-economic.html

[11] Under Reagan's 'governance' third world nations were to be rolled back (e.g., Nicaragua). Thus they were called 'terrorist' and the insurgents were labeled 'democratic'. The governments in countries to be supported by Reagan and Co, in turn, were called 'democratic' and the insurgents were labeled terrorists. From the book Rollback by Thomas Bodenheimer and Robert Gould

What does it mean to be 'slightly left of centre' today?

Today, I noticed that Angry Bear's website promises "slightly left of center economic commentary on news, politics, and the economy."

What does such a claim mean? Do the writers there aspire to only a slight tweaking of our economic system? Are their words a prayer for business as usual, but with social security payments and a public medical system thrown in?

Tell me how will 'slightly left' folks address a new world of dramatic and abrupt climate change? Will the 'slightly left' sit comfortably with the astounding rise of the planetary enterprise of giant corporate conglomerates? Mao’s dictum was that political power grows out of the barrel of a gun and the fact that corporate power and acquisition has done just that seems to shock no one.

C Wright Mills wrote that to be a member of the Right was to "celebrate society as it is, a going concern." [1] A going concern?? How many more moments will it be possible to pretend that our world can sustain uncontrolled exploitation?

Business people today are thriving in a legal framework that allows them to function without conscience. That means that they kill 600 year old giant rainforest trees on the North West Coast of Tasmania and they don’t care what happens. They change the course of a river, and they don’t care. It means large and small business are free to aerial spray the most dangerous chemicals over millions of people with decades of ongoing social protest still having no real effect.

To be Left, says Mills, is to provide "structural criticism and reportage and theories of society". But in this extraordinary time of history those small number of excessively rich and powerful people running the levers of our society are now presenting an apocalyptic near-future. How free should we be to tone down criticism today. How fair and reasonable is it to be "slightly Left"?

[1] C Wright Mills essay 'The New Left' Page 253 in 'Power Politics and People'.

Sotomayor’s Consumption as an Application of the Life-Cycle Model

I thought Greg Mankiw had a strong grasp of the life-cycle model of consumption:

Some save and intertemporally optimize their consumption plans, while others live paycheck to paycheck, spending their entire income as soon as it's received … Apparently, the new Supreme Court nominee Sonia Sotomayor is an example of the latter. The Washington Post reports that the 54-year-old Sotomayer has a $179,500 yearly salary but “On her financial disclosure report for 2007, she said her only financial holdings were a Citibank checking and savings account, worth $50,000 to $115,000 combined. During the previous four years, the money in the accounts at some points was listed as low as $30,000.” My grandmother would have been shocked and appalled to see someone who makes so much save so little.

That a 54 year woman with high income has only a modest amount in her bank accounts strikes Dr. Mankiw as strong evidence that she has consumed more of her past income than would be implied by the life-cycle model. But I can see at least two explanations for these facts that are entirely consistent with intertemporal optimization of one’s consumption plans. One has to do with the possibility that one’s expected future income can sustain high consumption in one’s later years, which conservative Tom Smith notes:

any day she wants to she could walk out of her current job and into a partnership at a law firm in Manhattan or DC and get paid (guessing again) maybe $2 million a year, with the potential for a lot more. In short, when you take Sotomayor's human capital and circumstances into account, there is nothing wrong with her balance sheet. Sure, she could have another $500,000 tucked away, and that would be nice. But why should she? She has no dependents, except maybe her mother, but her brother is a doctor who, let us assume, is doing well. She has a guaranteed job for life with very generous retirement and health benefits, and any day she decides she wants to be a millionaire, all she has to do is pick up the phone.

The other has to do with the possibility that her compensation includes more than simply this stated salary but also consists of deferred compensation in the form of contributions to a pension plan. Brad DeLong notes that Sotomayor’s wealth in the form of a defined pension plan may be $2.5 million:

Sonia Sotomayor has a large defined benefit pension with a current market value of roughly $2.5 million. Sonia Sotomayor has roughly $1 million in equity in her Greeenwich Village condo. Sonia Sotomayor has no descendents to bequeath wealth too.

How could someone as smart as Dr. Mankiw miss the obvious possibilities? Maybe he posted this very incomplete analysis as a test for his Harvard students to see if they could articulate the possible explanations of the facts presented in his post in a way that was consistent with the life-cycle model.

China's trade policy was not an economic one

Kissinger: Their interest is 100 percent political. There was no emphasis at all on the economic side. Even as we arrived at the airport, one of them commented to me, "We are being overwhelmed with your businessmen. In due time we'll do business, but in our own time."

Remember, these are men of ideological purity. Chou En-lai joined the Communist Party in France in 1920, long before there was a Chinese Communist Party. This generation didn't fight for 50 years and go on the Long March for trade.

Mr Shultz: In Marxist theory, economics is paramount and all else is superstructure.

Kissinger: In Marxist practice, politics is paramount.

Mr Shultz: Then this is ideological impurity.
.....
Kissinger: What I am saying is that they are not interested in trade for trade's sake. I am not saying they are not interested in getting things done.

Another thing struck me: When you have read the formalism of old China, it is remarkable to see the absence of hierarchy, for example, in the personal relationship between Chou and his interpreter. There was an easy personal relationship unlike what you would see in any Western official counterpart.
.....They are concerned with the Soviet military buildup on their border......

Whenever I mentioned chinese history to them, they emphasised what was new. But we were given a special tour of the Forbidden City by their chief archaeologist. Their grace and style did not give you a sense of an enormous break in continuity. At the same time, you get a mystical sense of their revolution as a tremendous emotional experience. Mao is right. It is hard to see how the next generation will feel and act the same way.
....

Mr Peterson: Well,Henry, it's good to have a reason to congratulate you for something other than your presumed sexual exploits.

Kissinger: You know I believe in the linkage theory!



White House Memorandum. 19th July 1971
http://www.gwu.edu/~nsarchiv/NSAEBB/NSAEBB66/ch-41.pdf

The scaffold of 1974

This week I found myself collecting together some memorabilia from 1974 to provide as a gift to a friend born in that year. I found evidence of the scaffold that swayed our future.

Wernher Von Braun (founder of modern rocket science and former vice president of Fairchild Industries) told Dr Carol Rosin (former corporate manager of Fairchild Industries 1974-1977) that the reasons for space-based weaponry were all based on a lie. He said that the strategy was to use scare tactics – that first the Russians, then the terrorists are going to be considered the enemy…. “I was at a meeting in Fairchild Industries in the War Room. The conversation [was] about how they were going to antagonize these enemies and at some point, there was going to be a Gulf War….” [1]

The ex-ambassador to Saudi Arabia, James E. Akins… argued [around 1980] that Kissinger acquiesced in the Shah-led oil price hikes beginning in 1974 to provide Iran with the finances to help out ailing Northrup, McDonnell Douglas, General Dynamics, Boeing, Grumman and Litton Industries. In 1974, as oil prices spiralled upward, the Shah launched what, if completed, would have been the most ambitious nuclear program in the Third World: 20 power plants to generate 23,000 megawatts of nuclear capacity by 1994. The Shah and his small industrial elite were in large part motivated by the huge kickbacks to be gained in the negotiations of each reactor contract. The, corporate vendors, on the other side, were reacting to dwindling sales at home and were often backed by substantial export credit offerings from the home governments.[2]

1974 - ‘The Khemlani Affair’ in Australia. Australian oligopoly media barons ran the most intensive campaign of attack against the Federal Labor (Whitlam) Government when it tried to borrow large sums of money directly from Middle East nations instead of through the (more expensive) US Morgan-Stanley Wall Street monopoly. [3]

The beginning of the ‘supply-side economics’. How a deranged cult hijacked economics. A meeting in Washington in 1974 between Arthur Laffer, an economist, Jude Wanniski, an editorial page writer for the Wall Street Journal and Dick Cheney, then deputy assistant to President Ford. “Notions that would have been laughed at a generation ago ... are now so pervasive, they barely attract any notice.” [4]

1974 –Prediction of the global consolidation of corporate giants. “Their bookkeeping will be the real story of international relations.”

“The world influence of the major corporations grows by the year as the multinational organizations overlaps political frontiers and undercuts the authority of nation states. Professor Howard Perlmutter has predicted a degree of global consolidation among the corporate giants that will, by 1985, place the bulk of the world’s economic power in the hands of two hundred multinational firms, possibly by then incorporated under the United Nations or World Bank. Many of these firms will be tied into “trans-ideological mergers” with socialist governments – like the recent agreement of the Soviet state insurance agency to underwrite American investments in the third world against the risk of expropriation or the much rumoured Russian-American-Japanese venture to exploit Siberian oil – and so will have more to do with the shape of world affairs than the official foreign ministries. Their bookkeeping will be the real story of international relations.” [5]

Who you think need war
Who own the oil
Who do no toil
Who own the soil
Who is not a nigger
Who is so great ain't nobody bigger
Who own this city
Who own the air
Who own the water [6]

[1] Testimony of Dr Carol Rosin
December 2000
From Duncan Roads
nexusmagazine@optusnet.com.au
http://www.mayanmajix.com/art742.html
and
Imagine
by Carol Sue Rosin
http://www.west.net/~crosin/imagine.html
and
Carol Rosin
http://en.wikipedia.org/wiki/Carol_Rosin

[2] The Multinational Monitor
DECEMBER 1980 - VOLUME 1 - NUMBER 11
I R A N
Business In the Shah's Iran
by John Cavanagh
http://multinationalmonitor.org/hyper/issues/1980/12/cavanagh.html

[3] 'Oil in troubled waters' by Jim Cairns (former Deputy Prime Minister in the Labor Whitlam Government in Australia)

[4] How a cult hijacked American politics. Flight of the Wingnuts
by Jonathan Chait. Post date: 09.03.07. Issue date: 09.10.07
http://www.tnr.com/docprint.mhtml?i=20070910&s=chait091007

[5] ‘Where the Wasteland Ends – Politics and Transcendence in Post Industrial Society’ by Theodore Roszak. ISBN 0571 10581 5. 1972. Faber and Faber Limited, London.

[6] Somebody blew up America. AMIRI B 10/01

The Decline and Fall of Work

The Latin word labor means 'suffering'. We are unwise to forget this origin of the words 'travail' and 'labour'. At least the nobility never forgot their own dignity and the indignity which marked their bondsmen. The aristocratic contempt for work reflected the master's contempt fo the dominated classes; work was the exploitation to which they were condemned for all eternity by the divine decree which had willed them, for impenetrable reasons, to be inferior. Work took its place among the sanctions of Providence as the punishment for poverty, and, because it was the means to a future salvation, such a punishment could take on the attributes of pleasure. Basically, though, work was less important than submission.

The bourgeoisie does not dominate, it exploits. It does not need to be master, it prefers to use. Why has nobody seen that the principle of productivity simply replaced the principle of feudal authority? Why has nobody wanted to understand this?

*



* 'The Revolution of Everyday Life' Chapter 5. 'The decline and fall of work'.
by Raoul Vaneigem. A translation from French of 'Traite de savoir-vivre a l'usage des jeunes generations' which was first published in 1967. Page 53

Democratic Masters of Ineptitude

California needs a two-thirds majority to pass the budget. The hard-line Republicans, who are already doing poorly with the public, looked bad. After long delays, six Republicans offered to support a vicious budget, with modest tax increases on matters that left business and the wealthy unaffected. Republicans required that the Legislature agreed to put a number of very restrictive budget referenda on a special election. This strategy was a brilliant success in tripping up the Democrats, who mostly supported the measure, while both anti-tax forces and most unions opposed it.

Besides, if Prop 1A had passed, the state would have to put funds into a rainy day fund, which would have provided a tempting target for future tax cutters.

All but one insignificant measure that affected legislators' salaries lost.

The media played the election is if it was a resounding victory for anti-tax forces. Even more cuts will hit education and the poor. And the Democrats will have no alternative to offer.

AIG: The Disaster of Regulator Shopping

The New York Times published a fascinating piece about how AIG managed to get itself regulated as a Savings and Loan by the Office of Thrift Supervision. Guess why? Light as bank regulation is, S&L regulation is even more lenient. And it paid off in the end, no?

Cyran, Robert. 2009. "Downfall of a Regulator." New York Times (9 April): p. B2.

US financial regulators have spent the last several years in a race to impotence. The clear winner of this chase to the bottom is the Office of Thrift Supervision (OTS), the agency that served as chief financial regulator to a motley crew of credit crunch losers, including Countrywide, Washington Mutual, IndyMac and American International Group. Shuttering OTS would be a good first prize.

Other regulators haven't exactly covered themselves with glory. In sheer numbers, more small state-chartered banks regulated by the Federal Deposit Insurance Corporation have failed. In size, only the government's determination that Citigroup was too big to fail and must be bailed out prevented the Comptroller of the Currency from winning the gold medal for incompetent regulation.

But the OTS exhibited the worst symptoms of regulatory capture -- that's to say taking the side of the industry it regulates instead of the public. Some signs are trivial but telling. It called institutions under its oversight "customers". Others are extraordinary. It allowed multiple thrifts, among them failed IndyMac, to backdate capital infusions so that earlier quarterly financial statements looked healthier than they would have done.

Without this action, IndyMac probably would have closed its doors sooner, possibly reducing associated losses to FDIC and depositors -- the bleeding usually increases as undercapitalised financial institutions stagger on. Scott Polakoff was replaced as acting head of OTS and put on leave at the end of March while the backdating matter is being investigated.

The reasons for this regulatory version of Stockholm Syndrome are multiple. The minimal number of bank failures in the middle of the decade bred widespread complacency among all financial regulators. The Bush administration tended to sympathise with the idea that markets regulate better than federal agencies. And the growth of unregulated mortgage brokers and other non-bank financial companies made even OTS oversight look stringent by comparison.

But OTS funding also probably played a key role in its failures. The agency's budget comes almost entirely from fees levied on the thrifts it regulates. Fees are based upon asset size. This structure gives OTS, or indeed any regulator, a potential incentive to first try and lure financial institutions into becoming thrifts and then look the other way if they enlarge their asset base through questionable lending.

These conflicts of interest were worsened by financial consolidation. A handful of institutions accounted for much of OTS's budget -- Washington Mutual, for example, provided about 12% of the agency's operating funds, according to Patricia McCoy, a professor at the University of Connecticut School of Law who has testified to the US Senate on the matter.

OTS rejects the notion that it encouraged or even temporarily benefited from regulatory arbitrage. But this is hard to square with history. Countrywide switched to the OTS in early 2007, a move that did consolidate the company's oversight but was also widely attributed to the attractions of the agency's perceived lighter touch.

That switch meant four of the five biggest issuers of option ARMs - a particularly virulent form of mortgage loan that former OTS head John Reich had praised in speeches - were under OTS supervision. The fallout from the housing downturn forced Countrywide into Bank of America's arms. The other three -- IndyMac, Downey Financial and Washington Mutual -- all failed.

So what can be done to prevent this happening again? Funding regulatory agencies at least partly through Congressional appropriations rather than user fees might help cut the ties between industry and regulators. It's no panacea, though. The predecessor to OTS was abolished precisely because lawmakers leaned on regulators -- and threatened to cut their budgets -- to stop an investigation into Lincoln Savings and Loan, the thrift controlled by Charles Keating which subsequently went bankrupt. But at least the distance between regulator and regulated is greater when funds come from Congress.

A better idea is regulatory consolidation on the federal level, with broad new statutes that apply to surviving regulators. For example, underwriting should be based on consumers' ability to repay. Common lending standards on sensible principles would limit the wiggle room in which toxic lending products thrive. And reducing the number of agencies should reduce regulatory arbitrage.

After all, Washington bureaucrats gain prestige and influence by winning turf wars, not unlike the private sector companies they oversee. Minimise the soil that can be fought over, and financial institutions have less ability to play one official off against another.

Saving ourselves in a new way

On the right see the satellite image of smoke from one of the many annual industrial forestry burns in Tasmania, Australia. This one is over North Eastern Tasmania where the pollution again caused people to evacuate their homes.

[We must] "stop seeking and celebrating dinky achievements" because "nothing that we are doing, nor even seriously contemplating, comes anywhere near such a massive transformation [as is necessary], yet every actor on the political stage ... downplays the terrible realities and trumpets small-scale solutions wrapped in upbeat rhetoric ... We are racing toward the end of the world and have no plan of escape, but it is considered impolite to acknowledge that fact in public."
----Ken Ward, the former deputy director of Greenpeace USA and an environmental strategist

The elephant in the room “is this: we only get one shot at this, and we don't have the luxury of a trial option that locks in a bad policy for decades…. At 1˚C the genie is out of the bottle, at 2˚C the bottle is broken.”
--- David Spratt, author of Climate Code Red.

"We are on our way to a destabilisation of the world climate that has advanced much further than most people or their governments realise", so "our survival would very much depend on how well we were able to draw down carbon dioxide to 280 parts per million", compared to the present level of close to 390ppm."
---Hans Joachim Schellnhuber, director of the Potsdam Institute and Europe's leading climate scientist

See here.

David Spratt informs the reader that Zero Carbon Britain released an alternative energy strategy in 2007 that found "in 20 years, the UK could produce 100 per cent of electricity without the use of fossil fuels or nuclear power, while also almost tripling electricity supply, and using it to power most heating and transport systems." [1] However, the report refers to carbon capture technology that is not yet proven. It also promotes the idea of a huge expansion of forestry and biomass crops over agricultural land. And here's another major cause for concern about this report. The science behind forests as carbon sinks is very dubious. See 'Pieces of Mind'.

[1] In the end, climate is not an economic question
By David Spratt - posted Tuesday, 8 July 2008
http://www.onlineopinion.com.au/view.asp?article=7602

Political Aspects of Full Employment V, 2.

by Michal Kalecki

'Full employment capitalism' will, of course, have to develop new social and political institutions which will reflect the increased power of the working class. If capitalism can adjust itself to full employment, a fundamental reform will have been incorporated in it. If not, it will show itself an outmoded system which must be scrapped.

But perhaps the fight for full employment may lead to fascism? Perhaps capitalism will adjust itself to full employment in this way? This seems extremely unlikely. Fascism sprang up in Germany against a background of tremendous unemployment, and maintained itself in power through securing full employment while capitalist democracy failed to do so. The fight of the progressive forces for all employment is at the same time a way of preventing the recurrence of fascism.

The Economics of Crisis and the Crisis of Economics

am preparing to give two lectures the economics of crisis and crisis of economics during my trip to China. I only have the introduction so far. I would much appreciate any comments.

The Economics of Crisis and the Crisis of Economics
The reputation of economics rises and falls with the business cycle. In the late 19th century, when capitalism faced what was then called the Great Depression, the world held economists in very low regard. For example, Walter Bagehot, longtime editor of London's The Economist, wrote:

Political Economy is not altogether satisfactory. It lies rather dead in the public mind. Not only does it not excite, the same interest as formerly, but there is not exactly the same confidence in it. Younger men either do not study it, or do not feel that it comes home to them, and that it matches with their most living ideas. New sciences have come up in the last few years with new modes of investigation, and they want to know what is the relation of economic science, as their fathers held it, to these new thoughts and these new instruments. They ask, often hardly knowing it, will this 'science' as it claims to be, harmonise with what, we now know to be sciences, or bear to be tried as we now try. [Bagehot 1885, p. 4]

http://michaelperelman.wordpress.com/2009/05/20/the-economics-of-crisis-and-the-crisis-of-economics/