If you live in Los Angeles County and had no light this week . . .

Many thousands of L.A. County residents found themselves without electrical power this week, stemming from downed power lines, due to high winds.  If you live in Los Angeles County and you were without light earlier this week, but you can now read this, then “Congratulations!”  You are now suddenly thrust back into the modern era, with freely flowing electricity, and all that goes with that! 

This provides me with a possible teachable moment, to continue my discussion on selected aspects of what I’ll call “energy and infrastructure.”  Here are  a few bullet points to consider:

·         If you (and the rest of the affected regions in L.A. Co.) had had newer, underground, high-performance power cables, this type of power outage likely would not have happened to you; moreover . . .

·         The need for such an infrastructure upgrade typically becomes painfully apparent to most of us only after disaster strikes;

·         Imagine the productivity losses (i.e., opportunity costs, missed business, absences, etc.) that this event has already created;

·         There are a number of different places on the planet (that I myself have lived in), wherein power outages of this duration (a couple of days within a week, sometimes longer) are not at all uncommon, and, this is often reflected in business planning, management, and culture in the Third World;

·         The combined, synergistic effects of climate change taking place in the natural environment,  together with the current level of human neglect toward the built environment (some of our urban infrastructure is now many years overdue for either routine maintenance or a major upgrade), all but ensures that events akin to what happened this week have been  “a preview of coming detractions” (with my usual caveat, “If present trends continue.”);  

·         In light of the point above (no pun intended), consider the roles of (Re-)insurance companies.   They know what’s going on now, and have ever so quietly recalibrated their actuarial tables accordingly, over the past decade or so.  The potential frequency and size of future payouts to policy-holders threatens a collapse of the entire insurance industry; hence the combination of rate hikes, and the actual de-insuring of large tracts of land in this country [check out the case of Coney Isalnd, Brooklyn, and storm insurance].  I’ve also written several times in the recent past that the US Department of Defense is likewise quietly preparing itself for the even newer New World Order (driven both by changes in energy availability and the climate).  The truth is out there; and we can find it from a myriad of different sources now— private, public, and civil society/non-profit organizations;

·         The fact that so much of the energy-ecology-economics discourse has been so dominated by “the petroleum-financial complex” (and all the subsidiary corporations and politicos who love them) means to me that we have been bearing witness to a slow tragedy (and a big racket) in the making, over the past few decades—it didn’t necessarily have to be this way.  But . . .

·         It’s not too late!  There are still many things we can do (individually and collectively—How about cooperatives for training and bulk purchasing/installing/maintaining of solar arrays?), such that we don’t end up cannibalizing our high-tech 20^th century infrastructure for parts, in order to build low-tech 21^st century shacks for housing (recall dystopic novels like Parable of the Sower, by Octavia Butler; or World Made by Hand, by James Howard Kunstler; and who could forget the Mel Gibson cult classic film, Mad Max?).  By all means, my friends, let us avoid this type of  “future-primitive scenario.”  

A lot of people (who are currently without sufficient work) could be employed in this country to help make these changes (recall, or Google, the old WPA program from the 1930s).  But, we now live in interesting times, wherein we have a large swath of the US Congress (and "interest groups" elsewhere in American society) seemingly committed to maintaining a latter 20^th century lifestyle (based on mid-20^th century paradigms), but without wanting to pay the necessary price to sustain it.  Additionally, it seems our leaders seek to do this under the rapidly advancing environmental conditions and changing global economic circumstances of the early 21^st century.  This is a negative case of leadership by example, and ultimately a recipe for disaster.  This has certainly been borne out by my own reading of history.   A study of the latter decades of the Western Roman Empire (contrasted with the subsequent flourishing of the Eastern Roman Empire) makes a wonderful historical case study, in that regard.  This has to do with adherence to traditions versus willingness to adapt, under changing global circumstances.  Question: How much do we resemble the Romans?

Consider the following quote, from the US Army War College, on what I’ll call organizational epistemology, or organizational views of the world.  The topic is “war” (of what I sometimes call “extreme public policy”), but the general thrust of this idea has broad applicability, I think.

History would suggest that military organizations have been more committed to the ethos of the past than to preparing to meet the future. There is a good reason for this: The effectiveness of military institutions in the Western tradition has depended on their ability to inculcate discipline . . . .  Yet the demand of discipline and rigid respect for one’s superiors—on which cohesion in battle depends—are antithetical to the processes of adaptation, which require a willingness on the part of subordinates to question the revealed wisdom of their superiors. It is this inherent tension between the creation of disciplined, obedient military organizations, responsive to direction from above, and the creation of organizations adaptive to a world of constant change that makes military innovation in peacetime and adaptation in war so difficult. 

[Source: http://www.au.af.mil/au/awc/awcgate/dod/ona_murray_adapt_in_war.pdf ] 

Allow me to use the above quote as a kind of metaphor for our current national situation.  I think we have reached a moment in our history wherein it is imperative that the “commanding officers” in our society begin to hear a bit more from the “foot soldiers.”  [The "Occupy" movement seems to be the first baby steps in that direction, in some ways.]  They need to grasp the implications of what is actually happening, on the ground, in the theater of operations.  But, in order for that to happen, they will have to first put down their strong drinks (abandon the intoxicating effects of outmoded ideology), then step away from the plush comforts of the Officers’ Club (be willing to let go of some luxuries for the sake a larger cause: our long-term survial), and walk across the base to get over to the “communications” building (do the work necessary to see and hear—to grasp—what's actually taking place).  

Reports have been streaming in—apparently for some time now—indicating that a very large force is now massing against us; and, it appears to be unlike anything we’ve ever encountered on this scale before.  If you step outside and look closely on the horizon, you can see even see something, faintly, in the distance.  [And, sadly for some perhaps, it looks like the elaborate party over at the Officers' Club, on the other side of the base, will now have to be cancelled.]  It’s almost midnight.  Those who are asleep will now have to wake up.  

On the issue of energy infrastructure, we shall have to mobilize ourselves as if on a war footing, in order to upgrade its functionality for a new, more dynamic, and more challenging era. 

It’s time to sound the alarm.  We need all hands on deck now.  Battle stations!  This is not a drill.  

I Repeat: this is not a drill . . .   

Blaine

The US Military's Intelligent Microgrid Solutions

Oftentimes, some of the most innovative forms technology are designed with military applications in mind, first.  Later, they can sometimes find widespread civilian application.  I believe that we are seeing that in action, here, with the above video.  Imagine that instead of being a forward operating base (FOB) somewhere in the Middle East, it is in fact a small city somewhere in the Mid-West.  The fundamental principle(s) would still be the same, however: built-in redundancy (duplicative or overlapping systems that also "check on each other"); such overlapping systems would be based on networked computer systems providing continuous feedback on overall energy use to the end-users, as well as re-balancing energy loads, depending on local circumstances; together with a mix of various "alternative" energy inputs, thereby significantly reducing the need for fossil fuel inputs.    

It is worth noting that a majority of combat casualties in Iraq were incurred in defending truck convoys which were carrying liquid fuels to FOBs.  Newer, high performance, high efficiency energy technology would (based primarily on wind and solar) go far to reduce reliance on those liquid fuels (based on petroleum).  Ergo, in the short-run, the combat casualty rate will likely go down (all other things being equal) as more and more of these new experimental forward operating bases are deployed in theaters of conflict.

In many ways, the US military is now helping to lead the way toward the new green economy!  In the search for solutions to our current (and deepening) energy and environmental predicament, we shall have to consider all possible sources of valuable information.  The work of the US Department of Defense is one key domain in the development of advanced, next generation, high-performance energy systems.  For more details on all of this, check out the US Marine Corps' Expeditionary Energy site, at http://www.marines.mil/community/Pages/ExpeditionaryEnergy.aspx.

The large electronics firm (and large-scale military contractor), Lockheed Martin, has this to say about its Microgrid Solutions program:

Lockheed Martin Missiles and Fire Control (MFC) Intelligent Microgrid Solutions meet energy challenges not possible with traditional power. They are designed to provide both basic and intelligent microgrid functionality. Further, they are scalable with a Plug-n-Play backbone and control system allowing future expansion to meet growing needs and/or adapt to geographic limitations. Applications include: fixed installations, remote operations, mobile operations, campuses, data centers and industrial sites.  

[Source: LockheedMartinVideosas seen on http://youtu.be/m59oyx0cwEw ] 

The New Sea Monster: "Debris washed to sea by the Japanese tsunami is headed for the U.S." (CNN)

This issue typifies one of the basics of general systems theory: disruptions in one part of the system create reverberations in other parts of the system.  Events of the past few months in Pacific Ocean follow this sequence, roughly: first, there was the earthquake off the coast of Japan; second, the subsequent tsunami which hit Japan caused massive destruction on land, in terms of the built environment; third, the receding waters from the tsunami dragged out an estimated 20 million tons of debris off Japan's coast; fourth, that debris is now afloat, and caught with the Pacific currents, headed toward Hawaii, and eventually the West Coast of the US; sixth, that "island of debris" will likely affect a wide range of other activities, spanning from animal migration to shipping to surfing to other as-yet-unknown events.

Indeed, it seems we now live in very interesting times.  The dual "crowding effect" of significant human population increases multiplied by increased levels of energy intensity (and the creation of the technology that goes along with that) has enabled humans to generate enormous metabolic processes, at the social level.  Those large-scale metabolic processes (often referred to as "the metabolism of society"), in turn, can generate correspondingly enormous waste streams.  The predominance of "econometric modelling" linked to narrow time horizons, themselves rooted in the philosophy of short-term profit maximization, has contributed to the present predicament.  Add to that the disruptive effects of earthquakes and tsunamis, and you have a recipe for the garbage monster now floating in the Pacific Ocean.   Indeed, the notion of monsters rising up out of the seas is a very ancient, archetypal motif.    





The Godzilla franchise is but a modern version of the classic sea monster motif.  The above clip (in Japanese voice-over, but filmed in New York City) is from the 1998 version.  A few things are worth noting here.  Typically, in classical mythology, the gods would unleash such creatures as a punishment for the wrongs done by human beings in relation to other aspects of their environment or their world ("the gods must be angry!").

Large bodies of water (and especially the ocean) are often representational of the human subconscious, as well as the primordial beginnings of the human race; therefore, out of our subconscious a monster is manifest.  That monster was/is, in many ways the product or spawn of our blind ambitions and our technical/mechanical creativity.  That monster, once unleashed into the conscious realm, can be highly destructive to human endeavor and hard to contain.  This, I think, is in many ways representational of our current reality: Wall Street's position in this movie is interesting.  Here, the virtual "Ground Zero" (pun intended) of our blind ambition and greed gets its own comeuppance, as a result.

We (those of us who like the "disaster movie" genre) seem to relish in the virtual destruction of some of our most cherished institutions and edifices, as if such scenes of destruction really do feed something in our collective subconscious.  [Q: How many LA-based disaster flicks have not resulted in the destruction of the Capitol Records building?  Think about it.]   It is a brief chance to experience a small, "take-home slice" of the classic notion of "the ecstasy of the apocalypse," minus the cuts and abrasions.  I suspect there is the seed of a little Godzilla in all of us, just waiting for the right conditions to appear. 

In the final analysis, the garbage monster now afloat in the Pacific Ocean is our own Godzilla.  Unlike the Godzilla in the movies, this one is very slow moving, comparatively; but it will probably be no less destructive.

Blaine

Mother of All Strikes: Greece grinds to halt for 48 hours (RT)

"The Collapse Is Coming...And Goldman Rules The World" (BBC)

Here's an excellent analysis and breakdown of the OWS Movement, by Business Insider.

CHARTS: Here's What The Wall Street Protesters Are So Angry About...

The "Occupy Wall Street" protests are gaining momentum, having spread from a small park in New York to marches to other cities across the country.

So far, the protests seem fueled by a collective sense that things in our economy are not fair or right.  But the protesters have not done a good job of focusing their complaints—and thus have been skewered as malcontents who don't know what they stand for or want.

(An early list of "grievances" included some legitimate beefs, but was otherwise just a vague attack on "corporations." Given that these are the same corporations that employ more than 100 million Americans and make the products we all use every day, this broadside did not resonate with most Americans).

So, what are the protesters so upset about, really?

Do they have legitimate gripes?

To answer the latter question first, yes, they have very legitimate gripes.

And if America cannot figure out a way to address these gripes, the country will likely become increasingly "de-stabilized," as sociologists might say. And in that scenario, the current protests will likely be only the beginning.

The problem in a nutshell is this: Inequality in this country has hit a level that has been seen only once in the nation's history, and unemployment has reached a level that has been seen only once since the Great Depression. And, at the same time, corporate profits are at a record high.

In other words, in the never-ending tug-of-war between "labor" and "capital," there has rarely—if ever—been a time when "capital" was so clearly winning.

Let's start with the obvious: Unemployment. Three years after the financial crisis, the unemployment rate is still at the highest level since the Great Depression (except for a brief blip in the early 1980s)

Image: St. Louis Fed

Jobs are scarce, so many adults have given up looking for them. Thus, a sharp decline in the "participation ratio."

Image: St. Louis Fed

And it's not like unemployment these days is a quick, painful jolt: A record percentage of unemployed people have been unemployed for longer than 6 months.

Image: St. Louis Fed

And it's not just construction workers who can't find jobs. The median duration of all unemployment is also near an all-time high.

Image: St. Louis Fed

That 9% rate, by the way, equates to 14 million Americans—people who want to work but can't find a job.

Image: St. Louis Fed

And that's just people who meet the strict criteria for "unemployed." Include people working part-time who want to work full-time, plus some people who haven't looked for a job in a while, and unemployment's at 17%

Put differently, this is the lowest percentage of Americans with jobs since the early 1980s (And the boom prior to that, by the way, was from women entering the workforce).

Image: St. Louis Fed

So that's the jobs picture. Not pretty.

And now we turn to the other side of this issue... the Americans for whom life has never been better. The OWNERS.

Corporate profits just hit another all-time high.

Image: St. Louis Fed

Corporate profits as a percent of the economy are near a record all-time high. With the exception of a brief happy period in 2007 (just before the crash), profits are higher than they've been since the 1950s. And they are VASTLY higher than they've been for most of the intervening half-century.

Image: St. Louis Fed

CEO pay is now 350X the average worker's, up from 50X from 1960-1985.

Image: G. William Domhoff, UC Santa Cruz

CEO pay has skyrocketed 300% since 1990. Corporate profits have doubled. Average "production worker" pay has increased 4%. The minimum wage has dropped. (All numbers adjusted for inflation).

Image: G. William Domhoff, UC Santa Cruz

After adjusting for inflation, average hourly earnings haven't increased in 50 years.

In short... while CEOs and shareholders have been cashing in, wages as a percent of the economy have dropped to an all-time low.

Image: St. Louis Fed

In other words, in the struggle between "labor" and "capital," capital has basically won. (This man lives in a tent city in Lakewood, New Jersey, about a hundred miles from Wall Street. He would presumably be "labor," except that he lost his job and can't find another one.)

Image: Robert Johnson

Of course, life is great if you're in the top 1% of American wage earners. You're hauling in a bigger percentage of the country's total pre-tax income than you have at any time since the late 1920s. Your share of the national income, in fact, is almost 2X the long-term average!

Image: David Ruccio

And the top 0.1% in America are doing way better than the top 0.1% in other first-world countries.

Image: David Ruccio

In fact, income inequality has gotten so extreme here that the US now ranks 93rd in the world in "income equality." China's ahead of us. So is India. So is Iran.

Image: G. William Domhoff, UC Santa Cruz

And, by the way, few people would have a problem with inequality if the American Dream were still fully intact—if it were easy to work your way into that top 1%. But, unfortunately, social mobility in this country is also near an all-time low.

So what does all this mean in terms of net worth? Well, for starters, it means that the top 1% of Americans own 42% of the financial wealth in this country. The top 5%, meanwhile, own nearly 70%.

Image: G. William Domhoff, UC Santa Cruz

That's about 60% of the net worth of the country held by the top 5% (left chart).

Image: G. William Domhoff, UC Santa Cruz

And remember that huge debt problem we have—with hundreds of millions of Americans indebted up to their eyeballs? Well, the top 1% doesn't have that problem. They only own 5% of the country's debt.

Image: G. William Domhoff, UC Santa Cruz

And then there are taxes... It's a great time to make a boatload of money in America, because taxes on the nation's highest-earners are close to the lowest they've ever been.

Image: National Taxpayers Union

The aggregate tax rate for the top 1% is lower than for the next 9%—and not much higher than it is for pretty much everyone else.

Image: G. William Domhoff, UC Santa Cruz

As the nation's richest people often point out, they do pay the lion's share of taxes in the country: The richest 20% pay 64% of the total taxes. (Lower bar). Of course, that's because they also make most of the money. (Top bar).

Image: G. William Domhoff, UC Santa Cruz

And now we come to the type of American corporation that gets—and deserves—a big share of the blame: The banks. Willie Sutton once explained that the reason he robbed banks was because "that's where the money is." The man knew what he was talking about.

Image: AP

Remember when we bailed out the banks? Yes, and remember the REASON we were told we had to bail out the banks? We had to bail out the banks, we were told, so that the banks could keep lending to American businesses. Without that lending, we were told, society would collapse...

So, did the banks keep lending? Um, no. Bank lending dropped sharply, and it has yet to recover.

Image: St. Louis Fed

So, what have banks been doing since 2007 if not lending money to American companies? Lending money to America's government! By buying risk-free Treasury bonds and other government-guaranteed securities.

Image: St. Louis Fed

And, remarkably, they've also been collecting interest on money they are NOT lending—the "excess reserves" they have at the Fed. Back in the financial crisis, the Fed decided to help bail out the banks by paying them interest on this money that they're not lending. And they're happily still collecting it. (It's AWESOME to be a bank.)

Image: St. Louis Fed

Meanwhile, of course, the banks are able to borrow money FOR FREE. Because the Fed has slashed rates to basically zero. And the banks have slashed the rates they pay on deposits to basically zero. So they can have all the money they want—for nearly free!

Image: St. Louis Fed

When you can borrow money for nothing, and lend it back to the government risk-free for a few percentage points, you can COIN MONEY. And the banks are doing that. According to IRA, the "net interest margin" made by US banks in the first six months of this year is $211 Billion. Nice!

Image: Institutional Risk Analytics

And that has helped produce $58 billion of profit in the first six months of the year.

Image: Institutional Risk Analytics

And it has helped generate near-record financial sector profits—while the rest of the country struggles with its 9% unemployment rate.

Image: Reuters (Felix Salmon)

And these profits are getting back toward a record as a percentage of all corporate profits.

Image: The Big Picture

And those profits, of course, are AFTER the banks have paid their bankers. And it's still great to be a banker. The average banker in New York City made $361,330 in 2010. Not bad!

Image: New York Times, New York State Comptroller

This average Wall Street salary was 6X the average private-sector salary (which, in turn, is actually lower than the average government salary, but that's a different issue).

Image: New York Times, New York State Comptroller

So it REALLY doesn't suck to be a banker.

And so, in conclusion, we'll end with another look at the "money shot"—the one overarching reason the Wall Street protesters are so upset: Wages as a percent of the economy. Again, it's basically the lowest it has ever been.

Image: St. Louis Fed

So now you know what the protesters are upset about!

Image: AR McLin via Flickr

Read more: http://www.businessinsider.com/what-wall-street-protesters-are-so-angry-about-2011-10?op=1#ixzz1bBUk9CEZ