The N-D Conundrum

What turns GREED to GREEN? What turns GREEN to GREED? We all assume a symbiotic relationship – it’s what this whole semantic notion is about. The hope for a magic, transcendental spell check that does the trick for us, changes one to the other (for a fee, of course) might be a nice idea for a conceptual art installation – The Syntax of the Hyper Real or some such – but little else.

In terms of planetary peril, it appears to be a irreconcilable symbol inversion in the alphabet. The Gaia Theory would appear to be promising, except for its implication for ‘we the people’. But we even have to accept this, if we’re willing to be so heedless about using the atmosphere as a free dumping ground. This interview with its originator is compelling in a gallows sort of way. He hates carbon trading and says its a scam, but is there another way to get the D to go N without taxing ourselves, without charging for the free dumping ground? While many understand the reasons why it will be better to transition away from this economic model and move radically toward renewable energy, the fossil fuel endgame remains viable because it is… cheaper. This is a compelling moral argument, though not one we should make or defend intentionally.

It’s unpleasant to think that we will be wont to change our behavior until we are compelled to do so, that we are in some sense the rich who won’t say they hate the poor but are nonetheless able to simply turn their backs on the suffering the poor endure. After all, for people whose primary motivation is green greed grrr, what makes us do anything?

Green Jobs, Green Shoots

These are two of the big catchwords of the year so far. What do they mean and, what is their relation to the Eco-logy/Eco-nomy mash-up from which they emerge?

Hard to say on either of these counts, without squaring the circle – that we have to cut down on consumption but keep on making things (have job for people to do). Not exactly business as usual.

Even as most of the new green jobs end up going to robots, we (third-person, sentient) still have to do certain things. This should settle back into two fundamental questions – what are these certain things, and of course, what does green mean?

Because as we settle on the parameters of the first, the elements of the second become more clear, or at least a matter debate. We can see how imposing costs on carbon dioxide emissions, for example, can trigger changes in the things we make and the ways we make them. Despite what you watch and hear, people are thinking about this. And despite what you watch, hear and read, this will require great amounts of thinking. And schooling. And cross pollination of everything we think about business and most of what know about technology, engineering, credit and risk.

In short, it could be sexy. It could capture the popular imagination and re-direct it toward more productive ends. I don’t mean to sound too optimistic on this count; things are as dire as we are lazy and easily amused. But we did go to the moon once, many years ago today.

So, who knows?

The Broken Table

There remains a very deeply held taboo on bankruptcy, even in this country, even now. The US now owns many of its banks, what’s left of its major automobile manufacturers and will likely soon see many more of its larger entities descend into some type of creditor protection and re-organization. Notice a pattern here, as our largest everythings achieve epic fail? We shouldn’t be too shy about this, nor too averse to the more figurative implications of re-organization, at least until someone adds a snappy jingle and uses it to advertise their product.

Re-organization – of what we make, what we eat, where live and how we get there – should be what we’re after. Indeed, even if you’re only watching the televised version, that what’s we’re seeing.

There’s nothing to say that we’ve got to necessarily revert to some brutish, Hobbesian state of nature. And there is actually quite of bit to recommend that we do not.

But I won’t try to put a positive spin on it, and not because it’s getting that much more difficult to explain how the economy will return to growth at some point in the near future. The point is that, as scary as it may seem initially, all of these terms should be seen as negotiable. For instance, if we suddenly were to question when, much less whether, this economy will return to growth, the possible answers become so much more abundant. That’s what we’ve always been about – possibilities. And that’s what seem so limited now, when we’re reduced to watching the DOW for positive signals about… our own hope and happiness. If we start looking at other, more tangible indicators – acknowledge what is already broken and defunct – we can begin the actual transition that now only takes the shape of clearance sales, emptying malls and vague unemployment statistics, which attempt to make sense of an epic collapse in some positive way without confronting its most obvious implications.

We should admit it; we’re afraid to be afraid. And it’s all about uncertainty. Let’s go ahead and become convinced that the economy we’ve built is over, become afraid about not knowing what will happen and get it over with. This is already the case, anyway, despite the illusion of the scrolling green carpet offered by your financial planner, mapping a secure path into the future. We tell children all the time that the scariest things usually end up being not that scary; it’s advice we would do well to heed and stop guarding this carcass of a model that, as great as it has been, is still starting to smell.

Philip II of Spain declared state bankruptcy 4 times between 1557 and 1596, primarily a result of an illusory flow of resources from the New World. That would be us, and ‘making do with more‘ is a mantra that has served us as well as it did him. So, what can we make out of the broken table?

How to Ctrl-Shift the Labor Force

I take this is essay in Foreign Policy, via, on the imminent “death of macho,” as mostly another set-up to establish the ever-present victimization of the most persecuted sub-species in the history of the world as seen through the prism of the last 2000 months: the white male. If it can be established to a reasonable doubt that the era of patriarchal hegemony is over, then the ground work can begin to rehabilitate, if not re-establish, its dominance.

Most titans of finance, captains of industry, even ‘fishers of men’ have sought to identify with the working man. Our bizarre allergy to elitism itself originated in what is perceived, from above, as the upward insecurities of the blue collar man, even though this phenomena resembles more a refusal to demean one’s position and accept certain peers, than any contempt for learning or the finer things. Still, the shift from an industrial- to an information-economy, while I might cheer the re-kindled emphasis on the mining of words, does appear to be a leveler from both directions, as the unwanted skills one group disdained and the other couldn’t afford begin to pile toward the center of the plate as the new source of growth and progress.

For several years now it has been an established fact that, as behavioral finance economists Brad Barber and Terrance Odean memorably demonstrated in 2001, of all the factors that might correlate with overconfident investment in financial markets—age, marital status, and the like—the most obvious culprit was having a Y chromosome. And now it turns out that not only did the macho men of the heavily male-dominated global finance sector create the conditions for global economic collapse, but they were aided and abetted by their mostly male counterparts in government whose policies, whether consciously or not, acted to artificially prop up macho.

Fine. I’m not going to disturb children fighting dragons with paper swords. But these kinds of built-environments, where fields of straw men bleed seamlessly into subdivided new attacks on old resentments, are sprinkled with acknowledgements of collapse and economic re-alignment. And there, we should welcome the cover fire, even if it is just a sound effect-mimic from the mouths of babes.

How will we shift the labor force, from the chairman’s suite to the break-truck, from burning things to making things? What does that even mean? It’s not just green, of course,  but a whole slew of implications about all the things we’ve built society on that we’ve got to stop doing. And yet, people will still need jobs – more to the point, people will need education, healthcare and the raft of other social services that we have always needed but which been downgraded on the payscale and prestige-o-meter to the point where we ignored them and THAT became as much of an explanation for our deplorable state of waste and natural illiteracy as much as the machinations of a single gender.

So, godspeed the death of macho, if that’s going help facilitate the shift. But I would fear, from the straw sticking out of his sad, thread-bare Zegna, that reports of its death are indeed an exaggeration.

Sustainable You

In order to keep oneself going, there are basic needs involving inputs and outputs which determine whether an entity dies or remains viable. In the debate over global climate change and whether anything should be done about it, we discuss and reflect on the effects of various elevations in temperature on our ability to secure the inputs necessary for viability. Or we act like there’s no such thing as climate change at all. But we’ll set that aside and believe for a moment that most people are sufficiently convinced.

Granting this, even if we can summon the political will to begin to limit greenhouse gas emissions to combat runaway climate change, would the resulting society otherwise be viable into the future? Do we believe we can achieve this and then be able to keep things – living standards, consumption levels – much as they are? In other words, would a reduced carbon-centric model be sustainable?

Many of the policy implications of limiting co2 emissions would necessarily alter the way we live. I trust this is a well understood point – and vociferous opposition to Waxman-Markey suggests that it is. The distaste and outrage toward this kind of change does not mean that it is any less likely. You can see the same evidence in the collapsed housing market, the financial services industry in tatters, the job losses in manufacturing, fractured global supply chains. When will this economy begin to recover? The question, taken with its constituent parts, almost answers itself. Or it should.

Even if there were no such things as rising oceans or the greenhouse effect, we could not sustain anywhere near present levels of energy consumption, and without those amounts of cheap energy, our society as presently construed cannot keep up its requisite levels of inputs needed for viability. We could not even keep it were it is.

Now, whether this adjustment is down or up would depend on nothing so much as our relative capacities for creativity and imagination – of course, the very reasons it all seems so unthinkable to so many. It is, literally. In order for there to be an evolution of our ideas about green, there will have to be a throughway beyond even sustainability.

Image: Henrik Hakansson, Fallen Forest, 2006.


The government is playing a game of hangman with the auto industry, which, only using the two words ‘cars’ and ‘economy’, is missing a couple of important letters.

It’s not a game really. But the word they come up with is the key. Because what’s happening is that the auto industry will not return to what it was, and I can’t say whether this is objectively good or bad – the livelihoods of millions of people are at stake and will change because of it. I can say that the industry and its products were objectively unsustainable, never geared toward lasting, if you will. The term Rustbelt was earned, obviously.

What will it all change to? Many, smaller ventures, likely, but when you expand the word list to include fortune and manufacturing, the people at stake might be able to actually avoid completing the figure on the gallows.

The situation should make us (we seem to only respond to force) begin to think about post-industrialization in a different way perhaps, and not just in terms of a service industry where we make money from money but no longer make any thing. We will continue to need many things, primarily food and but also jobs, for people. How do you create jobs for people? How do you make food? Where did all the people who made the cars come from?

On a very related point, conservatives scream socialism! so often and so loudly that they don’t even see when something really is socialism, like the president firing the CEO of a major corporation and ordering another to sell itself. Another pitfall of a discourse littered with chickenlittle-type hyperbole.  The timing couldn’t be better for this short-term policy solution. When they might reasonably object to something, the moral authority has been used up in petty political slander. A self-neutralizing opposition is good for President Obama, but I trust they wisen up. There will be need to be smart, effective opposition, eventually.

Turning Japanese

I try to resist the impulse to use pop songs in post titles, but I’m only human. My disdain for Wally what’shisname, however, remains in tact. S’why I get feverish in certain airports, methinks.

So Krugman believes we are fiscally morphing into our seemingly reserved and genuflective brethren. But if you look at what is meant by the words Japanese, economic and model in the 1990’s vintage, you’ll see that what people refer to as the ‘lost decade’ was merely a decade of flat growth. Well, tell you what:

Get. Used. To. It.

Otherwise called a starting place, for most of what is going to follow. The dissonance of what’s happening in the financial economy right now, talk of recovery and longing for normal times is all due to the fact that there’s no going back. And we shouldn’t see this as a bad thing. Our pent-up imaginations have all the rough stuff shoved to the fore, and we’ve conditioned ourselves to be righteously afraid of it. But it’s just us, our dogs, cats and cattle, and back in there somewhere also is the idyllic train rides to see your lover and long walks to the park, stolen flowers, broken kisses and other things you can’t put on a price tag on without them seeming like an old lady‘s hat. The fact is old ladies are people and hats are things they wear out in the sun.

We’re trying to understand the tunnel of love from a technical standpoint and well, the two just don’t mix. You can’t say where or how we’ll come out of this, but seeing that as the fun part takes a little more than the promise of low, low prices or assembly-line built excitement. Sorry.

Technical note: I discovered posterous, and am trying to make the most out of the sweet spot of not knowing what it’s for before that, too, passes.

World’s Longest Undefended Border

Between Canada and the United States? Between clever and stupid? You’re getting warmer. Try the critical dividing line between credit creation and value creation. Seeing these as one in the same is like, well, looking at the huge land mass between Panama and the North Pole and seeing a single, harmonious country. It’s not all the same, though it would change much if some solidarity formed around being North Americans, not all of it good.

There is some good, bad and wrong in this article. The author points to some interesting distinctions that have been missed, or at least underplayed, concerning credit and value.

There are some simple rules for sound banking and sound economies that need to be followed: Whenever credit is created and used to increase the amount of goods and services provided, it will be noninflationary: more money comes about, but also more goods and services. This is boring banking, without excessive bankers’ bonuses. But it is the kind of stable banking that created the postwar German and Japanese economic miracles, and also explains the rise of China and other East Asian so-called miracle economies.

But whenever credit is created and used for unproductive purposes, inflation comes about: more money chases a limited amount of goods or assets. The unproductive credit creation can take two forms: When credit is extended for consumption, it will result in consumer price inflation. When credit is extended for non-gross domestic product transactions (which means mainly financial and real estate transactions), there will be asset inflation. Both cases are unsustainable and if sufficiently large, result in banking and economic crises.

We can be more or less strict about any of this from a regulatory point of view, but what banks create with credit largely defines how we lope from bubbles to busts to bubbles again. Bankers were once (and will be again soon) the stiff, uptight types whose very boringness epitomized financial prudence featuring risk aversion, right down to their Brooks Brothers’ suits. This is the boring banking of low, constant annual returns – you may have heard of it. Though they may have been disparaged from time to time as prudish stereotypes, there was a certain reliance on them as a personification of the confidence we could place in the system. Credit was slow moving for a reason. But when, as the writer points out, credit is created and used for unproductive purposes, all manner of skulduggery becomes possible.

And here’s the civics class section that coach skipped over – when something involving money becomes possible in our system, it’s as good as mandatory.

We get exotic financial instruments and bankers in Zegna and Armani spinning a whole different kind of confidence game. These episodes, if that’s all they are, point back to an economy abandoned of its fundamentals, where people are making money off of money that, it turns out, isn’t real money. Inflated value is not real money, so you should not be able to get easy cash (more debt) in return for not having it.

Q: How can you afford a $789,000 home financed at 5.8% if you’re not an anesthesiologist?

A: You can’t.

There are all manner of warning signs that no one wants to believe (Dow 36,000?) and it’s easy to look back and say well, we should have known, what with all those e*trade commercials during breaks in ‘Flip that House’, you could see greed getting the best of the least among us first*. Yes, we should have and in fact many, many people did refuse the basic temptation to jump in and not get left out of the gold rush, which was based on nothing more than self-conjured pool of suckers-R-us.

* I’m thinking of the conscience-challenged here, first, but there’s a growing body of evidence which suggests some preternatural disposition toward not asking questions if the answers keep coming at a 30% annual rate of return.

What does 6.2% mean?

I can dig it when the Grey Lady steals my construct.

On Friday, the Bureau of Economic Analysis reported that gross domestic product fell at an annualized rate of 6.2 percent from the third to the fourth quarter of 2008. This was bad news, but some journalists have exaggerated the finding merely by misreading the report.

That post and graph is by a UChicago economist. Another economist I read regularly is Brad DeLong at Berkeley (who hopefully will be taking academic leave to work at the Treasury department very soon). Anyway, this post reminds me of something I heard DeLong say in a NPR essay, I think yesterday. He was talking about all the bad news that’s out there, about the fixation on the stock market as an indicator, the unemployment numbers, the CPI… and he was saying that its enough to make us all worried and scared. But he pointed out that because of certain trends in the fundamentals of the economy (which have been out of whack for several years, really), the stock market should be going down. And though we’ve known about most all of these trends and statistics since last fall, the news media has been more all over them of late. So while they are sufficiently dire that we should be worried and scared, we shouldn’t be more worried and scared than we were in December just because the news media is finally rending their garments.

But… check out DeLong; he has a great running gag (except its not so funny) about the Washington Post Death Watch that should serve him well when/if he gets back to DC.

Green Expo

I dropped by the Green Life Expo today, to check out what is and is not green. The signs, the products, the people, the giant inflatable planet in the middle of the room… they were all green. It seems we’re just past the marketing extravaganza phase but not quite into the details of what any of it means, as yet. Several people agreed to talk to me on camera about what they or their company were doing, and I’ll post some short videos soon.

Talking to a rep from a large recycling company, one of the things that came up was, after extolling the benefits of recycling, getting small cities and towns on board, doing all manner of public awareness campaigns, when those basics are behind you and you’re left to contemplate the evaporated foreign market for your material what you are left with is creating new profit-streams for companies that collect and “recycle” recyclables. The very nice guy did the equivalent of taking his hat off, wiping his brow and squinting into the sun to say, “Heck, I don’t know, hoss.”

Yeah, no kidding. There are many things like this that people aren’t thinking about, and they might sound complicated – like creating vertical integration with manufacturing companies, or getting companies to be happy with a lower domestic price for recycled materials rather than shipping then stuff overseas for a little higher return. These things are inherent to coupling ethical responsibility with economic viability – and it’s important to acknowledge in someway that this what we’re talkign about. But most of the earnest participants didn’t have anything to add to this besides agreeing that it was a good question.