Charles A. Hall writes that he wants to give us his “simplistic take” on the Wall Street mess (not to exclude greed, idiocy and so on):

Using what he is best at - Charlie suggests - Draw a Hubbert curve.  Then make an “Economic growth curve” in a different color that follows along the left hand (growth) side of the Hubbert curve .  As the Hubbert curve bends over  (Peak oil was more or less in 2005) everyone in Wall Street etc., believed that growth was continuing “as it always has”, so they kept their “assets”  “growing” with speculation.

================

Now economic reality is catching up with biophysical reality, which has not been growing.  This is called a financial “adjustment” to reality.  We have seen it every day for the last 10 days.  I think that this shows the power of a biophysical approach to economics to at least give us options as to how we should think about economics!

***

Charles A. Hall continues by suggesting we read the attached material by Gvail Tverborg, A Swedish economist:

Banks (enclosed), a Swedish economist, may be saying the same thing in a lot more words (attached).  I have just skimmed it - says Charlie.

Gail Tverborg’s take on gasoline shortages (they are serious!) :  http://www.theoildrum.com/node/4585 - see last paragraph there.

***

Further:
The Congressional switchboard is jammed. You can get through, but it takes a dedicated finger on the redial button of your phone. Operators at the Capitol say it’s been that way for a week now, as Americans across the country have been flooding their Congressional delegations with phone calls (and emails) urging them to vote “No” on the Bush/Paulson Wall Street bailout.

That today is no exception, after Democratic Party leaders (and both major party presidential candidates, John McCain and Barack Obama) bought into the plan after adding some window-dressing measures designed to make it look more palatable. This shows that ***the public is not fooled (calls are reportedly running better than 9:1 against a bailout, perhaps more like 99:1).

***

People see clearly that this is a trillion-dollar giveaway to the very people who have been hollowing out and destroying the US economy for over a decade or more by convincing both parties to let them do whatever they want to get rich, free of any kind of significant oversight or regulation.

***

As Nobelist economist Joseph Stiglitz has written of this outrageous rip-off, there are four problems facing the financial system, and the bailout proposal only addresses one–getting the toxic mortgages off the banks’ books and onto taxpayers’ hands. Left unsolved is the gaping hole in banks’ balance sheets in the form of loans made to people and companies which cannot be repaid, which will mean they still won’t start lending money again. Left unaddressed too is the continuing collapse of housing prices, which will inevitably lead to more bank collapses even after the bailout. Finally, Stiglitz says there is the general loss of faith in the financial system–a major crisis which the bailout will also not solve.

***

Stiglitz doesn’t even address a fifth problem which is that [with] this trillion-plus-dollar boondoggle (and when you add in the bailouts of Fannie Mae, Freddie Mac, AIG, Bear Stearns, the multiple mega-bank failures and the pending auto-industry bailout, you’re already talking $1.5 trillion and counting), all of it with borrowed money - the stage is being set for a collapse in the US dollar, with consequences that will reverberate through the economy.

Consider: if the dollar collapses, as many experts say is almost inevitable with this kind of huge addition to the national debt, oil prices (which are set in dollars) will soar to compensate, the price of all the other goods that Americans import–more than half of everything we use in daily life thanks to the decimation of American manufacturing–will rise dramatically, and ultimately, in an effort to stem the bleeding, interest rates will have to be raised, thus bringing what’s left of the economy to a grinding halt.

Download the Word document: banks_spec.doc

Arson attack on publisher of book on Prophet’s wife.
By Andy McSmith, The Independent, Monday, 29 September 2008.

Police are holding three suspected terrorists after a weekend arson attack at the London home of the publisher of a novel about the Prophet Mohamed’s child bride.

Two men were arrested by armed police outside the house in Islington, north London, and a third was detained outside a nearby Underground station. The fire was quickly put out after the fire brigade smashed the front door. The publisher, Martin Rynja, 44, was unhurt.

Scotland Yard described the operation as being “intelligence-led”, implying that the gang were being followed by undercover police.

***

Mr Rynja is director of Gibson Square, an independent publishing house which earlier this month announced it planned to release The Jewel of the Medina in Britain. He could not be contacted yesterday, and is thought to be under police protection.

The novel, by the American author Sherry Jones, was pulled by publishers in the US over fears it would anger Muslims, while a publisher in Serbia withdrew it from the shelves after protests from Islamic leaders, who said it insulted Mohamed and his family.

Neighbours of Mr Rynja said armed police, assisted by fire-fighters, broke into his home at around 2.30 am. Kevin Austin, 44, said he was woken up by police banging on his front door. “All we heard was someone outside shouting ‘Get on the ground. Get on the ground,’ loudly and forcefully,” he said.

“Then they shouted ‘Stop struggling,’ and we heard a van door closing and several cars speeding off. Then we were told to get out of the house. We only got as far as the front door when the police told us to get back inside.”

Another resident said he saw the two arrested men being put into forensic suits to protect evidence, before being bundled into a black van.

The three men, aged 22, 30 and 40, were arrested on suspicion of the commission, preparation or instigation of acts of terrorism, and are being questioned at a London police station. Officers also searched four properties in north-east London – two in Walthamstow, one in Ilford and one in Forest Gate.

***

Announcing the publication of The Jewel of the Medina earlier this month, Mr Rynja said he felt such books were important in a liberal democracy. “If a novel of quality and skill that casts light on a beautiful subject we know too little of in the West, but have a genuine interest in, cannot be published here, it would truly mean that the clock has been turned back to the dark ages. The Jewel of the Medina has become an important barometer of our time,” he said.

In an interview with a German newspaper, the author dismissed the idea that her work – which focuses on the relationship between Mohamed and his wife, Aisha – would provoke a violent response. “To claim that Muslims will answer my book with violence is pure nonsense,” she said.

Her agent, Natasha Kern, said: “There are many misconceptions about this book floating around the internet, including that it is a romance novel or that it focuses on sexual content. Nothing could be further from the truth.”

The Following is all from The Financial Times of  Monday, September 29, 2008.

We do not post the paper’s editorial by its Editorial Board, but we post Chrystia Freeland’s article - she is the Economics’ Editor of the paper.

David Sirota | Back In the USSR.
Friday 26 September, 26, 2008

by: David Sirota, Creators Syndicate

 http://www.truthout.org/092708F

When I worked for then-Rep. Bernie Sanders (I-Vt.) in the late 1990s, Washington was in the panting throes of a deregulatory orgy. Many lampooned my boss’s opposition to the grotesquerie, and his notoriety as the only self-described socialist in Congress. Nobody guessed that a few years later, our country would become the globe’s newest U.S.S.R.: The United States’ Socialist Republic.

Yes, a red flag is rising over the Capitol, only the laborer’s hammer and sickle has been replaced by a baron’s top hat and monocle. America is Amerika, and throughout Washington a socialist rallying cry echoes: Politicians and lobbyists of the world unite! — unite to rescue Wall Street capitalists with a $700 billion taxpayer bailout.

***

Though socialism seems new in the U.S., it isn’t. Using public resources and government power to control the economy is as Amerikan as the Pentagon and the Patent Office. And the problem is not socialism itself, but our uniquely destructive version of it.

Amerika’s is not the democratic socialism of many countries.

Ours is kleptocratic socialism — the objective is theft.

Unlike European comrades, our socialists rarely mandate returns on taxpayer investments. The same 19th century socialism that gave the Mountain West to railroad companies became a 20th century socialism subsidizing oil and drug industry profits. Now, our 21st century socialists propose giving financial industry con men the national credit card, confirming Marx’s theory that history repeats itself first as tragedy, then as farce.

Bolivian socialists nationalize to combat wealth stratification, remove greed from human necessities like energy, and allow the public to own the means of producing valuable commodities. Amerika’s socialists nationalize to preserve inequality and force the public to own the means of worthless production. Most recently, taxpayers’ $85 billion will purchase bankrupt AIG and its means of producing paper, all to let speculators continue profiteering off the human need for housing.

Shutter one in Ohio, and workers get nothing, except politicians saying their jobs are never returning and national health care is “unaffordable.” But if investment banks teeter, those same politicians quickly find billions for bailouts.

***

Of course, socialist revolutions can share key traits.

John “I am fundamentally a deregulator” McCain has suddenly gone French, embracing regulation with the zeal of a beret-wearing Parisian reciting “Das Kapital” in a left bank coffeehouse (call him Monsieur Jean McCain, s’il vous plait). CNBC’s Larry Kudlow justifies kleptocratic socialism by absolving the financial elite and blaming the meltdown on that all-powerful Poor People Lobby, which he claims is “forcing banks to make low-income loans.” And New York Times’ columnist David Brooks, long the ruling class’s Minister of Propaganda, applauds the “public spiritedness” of Paulson’s “Progressive Corporatism.”

As this socialist uprising intensifies, the most prominent counterrevolutionary is none other than Sanders. Now a senator, he is calling for both re-regulation and a millionaire surtax to pay for the bailout and avoid adding its full cost to the national debt.

“The people who can best afford to pay and the people who have benefited most from Bush’s economic policies are the people who should provide the funds for the bailout,” he said.

Once the federal government’s only (admitted) socialist, Sanders is evidently its only fiscal conservative, too. It’s time Amerika listened to this original visionary.

-——–

David Sirota is a bestselling author whose newest book, “The Uprising,” was just released in June of 2008. He is a fellow at the Campaign for America’s Future and a board member of the Progressive States Network — both nonpartisan organizations. His blog is at www.credoaction.com

 The Columbia University World Leaders Forum, September 26, 2008, Became The Podium For Prime Minister Anders Fogh Rasmussen of Denmark To Make Known A  Roadmap To The December 2009 Climate Change Meeting in Copenhagen. The Prime Minister Is Keenly Interested That The Copenhagen Event Becomes The Turnaround Point From Our Present Descent Towards Global Environmental Disaster, and He Negotiated This Week A Roadmap With The UN Secretary General Ban Ki-moon and The Two Candidates For The US Presidency.  We Wished Him All The Luck He Needs; Nevertheless We Expressed Some Skepticism.

The Columbia Forum brings to campus, during all months of the academic year, leaders involved with all sorts of ongoing problems, and at the time of the September High Level meetings of the UN General Assembly, it picks up special speed, and manages to pick up speakers that may have fallen in between the cracks when organizations like the Asia Society and the Americas Society, or the Foreign Policy Association, or the Council on Foreign Affairs, set up their schedules. This time it was really not the case. Prime Minister Rasmussen came to Columbia University because he has high esteem for the work done at the Earth Institute that is the home for a large number of scientists that were involved in the readying of the IPCC reports. Having said that, we must also note that rather then having the people from The Earth Institute involved in the Forum, the University chose to go all out with Columbia University President, Lee C. Bollinger, and University Professor of Economics and Law, Jagdish Bhagwati, a specialist on globalization and development, being the official hosts.

The above august Columbia University reception caused Mr. Rasmussen to start by saying: “I congratulate you on your work. I am impressed by the contribution of The Earth Institute to both the development agenda and the Millennium Development Goal. Issues I had the opportunity to discuss yesterday with other world leaders. Today, I will be speaking about another major topic for The Earth Institute and for many leaders including myself: CLIMATE CHANGE. I will focus on three key elements: THE CHALLENGE, THE VISION, and THE DEAL.”

 The introduction said to us clearly - the Prime Minister does not want to see the reality of climate change being submerged under tons of other global problems. The task of his leadership towards a Copenhagen 2009 agreement is to lead to an agreed timetable for the decrease of CO2 emissions from human made causes - it is this, rather then the maze of other linked problems, that he intends to tackle. He laid bare the problem in his first two segments - but his aim is the third segment - THE DEAL.

We intend to post his whole presentation - but for this fast posting we want to go directly to the DEAL, point out questions that came up in follow up discussions, and the full information that was then provided to the very few members of the media present at a follow up press conference.

***

The Prime Minister wants to see in the December 2009 declaration a deal based on four key elements:

FIRSTLY: A Long Term Vision for reducing global greenhouse gas emissions by 50% from 1990 baseline by 2050.                    This in order to set out targets for businesses in planning their investments.

SECONDLY: An Ambitious Medium Term Goal for the industrialized countries modeled after the European commitment to 30% reduction by 2020. “A tall order, I know, but it meets the challenge and creates opportunities.”

But that is not enough. The Major Emerging Economies will also have to join this endeavour by taking actions. They must stabilise, and subsequently reduce, their emissions. This obviously taking in consideration the different levels of development of the individual countries. IN THIS PRESERVATION OF FORESTS WILL PLAY AN IMPORTANT ROLE.

Without clear 10 to 15-year reduction commitments from the industrialized countries it will not be possible to develop cost effective measures.

THIRDLY: The Technology aspect requires the development and dissemination of low carbon technologies and INNOVATION within a global collaborative effort that promotes programs and policies that sustain economic development while ensuring decreased emissions. We must encourage investment and financing of low-carbon technologies.

FOURTHLY: Dealing with the special needs of the most vulnerable developing countries that contributed least to global warming and suffer the hardest consequences, they must be given a safety net which includes financial support for their efforts including adaptation.

The Prime Minister wants to see cost-effective, market-based instruments - efficiency standards and national, regional, and global carbon markets. He looked further at places that such moves were started already - the EU, China,  in many countries in Asia, other emerging economies.

“I believe the Chinese business sector and government have understood the prospects for low carbon technology. They can see a double benefit. Firstly their economy and, secondly, their participation in the global economy. They are already out there seeking to be part of the next generation of smart, low-carbon technologies” - he said.

Mr. Rasmussen did not mince words: “Following the last oil crisis Toyota started to build smaller and more fuel-efficient cars. General Motors did not. Today Toyota is the most sold car in America.”

“In China, cars are produced according to strict fuel efficiency standards. At the same time, US manufacturers are struggling with old fashioned fuel intensive models” - he said. “DO I NEED TO SAY MORE?”

From here Mr. Rasmussen pointed out that much did actually happen in many US individual States that have also established regional carbon markets and energy efficiency standards - so - he wants to see America lead again by example, by entrepreneurship - politically as well as economically.

“I know,” he said, “that many people fear competition from China, especially in energy intensive sectors. And Yes, no deal can address climate change without both China and the United States being part of it. But do not deceive yourself: with emissions at 24 tons per capita the USA has a long way to go and cannot afford to wait for others. There are huge gains to be won by moving rapidly and with determination.”

The choices that will be made in 2009 are not short of shaping actually the future of planet earth for the next century - but Mr. Rasmussen does not think that his goals are unattainable - they are not impossible and they are not unaffordable - they are actually absolutely vital for our survival - he said - and he offered also that they are vital for our economic recovery and growth.

“We could continue to wring our hands, watching helplessly as the oil price rises and falls. Watch weather systems spreading havoc. Continue to transfer huge amounts of wealth to autocratic regimes and rely on unstable supplies of oil and gas. Watch our planet grow more unlivable every day. But that is not an option. We are not going to do that.”

***

Professor Bhagawati, in his remarks mentioned, in reference to the present calamity of the US financial sector, also with application to the issues here at hand, that we were once used to the image of a ship captain standing in a position of salute when his ship was going down, this after putting his passengers into the lifeboats. Now we see the captains leaving in the lifeboats and leaving the passengers behind to go down instead.

He also suggested that from Kyoto I we will probably not go to Kyoto II, but rather to Copenhagen I. He wants to have in Poznan, Poland, in December 2008, already the agreement to go to 50% reduction of emissions, and during 2009 the negotiations for the intermediary steps with the consideration of different responsibilities for different stages of development, taken in full account.

***

We brought up the question about the timetable from now to December 2009, with the intermediary stop at Poznan in December 2008.

We explained that the US elections in November 2008 will have produced a new President-elect, but no practical change in the US representation -  what-so-ever - at the Poznan meeting. Simply - the US has only one President at one time. This will make it impossible to deal with the US in order to come up with the Poznan  decision, that is needed in order to reach an agreement that Mr.Rasmussen expects at the Copenhagen meeting in 2009.

Mr. Rasmussen answered that he is already in contact with both US Presidential campaigns, and both said that they will be ready with their plans when they take over on January 20, 2009. But this is also no solution - this because of the fact that a US negotiator will have to be approved by Congress - and it is hardly possible of having such an approval before March to the earliest. Really, as cabinet positions will have to be approved first - let me say that this will not happen before April.

With Poznan having become a dud, negotiations April - November 2009, can hardly be expected at turning Copenhagen of being more then a Poznan II, rather then a Kyoto II or Copenhagen I.

***

The Prime Minister is optimistic nevertheless and expects the EU to push for renewable energy and energy savings, and lead by example. He also puts his hope for Europe’s energy in the construction of pipelines from Central Asia that bypass Russia.

Furthermore, as it is true that climate change is with us for a long time - and it only got worse in the last two century because of the man-caused emissions, nevertheless, it is the confluence of that reason, with the present political reason, the fact that huge amounts of money are transferred to unstable regimes in payment for the energy, is strengthening our resolve to take action now. We must now brake our addiction to oil.

The Prime Minister also told us of a “Troica meeting” with the UN Secretary-General: Indonesia, Poland, Denmark - or the organizers of the Bali (2007), Poznan (2008) , and Copenhagen (2009) meetings, which just happened, a day earlier, at this reunion at the UN.

So, there was already a promise of 50% by 2050 / as per 1990, that was put on the table in Bali, and then backed by the G8 meeting in Japan.These answers to questions from the floor got then further amplified in the meeting with the four members of the Press that participated at the follow up session. And this is what I call now the Roadmap:

The year 2009 will involve Heads of State.

(a) In February - March 2009, UN Secretary-General Ban Ki-moon will hold a Heads-of-State Meeting at the UN in order to start the process rolling.

(b) In July 2009, probably in Rome, there will be a meeting of the G8 ++ - that is the major evolving countries - probably 5 of them if not more. This to reach an agreement that can then be brought to all Heads-of-State in a September Session of the UN.

(c) thus an energy/climate change UN High-Level September meeting at the UN headquarters in New York City.

(d) The December 2009 Copenhagen meeting.

Further, we wanted to know what the Prime Minister thinks about a US that will be spending now $1.5 trillion on the Wall Street Bailout - so where will the money come for doing the right things needed in regard to climate change? But the fighting optimist believes that really this is not a question of money, but political will.

Again, I felt compelled to wish good luck and to mention that we are all with him and hope he can pull it through.

Last comment for this first report is that I watched in amazement how the Prime Minister was accosted at the Columbia Forum reception by an Iranian young lady student, who for perhaps 15 minutes was trying him out on those famous cartoons, and how he tried to explain to her the workings of a democracy and the fact that freedom of speech, the press, religion, mean that one religion cannot be imposed on others, and that the government has no right to intervene in a  democracy, even though this student seemed not to want to accept this reality. Columbia University must really have succeeded in bringing on board all sorts of students - and we wish the school luck also, in the attempt to forge well behaved citizens even with hard to reach individuals that surely must come from the leading families of political strata of some of the most repulsive regimes. Finally, another student, waiting in line to talk to the Prime Minister, felt compelled to say - “let’s go back to energy questions.”  A different student, without offering a question,  thanked the Prime Minister for his strong stands.

——–

EU parliament demands more openness on hedge funds.

Tuesday, September 23, 2008.   http://www.theparliament.com/latestnews/…

MEPs have strongly backed a report which calls for EU legislation to force private equity groups and hedge funds to disclose unprecedented amounts of information about their activities.

The report has been watered down since he originally drafted it 18 months ago at the height of public concern over the allegedly asset-stripping activities of the funds.

***

The proposals approved by deputies at their Brussels plenary now cover all financial market players and highlights the key role of such funds in providing capital, particularly to SMEs.

The plans also include mandatory capital requirements for all financial institutions and aligning reward packages with longer term outcomes, to reflect losses as well as profits.

Speaking at a news conference after the parliamentary vote, Rasmussen, a former Danish premier, said he was “delighted” that a “vast majority” of MEPs had endorsed his report.

He added, “With millions of families worried about their savings and pensions he would be very unwise to remind us that until very recently he believed that self-regulation was best. The financial crisis has forced the conservatives in parliament to accept sensible reform, now it is the turn of the commission to prove that they no longer believe that the market alone knows best.”

However Scottish Nationalist MEP Alyn Smith was less enthusiastic, saying, “I reluctantly voted for this report, but have no enthusiasm for it.  The eventual compromise is muddled, and crucially could be taken to be a call for a massive increase in EU competence where in my view financial regulation, like tax, should remain firmly with the member states themselves.

“That said, the UK authorities have clearly failed, and failed the Halifax Bank of Scotland group in particular, so the many references in the report to greater transparency and accountability are to be welcomed.”

***

Meanwhile, a petition signed by over 100,000 people has been submitted to parliament calling on European, US and world leaders to strengthen financial market rules.

 Organised by the global internet movement Avaaz, the petition states “We urge you to take a lead in fixing the fundamental flaws and loopholes which made the global financial crisis possible, including basic problems of debt and risk, incentives and transparency.

“We need you to work together to protect the public good by framing stronger rules for all parts of the global financial system. Be bold, and we will support you.”

US-Style “Financial Socialism” Not An Option for Europe Says EU Commissioner Joaquin Almunia.
LEIGH PHILLIPS, for EUobserver, September 19, 2008.

 http://euobserver.com/9/26775/?rk=1

The EU’s economic and monetary affairs commissioner, Joaquin Almunia, has said Europe should not employ what he called “financial socialism” to solve the ongoing banking crisis by bailing out failing companies.

“Socialists like me, we are against financial socialism,” he said, alluding to the multi-billion-dollar supports and nationalisations of recent weeks that Washington has engaged in to save a host of financial institutions it argues are “too big to fail.”

***

The commissioner - a member of Spain’s centre-left Socialist Workers Party - speaking at a Madrid conference organised by Spanish bourse regulator CNMV, did nonetheless say such measures were warranted where the financial system as a whole was threatened, however.

“No one can say that there won’t be anyone in Europe who will have to face a solvency problem that poses a systematic risk to the financial system,” he said, according to Dow Jones Newswires.

Despite his veiled criticism of how the Bush administration has responded to the crisis, he said Europe was prepared to step into markets if the situation ever deteriorated to such a level.

***

“The economic authorities, financial authorities and central banks are prepared if that case were to occur in Europe,” he said. “I hope it won’t happen in Europe, but no one can rule it out either.”

“During a financial crisis, there are different types of support, with public funds, taxpayers, which are justified by the systemic risk,” he added, reports Reuters.

The commissioner said the current upheaval may continue for some time. “We still have no idea how long this turbulence will last and when normality will return to the markets.”

He also said dealing with the crisis required greater co-ordination by European financial authorities.

“We need more coordinated action by supervisors than currently exists … We must move forward faster, we cannot wait until a financial institution operating in seven or 10 countries of the European Union has problems such as those of Lehman Brothers or Bear Sterns.”

***

In separate news on Thursday, central banks worldwide pumped €126 billion into markets in an attempt to boost liquidity.

The money was released by the US Federal Reserve to five other central banks who then made it available to financial institutions domestically.

The European Central Bank is to make €39 billion available and the Bank of England €28 billion. The Swiss National Bank and the Bank of Canada also participated in the operation.

_______________________

In DC, Bailout Bill Pushed Beyond US, to HSBC, Barclays, Deutsche Bank, Nomura, RBS - & Sovereign Wealth Funds?

Byline: Matthew Russell Lee of Inner City Press in DC: News Analysis

WASHINGTON DC, September 21 — As the fast track proceeds toward rubber-stamp approval of the bail-out proposal by Henry Paulson and Ben Bernanke, changes are being made, and they are no