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The Era of Breakdown



The fourth of the stages in the sequence of collapse we’ve been discussing is the era of breakdown. (For those who haven’t been keeping track, the first three phases are the eras of pretense, impact, and response; the final phase, which we’ll be discussing next week, is the era of dissolution.) The era of breakdown is the phase that gets most of the press, and thus inevitably no other stage has attracted anything like the crop of misperceptions, misunderstandings, and flat-out hokum as this one.

The era of breakdown is the point along the curve of collapse at which business as usual finally comes to an end. That’s where the confusion comes in. It’s one of the central articles of faith in pretty much every human society that business as usual functions as a bulwark against chaos, a defense against whatever problems the society might face. That’s exactly where the difficulty slips in, because in pretty much every human society, what counts as business as usual—the established institutions and familiar activities on which everyone relies day by day—is the most important cause of the problems the society faces, and the primary cause of collapse is thus quite simply that societies inevitably attempt to solve their problems by doing all the things that make their problems worse.

The phase of breakdown is the point at which this exercise in futility finally grinds to a halt. The three previous phases are all attempts to avoid breakdown: in the phase of pretense, by making believe that the problems don’t exist; in the phase of impact, by making believe that the problems will go away if only everyone doubles down on whatever’s causing them; and in the phase of response, by making believe that changing something other than the things that are causing the problems will fix the problems. Finally, after everything else has been tried, the institutions and activities that define business as usual either fall apart or are forcibly torn down, and then—and only then—it becomes possible for a society to do something about its problems.

It’s important not to mistake the possibility of constructive action for the inevitability of a solution. The collapse of business as usual in the breakdown phase doesn’t solve a society’s problems; it doesn’t even prevent those problems from being made worse by bad choices. It merely removes the primary obstacle to a solution, which is the wholly fictitious aura of inevitability that surrounds the core institutions and activities that are responsible for the problems. Once people in a society realize that no law of God or nature requires them to maintain a failed status quo, they can then choose to dismantle whatever fragments of business as usual haven’t yet fallen down of their own weight...That’s a more important action than it might seem at first glance. It doesn’t just put an end to the principal cause of the society’s problems. It also frees up resources that have been locked up in the struggle to keep business as usual going at all costs, and those newly freed resources very often make it possible for a society in crisis to transform itself drastically in a remarkably short period of time. Whether those transformations are for good or ill, or as usually happens, a mixture of the two, is another matter, and one I’ll address a little further on.



Weekend Economists Do the Flamenco June 5-7, 2015

(As to the plans I had...I chickened out. I can only take so much novelty in a day, and I did accomplish a lot, but never enough. It is either a sign of the decrepitude of age, or the shattering effects of unremitting stress--or both. I like a quiet routine. Unfortunately, neither the Kid nor anyone else in the vicinity does. So running away for fun is, in the end, too much like work...)

Flamenco (Spanish pronunciation: ) is a form of Spanish folk music and dance from the region of Andalusia in southern Spain. It includes cante (singing), toque (guitar playing), baile (dance) and jaleo, which refers to the vocalizations and rhythmic sounds of palmas (handclapping) and pitos (finger snapping) that encourage performers to excel. First mentioned in literature in 1774, the genre is thought to have grown out of Andalusian music and dance styles. Flamenco is often associated with the gitanos (Romani people of Spain) and a number of famous flamenco artists are of this ethnicity. Because of this, it is often assumed or claimed that Flamenco music originated within the Romani minority in Andalucia but evidence to support this ranges from dubious to nonexistent. What is known is that it originated in Andalucia. Flamenco music was first recorded in the late 18th century but the genre underwent a dramatic development in the late 19th century. (I assume they mean written down)

In recent years flamenco has become popular all over the world and is taught in many countries. In Japan there are more flamenco academies than there are in Spain. On November 16, 2010 UNESCO declared flamenco one of the Masterpieces of the Oral and Intangible Heritage of Humanity...

Americans of the gringo persuasion probably first gained exposure to flamenco through Jose Greco. In the 1950s Jose Greco was one of most famous male Flamenco dancers, performing on stage worldwide and on television including the Ed Sullivan Show, and reviving the art almost singlehandedly. His dance troupe was featured in Michael Todd's film Around the World in 80 Days; the original Jules Verne story was rewritten so that the hot air balloon and the visit to Spain could be included (Verne had written a different story about ballooning... the Mexican comedian Cantinflas, who played Passepartout, probably was delighted by the detour to Spain so he could fight the bull).

East Flint blown up by Army

Victory for Ecuador as US Court Rejects Fugitive Bankers' Case


The Isaias brothers were found guilty in absentia and sentenced to eight years in prison for falsifying financial statements...The state of Ecuador won an important case Monday brought against it by the Isaias brothers, a pair of fugitive bankers who were convicted of embezzlement for their role as the heads of bank Filanbanco during the Ecuadorean banking crisis in the late 1990s.

Ecuador’s attorney general revealed in a communique that the court of the Southern District of New York has denied a suit by William and Roberto Isaias, which sought to sue Ecuador for US$1 billion, after the state seized approximately 200 business connected to the brothers when the pair fled the country.

The U.S. court determined that the suit did not fall under its jurisdiction, as the state of Ecuador enjoys sovereign immunity. According to the communique, the court also found that the brothers had failed to prove that the seizures were illegitimate. The brothers have the option to appeal within 30 days.

Ecuador is still seeking the extradition of William and Roberto Isaias. However, the pair have received preferential treatment, due to their connections to U.S. Senator Robert Menendez, himself the subject of a corruption investigation. The brothers were found guilty in absentia and sentenced to eight years in prison by the Ecuadorean National Court, which determined that the brothers had falsified Filanbanco’s financial statements. Filanbanco received millions from the Ecuadorean state in bail-outs during the country’s bank crisis.

This is the second case the Isaias brothers have lost in U.S. courts, after a 2014 ruling determined that Ecuador could attempt to seize properties belonging to the brother in Florida in order to recover a portion of the US$200 million the government of Ecuador says it is still owed.

This content was originally published by teleSUR at the following address:
http://www.telesurtv.net/english/news/Ecuador-Wins-Case-Against-Fugitive-Bankers-Hiding-in-the-US-20150602-0017.html. If you intend to use it, please cite the source and provide a link to the original article. www.teleSURtv.net/english

Weekend Economists Seek Psychic Healing May 29-31, 2015

I ask, and nobody offered, so....

Psychic healing...two words that cover a multitude of sins....

While the common definition involves chakras, and imaging, and whatnot, I prefer to focus on the kind of healing that will take a borderline-personality nation like ours, looking for trouble in all the wrong places (and finding it) and spreading it around to afflict other nations and peoples.

What will it take to heal the American psyche? What broke it in the first place?

Finding Healing When You’re Broken


As her mom, I felt helpless. I couldn’t make her pain go away. I couldn’t fix her broken arm. So I simply put my head next to hers, and told her that I was here, and I wouldn’t leave her. That was the mantra I repeated over and over. And it was enough.

We humans break easily.

And I’m not talking simply about bones. Our feelings get hurt. Our self-esteem is fragile. We hurt each other with words and actions. We bully each other, steal from one another, gossip, verbally abuse, and assault those around us. We hurt ourselves by what we do. We cut or burn ourselves, neglect our health, abuse food and drugs, and engage in reckless behavior.

Others abuse us and neglect us. People who should love us hurt us. Sometimes simply getting through one day to the next takes an incredible amount of courage and strength.

When people come to therapy, they often see themselves as hurting and broken. People don’t come for counseling when they’re feeling great and on top of the world. They come when they’re in pain. When I entered graduate school, I wanted to become a therapist so I could help people who were hurting. I wanted to solve problems, give answers, and make things better, to take away pain. It didn’t take me long to realize that this wasn’t possible. My job was not about fixing, but about guiding, supporting, and listening.

Everyone — everyone — is broken. There is not a human on this earth who has not hurt, who is not damaged, or is not in pain. We don’t hurt in the same way, of course. And some people have suffered traumas that are hard to fathom...

One has to wonder what kind of trauma has broken the spirit of a nation--and especially the rich and powerful of that nation--that the nation would tolerate, nay, cheer on: wars of conquest and pillage and destruction; universal surveillance; slavery and starvation and oppression to the point of having to produce ID to vote!

Or a Nation. Or a World. Or the Human Race.

In order to be fair to other religions, let's add a few more:

The Texas Floods Are So Big They Ended the State’s Drought

Source: Wired

Texas really can’t seem to catch a break. A month ago, the Lone Star state was in the middle of a dry emergency: Its reservoirs were draining, its depleted aquifers were sucking in the earth above. As of Wednesday, though, the state is saturated. Four weeks of dousing storms have swept away property, roads, lives, and prompted governor Greg Abbott to declare 37 counties as disaster areas.

The devastation caused by these floods is heart-wrenching. But you could consider Texas’ weather whiplash to be a good thing: These dousing storms, which seem more and more like the consequence of a strengthening El Niño, have brought an end to a four-year water shortage. Just how much of a silver lining these floods are creating, though, depends on the particular geography of Texas’ different regions—it is a gigantic place, y’all. And the land’s composition also plays a crucial role in just how bad the flooding has gotten.

“Texas is a big state, and there is a big contrast in what happens when rain falls,” says Ronald Kaiser, a water expert at Texas A&M in College Station. There’s no perfect way to slice up the state’s water resources, but broadly, you can think of it in four parts.

East of highway I-35 to the Gulf Coast—crowned by Houston—is low and flat, with dense soils and a shallow clay layer that makes it easy to flood. This is where rain falls hardest, rivers run thickest, and most of the state’s reservoirs are located. “There’s a joke that if it’s overcast in Houston you’ll get flooding,” says Kaiser. Which is why things got so bad so quickly when 10 inches fell on the city Monday night. Talk about a punchline.

From a water supply standpoint, the storms were great for this part of the state. As you can see in the graphic on the left, every reservoir in the eastern part of the state is above 90 percent full (the graphic was updated May 28). But the area also set itself up for more devastating consequences from the rainfall, because during the drought east Texas water districts were pumping groundwater. This leads to so-called subsidence: The ground literally loses elevation as the water is sucked out from under it. Because it’s so low and flat there, even a foot of shrinkage can lead to a lot more standing water. Though subsidence has mostly stabilized in recent years, in the past parts the Houston area were sinking at rates up to three inches a year. Add that to .08 inches of sea level rise a year, and Houston was primed for flood...MORE

Read more: http://www.wired.com/2015/05/texas-floods-big-ended-states-drought/

Five hundred new fairytales discovered in Germany


A whole new world of magic animals, brave young princes and evil witches has come to light with the discovery of 500 new fairytales, which were locked away in an archive in Regensburg, Germany for over 150 years. The tales are part of a collection of myths, legends and fairytales, gathered by the local historian Franz Xaver von Schönwerth (1810–1886) in the Bavarian region of Oberpfalz at about the same time as the Grimm brothers were collecting the fairytales that have since charmed adults and children around the world.

Last year, the Oberpfalz cultural curator Erika Eichenseer published a selection of fairytales from Von Schönwerth's collection, calling the book Prinz Roßzwifl. This is local dialect for "scarab beetle". The scarab, also known as the "dung beetle", buries its most valuable possession, its eggs, in dung, which it then rolls into a ball using its back legs. Eichenseer sees this as symbolic for fairytales, which she says hold the most valuable treasure known to man: ancient knowledge and wisdom to do with human development, testing our limits and salvation.

Von Schönwerth spent decades asking country folk, labourers and servants about local habits, traditions, customs and history, and putting down on paper what had only been passed on by word of mouth. In 1885, Jacob Grimm said this about him: "Nowhere in the whole of Germany is anyone collecting so accurately, thoroughly and with such a sensitive ear." Grimm went so far as to tell King Maximilian II of Bavaria that the only person who could replace him in his and his brother's work was Von Schönwerth.

Von Schönwerth compiled his research into a book called Aus der Oberpfalz – Sitten und Sagen, which came out in three volumes in 1857, 1858 and 1859. The book never gained prominence and faded into obscurity...


Why So Many Jobs Are Crappy


I’ve been thinking about it. Work, being a core part of life, is meant to be interesting, engaging, and meaningful. Otherwise, why are we wasting our time on this planet? Yet, for many, work is not living up to its name. Work of the good kind is less and less on offer in the jobs being created. I’ve been reflecting on possible reasons why, and decided it’s really simple. The problem is not the jobs. It’s us. Most humans are simply not the kind of people a boss would want to hire. Take yourselves as a case in point. I’m guessing you’re the kind of people who’d prefer to feel needed rather than expendable. Well, that kind of attitude won’t do. Bosses want to keep your wages down, and that would be harder to do if you were given opportunities to make yourselves invaluable and near on irreplaceable. Bosses need to keep their options open in case some of you get ideas about better pay and conditions, or just generally become ‘difficult’ or, dare I say, ‘bolshie’. You know it’s true. A boss needs to be able to dump you at the drop of a hat. Maybe it’s to boost profits. Maybe it’s to cut costs. Or maybe it’s just because it feels good.

And a boss needs to be able to dump you without it having detrimental effects. There must be ready replacements, eager to crank it up, the moment you’re out the door. And if morale suffers, because the buddies you left behind miss you, the boss will want to send them packing too, and bring in a fresh batch of wage-slaves.

Quite simply, there is little place for satisfying roles, the kind where you get to learn more and more interesting stuff over time. The only good on-the-job learning is no learning at all. Or, if you must learn, thirty minutes tops to master a dead-end role. Although the point seems obvious, I don’t believe it has been treated with the kind of gravity that only the economics blogosphere is fully equipped to deliver. It’s high time the situation was spelled out in painstaking – okay, not painstaking – analytical terms. Then we can all lower our expectations and knuckle down to a lifetime of short-lived McJobs and frequent sackings. If we’re lucky.

One way to characterize a job is by the learning that occurs in it. This can be described by a learning curve:

In the diagram, u(t) stands for the unit labor cost that a worker – let’s say you – achieves at a given point in time, after you have built up an amount, t, of experience. It is how much you cost the employer per unit of output produced, at a given moment in time. We can call this the ‘instantaneous unit labor cost’, or sometimes just ‘efficiency’ for short. If learning occurs on the job, you get more and more efficient, and your unit labor cost falls over time. The curve is drawn assuming a particular wage level. If the wage increases, the curve will shift up.

On first being hired, you were green, and cost the bosses m + c per unit of output. Eventually, through learning on the job, you will get this down almost to m, which is your ‘potential efficiency’, given current pay and conditions. Some jobs will allow more learning than others, which will be reflected in the amount c, which is the ‘scope for learning’.

Here is one possible algebraic representation of the learning curve:

The second term is the one that captures the learning process. When you just start the job, t = 0, and the second term equals c. Just as shown in the diagram, you cost the bosses m + c per unit of output. The longer you stay in the job, the larger t gets, and the closer the second term gets to zero, which it approaches asymptotically. Your unit labor cost converges on m, as indicated in the diagram.

The rate at which you reduce your unit labor cost from m + c down to m depends on how fast learning can take place on the job. The ‘rate of learning’ is represented by λ. When λ is large, the learning curve will be very steep initially, and almost all the learning will occur just after being hired. When λ takes intermediate values, the learning process is steadier and longer lasting, reflected in a more gradual curvature in u(t).

McJobs are those where learning is either nonexistent or extremely rapid but short-lived. If there is no learning, c = λ = 0 and the learning curve would just be a horizontal straight line showing a constant unit labor cost of m. Rapid but short-lived learning would mean the learning curve slopes down almost vertically until m is nearly reached, then stays almost flat after that. It would probably take most of us a half shift to master flipping burgers, but after that we’d have it down pat. Bosses love McJobs. They make us readily replaceable.

Satisfying jobs – let’s call them ‘good jobs’ – will generally be ones where learning occurs at a steady pace more or less indefinitely, probably as part of a defined career path. Bosses would prefer not to offer these, and will always be looking for ways to deskill roles that, for now at least, need to allow workers greater autonomy, ingenuity, and scope for on-the-job learning.
Once you gain experience in a good job, you will soon become much more efficient in the role than an inexperienced replacement would be. This might remain true even if you happen to win a pay rise, work less hours, or start operating at a more leisurely – let’s say human – pace. Any of these things would shift your learning curve up, because you would now have a higher unit labor cost at any given level of experience. Even so, you might still be more efficient than a prospective replacement.


A Final Pet Peeve: The Right to Consumer Financial Industry Data


...Why does the government have to rely on commercially-collected financial industry data sets or voluntary surveys of financial firms to discover the effects of policies the government has put in place? This is just embarrassing. The U.S. government has so little power over the financial industry – an industry that only exists by virtue of the full faith and credit, payments systems, FDIC insurance, etc. provided by the U.S. government – that it cannot demand data from banks and financial firms, but instead must ask politely for voluntary survey answers or search the data market and pay for information like a commoner?

The CFPB fancies itself a “data-driven agency” but is subject to budgetary constraints in obtaining that data. Worse, it can only obtain the data the market chooses to provide, which is often a bunch of incomplete data sets that cover performance of only a sample of any particular financial product or that consist of voluntary unverified survey responses of industry members. Even more galling, some of those data purchases come with use restrictions. For example, it appears that the CFPB's recent report on student loans was based on data provided voluntarily by lenders, data which was stripped of identifying information before it was shared with the government not merely to protect individual borrowers but to prevent identification of any particular lender within the data. Other government agencies are often in the same position. The Government Accountability Office, for example, often relies on data in whatever form industry chooses to sell or voluntarily share it (see, e.g., GAO’s report to Congress on the potential impacts of Dodd-Frank’s mortgage provisions, which forecasts the effects of Dodd-Frank's loan structure and underwriting provisions discussed in one of my prior posts by applying them to mortgages originations between 2001 and 2010, relying on loan-level data purchased on the private data market, data that covers only part of the mortgage market and only some of the pertinent loan structure and underwriting details).

I remember back in 2003 when the Office of the Comptroller of the Currency suggested that the subprime mortgage loan market was price competitive and therefore not "predatory." The OCC based this conclusion in part on loan pricing and loss rate data from a single subprime lender. That lender had provided researchers with its claimed loss rate data from 2002 and with the interest rate sheets for 30-year fixed rate loans offered by that lender during a single week in 2002 for two subprime loan programs the lender ran in Colorado and Utah only. There was no evidence that any of this data was representative of subprime lending generally, or even of this particular lender's national portfolio or outside of the single week in which the rates were in effect.

How convenient for industry to be able to feed regulators the “data” it selects and restrict the use of that data as it sees fit. And if that data turns out less favorable than industry might have expected, it can then argue that any criticism of industry is based on “incomplete data.”

Each and every time the government issues, changes, or removes a regulation, industry should be required to report back with follow-up data, anonymized to protect individual consumer privacy, about which consumers have been affected by the change and how they have been affected. To the extent that trade secrets can be removed from the data, that data should be made available to the research community as well. No one can ever foresee all consequences of any regulatory change, or all the ways in which potentially affected parties might avoid the intended consequences. Particularly when a host of regulatory changes are made all at once, as in the Dodd-Frank regulations, vigilant monitoring of the effects is necessary to address the inevitable problems that will arise. Data alone will not yield all the answers; value-laden judgments are required because costs and benefits are rarely in commensurate currency. But exchanging data is no longer an expensive and time consuming proposition. Financial firms compile reams of data for their internal purposes, and the additional cost of sharing it with the government is almost certainly negligible. There is no need to deny the government the resources industry has. There is no need to regulate in complete dark when some light is available.

March 24, 2013



Dutch elm disease: Toronto DNA-mapping team gets closer to a cure for tree-killing fungus



Decades after Dutch elm disease spread to Canada, killing many of Toronto’s elm trees, researchers have mapped the genome of a fungus that causes it. Understanding the make-up of Ophiostoma ulmi could be a step toward halting future destruction, said Dr. Dinesh Christendat. The University of Toronto associate professor and molecular biologist is part of a team that spent two years mapping the 30-million-letter DNA chain.

“It opens up a multitude of opportunities for research around the world . . . now they can start understanding how it’s infecting these trees,” said Christendat, one of the authors of an article outlining the findings published last week in the journal BMC Genomics.

About 4.4 per cent of Toronto’s 10.2 million trees are elms, said Beth McEwen, the city’s manager of urban forest renewal. She estimated that, before the disease hit the city, elms were closer to 12 per cent of Toronto’s trees. The fungus, which often kills trees two years after infection, is thought to have originated in the Himalayas, hitting the Netherlands shortly after the First World War. In Canada, it was first detected in Quebec in 1945, after spreading from the United States. Eventually it would kill 80 per cent of Toronto’s 35,000 elms in a single year, according to federal research...elms in Toronto include the American, Slippery and Siberian varieties. The latter is resistant to the fungus, which interrupts nutrient distribution by blocking the flow of sap....Christendat said the idea of using the university’s sequencer to map the fungus genome was sparked over coffee with a colleague who focuses on forestry.

“Instead of trying to control the spread of the organism by restricting the movement of firewood and (infected) beetles, we could try to get rid of the fungus itself,” Christendat said, adding that research in Quebec is looking at a second variation of the Dutch elm disease fungus.

“It’s very important to protect (the elms) remaining.”

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