Tuesday, October 12, 2010

Planet Earth becoming a desert



I've been paying a lot of attention lately to the climate heating problem we and our children and grandchildren are heading into. This, plus the end of cheap oil looming, should be our main preoccupation, but, of course, are not. I ride my bike, eat vegan, and use public transport. My CO2 footprint is now 0.6 tonnes per year, compared to the average for Toronto of 10.0 tonnes per person. And I am meeting regularly, as we try to plan a future, with the Transition Town group in my village of Durham, Ontario. Look us up at localmotiveproject.com/transitiondurham. The movement is described at transitionnetwork.org

Above is a greatly simplified diagram of what's happening, or about to...

Friday, April 16, 2010

Stuff That’s Not So Bad

1. Lots of ever expanding obesity among humans. Children playing virtual games instead of real physical ones. North American lifestyle junk food diets. Associations of people trying to get fat, aiming to be 600+ lbs. and set Guinness records. Other Associations to build the self esteem of the overweight.

What else do we know?

We know we have a health care cost crisis. We know the overweight have shortened life spans. We know they cost the health care system less than the people of normal weight and exercise regimens who live long and make up about 70% of total health care costs. We know the DNA of those prone to addictions, including food addictions, and too stupid to take charge of themselves, should not be encouraged to proliferate. Logically, we should encourage those addicted to grossly fattening foods to gain as much weight as possible, as soon as possible.

But they don’t need encouraging, they’ll do it to themselves.

That’s not so bad.


2. People in North America and elsewhere in the world are running out of potable drinking water, agricultural water, and arable agricultural land is disappearing everywhere.

Severe and rapid climate change threatens life everywhere.

40 000 years ago humans and their domestic animals made up only 1/4 of 1% of the vertebrate biomass on earth. Today, humans and their domestic animals comprise 95% of the vertebrate biomass of the planet.

Where is the good in this?

Humans are the cause of these problems. And because of their stubborn addictions to unhealthy foods, enormous petroleum energy consumption, substitution of machines for human effort and exercise, and procreation, they are not likely to solve any of these problems without a drastic, forced reduction in total human biomass.

The planet herself will take care of herself by getting rid of humans. All they have to do, which is all they are likely to do, is go on as they have been, indulging their addictions and encouraging all nations to join in the party.

That’s not so bad.

4. In Ontario, $42 billion of a budget total of $100 billion goes to health care. $14 billion goes to education. Health care costs are rising without letup at 6% per year. In 6 years time, by 2016, the increase in health care costs will wipe out the entire education budget.

We know that health care costs per person are about $200 per year until age 60 or so, when they start to rise dramatically, reaching $10 000, $15 000, $20 000 per person per year by age 75-80. 70% of the total health care budget goes on chronic (that is incurable) illnesses of the elderly, palliative care merely, just keeping them alive longer.

Note I have no bias in this, I’m 75 years of age in May of 2010.

It doesn’t matter what people want, or what the Government says, we’ll have to spend the education budget to keep the elderly alive beyond their time. Without all the expensive drugs and other interventions their time is of course limited by their unhealthy lifestyles, including the wrong kinds of food all their lives.

In places, known as “blue zones”, in many locations around the world, people live to age 90 without much health care at all, then die. How come? Look it up. Google “blue zones” and get the data. It’s being vegan, getting exercise, and living without stress. Simple, and inexpensive.

So the warfare between the old and young continues. The old who vote grow in percentage of the population and demand the limited budget taken from the earnings of the young taxpayers be spent on palliating the result of their lifelong addictions to unhealthy lifestyles. The young grow fewer in numbers, and with poorer educations cannot compete with the global education and internet job sharing systems of India, China, Brazil and their 100’s of millions of young people. Canadian companies out source their work globally with no loyalty to Canadian youth. We lose lifetime jobs we used to have making stuff in our communities, our neighbourhoods. Sure a few can earn good incomes in the resource extraction businesses, oil and mining, as long as that lasts... But that is only the few.

We will lose our civility if this continues.

But you and I don’t have to do anything. Our whining and ranting won’t change people. The lack of enough money, as it always has throughout history, will force the needed change.

Governments will be forced to make health care a user pay system for those over 60, for those addicted to unhealthy food, tobacco, drugs and alcohol. The vast mass of the people will not be able to afford health care by the current medical establishment model, composed of Big Pharma and expensive doctors. To stay alive and be healthy, we will have to alter our lifestyles, change our food and exercise habits, be more at ease with ourselves and our families. In the words of Huddie Ledbetter, the last verse of “Good Night Irene”, “Stop your ramblin, stop your gamblin, stop stayin out late at night, go home to your wife and children, stay there by your fireside bright”.

That’s not so bad.

Donato April 16 2010

Thursday, April 15, 2010

Our Money is About to Vanish



This chart shows how every extra dollar of government borrowing is actually reducing the GDP, the “financial economy” is strangling the “real economy".



Our Money is About to Vanish

The history of paper money is that it always at some point vanishes in a storm of hyper inflation and has to be replaced . The US dollar which has been the world’s trading currency since it was imposed on all economies by the armed might of the US after the 2nd World War is about to undergo its final flameout. The Canadian and other currencies will likely be taken with it.

How will this happen?

The background

The money lending ( and therefore money creation) activities of the world’s central banks, and the money borrowing of the financial world’s large hedge funds, mortgage issuers, commercial banks and financial “insurance’ entities have brought us to the edge of the precipice with now nowhere to go but over.

Money gets created and put into circulation whenever and wherever it is loaned by any bank. This money continues to circulate until it is extinguished by being paid back by the bank to the central bank from which it was drawn. And the commercial bank can't pay it back unless they first collect what they have lrnt out. If too much money is created, beyond that needed to handle normal business transactions of the “ real” economy, then, money becomes plentiful, it becomes worth less because it is seen as plentiful, and hence prices rise, and interest rates rise, as people seek to preserve the purchasing power of their savings, and of the goods they are holding to exchange for other goods they need to maintain their lives and business and other activities. this is called inflation. When I was young, in the '40s a good pair of skates cost about $2.50, now they are over 100 times as much. It’s obvious that banksters, and their supposed masters in government cannot restrain themselves from printing too much money, thus eroding its worth over time through steady inflation. In a hyper inflation, the price of those skates will rise to maybe $10,000 or more very quickly. Commerce shuts down. Business and household finances collapse. Savings and pension funds disappear. Civil chaos may well ensue, as it did in Germany in the 1920’s leading directly to the takeover by the Nazi regime of ill memory.

The mechanism

We have essentially two different economies to consider. Though they are intertwined, they are separate. One I designate as the “real economy”, the other, the “financial economy”.

The real economy maintains itself through the making and trading of goods and services with money as the medium of exchange. It involves primarily real activity and real production by the participants. The financial economy maintains itself by “renting” goods, and money in return for money, which is a form of gambling, betting that the borrower will pay back the loan plus interest, or by providing various forms of ‘”insurance”, which is another form of gambling .

To describe these and their interaction further let us consider a useful analogy. Imagine being at the horse races. What you see is a grandstand full of people, maybe 2000 or so, watching horse races in which 10 or so horses race in each race. Suppose the real economy here is the grandstands, the food and drink vendors, the horses and their owners and all the workers, jockeys, grooms, etc. including those who own build, and maintain the track. The financial economy is the activity of gambling by those in the stands watching. The race track owners rent the right to bettors to participate in the pools of money available. They ensure they won’t go broke by paying out less than they take in, which is also what car, house, and mortgage and other forms of insurance companies do.

Now imagine we expand the activity of gambling on the races to many thousands, even millions of participants, on the internet, or by other forms of communication. We might imagine the races taking a long time to complete, so there would be the question of which horse and jockeys would last, and for how long, and even some might change jockeys and so on. So in a $10, 000 prize race, with 10 horses, we have betting activity amounting to millions of dollars. Then, extend this further. Imagine some clever financial people start to offer insurance to the bettors, in case they lose too large a sum of money. Imagine also they begin to offer the opportunity to bet on the success of individual bettors, rather than just on the horse. And further suppose that all this “financial activity” is supported by central banks loaning huge sums to the participants. Loans to bettors, loans to those insuring the bettors, loans to those selling "packages” of bets. (Today, anyone who buys a house counting on its value to increase so they can use it for their pension fund, or as an ATM machine, is gambling. Recognise the scenario?) And so on.

This is exactly what the “financial economy” has become in our life time. It is now some 100’s of times larger in the amount of money in circulation within it, than the “real economy” on which it is supposedly based. When all those “financial” instruments, such as “mortgages” and other far more complex and unsaleable paper promises, begin to be perceived as not likely to be paid back, the “renters” will start trying to sell off their paper promises. Only the first few to do so will get out with any value. All the rest will be lost as the entire house of cards comes down. But, here is the rub. The money that was loaned into existence to enable all this “financial” activity will still exist. And it will be seeking a safe haven to preserve its purchasing power. The price of solid assets and of goods and services in the real economy will skyrocket. Hyperinflation will roam the land destroying savings, wealth, purchasing power, even survival for many.



Donato April 15 2010




This chart shows how spending money is already starting to flood out of the “financial economy”, in quantities far greater than needed to sustain the “real economy”.




A QUOTE FROM AN ONLINE SOURCE:

These days, the (US) Administration’s watered-down “Volcker rule” – which will likely be diluted to water-like reform legislation in Congress – excludes the government debt markets from proprietary trading restrictions. Government finance is today’s unfolding Bubble and, not surprisingly, this Bubble is off limits for regulatory reform. Government deficits are integral to the Bubble, and there will be no serious effort to rein them in. The Fed’s balance sheet is a serious Bubble issue, but it also remains untouchable. Treasury, GSEs, and Federal Reserve Credit are viewed as the solution, and a historic Bubble is emboldened and builds momentum.

The markets’ perception of “too big to fail” has for years been an integral facet of Bubble dynamics. And despite all the talk of trying to rid the marketplace of this notion, the markets remain more persuaded than ever: the unfolding global government finance Bubble is much too gigantic for policy makers to risk letting it come anywhere close to failing. Massive U.S. deficits and near-zero interest rates ensure a steady flow of finance (newly created as well as an ongoing exodus out of low-yielding instruments) to debt markets around the world. Confidence runs high that ultra-loose U.S. financial conditions will continue to underpin Credit expansions globally. Politicians may talk tough, and they do put on a good show. Meanwhile, markets function with reticent aplomb, knowing they’ve got policy makers right where they want them.