Wolves Are Being Slaughtered Again

NRDC tells us the death toll of grey wolves in the Rockies is mounting steadily.  Conservationists were unable to convince former rancher and Secretary of the Interior Ken Salazar to end the wolf slaughter authorized by the previous regime. {3.20.08}  Litigation in federal court to stop Montana and Idaho's radical hunting program has so far been unsuccessful. Nearly 200 wolves have been killed by hunters in the two months open season was declared.  Another 130 have been killed by government hunters since last spring when Salazar approved removing the grey wolf from the protection of the Endangered Species Act.  From the beginning the first hunting seasons in modern times has gone wrong.  Montana implemented the hunt to reduce predation of livestock, but the state permitted hunting in back country areas before opening front range areas resulting in the deaths of animals posing no threat to livestock.  Members of Yellowstone Park's Cottonwood Creek pack were killed when they wandered beyond park boundaries, as well as collared animals being studied by wildlife biologists.  After a public outcry, Montana closed off some areas around the Park to wolf hunting. But the entire hunting program with its ridiculously high quotas demonstrates the dysfunctional relationship some western landowners have with the predator.  These influential special interests are determined to eradicate the species once and for all.  By the time conservationists convince a federal court to return the wolves endangered listing, 40% of the wolf population in these two states could be gone.  Help NRDC fight for the grey wolf by donating financial support.

Chart of the Week: "Too Big To Fail" Is Failure

The economic crisis is unparalleled since the Great Depression, and US Person is not alone in referring to it as "the Second Great Depression". There is now a consensus that the crisis was precipitated by a combination of easy credit, lax government regulation, and the explosive growth of finance capitalism.  The chart above shows the disproportionate growth in wealth of the fianancial sector compared to manufacturing and households in our economy.  As the hearings in the House of Representatives will hopefully demonstrate, the nation is in the grip of the Money Power as embodied by Wall Street financial institutions as never before in our history. The very fact that national government leaders felt compelled to give unprecedented financial aid to private speculators largely responsible for destablizing excesses, tells us that the current system has failed {11.28.09}. It has failed because the system compensates bankers to take inapproriate risk to generate short term profit.  This fact is reflected in the growth of Wall Street bonuses compared to the stagnated income of ordinary Americans:

The tax proposed by President Obama to recover the cost of bailing out 'the masters of the universe' is a good beginning to reforming the financial system, but the entire concept of a financial institution being "too big to fail" is warped.  No individual insolvent institution should be so large that its failure endangers the entire banking system.  The banking system should be decentralized, and banks should be run in a manner to meet the credit needs of the public, not the profit motives of the super rich.  A humble example of what can be achieved by a  publicly owned state bank can be seen in North Dakota.

While larger more populous states like California and Michigan are teetering at the edge of default, North Dakota is declaring a surplus so large that taxpayers will average $650 savings in 2009 taxes.  And they are not cutting services to the bone just for a tax refund.  At the center of this unusual economic strength is the only state-owned bank, the bank of North Dakota.  Established in 1919, the waning era of populous agrarian revolt, the bank has since been a credit machine promoting agriculture, commerce and industry for the state.  North Dakota has the lowest unemployment rate in the nation at 4.1%.  BND acts as a 100% publicly owned central bank, unlike the Federal Reserve which is owned by  private banks that make up its membership. Local banks do the most lending, so BND acts a secondary market for local bank loans.  Its residential loan portfolio is over $500 billion in a state with a population of only 700,000.  BND avoided the credit crisis when secondary markets for loans collapsed in 2007 through prudent management. To be sure, there are no eight digit bonuses paid to BND executives. The bank earns a health 25% return on equity without speculating with complex, high-risk derivatives. When the state failed to meet its budget a few years ago BND stepped with financing for the shortfall.  California has no such state institution to help it meet an $20 billion budget shortfall, and must ask an unsympathetic federal government to give it $7bn in aid.

US Person can hear the perspicacious say, "we had this argument before, and Andy Jackson lost".  But it is equally obvious the Federal Reserve has been captured by the Money Power. The central bank's primary purpose of regulating the supply of money has been overshadowed by it becoming a hand maiden to the highly leverage international banking system{11.09.09}.  A return to a decentralized state banking system would not present the problems of multiple currency issue that it did in the 19th centrury. Greenback issue and monetary policy would remain the function of a smaller, transparent Federal Reserve Bank under joint congressional supervison pursuant to Congress' constitutional powers over currency.  Obama cannot stop with just a tax, no matter how satisfying the concept may be to exploited taxpayers.  The 'masters' must once again be made the servants of the people.

In the Back Rooms of Washington

When it comes down to hard negotiating over major policy, official Washington retreats behind close doors, open government rhetoric be damned.  So it is with the "change" administration and its efforts to reach one-party consensus on the health bill.  US Person will not dignify the pending proposals with the term "reform" because there is precious little reform in the Senate bill and only a modicum more in the House proposal.  The real reform so desperately needed is a method to control escalating medical care costs in this country.  The House bill attempts some cost control by providing competition from a non-profit government insurance plan.  But as we have seen this idea is too effective for the revanchists that represent the insurance industry in the Senate.  The Senate is only willing to allow some pilot cost control programs as a sop to progressives who saw their public option axed by Joe Lieberman and his ilk.  As Republican leader Mitch McConnell rightly observed, "this bill doesn't even meet the basic goal that the American people had in mind and what they thought this debate was all about: to lower costs."  The complaint may be disingenuous coming from an obstructionist like McConnell, but it is accurate.  The Congressional Budget Office agrees the Senate bill makes no significant long-term cost reductions.

Health care cost are strangling our economy: eighteen cents of every dollar an American earns goes to health care.  Between 1999 and 2009 the average annual premium for an employer provided plan rose from $5,800 to $13,400.  The average cost for a Medicare recipient went from $5,500 to $11,900.  Our system costs so much not because of superior quality--Europe does it better for less--but because our so-called system is fragmented, disorganized, inconsistent and profit oriented.  At the current rate of increase, the cost of family insurance will reach $27,000 or more in a decade.  Business will see the share of their labor costs devoted to providing insurance rise to 17%.  Medicare will be bankrupt in eight years.[1]  Not only will Americans be unable to afford health insurance, the current broken system will bring the national economy to its knees.

Senate bill supporters point to the excise tax on high cost health plans favored by Forty-four as a cost control measure.  The reasoning is that if expensive plans  are taxed, businesses will not offer them and consumers will not take advantage of generous benefits.  The reasoning is specious.  The 40% excise tax will affect insurers and large self-insured employers who will then past on the costs to employees.  By 2019 the tax would affect one-fifth of households making between $50,000 and $75,000 a year--the working middle class--according to the Congressional Joint Committee on Taxation.  Studies show that expensive plans do not always have generous benefits, either.  High premiums are associated with older workers, smaller employers, and women. Where a worker lives also makes a difference in premiums.  A twenty thousand dollar policy in Miami costs only fifteen thousand in Phoenix. The difference has nothing to do with overly generous benefits, but is a function of prices and medical practices in each market[2]. So the bottom line is that the only practical solution offered by Congress in either bill--non-profit competition for the private profit insurance business--has been defeated by the insurance lobby, and once again Americans will be left to pay the mounting bills.

[1] "Testing, Testing", New Yorker Magazine 12.14.09
[2]Bill Salganik,Counterpunch 01.14.10  Unions managed to cut a deal with Forty-four in private meetings at the White House to exempt their contracts from the excise tax for five years.  Of course the political concession to unionized labor only makes the tax even more unfair.

'Toontime: Mirror, Mirror of TV....

[credit: Tom Toles, The Washington Post]

The latest kiss and tell book roiling Washington, Game Change, which exposed the atavistic race attitudes of Senator Harry Reid, also has some unkind things to say about Ms. Palin's emotional stability, not to mention her faulty grasp of world affairs.  Apparently while campaigning for the vice presidency, the former Governor of Alaska and beauty queen, experienced wild mood swings and moments of complete withdrawal.

Black Rhinos Still Dying for Horn

The chaos that has become Zimbabwe continues unabated, and wildlife as well as humans are paying the price. Liberation war veterans, staunch supporters of freedom fighter turned dictator, Robert Mugabe, are now turning to rhino poaching as a means of making money. Veterans settled in Chiredzi District are poaching rhinos in a game reserve and selling the horn to South African dealers, according to informed sources at nearby communities.  The rhinos are being poisoned with tainted cabbages left at watering holes. The poachers track the dying animals until they drop dead, and then remove the horn. A community spokesman said the water holes are also affected, and the poisoning is killing their cattle. The lawlessness has undermining decades of painstaking effort to increase rhino numbers in Zimbabwe. An estimated 200 rhinoceros have been killed in the last three years. Authorities believe the horn is going to South African middlemen who ship the illegal ivory to East Asia, notably South Vietnam and China where it is used in traditional medicine as a Viagra-like drug. Yemen was once a major market for horn because the handles of ceremonial daggers (jambiya) carried by men traditionally were made of horn. A religious fatwa  issued by the grand mufti said the killing of rhinos is against the will of Allah.  Today's jambiya handles are made from water buffalo horn, camel nails or plastic. Conservation experts no longer see Yemen as a factor in the illegal trade. Despite the decline in the Yemeni market, the illegal trade has hit a fifteen year high which means more than 3100 kgs of illegal horn have reached Asian markets from 2006 to 2009.  The poachers operate in armed gangs and are willing to shoot people trying to protect the animals. When poachers are captured, they routinely escape punishment. In September 2008 a gang of four Zimbabwean poachers who admitted killing 18 rhinos were freed by a corrupt judiciary. Senior Mugabe officials have been implicated in the resurgence of rhino poaching according to the Environment Minister, Francis Nhema.  89% of illegally killed rhino come from Zimbabwe.  Other rhino countries have population increases, but in Zimbabwe the population is declining. The country has the world's fourth largest population of critically endangered black rhino (Diceros bicornis) but not for long if the criminal gangs are not stopped soon.

[photo: ecoworldly.com]

Budget? What Budget?

Increasing budget deficits and the ballooning national debt--the limit was recently  temporarily increased by $290 billion--are the topics du jour for the chattering classes[1].  But when it comes to the Pentagon budget, the natterers fall silent.  Forty-four requested a record $708 billion for defense purposes, a staggering sum that dwarfs comparable spending by other industrialized countries.  The figure does not include $33 billion for the small wars in Iraq and Afghanistan. The reality 'out of bounds' for the ruling elites over cocktails at the White House is that America is a military empire whose economy is dominated by a policy of military Keynesianism. {The Road to Weimar 12.31.06}The term was coined by economist Micha Kalecki to explain the rise of Germany from the depths of the Great Depression. Our country has been in a permanent state of military mobilization since the end of World War II. To take just one example of how military spending drives the US economy consider this fact. Depending on who is doing the estimating the United States since 1983 has spent between $92.5 billion and $130 billion trying to figure out a way to shoot down ICBMs in flight, without success[2]. No one knows for sure how much has been spent--not even members of Congress--because most of the spending is classified. The success of a military program is really beside the point now. Spending by the military-industrial complex is routinely pitched to Congress by Pentagon lobbyists as a jobs program. When the current administration decided to end the procurement of unnecessary F-22 Raptors[3], protests were raised about the relatively few numbers of jobs that would be lost at Lockheed-Martin. Without a doubt the Pentagon budget is a cash cow for corporations, lobbyists, Congressmen and military officers. As President Eisenhower warned when he retired from political office, the military has become a dominant part of the nation's economic life. We are still paying off interest on debt incurred to fight World War I! And they wonder how to pay for a national health insurance program.

[1]The bond raters, Fitch, have issued a caution: "Difficult decisions will have to be made regarding spending and tax to underpin market confidence in the long-run sustainability of public finances. In the absence of measures to reduce the budget deficit over the next three to five years, government indebtedness will approach levels by the latter half of the decade that will bring pressure to bear on the US's 'AAA' status"
[2]  Besides the inherent physical difficulty of destroying a warhead moving faster than a speeding bullet, modern ICBMs employ a range of defensive devices intended to defeat anti-missile defense systems.  A prime example is the mobile TOPOL-M.  This Russian missle features high speed solid rocket boosters, hardening against laser and radiation attack, mid-course maneuverability, three MIRV warheads and four sophisticated decoys. Hit that, Uncle!   Even a rogue state could launch a missile swarm that could allow one ICBM with a warhead to evade an anti-missle battery. 
[3] In response to the United States continued development of high tech war birds like the F-35 Lightning II, Russia is developing a fifth-generation stealthy fighter in full partnership with India,  designated the Sukhoi T-50 PAK FA.First flight is scheduled for 2010 with mass production in 2013-15 [image].

Chart of the Week: The Great Consumer Deleveraging

US Person showed you in the last Chart of the Week posted on Saturday, that the decade of the 2000s was a bust from the standpoint of civilian employment among other things.  When consumers are not employed two things happen:  the government collects less tax revenue, and consumers stop discretionary spending which in our leveraged economy means using less credit.  The following charts from Martket Ticker clearly show de-leveraging is taking place and is far from over:

The first chart is a historical perspective. Growth in the amount of consumer debt since 1960 has always been positive except for a brief dip below zero in the early 90's. Prior to now, consumer credit has never contracted below -2%.

This chart shows the growth in consumer credit peaked in 2007 and is contracting especially for credit card debt (revolving) which is accelerating and approaching -10%. Consumer credit has contracted for a record ten months in a row.  But the amount of de-leveraging (4.5%) has a long way to go in absolute terms as shown in the final graph.  How you can create economic expansion without consumer spending is a trick that would interest even Ben 'Bubbles' Bernanke*.

*Two of the economists Bernanke cites for his denial that a low central bank rate [the real rate was actually negative for 40% of the relevant period] contributed to the housing bubble—Frank Smets, director of research at the European Central Bank, and his colleague Marek Jarocinski—reported in the July/August issue of the St. Louis Fed Review that "monetary policy has significant effects on housing investment and house prices and that easy monetary policy designed to stave off perceived risks of deflation in 2002-04 has contributed to the boom in the housing market in 2004 and 2005."  See Prof. Taylor's critique of the Fed Chairman's January 3rd speech in the online  Wall Street Journal.