Tuesday, November 23, 2010

The American Way?

Ed- American capitalism is working more efficiently than ever. What does that mean for the future of our country?


Corporate Profits Were the Highest on Record Last Quarter
By CATHERINE RAMPELL


Published: November 23, 2010


The nation’s workers may be struggling, but American companies just had their best quarter ever.

American businesses earned profits at an annual rate of $1.66 trillion in the third quarter, according to a Commerce Department report released Tuesday. That is the highest figure recorded since the government began keeping track over 60 years ago, at least in nominal or non-inflation-adjusted terms.

Corporate profits have been going gangbusters for a while. Since their cyclical low in the fourth quarter of 2008, profits have grown for seven consecutive quarters, at some of the fastest rates in history.

This breakneck pace can be partly attributed to strong productivity growth — which means companies have been able to make more with less — as well as the fact that some of the profits of American companies come from abroad. Economic conditions in the United States may still be sluggish, but many emerging markets like India and China are expanding rapidly.

Tuesday’s Commerce Department report also showed that the nation’s output grew at a slightly faster pace than originally estimated last quarter. Its growth rate, of 2.5 percent a year in inflation-adjusted terms, is higher than the initial estimate of 2 percent. The economy grew at 1.7 percent annual rate in the second quarter.

Still, most economists say the current growth rate is far too slow to recover the considerable ground lost during the recession.

“The economy is not growing fast enough to reduce significantly the unemployment rate or to prevent a slide into deflation,” Paul Dales, a United States economist for Capital Economics, wrote in a note to clients. “This is unlikely to change in 2011 or 2012.”

The increase in output in the third quarter was driven primarily by stronger consumer spending. Wages and salaries also rose in the third quarter, which might help bolster holiday spending in the final months of 2010.

Private inventory investment, nonresidential fixed investment, exports and federal government also contributed to higher output. These sources of growth were partially offset by a rise in imports, which are subtracted from the total output numbers the government calculates, and a decline in housing and other residential fixed investments.

Friday, November 5, 2010

Want Sane Politics? Start Here:

  Editors note:   This is how the Mother of Parliaments deals with candidates or campaigns run on lies and half-truths. At a stroke. Can we learn? (reprinted from The Telegraph of London  (11/5).

 Labour minister barred from Commons for three years

Phil Woolas loses seat after knowingly making false statements about opponent in May's general election.

The Labour MP could be barred from the Commons for three years, with the election contest for his Oldham East and Saddleworth seat set to be re-run. 

But Mr Woolas said he would fight the ruling - the first of its kind in 99 years - and was seeking a judicial review.

"The court has decided that an election should be overturned and an MP should lose his seat and be incapable of being elected to the House of Commons for three years because statements which attacked a candidate's 'political conduct' were also attacks on his 'honour' and 'purity'."

The court decided that the Oldham election should be be re-run, and that Mr Woolas should lose his seat and be barred from being elected to the House of Commons for three years.
It is now up to Commons Speaker John Bercow to decide whether to impose the three year ban, initiate a by-election for Oldham East and Saddleworth immediately or wait for further legal proceedings.

The Speaker's office said Mr Bercow would make a statement to the Commons on Monday.
Lord Falconer, the former Lord Chancellor, had earlier conceded that Mr Woolas would be forced out, saying he will not be Labour's candidate in the by-election that must now be held.

He said: "If there is to be a by-election, which it sounds like there is going to be, then Labour will have a new candidate."

Mr Woolas, who won May's general election with a majority of just 103 votes, is the first MP for 99 years to face a successful challenge to his election victory on the basis of publishing false statements about an opponent.

The specially convened election court had heard that the Labour MP stirred up racial tensions in a desperate bid to retain his seat in Oldham East and Saddleworth.


Giving their judgment, Mr Justice Nigel Teare and Mr Justice Griffith Williams said Mr Woolas was guilty of illegal practices under election law.

Mr Woolas was also found to have knowingly made a false statement that Mr Watkins had reneged on a promise to live within the constituency prior to the election.

That suggested Mr Watkins was "untrustworthy".

Sunday, October 17, 2010

Soles of War

by Claudia Ricci

Professor Ricci is an author, professor of journalsim at SUNY/Albany
and a founding principal in "Wordsmith Wars"

Outdoors, in the garden. The light is the color of seawater. There are shadows. There are feathery astilbe tails, swishing like golden wings. There are lilies of every color, cupped to the sky. And there are trees: palm and mango and even, a dwarf apple. Always in a story like this, a tale of evil and temptation, a story of sin and possible redemption, there has to be an apple tree. And of course, an Eve. Only in this case, Eve’s name is Caroline. Cee for short.




Oddly enough, his name is actually. Adam.



“Oh but why?” she asks him. Her eyelashes are as thick and dark as midnight brooms.



“Why do you have to go?”



“Why do you think?” He toys with her earlobe. A teardrop of flesh between his callused fingertips. Then he slides one finger down her neck. Traces her collarbone. Stops right on the point of it. Her collarbone. The rounded nub. It sticks out so far. She’s always been so self-conscious.



“Could you not do that?” She speaks in a low voice.



“Don’t whine.”



She sits up. They are parked on the lush green lawn that occupies one side of the hotel’s garden. She is sitting enveloped in between his legs. His arms wrap hers. His arms in fatigues. Hers in a white T. “I’m not whining,” she says, struggling to ramp her voice up to a new note. It sounds false.



She cocks her head back. Her eyes are giant black olives. “I just can’t believe you are leaving me. Again. When you promised you wouldn’t. When you came back you said you would never ever have to…”



He moves roughly to cover her mouth with his hand. “And so now I do. I have to go, Cee. Please don’t make it hard for me.”



She tries to move his hand away with her own two, but his hand is vised there. She smells his cologne. A fragrance her body owns. She makes a small ragged noise as she pries away at his grip. Finally she bellows loud and sharp and starts kicking her sneakered feet. For a fleeting moment, she thinks: this is what it must feel like, to be one of his enemy prisoners.



One long screech, and then she is free of his embrace. She gets to her feet. Her face is red and blotchy. Her heart is slamming.



“Damn you Adam. Damn you. You didn’t have to do that.” She bolts out of the garden. Walks the curved white stone path that ends up in the slate courtyard of the hotel. The doors slide open and she steps into the frigid air conditioned lobby. The chill feels good on her face, which is burned by his hand. She walks past the desk and the dull-eyed clerk and pushes the elevator button. She is going up.



The door of the elevator opens. As it does, she sees into the mirror inside. He’s standing there behind her. He is more than a full head taller than she is. She hesitates, glares at him. They get into the elevator. She turns away from him. Crosses her arms. The door closes. They are going up.



“Caroline, the simple matter is this. I have to hit the sands in 33 hours exactly. Now are you going to spend this last day being angry at me?”



She blinks. Her image of him now: silty. Covered in the fine white and yellow dusts of the desert. His helmet. His eyes. His nostrils. All encrusted. The terrible terrible desert he has described to her so many times. Her heart pumps a little bit faster. Thinking of him like this makes her eyes watery. All those months she spent. Watching CNN. Waiting for email. Cringing at every early morning or late night phone call.



She can’t live life with him over there. She shouldn’t have to. Again.



Tears balance like waves on the rims of her eyes.



But they don’t fall.



Instead, she hears these words. They form all on their own, as if her lips are a forge of their own.



“I’m going. I’m going too, Adam. I’m going to sign up. Join. If you are going, then, hell, I’m going to. I’m not staying here. I won’t…I just won’t do it, won’t stay behind. Waiting. Waiting. I won’t do it anymore. I can’t. I can’t live that way.”



There is a small ding. The doors open. They both stand there.



“That is the stupidest thing you have ever said.” He mutters that and shuffles out of the elevator.



She sniffles. Starts to trail after him. “Oh what, so you think I can’t do it? You think I can’t be a soldier. What I’m too weak, too scared?”



He doesn’t speak. And then he does. “No, Caroline, you are not too weak. You are not too scared. There are just things you could never do,” he says. He starts down the hall.



“What things? What things? What like marching or something?” She is following him. She is hurrying. She hears herself. She is shrieking.



He stops. He turns to face her. To look down into her eyes. He’s smirking. She stares at him. His squared jaw. His pouty lips. His eyes, which narrow into slits.



“What things can’t I do?” she says again, breathing hard, but more quietly now.



He bends toward her. She can smell garlic on his breath. Garlic from the shrimp they ate at lunch. And she can smell the bottle of white wine they shared.



“You couldn’t hurt somebody Caroline. You would fall apart before you shot somebody in the head. And there comes a time when you have to hurt somebody in war. You have to hurt somebody real bad. As in, pow. Splat. Red blood. Dead.”



His eyes –hazel with a yellow streak--widen. And maybe it’s her imagination, but they seem to shine. They seem to shine in some kind of violent color.



She shrinks away from him. He turns, and all of a sudden she sees him. Falling. Fallen. His face blackened, one cheek crushed into the ground. His teeth smashed. Bits of teeth everywhere. And his right leg. A bloody stump lying a few feet away on the side of the road. The fabric of his pants blood soaked. The humvee he was riding in a moment ago, now tipped upside down, the dull grey metal in shreds. The shattered pieces scattered across the road amid dead body parts and a tangle of brambles and bushes.



She shakes her head. She has to make the image go away. “I would do anything to stop you from going, Adam.” She says that so quietly it cannot be heard. And now she is starting to sob. But he is walking away. “Doesn’t that matter to you Adam? At all? Adam?”



He stops again. Doesn’t turn to face her. Speaks into the empty hotel hallway. His voice thunders in her ear.



“Caroline for chrissakes what has gotten into you? You went through two years with me gone. And you knew there was a chance I’d have to go back. And now here I am half-way there. No, three quarters. For chrissakes. Here I spend a goddamn fortune on two days with you in a five-star hotel just so you can ruin things this way? What the hell are you doing?”



“Adam, I just know,” she says, sucking in her breath. “I just…I know you shouldn’t go. Something…something is going to…”



He is too far down the hallway now to hear her. The thick carpet sucks up the word “happen.” There is no sound from his boots.



She stares into the muted lights on the walls.



He disappears around the corner.



She blinks.



She follows him. Something comes to her now. Another vision of him.



She is thinking something she can’t possibly think.



********



They make love with the television blaring. When they finish, they lie in silence, side by side, changing channels.



“You hungry Cee?” he says after a while.



“I guess. I don’t know. I’ll be fine.” She hugs her knees. She is in a short pale blue silk bathrobe, sitting on the bed, cross legged.



He picks up the phone and orders a bottle of chilled champagne and fresh strawberries and warm chocolate from room service.



After a while, there is a knock on the door. It is about four o’clock. The sun rays are lying across the bed like strips of gold.



The waiter, an older black man dressed in a short red jacket and crisp grey trousers, wheels in the table, covered in a spotless white cloth. The champagne is in a large silver decanter that gleams. The strawberries are piled high in a silver bowl. The chocolate is in a closed bowl astride a small candle.



The waiter offers to open the bottle but Adam declines the offer.



As soon as the waiter leaves, Adam twists off the wire caging at the top of bottle. Then he leans to a chair and pulls out his pocket knife from his fatigues. The blade is a sharp little mirror that catches a narrow wedge of sun and casts it on the wall. He uses the blade to loosen the cork. In a moment the cork shoots up across the bed. Champagne the color of ginger ale slops out of the bottle. He holds the bottle to his lips and slurps in the champagne. Grinning, he offers her the bottle. She refuses.



“Geesh,” he says, wiping the back of his hand across his mouth.



He lays the pocket knife on the table. She eyes the blade. She blinks. She is thinking something she doesn’t want to think.



He is bare-chested. In red plaid boxer shorts. Sitting on the edge of the bed, he pours two glasses of champagne. The white fizz foams up and over the top of the slender glasses. He holds up one glass and hands her the other. She raises her glass but averts her eyes.



“Caroline?”



She looks up at him. She blinks. Her mouth is cottony. Her lips are a grim little line. She raises her glass and the two glasses come together in a dull “clink.”



They dip strawberries into warm chocolate. She eats one and says she’s had enough.



“You know, Cee, lately you are no fun at all.” He dips one after another strawberry into the chocolate goo.



They finish the champagne. He drinks most of the bottle.



They sit in bed, slumped together under the comforter. There is a smudge of chocolate on the sheets.



Soon, she can tell from his occasional snore, and his steady breathing, that he is asleep. She pulls herself from his grasp. She keeps the television on.



She stares at his sleeping face. The soft O in his pouty lips. She picks up one of his hands and kisses the back of his knuckles. He mutters something, but drops back to sleep. She kisses his lips. Her hair falls onto his cheeks.



She makes the sign of the cross and lifts her eyes into the air. “Bless me Father,” she whispers, “for I am about to sin.” Her head drops. “Please, that I may be forgiven.”



She walks to the end of the bed. Pulls up the comforter. Pulls up the sheet.



His feet are bare. The tops of his feet are wired in sparse black hairs. His toenails are square and ragged. Yellowing. They need clipping.



She walks over to the table where the empty champagne bottle lies in the silver decanter. She picks up the pocket knife.



She is not crying or trembling and she can’t figure out why she is not.



She carries the pocket knife to the end of the bed. She sits cross legged on the floor. She reaches up to the bottom of his left foot. She stares at the callused heel a moment, and then, she cuts.



She slashes the knife straight up, from heel to toe, going deep with the knife. Then she switches direction, cuts again, perpendicular this time, so that he has what looks to be a crude red crucifix on the bottom of his foot. Blood spurts out from the cross. His leg jerks back into the covers. Her breath grows rapid as warm crimson streaks the sheets.



She kneels, and bowing over the right foot, she sets quickly to work. Digging. Deep into the other sole.



The End

Wednesday, September 15, 2010

The Roman Empire Comes to Delaware


This single Republican may cost Republicans control
of the Senate and Nation



By A S Sandy Prisant

Are we about to prove the adage: if you don't heed history, you're condemned to repeat it?

Those who know Europe appreciate there isn't that much to see today that can't be linked back to the Romans and their stunning Empire.  Roman aqueducts still stand, all the way down to the Middle East. Roman roads still criss-cross the continent. Almost all spa baths are the ones Roman discover and developed 3,000 year ago. Some say, only partly tongue-in-cheek, mankind has created little of import since the Romans--except possibly Lipitor for cholesterol.

Tuesday night, the US Republican Party--already the most right-wing of all the world's major right-wing parties, was embarrassed to learn that its followers had nominated in a Delaware primary for US Senator, an amateur so far off the end of the cliff that she, Sarah Palin, and The Tea Party that supported her have now left the Planet Earth.

What is the difference between standard Republicans and this latter lot? Every Republican sentence on policy includes the words "cut" or "repeal". Never an idea. Even a bad one. The Tea Party folks say the very same thing, but add at the end of each sentence: "or I will shoot you." 

Christine O'Donnell has no management experience and no political or government experience. At all. For years she's just been running and losing. She is a fiscal conservative whom personally is a fiscal radical with a record of horrendous personal debt. She is a strident believer in truth, morality and no abortions, but it turns out her academic credentials are a thin tissue of lies. Upon hearing of her victory, it was reported that Karl Rove--Bush's ex-Rasputin--had to undergo a Heimlich Maneuver to be saved from choking to death.  Rove, who knows much more about such things than us, says O'Donnell can't possibly win in November.

Meanwhile in liberal New York State, one of the first Tea Party candidates for governor won the Republican nomination.  The New York Times said: "The result was a potentially destabilizing blow for New York Republicans." The little known man, who seems to struggle with English, is like Silvio Berlusconi, but without the style. In short, a tough guy.

And how is this like the Roman Empire?  Historians have shown that every great nation has its day and then begins to slip.  Usually this is the moment when more extremist elements come out and society begins to break down into sects--more concerned with internal spats and resisting change than righting the Ship of the Nation. It's human nature: let's do anything to keep our eye off an unpleasant future.

This is precisely what caused Rome's collapse--no direct invasions; no major competitors, simply endless internal sniping, distracting minor wars over the horizon and arguments over angels dancing on the head of a pin. All sense of community was lost, meaning common will and purpose was replaced by endless domestic power grabs. Then, by nobility. Today, by the banks. The result: slow, steady utter collapse of a nation-state. 

In the O'Donnell case, It leaves everyone in the middle--44% of whom have someone unemployed in their family--flailing in frustration and irrationally yelling to the heavens: "Don't Confuse Us With Ideas. Just Do Something or We'll Vote for an Anti-Candidate!!"

Does any of this sound like what's happening in a nation near you?

  




Wednesday, July 14, 2010

A Second Opinion on U.S. Health Care Reform

editor:  the following is a reply to a "New England Journal of Medicine"  commentary. The author, an  M.D. and Ph.D., is assistant professor at the Institute for Health and Aging at the University of California, San Francisco.

By Claudia Chaufan MD

In a recent issue in the New England Journal of Medicine, economist Jonathan Gruber praises the Patient Protection and Affordable Health Care Act (PPACA) as a “step in the right direction,” even as he expresses a healthy skepticism about PPACA’s capacity to control escalating health care costs, which he recognizes as “key to the long-term viability of our health care system.” Gruber also argues that there is “shortage of evidence” regarding which approach will meet Americans’ health care needs while controlling costs; therefore there is “no consensus” on what works [1].

Had Gruber looked beyond the U.S. borders, however, he would have found plenty of evidence. For instance, he would have found that U.S. consumption of health care as measured by critical indicators — per capita annual doctor visits, length of stay following heart attacks, or length of stay following normal childbirth – is no greater than the OECD average, and therefore cannot justify the extraordinary level of U.S. spending [2].


He would also have found that U.S. prices for medical care commodities and services are significantly higher than in other nations and constitute a key determinant of U.S. overall spending [3], and that such prices are determined by the exceptionally high administrative overhead caused by the system’s fragmented, public-private financing [4] and by the comparatively limited market power of American patients vis-à-vis their counterparts in countries with national health systems where the government negotiates prices with drug and medical device companies [5]. And he might have concluded that PPACA will do predictably little to change all this.

Moreover, the international literature would have shown the author the extraordinary international consensus around nonprofit financing to cover medically necessary services [5].

But what about the dramatic expansion of coverage promised by PPACA? Is this not a step in the right direction? The problem is that insurance coverage, as desirable as it may be, is not health care, but just a means to that end. And the U.S. system is notorious for providing coverage without care. High co-pays and deductibles are significant obstacles to access. Nor does health insurance offer financial security: nearly 78 percent of personal bankruptcies in 2007 that were linked to medical debt involved persons who were insured at the onset of their illness or injury [6]. PPACA, by allowing the sale of premiums for policies that will cover only 60 percent of health expenses [7], will do predictably little to change this state of affairs.


There is, however, an alternative proposal whose financial and policy soundness are based on decades of international experience and evidence. It would improve and expand Medicare to include all residents in the nation or in one state. That alternative may have to wait until PPACA unravels, as it predictably will [8].


President Obama argued that a model of reform as that implemented by PPACA would allow Americans to build on “what works” [9] – a decades-long experience with employer-sponsored for-profit health insurance. Maybe paradoxically, however, PPACA will unravel as employers realize that it is cheaper to pay a fine than pay for increasingly more expensive and inadequate policies, and employees enter the individual health exchanges implemented by the new law and find them so expensive that they “clamor for a nationalized health care system” [10].


References


1. Gruber, J., The Cost Implications of Health Care Reform. N Engl J Med: p. NEJMp1005117.


2. Peterson, C.L. and R. Burton, U.S. Health Care Spending: Comparison with Other OECD Countries. 2007. Order Code RL34175(September 17): p. http://assets.opencrs.com/rpts/RL34175_20070917.pdf (Accessed November 10 2007).

3. Anderson, G.F., et al., It’s The Prices, Stupid: Why The United States Is So Different >From Other Countries. Health Affairs, 2003. 22(3): p. 89-105.

4. Woolhandler, S., T. Campbell, and D.U. Himmelstein, Costs of Health Care Administration in the United States and in Canada. The New England Journal of Medicine, 2003. 349(August 21): p. 768-75.

5. White, J., Competing solutions: American health care proposals and international experience. 1995, Washington D. C: The Brookings Institution.

6. Himmelstein, D., U. , et al., Medical Bankruptcy in the United States, 2007: Results of a National Study. The American Journal of Medicine, 2009. 122(8): p. 741-746.

7. Dorgan, B., The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act. http://dpc.senate.gov/dpcdoc-sen_health_care_bill.cfm, 2010. Democratic Policy Committee.

8. Angell, M., Is the House Health Care Bill Better than Nothing? Physicians for a National Health Program, 2010: p. http://www.pnhp.org/news/2009/november/is_the_house_health_.php (May 17, 2010).

9. The New York Times, Obama’s Health Care Speech to Congress. 2009: p. http://www.nytimes.com/2009/09/10/us/politics/10obama.text.html?_r=1&pagewanted=print (Date accessed September 12, 2009).

10. Helderman, R., Gingrich in Va.: A Republican Congress could defund health care law. 2010: The Washington Post. p. http://voices.washingtonpost.com/virginiapolitics/2010/05/former_speaker_of_the_house.htm

 

Monday, July 5, 2010

Finally: People Are Using the "D" Word


By Sandy Prisant

While there are a few facts about the number of bank failures and percentage of US unemployed that are less grim this time, the greatest difference between the The Great Depression and The Great Recession is the choice of one word.

As we roll through Year 3 of this, house prices are again falling,  consumer confidence and stock markets are again dropping.  At the current rate of job creation it will take more than 10 years to replace all the jobs we've lost--which is a tactful way of saying we will NOT be able to replace all the jobs we've lost. Ever.

At the moment we are locked in a profound debate about the choice between balanced budgets and throwing lifelines.  But the US economy seems to snicker at all this chatter and continues to wend its way down hill.

In the last couple of years we've had a surfeit of wild estimates about this decline lasting 6 months. Or a year. Or a couple of years.  We've had "jobless recoveries" before and our gut tells us this isn't one of them. The fact is The Great Depression lasted 10 full years and it took Adolf Hitler to get us out of it. 

To date no one has presented any compelling case for our current malaise lasting less than a decade--as Depressions can. But there are some experts detailing what most US sources are unwilling to say. 

The following article from Sunday's Telegraph (London) comes from a senior economics analyst:

With the US trapped in depression, this really is starting to feel like 1932


The US workforce shrank by 652,000 in June, one of the sharpest contractions ever. The rate of hourly earnings fell 0.1pc. Wages are flirting with deflation.



People queue for a job fair in New York. The share of the US working-age population with jobs in June fell from 58.7pc to 58.5pc. The ratio was 63pc three years ago. Photo: EPA


By Ambrose Evans-Pritchard

Published: 9:33PM BST 04 Jul 2010


"The economy is still in the gravitational pull of the Great Recession," said Robert Reich, former US labour secretary. "All the booster rockets for getting us beyond it are failing."


"Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year. So what are we doing about it? Less than nothing," he said.


California is tightening faster than Greece. State workers have seen a 14pc fall in earnings this year due to forced furloughs. Governor Arnold Schwarzenegger is cutting pay for 200,000 state workers to the minimum wage of $7.25 an hour to cover his $19bn (£15bn) deficit.

Can Illinois be far behind? The state has a deficit of $12bn and is $5bn in arrears to schools, nursing homes, child care centres, and prisons. "It is getting worse every single day," said state comptroller Daniel Hynes. "We are not paying bills for absolutely essential services. That is obscene."

Roughly a million Americans have dropped out of the jobs market altogether over the past two months. That is the only reason why the headline unemployment rate is not exploding to a post-war high.


Let us be honest. The US is still trapped in depression a full 18 months into zero interest rates, quantitative easing (QE), and fiscal stimulus that has pushed the budget deficit above 10pc of GDP.

The share of the US working-age population with jobs in June actually fell from 58.7pc to 58.5pc. This is the real stress indicator. The ratio was 63pc three years ago. Eight million jobs have been lost.

The average time needed to find a job has risen to a record 35.2 weeks. Nothing like this has been seen before in the post-war era. Jeff Weninger, of Harris Private Bank, said this compares with a peak of 21.2 weeks in the Volcker recession of the early 1980s.

"Legions of individuals have been left with stale skills, and little prospect of finding meaningful work, and benefits that are being exhausted. By our math the crop of people who are unemployed but not receiving a check amounts to 9.2m."

Republicans on Capitol Hill are filibustering a bill to extend the dole for up to 1.2m jobless facing an imminent cut-off. Dean Heller from Vermont called them "hobos". This really is starting to feel like 1932.

Washington's fiscal stimulus is draining away. It peaked in the first quarter, yet even then the economy eked out a growth rate of just 2.7pc. This compares with 5.1pc, 9.3pc, 8.1pc and 8.5pc in the four quarters coming off recession in the early 1980s.

The housing market is already crumbling as government props are pulled away. The expiry of homebuyers' tax credit led to a 30pc fall in the number of buyers signing contracts in May. "It is cataclysmic," said David Bloom from HSBC.

Federal tax rises are automatically baked into the pie. The Congressional Budget Office said fiscal policy will swing from a net +2pc of GDP to -2pc by late 2011. The states and counties may have to cut as much as $180bn.


Investors are starting to chew over the awful possibility that America's recovery will stall just as Asia hits the buffers. China's manufacturing index has been falling since January, with a downward lurch in June to 50.4, just above the break-even line of 50. Momentum seems to be flagging everywhere, whether in Australian building permits, Turkish exports, or Japanese industrial output.

On Friday, Jacques Cailloux from RBS put out a "double-dip alert" for Europe. "The risk is rising fast. Absent an effective policy intervention to tackle the debt crisis on the periphery over coming months, the European economy will double dip in 2011," he said.

It is obvious what that policy should be for Europe, America, and Japan. If budgets are to shrink in an orderly fashion over several years – as they must, to avoid sovereign debt spirals – then central banks will have to cushion the blow keeping monetary policy ultra-loose for as long it takes.

The Fed is already eyeing the printing press again. "It's appropriate to think about what we would do under a deflationary scenario," said Dennis Lockhart for the Atlanta Fed. His colleague Kevin Warsh said the pros and cons of purchasing more bonds should be subject to "strict scrutiny", a comment I took as confirmation that the Fed Board is arguing internally about QE2.

Perhaps naively, I still think central banks have the tools to head off disaster. The question is whether they will do so fast enough, or even whether they wish to resist the chorus of 1930s liquidation taking charge of the debate. Last week the Bank for International Settlements called for combined fiscal and monetary tightening, lending its great authority to the forces of debt-deflation and mass unemployment. If even the BIS has lost the plot, God help us

Friday, June 11, 2010

Oil in the Gulf: The 100 Million Gallon Truth


By Sandy Prisant

The 24-hour news cycle and the explosion of media mean an awful lot of people need to do an awful lot of talking about the Gulf of Mexico Oil Catastrophe and anything periphal to it: the President's image,  volume of oil recovered, compensation claims, oyster beds, marshes, barriers, ruined vacations, Federal law, etc.

And BP is really OK with all that because it means a lot of help for them in keeping your eye off the ball.  So what should you do?  

Don't Listen. There is only one fact that matters and from which all consequences spring:

The consensus of US technical experts from the Government's flow rate panel, the University of Indiana  U.S. Geological Survey and Woods Hole Observatory  is that "from April 22 when the Deepwater Horizon rig sank until June 3 the well has gushed 1.26 million barrels of oil, or 52.9 million gallons." (Blomberg News) 


Since the leak cannot be stopped for at least another 75 days therafter, (until new side wells are completed)  the most conservative estimate insures a total spill of 3-3.5 million barrels.
 
 
According to the Department of Energy, there are 42 gallons of oil in one barrel. And that means the only fact you need to think about is this: By the end of August BP will have spilled into the Gulf, a minimum of:
 
130 MILLION GALLONS OF OIL
130 MILLION GALLONS OF OIL
130 MILLION GALLONS OF OIL