The Beginning Of Global Order

Source: Pablo Ouziel, Countercurrents.org.

We can continue to believe our politicians as they echo messages of stability and order around our planet, and we can continue to feed off the BBC or the New York Times to get an insight into the normality of the global situation, but sooner or later, the collapse of our economies is going to affect us directly by hitting our pockets, and then perhaps we will be ready to act. Hopefully, against those politicians and global capitalists who are infecting our daily life by bringing a painful and miserable reality to the majority of humanity.

Yesterday, as I drove on the motorway towards Barcelona, I was overcome with tears. Lining the roads were truckers slowing the traffic, waving banners and making noise to be heard in order to be understood, while the rest of the drivers in their cars were feeling annoyed at the inconvenience of a minority obstructing their daily routine. The radio was repeating negative messages about the truckers, the politicians were repeating over and over again that these people were a minority, and that the rest of us should not worry, because they would not achieve the goal of disrupting the flow of petrol or the arrival of goods from one point to another.

As this was happening in Spain, discontented truckers in different points of the planet were also complaining. Their complain was a simple one, “We can no longer afford to feed our families”. Yet, solidarity is running so short these days, that isolated groups get affected by the global economic situation, while the rest of us continue our routine without paying much attention to their pleas. What people are failing to see, is the connection between the truckers today, the fishermen a few weeks ago, the homeowners losing their homes, and the global revolts because of rising food prices. The people being affected directly are giving us a warning of things to come, and the only way this can be reversed, is if we group together and begin to show support to those who are feeling the pain right now.

We have not been smart enough as a collective of global citizens to understand that we are being taken on a ride, that affected groups are being kept isolated by the magic wand of the mainstream media regurgitating the propagandistic message of the ruling elite. Everyday, the global situation is getting worse. As strikes are on the rise and unemployment is increasing, we must be alert, we must understand what is happening. The elites will continue to keep us divided, because divided is how they can control us, but we must be smarter than them and understand that the only strength we have against their policies, is the collective strength of united discontent.

When will we understand that our politicians are lying to us? Will we ever understand that the mainstream media is not democratic and that the police are there to defend the interests of the wealthy? One can see clearly whose interest the police serves when those who protest and strike have guns pointed at them. Only a few years ago, Argentineans were going to the bank to retrieve their money, and instead of happy clerks, they found hostile policemen telling them to go away. Their money was not theirs anymore, it was gone. Yet, the owners of the banks never lost anything, all their money was out of the country, and once that country had collapsed, they came back again with smiles buying things cheap. I often come cross Argentineans, and frequently they tell me that a global ‘corralito’ is what is about to happen. The sad thing is that I do not need their wisdom to understand that, because I am seeing it with my own eyes. Friends are losing their homes, others are losing their jobs, oil prices are making life hard for those close to me who have to commute everyday, and the hopelessness of the situation is slowly breaking the fabric of the community in which I live.

Because of the internet, I am able to communicate with lots of people around the world, and everything which I see around me, many in other places are seeing around them. So, while bankers and politicians speak of inflation being under control, recession being an illusion, and economic fundamentals being strong, I am led to believe that in their world — wherever that is — they are not exposed to reality. Yet the truth is, that they know the reality much better than I do, they have access to information which I will only see years from now, when hopefully they are punished for their crimes against humanity.

Going back to those truckers whom I saw furious yesterday on the motorway, people must begin to see that they were not obstructing normality, but rather pointing out an abnormality which global citizens must unite to correct. Yesterday, we should have all stopped our cars in support of the truckers, because by supporting the truckers we would be supporting ourselves. We should have demanded that CEOs of oil companies stop receiving multimillion dollar salaries, we should have demanded that our governments implement measures to limit the rising prices of oil, we should have ultimately asked that our governments seize all their hostilities against the oil producing countries, many of those currently in the Middle East.

The last time oil prices skyrocketed was in 1973 when the members of Organization of Arab Petroleum Exporting Countries OAPEC, announced, as a result of the ongoing Yom Kippur War, that they would no longer ship oil to nations that had supported Israel in its conflict with Syria and Egypt. What a coincidence that oil prices are rising today, as the West is on a rampage against the Arab world, supporting the slaughter of the people in Gaza, supporting the destruction of Iraq and Afghanistan, and showing an ever growing hostility towards Iran.

We must begin to pave the path to peace in order to gain global stability, and that must be done by setting measures to stop speculators from benefiting from the misery of others, by punishing corrupt politicians, and by collectively understanding that bankers are rich because we have placed our money in their hands. Ultimately, unless we begin to see the world as a whole, in which things are truly interconnected, our governments will continue their hostilities, oil prices will keep on rising, and when the time comes for us to complain, we will be faced with the guns of the police whom we have helped to create with the payment of our taxes. The only positive thing coming out of this chaos, is that we are no longer able to avoid facing reality, and soon after this social Tsunami which has begun to unravel is over, we will be faced with a true opportunity to collectively construct global order.

Pablo Ouziel is a sociologist and freelance writer

Greg Palast: Driving the surge in gas prices? The Bush-McCain surge in Iraq

http://www.gregpalast.com/obama’s-secret-war-profiteering-tax/#more-2026

I can’t make this up:

In a hotel room in Brussels, the chief executives of the world’s top oil companies unrolled a huge map of the Middle East, drew a fat, red line around Iraq and signed their names to it.

The map, the red line, the secret signatures. It explains this war. It explains this week’s rocketing of the price of oil to $134 a barrel.

It happened on July 31, 1928, but the bill came due now.

Barack Obama knows this. Or, just as important, those crafting his policies seem to know this. Same for Hillary Clinton’s team. There could be no more vital difference between the Republican and Democratic candidacies. And you won’t learn a thing about it on the news from the Fox-holes.

Let me explain.

In 1928, oil company chieftains (from Anglo-Persian Oil, now British Petroleum, from Standard Oil, now Exxon, and their Continental counterparts) were faced with a crisis: falling prices due to rising supplies of oil; the same crisis faced by their successors during the Clinton years, when oil traded at $22 a barrel.

The solution then, as now: stop the flow of oil, squeeze the market, raise the price. The method: put a red line around Iraq and declare that virtually all the oil under its sands would remain there, untapped. Their plan: choke supply, raise prices rise, boost profits. That was the program for 1928. For 2003. For 2008.

Again and again, year after year, the world price of oil has been boosted artificially by keeping a tight limit on Iraq’s oil output. Methods varied. The 1928 “Redline” agreement held, in various forms, for over three decades. It was replaced in 1959 by quotas imposed by President Eisenhower. Then Saudi Arabia and OPEC kept Iraq, capable of producing over 6 million barrels a day, capped at half that, given an export quota equal to Iran’s lower output.

In 1991, output was again limited, this time by a new red line: B-52 bombings by Bush Senior’s air force. Then came the Oil Embargo followed by the “Food for Oil” program. Not much food for them, not much oil for us.

In 2002, after Bush Junior took power, the top ten oil companies took in a nice $31 billion in profits. But then, a miracle fell from the sky. Or, more precisely, the 101st Airborne landed. Bush declared, “Bring’m on!” and, as the dogs of war chewed up the world’s second largest source of oil, crude doubled in two years to an astonishing $40 a barrel and those same oil companies saw their profits triple to $87 billion.

In response, Senators Obama and Clinton propose something wrongly called a “windfall” profits tax on oil. But oil industry profits didn’t blow in on a breeze. It is war, not wind, that fills their coffers. The beastly leap in prices is nothing but war profiteering, hiking prices to take cruel advantage of oil fields shut by bullets and blood.

I wish to hell the Democrats would call their plan what it is: A war profiteering tax. War is profitable business – if you’re an oil man. But somehow, the public pays the price, at the pump and at the funerals, and the oil companies reap the benefits.

Indeed, the recent engorgement in oil prices and profits goes right back to the Bush-McCain “surge.” The Iraq government attack on a Basra militia was really nothing more than Baghdad’s leaping into a gang war over control of Iraq’s Southern oil fields and oil-loading docks. Moqtada al-Sadr’s gangsters and the government-sponsored greedsters of SCIRI (the Supreme Council For Islamic Revolution In Iraq) are battling over an estimated $5 billion a year in oil shipment kickbacks, theft and protection fees.

The Wall Street Journal reported that the surge-backed civil warring has cut Iraq’s exports by up to a million barrels a day. And that translates to slashing OPEC excess crude capacity by nearly half.

Result: ka-BOOM in oil prices and ka-ZOOM in oil profits. For 2007, Exxon recorded the highest annual profit, $40.6 billion, of any enterprise since the building of the pyramids. And that was BEFORE the war surge and price surge to over $100 a barrel.

It’s been a good war for Exxon and friends. Since George Bush began to beat the war-drum for an invasion of Iraq, the value of Exxon’s reserves has risen – are you ready for this? – by $2 trillion.

Obama’s war profiteering tax, or “oil windfall profits” tax, would equal just 20% of the industry’s charges in excess of $80 a barrel. It’s embarrassingly small actually, smaller than every windfall tax charged by every other nation. (Ecuador, for example, captures up to 99% of the higher earnings).

Nevertheless, oilman George W. Bush opposes it as does Bush’s man McCain. Senator McCain admonishes us that the po’ widdle oil companies need more than 80% of their windfall so they can explore for more oil. When pigs fly, Senator. Last year, Exxon spent $36 billion of its $40 billion income on dividends and special payouts to stockholders in tax-free buy-backs. Even the Journal called Exxon’s capital investment spending “stingy.”

At today’s prices Obama’s windfall tax, teeny as it is, would bring in nearly a billion dollars a day for the US Treasury. Clinton’s plan is similar. Yet the press’ entire discussion of gas prices is shifted to whether the government should knock some sales tax pennies off the oil companies’ pillaging at the pump.

More important than even the Democrats’ declaring that oil company profits are undeserved, is their implicit understanding that the profits are the spoils of war.
And that’s another reason to tax the oil industry’s ill-gotten gain. Vietnam showed us that foreign wars don’t end when the invader can no longer fight, but when the invasion is no longer profitable.

*****************
Greg Palast is the author of, “Trillion Dollar Babies,” on Iraq and oil, published in his New York Times bestseller, Armed Madhouse.

Palast is currently working with Robert F. Kennedy Jr. on investigation the latest attacks on the right to vote in America. Support this effort and receive a signed copy of Armed Madhouse from the author at Palast Investigative Fund.

View Palast’s commentary on oil and war windfalls on Air America Radio’s Palast Report – on YouTube here.

Paul Craig Roberts: Why the Oil Price Is High

Source: Information Clearing House.

How to explain the oil price? Why is it so high? Are we running out? Are supplies disrupted, or is the high price a reflection of oil company greed or OPEC greed. Are Chavez and the Saudis conspiring against us?

In my opinion, the two biggest factors in oil’s high price are the weakness in the US dollar’s exchange value and the liquidity that the Federal Reserve is pumping out.

The dollar is weak because of large trade and budget deficits, the closing of which is beyond American political will. As abuse wears out the US dollar’s reserve currency role, sellers demand more dollars as a hedge against its declining exchange value and ultimate loss of reserve currency status.

In an effort to forestall a serious recession and further crises in derivative instruments, the Federal Reserve is pouring out liquidity that is financing speculation in oil futures contracts. Hedge funds and investment banks are restoring their impaired capital structures with profits made by speculating in highly leveraged oil future contracts, just as real estate speculators flipping contracts pushed up home prices. The oil futures bubble, too, will pop, hopefully before new derivatives are created on the basis of high oil prices.

There are other factors affecting the price of oil. The prospect of an Israeli/US attack on Iran has increased current demand in order to build stocks against disruption. No one knows the consequence of such an ill-conceived act of aggression, and the uncertainty pushes up the price of oil as the entire Middle East could be engulfed in conflagration. However, storage facilities are limited, and the impact on price of larger inventories has a limit.

Saudi Oil Minister Ali al-Naimi recently stated, “There is no justification for the current rise in prices.” What the minister means is that there are no shortages or supply disruptions. He means no real reasons as distinct from speculative or psychological reasons.

The run up in oil price coincides with a period of heightened US and Israeli military aggression in the Middle East. However, the biggest jump has been in the last 18 months.

When Bush invaded Iraq in 2003, the average price of oil that year was about $27 per barrel, or about $31 in inflation adjusted 2007 dollars. The price rose another $10 in 2004 to an average annual price of $42 (in 2007 dollars), another $12 in 2005, $7 in 2006, and $4 in 2007 to $65. But in the last few months the price has more than doubled to about $135. It is difficult to explain a $70 jump in price in terms other than speculation.

Oil prices have been high in the past. Until 2008, the record monthly oil price was $104 in December 1979 (measured in December 2007 dollars). As recently as 1998 the real price of oil was lower than in 1946 when the nominal price of oil was $1.63 per barrel. During the Bush regime, the price of oil in 2007 dollars has risen from $27 to approximately $135. (see table)

Possibly, the rise in the oil price was held down, prior to the recent jump, by expectations that Democrats would eventually end the conflict and restrain Israel in the interest of Middle East peace and justice for the Palestinians. Now that Obama has pledged allegiance to AIPAC and adopted Bush’s position toward Iran, the high oil price could be a forecast that US/Israeli policy is likely to result in substantial supply disruptions. Still, the recent Israeli statements that an attack on Iran was “inevitable” only jumped the oil price about $8.

Perhaps more difficult to understand than the high price of oil is the low US long term interest rates. US interest rates are actually below the rate of inflation, to say nothing of the imperiled exchange value of the dollar. Economists who assume rational participants in rational markets cannot explain why lenders would indefinitely accept interest rates below the rate of inflation.

Of course, Americans don’t get real inflation numbers from their government and have not since the Consumer Price Index was rigged during the Clinton administration to hold down Social Security payments by denying retirees their full cost of living adjustments. According to statistician John Williams (Shadow Stats), using the pre-Clinton era measure of the CPI produces a current CPI of about 7.5%.

Understating inflation makes real GDP growth appear higher. If inflation were properly measured, the US has probably experienced no real GDP growth in the 21st century.

Williams reports that for decades political administrations have fiddled with the inflation and employment numbers to make themselves look slightly better. The cumulative effect has been to deprive these measurements of veracity. If I understand Williams, today both inflation and unemployment rates, as originally measured, are around 12%.

By pumping out money in an effort to forestall recession and paper over balance sheet problems, the Federal Reserve is driving up commodity and food prices in general. Yet American real incomes are not growing. Even without jobs offshoring, US economic policy has put the bulk of the population on a path to lower living standards.

The crisis that looms for the US is the loss of world currency role. Once the dollar loses that role, the US government will not be able to finance its operations by borrowing abroad, and foreigners will cease to finance the massive US trade deficit. This crisis will eliminate the US as a world power.

–

Paul Craig Roberts a former Assistant Secretary of the US Treasury and former associate editor of the Wall Street Journal, has been reporting shocking cases of prosecutorial abuse for two decades.

Jim Kunstler: A Harsh Season

Source: Clusterfuck Nation by Jim Kunstler.

The banking “industry” slept like a dog through the climax of the political primary season. Meanwhile, the banks sucked in scores of billions in cheap loans from the Federal Reserve, using bundles of devalued-to-worthless “innovative” securities as collateral. This dodge has worked for about three months, allowing them to pay their employees and cover their electric bills, and is now collapsing because American society can’t maintain the flow of repayment on current debts and can’t take on any additional debt – meaning both the regular “churn” of revenue flowing to the banks is impaired at the same time that fees for originating new loans cannot be generated. Uh Oh.
Out there in the cul-de-sacs and the strip malls, people are months behind in their mortgage payments, maxed out on their plastic, handing over their car keys to the lien-holders, and feeding their kids Spam fillets. Truckers get paid less for their loads than the cost of transporting the load. The airlines have financial cancer and will be dead in eighteen months. Container ship costs are heading out-of-sight. Municipalities are going broke. A weekend flood just destroyed part of the Midwest corn crop. And, of course, oil prices took a jagged turn upward last Friday en route to their next stop: $150-a-barrel.

The New York Times reported Monday that rural Americans are being hit hardest by the rise in gasoline prices. Duh. It’s worst, naturally, in the big southern states where wages are low and the distances are vast. There’s a reason why Nascar is the second-biggest religion down there: the automobile rescued southerners from the tyranny of geography. Cheap gas allowed them to build a “new ” economy based mainly on the construction of suburban sprawl. In the process it deified the pickup truck. Guess what? The rural South made a big mistake. The Dukes of Hazard show is now drawing to a close. They are about to take a turn back to being what they were before the Second World War: an agricultural backwater. God knows what will happen to asteroid belts of “production housing” and big box shopping outside the relatively tiny pre-automobile cores of places like Houston and Atlanta.

The New York Times made a particularly inane point in their lead business section story today (Rural U.S. Takes Worst Hit as Gas Tops $4 Average) saying:

…Sociologists and economists who study rural poverty say the gasoline crisis in the rural South, if it persists, could accelerate population loss and decrease the tax base in some areas as more people move closer to urban manufacturing jobs.

Is it possible, nobody informed the reporters (and editors!) that A.) America has already hemorrhaged manufacturing jobs; and B.) That much of the little manufacturing that remains is not located in any cities per se?
So we now head into the general election. One thing the pundits of the mainstream media seem to miss is how much more room for economic carnage there is in the months remaining. They seem to be laying their current odds on the idea that McCain and Obama are starting on a “level playing field.” In fact, McCain is already up to his hips in trouble from his sheer association with the Republican establishment, which will be so badly discredited by the shattered economy that it may actually go the same route as the 19th century whig party and dissolve in a putrid vapor of fecklessness. By November, the Republicans will be viewed as the party that wrecked the nation, and McCain will be in a hole so deep (still on the 20-yard-line by the way) that nobody will be able to see his lips move.

It was a relief, at long last, to see the odious Hillary step aside on Saturday — though she could not have engineered a more self-glorifying exit. There is talk, all of a sudden, about a President Obama perhaps stashing Hillary in the Supreme Court seat currently occupied by Ruth Badar Ginsburg, whose health is failing. I’d like to see Hillary packed off there. It would get her out of the senate. You can’t really grandstand on the Supreme Court. The nation — if it remains a nation — could forget about her.
Well, here we are about twenty minutes from Wall Street’s Monday open. I imagine it’s going to be quite a day. Over 90-degrees and oil cutting its overnight losses. Praise the lord and pass the Xanax.

Senator Bernie Sanders: THE COLLAPSE OF THE MIDDLE CLASS

http://www.sanders.senate.gov/qa/meetingqs.cfm

Dear Friend,

As gas and oil prices soared and as the nation slipped into recession, I made a request to Vermonters on my e-mail list. I asked them to tell me what was going on in their lives economically. That was it. Frankly, I expected a few dozen replies. I was amazed, therefore, when my office received over 600 responses from all across the state, as well as some from other states. This small booklet contains a few of those letters.

It is one thing to read dry economic statistics which describe the collapse of the American middle class. It is another thing to understand, in flesh and blood terms, what that means in the lives of ordinary Americans. Yes, since George W. Bush has been in office 5 million Americans have slipped into poverty, 8 million have lost their health insurance and 3 million have lost their pensions. Yes, in the last seven years median household income for working-age Americans has declined by $2,500. Yes, our country, for the first time since the Great Depression, now has a zero personal savings rate and, all across the nation, emergency food shelves are being flooded with working families whose inadequate wages prevent them from feeding their families.

Statistics are one thing, however, and real life is another. The responses that I received describe the decline of the American middle class from the perspective of those people who are living that decline. They speak about families who, not long ago, thought they were economically secure, but now find themselves sinking into desperation and hopelessness.

These e-mails tell the stories of working families unable to keep their homes warm in the winter; workers worried about whether they’ll be able to fill their gas tank to get to their jobs; and seniors, who spent their entire lives working, now wondering how they’ll survive in old age. They describe the pain and disappointments that parents feel as they are unable to save money for their kids’ college education, and the dread of people who live without health insurance.

In order to try and break through the complacency and isolation inside the Washington Beltway, I have read some of these stories on the floor of the Senate. It is imperative that Congress and the corporate media understand the painful reality facing the middle class today so that we can develop the appropriate public policy to address this crisis.

Let me conclude by thanking all of those people who have so kindly shared their lives with me through these letters. I know that for many of you this was not an easy thing to do.

Letters from Vermont and America:
For a downloadable booklet of complete letters click here.

“We have at times had to choose between baby food and heating fuel.”

“By February we ran out of wood and I burned my mother’s dining room furniture.”

“Not spending those ten hours at home with my husband and son makes a big difference.”

“I want to drop everything I am doing and go visit him.”

“We also only eat two meals a day to conserve.”

“My husband and I are very nervous about what will happen to us when we are old.”

“The pennies have all but dried up….Today I am sad, broken, and very discouraged.”

“I don’t go to church many Sundays, because the gasoline is too expensive to drive there.”

“At the rate we are going we will be destitute in just a few years.”

“I am just tired….I work 12 to 14 hours daily and it just doesn’t help.”

“Now we find that instead of a feeling of comfort, we have a feeling of dread.”

“Some nights we eat cereal and toast for dinner because that’s all I have.”

“Insurance costs continue to rise causing some to forgo insurance to pay for groceries.”

“Dentistry is expensive and people are opting not to come to the dentist.”

“How devastating it has been for folks who travel great distances to get to their cancer treatment.”

“I feel as though I am between a rock and a hard place no matter how hard I try.”

“I have been forced to go back to work.”

“We would like to not have to worry about where our next meal will come from.”

“My husband and I followed all the rules…. Slowly, though, we have sunk back to the ‘poor’ days.”

“It costs me so much money in gas that my wife and I live on $6 per day to eat.”

“How much more of a hit can people take? The future looks extremely bleak to me.”

“I am now living out of my car.”

“Our life style has drastically changed in the past 12 months.”

“My mortgage is behind, we are at risk for foreclosure, and I can’t keep up with my car payments.”

“We are barely staying afloat.”

“I wonder some times if we should try to follow our dreams – decide to have children?”

“People say, ‘Cut back.’ “

“Does anybody have a solution? Does anybody in Washington care?”

For a downloadable booklet of complete letters click here.

Do you have a story you would like to share? If so click here.

The Panic Of ’08 – Oil, War And Denial

Source: Gerald Celente, Trends Alert.

06-07-2008

RHINEBECK, NY — The Panic is “On.” Each day brings more bad news and it just got much worse.

On Friday, oil super-spiked nearly $11 to close above $138 a barrel and the Dow dumped nearly 400 points. The dollar is back on its losing streak and gold is back above $900 an ounce. Job losses increased for the fifth month in a row and the unemployment rate had its biggest jump since 1986.

Chain stores are closing, credit keeps tightening and economic conditions are worsening. The government is going broke, the people are broke, the nation’s fighting two costly wars and losing both and the President warns there may be more.

Avoiding intelligent discussion of the dire implications of the oil shock, the next credit crisis and President Bush’s warnings that Iran is a potential military target, the nation’s news has been focused on the elimination rounds of The Presidential Reality Show.

And while rumors of an attack on Iran by the US are generally ignored or denied, the undercurrent of Middle East war is another speculative factor driving oil prices higher. Among them, Israel announced new construction of 900 homes in the occupied West Bank and threatened a major military offensive to put down the worsening Gaza uprisings.

Iran, who Israel accuses of supplying weapons to the Palestinians, has also become a military target. On Friday, Israeli deputy Prime Minister, Shaul Mofaz, said, “Attacking Iran, in order to stop its nuclear plans, will be unavoidable.” And, according to reports, the US also has plans to launch a military strike against Iran. (“Limited US attack on Iranian Revolutionary Guards bases in sight” (DEBKAfile, 3 June 2008); (“Bush intends to attack Iran before the end of his term,” The Jerusalem Post, 20 May 2008.) Note: Yielding to pressure from Washington, The Jerusalem Post pulled the May 20th headline story from its website.

Trend Analysis: With commodity speculators currently being blamed for the oil spike, the threat of war and how it relates to high oil prices, until just recently, was absent from national debate as are the devastating global implications that would result from a Persian/US/Israel war.

Unless oil prices swiftly and dramatically decline, the American people will suffer the worst socioeconomic conditions in living history. Utility bills won’t be paid, foreclosures will escalate, crime will dramatically increase tax revolts, gas riots, strikes and protests will ensue. Millions of elderly, those on fixed incomes and paycheck-to-paycheck people won’t be able to heat their homes, fuel their autos or cover their expenses.

It’s pure and simple. For the working majority, wages are falling, home equity is evaporating, investments are failing, pensions are lost, benefits are scarce and each day it costs more to live.

Forced to choose between filling the gas tank or feeding the family, trying to make ends meet is a losing game. In the real world, despite the government’s adjusted-for-manipulation core inflation index, which omits food and fuel from its calculations, the working class is going under as prices of life’s essentials keep going higher.

Without money to make up for rising costs, credit cards will be increasingly used as the finger in the bursting financial damn that will eventually drown debt burdened Americans who won’t be able to meet their monthly card payments.

But over the past weeks, the word from those who didn’t see the financial storm coming were now claiming that the worst of it was over. The US Treasury Secretary, the Federal Reserve Chairman and the presidents of the biggest banks and brokerages have declared that the credit crisis is closer to the end than the beginning.

Publisher’s Note: Throughout the millennia and regardless of country, economic hardship, not moral justification, has often been used as a political pretext to wage war and as the public rationale to support one.

For example, when asked why the US launched the First Gulf War against Iraq over their oil dispute with Kuwait in 1991, US Secretary of State James Baker said, “It’s about jobs, jobs, jobs” and the American people agreed.

Similarly, with high oil prices inflicting wide socioeconomic damage, an attack upon an oil rich country, such as Iran, under the guise of maintaining global stability, could be sold as an excuse for war by politicians and supported by an economically depressed public as a rationale to wage one.

Gerald Celente
Founder/Director
The Trends Research Institute ®
E-mail: gcelente@trendsresearch.com
Website: www.trendsresearch.com
Media Relations: 845.876.6700 Ext. 311
cheri@trendsresearch.com

Oil prices seep into asphalt costs, detour road work

By Judy Keen, USA TODAY.

Repair projects are a blow to budgets

CHICAGO — Fewer roads will be repaved this summer, thanks to soaring prices of oil-based asphalt.

Some states, cities and counties say their road-repair budgets didn’t anticipate asphalt prices that are up 25.9% from a year ago, so they’re being forced to delay projects.

“We will do what patching we can, but this will truly, truly be a devastating blow to the infrastructure,” says Shirlee Leighton, a county commissioner in Lake County, S.D., where a 5-mile repaving project was postponed after bids came in $79,000-$162,000 higher than the $442,000 budget.

The mix used to resurface roads consists of gravel and sand held together with a binder called liquid asphalt, which is made from crude oil. As oil prices rise, so does the cost of asphalt, says Don Wessel of Poten & Partners, a consulting firm that publishes Asphalt Weekly Monitor. “Prices are the highest I’ve seen in many, many, many years,” he says. “The concern is that they will go up considerably.”

Increases in the cost of diesel fuel used to transport, heat and lay asphalt are adding to the sticker shock, too, creating headaches across the USA:

•Larimer County, Colo., would like to resurface 16-20 miles of its 450 miles of paved roads each year. “This year, we’ll be lucky to do seven miles,” says road and bridge director Dale Miller.

•Paul Degges, chief engineer for the Tennessee Department of Transportation, will resurface 1,600 miles of state highway this year, well short of his 2,500-mile target. “Since my budget is not growing and costs are up, we’re doing less paving,” he says.

•A few paved roads in Hall County, Neb., will revert to gravel surfaces, says public works director Casey Sherlock. “At some point, they’ll be potholed so bad we won’t be able to keep patching them.” He had hoped to resurface 6-7 miles of road this spring and could afford only 2 miles.

•In Washington County, Md., acting deputy public works director Robert Slocum is using alternative treatments requiring less asphalt. The result: More miles are being treated with less asphalt, but “ride quality” can be compromised.

•Snohomish County, Wash., pays 17% more for asphalt than a year ago, says county engineer Owen Carter. It’s pooling funds with four cities to get a better price.

•The Grand Traverse County (Mich.) Road Commission plans to bid out 30 miles of resurfacing before a bond issue of up to $4 million is finalized to lock in prices before they go even higher, Road Commission manager Mary Gillis says.

Ken Simonson, chief economist for Associated General Contractors of America, says the asphalt-price squeeze exacerbates the USA’s infrastructure problems and “may force Congress and the states to find more money for roads sooner than they would have otherwise.”

10 Times the Price and 10 Times Crappier

By SHARON ASTYK.

http://www.alternet.org/story/83555/?page=1

Chalmers Johnson is one of my favorite thinkers, so I link to his article for the sheer pleasure of introducing him to anyone else who doesn’t know his work. But I also mention it because it got me thinking. Now we all know the statistics – you know, the ones for things like fact that the American military budget is 10 times the budget of the next biggest military power, China, or that we spend much more than all the other countries put together. But somehow seeing the number laid out in Johnson’s analysis led me to a new thought – the 10 Times More = 10 Times Less Rule.

What is this rule? Simply this – if we in America use 10 times as much as another country, or spend 10 times as much on something, not only will we use more and pay more, but we’ll get less. What we get will, inevitably be at least twice as crappy as the much cheaper model, and often as much as 10 times worse.

Is this really a rule? Well, let’s start with the military budget. Look, I’m a lefty and no big fan of our invasions, but my feeling is if we’re going to spend 10 times more in our military budget than our nearest threat we should be a lot better than everyone else – that is, we should be able to crush anyone we want like flies. Again, I’m not saying I’m for this fly crushing thing, just that spending that much should pay off. Instead, we keep discovering the same freakin’ thing – that people who want you out of their country are way more passionate than 20 year olds who just want some bucks for college, and that a 2 million dollar tank can get its ass kicked by a 300 dollar IED. So the tanks end up lying on their sides along a road, and we end up paying trillions for an expensive exit strategy, which is a polite way of saying “we got our ass kicked and wasted lives.”

Or what about our food? The average bite of American food takes 10 calories of oil to produce a single calorie of American food. The average Indonesian’s dinner comes in at about 1 a calorie of oil (this all assumes that the average Indonesian can get food, but let’s assume they can). And let me clearly reassure you that the average Indonesian’s cheap-ass bowl of laksa – noodles, broth, coconut milk, maybe a piece of fish – taste 100 times better than a Big Mac or a bag of Doritos. That is, we put in all this oil and what comes out – food that tastes like crap, is really awful for us, and can’t even remotely approach the quality of the street food you’d find in almost any third world country on earth.

We only spend twice as much on medical care as most Europeans, but we report that we’re four times as unhappy with our healthcare system, so I bet if we worked on getting our spending up, we could be 10 times as unhappy with our medical care. One of the largest studies of end of life care in American history discovered that 65% of Americans die “in debt, in pain and alone.” Now I don’ t know about you, but that sounds pretty much like everyone’s worst nightmare. The same study found that many other nations do a vastly better job of simply making sure you don’t hurt and you have someone there. But here, the suffering costs extra.

The good news about the 10 times more = 10 times less rule is this – if true, we could actually get our usage of many resources back down to a level that might let us go on from here. Our goal when Rioting for Austerity was to get down by 90% in all 7 categories. At the end of the project’s first year, we’re down by at least 75% in all 7 categories, and to 90% in food, garbage and consumer goods. We should hit our goals in heating oil and water in this coming year, as some of our infrastructure changes begin. Including the allotment for working at home, we came in just short of our share of electricity, and gas is one we’re still struggling with. But we’re using 78% less gas than the average Americans (except Eli, who is using 69% less, because of his school busing) .

Were we less happy? No, not at all. In fact despite the fact that I was nuts and agreed to write two books in 15 months, I’d say we were happier. Not 10 times happier, but maybe half again as much. Maybe even double – we saved a ton of money, we had a ton of fun, we found a new community, we had more time. What’s not to like?

The thing is, right now, using less energy and having less money is making a whole lot of people less happy. The reason, of course, is that we aren’t thinking it through – this isn’t a managed decline, and with the media telling us that the crisis was over yesterday all the time, most people are sitting tight, waiting for the good times to roll again. The great news is that using as much as 10 times less in many areas won’t hurt – but only if we think it through. That is, you can’t magically get to a diet of great low energy, low cost sustainable food simpy by taking the oil out of the supply chain. You have to work it. But it can be done, and helping millions who have no choice do it is going to be a big – and fascinating – project.

Sharon

Anxious Hiatus

By Jim Kunstler, Clusterfuck Nation.

Loveliness was everywhere this holiday weekend in upstate New York, and it was probably hard for many to believe that the wayward nation would return to the dread uncertainty of life in the crash lane when the barbeques were over. There was even a wan overtone to the late-night sports news about the Indy 500 race — as though the spectacle of cars droning round and round a speed oval epitomized the futility of American life in this moment of our history.

I had a discussion with one guy at a Sunday night party about the prospects for hydrogen-powered cars. We rehearsed the usual reasons why such a system was unlikely to get up-and-running — and then he said, “…but what if we took all the money from the war and put it into something like the space program and… they came up with some way to make it happen…!”

This is certainly the golden heart of the great wish out there, as the empire of Happy Motoring begins to run down on $4 gasoline. It seems inconceivable that a society so bold as to put men on the moon (fer crissake) can’t overcome such a prosaic problem as finding something other than oil byproducts to run our cars on.

From this holy font all cognitive dissonance flows.

It seems inconceivable, but it begins to look like that’s the way it really is, and we just can’t accept it.

Of course, one of the reasons that Americans are so anxious to get away on a holiday weekend from the places where they live is because we did such a perfect job the past fifty years turning our home-places into utterly unrewarding, graceless nowheres, where the private realm of the beige houses is saturated in monotony, and the public realm has been reduced to the berm between the WalMart and the strip mall. Now, we barely have the gasoline to run all this stuff, let alone escape from it for a weekend.

We’re at a dead end with all this and a lot of Americans are paralyzed with fear about what’s next. This may actually be a deeper fear than the anxiety about money and banking in 1933, when Franklin Roosevelt was sworn in and tried to reassure the nation. Back then, despite the grave problems of capital, we still had plenty of everything: plenty of good productive land, plenty of manpower earnestly eager for hard work, plenty of ore in the ground, shining cities equipped with excellent streetcar systems, a railroad network that was the envy of the world, sturdy small towns and small cities fully equipped with locally-owned business, and a vast number of small family farms that could re-absorb family members unable to get wages in the cities. Most of all, we had plenty of oil in the ground, and the world’s biggest industry for getting it out and selling it. What we didn’t have in 1933 was cash money.

The crisis at hand now goes way beyond a crisis of capital — though that is certainly part of it. Notice how many of the things we had in 1933 are gone now. Our cities, with a few exceptions, are imploded husks. Our small towns and small cities (Schenectady, home of G.E.!) are gutted, especially in terms of locally-owned business. Our passenger rail system is worse than anything a Soviet ministry might produce (while the airline industry that replaced it is dying of a kind of financial hemorrhagic fever). Our local transit hardly exists anymore. Family farms have all but disappeared. We have plenty of manpower earnestly eager to become American Idols (but certainly not for heavy labor). Our oil industry now supplies only a fraction of the world’s daily supply (and not even enough for half of our own needs).

What happens now? We face not just change but convulsive change. The public senses the rapid unraveling of our car-centric arrangements. In the week before the holiday, gasoline prices went up several cents each day — in upstate New York, it crossed the $4 mark and kept going up. The trucking system faces collapse as diesel fuel price-rises exceed even the rise in gasoline, and the vast number of independent truckers who make up the system confront the individual calamity of a personal business failure. American Airlines last week announced severe measures to keep operating through the fall of 2008. but none of the airlines can feasibly carry on as usual with oil prices above $120-a-barrel — and the ominous message is of a business model that has no conceivable way to adapt to the new reality. Most likely, in a very few years air travel will no longer be a “consumer” enterprise.

In the background of these practical problems — “off screen” during the holiday of car races and ball games — is a crisis of capital orders of magnitude worse than the one faced by Franklin Roosevelt in 1933. For behind the “liquidity” (i.e. insolvency) issues faced by the big institutions lurks the Godzilla of the derivatives trade, which has evolved into a black hole capable of sucking all notional “money” into oblivion. That “money,” which represents the aggregate value of our society, also amounts to the emperor’s new clothes of an empire in serious trouble. As the black hole of derivatives sucks away these “new clothes,” America will stand naked against the elements of fate.

Today’s Daily Reckoning – Welcome to Squanderville

Actually, this was yesterday’s DR, but I thought it too good to pass by, especially the information at the end.

Source: Bill Bonner, The Daily Reckoning.

Today is a holiday in Britain and America. But here at The Daily Reckoning, we are on the job – because there are things that need to be reckoned with.

Before we get down to serious reckoning, however, we give you a look at the news from the end of last week.

On Friday, the Dow fell another 145 points. Oil stuck around $132 and the dollar at $1.57 per euro. Gold rose to $925.

Remember when you could buy an ounce of gold for less than $100? We do. Remember when you could buy a gallon of gas for 25 cents? We do. What is Memorial Day for…but for remembering?

First, let us pause for a moment of silence, in honor of our ancestors, our veterans and our war dead. Like Pericles, we recognize that we have a big debt to the generations that went before us — their sacrifices have helped made us what we are…and made the country what it is. They saved. They invented. They built. What we see around us is mostly the result of their hard work…and many years of saving. If our ancestors had used up everything they produced, there would have been nothing left behind. But they didn’t. They left us their inventions and their constructions. They left us money, too. In the post-WWI period up until the mid-‘1980s, America was the world’s biggest creditor. More people owed more money to Americans than to any other nation. Public finances were occasionally stretched – such as during WWII itself – but from the founding of the republic almost until the Reagan years, each federal administration generally tried to leave the government cash till in about the same state it found it.

But in the space of a single generation, that huge legacy of capital and custom has been squandered. Now, the United States is the world’s greatest debtor – by a huge margin. Every year, it spends approximately 6% more than it earns. Its leaders have abandoned the virtuous practices of their ancestors. They no longer even pay them the homage of hypocrisy; they don’t even pretend to balance the budget, and the latest tally reported in these reckonings put the total unfunded liability at $61 trillion. This has effectively bankrupted the average family. It also turns every new baby in the U.S.A. into a major debtor – with more than $100,000 worth of unpaid bills –on the day he is born.

So we have a lot to remember this Memorial Day, and a lot to reckon with.

Warren Buffett was born in 1930. He must remember what the United States was like when it was still growing and genuinely prosperous.

“I’m fond of 1929,” said he a few months ago. “I was conceived that year and have always had an agreeable feeling towards the crash.”

Now, the richest man in the world, Buffett has come to Europe looking for better investments.

In an interview for Der Speigel, the Sage of the Plains said the United States was already in a recession and that it would be “deeper and longer than people think.”

He was in Madrid over the weekend, so we picked up a copy of El Pais to see what else he was saying.

When will growth in the U.S. economy pick up, the Spanish paper wanted to know?

“I have no idea,” Buffett replied.

When will the financial markets stabilize?” El Pais persisted.

“No idea about that either.”

So you see, Buffett could write for The Daily Reckoning; he would fit right in. Go ahead; ask us a question. We’ll give you the same answer Buffett gives:

We have no idea. But we do have opinions.

And in our opinion, George Soros is probably right when he says:

“The current financial crisis was precipitated by a bubble in the US housing market. In some ways it resembles other crises that have occurred since the end of the second world war at intervals ranging from four to 10 years. However, there is a profound difference: the current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency. The periodic crises were part of a larger boom-bust process. The current crisis is the culmination of a super-boom that has lasted for more than 60 years.”

*** Yes, it was a super-boom that Soros describes. And it coincided with your author’s life. He was born at the beginning of it. He has now reached what he thinks is the end of it. That financial super-boom also probably marked America’s great peak – when everything went so well for so long that politicians and central bankers all wanted to claim credit for it.

But the tippy top of the peak also coincided with a number of trends and events that made it possible. Among the most important was a low oil price. Back in the ‘70s, the price of oil went to $30 – and shocked the world. It stayed around that level for 5 years, long enough to convince people that it was permanent. Consumers – especially in Europe – learned to live with less energy. Oil companies spent fortunes to produce more. And then the price plummeted back to $10…and world enjoyed a great boom.

That boom seems to be over, it drowned in the rising tide of the oil price. The black goo has gone up $50 a barrel since last September. The world’s consumers and producers should simply take the price clue with good grace – cutting back consumption and looking for new supplies, just as they did in the ‘70s.

That is what is happening. The oil companies are spending four times as much on exploration as they did eight years ago. And consumers are being forced to cut back too. But it is not all that is happening. Central banks are fighting the correction with everything they have – and all they have is cheap money.

As you know, the combination of higher fuel prices…and lower housing prices…is squeezing America’s family. Comes news at the end of last week that the typical house in California is down 32% from a year ago. The state also has the second highest foreclosure rate in the nation, with one out of every 204 houses going back to lenders.

The other thing putting pressure on U.S. family budgets is the price of food. For the 15 years, up to 2007, food prices rose only 2.5% per year. This was the “Great Moderation” that central banks felt so proud of. But in the last 12 months, food prices are said to be up 4%.

We use the expression “said to be” as a polite way so saying that the government is lying. The raw data show food prices going up twice to three times as fast. Wholesale food prices are going up even faster. And every independent tally of prices at the supermarket shows much bigger increases than the government’s numbers are willing to confess.

For example, on this Memorial Day, you’ll find the price of hot dogs about 7% higher than a year ago, according to the Associated Press. Soda and potato chips are 10% higher. And hamburger buns are up 17%.

What do we have to thank for such high prices? Partly, it is a natural, cyclical trend in the food sector. But that’s not all. There is also all that cheap money that central banks are putting out. Speculators are using it to wager on oil…and food.

*** Think you’ve got it bad. El Pais sent a reporter to Cuba to see how the island was doing now that Fidel has stepped down.

It appears that bro’ Raul is trying to take the country in the direction China has taken: preserve the communists’ grip on power, but give the economy some air.

The El Pais reporter found a country desperate for some fresh air. Nothing seems to work – not even the public toilets. And thanks to bad agricultural policies (collective farming) vast tracks of what would otherwise be productive farmland have gone to seed. A nasty shrub tree, the marabu, has taken over. Crews of laborers work all day, with machetes, clearing them out.

A man can clear two “cordels” of land in a day, each measuring 400 square meters, says the reporter. For each cordel cleared in the Cuban worker’s paradise, he is paid 1 euro (about $1.57).

But if the money is bad, the satisfaction is worse.

“You can clear a whole field,” said one worker, “and then if they don’t put tractors and pesticide on it, you’ve done nothing. It [the marabu] just comes back.”

*** “When the price of oil was $25 and gold was $300, it was easy to know what to do with your money,” lamented MoneyWeek editor Merryn Somerset Webb last week. “Now, it’s not so easy.”

A friend in Paris echoed her sentiment on the weekend:

“I just don’t know what to do…I’ve got all my money in cash, because I can’t decide…and the dollar is falling. This is terrible. What should I do?”

We gave our friend the same answer Buffett gave El Pais. We don’t know.

It is not given to man to know his fate. We don’t know what will happen.
Still, you need to make decisions. So, here we offer a very little, very modest bit of advice. It is worth every penny you pay for your Daily Reckoning subscription:

First, pay attention to your business…or your earnings. This is where you get your money. Make sure you understand what you’re doing.

Then, make sure your costs are lower than your income.

If you have a house, make sure it is a place to live, not a speculation.

When you invest, there too make sure you’re really investing – not speculating. Buffett told El Pais what he always tells investors: never invest in anything you don’t understand. If you don’t understand it – that is, how the underlying business works and how you will make money from it – it’s not an investment. It’s just a speculation.

Right now, we are putting cash into three things:

1) Gold…for all the reasons you have read about in these Daily Reckonings. Is gold going up? We don’t know…we think there is a fair chance of it. But we don’t care; the gold (we hope) is for the next generation.

2) Swiss francs…because it is not the dollar

3) Emerging markets…because they are going up; it’s a trend we think will continue as the world economy regresses to the mean. We suggest an ETF of major developing markets…recognizing that some will probably fail and others will continue to grow.

What about oil? What about commodities? We don’t know enough about them to speculate. But from what we see, they look toppy.

Enjoy your Memorial Day,

Bill Bonner