Wednesday, October 22, 2008


(I wouldn't normally be posting stuff like this, but since I made this video I'm linking it here.)

A violin instructor and alumna from the University of Puget Sound, Janet Utterback-Peck, teaches violin students (ages 6 - 14) by recording them and posting their videos on a private YouTube account. She and her community of violin instructors have found that video-taping their students increases the students' self-efficacy, and opens them to a wide range of violinists over the internet.

"I think the physical part - looking - and connecting - what physical motions make certain sounds is key," she says. Janet also uses YouTube to learn tricks from the professionals in her own work as a violinist with the Tacoma and Northwest Symphony Orchestras.

Staci Elliott and I created this short documentary video through Instructional Technology, which is the department that administers a BlackBoard content management system, tutorializes university software, and offers to students and educators regarding technological and pedagogical combinations. In the video I featured a documentary about Jascha Heifetz, which can be seen here, and a rendition of "Last Rose of Summer" by Hilary Hahn (which happens to be one of Janet's favorites). That video can be seen separately here.

Tuesday, October 21, 2008

How the Indigenous Organized

"The revolutionary organization must learn that it can no longer combat alienation with alienated means."

- Situationist International

This was a central tenet of the SI, guiding their work on the spectale's recuperative strategies and especially the strategies of the subordinated classes. I am taking a look at the indigenous organization in Bolivia from the 1990s to the present. The indio community there has created a revolutionary struggle that, while not impervious to recuperative forces, is possibly the best model for decentralizing power and collective bargaining in the present era.

The organization of indigenous groups changed after the political turmoil of the late 1990s. The indigenous supplanted the labor unions as the primary working class mode of resistance by forming ad hoc groups organized around specific issues from their different but overlapping perspectives.

Urban employment after Coca Zero - the U.S.'s plan to eradicate coca growing in Bolivia - brought the indigenous to the cities, where they displaced miners (long considered the vanguard of the working class by the Bolivian left). They functioned primarily in neighborhood collectives that incorporated many elements of labor unions, but were not based on connections to particular employers. The neighborhoods maintained constant pressure on the government, with an overall emphasis on the failed Coca Zero plan, and the privatization of natural resources.

“By freely combining indigenous, nationalist, and anti-neoliberal discourses, they often incorporated the demands of other groups to broaden their base of support or increase their legitimacy.”

- Benjamin Kohl and Linda Farthing, Impasse in Bolivia

While the neighborhoods increasingly assumed the vanguard position toward social change in Bolivia, each followed its own agenda, organizing strategies, and rationale for action, but often worked side by side under unlikely conditions. For example, coca growers in Aymara joined forces during the “water war” of 2000 to combat privatization and defend the indigenous way of life in the highlands. This method, which has been echoed elsewhere all over the world in resistance movements, is broadly anarcho-syndicalist in its outlook though the political makeup of the Bolivian groups may have specific ideological goals that are not. With over 35 distinct cultures in Bolivia, the groups remain distinct but culturally cohesive (Wise et al. 2003).

Both the unions and the campesinos – the rural laborers and coca growers – act as the basis for local governments, assigning land and mediating disputes both within and between communities. The local unions collaborated to form federations of unions, and the federations were large enough to democratically make decisions at the municipal level. Almost without exception, the mayors, council members and congressional deputies in the Chapare region have come from coca-growing unions. This mixture of neighborhood, government and union has created a broader class of people working together toward a common goal.

Eliminating imperialism anywhere cannot happen without such a broad organization force like this. Imperialism in all its forms will have to confronted in such a way that gives resistance to it an intrinsic satisfaction, as the SI was quick to point out. I often have the feeling that resistance in the U.S. does not have intrinsic qualities like this. It's more like a separate activity from everyday life. People who enjoy "politics" on an abstract discursive level may be like that, but resistance is purposive, active, and connected with daily living.

Of the tools at the oppressor's disposal, the dismissal of resistance culture is one of its strongest. As Nietzsche said in BGE, despising the "smell" of another human being is one of the most acerbic ways to reprobate the Other. Look how the mestizos hate the smell of indigenous people in Bolivia. Anything indio is unwanted and unaccepted: indio labor, indio life, indio music, indio skin tone. Racist class war in Bolivia therefore made it necessary to create a revolutionary struggle beginning with a cohesive indio solidarity movement.

Monday, October 20, 2008

Total Cost of the Iraq War

An old saying in economics: there is no "free lunch". Last week it was Joseph Stiglitz point, speaking at Seattle U about his new book Three Trillion Dollar War, that there is no such thing as a "free war".

I thought Stiglitz, whose Nobel Prize work is related to information asymmetry and market failure, would be out of his league when discussing the accounting costs of the Iraq War. But as he described it - it's not very difficult to add up these costs, it just takes a bit of investigation.

Bad accounting procedures, attempts to deceive US citizens about the costs of the war, hidden costs in terms of health and opportunity costs, diminish the official costs of the Iraq War. The number, $3 trillion, is an enormous number. But it is still the conservative accounting estimate; Stiglitz claims the range of costs is somewhere between $3 and $5 trillion.

In 2003, Chief Economic Adviser Lawrence Lindsey said the Iraq War might cost, $100 to $200 billion dollars. He rewarded by being fired. Secretary of Defense D. Rumsfeld said the War would cost $50 billion. This is the amount we actually spend every 3 to 4 months in the "official" Iraq War budget. But the up-front budgetary costs are much smaller than the hidden costs.

For example, war contractors must have disability insurance and death benefits by law. But the insurance premiums are not surprisingly so high that the Department of Labor pays for it out of taxes. It is not counted in the Iraq budget. And while taxes pay for the insurance premiums, a lot of the money has gone to AIG, the company which has recently gained notoriety from the financial crisis. Stiglitz says the company was essentially stealing tax-payer money to pay for disabilities and death benefits, but it included a cynical little clause stating that AIG would not pay for disabilities or deaths arising from "hostile action". So taxpayers pay these insurance premiums, in fact, twice.

Cost like this that increase the real cost and decrease the budgetary cost are abundant. At this point, the occupations of Iraq and Afghanistan are two of the four longest notorious hot wars in US history.

  • Vietnam War .................. 8 years, 5 months
  • Afghanistan ..................... 7 years, 1 month
  • Revolutionary War ............ 6 years, 9 months
  • Iraq .............................. 5 years, 8 months
  • First Barbary War..............5 years
  • Civil War ....................... 4 years
  • Philippine Insurrection........4 years
  • WWII ............................ 3 years, 8 months
  • Korean Hot War............... 3 years, 1 month
  • Kosovo...........................3 years
  • Somali Civil War...............3 years
  • War of 1812 ................... 2 years, 6 months
  • Bosnia............................2 years
  • U.S.-Mexico War .............. 1 year, 10 months
  • WWI ........................... 1 year, 7 months
  • Invasion of Grenada..........1 year
  • Second Barbary War..........1 year
  • Spanish American War....... 8 months
  • Persian Gulf War ............ 1.5 months

The Gulf War was only a 1.5 month hot war, costing $200 billion in disability and health benefits. Of the 1.1 million US soldiers in the first Gulf War, 300,000 were granted disability compensation, many of which is long-term. By comparison, one-third of soldiers coming back from Iraq have been diagnosed with deep depression, PTSD, and traumatic brain injuries. Many will not be able to work full-time and will have other problems associated with mental health and their quality of living. A disproportionate number of homeless in the US are Vietnam Veterans; we are creating the new generation of homeless and disabled by, even with the exorbitant military spending levels, lack of adequate VA funding.

The DOD website says the number of wounded American soldiers in Iraq is 30,000. This number only counts those wounded in hostile actions. But non-combat wounds Stiglitz discovered through a FOIA request was more than double the official number. That is over 60,000 soldiers that are not included to make the war appear less volatile to the US public.

The costs I outlined here are actually more overt than others Stiglitz covers: there are hidden costs from borrowing foreign money to finance the war, deficit-spending (an all time high), the opportunity costs from occupying Iraq versus managing crises in the U.S., like Hurricane Katrina or the Iowan tornadoes; increases in oil prices and the effect on futures markets; the lost investment in young people who are dead or disabled from the war who would have lived productive lives otherwise; the cost of Iraq versus funding research in medicine and mental health, and so on.

Sunday, October 19, 2008

Reasons to Love Portland

I just got back from a great party in Portland, one of my favorite cities in the U.S.

  • A light rail system connects Portland to the suburbs, something "environmental" Seattle barely has.
  • We spent the night at a friend's house and found a copy of Portland's "Gay and Lesbian Yellow Pages" on the doorstep when we woke up.
  • Rent is cheaper in Portland, at least on M.L.K.
  • Portland is bicycle friendly, with bike paths an almost every big road.
  • There is a sense of community in Portland.
  • Portlanders are happy and talk to neighbors.
  • Portlanders are relaxed about fixing up their yards to look like golf courses, and instead find many other interesting uses for yards, like artwork and gardening.
  • Whole time I was there I did not see one cop. As soon as I got back to Tacoma I saw five and one squad SUV in a matter of ten minutes.
  • Parties in Portland attract some of the best musicians.
  • According to Grist, Portland is the second-most green city in the world behind Reykjavik, Iceland.
  • Portland has some of the largest city parks in the U.S.
  • DIY crafting is a big thing in Portland.
  • Portland is home to many interesting people, like Linus Torvalds (founder of Linux).

By contrast,

  • I recently discovered Tacoma was listed on CNN as the top most stressful city in the United States.

Saturday, October 18, 2008

Materialism, plain and simple

I tend to set my mind in rigidity. I unwittingly follow hidden assumed rules which manifest in habitual patterns of thought and behavior. These thoughts don't manifest when I am completely detached from my material possessions. In fact, when I have no sense of materialism, I think I am the most happy. Rigidity manifests when I am trapped in routine, when I want to control my situation, when I long, crave, confuse myself, and ultimately, suffer.

The problem is I am still a materialist. I have not given up that aspect of my life. Where would I be without my computer, my books. I resist becoming detached from materials because I don't see anything possible for myself outside material life. It is a ridiculous resistance, because I know that I am happiest when I do not resist. So what the fuck am I doing?

Friday, October 17, 2008

Thinking About Obstacles in a Different Way

Some like yoga, others prefer tai chi or karate. Nothing gets my blood flowing like parkour.

Parkour is incredibly subversive. Its philosophical principles are linked to Situationist writings which view the urban landscape like a trap built by capitalism to shape our consciousness, making us prisoners to a routine life. The Situationists proclaimed there were original and useful ways of perceiving the landscape, and only a radical shift in "psychogeography" could help access our nativist urban psychology.

Parkour is also incredibly practical as a revolutionary tool. Jumping fences, getting away from the cops, dodging bullets: all these things are possible with a rigorous parkour training. It encourages physical fitness and ease of transition in all sorts of environments typically thought to be unsurmountable.

Today practiced parkour with handful of others in a park nearby. We jumped tables, walls, and other barriers. I began to think no obstacle was impossible to get by. We climbed trees, jumped from walls, and balanced on poles. A couple were running and side-flipping or back-flipping off obstacles. If only I were that agile. At this point my training has only begun.

This is essentially what parkour looks like.

More information on parkour here.

Wednesday, October 15, 2008

A Coup Has Taken Place...

As of October First, we are living in what can only be called the closing society.

A series of decisions has made it possible for this to happen. President George Bush struck down posse comitatus, which now allows the military to patrol the U.S. The legally-established "War on Terror" states the U.S. is at war around the globe and that the U.S. is also a battlefield.

In light of more recent events on October 1, 2008, Democracy Now! interviews NorthCom Col., Michael Boatner and writer for The Progressive, Matthew Rothschild:

Presidential Directive 51 - May 9th, 2007:

"Catastrophic Emergency" means any incident, regardless of location, that results in extraordinary levels of mass casualties, damage, or disruption severely affecting the U.S. population, infrastructure, environment, economy, or government functions.

Considering how these changes in policy - and not only the language but the practice - were allowed to happen, author Naomi Wolf has come forward declaring that the coup has already taken place.

In a conversation Naomi published on AlterNet, she asks retired Air Force Colonel what would prevent the President from sending the First Brigade to arrest the editor of the Washington Post.

Col: "Nothing. He could do what he did in Iraq -- send a tank down a street in Washington and fire a shell into the Washington Post as they did into Al Jazeera, and claim they were firing at something else."

NW: "What happens to members of the First Brigade who refuse to take up arms against U.S. citizens?"

Col: "They'd probably be treated as deserters as in Iraq: arrested, detained and facing five years in prison. In Iraq a study by Ann Wright shows that deserters -- reservists who refused to go back to Iraq -- got longer sentences than war criminals."

But given that the jurisdiction over the First Brigade lies with the President, and what the President orders is de facto a lawful order, if the troops disobey the Commander in Chief, what would happen to the military system? Naomi asks.

Col: "Perhaps they would be arrested and prosecuted as those who refuse to participate in the current illegal war. That's what would be considered a coup."

NW: "But it's a coup already."

Col: "Yes."

Naomi Wolf's strong resistance narrative and her ability to convey this grave concern to the rest of American society is something I value in her work. All of us who were involved in resistance politics at the DNC and RNC can follow the discomfort and frustration behind her rhetoric, because we witnessed first-hand what she describes as a taste of things to come.

As I listened to Naomi speaking on KUOW - Seattle's NPR - I thought about the "kafkaesque" strategies the FBI, military, and police used at the DNC and RNC to very effectively intimidate. I thought about fascist societies in the past which were transformed from know-nothing democracies to globalistic empires.

I have to ask myself whether Americans who accuse this country of imperialism are serious about this or not. And if so, how serious are we? Will we be able to disable the empire when it comes time? And when it happens, will we be ready to build a just and sustainable society in its place?

How far are we willing to take this consideration? To the internet? To the classroom? To the arms dealer?

Monday, October 13, 2008

Fascism is Cost-Effective, Here is My Evidence

Jonathan Klick, professor of law and economics at Florida State University, had an idea for how to examine a difficult social science question: Do more police officers in fact reduce crime?

Over and over again, myopic economists answer this question by excluding important independent variables, like you are about to see.

In a paper titled "Using Terror Alert Levels to Estimate the Effect of Police on Crime" (a copy of the article is available here) Klick and Tabarrok argued that changes in the national terror alert ("green", "yellow", "orange", "red", etc.) corresponded to shifts in crime levels.

"On high-alert days,'' they wrote, ''total crimes decrease by an average of seven crimes per day, or approximately 6.6 percent.''

And, every $1 to add officers would reduce the costs of crime by $4.

By measuring elasticities for auto theft and other street crimes while the terror alert is high as opposed to when it is low, the economists conclude with a straight face that "if we had a 10 percent increase in police, crime would go down by about 4 percent.'' Nationally, ''that means about 700,000 fewer property crimes and 213,000 fewer violent crimes.''

Or in other words, an increased threat of terrorism makes America's streets safer. Only the economists' argument is for carefully designed to talk only about the 'effect of police on crime', not the 'effect of expected terrorism on the person in the street'.

All surface-level discussion of urban social policies emerges from a context of fragmented thinking. Many theoretical accounts in political science, economics, criminal justice, are not validated, or held to rigorous social scientific (more broadly defined) standards. But this does not stop us from implementing flawed policies. Even if terror alerts or the number of police decrease crime on a superficial level like this, it is still highly contestable whether an emergency policed state is the social meaning of order and security.

Professor Klick offered an even more striking suggestion to a NYTimes reporter. ''It wouldn't be unreasonable,'' he said, ''based on our estimates and based on conservative estimates of the costs of crime, to say it would be cost-effective to actually double the number of people working in police forces, which is pretty amazing."

Sunday, October 12, 2008

Obituary of a City Banker

As the credit crisis and financial markets bubble to a steaming head, this week millionaire financier Kirk Stephenson, 47, chief operating officer at Olivant, threw himself in front of a 100 MPH express train in Berkshire. Under a mountain of pressure from the collapse of banks, Stephenson, who was paid millions through Olivant and owned a five-story house in Chelsea, surprised his colleagues and family when the news of his suicide was told.

The banker became suicidal during this highly stressful period of fiscal and monetary stimuli which has not yet convinced the banks to start lending money to each other. Investors are dropping out of the market at any price whatsoever because they have given up all hope of making money. Panic-selling, high volumes of transactions, yelling, screaming and kicking, and now, death on the tracks.

Friday, October 10, 2008

Seed Spreaders Past and Present

In the beginning, English anarchists during the 17th Century spread seeds and small egalitarian communities based on teachings found in the Book of Acts. They were known as the Diggers. And in the 19th Century it was Johnny Appleseed, the flummoxed sermonizer, who spread apples and the good word everywhere along the American frontier.

Today seeds and spontaneity are going together as before, but a secular discourse displaced the older ones regarding human liberation. The gospel of today's guerrilla gardeners is to declare with pure genius that cities are using their lands irresponsibly. Look at all this speculation, all this empty space, all this divine land! Let's take your ugly beauty bark and make it into something we can cultivate. Let's take this patch of vacant lots and turn it into a sunflower park. These walls are looking bare without moss if you haven't noticed.

Thursday, October 09, 2008

New Documentary about Danish Squatters

Works in Progress is a free, volunteer-operated progressive community newspaper based in Olympia, Washington. I am not exactly sure what the connection is, but some of their members have teamed up with a documentary group from Seattle called Bus No. 8 and created an excellent documentary about a culturally-enriched squat in Copenhagen.

The neighborhood, called the free state of Christiania (wikipedia), is a world of its own. Within Christiania there are legal and illegal houses, but around 200 are free-standing "illegal" houses or squats. It has existed in Copenhagen for nearly 40 years. But now the Danish government wants to "normalize" the community and evict the illegal homes, destroy the fabric of this alternative society and put everything onto a grid, onto a sterile, uncreative grid.

The crown of Denmark is serious about ending freedom in Copenhagen; last year they evicted hundreds from a famous activist squat called Ungdomshuset (Danish website), (wikipedia), which had stood and kept its doors open for nearly 20 years. When the police and wrecking balls came, the people of Copenhagen fought back. After several days the city eventually kicked them out very brutally, after which the City of Copenhagen destroyed the building and titled the property to a fanatical right-wing religious group.

I hope that does not happen to Christiania.

You can watch 4 chapters from the documentary Christiania: Our Hearts are in Your Hands, here.

Chapter 1) Building Culture
Chapter 2) Hélène
Chapter 3) Kindergarten
Chapter 4) Police

Wednesday, October 08, 2008

Ground Noise and Static

Our goal at the Democratic and Republican National Conventions was to cover what was happening in the streets. This included a 10 to 15 minute daily video dispatch as well as blogs from each convention. (Click here to see all of that). The daily video dispatches are viewable online and were also aired on television via Free Speech TV.

This film certainly has its weaknesses since it was a edited in a week. I suggest checking out the rest of the DNC/RNC blogs and videos to see what we were up to during the summer of '08.

Tuesday, October 07, 2008

How to Create a Wind-Powered Pacific Northwest

According to the Northwest Power and Conservation Council, this is the electricity source makeup of the Pacific Northwest:

  • 51% Hydroelectricity
  • 20% Coal
  • 21% Natural Gas
  • 3.2% Nuclear
  • 1% Wind

First of all, in an advanced and allegedly environmentally aware section of the country such as ours claims or pretends or feigns to be, you should by asking why we derive 20% of our energy from burning coal and get almost none from the winds coming down from Alaska and off the coast?

If environmental costs were included in the cost of production, "the electricity generated from coal fired plants would be 50-100% more expensive than it is today", according to the the Wind Energy Association of America.

Recently, increased energy demand has been met by constructing coal and natural gas-fired plants. Why? Hydroelectricity in the Northwest is limited because there are few rivers left untouched by dams and political support for the construction of new dams is weak. Awareness of the rivers' role in the forested ecosystem is taught in public schools, and many people are aware of the effects on natural salmon reproduction in particular.

The current price of electricity generated by coal in Washington 5.8 cents per kWh. The Department of Energy estimates that 2.095 pounds of CO2 are emitted per kWh. Take the market price for CO2, $32.50 per ton, or 3.2 cents per pound, and multiply it by the amount of CO2 generated by one kWh and then add it to the current price of carbon, and you get an estimation of the true cost per kWh of coal generate electricity.

5.8+(3.2*2.095)=12.57, so $12.57 per kWh of coal-fired energy.

This is far more expensive than any wind-generated energy plant's costs, and the fact that substitutes like wind or solar are currently not competing at these true market prices is an example of market failure.

It is at this point that my blog becomes more inquisitive than matter-of-fact.

The problem as I see it is, even though both Presidential candidate are proposing carbon cap-and-trade systems, this will not ensure that the most environmentally sustainable energy sources will be the market's alternatives. (The next best choice in the Northwest would be hydroelectric, which is undesirable too.) But since this is a "market-based solution" the methodology is not to tell energy corporations what to produce and what not to. The methodology aims to put into place the correct cost structure and let the market find alternatives given the new parameters.

So - if there is going to be a carbon cap-and-trade system, it had better not create environmental loopholes so that energy corporations do not take over our rivers and streams. A mechanism to calculate the costs per kWh of hydroelectric energy could be capped and traded as well.

The other option, which actually makes more sense in terms of being "market-based", is to have every firm simply pay the full price of energy production per kWh to a third party. This way there would be no capping, and that certainly has its appeal to anti-paternalists. The problem with this is it would create a legal structure that would continually sue and appeal regarding the costs each plant had incurred by making energy. It would be difficult to say exactly how much each plant destroys per kWh produced without incurring more and more costs simply to monitor that output and destruction. It would also not encourage managements to design new ways of making each kWh of energy less harmful to the environment.

And there's also the grid system to factor into any decision about energy "policy", which was originally designed to be less wasteful, but has resulted in freerider problems and the creation of Enrons. Nothing seems right, nothing seems fair. I am at a loss for solutions :(

Monday, October 06, 2008

A Post-Apocalyptic Place Strewn With Half-Formed Cities and Bridges

Second Life, one of the online virtual economies, has developed from earlier models such as Norrath, and what made SL unique is that its platform consists of one contiguous reality with streaming architecture that allows for “dynamic, collaborative creation” on a single world, as opposed to many copies operating independently on various servers.

Second Life has so many similar features as does an Earth-based economy: land-scarcity, copyright, labor strikes, monopoly, xenophobia, real wages, deflation, you name it. I have been in-world in SL here and there. Once I gave a tour of SL to a group of college first-years taking a class called "The Post Human Future", which was taught by Paul Loeb. Given that this is an area peculiarly interesting to researchers, especially in economics, I would ask the following questions about Second Life.

  • People are making insane amounts of money in SL markets. What kinds of barriers to entry exist in the SL market? That is, if you join today, is there are skill set and a knowledge of the market in SL that creates a kind of barrier? Does SL easily lend itself to monopoly market structure?
  • What is the ratio of users with net profits to those with net losses? Are most users making money, or are some just in it for the fun and therefore losing money? Does that effect peoples' decision to join or not to join?
  • SL is sometimes a very baron place. But it seems that no matter what island you are on there is always something being advertised. Is this kind of advertising particularly effective? What kind of research has been done to show that it is or isn't?
  • Because Second Life has been remarkably more successful than other virtual worlds of its kind, what can we attribute to that? Someone has probably suggested before that Second Life has property rights in a way that no other virtual economy did before it. Second Life could be the perfect experiment for how studying how effective property rights in capitalism is. On the other hand Second Life is not as much fun as other worlds, so does this mean capitalism is not very fun? etc.

Currently reading:

Ondrejka, Cory. Aviators, Moguls, Fashionistas and Barons: Economics and Ownership in Second Life. Social Science Research Network: 2004.

Saturday, October 04, 2008

The 10 Steps to Fascism

Naomi Wolf, author of "End of America" and blogger at My America Project, has outlined ten easy steps to fascism. Allow me to summarize.

  1. Invoke a terrifying internal and external enemy.
  2. Create a gulag.
  3. Develop a thug caste.
  4. Set up an internal surveillance system.
  5. Harass citizens' groups.
  6. Engage in arbitrary detention and release.
  7. Target key individuals.
  8. Control the press.
  9. Dissent equals treason.
  10. Suspend the rule of law.

Thursday, October 02, 2008

A Day of Mournful Overcast 10/02/08

Over the past few days I've seen a number of articles talking about surges of troops in Iraq and military forces on U.S. streets.

Brigade Homeland Tour Starts Oct. 1. Gina Cavallaro. Army Times: September 30th, 2008.

The US Army is going to go "on tour" in the Homeland looking for terrorists (this means protesters). Their new weaponry is designed to "subdue unruly or dangerous individuals without killing them," the Army says. "They’ve been using pieces of it in Iraq, but this is the first time that these modules were consolidated and package fielded". "They may be called upon to help with civil unrest and crowd control or to deal with potentially horrific scenarios such as massive poisoning and chaos in response to a chemical, biological, radiological, nuclear or high-yield explosive, or CBRNE, attack" The package includes equipment to stand up a hasty road block; spike strips for slowing, stopping or controlling traffic, shields and batons, beanbag bullets, etc. Notice how the article only briefly mentions "crowd control" and drowns this out with threats of "chemical, biological, radiological, nuclear...." and other mushroom-cloud type words.

Invasion of the Sea Smurfs. Amy Goodman. Truth Dig: October 1st, 2008.

Referring to the previous article, Amy Goodman begins investigating because no one else seems to notice. The Army's Consequence Management Response Force - nicknamed "sea smurf" - have patrolled the hard streets of Iraq, but will now be called upon to patrol U.S. streets for disasters and protests. Goodman writes, "The John Warner National Defense Authorization Act for Fiscal Year 2007 ... included a section that allowed the president to deploy the armed forces to 'restore public order' or to suppress 'any insurrection.'" Amy Goodman relates the surge in domestic security to the perceived threat of protests due to the crisis on Wall Street. But there may be other uses, as the next article explains.

Nearly 10,000 headed from Fort Lewis to Iraq, Pentagon announce plan to deploy total of 26,000. Scott Fontaine. Olympian: October 1st, 2008.

"All told, the U.S. military is planning deployments of about 26,000 troops and would maintain 14 combat brigades in Iraq from about February to early fall 2009... Nearly 10,000 troops from Fort Lewis will head to Iraq next year, when the post's commanding general and the rest of I Corps take over daily operations in the country and two Stryker brigades fall under its command."

10 Days That Shook Olympia. Peter Bohmer. Counter Punch: November 17th, 2007.

This article outlines the sequence of events and the fervor of the Port Militarization Resistance movement in the Pacific Northwest. In Olympia, WA ten days of non-stop protesting prevented military munitions and Stryker vehicle to be transported through the Port of Olympia. At one point in the week, the protest held the port out of police or military control for 18 straight hours, blocking roads and access to the port. Their goal was to contain the military equipment inside holding stalls and send a message to the rest of the country that this war should have been stopped already. I was there early that week and created this propaganda video about it.

Wednesday, October 01, 2008

Liquidity Trap --> Recession

What is a Liquidity Trap?

A liquidity trap happens when interest rates come closer and closer to zero, and thereby changes in the money supply are very ineffective at stabilizing the economy.

If at first blush that does not make sense, another way to put it is like this.

"LM" is the money supply and liquidity preference combined in the IS-LM model. Visually, the central bank is trying to get the economy to "YF", which means a higher overall economic output and full employment. But when a central bank increases LM with interest rates so low like this, it does not change Y. So the monetary "transmission mechanisms" are essentially useless. On September 17 the interest rate for 3-month treasury bills (the most popular) fell to 0.06%, the lowest on record, and today are standing at 0.08%.

Japan: a case study

U.S. interest rates were well below 1% throughout the Great Depression, and the same was true for Japan in the 1990s, where they stood at one-tenth of 1%. Neo-Keynesian Gregory Mankiw, economist and author of the popular Macroeconomics textbook, says the crisis in both cases were traced to bad stock performances. Japanese land prices also peaked in the 1980s before crashing in the 1990s. It was a speculative development bubble, similar to the current one in the U.S. When the value of these holdings collapsed, the Japanese "saw their wealth plummet" and this "depressed consumer spending". [found on p.324]

Next, the banks

"ran into trouble and exacerbated the slump in economic activity. Japanese banks in the 1980s had made many loans that were backed by stock or land. When the value of this collateral fell, borrowers started defaulting on their loans".

This should sound very, very familiar to the U.S. sub prime mortgage default situation.

"... these defaults on the old loans reduced the banks' ability to make new loans. The resulting 'credit crunch' made it harder for firms to finance investment projects and, thus, depressed investment spending."

What made the downturn worse were the low interest rates which made monetary 'stabilization policy' ineffective. That is to say, the liquidity trap. Both the Great Depression and 1990s Japan saw low economic activity coincide with low interest rates.

"... this fact suggests that the cause of the slump was primarily a contractionary shift in the IS curve, because of shift reduces both income and the interest rate. The obvious suspects to explain the IS shift are the crashes in stock and land prices and the problems in the banking system."

Mankiw says the policy debates during the Great Depression and Japan during the 1990s were essentially the same: Keynesian, but he does not use this word.

"Some economists recommended that the Japanese government pass large tax cuts to encourage more consumer spending."

It was their version of today's Paulson Plan. These sorts of plans aim to shift out the IS curve instead of the LM curve. But during both the Depression and in Japan policymakers wanted to avoid budget deficits from cutting taxes and/or increasing spending.

"...Other economists recommended that the Bank of Japan expand the money supply more rapidly. Even if nominal interest rates could not go much lower, then perhaps more rapid money growth could raise expected inflation, lower real interest rates, and stimulate investment spending."

Eventually the Japanese plan was a combination of shifting IS and LM together. If we measure recovery by unemployment, for example, Japan still has not recovered. Unemployment was 2.1% in 1991, 5.4% in 2002, and 4.5% by 2005. Real GDP grew by 4.3% during the Japanese "miracle" boom of 1980s, but during the 1990s it grew by 1.3%. This is very low by developed-country standards, and generally considered undesirable, even unsustainable.

Today's Economic Portrait

"The liquidity trap" has not entered mainstream public consciousness yet. But as Paul Krugman
wrote last monday, the fact that we are dabbling in liquidity trap territory is becoming obvious.

"You still see people saying, in effect, “never mind the zero interest rate, why not just print more money?” Actually, the Bank of Japan tried that, under the name “quantitative easing;” basically, the money just piled up in bank vaults. To see why, think of it this way: once T-bills have a near-zero interest rate, cash becomes a competitive store of value, even if it doesn’t have any other advantages. As a result, monetary base and T-bills — the two sides of the Fed’s balance sheet — become perfect substitutes. In that case, if the Fed expands its balance sheet, it’s basically taking away with one hand what it’s giving with the other: more monetary base is out there, but less short-term debt, and since these things are perfect substitutes, there’s no market impact. That’s why the liquidity trap makes conventional monetary policy impotent."

Krugman has been saying since March of 2008 that we're "pretty close" to a liquidity trap. This September we are sliding against a razor thin margin, and the possibility that we are already in a liquidity trap will only be known months later given time lags in economic data.

The technical definition of a recession is 'two consecutive quarters of falling GDP'. But another, probably more apt, way to define recession is how many times the word comes up in the mainstream press. The more the word "recession" is used, the more consumer confidence drops, and the likelihood that we are actually in a recession becomes realistic. But the press have been using the word "recession" throughout the entire year it seems (just do a Google "trends" search), so I am beginning to think this is not a good barometer.

My new thought is that once people start using the phrase "liquidity trap", it will imply that our understanding about the severity of the crisis has developed to such an extent that you can be sure we are in a real recession.