The Race to the Bottom

August 14th, 2007

It all started over thirty years ago with Saint Ronnie the Reagan, fresh off his Death Valley Days gig … a polished and televised disconnect from the kind of FDR people-helping philosophy that rescued the nation during the Great Depression while building the infrastructure that would keep her strong. It came to us all cowboy’d up … the tough loner that “can do” for me and mine — you get yer own. It was “might makes right” and “power to the individual” mythology … we sucked it up.

Now, the faux-cowboy in today’s White House has ridden his hobby-horse roughshod over the last remaining protections and entitlements, given that last little kick into a bruised and battered system with his Commander-in-Chief-embellished [honest, he's got 'em!] cowboy boot these last seven years — rolling the nation right over into Grover’s bathtub to sink by painful inches into bloat and decay. And it was all “planned” on the premise that when you get out of the governance business, the private sector will step in and see to the “mob’s” [as Mr. Rove referred to American citizens yesterday] needs. Problem is … they won’t unless you’ve got a checkbook — so now we have the most depressing disparity between rich and poor since the Robber Barons ruled the world … and Republicans have forgotten entirely how to govern [if they ever knew,] the well-being of the nation no longer, nor for years, on their list of absolutes.

We find ourselves broken, now … and facing a systemic breakdown that will require every bit of attention we can give it, when the time comes. Until then — all we can do is watch the government services and infrastructure slip under the water, white-knuckled, weary and holding our breath.

The first piece here is a charming little read; sadly, a reminder of how it was — and where it has to go again. The second is an affirmation of where we’ll get to first , as the truth of our situation dawns on the multitude. The rest are examples of problems … big ones … we face now — not that our Happy Little Cowpoke will cop to them.

There IS some good news, that “shift” I spoke about yesterday — bittersweet, but finally arrived. The reality of life these days trumps the Dubby’s rhetoric every single time, the frustration and growing austerity of our experience is foreshadow of what’s to come — we’ve finally faced the fact that we’re in the danger zone of both democracy and functionality … but the “fix” to any of this is still elusive.

As I’ve said many many times before: Waking Up Is Hard To Do! And now that we’re awakening, we’re floundering around in What The Hell Do We Do Now?

Jude

The Ghost of Populism
Richard Cohen, The Boulder Daily Camera
Wednesday, August 8, 2007

As always, I was awakened by a sudden draft through the closed windows, saw the curtains ominously stirring and sensed instantly that someone was in my bedroom. Without even looking up, I knew it was my long-dead grandfather, an immigrant of socialist leanings and what he would call common sense. Wearily, I went through the drill.

“Grandpa, is that you?”

“You were expecting maybe Lucy Lohan?”

“Lindsay,” I corrected.

“‘Scuse me. Where I am we don’t get People magazine.”

I tried to get to the point. “What brings you down this time?” I asked.

He was holding a newspaper, always a dangerous sign.

“What’s happened to the Democratic Party?” he asked.

“What do you mean?”

“What do I mean? What do I mean? Listen, college boy, in my day, the Democrats stood for the little man. You know the little man, boychik?”

“Yes, grandpa … ”

“He’s the working stiff. He’s the guy with a lunch pail. You think it’s right he pays a higher rate of taxes than those hedge fund managers?”

“Oh, grandpa, you’re talking about something called the ‘Carry.’ It stands for carried interest and it means that these money managers and hedge fund guys, wonderful risk takers and builders of wonderful wealth, get taxed as if their income is capital gains - 15 percent. The IRS says it’s legal.”

“Legal, shmegal! You think it’s fair?”

“Fair?”

“Yeah, fair. You heard of fair, Mr. famous columnist?”

“This is not a matter of fairness, grandpa. Believe me, there are vast issues of macroeconomics and tax policy here which, if not handled properly, will sink the economy.”

“Who are you?” my grandfather bellowed. “The poor pay more than the rich and you give me this macaroni economics stuff. You should be ashamed of yourself.” He paused.

“You know this Schumer?”

“Chuck? The senator? Yeah.”

“He’s opposed to this tax fairness. What kind of Democrat is this?”

“You have to understand,” I explained. “Schumer represents Wall Street.”

“What about Main Street?”

“Hillary supports your view.”

“You think I was born yesterday? She’s not going to campaign on that. She’ll let this Chuck character take the heat and she’ll do nothing.”

“Do you have two sources for that?”

“Oh, wake up! Don’t you know nothing about bosses and workers and who controls politicians? Too much college made your brain soft.” He paused again.

“You know any subprime people?”

“What?”

“These people who got these lousy mortgages. They got this fancy word for these poor suckers. Subprime.”

“These are wonderful financial instruments that have made us a great nation of homeowners.”

“This is a Brooklyn Bridge for poor people to buy. This is a way of selling houses to people who can’t afford them. It’s a way for bankers to make money. They take the loans from these poor people and then they put thousands of them in a Vegematic or something and then sell what comes out. The lenders don’t lose nothing. They didn’t warn people that interest rates would go up and they would lose everything - their house and everything they put in it. That’s a crime in my book. Someone should be punished. Instead, the mortgage people make out like bandits.”

“You have a point.”

“Thank you. And where is the Democratic Party? Where is the party of the little man? Nowhere. Who’s yelling and screaming about this or, God forbid, leading a march or holding a rally just like the old days? Who’s organizing a boycott or maybe holding a show in a theater? Not the Democrats. Too afraid of Wall Street.”

“Oh, grandpa, that’s so old-fashioned.”

“You think so, smarty-pants? You think honesty and fairness is old-fashioned? You think it’s right for the head of this Blackstone group to make hundreds of millions of dollars and pay almost no taxes? Virtually nothing! And he gives a party for himself in New York that costs millions. He has a 35-room apartment that once belonged to a Rockefeller and fancy art on the wall and has the chutzpa to buy lobbyists by the dozen so he don’t pay his fair share in taxes. Is that right?”

“Maybe he should pay more.”

“Maybe? Maybe you should write columns kicking the Democrats in the pants for forgetting who they represent. Maybe you should get angry yourself. Maybe you should remember who you are and where you come from?”

“Yes, grandpa.”

“Good. How’s your mother?”

“Pretty good. She was 95 on July 4th.”

“Tell her I love her.”

“Yes, grandpa.”

“Go back to sleep, boychik.”

And, like the rest of the country, I did. ++

George W. Bush, This Is Your Life
Timothy Gatto, Smirking Chimp
Aug 13 2007

Congratulations to you President Bush, you may not realize this, but you and Vice President “Rabid Dog” Cheney have turned your citizens against their own country. Most Americans I come in contact with through my writing now believe that the United States is a predatory nation that kills human beings indiscriminately and takes whatever it wants, when it wants it. Don’t believe me? Just look at some of my writing in the last few weeks. There are people that feel that this nation is too far over the brink to ever be brought back to a decent republic. They feel shame over everything that has happened, not only on your watch, even though that started it, but now they have looked at the nation with a critical eye and they really don’t believe that this nation has ever stood for anything worthwhile.

I know that it isn’t true. The United States has done some noble things in its history. What you are seeing Bush baby, is something called malaise. Just so you know what I’m talking about I’ll give you the definition, I know you aren’t that smart:

Main Entry: mal·aise

Pronunciation: m&-’lAz, ma-, -’lez

Function: noun

1 : an indefinite feeling of debility or lack of health often indicative of or accompanying the onset of an illness

2 : a vague sense of mental or moral ill-being, a malaise of cynicism and despair.

Why do they have this condition? I don’t think that you have very far to go to see what has caused it. Look in the mirror. Call Cheney and Rice and Gates in and listen to their world-view as if you weren’t the President, but a spectator from middle America. Put yourself in the place of someone that has a hard time meeting their rent or mortgage payment, or an old lady that lost her life savings to the Enron Scandal, or to a young woman that lost her husband to an IED, or maybe someone that thought that they could get this country on the right track but now sees that it’s a Herculean task because all the cards are stacked in the governments favor. Oh that’s another word you will probably have a hard time with, its called “empathy” of which you have none.

You won’t see this malaise in the eyes of the people YOU meet. They are too busy slapping each other on the back and telling each other what a great job they have done. Most of them are making money hand over fist and don’t have a care in the world. You surround yourself with these people. They don’t see what they have done to the spirit of the people in this once-proud nation. They are in “denial”. Remember when you were drinking and snorting coke and chasing Mexican girls in Texas, and your parents told you that you had a problem? You didn’t believe them? That’s what denial is. Once you have it, you can’t see clearly at all. It’s a system of beliefs that doesn’t allow you to see reality. Just as well, if you saw, I mean really saw what you have done to this country, you’d put a bullet in your mouth like Hitler did. Yeah, you’re that bad.

The trouble with all of this, is after most people get over they’re malaise, they get angry. A lot like I am. Once they really get angry, there isn’t much you can do after that. The thing is, after they shake the feelings off, they really don’t care what happens as long as they don’t have to go back to feeling the way they did before. Some of them will die before they get that hopeless feeling again. I know, that’s where I’m at. It only takes one spark to set them off. Take someone away from their family for writing against the things America is doing. Start your war against Iran that we know you are planning. Let the rest of your cronies put everyone on part-time so that they don’t have to pay their workers benefits and watch this nation come to a boil. Howard Zinn is wrong. If you are going by what he writes, you must feel pretty comfortable. He’s practically given up on the human race. You have to deal with people like me. I’ve told your Generals to go to hell and I’m still here. There are others like me around too. People that haven’t given up on this country, people that still believe that this country is “of the people and for the people”.

So while you are sitting back enjoying this “good life”, remember that there are many in this country that don’t wish you well. There are many in this country that at this point are ashamed to be Americans. That’s sad, That’s where you have brought us, to this place of hopelessness. Just remember this, after depression, anger. I hope you are ready for it. ++

A Lot More Than One Bridge Could Crumble Under GOP
Jesse Jackson, The Chicago Sun-Times
Thursday, August 9, 2007

A 40-year-old bridge collapses into the Mississippi River in Minneapolis. Levees give way in New Orleans at the foot of the Mississippi. An 83-year-old steam pipe produces an eruption that terrorizes Manhattan. As our infrastructure literally crumbles beneath our feet, America is building the largest embassy compound in the world in Iraq — an area larger than the Pentagon — to manage a war now estimated to cost $1 trillion.

What happened at both ends of the Mississippi and is happening in cities across the country are tragedies, but they aren’t random accidents. They are the direct price of the right wing in power. Scornful of government, intent on cutting taxes and slashing spending, they systematically have shorted public investment in our basic infrastructure — in bridges and roads, in rail lines and air systems, in parks and schools.

The American Society of Civil Engineers gave America a D for its infrastructure in their most recent report in 2005. Ironically, bridges did better — a grade C — than sewers, water treatment and a range of other areas. In the report, more than one out of every four bridges in America were rated as structurally deficient or functionally obsolete. Don’t think about that when you drive over your next bridge.

For over 25 years, we’ve cheated on public investment. “Government,” Ronald Reagan preached, “is not the solution. Government is the problem.” Activists like Grover Norquist took this to the extreme, saying, “I don’t want to abolish government. I simply want to reduce it to the size where I can . . . drown it in the bathtub.”

Norquist and his allies have bullied Republicans into signing a pledge never to raise taxes. In Minnesota, the conservative governor, Tim Pawlenty, campaigned against taxes and vetoed an appropriation bill that would have provided increased funds for highway and bridge repairs. Interstate 35’s Bridge 9340, rated structurally deficit by the U.S. Department of Transportation, had repairs on it postponed for a year.

One trillion dollars squandered in the debacle in Iraq. A clamp on vital investments here at home. Those are the stated priorities of modern-day conservatives — a far remove from those of President Dwight Eisenhower, who built the interstate highway system while putting a lid on military spending and balancing the budget. Ike knew that infrastructure was important; military adventurism was dangerous and fiscal balance was common sense.

Modern-day conservatives have abandoned every part of his lessons.

Of course, conservatives will deny that they are responsible for the crumbling of America. In the Republican debate in Iowa, every leading Republican presidential contender called for staying in Iraq and opposed increasing taxes on the wealthy even as they admitted the need to invest in our infrastructure. They are peddling fantasies to a people in desperate need of the truth.

As Minneapolis showed, disdain for public investment can be deadly. It also snuffs out hope. Our schools are old and crowded. There simply isn’t the space to provide rising enrollments with the smaller classes that are so necessary for the early years. We should be making schools modern sanctuaries for children, demonstrating how important we take their education to be. Instead, we send them into drafty and dank buildings, with broken windows, outmoded heating systems and crowded classrooms. That is the first lesson they learn.

No one should be fooled. Those who choose to spend $11 billion a month in Iraq while shorting vital investments here at home aren’t securing America; they are weakening it.

And as citizens from New Orleans to Manhattan to Minneapolis have discovered, we are all more vulnerable as a result. ++

Prices for Key Foods Are Rising Sharply
Kevin G. Hall, McClatchy Newspapers
Tuesday, August 14, 2007

[open link for jim-dandy graph!]

MIDLAND, Va. - The Labor Department’s most recent inflation data showed that U.S. food prices rose by 4.1 percent for the 12 months ending in June, but a deeper look at the numbers reveals that the price of milk, eggs and other essentials in the American diet are actually rising by double digits.

Already stung by a two-year rise in gasoline prices, American consumers now face sharply higher prices for foods they can’t do without. This little-known fact may go a long way to explaining why, despite healthy job statistics, Americans remain glum about the economy.

Meeting with economic writers last week, President Bush dismissed several polls that show Americans are down on the economy. He expressed surprise that inflation is one of the stated concerns.

“They cite inflation?” Bush asked, adding that, “I happen to believe the war has clouded a lot of people’s sense of optimism.”

But the inflation numbers reveal the extent to which lower- and middle-income Americans are being pinched.

The Bureau of Labor Statistics said in its June inflation report that egg prices are 19.5 percent higher than they were in June 2006. Over the same period, according to the department’s consumer price index, whole milk was up 13.3 percent; fresh chicken 10 percent; navel oranges 19.8 percent; apples 11.7 percent. Dried beans were up 11.5 percent, and white bread just missed double-digit growth, rising by 9.6 percent.

These numbers get lost in the broader inflation rate for all goods and services, which measured 2.7 for the same 12-month period. Across the economy, rising food prices were offset by falling prices for things bought at the mall: computers, cameras, clothing and shoes.

“All of that stuff is going down in price, but prices for gasoline have gotten higher, and food prices have gone up,” said Mark Vitner, a senior economist for Wachovia, a large national bank based in Charlotte, N.C.

People also go to the mall a lot less than they go to the grocery store, so they’re constantly reminded that dietary staples are up sharply.

Why are food prices rising?

It’s partly because of corn prices, driven up by congressional mandates for ethanol production, which have reduced the amount of corn available for animal feed. It’s also because of tougher immigration enforcement and a late spring freeze, which have made farm laborers scarcer and damaged fruit and vegetable crops, respectively. And it’s because of higher diesel fuel costs to run tractors and attractive foreign markets that take U.S. production.

The Labor Department’s last detailed survey of consumer spending, in 2005, showed that Americans spent about 12.8 percent of their income on food. A bit more than 7 percent of their income was spent on food at home, and 5.7 percent was spent on food away from home.

These percentages suggest that higher food prices, while unwelcome, won’t break the bank for most consumers. But for retirees such as Jacqueline Wilson, 60, of Upper Marlboro, Md., rising food and fuel prices take a big bite out of fixed income. “I make every dollar count,” said Wilson, outside a Giant supermarket. “I cut back. … I get only as much as I need. I don’t buy it because it is 10 for $10, but so that I’m using it and not wasting my money.”

Asked about her view of the economy, she answered, “Terrible.”

In broad terms, the economy isn’t terrible. Unemployment is near record lows, and the second quarter posted a strong 3.4 percent growth rate. But it is for those Americans who are pinched by rising food and gasoline costs, and that’s a lot of folks. Half the nation’s families earn below the median family income of about $56,000. Three-fifths of American families report income under $70,000.

At the Al-Mara farm in Midland, Va., Jeff and Patty Leonard run a large dairy operation where about 600 cows produce 19,000 pounds of milk each day. They plant about 1,000 acres of corn, so they don’t face all of the rising feed costs like some farmers. But they sympathize with consumers because the costs of nitrogen fertilizers and diesel fuel have all gone up sharply, raising production costs by nearly 30 percent.

“That’s how your farmer feels here at home when we’re trying to buy soybean meal, food for our cows and trying to maintain our equipment,” said Patty Leonard. “I can understand exactly what the shopper is going through.”

Milk prices aren’t set on the farm. That’s done by marketing cooperatives, which this year have been successful in passing on higher production costs after several dismal years of prices that took dairy farmers back to the 1970s.

“It’s pretty much a realignment of the actual value of milk in today’s dollar,” Patty Leonard said. “Milk has been cheap for a long, long time.”

Globalization also explains higher milk prices. Australia, a leading milk exporter, is struggling through a drought, and European governments are pulling back dairy subsidies. So U.S. farmers, aided by a weak dollar, are stepping in to meet growing demand for milk products in China and India. That’s pinched supply at home and abroad, driving up prices.

“U.S. per capita dairy consumption is the highest it’s been since 1987,” said Chris Galen, vice president of the National Milk Producers Federation, pointing to rising U.S. demand for cheese, made from milk. “Americans are eating more cheese than ever - not just volume but per capita.”

To make more milk, or raise more chickens that lay more eggs, farmers need feed corn and other feed products. But corn prices have soared over the past year as Congress pushes ethanol, a renewable fuel made from corn. Fields that previously grew soybeans are now yielding corn, and that’s driven up the price of soybeans as they become scarce.

Iowa State University’s Center for Agricultural and Rural Development shocked the farm sector earlier this summer with a report that corn farmers are expected to lock in prices of $4 a bushel through 2010, about double what corn fetched two years ago.

“You will probably be seeing these prices rise for quite a long time and stabilizing, maybe, but not going back to the $2-a-bushel corn,” said Jacinto Feitosa, co-director of the center in Ames, Iowa. ++

US Tumbles Down the World Ratings List for Life Expectancy
Ewen MacAskill, Guardian/UK
Monday, August 13, 2007

[open link for another nifty graph!]

A combination of expensive health insurance and an ever-increasing rate of obesity appear to be behind a startling fall by the US in the world rankings of life expectancy.

Despite being one of the richest countries in the world, America has dropped from 11th to 42nd place in 20 years, according to official US figures.

Dr Christopher Murray, head of the Institute of Health Metrics and Evaluation at the University of Washington, said: “Something’s wrong here when one of the richest countries in the world, the one that spends the most on health care, is not able to keep up with other countries.”

The lack of health care available to many Americans - 45 million have no health insurance - is set to be one of the biggest issues in next year’s presidential election campaign. The Democratic contenders all promise universal health care.

The decline reflects the disparity in wealth. The life expectancy of African Americans is 73.3 compared with 77.9 for whites. For African-American males, it is even shorter: 69.8.

Jim McDermott, a Democratic Congressman, said: “Health care coverage is the single biggest domestic crisis facing America. It threatens all but the wealthiest Americans. “If you aren’t part of the richest 1%, then you know you are living one phone call, accident or illness away from financial ruin because of a medical crisis.”

Obesity is frequently cited as among the causes of lower life expectancy. Almost a third of US adults are obese, according to the National Center for Health Statistics, which compared US life expectancy with the rest of the world.

Paul Terry, an assistant professor of epidemiology at Emory University in Atlanta, said: “The US has the resources that allow people to get fat and lazy.”

The drop is also due to improved health care, nutrition and lifestyle elsewhere in the world. Countries with longer life expectancy include most of Europe, Japan, Singapore and Jordan.

The US also has a higher infant mortality rate than many other countries: 6.8 deaths for every 1,000 live births. The worst life expectancy figures are in Africa, with Swaziland at the bottom, at 34.1 years. ++

Buy Feed Corn, They’re About to Stop Making It
The Hidden Agenda Behind Bush’s Biofuel Plan
F. WILLIAM ENGDAHL, CounterPunch
August 13, 2007

That bowl of Kellogg’s Cornflakes on the breakfast table, or the portion of pasta or corn tortillas, cheese or meat on the table is going to rise in price over the coming months as sure as the sun rises in the East. Welcome ladies and gentlemen to the new world food price shock, conveniently timed to accompany our current world oil price shock.

Curiously it’s ominously similar in many respects to the early 1970’s when prices for oil and food both exploded by several hundred percent in a matter of months. That mid-1970’s price explosion led President Nixon to ask his old pal, Arthur Burns, then Chairman of the Fed, to find a way to alter the CPI inflation data to take attention away from the rising prices. The result then was the now-commonplace publication of the absurd “core inflation” CPI numbers–sans oil and food. Stephen Roche was the young Fed economist who was assigned the statistical manipulation job by Burns.

The late American satirist, Mark Twain once quipped, “Buy land: They’ve stopped making it” Today we can say almost the same about corn or all grains worldwide. The world is in the early months of the greatest sustained rise in grain prices, for all major grains including maize, wheat, rice that we have seen in three decades. Those three crops constitute almost 90 per cent of all grains cultivated in the world.

What’s driving this extraordinary change? Here things get pretty interesting. The Bush Administration is making a major public relations push to convince the world it has turned into a “better steward of the environment.” The problem is that many have fallen for the hype.

The center of his program, announced in his January State of the Union Address is called ‘20 in 10′, cutting US gasoline use 20 per cent by 2010. The official reason is to “reduce dependency on imported oil,” as well as cutting unwanted “greenhouse gas” emissions. That isn’t the case, but it makes good PR. Repeat it often enough and maybe most people will believe it. Maybe they won’t realize their taxpayer subsidies to grow ethanol corn instead of feed corn are also driving the price of their daily bread through the roof.

The heart of the plan is a huge, taxpayer subsidized expansion of use of bio-ethanol for transport fuel. The President’s plan requires production of 35 billion gallons (about 133 billion liters) of ethanol a year by 2017. Congress already mandated with the Energy Policy Act of 2005 that corn ethanol for fuel must rise from 4 billion gallons in 2006 to 7.5 billion in 2012. To make certain it will happen, farmers and big agribusiness giants like ADM or David Rockefeller get generous taxpayer subsidies to grow corn for fuel instead of food. Currently ethanol producers get a subsidy in the US of 51 cents per gallon ethanol paid to the blender, usually an oil company that blends it with gasoline for sale.

As a result of the beautiful US Government subsidies to produce bio- ethanol fuels, and the new legislative mandate, the US refinery industry is investing big time in building new special ethanol distilleries, similar to oil refineries, except they produce ethanol fuel. The number currently under construction exceeds the total number of oil refineries built in the US over the past 25 years. When finished in the next 2-3 years the demand for corn and other grain to make ethanol for car fuel will double from present levels.

Not just USA bio-ethanol. In March Bush met with Brazil’s President to sign a bilateral “Ethanol Pact” to cooperate in R&D of “next generation” bio-fuel technologies like cellulosic ethanol from wood, and joint cooperation in “stimulating” expansion of bio-fuels’ use in developing countries, especially in Central America, and creating a “bio-fuels OPEC-like” cartel market with rules that allows formation of a Western Hemisphere ethanol market.

In short, the use of farmland worldwide for bio-ethanol and other bio-fuels –burning the food product rather than using it for human or animal food — is being treated in Washington, Brazil and other major centers, including the EU, as a major new growth industry.

Phony green arguments

Bio-fuel — gasoline or fuel produced from refining food products — is being hyped as a solution to the controversial Global Warming problem. Leaving aside the faked science and the political interests behind the sudden hype about dangers of global warming, bio-fuels offer no net positive benefits over oil even under best conditions. Its advocates claim that present first generation bio-fuels “save up to 60per cent of carbon emission.” As well, amid rising oil prices at $75 per barrel for Brent marker grades, governments such as Brazil’s are frantic to substitute homegrown bio-fuels for imported gasoline. In Brazil today 70 per cent of all cars have “flexi-fuel” engines able to switch from conventional gasoline to 100per cent bio-fuel or any mix. Bio-fuel production has become one of Brazil’s major export industries as well.

The green claims for bio-fuel as a friendly and better fuel than gasoline are at best dubious, if not outright fraudulent. Depending on who runs the tests, ethanol has little if any effect on exhaust- pipe emissions in current car models. It has significant emission, however, of some toxins including formaldehyde and acetaldehyde, a suspected neurotoxin which has been banned as carcinogenic in California.

Ethanol is not some benign substance as we are led to think from the industry propaganda. It is highly corrosive to pipelines as well as to seals and fuel systems of existing car or other gasoline engines. It requires special new gas pumps. All that conversion costs money.

But the killer-diller about ethanol is that it holds at least 30 per cent less energy per gallon than normal gasoline, translating into a loss in fuel economy per gallon of at least 25 per cent over gasoline for an Ethanol E-85per cent blend. No advocate of the ethanol boondoggle addresses the huge social cost which is beginning to hit the dining room tables across the US, Europe and the rest of the world. Food prices are exploding as corn, soybeans and all cereal grain prices are going through the roof because of the astronomical — Congress-driven — demand for corn to burn for bio-fuel.

This year the Massachusetts Institute of Technology issued a report concluding that using corn-based ethanol instead of gasoline will have no impact on greenhouse gas emissions, and would even expand fossil fuel use due to increased demand for fertilizer and irrigation to expand acreage of ethanol crops. And according to MIT “natural gas consumption is 66per cent of total corn ethanol production energy,” meaning huge new strains on natural gas supply, pushing prices there higher.

The idea that the world can “grow” out of oil dependency with bio- fuels is the PR hype being used to sell what is shaping up to be the mist dangerous threat to the planet’s food supply since creation of patented genetically manipulated corn and crops.

US farms become bio-fuel factories

The main reason US and world grain prices are soaring in the past two years and now pre-programmed to continue rising at a major pace, is the conversion of US farmland to become de facto bio-fuel factories. In 2006 US farmland devoted to bio-fuel crops increased by 48 per cent. None of that land was replaced for food crop cultivation. The tax subsidies make it far too profitable to produce ethanol fuel.

Since 2001 the amount of maize used to produce bio-ethanol in the USA has risen 300 per cent, with the trend increasingly going forward. In fact, in 2006 US maize or corn crops for bio-fuel equaled the tonnage of corn used for export. In 2007 it is estimated it will exceed the corn for export by a hefty amount. The US is the world’s leading corn exporter, most going for animal feed to EU and other countries. The traditional USDA statistics on acreage planted to corn is no longer a useful metric of food prices as all marginal acreage is going for bio-fuel growing. The amount available for animal and human feed is actually declining.

Brazil and China are similarly switching from food to bio-fuels with large swatches of land.

A result of the bio-fuel revolution in agriculture is that world carryover or reserve stocks of grains have been plunging for six of the past seven years. Carryover reserve stocks of all grains fell at the end of 2006 to 57 days of consumption, the lowest level since 1972. Little wonder that world grain prices rose 100 per cent over the past 12 months. This is just the start.

That decline in grain reserves, the measure of food security in event of drought or harvest failure — an increasingly common event in recent years — is pre-programmed to continue going as far ahead as the eye can see. Assuming modest world population increase annually of some 70 million people over the coming decade, especially in the Indian subcontinent and Africa, the stagnation or even decline in the tonnages of feed corn or other feed grains including rice that is harvested annually as growing amounts of bio-ethanol and other bio-fuels displaces food grain, in fact means we are just getting started on the greatest transformation of global agriculture since the introduction of the agribusiness revolution with fertilizers and mechanized farming after World War II. The difference is that this revolution is at the expense of food production. That preprograms exploding global grain prices, increased poverty and malnutrition. And the effect on gasoline import demand will be minimal.

Prof. M.A. Altieri of Berkeley University estimates that dedicating all USA corn and soybean production acreage to bio-fuels would only meet 12 per cent of gasoline and 6 per cent of diesel needs. He notes that though one-fifth of last year’s corn harvest went to bio-ethanol, it met a mere 3 per cent of energy needs. But the farmland is converting at a record pace. In 2006 more than 50 per cent of Iowa and South Dakota corn went to ethanol refineries. Farmers across the Midwest, desperate for more income after years of depressed corn prices, are abandoning traditional crop rotation to grow exclusively soybeans or corn with dramatic added impact on soil erosion and needs for added chemical pesticides. In the US some 41 per cent of all herbicides used are already applied to corn. Monsanto and other makers of glyphosate herbicides like Roundup are smiling on the way to the bank.

Going global with bio-fuels

The Bush-Lula pact is just the start of a growing global rush to plant crops for bio-fuel. Huge sugarcane, palm oil and soy plantations for bio-fuel refining are taking over forests and grasslands in Brazil, Argentina, Colombia, Ecuador and Paraguay. Soy cultivation has already caused the deforestation of 21 million hectares in Brazil and 14 million hectares in Argentina, with no end in sight, as world grain prices continue to rise. Soya is used for bio- diesel fuel.

China, desperate for energy sources, is a major player in bio-fuel cultivation, reducing food crop acreage there as well. In the EU most bio-diesel fuel is produced using rapeseed plants, a popular animal feed. The result? Meat prices around the globe are rising and set to continue rising as far ahead as the eye can see. The EU has a target requiring minimum bio-fuel content of 10 per cent, a foolish demand that will set aside 18 per cent of EU farmland to cultivate crops to be burned as bio-fuel.

Big oil is also driving the bio-fuels bandwagon. Prof. David Pimentel of Cornell University and other scientists claim that net energy output from bio-ethanol fuel is less than the fossil fuel energy used to produce the ethanol. Measuring all energy inputs to produce ethanol from production of nitrogen fertilizer to energy needed to clean the considerable waste from bio-fuel refineries, Pimintel’s research showed a net energy loss of 22 per cent for bio-fuel — they use more energy than they produce. That translates into little threat to oil demand and huge profit for clever oil giants that re-profile themselves as “green energy” producers.

So it’s little wonder that ExxonMobil, Chevron and BP are all into bio-fuels. This past May, BP announced the largest ever R&D grant to a university, $500 million to the University of California-Berkeley to fund BP-dictated R&D into alternative energy including bio-fuels. Stanford’s Global Climate and Energy Program got $100 million from ExxonMobil; University of California-Davis got $25 million from Chevron for its Bio-energy Research Group. Princeton University’s Carbon Mitigation Initiative takes $15 million from BP.

Lord Browne, the disgraced former CEO of BP declared in 2006, “The world needs new technologies to maintain adequate supplies of energy for the future. We believe bioscience can bring immense benefits to the energy sector.” The bio-fuel market is booming like few others today. This all is a paradise for global agribusiness industrial companies like Cargill, ADM and Monsanto, Syngenta.

All this, combined with severe weather problems in China, Australia, Ukraine and large parts of the EU growing areas this harvest season, guarantee that grain prices are set to explode further in coming months and years. Some are gleefully reporting the end of the era of “cheap food.” With disappearing food security reserves and disappearing acreage going to plant corn and grains for food, the bio- fuel transformation will impact global food prices massively in coming years.

Another agenda behind Ethanol?

Uh Huh. The dramatic embrace of bio-fuels by the Bush Administration since 2005 has clearly been the global driver for soaring grain and food prices in the past 18 months. The evidence suggests this is no accident of sloppy legislative preparation. The US Government has been researching and developing bio-fuels since the 1970’s. The bio-ethanol architects did their homework we can be assured. It’s increasingly clear that the same people who brought us oil price inflation are now deliberately creating parallel food price inflation. We have had a rise in average oil prices of some 300 per cent since the end of 2000 when George W. Bush and Dick Halliburton Cheney made oil the central preoccupation of US foreign policy.

Last year, as bio-ethanol production first became a major market factor, corn prices rose by some 130 per cent on the Chicago commodities in 14 months. It was more than known when Congress and the Bush Administration made their heavy push for bio-ethanol in 2005 that world grain reserves had been declining at alarming levels for several years at a time when global demand, driven especially by growing wealth And increasing meat consumption in China, was rising.

As a result of the diversion of record acreages of US and Brazilian corn and soybeans to bio-fuel production, food reserves are disappearing. Global food security, according to FAO data, is at its lowest since 1972. Curiously that was just the time that Henry Kissinger and the Nixon Administration engineered, in cahoots with Cargill and ADM_the major backers of the ethanol scam today_what was called The Great Grain Robbery, sale of huge volumes of US grain to the Soviet Union in exchange for sales of record volumes of Russian oil to the West. Both oil and corn prices rose by 1975 some 300-400per cent as a result. Just how that worked, I treated in detail in: A Century of War: Anglo-American Oil Politics.

Today a new element has replaced USSR grain demand and harvest shortfalls. Bio-fuel demand, fed by US government subsidies is literally linking food prices to oil prices. The scale of the subsidized bio-fuel consumption has exploded so dramatically since the beginning of 2006 when the US Energy Policy Act of 2005 first began to impact crop planting decisions, not only in the USA, that there is emerging a de facto competition between people and cars for the same grains. Lester Brown recently noted, “We’re looking at competition in the global market between 800 million automobiles and the world’s two billion poorest people for the same commodity, the same grains. We are now in a new economic era where oil and food are interchangeable commodities because we can convert grain, sugar cane, soybeans — anything — into fuel for cars. In effect the price of oil is beginning to set the price of food.”

In the mid-1970’s Secretary of State Henry Kissinger, a protégé of the Rockefeller family and of its institutions stated, “Control the oil and you control entire nations; control the food and you control the people.” The same cast of characters who brought the world the Iraq war, the global scramble to control oil, who brought us patented genetically manipulated seeds and now Terminator suicide seeds, and who cry about the “problem of world over-population,” are now backing conversion of global grain production to burn as fuel at a time of declining global grain reserves. That alone should give pause for thought.

As the popular saying goes, “Just because you’re paranoid doesn’t mean they aren’t out to get you.” ++

Subprime or Subcrime? Time To Investigate and Prosecute
Danny Schechter, MediaChannel
August 14, 2007

[thanks, Eileen]

There comes a time when the frame of a news story changes. It happened in Iraq when the “war for Iraqi freedom” became seen as a bloody occupation, not a beneficent liberation. It is happening as the war on terror is increasingly perceived a war of error and when voting problems are reframed as electoral fraud.

And it will happen in the economic arena too, when we see the “subprime” credit crunch for what it is: a sub-crime ponzi scheme in which millions of people are losing their homes because of criminal and fraudulent tactics used by financial institutions that pose as respectable players in a highly rigged casino-like market system.

Suddenly, after years of denial and inattention, the press has discovered what they call “the credit crisis.” Vague words like “woes” are still being used to mask a financial calamity that some analysts are already calling an apocalypse as lenders go under and the Stock Market melts down.

A French bank froze billions Thursday saying, “”The complete evaporation of liquidity in certain market segments of the U.S. securitization market has made it impossible to value certain assets.” Translation from the French: We are all in deep shit.

On Thursday morning, President Bush was asked about this at a press conference. He blamed borrowers for not understanding the documents they signed. But if you have ever tried to read the documents banks prepare for mortgage closings, you will know that they are written by risk-minimizing lawyers and are too long and dense to be understood. (Later in the day, the market reacted to Bush’s upbeat assessment with the Dow plunging 387 points.)

The financial insiders who watched were more than skeptical. Here are some quotes from a discussion on the Mi-implode Web site. One of the discussants calls our fearless leader, “President Pumpkinhead:”

Why’d president pumpkinhead have a news conference in the morning? Probably hoping no one would see it and he wouldn’t have to lie to as many people.

Another described what he was watching with more than disbelief:

“He’s being hit with a lot of questions on mortgages, credit crisis, and the economy … and of course the economy is ‘in for a soft landing,’ he’s been assured by the treasury that ‘there is plenty of liquidity,’ yadda-yadda-yadda.

But he is stumbling over his words more then usual, not making eye contact, not finishing his sentences … and when he wonders a bit, he quickly goes back on script. It is very odd to watch, to say the least.”

“Odd?” Not for him, but, of course, there is more than one man to hold accountable. This is a deeper structural problem that implicates a whole industry and the process of “financialization” it promotes. This crisis is an example of what goes around comes around as the companies that suspended their usual “standards” and “rules” and self-styled “due diligence” knowingly sucked money out of people with poor credit records and who now find their own companies imploding and collapsing worldwide. Many of the victims are people of color. They were targeted by predators.

Underscore that this was done deliberately, with forethought and malice, a well orchestrated plan to create armies of “suckers” and steal — yes, I said it — their monies to leverage even bigger deals. Their greed had no limits, until the scheme collapsed.

Behind it all were the so-called “Masters of the Universe,” the wise men of Wall Street who worked behind the scenes to turn mortgage brokers and small lenders into part of what will one day be seen as a criminal network worthy of prosecution under the RICO conspiracy laws used against the mob and drug dealers. Read this account from the Wall Street Journal:

Lou Barnes, co-owner of a small Colorado mortgage bank called Boulder West Inc., has been in the mortgage business since the late 1970s. For most of that time, a borrower had to fully document his income. Lenders offered the first no-documentation loans in the mid-1990s, but for no more than 70% of the value of the house being purchased. A few years back, he says, that began to change as Wall Street investment banks and wholesalers demanded ever more mortgages from even the least creditworthy — or “subprime” — customers.

“All of us felt the suction from Wall Street. One day you would get an email saying, ‘We will buy no-doc loans at 95% loan-to-value,’ and an old-timer like me had never seen one,” says Mr. Barnes. “It wasn’t long before the no-doc emails said 100%.”

You don’t read many accounts like this of businessmen bashing Wall Street in the business press. Could it all have been stopped? Of course, if there were real regulators and rules protecting consumers and the public interest. And if there were a social movement that championed economic justice.

And also, if there were investigative journalists like the ones who just wrote a series on the “debacle” of the “debt bomb” in the Journal — but after the collapse, not before. And what do they admit now? That this is not just a subprime problem but far more serious and global.

They note that “credit problems once seen as isolated to a few subprime mortgage lenders are beginning to propagate across markets and borders in unpredicted ways and degrees. A system designed to distribute and absorb risk might, instead, have bred it by making it so easy for investors to buy complex securities they didn’t fully understand. And the interconnectedness of markets could mean that a sudden change in sentiment by investors in all sorts of markets could destabilize the financial system and hurt economic growth.”

Will the rest of the media follow up and explain what is really going on?

This is very serious, but far too many progressives, activists and politicians alike haven’t spoken out about the crime behind this rolling scandal. We should be calling for major debt reform in America like Bono advocates for Africa. We should demand criminal penalties for the profiteers who started out to enrich themselves and seem to have ended up destroying the very system they misused. We should press the Congress to use its subpoena power to investigate the corporate criminals and their government enablers.

When they propose a bailout, we should demand a “jailout.” The Washington Post reports that the US has started a bailout “pumping more than $150 billion into the financial system to keep it operating smoothly.” Where is this money coming from? Not from the military budget you can be sure.

Blogger Carolyn Baker writes that we all must become more engaged with these issues saying she is “aware of the role of economic issues — perhaps more than militarism, health care, education, politics, or any other institution, in the dead-ahead demise of empire.

“I also notice that few in the left-liberal end of the political spectrum have a firm grasp on economic issues which I suspect comes from a fundamental polarization between activism and financial intelligence,” she writes.

Reviewing conservative author Michael Panzer’s book, Financial Armageddon, she criticizes his analysis as limited, and by extension, the left’s avoidance of these issues as well.

“What is most disturbing to me,” she writes, “about the book is what appears to be a total lack of perception regarding the role of fraud, theft, and malicious intent in the American and global financial train wreck which has been exacerbating over recent decades.”

Indeed! What are we going to do about this? How about starting with becoming more aware? ++

News Dissector Danny Schechter edits Mediachannel.org and directed the new film “In Debt We Trust: America Before The Bubble Bursts.” To get involved, visit Stopthesqueeze.org.

“So keep fightin’ for freedom and justice, beloveds, but don’t you forget to have fun doin’ it. Lord, let your laughter ring forth. Be outrageous, ridicule the fraidy-cats, rejoice in all the oddities that freedom can produce. And when you get through kickin’ ass and celebratin’ the sheer joy of a good fight, be sure to tell those who come after how much fun it was.”
~ Molly Ivins, 1944 - 2007

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Entry Filed under: Political Waves