A Long Economic Winter Ahead

See it on Amazon USA:

See it on Amazon Canada:

See it on Amazon UK:

or, in Australia at:

Please ask your favorite bookstore and your local library to order

the book: The Code for Global Ethics, Ten Humanist Principles,

by Dr. Rodrigue Tremblay, prefaced by Dr. Paul Kurtz, Prometheus Books, 2010, 300 p. ISBN: 978-1616141721.

*****The French version of the book is also now available. See:

http://www.TheNewAmericanEmpire.com/tremblay=1128

or on Amazon Canada

_____________________________________

Posted, Thursday, August 12, 2010, at 5:30 am

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The above is presented for educational purposes only.

Friday, July 9, 2010

A Long Economic Winter Ahead

by Rodrigue Tremblay

"A State divided into a small number of rich and a large number of poor will always develop a government manipulated by the rich to protect the amenities represented by their property.":

Harold Laski (1893-1950), British political theorist, 1930

“Money becomes evil not when it is used to buy goods but when it is used to buy power... economic inequalities become evil when they are translated into political inequalities.”

Samuel Huntington (1927-2008), political scientist

“… if financial markets are skittish and don't have confidence in a country's fiscal soundness, that is also going to undermine our recovery."

President Barack Obama, June 25, 2010

“Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius, and a lot of courage to move in the opposite direction.”

Albert Einstein (1879-1955) Physicist and Professor, Nobel Prize 1921

The bond market is telling us that there could be hard economic times ahead and that deflation, for the time being, is more of a threat than inflation. -Leading indicators are also pointing to possible economic weakness ahead. -The Euro zone is being pulled apart by the economic asymmetry of its members, the less productive among them (Greece, Spain, Ireland, Portugal and Italy) being unable to keep pace with the very productive German economy. -The U.S. money supply M3 is contracting. -The Chinese bubble is dangerously approaching the bursting point. -And, the deflation of debt all over the place threatens to plunge the world economy into a deflationary tailspin. —In this context, there is a good chance of a double-dip recession next year, in 2011.

Readers of this blog know where I stand on this issue. One year ago, on July 10, 2009, when everybody and his uncle was declaring the recession over and the return of business as usual, I wrote a piece announcing that my analysis was pointing out to ten years of economic hardship entitled “We are in the Midst of the Great Baby-Boomers Economic Stagnation of 2007-2017”. I wrote then that “many observers think that 'prosperity is around the corner' and that this recession, like others since World War II, will end as soon as the stock market, as a leading indicator, recovers and people start spending again. This is a myopic view of the current economic big picture.”

Let us keep in mind that in May of 1930, President Herbert Hoover was also proclaiming that “the danger ... is safely behind us.” This was ten years too early for such a declaration. Just as in the 1930s, the U.S. economy and many part of the world economy suffer from a debt overhang that usually takes at least ten years to correct. When overall debt is four times larger than the economy, as it is the case today and as it was close to being the case in the 1930s, a debt deflation becomes unavoidable.

Economic booms built on a mountain of debt, some of which is fraudulent and speculative debt, tend to end badly. The higher the debt mountain relative to the real economy, the more serious is the following economic meltdown. This is because an unsustainable debt level means that some of the investments and projects thus financed make no economic sense and no sufficient income can be forthcoming to service and repay the debts. The first consequence is excess capacity and falling asset prices. The second consequence is an unavoidable liquidation of debts and a debt deflation. The third consequence is economic stagnation.

The danger that accompanies a protracted period of debt-liquidation and debt deflation after a binge of over-indebtedness is well known in economics. In 1933, Yale economist Irving Fisher published his debt-deflation theory of economic depressions. The core of the theory is that over-indebtedness leads to deflation, which in turn leads to an economic contraction. Fisher summarizes the links between debt liquidation and economic contraction in nine interacting steps:

1- Debt liquidation leads to distress selling.

2- Contraction of deposit currency, as bank loans are paid off, and to a slowing down of the velocity of circulation of money.

3- A fall in the level of prices.

4- If the fall of prices is not interfered with by reflation or otherwise, this is followed by greater fall in the net worth of business, precipitating bankruptcies.

5- This leads to a like fall in profits.

6- A reduction in construction, output, trade and in employment of labor results.

7- Losses, bankruptcies and unemployment lead to pessimism and loss of confidence.

8- The result is hoarding and a contraction in bank credits, which contribute in slowing down even more the velocity of circulation of money.

9- The overall deflation causes a fall in the nominal or money interest rates accompanied by a rise in the real or commodity rates of interest as prices fall.

A similar self-reinforcing spiral-down of debt-deflation and economic contraction can be feared in the coming years as the level of debt to the economy goes from about four times the economy to a more manageable two times the economy. In other words, it should not take more than $1.50 or $2 of new debt and credit to generate one dollar of new output. When it takes more debt than that to generate new production, this is an indication that the economy is becoming over-leveraged with debt.

Judging by the pronouncements made by leaders at the recent G8 and G20 meetings in June, and their collective commitment to cut governments’ deficits in half by 2013, I don't think that politicians fully understand the danger presently facing the world economy. In fact, any new shock hitting the world economy, economic or political, risks accelerating the collapse of the debt house of cards, with dire consequences for production and employment.

Austerity fiscal measures may raise government efficiency, but they are not what will cushion the real effects of the debt deflation. Both reflationary monetary policies and overall stabilization policies are needed, especially in the banking sector, in order to make sure that producers and employers are not frozen out of new bank credit.

Rodrigue Tremblay

is professor emeritus of economics at the University of Montreal

and can be reached at rodrigue.tremblay@yahoo.com. He is the author of the book "The Code for Global Ethics" at: www.TheCodeForGlobalEthics.com/

The book “The Code for Global Ethics, Ten Humanist Principles”, by Dr. Rodrigue Tremblay, prefaced by Dr. Paul Kurtz, has just been released by Prometheus Books.

Please visit the book site at:

See it on Amazon USA:

See it on Amazon Canada:

See it on Amazon UK:

or, in Australia at:

Please ask your favorite bookstore and your local library to order

the book: The Code for Global Ethics, Ten Humanist Principles,

by Dr. Rodrigue Tremblay, prefaced by Dr. Paul Kurtz, Prometheus Books, 2010, 300 p. ISBN: 978-1616141721.

*****The French version of the book is also now available. See:

http://www.TheNewAmericanEmpire.com/tremblay=1127

or on Amazon Canada

_____________________________________

Posted, Friday, July 9, 2010, at 5:30 am

Email to a friend:

or click on Blog at: www.TheCodeForGlobalEthics.com

Send contact, comments or commercial reproduction requests (in English or in French) to:

N.B.: Messages may be published in our weblog, unless you request otherwise.

Disclaimer: All quotes mentioned above are believed in good faith to be accurately attributed, but no guarantees are made that some may not be correctly attributed.

Please register to receive free alerts on new postings of articles.

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Comments (6)

Monday, June 21, 2010

The Bush-Cheney Gulf Coast Oil Spill of 2010

by Rodrigue Tremblay

“If ever a time should come, when vain and aspiring men shall possess the highest seats in Government, our country will be in need of its experienced patriots to prevent its ruin."

Samuel Adams (1722-1803), statesman, political philosopher, and one of the Founding Fathers of the United States, 1776

“America is addicted to oil.”

President George W. Bush, State of the Union address, 2006

“Let me be clear: BP is responsible for this leak; BP will be paying the bill.”

President Barack Obama, May 2, 2010

More often than not, the consequences of public policies, good or bad, are felt many years after they have been taken. The 2010 BP oil spill in the Gulf of Mexico is a good example. This disaster is, to a large extent, a consequence of the Bush-Cheney energy policy of 2001 and later.

After being ushered into power by a one-vote-majority Supreme Court decision, one of the first decisions made by the new Republican administration was to establish an Energy Task Force (the National Energy Policy Development Group) under the authority of oil-man Dick Cheney, former CEO of Halliburton (1995-2000). As some have asserted, chief deregulator Dick Cheney was not only a vice president but a genuine co-president in the split Bush-Cheney administration.

After some 106 days of mainly secret consultations and deliberations with the executives and interest groups representing the U.S. electricity, coal, natural gas and nuclear industries, with a pledge to keep secret the names of participating individuals, the Task Force's 163-page final report was sent to President George W. Bush on May 16, 2001.

The report focused on how to open up new domestic petroleum sources and on the need to expand and control the all-important Middle East oil production. A parallel report to the official Cheney report (Strategic Energy Policy Challenges for the 21st Century) even stated that “Iraq has become a key 'swing' producer, posing a difficult situation for the U.S. government”, ... a harbinger of things to come. This is all well documented in my book “The New American Empire”.

Soon after the secretive Cheney's Task Force report came out, things began rolling for the U.S. petroleum industry. The regulatory rulebooks for energy development on public property were rewritten with the idea of making the world environment safe for oil business companies. It was going to be “Drill, baby, drill”, including for deep-ocean drilling with minimal precautions, and damn the consequences! Regulations and clean energy budgets began to fall.

On April 9 2002, President George W. Bush announced deep cuts in public clean energy research and development.

In 2001-02, the Bush-Cheney administration's energy policy goals were incorporated into an energy bill (H.R. 4) titled the Securing America's Future Energy Act (SAFE) that included $33.5 billion in tax breaks and other incentives for oil companies and that lifted the oil drilling ban on the Coastal Plain of the Arctic National Wildlife Refuge in Alaska. In May 2002 the Democrat-controlled Senate narrowly rejected the bill.

On August 8, 2005, however, President George W. Bush signed into law the new approach and enacted a new sweeping pro-oil bill, the “Energy Policy Act of 2005”. The bill followed closely in the footsteps of Vice President Cheney’s 2001 energy report and provided $27 billion to coal, oil and gas, and nuclear industries, and $6.4 billion for renewable energy.

Then, also in 2005, the Bush-Cheney administration allowed the U.S. oil and gas industry to regulate itself. The federal agency responsible for managing oil and gas resources and for collecting royalties from companies, the Interior Department's Minerals Management Service (MMS), decided, on August 30, 2005, that oil companies, rather than the government, were in the best position for determining their operations’ environmental impacts. In effect, MMS decided on that date to de facto merge its services with those of the oil companies, even to the point of letting the oil industry fill out MMS's inspection reports. MMS officials also had other cozy relations with the companies they were supposed to regulate.

Then again, on July 14, 2008, just months before leaving office, President George W. Bush signed an executive order to lift the moratorium on offshore drilling in the eastern Gulf of Mexico and off the Atlantic and Pacific coasts. Such a moratorium had been put in place in 1990 by President George H.W. Bush.

There is also some confusion concerning the scope of responsibility that oil companies have in the event of an environment catastrophe. Since 1986, there already was on federal books an Oil Spill Liability Trust Fund (OSLTF) that set a cap on losses that a business could suffer from an oil spill. That liability cap was set at $75 million by the George H. Bush administration, as part of the Oil Pollution Act of 1990, after the Alaska Exxon Valdez spill of March 1989. Only proven negligence can render that liability cap inoperative. Since the puny $75 m. cap has not been increased in twenty years, that may explain why some analysts still recommend to their clients to buy the BP stock. BP is a worldwide oil company that makes in excess of $25 b. a year.

Covered from losses by the liability cap, oil companies persuaded the Bush-Cheney administration that expensive security measures were not required, even for drilling in deep oceanic waters. For example, Minerals Management Service (MMS), decided not to require oil companies to install a remote-control oil blowout preventer on their deep-sea oil drilling rigs, i.e. an acoustic blow off valve that immediately chokes off the flow of oil in an emergency. Even though they are expensive, (they cost $500,000 each), most offshore oil rigs in other countries—in Norway and in Brazil for example, but not in the U.S. or the U.K— have such a switch installed for cutting off the flow of oil in an emergency by closing a valve located on the ocean floor.

No such emergency switch was available on April 20, 2010, when BP's 18,000-foot-drilling-deep floating oil rig blew up, a catastrophe that killed eleven workers, injured many others, and which has spewed, so far, as much as 100 million gallons of oil into the Gulf of Mexico (some 2,400,000 barrels, or nearly ten oil tankers the size of the Exxon Valdez). The British-American BP company, seemingly, had cut corners in order to take advantage of the lax regulatory environment.

However, contrary to the damage done by Hurricane Katrina in 2005, a natural event, the 2010 Gulf oil spill is a man-made disaster (just as, by the way, the 2003 Iraq war and the 2007-08 financial crisis were also man-made disasters). It could have been prevented if the Bush-Cheney administration had not removed the regulations mandating basic safety procedures in oil drilling, especially for offshore drilling.

Of course, BP and its subcontractors (Transocean, Halliburton, etc.) are the ones who are directly responsible for the disaster. But the Bush-Cheney administration must share a large part of the blame and responsibility in preparing the regulatory background for the disaster.

President Barack Obama also doesn't escape all responsibility, because he was the one who insisted on keeping so many Bush-Cheney appointees in their high

positions after he was elected. Moreover, on March 31, 2010, only weeks before

the BP Gulf Oil Spill, his administration also proposed to open vast expanses of American coastlines to oil and natural gas drilling. Americans have reasons

to be confused and appalled.

Rodrigue Tremblay

is professor emeritus of economics at the University of Montreal and can be

reached at rodrigue.tremblay@yahoo.com. He is the author of the book "The Code for Global Ethics" at: www.TheCodeForGlobalEthics.com/

The book “The Code for Global Ethics, Ten Humanist Principles”, by Dr. Rodrigue Tremblay, prefaced by Dr. Paul Kurtz, has just been released by Prometheus Books.

Please visit the book site at:

See it on Amazon USA:

See it on Amazon Canada:

See it on Amazon UK:

or, in Australia at:

Please ask your favorite bookstore and your local library to order the book:

The Code for Global Ethics, Ten Humanist Principles, by Dr. Rodrigue Tremblay, prefaced by Dr. Paul Kurtz, Prometheus Books, 2010, 300 p. ISBN: 978-1616141721.

*****The French version of the book is also now available. See:

http://www.TheNewAmericanEmpire.com/tremblay=1126

or on Amazon Canada

_____________________________________

Posted, Monday, June 21, 2010, at 5:30 am

Email to a friend:

or click on Blog at: www.TheCodeForGlobalEthics.com

Send contact, comments or commercial reproduction requests (in English or in French) to:

N.B.: Messages may be published in our weblog, unless you request otherwise.

Disclaimer: All quotes mentioned above are believed in good faith to be accurately attributed, but no guarantees are made that some may not be correctly attributed.

Please register to receive free alerts on new postings of articles.

Send an email with the word "subscribe" to: bigpictureworld@yahoo.com

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COMMENTS (5)

Monday, June 7, 2010

For a More Ethical Civilization

by Rodrigue Tremblay

"When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it."

Frederic Bastiat (1801-1850), French economist

"The world today is as furiously religious as it ever was. ... Experiments with secularized religions have generally failed; religious movements with beliefs and practices dripping with reactionary supernaturalism have widely succeeded."

Peter Berger, Desecularization of the World, 1999

“I think that on balance the moral influence of religion has been awful. With or without religion, good people can behave well and bad people can do evil; but for good people to do evil—that takes religion.”

Steven Weinberg, 1979 Nobel Laureate in Physics

There has never been more talk about ethics than today, not only in private lives, but also in government circles, in business boardrooms and in the media. That is because most people realize we are living a very corrupt period. In 2009, the United States ranked 19^th in a worldwide corruption index, way below New Zealand (1^st) or Denmark (2^nd).

Indeed, more than three quarters of Americans believe that we are living at a time of declining moral values. A recent Gallup poll found that 76 percent of Americans think moral values in their country are getting worse, while only 14 percent believe they’re getting better. This would seem to be paradoxical, since other indicators show that the United States is getting more religious and pious. More religion and less morality?

For instance, it has been observed that teen birth rates are the highest in the most religious states. That may be because poor people tend to be more religious compared to the rich and tend to be less educated and less well informed. Consider also that it has been observed that religious people are more racist than average.

Morality is a complex issue, but that is no reason to sweep it under the rug of indifference.

In a new book, I attempt to tackle the issue of ethics and its sources. I have arrived at the conclusion that humanity needs a new worldview—a new moral code— a new objective standard of right and wrong, because our prevailing sources of morality are at best inadequate, and at worse, perverse.

This is because many of our problems today are not only technical in nature, but they also have a moral underpinning, and are thus much more difficult to solve. It may also be because our scientific and technological progress seems to be advancing much faster than our moral progress, with the consequence that problems arise faster than our moral ability to face them and to solve them can cope. Indeed, our problems are more and more global in nature, while our moral worldview is still essentially parochial.

We thought that wars of aggression (or pre-emptive wars) had been abolished with the adoption of the United Nations Charter on June 26, 1945 and the issuance of the Nuremberg Charter on August 8, 1945. But wars of aggression persist. —We also thought that financial crises and the severe economic recessions and sometimes depressions they provoked were a thing of the past, thanks to a protecting net of financial regulations designed to control greed and prevent a repeat of the past. Well, twenty years of wholesale deregulation has brought us back to an era of anything goes and financial collapse. We also thought that the problem of poverty in the world could be alleviated, but abject poverty persists in many parts of the world.

There seems to be a pattern here, and it is that humanity seems unable to break out of a cycle of wars, economic crises and endemic poverty.

And, these throwbacks to an unpalatable past seem to coincide with other developments, such as the spread of nuclear weaponry, the persistence of ignorance, growing social and economic inequalities, disregard for basic democratic principles, the rise in global pollution, and an increasing religion-based willingness to kill and terrorize.

With the current globalization of our problems, we need to extend our circle of empathy and view humanity as a worldwide extended human family. As long as we refrain from facing that challenge, divisiveness and unsolvable conflicts will persist.

The contradiction between modern problems, new scientific knowledge and the inadequacy of our prevalent source of morality or of ethics, led me to ask what kind of values would be required to face the new challenges. What would our civilization look like if we were to adopt them?

In such a such a civilization,

• All human beings would be equal in dignity and in human rights.

• Life on this planet would not be devalued and seen as only a preparation for a better life after death, somewhere beyond the clouds.

• The virtues of tolerance and of human liberty would be proclaimed and applied, subject only to the requirements of public order.

• Human solidarity and sharing would be better accepted as a protection against poverty and deprivation.

• The manipulation and domination of others through lies, propaganda, and exploitation schemes of all kinds would be less prevalent.

• There would be less reliance on superstition and religion to understand the Universe and to solve life's problems and more on reason, logic and science.

• Better care of the Earth's natural environment—land, soil, water, air and space—would be taken in order to bequeath a brighter heritage to future generations.

• We would have ended the primitive practice of resorting to violence or to wars to resolve differences and conflicts.

• There would be more genuine democracy in the organization of public affairs, according to individual freedom and responsibility.

• Governments would see that their first and most important task is to help develop children's intelligence and talents through education.

Yes we can, if we try.

* Drawn from notes for a conference by Dr. Rodrigue Tremblay at the American Humanist Association's Annual Meeting, San Jose, California, Friday, June 4, 2010. For the complete text of the conference, please click HERE.

Rodrigue Tremblay

is professor emeritus of economics at the University of Montreal and can be reached at rodrigue.tremblay@yahoo.com. He is the author of the book "The Code for Global Ethics" at: www.TheCodeForGlobalEthics.com/

The book “The Code for Global Ethics, Ten Humanist Principles”, by Dr. Rodrigue Tremblay, prefaced by Dr. Paul Kurtz, has just been released by Prometheus Books.

Please visit the book site at:

See it on Amazon USA:

See it on Amazon Canada:

See it on Amazon UK:

or, in Australia at:

Please ask your favorite bookstore and your local library to order the book:

The Code for Global Ethics, Ten Humanist Principles, by Dr. Rodrigue Tremblay, prefaced by Dr. Paul Kurtz, Prometheus Books, 2010, 300 p. ISBN: 978-1616141721.

*****The French version of the book is also now available. See:

http://www.TheNewAmericanEmpire.com/tremblay=1125

or on Amazon Canada

_____________________________________

Posted, Monday, June 7, 2010, at 5:30 am

Email to a friend:

or click on Blog at: www.TheCodeForGlobalEthics.com

Send contact, comments or commercial reproduction requests (in English or in French) to: