Life’s little ironies…
“Go ahead… make my day.”
Life’s little ironies…
“Go ahead… make my day.”
On March 18, 2014 at 10:17 a.m., over at naked capitalism I commented on the Ukraine situation (and got clocked for it) thus:
Well, the U.S. gets a double win here, as eventually Europe will have to buy our natural gas exports (and we can legitimize our need to export), and what a great bargaining chip that becomes in forcing the EU to start agreeing to the U.S. terms on the trans-Atlantic trade agreement.
Damn, who thinks these things up in D.C.? Pure (evil) genius.
My point remains: A move to export natural gas doesn’t have to “make sense.” In her March 31, 2014 post at Our Finite World, “The Absurdity of US Natural Gas Exports,” Gail Tverberg does a great job of arguing her point against exports, but even she recognized why these efforts are moving forward:
“Why all of the natural gas exports, if we don’t have very much natural gas, and the shale gas portion (which is the only portion with much potential for growth) is so unprofitable? The reason for all of the exports is to pump up the prices shale gas producers can get for their gas. This comes partly by engineering higher US prices (by shipping an excessive portion overseas) and partly by trying to take advantage of higher prices in Europe and Japan.”
Her emphasis, not mine.
And right or wrong, the speculators seem to be onboard.
We have legal restrictions on natural gas exports in place, and the energy companies are leaning on Congress to remove those restrictions.
What better way to stir the we-need-natural-gas-export-restrictions-lifted pot than to find a bottleneck in the gas supply in a country that had a shaky political landscape (Ukraine), the help of which we could get those restrictions removed? Blunt force to remove those restrictions would not have played well with an American public that has grown accustomed to the we-need-energy meme.
Once those restrictions are removed, the carrot starts to look bigger for those trade agreements dangling over the Atlantic (TransAtlantic Free Trade Agreement, or TAFTA) and Pacific (Trans-Pacific Partnership, or TPP). Intransigent opposition to U.S. demands, from either side of those ponds, can quickly melt away when European and Asian political leaders are faced with populations growing cold over a harsh winter. Consider:
The crisis also is being used to promote a proposed trade deal, known as the Trans-Atlantic Trade and Investment Partnership, between the U.S. and 28-nation European Union.
“The recent developments in Ukraine only make it more clear why TTIP is important,” Froman said during a March 22 interview in Brussels.
(see “Ukrainian Crisis Not Wasted by Washington Lobbyists” link below for source of this quote).
While Germany and Japan rattle their sabers and threaten a return to coal power, they do so mainly as a weak attempt to counter what they know will be a choice between a) doing an about-face and return to nuclear, or b) adopt a larger share of natural gas, to counter adding to greenhouse gases during the generation of electricity. By adopting natural gas, both Germany and Japan know that road runs through the U.S., but are – at this point – unwilling to admit it for fear of the inevitable: The U.S. using its gas supply as a bargaining chip in the ongoing trade negotiations mentioned above. While the U.S. government wouldn’t restrict the flow of natural gas to these countries, they certainly have the power to control export tariff levels on gas supplies.
With slowing demand for energy due to a global economic anemia settling in, what better use of a synthetic crisis (Ukraine) to keep natural gas prices rising? Right now, with the widespread use of fracking, the U.S. is awash in natural gas, and energy companies want to get it off U.S. shores so that prices can rise, rather than falter. Never mind the transportation costs: If natural gas prices rise, the cost of developing the infrastructure to ship natural gas overseas will increasingly become a secondary, even tertiary, consideration.
This certainly adds credence to the argument that Ukraine simply became a pawn in a larger natural-resource pricing move: Ukrainian Crisis Not Wasted by Washington Lobbyists.
And there’s nothing like a crisis to keep the momentum of foreign energy companies (including the U.S.) moving towards the Drain of Spain: Foreign Frackers Now Find Comfort in Water-Hungry Spain. And Spain itself is running into trouble from its reliance on hydro-electric power, only adding to its eventual need for natural gas.
For those who find it unimaginable that stupidity runs rampant in the natural-gas sector consider this: Gas Carousel Making Spain Europe’s Biggest LNG Exporter. So do you think with this kind of mentality the LNG folks will really care if they ultimately drive up the price of doing business in the U.S.? They don’t get paid to be considerate. Besides, reflecting on the global scope of the natural-gas moves in play, it’s plain to see the powers-that-be in this sector intend to drive the prices upward on a global scale, thus not creating any cost disadvantage solely for American businesses.
A pot of gold at the end of an otherwise gray rainbow?
In the long-term, this manic drive to increase natural gas prices should spur other countries to develop alternative energy technologies, to remove themselves from the shackles of both U.S. and Russian natural gas. Perhaps, just perhaps, we’ll see the advent of a real paradigm buster with the creation of technologies that will finally make hydrogen a viable energy source, unleashing the potential of our universe’s most plentiful element.
The latest round of fleecing-the-government has cropped up in the Medicare system.
What a surprise.
These newly minted millionaire doctors shows that the single-payer-system-is-Nirvana meme is nothing more than the tired flapping of gums by those who continue to believe that the Federal government can still manage its bloated bureaucracy,”if only….”
Whatever. Consider these top-of-mind failures from our Federal government. There are far more that I have forgotten:
Etc., etc., ad infinitum, ad nauseum.
“But wait,” you say as you attempt to register a complaint, “we have a private healthcare system that is already fleecing the government-cum-taxpayers.”
Indeed we do, but it is not a free-market system, not even close, and those hypocritical pansies who pass as CEOs of healthcare insurance firms, who will thump their chests over our need for “free markets” are the very same ones who blocked a proposal during debates over the ACA that would have rescinded state-line barriers to selling healthcare insurance everywhere and anywhere. The management of HMOs and their ilk soiled their collective pants when faced with the red-hot prospect of having to release their grip on their state-bound oligarchies.
If you want to know what a real free-market healthcare system would look like, one that would drive the healthcare profiteers into the streets weeping, then you’ll have to glance at this.
There are countries that have single-payer systems, and they work well for those countries. Not perfectly, but well. Here in the U.S., however, we are saturated with a fleece-the-government culture. Infrastructure projects cost far more than they should, as do defense procurements, healthcare systems, airway traffic systems… the list goes on.
So what part of history leads any of us to believe our Federal government is fully capable of properly managing a single-payer healthcare system?
For some time I have been at odds with fellow sustainable agriculture supporters over the seemingly singular obsession of the movement with Genetically Modified Organisms (GMO). GMO crops are hybrids on steroids, with the genes being manipulated in the lab rather than the old-fashion cross fertilization of plants.
GMO crops may indeed pose a real threat to human health, I’m not denying that possibility. But the problem with attacking GMO crops is the dearth of research out there that upholds our fear of GMOs. A nascent growth of research is emerging from Europe that starts to peel back the Secrets of GMO, since governments there fund the research. Here in the States, however, the state of GMO research is left wanting. Most U.S.-based research at the university level is funded by corporations or private organizations backed by corporations. The corporations that stand to profit from GMO crops represent a massive resource for university-research funding, so guess what the research findings reveal? Largely positive findings in favor of GMO crops.
Until a new model for funding university research is found, little ammunition will be found challenging GMO crops. Unfortunately, even if we see a precipitous rise in GMO research coming out of Europe that uncovers dangers in GMO crops, the very fact that the research emanated from Europe is enough for dark corners of power in the U.S. to launch a smear campaign against the results (which is precisely what happened to some GMO researchers in France, whose findings were less than flattering for GMO crops). “If the research comes from Europe,” the meme goes, “it can’t be trusted.” Never mind that these smear campaigns have yet to answer the very simple question, “Why can’t continental research be trusted?” It is enough that findings representing a challenge to the market power of U.S. corporations be eradicated in the quickest manner possible.
As a former sustainable farmer and and present advocate, there are two issues surrounding industrial agriculture that can be challenged, because the support for these arguments are in plain sight: 1) the erosion of topsoil thanks to the industrial practice of no till and the massive expansion of cropland under management by a single farm and 2) the largely uncovered story of Private Equity and Hedge Fund investment in farmland around the globe.
The erosion story will wait for another day; you can read a quick summary of the problem in Urban Redevelopment in Agriculture under the section, “Two Ills, One Remedy,” pp. 19-21.
As for the corporate consumption of farmland that challenges global food security, I uncovered this trend in 2011 while working on a paper for Worldwatch, a sustainability organization based in Washington D.C. Savills PLC, of London, openly promotes its investment fund in farmland, specifically known as InvestAg Savills. This fund pursues farmland acquisitions globally. The fund is active in the States, but also in Africa, a continent that has struggled with food security ever since colonialization.
Now a story has emerged tracing the threat to U.S. food security from Private Equity as well. The trend is growing.
The thinking behind this seemingly sudden interest in farmland-as-investment is simple. Since the Global Financial Crisis of 2008, investors quickly discovered that if stocks, money markets, Collateralized Mortgage Obligations and other derivatives could not be trusted as investments, then find a bottleneck, the place where inelastic demand exists, namely, food and energy. Food and energy are inelastic in their demand because people need to eat and people need energy. There is no slack, there are no other options.
This is why Wall Street hedge funds have jumped into commodity speculation with both feet, driving up food and energy prices beyond levels demanded by substantive supply issues (Hint: there are very few real supply issues; most of the “shortages” reported in the press originate from “analysts” who operate as mouthpieces for Wall Street, and the dutiful dogs-turned-journalists report these analyses in the news without substantiating the claims).
Of course, farmland is directly tied into our food chain, so this becomes just another investment in industries with inelastic demand. It also holds the added benefit of large tax loopholes since investment in farmland turns speculators into “producers.” The goose laying the golden eggs is suffering from diarrhea, and the rest of us are left without real eggs.
More importantly, both farmland investment and topsoil erosion are real issues, and the arguments can be backed with real findings. This is why the sustainable agriculture community needs to concentrate on these real and immediate dangers, instead of chasing tenuous issues that are difficult to substantiate at the moment. Start with the substantive issues, gain some credibility, then go after demands for objective research into GMO crops.
Right now, the sustainable ag movement is running in circles, making deep ruts that lead nowhere. Meanwhile, industrial agriculture is heading in the wrong direction, unfolding in insidious ways, and very few are blowing the whistle of warning. As long as industrial agriculture keeps sustainable agriculture mesmerized by the GMO debate, it succeeds in castrating the movement.
Addendum: The sustainable agricultural movement needs to increase its awareness of the growth in shills from industrial ag populating its ranks. For instance, there is a large group on LinkedIn associating itself with organics that is loaded with industrial ag shills, and other actions by this group leaves a question as to where its loyalties can be found.
The entire organic-food industry has become suspect, as the certification process places a large financial burden on small producers while clearly favoring large producers – owned by even larger food giants – who not only find it much easier to pay the fees, but can achieve organic certification with lax standards. True sustainable agriculture is far more demanding in its practices but since there are no legal standards to define sustainable ag, nor any concerted effort to educate the public on sustainable ag since legal standards do not exist, it keeps real knowledge from making its way to the public forum.
From a December 10, 2008 post on the original, independent The Small “r” blog:
During a mid-career pursuit of graduate school, I wrote a paper in 2004 investigating Japan’s seemingly endless and entrenched recession that started in 1991. This led me to research the economic health of middle-class American households which, in turn, brought me to the Federal Reserve data that I highlight in this paper (see page 4). At first glance, I had to double-check the calculations I ran on the Excel spreadsheets downloaded from the Federal Reserve. I couldn’t believe the increase in debt loads, nor how our economy was still functioning.
Having this knowledge swirling inside my head – it was akin to having a broken leg, wherein you can never completely ignore the pain until it heals – a short, almost insignificant news story caught my attention in March of 2007. The New York Times headline read:
The story reported accounting irregularities at the New Century Financial Corporation, a large mortgage company that specialized in subprime mortgages. “The troubles at New Century are the latest sign of the deterioration in subprime lending,” the story related, “until recently the fastest-growing segment of the mortgage business.”
Could this be the beginning of the unraveling? In light of what I knew about household debt loads, I was convinced of it. Online searches revealed that news stories as early as December 2006 started to report subprime mortgage holders were beginning to struggle due to rate adjustments. Two [now eight - ed.] years later, we still haven’t seen the end of the de-leveraging process.
The Federal Reserve’s mammoth Quantitative Easing programs were installed out of fear, and one fear only: At all costs, prevent deflation, which is what a de-leveraging process of households will incur unless prices can be artificially propped up. Witness the fate of Japan. The real healing has yet to begin; we have simply seen a very large bandage applied on the U.S. economy over the past few years.
We have little meaningful household income growth save for at the the upper five percentile, the Federal Reserve’s Quantitative Easing helped increase food and energy prices at a time when most households experienced stagnant or declining incomes (thus pulling even more money out of circulation from the middle class), and what growth has been eked out can be traced to the continued rise in household debt, which is now being called “good news” by Bank of America CEO Brian Moynihan… as does, incredulously, Shaila Dewan at The New York Times.
Bottom line: Nothing will be done about the U.S. economy, which is why neither presidential candidate in the 2012 presidential campaign discussed economic rebuilding programs but managed to create many diversions. The end game is to drive down labor costs as much as possible, while continuing to drive up consumer indebtedness as much as possible. If this sounds like a recipe for disaster, well, it is, but remains of little concern for the powers-that-be. They no longer care, for at the point of collapse they will have extracted the maximum possible profits from the system, leaving no money on the table.
An early post from The Small “r” blog, dated December 5, 2008. Troublesome indeed is the prospect the Democratic Party may rally around Hillary Clinton in 2016… more of the same:
With President-Elect Obama’s continuing Cabinet stocking of former Clintonites, it seems the only difference in scenarios we have between our present outcome and the one where Hillary Clinton would have won the primary and general elections is the occupant in the Oval Office. The former foxes that were supposed to guard the chicken coop, but instead opened the door to allow their fellow curs to feast, are dutifully returning for security duty. So the Bill Clinton brain trust – in concert with the George W. Bush brain trust – that placed us in many of our economic woes will continue in the fine Federal tradition of creating irrelevant answers.
Now we add the resume enhancer of “rubber stamper” to the desirable-features list on the Obama Administration’s vetting questionnaire:
Yesterday morning, Bloomberg News reported that Treasury Secretary-elect Geithner* may be trying to rid D.C. of Sheila Bair. I’m not in lock step with all of Chairman Bair’s plans, but she has been the lone voice (in the Bush administration) that consistently has been out in front of this economic debacle from the beginning. That’s not how she’s seen inside the beltway:
“Geithner, president of the Federal Reserve Bank of New York, has argued Bair isn’t a team player and is too focused on protecting her agency rather than the financial system as a whole, according to two congressional officials and a person familiar with his thinking. Bair has battled with Geithner and fellow regulators over aid to Citigroup Inc. and other emergency actions, making her enemies in the Bush administration.” (emphasis added)
Well, so much for President-Elect Obama’s team of rivals.
*It appears the Treasury Secretary-elect has a few questions to answer about his role in the government’s reaction to the credit crisis.
I find it interesting that during the Global Financial Crisis, banks, the Federal Reserve, Congress and government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac implicitly blamed borrowers for the mortgage-default debacle by their actions, such as the Fed’s preference for helping lenders rather than homeowners, Freddie Mac betting against the homeowners and banks pressing the Fed to curb borrowers’ rights. Yet, when it came time to consider new regulatory action to prevent future mortgage debacles, the Fed wanted to strip homeowners of their right to fight foreclosures, and the only legislation with teeth came in the form of tougher scrutiny for borrowers, not banks.
What was, and continues to be, missing is a means to disseminate full disclosure of what, exactly, the home buyer is signing. That bright, shiny home is too much of a temptation, and all rational thinking goes out the door. Papers are pushed across the table, everyone is grinning, pens go to work signing, and keys are handed over. A new homeowner is born, and the poor son-of-a-bitch hasn’t a clue as to what he or she just signed.
I always tell family and friends the same thing, over and over, when buying a home: Hire an attorney and a home inspector. The home inspector retained by the bank is working for the bank, not the buyer, a detail over which most home buyers seem to remain completely clueless. It’s as if the bank has suddenly become a close friend, and is concerned the buyer may unwittingly buy a home with unknown defects. In fact, that home inspector has no other interest than in telling the bank that should the home go into foreclosure, the home’s condition is just good enough for the bank to expect its investment recoverable, ceteris paribus. If the buyer’s down payment and any subsequent investments in time and money are lost in the process, well, oh well.
And since when does someone sign a mountain of legal documents without retaining professional legal help in reviewing those documents? If a buyer cannot afford to retain an attorney, then he or she has no business buying a home.
Yet, few ever heed my advice, and I see homes being purchased without an attorney or inspector involved in the process.
It becomes difficult to muster any sympathy for such negligence but I will also side with the need for full disclosure to homeowners, including a strong suggestion from the seller of mortgages to retain an attorney and inspector. Short of that – and somehow we know home buyer behavior will not change despite what has just transpired in the home market in recent years – explicit explanations of just what, precisely, the buyer is signing onto should be mandated by law. Asymmetrical information – wherein the seller understands perfectly what is being sold but fails to provide full disclosure to the buyer – represents not only a potential economic collapse in the aggregate, but a moral failure in the particular. Properly functioning markets do not create morals, but certainly assume such morals are in place. This precipitous growth in the lack of trust in markets and market transactions goes to the very heart of why centralized capitalism is collapsing.
And yet, corporations continue to oppose symmetrical information: for example, the Grocery Manufacturers Association is fighting against full disclosure of food contents on labels. Without this information, consumers can hardly make informed choices that can have a direct impact on their health. In the aggregate, such decisions could help reduce the need to access the healthcare system in the future, and thus help contain healthcare costs.
From the corporate side, however, there’s little incentive anywhere. Hide the true and accurate content of food, and more buying decisions for a product will be made. If the contents of that food create illnesses, then more people will access the healthcare system and drive the demand for pharmaceuticals, hospital beds, physicians and medical devices. As healthcare costs rise, demand for health insurance rises in concert. It’s a win-win-win for the corporatists.
But for individual consumers? They are hung out to dry. In an era of decreasing incomes, yet with rising food and energy costs, consumers are becoming ever more stretched in being able to pay for health insurance. Some simply can’t afford it at all, and the Federal government’s answer is to place a gun at the head of those struggling to make ends meet and force the purchase of health insurance… just to make sure every last drop of blood has been squeezed out of the consumer. The corporatists certainly wouldn’t want to waste a good consumer.
At every turn the consumer is being stretched, and the increases in neuroses are rising as a result of having to live within this ugly reality. Simply track the precipitous rise in the sales of psychoactive prescription drugs… or even the illegal ones.
As long as the corporatists continue to block access to the critical information necessary for intelligent buying decisions, they will labor to bring about their own demise by ensuring the collapse of centralized capitalism. Trust in markets precedes functionality. Forget that, and you can expect a backlash against capitalism in the same manner we witnessed a backlash against communism in the late 20th century.
Only this time, there will be no backup economic system upon which we can rely.