Question time on the FM website – chapter 11

Ask any question about geopolitics, broadly defined. We — and others reading the FM website — will attempt to answer it in the comments.   Like Jeopardy, your comments must be in the form of a question!  All answers welcomed!

Questions received so far (click on the link to go directly to that thread):

  1. What are three reasons not to vote for Ron Paul?
  2. When did the Civil War end?
  3. What about people who worry about civilization collapsing?
  4. A video intermission:  the trailer for Them!
  5. What’s our best response if Iran gets atomic weapons?
  6. What would be the long term consequences of the US Government issuing its own notes, rather than the Federal Reserve issue FRNs like it does now?
  7. Will we have a global recession in 2012?
  8. Does a large and  trained army with big hardware reserves these days inevitably start a war or has it other options?
  9. What did you find scary about the “Thinking the Unthinkable” article?
  10. So is it the fate of many young Americans to be chronically poor?  Is this irreversible?
  11. Best of thread:  You always say “we” when writing about America.  Where is this “we” supposed to come from? How would you bring it about?
  12. Is the Penn State scandal an orchestrated circus to distract us or simply amazing timing  for the revelation of a story that has been brewing for many years?
  13. How will western nations grow during the next few years ?

Some interesting reading to start the discussion

  1. Scariest article I’ve read this year:  “Thinking the Unthinkable“, Tullett Prebon (see this about the firm), July 2011 — “Might there be no way out for Britain?”
  2. Depressing reading, but I already knew it:  “The Day America Died“, Paul Craig Roberts, CounterPunch, 4 October 2011 — “September 30, 2011 was the day America was assassinated.”
  3. Article about an undercovered but important story:  Local police forces are now little armies. Why?“, Nieman Watchdog (of Harvard), 6 October 2011
  4. A look in the mirror at America, about our elections:  “A Snapshot from the Age of Distraction“, Scott Horton, Harper’s, 6 October 2011
  5. Important news:  “Old people getting richer, young people getting poorer“, Alex Paraeene, Salon, 8 November 2011 — “The age-based wealth gap is big and growing, thanks to younger Americans’ debts”
  6. The difference between hate-speech directed at Israelites and Palestinians:  “Why the Washington Post won’t fire Jennifer Rubin“, Glenn Greenwald, Salon, 11 November 2011

41 thoughts on “Question time on the FM website – chapter 11

    1. His signature issue is finance/economics, about which his views are crackpot ignorance. That tells all one needs to know about him. No other reasons are necessary.

      More broadly, the Republican candidates are one of the oddest collections of politicans ever fielded by a major US party, prima facie evidence of a deep dysfunctionality in American conservatism.

    2. “More broadly, the Republican candidates are one of the oddest collections of politicans ever fielded by a major US party, prima facie evidence of a deep dysfunctionality in American conservatism.”

      Agreed on that point, but I think his signature issue is foreign policy. If by signature we mean by what makes him stand most apart from the Republican and even Democrats. It seems Kucinich and Paul are one of the few consistent antiwar congressmen.

    3. “Signature issue”

      There is no standard definition. I meant by the signature issue that in which the politican has invested the most time and attention. For Ron Paul that is clearly finance and economics.

    4. before you dismiss Ron Paul’s economic views, you should read this post, which makes the most persuasive case for dollar hyperinflation: “Moneyness“, FOFA, 6 November 2011.

    5. The author of “moneyness” would have to work long and hard to improve his understanding up to “wrong.” This is just a work of imagination, fantasy. The “make a long series of bold statements” theory of arguement.

      Much of it is directed at refuting Modern Monetary Theory (MMT), a fringe theory in economics.

      BTW — this article has many of the characteristics of pseudopscience. One of the most distinguishing is IMO a belief that a current field of science is totally wrong, and that one can start from first principals and deduce a more correct version. I’ve found that reading articles that start from that assumption is almost always a waste of time, except for entertainment value.

    1. The mundane answer is 1865. This ignores the successful counter-revolution by the South’s whites, by which they re-oppressed the region’s Black Americans.

      A better answer is 1965, when Johnson signed the great civil rights legistlation. I’ve used that date on occasion.

      A better answer is 1969. No political reform is enduring in a democracy until the opposition party adopts it. In 1969 President Nixon put into effect the Philadelphia Plan — the first Federal affirmative action plan. Considering his Southern strategy, he might have gone the other way — with an ill effect on American history.

    2. The Civil War ended in 1865 with the surrender of the major armies and Lee’s decision not to engage in or endorese guerrilla warfare.

      As you noted, the South’s whites then followed Clausewitz, employing politics as the continuation of warfare by other means. They could have used this strategy without having a civil war, but that kind of intelligence has been in short supply among our elites in the South.

  1. In an earlier posting you stated that peak oil is likely in the next few years. Have your views changed onwhat will happen changed from previous postings? I mean given we have no alternatives that I know of in the pipeline, it seems Mike Ruppert is right in that industrial civilization is dependent on abundant cheap energy which we are running out of. And that it will result in the collapse of that civilization.

    1. On October 14 you asked if Europe would cause an economic collapse (link).
      On October 22 if municipal layoffs were a sign of the collapse (link).
      On October 27 derivatives were the threat (link).
      On October 28 it was peak oil (link).
      This morning it was Europe, again (link).
      Now you are back to peak oil.

      I’ve seen no analysis suggesting that any of these will “collapse civilization”. People making bold guesses is just fantasy.

      I suggest you that you are the problem. Specifically, your fondness for reading sources that lie to you. It’s become a widespread problem in America. I recommend

      1. find new, reliable information sources — such as The Economist and New York Times,
      2. going to the library and checking out some horror stories. They will provide entertainment without worries afterwards.
    2. Im just pessimistic about the future of this country thats all. I do not whant these thing to happen.

    3. We have exchanged over two dozen emails and comments, so I can give you a strong recoemmentation. You can make a contribution to America by finding new, reliable sources of information. Read The Economist and the New York Times, instead of the garbage sources which peddle urban legends. Then you will have taken a large step to becoming part of the solution — rather than part of the problem.

  2. I appreciate the implications of Iran possessing nuclear weapons, but if there isn’t anything we can realistically do to stop that, what’s our best response if it does happen?

  3. What would be the long term consequences of the US Government issuing its own notes, rather than having the Federal Reserve issue FRNs like it does now?

    1. The Federal Reserve is a weird hybrid, but in most respects an agency of the Federal government. It is given some indepenedence to allow monetary policy to be set by someone other than our elected representatives, for a variety of stated and unstated reasons. it’s IMO a daft arrangement, however common among modern democracies.

      There might be a trend to changing this arrangement. In Britain, for example (see this Reuters article).

      Bringing the Fed’s monetary and regulatory policies back “in-house”, to the treasury or an agency like the SEC, would be a large change — reducing the role of banks in these government functions. IMO that would be a valuable reform We do not allow drug companies to appoint FDA board members.

      It would be a change of governance — who controls the levers — but not a functional change. That’s badly stated, but I hope conveys the concept.

    1. You’ve made a statement, what is your question?

      Recessions can be severe or mild, short or long, and no reputable economist has made any prediction as to whether this will be a short gentle drop or something more severe. Also I would generally be very careful about trusting the opinions of most financial gurus. They are to be controversial, not accurate.

      Finally, I’d note that even experts are frequently wrong. As FM has said many times before, the future is unknowable.

    2. Oops, I meant to say in my previous comment that financial gurus are frequent paid to be controversial, not accurate.

      Hopefully my Rick Perry moment will be short and painless.

    3. That is a great question, but very complex. Here are a few brief points, as space and time prevent a full answer.

      (1) “Most of the reliable economists and financial gurus now think a new global recession is inescapable”

      Not so. I know of no forecasts by a major economic forecasting firm saying that a global recession is likely in 2012. Like weather forecasting, accurate predictions of the world economy requires vast amounts of detail, a highly-trained staff of analytsts, and powerful computers. It’s not something that can be done on the back of an envelope.

      Jim Rogers is a celebrity, not a practicing economist. The ECRI’s forecast of a recession is for the US, not the world. Krugman says that the odds are even, not “inescapable.”

      (2) What is a recession?

      For a good answer, see “ECONOMIC DIP, DECLINE OR DOWNTURN? AN EXAMINATION OF THE DEFINITION OF RECESSION“, Emma O’Donoghue, Student Economic Review (Dept of Economics, U of Dublin, 2009

      There is not agreed-upon definition of a global recession. The most common is growth of global real GDP less than 2% or 3%. That is, below trend growth. Not decline.

      (3) Where to find forecasts of the global economy?

      (a) My primary source: The OECD’s Compositte Leading Indicators (CLI), reported monthly by region and for the major nations.

      (b) My secondary source: the Weekly Leading Indicators of the Economic Cycle Research Institute.

      (4) How accurate are such forecasts?

      Not very. Economic theory remains too immature for accurate forecasting, and real-time global data is both unrelaible and old. It is beyond the state of the art, today.

  4. Does a large and trained army with big hardware reserves these days inevitably start a war or has it other options? In other words, what value has a high military budget these days?

    1. Japan and China have large military forces, and have not started wars.

      Perhaps there is some tipping point, beyond which the urge becomes irresistable to get a return on the military investment.

      It’s an interesting and important question. Does anyone know of any research about this?

    2. “what value has a high military budget these days?”

      It’s the only form of economic stimulus we’re likely to get in the near future, as we suffer from the current outbreak of austerianism.

  5. FM, you stated that the “Thinking the Unthinkable” article was the scariest thing you’ve read all year. After reading the executive summary of the article, I can take your statement multiple ways. What did you find scary about the article?

    1. It reminds me of a fact that I’d prefer to ignore: there are nations today that might be past the point of recovery. Japan is the most obvious. Perhaps Britain.

      Neither island will sink into the sea, or become a barbarian wilderness. But their current social and economic structure might collapse, evolving into a new order. That transition might be fast or slow, pleasant or horrific — leading to a new system that is better or worse. But history suggests that the process will be like birth: painful, producing an uncertain result.

      Japan and Britain are IMO not the only nations facing endgames in the next generation or so.

    2. Excellent article ,stuff many older Brits ( including me )have been saying for last 12 years .. I think consensus in this group would be also be that we should leave EU ; which would reduce regulatory burdens , jobloss to EU migrants , rights to entitlements .Maybe only allow imports that were matched with exports ; appoint a Minister for Luddites , taxing voicemails and automated checkouts . Those of us who remember the 1950’s ( veg in season , week at the seaside , home sewn frocks , one TV in the street , kids skylarking on bombsites) – remember austerity not as a problem but as a sort of freedom .. I’m not being sarcastic .Like wearing a uniform gives a freedom from peer pressure at school or work .
      A false assumption , from what I see from my worms eye view , that private firms can run public services better/cheaper than the state .

  6. Lower income and lower present savings should mean that the young of today will have a smaller slice of the GDP pie in the future.

    So is the faith of many young Americans as chronically poor irreversible?

    1. “So is it the fate of many young Americans to be chronically poor? Is this irreversible?”

      Nothing is written. We — America — have the resources to be whatever we want to be.

      Sloth, ignorance, and apathy are our enemies. Willpower, common sense, and the ability to act together are our weapons.

  7. FM Note: IMO, this is the best comment of this thread!

    When you write about America, you always say “we.” In theory it sounds good, but what do you really mean by it?

    I personally don’t see much “we” in America. Most people don’t even know (or want to know) their neighbors in my experience, much less feel a sense of shared commonality with the nation (and I use this term very lightly as in at large collection of people occupying boundaries drawn on a map), I personally have better things to worry about, despite hobbies like wasting time thinking about it, like putting food on the table. Unless forced, like on the job, people refuse to even associate with someone who thinks differently (or even casually know).

    The Internet has resulted in intellectual ghettos that people willingly wallow into and never seem to leave, thus reinforcing their mindset and further fragmenting this sense of “we.”. 4GW theory predicts a state of affairs where people look to primary loyalties, and it is not the state.

    So where is this “we” supposed to come from, and how would you bring it about?

    1. I agree with you 100%. You describe the problem.

      Only collective action can save the Republic. Perhaps the time has passed when the Republic can be saved. So only collective action can prepare the foundation for the Third Republic.

      Collective action requires agreement by a substantial sliver of the people about the nature of the problem, the appropriate methods to address it, and (in vague form) short- and long-term goals.

      How to build this? We can turn for counsel to the Founders. Among their earliest acts: forming the Committeees of Correspondence, the first in 1764. They conveyed information, analysis, insights — and inspiration. The FM website is, in a tiny way, perhaps one of the kernals around which something similar can form.

      On a larger scale, the people must be aroused, their spirts lighted. In a small way the FM website attempts to do this.

      I have posted the following many times. i doubt many readers understand how it applies to us. When they do, perhaps we’re ready to take a second step. This is just one of many possible paths to a better future.

      Weber points us toward Nietzsche as the common source for serious thinkers of the twentieth century. He also tells us what the single fundamental issue is: the relation between reason, or science, and the human good. When he speaks of happiness and the last man, he does not mean that the last man is unhappy, but that his happiness is nauseating. An experience of profound contempt is necessary in order to grasp our situation, and our capacity for contempt is vanishing.

      Weber’s science presupposes this experience, which we would call subjective. After having encountered it in Nietzsche, he spent the greater part of his scholarly life studying religion in order to understand the non-contemptible, those who esteem or revere and are therefore not self-satisfied, those who have values …

      — From The Closing of the American Mind, chapter “Values”, Allan Bloom (1987)

  8. Is the Penn State scandal an orchestrated circus to distract us or simply amazing timing for the revelation of a story that has been brewing for many years?

    1. About the Penn State scandal

      Clearly the latter. It is pocket of corruption festering for over a decade. How could it be the former?

      The behavior of Penn State’s leaders show the values we consistently see in America’s leaders. They often giving “doing it for the children” as motive for their actions, but she comes to hard actions children’s lives mean nothing . Anal rape by coaches. Cluster bombs and minefields. They think only of the big picture.

      Unfortunately the long and massive pedophilia scandal of the Catholic Church shows that even disclosure of outright evil at an institution’s core does not impell Americans to demand change. We passively sit on our bottoms, listening to our leader’s sermons like well- fed sheep.

  9. Too late for a question ? Just how are western nations going to do ‘ growth ‘ in the next few years ? Exclude population growth , inflation and claiming land from the sea . The save the planet , live simply movement has been carefully compressed back into its box , but the developing countries have the natural resources , cheap labour and educated Cassii we dont ; also the potential to act with local violence against multinationals.

    1. On the FM website it’s never too late for a question! Especially an important question like yours.

      The asnwer is simple: probably the western nations (as a group, there will be exceptions) and Japan will not grow during the next few years. Properly managed, they will deleverage without much pain — but with little growth. Poorly managed it will result in another “lost decade”. Some nations, such as Britain and Japan, might experience falling GDP — putting their political and economic regimes at risk.

  10. I have a stupid question re:oil sands pipeline. Why are we wanting to pipe the tar sands from Alberta to TX? Why not build a refinery on site or in MT or in ND and pipe the finished product? I have been to Alberta. Once out of the city, I saw nothing but moose and spruce. There is also lots of water there.

    1. News reports are unclear what the pipeline will carry. Some combination of partially refined bitumen (something between the mineral bitumen and the synthethic oil final product of the refining process).

      Sending the partially refined product of Alberta’s mines south is probably economical due to available refinery capacity in America’s south, which also is linked to the existing US pipeline distribution network. Duplicating that infrastructure from scratch would cost money and take time.

      ND already has oil output in excess of available transportation. They’re shiping much of it out by railroad, far more expensive than by pipeline.

  11. Usually the bitumen (not oil) from the tar sands is mixed with solvent and transported by short pipeline to an upgrader operation. The solvent is returned to the tar sands in a return pipe. Upgrading converts bitumen to oil. This oil can be sold and distributed like any other oil. Google these key words for the details: upgrading upgrader bitumen SAGD tar sands.

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