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

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 not pro-consumer. Rather, non-U.S. institutions involved in subprime lending, such as HSBC, Deutsche Bank, Barclays, Royal Bank of Scotland, Credit Suisse, Nomura and even Sovereign Wealth Funds have gotten themselves included in the bailout. Their access can be documented. Paulson’s initial proposal as issued on September 20 was:

“The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.”

  This phrase, headquarters in the U.S., caused agitation. Lobbying was done and concession were made.

Paulson and Bernanke: let’s thrown some billions to HSBC and Barclays

 Later on September, Paulson’s Treasury Department issued a clarifying fact sheet:

“To qualify for the program, assets must have been originated or issued on or before September 17, 2008. Participating financial institutions must have significant operations in the U.S., unless the Secretary makes a determination, in consultation with the Chairman of the Federal Reserve, that broader eligibility is necessary to effectively stabilize financial markets.”

  The switch no longer requires a U.S. headquarters, only “significant operations” in the country. Surely HSBC, based in London and Hong Kong, considers its Chicago-based subprime lender significant. So too Deutsche Bank’s two subprime lenders.

   Also significant, in terms of supposed concern about moral hazard, is the cut-off date of September 17. Weren’t people on notice at least since February 2008 about the problems in the subprime market?                  Why should investments made after that still be in line for a Federal bail-out?

Arctic Oil and Gas Rush Alarms Scientists.

Stephen Leahy, IPS, from UXBRIDGE, Canada, Sep 8, 2008, (brought to our attention by Roberto Savio).

As greenhouse gas pollution destroys Arctic ecosystems, countries like Canada are spending millions not to halt the destruction but to exploit it.

Late last August, Canada announced a 93.7-million-dollar prospecting programme to map the energy and mineral resources of the region. There are “countless other precious resources buried under the sea ice and tundra,” Prime Minister Stephen Harper said during the announcement. The government’s mapping effort is expected to trigger 469 million dollars in private sector resource exploration and development.

“Many experts believe this new rush to the polar regions is not manageable within existing international law,” says A.H. Zakri, director of the United Nations University’s Yokohama-based Institute of Advanced Studies (UNU-IAS), co-organisers of the conference with Iceland’s University of Akureyri.

***

“Pressure on Earth’s unique and highly vulnerable polar areas is mounting quickly and an internationally-agreed set of rules built on new realities appears needed to many observers,” Zakri said in a statement.

“Climate change is the number one issue for the polar regions. Iceland experienced its hottest day in history this summer,” Leary told IPS from Akureyri in northern Iceland. “I expect some strong recommendations on climate change to come from this meeting.”

***

As climate change opens the Arctic Ocean to shipping, fishing, and other resource exploitation, pollution will pose another major threat to the region, he said.

“Arctic sea routes are among the world’s most hazardous due to lack of natural light, extreme cold, moving ice floes, high wind and low visibility,” said Tatiana Saksina of the World Wildlife Fund’s International Arctic Programme.

“Accidents are going to happen. How will an oil spill be cleaned up? Who will rescue crew and passengers?” asked Leary.

***

Last November, a tourist ship carrying more than 150 people capsized off the tip of Antarctica after hitting some ice. Fortunately, other ships were close by and everyone was rescued. There was no oil spill. However, not all accidents will be so fortunate, he said.

“There is an urgent need for a comprehensive international environmental regime specially tailored for the unique arctic conditions,” noted the WWF’s Saksina.

The urgency stems from the reality that the ice in the Arctic is melting quickly, leaving the region without a solid-ice cover in summer starting just five years from now, according to some estimates. Without international environmental rules, unplanned and unregulated development is likely to damage the very resources most necessary for a sustainable future in the Arctic, she said.

“There is no time to waste and no reason to wait,” Saksina concluded.

[Comment] Who will look after the Arctic?
Arctic resources should be used in a sustainable manner that preserves biological diversity

By LISBETH KIRK, EUobserver Comment/Opinion, September 9, 2008.

 The vulnerable Arctic Region is vital to the global climate and environment, but its future is dependent on striking a delicate balance between conservation and use.

The geographical position of the Nordic countries entails a special responsibility for ensuring that national interests are not allowed to get in the way of the international community making a difference in the Arctic. The Nordic Region must take the lead in promoting sustainable development in the Arctic - and it is a matter of the greatest urgency.

Since much of its territory, both on land and at sea, falls within the Arctic Circle, the Nordic Region is heavily committed to addressing the issues faced by this unique yet vulnerable area.

The Nordic countries already work together to support the Arctic population’s social, economic and cultural development, however, as a political unit, the Nordic Region would also like to make sure that Arctic resources are used in a sustainable manner that preserves biological diversity.

Although the global economy creates new challenges for the people of the Arctic, it also provides them with new opportunities. It is vital that we make the most of these opportunities to raise the standard of living in the area in a sustainable manner.

***

It is essential that the EU also assumes a high degree of responsibility for the Arctic Region. Under the Danish EU Presidency in 2001, the Arctic Window became part of the union’s work on the Northern Dimension, which in turn received a further boost under the Finnish Presidency in 2007.

The Nordic Region still needs to draw greater attention to Arctic issues in the EU, however, especially those relevant to the integrated maritime policy and the EU’s leadership role in international climate negotiations.

To this end, the Nordic Council of Ministers has just published a report on the impact on the Arctic Region, direct and indirect, of the EU’s many policy areas. Its findings reveal that although the EU already exerts a major influence in the Arctic Region, it does not have a coherent policy for the area.

In order to involve the EU, its member states and other important stakeholders in Arctic questions, the Nordic Council of Ministers is organising a conference, “Common Concern for the Arctic,” in Greenland, beginning on Tuesday (9 September).

***

One positive development is that the EU, under the current French Presidency, is working on an Arctic communiqué to be published in the autumn.

But active commitment to the Arctic is required from the EU and the rest of the international community – and it is a matter of the greatest urgency.

***

The Arctic’s global significance must not and shall not be underestimated. The Nordic Region, along with the people of the Arctic, must lead the way and strike the right balance between conservation and use. We cannot do it on our own, however. We need to bring other stakeholders on board.

Cristina Husmark Pehrsson is Minister for Nordic Cooperation in Sweden and Halldor Asgrimsson is Secretary General of The Nordic Council of Ministers

Finland and Sweden revive debates on NATO membership.
VALENTINA POP, September 1, 2008, the EUobserver.

Until recently, discussion of possible NATO membership has not been a lively political topic in neutral Finland and Sweden, but Russia’s actions in Georgia have encouraged those who back membership to become more vocal.

“We need to reconsider our security policy,” said the Finnish Foreign Minister Alexander Stubb in an interview with Austria’s Die Presse on Saturday, August 30, 2008.

Traditional conflicts are making a comeback in the post-9/11 era - he argued - saying Finland needs to begin to consider NATO membership, that the Georgian conflict has highlighted the UN’s problems and the need for a more active security policy.

***

“The talk about how nothing has changed is inconceivable to me,” said the conservative Mr Stubb, who represents the smaller coalition party in the government.

“It makes sense now to take into consideration a NATO bid. The time for a decision in this regard has not come yet, but we need to be flexible and quickly adapt our security policy. This must not take place in slow motion.”

In Sweden, the liberal People’s Party – a government coalition partner - is also trying to launch a NATO membership debate.

Allan Widman, the party’s foreign policy spokesman, championed his country’s membership to NATO in an interview with the Dagens Nyheter newspaper.

The People’s Party has always been in favour of membership, but respected the coalition agreement not to place the topic on the public agenda. This has changed since the Russian invasion of Georgia.

The leader of the Social-Democrat opposition strongly rejects Sweden’s NATO bid, however. The Scandinavian country has had a long tradition of being a neutral country, even though neighbours Denmark and Norway are part of the Western security alliance.

Finnish NATO split: In Finland, Mr Stubb was appointed earlier this year as foreign minister, after being a member of the European Parliament for four years. He is a vocal supporter of his country’s membership in NATO but promised to be reserved on the issue in his new job, due to internal division within the governing coalition.

The Centre Party lead by Prime Minister Matti Vanhanen is split on the issue, as are the Social Democrats.

The current president, Social Democrat Tarja Halonen, is a strong opponent of the NATO bid. Her mandate ends in 2012.

Finland has a 1,200 km long border with Russia, something that caused much consternation for Finnish foreign policy during the Cold War. The country inched closer to NATO in March when it announced its intention to join future operations of the alliance’s rapid reaction force. It has developed technical capacities alongside NATO for several years and would be ready to join quickly if the decision was made.

*****

We visited him on his boat right here in New York, then later in Tel Aviv. He was one of a kind. His bringing ice cream to the children of Gaza did not end the will to fight - but showed that it is possible to be humane.
Yes, we know, some of the children that got his ice cream are now in the Hamas. But then, would they have been any better without that ice cream? It did nevertheless attempt to put a human face to the conflict, and it is not his fault that it did not lead to a more solid understanding.

If not the Palestinians and the Egyptians - there were hundred of thousands of Israelis that understood him. His spirit continues to be present at the Uri Avneri round table - every Friday night at least.

A coincidence - his death was announced on the day Barak Obama assumes the leadership of the Democratic Party of the US. We wonder what he would have said and post also the following tidbit:

And the New York Times correspondent from Jerusalem wrote the following version:

Author Solzhenitsyn, who exposed gulag horrors, dies at 89.

MOSCOW, Russia (AP) — Alexander Solzhenitsyn, the Nobel Prize-winning Russian author whose books chronicled the horrors of dictator Josef Stalin’s slave labor camps, has died of heart failure, his son said Monday. He was 89. Stepan Solzhenitsyn told The Associated Press his father died late Sunday in Moscow, but declined further comment.

Through unflinching accounts of the eight years he spent in the Soviet gulag, Solzhenitsyn’s novels and non-fiction works exposed the secret history of the vast prison system that enslaved millions. The accounts riveted his countrymen and earned him years of bitter exile, but international renown.

And they inspired millions, perhaps, with the knowledge that one person’s courage and integrity could, in the end, defeat the totalitarian machinery of an empire.

Beginning with the 1962 short novel “One Day in the Life of Ivan Denisovich,” Solzhenitsyn devoted himself to describing what he called the human “meat grinder” that had caught him along with millions of other Soviet citizens: capricious arrests, often for trifling and seemingly absurd reasons, followed by sentences to slave labor camps where cold, starvation and punishing work crushed inmates physically and spiritually.

His “Gulag Archipelago” trilogy of the 1970s shocked readers by describing the savagery of the Soviet state under the dictator Josef Stalin. It helped erase lingering sympathy for the Soviet Union among many leftist intellectuals, especially in Europe. See photos from Solzhenitsyn’s life »

But his account of that secret system of prison camps was also inspiring in its description of how one person — Solzhenitsyn himself — survived, physically and spiritually, in a penal system of soul-crushing hardship and injustice.

The West offered him shelter and accolades. But Solzhenitsyn’s refusal to bend despite enormous pressure, perhaps, also gave him the courage to criticize Western culture for what he considered its weakness and decadence.

After a triumphant return from exile in the U.S. in 1994 that included a 56-day train trip across Russia to become reacquainted with his native land, Solzhenitsyn later expressed annoyance and disappointment that most Russians hadn’t read his books.

During the 1990s, his stalwart nationalist views, his devout Orthodoxy, his disdain for capitalism and disgust with the tycoons who bought Russian industries and resources cheaply following the Soviet collapse, were unfashionable. He faded from public view.

But under Vladimir Putin’s 2000-2008 presidency, Solzhenitsyn’s vision of Russia as a bastion of Orthodox Christianity, as a place with a unique culture and destiny, gained renewed prominence.

Putin now argues, as Solzhenitsyn did in a speech at Harvard University in 1978, that Russia has a separate civilization from the West, one that can’t be reconciled either to Communism or western-style liberal democracy, but requires a system adapted to its history and traditions.

“Any ancient deeply rooted autonomous culture, especially if it is spread on a wide part of the earth’s surface, constitutes an autonomous world, full of riddles and surprises to Western thinking,” Solzhenitsyn said in the Harvard speech. “For 1,000 years Russia has belonged to such a category.”

***

Born December 11, 1918, in Kislovodsk, Solzhenitsyn served as a front-line artillery captain in World War II, where, in the closing weeks of the war, he was arrested for writing what he called “certain disrespectful remarks” about Stalin in a letter to a friend, referring to him as “the man with the mustache.” He served seven years in a labor camp in the barren steppe of Kazakhstan and three more years in internal exile in Central Asia.

That’s where he began to write, memorizing much of his work so it wouldn’t be lost if it were seized. His theme was the suffering and injustice of life in Stalin’s gulag — a Soviet abbreviation for the slave labor camp system, which Solzhenitsyn made part of the lexicon.

He continued writing while working as a mathematics teacher in the provincial Russian city of Ryazan.
***

The first fruit of this labor was “One Day in the Life of Ivan Denisovich,” the story of a carpenter struggling to survive in a Soviet labor camp, where he had been sent, like Solzhenitsyn, after service in the war.

The book was published in 1962 by order of Soviet leader Nikita Khrushchev, who was eager to discredit the abuses of Stalin, his predecessor, and created a sensation in a country where unpleasant truths were spoken in whispers, if at all.

Abroad, the book — which went through numerous revisions — was lauded not only for its bravery, but for its spare, unpretentious language.

After Khrushchev was ousted in 1964, Solzhenitsyn began facing KGB harassment, publication of his works was blocked and he was expelled from the Soviet Writers Union. But he was undeterred.

***

“A great writer is, so to speak, a secret government in his country,” he wrote in “The First Circle,” his next novel, a book about inmates in one of Stalin’s “special camps” for scientists who were deemed politically unreliable but whose skills were essential.

Solzhenitsyn, a graduate from the Department of Physics and Mathematics at Rostov University, was sent to one of these camps in 1946, soon after his arrest.

***

The novel “Cancer Ward”, which appeared in 1967, was another fictional work based on Solzhenitsyn’s life. In this case, the subject was his cancer treatment in Tashkent, Uzbekistan, then part of Soviet Central Asia, during his years of internal exile from March 1953, the month of Stalin’s death, until June 1956.

In the book, cancer became a metaphor for the fatal sickness of the Soviet system. “A man sprouts a tumor and dies — how then can a country live that has sprouted camps and exile?”

He attacked the complicity of millions of Russians in the horrors of Stalin’s reign.

“Suddenly all the professors and engineers turned out to be saboteurs — and they believed it? … Or all of Lenin’s old guard were vile renegades — and they believed it? Suddenly all their friends and acquaintances were enemies of the people — and they believed it?”

The Stalinist era, he wrote, quoting from a poem by Alexander Pushkin, forced Soviet citizens to choose one of three roles: tyrant, traitor, prisoner.

***

He was awarded the Nobel Prize for Literature in 1970, an unusual move for the Swedish Academy, which generally makes awards late in an author’s life after decades of work. The academy cited “the ethical force with which he has pursued the indispensable traditions of Russian literature.”

Soviet authorities barred the author from traveling to Stockholm to receive the award and official attacks were intensified in 1973 when the first book in the non-fiction “Gulag” trilogy appeared in Paris.

“During all the years until 1961,” Solzhenitsyn wrote in an autobiography written for the Nobel Foundation, “not only was I convinced that I should never see a single line of mine in print in my lifetime, but, also, I scarcely dared allow any of my close acquaintances to read anything I had written because I feared that this would become known.”

The following year, he was arrested on a treason charge and expelled the next day to West Germany in handcuffs. His expulsion inspired worldwide condemnation of the regime of Soviet leader Leonid Brezhnev.

Solzhenitsyn then made his homeland in America, settling in 1976 in the tiny town of Cavendish, Vermont, with his wife and sons.

Living at a secluded hillside compound he rarely left, he called his 18 years there the most productive of his life. There he worked on what he considered to be his life’s work, a multivolume saga of Russian history titled “The Red Wheel.”

***

Although free from repression, Solzhenitsyn longed for his native land. Neither was he enchanted by Western democracy, with its emphasis on individual freedom.

To the dismay of his supporters, in his Harvard speech he rejected the West’s faith in “Western pluralistic democracy” as the model for all other nations. It was a mistake, he warned, for Western societies to regard the failure of the rest of the world to adopt the democratic model as a product of “wicked governments or by heavy crises or by their own barbarity or incomprehension.”

Some critics saw “The Red Wheel” books as tedious and hectoring, rather than as sweeping and lit by moral fire.

“Exile from his great theme, Stalinism and the gulag, had exposed his major weaknesses,” D.M. Thomas wrote in a 1998 biography, theorizing that the intensity of the earlier works was “a projection of his own repressed violence.”

***

Then-Soviet President Mikhail Gorbachev restored Solzhenitsyn’s citizenship in 1990 and the treason charge was finally dropped in 1991, less than a month after a failed Soviet coup. Following an emotional homecoming that started in the Russian Far East on May 27, 1994, and became a whistle-stop tour across the country, Solzhenitsyn settled in a tree-shaded, red brick home overlooking the Moscow River just west of the capital.

While avoiding a partisan political role, Solzhenitsyn vowed to speak “the whole truth about Russia, until they shut my mouth like before.”

He was contemptuous of President Boris Yeltsin, blaming Yeltsin for the collapse of Russia’s economy, his dependence on bailouts by the International Monetary Fund, his inability to stop the expansion of NATO to Russia’s borders, his tolerance of the rising influence of a handful of Russian billionaires — who were nicknamed “oligarchs” by an American diplomat.

Yeltsin’s reign, Solzhenitsyn said, marked one of three “times of troubles” in Russian history — which included the 17th century crises that led to the rise of the Romanovs and the 1917 Bolshevik revolution. When Yeltsin awarded Solzhenitsyn Russia’s highest honor, the Order of St. Andrew, the writer refused to accept it. When Yeltsin left office in 2000, Solzhenitsyn wanted him prosecuted.

***

The author’s last book, 2001’s “Two Hundred Years Together,” addressed the complex emotions of Russian-Jewish relations. Some criticized the book for alleged anti-Semitic passages. But the author denied the charge, saying he “understood the subtlety, sensitivity and kindheartedness of the Jewish character.”

***

Yeltsin’s successor Putin at first had a rocky relationship with Solzhenitsyn, who criticized the Russian president in 2002 for not doing more to crack down on Russia’s oligarchs. Putin was also a veteran of the Soviet-era KGB, the agency that, more than any other, represented the Soviet legacy of repression.

But the two m