What’s one more distraction from the Tassie Project…?

18 03 2019

Life, as they say, gets in the way of the best laid plans, and this time, it has really gone out of its way…. the reason I haven’t written much here lately is due to the fact three weeks ago I fell off my rolling platform, landing on top of the short stepladder I use to climb onto it, breaking two ribs in the process. It sounds bad – and it’s not good – but it could have been a lot worse had I landed on my spine, or crashed to the concrete floor on my skull….

I spent one night in the Hobart Hospital where I was treated very well. A CT scan revealed ribs 9 and 11 broken, but fortunately, no internal injuries to my kidney or spleen…. I got off lightly, and it’ll be handy having an unbroken rib between the two that are..! You hear a lot of bad stories about the state of the Tasmanian health system on the news, but I have no complaints. They drugged me to the eyeballs, what more could you ask for?

It’s my poor wife who’d only been here a week and forced to smoothly transition from going on ambulance rides with her mother and pushing her around in a wheelchair, to doing it for me that I feel sorry for….

I was seriously surprised at how painful it all was, so much so I could not walk at all for the first couple of days, relying on a wheelchair; but day by day I’ve been improving, even walking the whole 300m to the house site within a week to check on what poor old Gerard, my current wwoofer, has been up to without me. Sometimes I’m so lucky with wwoofers, it’s unbelievable. Gerard usually works for the French Antarctic base as chief ‘fix it’ man….. he’s a boilermaker by trade, but got his plumbing ticket to get the job in Antarctica, and is a methodical worker who knows enough about carpentry to make him extremely valuable here at the moment…. there will be more about this…..

I’m slowly improving, and can now even climb ladders again, even lift sheets of iron on the roof, with the right technique, but I’m told it’ll easily take another three weeks before I’m even close to 100%… at least I’m mostly off the heavy duty painkillers, and that’s a plus.

The rolling platform, with the stepladder beneath on which I could have easily broken my back…. much safer with the brakes on.

Time to rethink monetary policy

15 02 2019

How this great article went under my radar, I do not know……. another classic from the Consciousness of Sheep.

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When the first stuffed platypus was presented to European scientists, they dismissed it.  “What we have here,” they opined, “is some unfortunate lutrinae onto which some scoundrel has attached various anatidae parts.”  And so the innocent little platypus, which had been minding its own business until the European explorers arrived, was placed on the same zoological shelf as the Yeti.

The European scientists, you see, had a model.  A map of how the world’s animal species were ordered.  At the apex, predictably, were humans themselves.  Beneath them were anatomically similar apes and monkeys; followed by cats, dogs, pigs, etc.  What all of these “higher” species had in common, however, was that they were all mammals – creatures that carry their young in an internal womb, and that suckle them with milk.  This distinguished them from other, dissimilar species like birds, reptiles, amphibians and insects.

Then along comes this upstart platypus, not just looking like it possesses bird parts, but having the audacity to lay eggs!  For several decades, despite growing evidence that platypuses were real, European scientists continued to dismiss these reported sightings as fake news.  The platypus was an unfortunate intrusion into the scientists’ neatly ordered model of how the world worked.  Despite the philosophy of science demanding that a fact – like the existence of a platypus – that disproves a model is the very essence of falsifiability, the scientists chose to reject the fact rather than deconstruct and rebuild their model.

The same European scientists later – and infamously – rejected evidence for the existence of one of the platypus’s neighbours… the black swan… which brings us to a modern pseudoscience that also famously rejects reality in order to preserve the models that it has spent decades finessing.

Economic models have already proved their – very negative – worth in the worst possible way in the shape of the 2008 financial crash and the ensuing global depression.  This ought to have been enough for the entire economics profession to be given their marching orders and afforded their true place alongside aromatherapists, astrologers and homeopaths.  However, in 2008, governments lacked any acceptable alternative.  So despite knowing that an economic forecast was of equal value to flipping a coin, they put the same economists who had broken the system in charge of fixing it.

The economists did no such thing, of course.  The financial crisis of 2008 was the platypus of our age; something so out of step with the models that it could not reasonably be incorporated into them.  They even used the term “black swan” to describe it.

Any examination of the real economy over centuries, however, demonstrates that cyclical period of boom and bust – frequently punctuated by major financial crashes – are in fact the norm.  It is the so-called “Great Moderation” in the economists’ model that is the aberration… the thing so out of step with reality that it can reasonably be dismissed as fake news.

This, however, is merely the most obvious flaw in an economic model that is based on anomalies.  Most importantly, almost everything that economists are taught about how the economy works is based on what happened in the course of the two decade long mother of all anomalies; the post war boom 1953-1973.  As historian Paul Kennedy explains:

“The accumulated world industrial output between 1953 and 1973 was comparable in volume to that of the entire century and a half which separated 1953 from 1800.  The recovery of war-damaged economies, the development of new technologies, the continued shift from agriculture to industry, the harnessing of national resources within ‘planned economies,’ and the spread of industrialization to the Third World all helped to effect this dramatic change.  In an even more emphatic way, and for much the same reasons, the volume of world trade also grew spectacularly after 1945…”

In other words, economic modelling based on how the economy operated in the decades prior to the First World War might provide a closer fit to the real world in 2018.  The same is true for interest rates. As political economist Mark Blyth has shown, economists have modelled interest rates on the two decades around the historical high point in 1981.  However, for the entire period following the introduction of derivatives by the Dutch in the sixteenth century, the average interest rate is below four percent.

This is no trifling academic issue.  Interest rates have become the primary means by which economists – to whom our politicians have handed the leavers [I can’t make up my mind whether this is a typo, a Freudian slip, or a very clever pun!] of power – seek to manage the economy.  The aim of “monetary policy” being to raise interest rates sufficiently high to prevent a recurrence of the inflation of the 1970s, while keeping them sufficiently low that they do not trigger or exacerbate a repeat of the 2008 crash.

The problem with this as of 2018 is that despite close to zero percent interest rates – and trillions of dollars, euros, pounds and yen in stimulus packages – the rate of inflation has barely moved.  Indeed, with growth rates stalling in the USUK and Eurozonedeflation is more likely than inflation.  Despite this, the Federal Reserve, Bank of England and European Central Bank remain committed to raising interest rates and reversing quantitative easing… because that is what their model tells them that they should do.

Central to the model is a belief – based on those anomalous decades when we had growth on steroids and interest rates to match – that employment causes inflation.  So with the official rate of unemployment in the USA standing at 4.1 percent and the UK at 4.2 percent, the model is telling the economists at the central banks that inflation is already running out of control… even though it isn’t.  As Constance Bevitt, quoted in the New York Times puts it:

“When they talk about full employment, that ignores almost all of the people who have dropped out of the economy entirely. I think that they are examining the problem with assumptions from a different economic era. And they don’t know how to assess where we are now.” [It’s occurred to me that lots of baby boomers, such as myself, have now retired and dropped out of ‘the workforce’, and none of this is taken into account…]

Larry Elliott at the Guardian draws a similar conclusion about the UK:

“Britain’s flexible labour market has resulted in the development of a particular sort of economy over the past decade: low productivity, low investment and low wage. Since the turn of the millennium, business investment has grown by about 1% a year on average because companies have substituted cheap workers for capital. Labour has become a commodity to be bought as cheaply as possible, which might be good for individual firms, but means people have less money to buy goods and services – a shortfall in demand only partly filled by rising levels of debt. The idea that everyone is happy with a zero-hour contract is for the birds.

“Workers are cowed to an extent that has surprised the Bank of England. For years, the members of Threadneedle Street’s monetary policy committee (MPC) have been expecting falling unemployment to lead to rising wage pressure, but it hasn’t happened. When the financial crisis erupted in August 2007, the unemployment rate was 5.3% and annual wage growth was running at 4.7%. Today unemployment is 4.2% and earnings are growing at 2.8%.”

This is a very different economy to the one that operated between 1953 and 1973; a time when the workers’ share of productivity rose consistently.  In those days a semi-skilled manual worker had a sufficient wage to buy a home, support a family, run a car and afford a holiday.  In 2018, a semi-skilled manual worker living in the UK depends upon foodbanks and tax credits to remain solvent.

In short, despite mountains of evidence that the economists’ model bears no relation to the real world, like their nineteenth century zoological counter parts, they continue to reject any evidence that disproves the model as fake news.  One obvious reason for this is that all of us – whatever our specialisms – get a sinking feeling of despondency when some inconvenient fact comes along to tell us that it is time to go back to the drawing board.  Understandably, we test the inconvenient fact to destruction before deconstructing our models.  But even when the fact proves sufficiently resilient to be considered to be true, there remains the temptation to sweep it under the proverbial carpet and pretend that nothing is amiss.

There is, however, another reason why so many economists spend so many of their waking hours studiously ignoring reality when it whacks them over the head with the force of a steam hammer.  They simply do not see it.  That is, if you are on the kind of salary enjoyed by a member of one or other monetary policy committee, your lived experience will be so removed from the experience of ordinary working (and not working) people that you simply refuse to believe them when – either by anecdote or statistic – they inform you of just how bad things are down on Main Street.

The two proposed solutions to this latter problem involve the question of diversity.  Among its other work, the campaign group Positive Money has highlighted the race and gender disparity at the Bank of England.  However, were we to just swap some white male mainstream economists for some equivalent BME and female mainstream economists, this is unlikely to have much impact.  A second approach to diversity from radical economists such as Ann Pettifor is to break up the neoclassical economists’ monopoly by bringing in economists from different schools of economics.

Arguably, however, neither of these proposed solutions would be sufficient to solve the problem of economists refusal to allow facts to stand in the way of their models.  For this, something even more radical is required – a complete rethink of the way monetary policy is made.  The 2008 crash and the decade of near stagnation for 80 percent of us that followed has demonstrated that the approach of handing economic policy to technocrats has failed.  The unelected Bank of England or Federal Reserve Chairman can no longer be allowed to be the final authority.  Policy must ultimately reside with elected representatives  whose jobs are on the line if they mess up.

Of course it is entirely reasonable that our representatives base their decisions on the advice and recommendations of experts.  It is here that real diversity is required.  Not merely swapping white male economists for black female ones, or opening the door just wide enough for some token contrarian economists.  Rather, what is needed is for monetary policy committees to encompass a range of specialisms far beyond economics and the social sciences, together with representatives from trades unions, charities and business organisations that are more in touch with the realities of life in the real economy.

None of this is about to happen any time soon; not least because nobody voluntarily relinquishes power and privilege.  But another crisis is brewing; and there are signs that it will be bigger than 2008.  And when that crisis bursts over us, this time around we need to put these changes in place before the economists rally round and persuade our craven politicians that there is no alternative… because there is.

Playing chicken with Armageddon….

26 01 2019

It all started over a week ago when a thunderstorm came through Geeveston. At the time it all seemed exciting, because I hadn’t seen a thunderstorm since leaving Queensland over three years ago; the problem is, unlike up north where such storms usually bring torrential rain, this one released 0.5mm of precipitation, and the lightning strikes started fires all over the place. Those closest to Geeveston were quickly put out, but four others way out in the forest on the other side of the Huon River past the Tahune tourist attraction became uncontrollable, recently joining up to form one big fire…….

Smoke started invading the Huon Valley, not particularly bad to begin with, but by last Tuesday my Iranian wwoofer who had had a lot of experience with very bad air quality in Teheran said we should leave when the particulates index hit 214….. He even introduced me to air quality websites where you can monitor these issues; I’d never even heard of them before because air quality is not something I normally concern myself in the pristine air of Southern Tasmania.

Where’s my pristine air gone…? And now the choppers are filling up with our water….

Little did we know, things were going to get worse, a lot worse…… by the time we left, the index had risen to over 460, and Geeveston had the worst air quality in the world……

Chloe, a French wwoofer who was here when Glenda arrived in November had returned for a quick look see at how the work she’d done had progressed. By the time we’d walked half way to the house site, my lungs hurt and I was puffing….. I escaped to Hobart and stayed with a friend. The next day, the index had risen to a staggering 800….. you can’t make this shit up, honestly, because later, Cygnet’s index went up to 1100! And it’s on the other side of the estuary! Don’t ask, I don’t know…..

Before returning to prepare for the obvious looming fire disaster which was all over the news, I spent $100 on a mask capable of filtering out P2 (2 microns) particles. I was amazed at how well it worked, it allowed me to work all day cutting grass and moving stuff all day long. It was hot and sweaty, but beat the hell out of sore lungs and life shortening exposure.

By then we were warned it would be safer to leave than stay behind to protect property. My shed’s built out of firewood, is on stilts – fortunately at the NE corner where the fire wasn’t coming from, but all the same ember attacks are what one has to worry about.

I set up and tested sprinklers to soak the area, and the pump near the power station was on for days at a time running 6 to 10 hours a day depending on the availability of sunlight. All the utes are parked up there too, near the dam where it’s most unlikely fire would reach.

Luckily, my neighbour Matt has many acres under apples which when irrigated don’t burn. His farm will be a good buffer in the event of all out Armageddon…..

After attending a community meeting packed to the rafters (they had to hold a second one because the hall was way too small) and being told that Friday was going to be hell on Earth with 35 degrees and 50 to 70 km/h winds and burning embers falling out of the sky, I decided discretion was the better part of valor, and packed little Suzie with all sorts of assorted stuff and left.

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The weather was supposed to get angry from 5am, but nothing of the sort happened. So I drove back to Geeveston to do more preparation. The air was even way cleaner than that other awful day. I had a chat with Matt and decided to go back to Hobart. Next day, I went back again. We had 30 ducklings hatch just before all this happened, and if they were still alive I wasn’t going to let all that effort go to waste. I even moved about 10 lengths of 8×2 rafters I need to finish the house’s roof structure into the container; timber like that doesn’t come easily.

Some of the crap that was falling out of the sky….

As in war, it seems the first victim of bushfires is the truth…… the unbelievable array of conflicting information appearing on not just social media but even the ABC news was bewildering. This morning, we were told the fire had reached Costains Road, just half a km away, when in fact it was much farther away at Bennetts Road, with the ABC later publishing a retraction online…..

The red dot is where we live….

The best info I received was actually from my neighbour who decided to stay as long as possible, and is still there…… he even texted me a firey’s map (we call firefighters fireys here!) he photographed that showed just how close the fire actually was at 10am this very morning….. then the wind changed. Tassie’s fickle weather at it again. ALL the pollution, which went from zero to 600 and back again in a few hours disappeared when the SE wind took off. Unfortunately, it won’t last, the NW winds will be back Monday.

He’s just texted me the choppers are filling up from our dam…..!!

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The real heroes, our fireys…….

The latest news is that it’s safe to come home again, but to not be complacent.

Let me tell you, I’m sick of playing chicken with Armageddon…… and it’s not over ’til the Fat Lady sings. Tomorrow I’ll be back on deck to check my ducks are OK…… and now check the water level in the dam.

The real tragedy, however, is the potential damage, if not disappearance, of Tasmania’s unique and pristine ecosystems…… I can build a new shed, you can’t replace this stuff…

It’s Too Late to Brace for Impact

14 12 2018

Here, in the 18th year of the New Millennium, the 28th Year of Our Internet (delivering unlimited information to all), and the 30th year of the Great Harangue over Climate Change (dating it from James Hansen’s testimony to the Senate), this is where we are:

  • The world’s emissions of greenhouse gases — the kinds of pollution that trap solar radiation like greenhouse windows and heat the climate — not only increased in 2018, but increased faster, setting a new all time record — despite the wildly hyped growth of “renewable” energy sources — according to two new studies published last week. Scientists said the emissions’ growth and the resulting acceleration of climate change, resembles a “speeding freight train.”  
  • The world’s people bought more cars, and drove them farther, in 2018 than in any year in history, driving oil consumption up for the fifth consecutive year despite the advent of hybrid and electric vehicles.
  • In November the Trump White House published findings by 13 Federal agencies and hundreds of scientists concluding that climate change is well under way and will cost the economy hundreds of billions of dollars by the end of the century. Never mind the millions of deaths, the migrations, the homelessness, the dislocations — we have to put a dollar value on it to pay any attention to it. Asked what he thought of the report, President Trump said “I don’t believe it.”
  • In October the UN’s Intergovernmental Panel on Climate Change issued an alarming report warning that greenhouse gas emissions are rising so fast that they will cause widespread food shortages, wildfires, coastal flooding and population displacement, not by the end of the century, but by 2040. One of the latest studies — the “speeding freight train” one — says all those effects may be seen by 2030. That would be just over 11 years from now
  • Last week, the Climate Change Conference meeting in Poland — this is among other things the conference of 200 nations that agreed to and is trying to implement the Paris Agreement on how to combat climate change — refused to adopt the October IPCC report on objections by the United States, Saudi Arabia, Russia and Kuwait. Thus what one major international UN organization had concluded about the facts of climate change were deliberately ignored by another major international UN organization working on climate change.
  • Last week, France cancelled a planned increase in taxation of fossil fuels, part of a four year effort to reduce carbon emissions and slow global warming. Carbon taxes have long been advocated as one of the few effective things government could to to reduce emissions. The prospect of this tax ignited violent protests by thousands of so-called “yellow vest” demonstrators who threatened to destabilize the country, and continue to do so after the cancellation of the fuel tax.  

The secretary general of the United Nations, Antonio Guterres, told the climate change conference in Poland now in session, “We are in trouble. We are in deep trouble with climate change.” He went on to say, as hundreds of scientists and bureaucrats before him have said, that we are not doing enough. But he’s dead wrong about that. We are not doing anything. We are making it worse, faster. In part by jetting hundreds and thousands of people hither and yon around the world to conduct endless air-conditioned meetings on what we might think about doing, if we were ever going to do anything.  

Here’s how I would put it: forget Brace for Impact, it’s way too late for that. What we need to do now, collectively, is bend over, take a firm grip on our knees, and …. well, you know the rest.

From Tom Lewis’ Brace for Impact website….


30 11 2018

Over the years, I’ve written a fair bit about debt and how the only way out is a Jubilee…. well, Michael Hudson, someone whose podcasts I now listen to religiously, has written a whole book about this subject. Here’s a review of the book I must buy myself……

A Review of Michael Hudson’s new book
…. and Forgive Them Their Debts

As published on Naked Capitalism

by John Siman

To say that Michael Hudson’s new book And Forgive Them Their Debts: Lending, Foreclosure, and Redemption from Bronze Age Finance to the Jubilee Year (ISLET 2018) is profound is an understatement on the order of saying that the Mariana Trench is deep. To grasp his central argument is so alien to our modern way of thinking about civilization and barbarism that Hudson quite matter-of-factly agreed with me that the book is, to the extent that it will be understood, “earth-shattering” in both intent and effect. Over the past three decades, gleaned (under the auspices of H


arvard’s Peabody Museum) and then synthesized the scholarship of American and British and French and German and Soviet assyriologists (spelled with a lower-case a to denote collectively all who study the various civilizations of ancient Mesopotamia, which include Sumer, the Akkadian Empire, Ebla, Babylonia, et al., as well as Assyria with a capital A). Hudson demonstrates that we, twenty-first century globalists, have been morally blinded by a dark legacy of some twenty-eight centuries of decontextualized history. This has left us, for all practical purposes, utterly ignorant of the corrective civilizational model that is needed to save ourselves from tottering into bleak neo-feudal barbarism.

This corrective model actually existed and flourished in the economic functioning of Mesopotamian societies during the third and second millennia B.C. It can be termed Clean Slate amnesty, a term Hudson uses to embrace the essential function of what was called amargi and níg-si-sá in Sumerian, andurārum and mīšarum in Akkadian (the language of Babylonia), šudūtu and kirenzi in Hurrian, para tarnumar in Hittite, and deror (דְּרוֹר) in Hebrew: It is the necessary and periodic erasure of the debts of small farmers — necessary because such farmers are, in any society in which interest on loans is calculated, inevitably subject to being impoverished, then stripped of their property, and finally reduced to servitude (including the sexual servitude of daughters and wives) by their creditors, creditors. The latter inevitably seek to effect the terminal polarization of society into an oligarchy of predatory creditors cannibalizing a sinking underclass mired in irreversible debt peonage. Hudson writes: “That is what creditors really wanted: Not merely the interest as such, but the collateral — whatever economic assets debtors possessed, from their labor to their property, ending up with their lives” (p. 50).

And such polarization is, by Hudson’s definition, barbarism. For what is the most basic condition of civilization, Hudson asks, other than societal organization that effects lasting “balance” by keeping “everybody above the break-even level”?

“Mesopotamian societies were not interested in equality,” he told me, “but they were civilized. And they possessed the financial sophistication to understand that, since interest on loans increases exponentially, while economic growth at best follows an S-curve. This means that debtors will, if not protected by a central authority, end up becoming permanent bondservants to their creditors. So Mesopotamian kings regularly rescued debtors who were getting crushed by their debts. They knew that they needed to do this. Again and again, century after century, they proclaimed Clean Slate Amnesties.”

Hudson also writes:

“By liberating distressed individuals who had fallen into debt bondage, and returning to cultivators the lands they had forfeited for debt or sold under economic duress, these royal acts maintained a free peasantry willing to fight for its land and work on public building projects and canals…. By clearing away the buildup of personal debts, rulers saved society from the social chaos that would have resulted from personal insolvency, debt bondage, and military defection” (p. 3).

Marx and Engels never made such an argument (nor did Adam Smith for that matter). Hudson points out that they knew nothing of these ancient Mesopotamian societies. No one did back then. Almost all of the various kinds of assyriologists completed their archaeological excavations and philological analyses during the twentieth century. In other words, this book could not have been written until someone digested the relevant parts of the vast body of this recent scholarship. And this someone is Michael Hudson.

So let us reconsider Hudson’s fundamental insight in more vivid terms. In ancient Mesopotamian societies it was understood that freedom was preserved by protecting debtors. In what we call Western Civilization, that is, in the plethora of societies that have followed the flowering of the Greek poleis beginning in the eighth century B.C., just the opposite, with only one major exception (Hudson describes the tenth-century A.D. Byzantine Empire of Romanos Lecapenus), has been the case: For us freedom has been understood to sanction the ability of creditors to demand payment from debtors without restraint or oversight. This is the freedom to cannibalize society. This is the freedom to enslave. This is, in the end, the freedom proclaimed by the Chicago School and the mainstream of American economists. And so Hudson emphasizes that our Western notion of freedom has been, for some twenty-eight centuries now, Orwellian in the most literal sense of the word: War is Peace • Freedom is Slavery • Ignorance is Strength. He writes:

“A constant dynamic of history has been the drive by financial elites to centralize control in their own hands and manage the economy in predatory, extractive ways. Their ostensible freedom is at the expense of the governing authority and the economy at large. As such, it is the opposite of liberty as conceived in Sumerian times” (p. 266).

And our Orwellian, our neoliberal notion of unrestricted freedom for the creditor dooms us at the very outset of any quest we undertake for a just economic order. Any and every revolution that we wage, no matter how righteous in its conception, is destined to fail.

And we are so doomed, Hudson says, because we have been morally blinded by twenty-eight centuries of deracinated, or as he says, decontextualized history. The true roots of Western Civilization lie not in the Greek poleis that lacked royal oversight to cancel debts, but in the Bronze Age Mesopotamian societies that understood how life, liberty and land would be cyclically restored to debtors again and again. But, in the eighth century B.C., along with the alphabet coming from the Near East to the Greeks, so came the concept of calculating interest on loans. This concept of exponentially-increasing interest was adopted by the Greeks — and subsequently by the Romans — without the balancing concept of Clean Slate amnesty.

So it was inevitable that, over the centuries of Greek and Roman history, increasing numbers of small farmers became irredeemably indebted and lost their land. It likewise was inevitable that their creditors amassed huge land holdings and established themselves in parasitic oligarchies. This innate tendency to social polarization arising from debt unforgiveness is the original and incurable curse on our post-eighth-century-B.C. Western Civilization, the lurid birthmark that cannot be washed away or excised. In this context Hudson quotes the classicist Moses Finley to great effect: “…. debt was a deliberate device on the part of the creditor to obtain more dependent labor rather than a device for enrichment through interest.” Likewise he quotes Tim Cornell: “The purpose of the ‘loan,’ which was secured on the person of the debtor, was precisely to create a state of bondage” (p. 52 — Hudson earlier made this point in two colloquium volumes he edited as part of his Harvard project: Debt and Economic Renewal in the Ancient Near East, and Labor in the Ancient World).

Hudson is able to explain that the long decline and fall of Rome begins not, as Gibbon had it, with the death of Marcus Aurelius, the last of the five good emperors, in A.D. 180, but four centuries earlier, following Hannibal’s devastation of the Italian countryside during the Second Punic War (218-201 B.C.). After that war the small farmers of Italy never recovered their land, which was systematically swallowed up by the prædia (note the etymological connection with predatory), the latifundia, the great oligarchic estates: latifundia perdidere Italiam (“the great estates destroyed Italy”), as Pliny the Elder observed. But among modern scholars, as Hudson points out, “Arnold Toynbee is almost alone in emphasizing the role of debt in concentrating Roman wealth and property ownership” (p. xviii) — and thus in explaining the decline of the Roman Empire.

“Arnold Toynbee,” Hudson writes, “described Rome’s patrician idea of ‘freedom’ or ‘liberty’ as limited to oligarchic freedom from kings or civic bodies powerful enough to check creditor power to indebt and impoverish the citizenry at large. ‘The patrician  aristocracy’s monopoly of office after the eclipse of the monarchy [Hudson quotes from Toynbee’s book Hannibal’s Legacy] had been used by the patricians as a weapon for maintaining their hold on the lion’s share of the country’s economic assets; and the plebeian majority of the Roman citizen-body had striven to gain access to public office as a means to securing more equitable distribution of property and a restraint on the oppression of debtors by creditors.’ The latter attempt failed,” Hudson observes, “and European and Western civilization is still living with the aftermath” (p. 262).

Because Hudson brings into focus the big picture, the pulsing sweep of Western history over millennia, he is able to describe the economic chasm between ancient Mesopotamian civilization and the later Western societies that begins with Greece and Rome: “Early in this century [i.e. the scholarly consensus until the 1970s] Mesopotamia’s debt cancellations were understood to be like Solon’s seisachtheia of 594 B.C. freeing the Athenian citizens from debt bondage. But Near Eastern royal proclamations were grounded in a different social-philosophical context from Greek reforms aiming to replace landed creditor aristocracies with democracy. The demands of the Greek and Roman populace for debt cancellation can rightly be called revolutionary [italics mine], but Sumerian and Babylonian demands were based on a conservative tradition grounded in rituals of renewing the calendrical cosmos and its periodicities in good order. The Mesopotamian idea of reform had ‘no notion [Hudson is quoting Dominique Charpin’s book Hammurabi of Babylon here] of what we would call social progress. Instead, the measures the king instituted under his mīšarum were measures to bring back the original order [italics mine]. The rules of the game had not been changed, but everyone had been dealt a new hand of cards’” (p. 133).

Contrast the Greeks and Romans: “Classical Antiquity,” Hudson writes, “replaced the cyclical idea of time and social renewal with that of linear time. Economic polarization became irreversible, not merely temporary” (p. xxv). In other words: “The idea of linear progress, in the form of irreversible debt and property transfers, has replaced the Bronze Age tradition of cyclical renewal” (p. 7).

After all these centuries, we remain ignorant of the fact that deep in the roots of our civilization is contained the corrective model of cyclical return – what Dominique Charpin calls the “restoration of order” (p. xix). We continue to inundate ourselves with a billion variations of the sales pitch to borrow and borrow, the exhortation to put more and more on credit, because, you know, the future’s so bright I gotta wear shades.

Nowhere, Hudson shows, is it more evident that we are blinded by a deracinated, by a decontextualized understanding of our history than in our ignorance of the career of Jesus. Hence the title of the book: And Forgive Them Their Debts and the cover illustration of Jesus flogging the moneylenders — the creditors who do not forgive debts — in the Temple. For centuries English-speakers have recited the Lord’s Prayer with the assumption that they were merely asking for the forgiveness of their trespasses, their theological sins: “… and forgive us our trespasses, as we forgive those who trespass against us….” is the translation presented in the Revised Standard Version of the Bible. What is lost in translation is the fact that Jesus came “to preach the gospel to the poor … to preach the acceptable Year of the Lord”: He came, that is, to proclaim a Jubilee Year, a restoration of deror for debtors: He came to institute a Clean Slate Amnesty (which is what Hebrew דְּרוֹר connotes in this context).

So consider the passage from the Lord’s Prayer literally: … καὶ ἄφες ἡμῖν τὰ ὀφειλήματα ἡμῶν: “… and send away (ἄφες) for us our debts (ὀφειλήματα).” The Latin translation is not only grammatically identical to the Greek, but also shows the Greek word ὀφειλήματα revealingly translated as debita: … et dimitte nobis debita nostra: “… and discharge (dimitte) for us our debts (debita).” There was consequently, on the part of the creditor class, a most pressing and practical reason to have Jesus put to death: He was demanding that they restore the property they had rapaciously taken from their debtors. And after His death there was likewise a most pressing and practical reason to have His Jubilee proclamation of a Clean Slate Amnesty made toothless, that is to say, made merely theological: So the rich could continue to oppress the poor, forever and ever. Amen.

Just as this is a profound book, it is so densely written that it is profoundly difficult to read. I took six days, which included six or so hours of delightful and enlightening conversation with the author himself, to get through it. I often availed myself of David Graeber’s book Debt: The First 5,000 Years when I struggled to follow some of Hudson’s arguments. (Graeber and Hudson have been friends, Hudson told me, for ten years, and Graeber, when writing Debt; The First 5,000 Years, relied on Hudson’s scholarship for his account of ancient Mesopotamian economics, cf. p. xxiii). I have written this review as synopsis of the book in order to provide some help to other readers: I cannot emphasize too much that this book is indeed earth-shattering, but much intellectual labor is required to digest it.

ADDENDUM: Moral Hazard
When I sent a draft of my review to a friend last night, he emailed me back with this question:
— Wouldn’t debt cancellations just take away any incentive for people to pay back loans and, thus, take away the incentive to give loans? People who haven’t heard the argument before and then read your review will probably be skeptical at first.

Here is Michael Hudson’s response:
— Creditors argue that if you forgive debts for a class of debtors – say, student loans – that there will be some “free riders,” and that people will expect to have bad loans written off. This is called a “moral hazard,” as if debt writedowns are a hazard to the economy, and hence, immoral.

This is a typical example of Orwellian doublespeak engineered by public relations factotums for bondholders and banks. The real hazard to every economy is the tendency for debts to grow beyond the ability of debtors to pay. The first defaulters are victims of junk mortgages and student debtors, but by far the largest victims are countries borrowing from the IMF in currency “stabilization” (that is economic destabilization) programs.

It is moral for creditors to have to bear the risk (“hazard”) of making bad loans, defined as those that the debtor cannot pay without losing property, status or becoming insolvent. A bad international loan to a government is one that the government cannot pay except by imposing austerity on the economy to a degree that output falls, labor is obliged to emigrate to find employment, capital investment declines, and governments are forced to pay creditors by privatizing and selling off the public domain to monopolists.

The analogy in Bronze Age Babylonia was a flight of debtors from the land. Today from Greece to Ukraine, it is a flight of skilled labor and young labor to find work abroad.

No debtor – whether a class of debtors such as students or victims of predatory junk mortgages, or an entire government and national economy – should be obliged to go on the road to and economic suicide and self-destruction in order to pay creditors. The definition of statehood – and hence, international law – should be to put one’s national solvency and self-determination above foreign financial attacks. Ceding financial control should be viewed as a form of warfare, which countries have a legal right to resist as “odious debt” under moral international law.

The basic moral financial principal should be that creditors should bear the hazard for making bad loans that the debtor couldn’t pay — like the IMF loans to Argentina and Greece. The moral hazard is their putting creditor demands over the economy’s survival.

Peak Oil & Drastic Oil Shortages Imminent: IEA

24 11 2018

While the IEA got a lot of coverage for its World Energy Outlook 2018 (WEO 18), there might be a little snippet that got way underappreciated. (from Cleantechnica)

On page 159 of its Outlook, accessible only behind a payment barrier, the following graph can be found:


It is clear to see that Peak Oil will be hit well before 2020, while demand keeps on rising, unless the world’s Oil Majors and State Owned Oil Companies would massively invest in new exploration, according to the IEA.

However, the Oil Majors did already heavily spend on new oil exploration in the years after 2000, where a fossil fuel hype with an accompanying coal boom lead up to an oil price of over $150 in 2008. While this oil price proved unsustainable for a crashing world economy, this oil exploration boom lead to very little new findings in the big scheme of things:

So what does that mean?

It means that a collapse of oil supply to half of its current size within only six years simply cannot be compensated by new oil findings and certainly not by unconventional oil sources like oil sands and fracking. That the Oil Majors did not pick up with new oil exploration after the oil price rose again to $100 per barrel in the years after 2008 is another sign that the world is already “overexplored,” as geologists put it. Instead the Oil Majors concentrated on a stock buyback, knowing full well that further exploration would be a waste of money while they are sitting on oil that will become very valuable even though the amount of oil they will extract will decline significantly.

In summary, the Oil Majors and State Owned Oil Companies (in this field notably the Initial Public Offering (IPO) of Saudi-Aramco, the world’s biggest oil company, has been scrubbed) are waiting for an oil price bonanza to happen, while the IEA is very concerned about future oil supply.

While the IEA has no credibility left when it comes to renewables (see following graph), because its forecasts historically have all been absurdly wrong, the IEA should possess some knowledge in the oil business and especially concerning the decline rates of existing conventional fields, which have been studied in depths for decades.

Notably the Peak Oil graph from the IEA (first graph in this article) has been unearthed by the Association of Study of Peak Oil and Gas (ASPO), which as an organization has itself published multiple studies on Peak Oil. While ASPO has put Peak Oil sooner than the IEA, in its latest study already at 2011 for conventional crude, it is remarkable that the IEA refuted this claim back then with the statement that Peak Oil would not be reached before 2020. Well, it surely looks like they corrected that statement for themselves now.

So what does that mean for investors in oil and the world economy?

Surely there could a handsome profit be made by riding the coming oil shortages, but one has to keep in mind that while the oil price may go through the roof, the barrels that can be sold also shrink fast and drastically. So there remains the question of how high the profits of the Oil Majors will rise and how much will this be appreciated by the stock price for these clearly dying companies. Furthermore, with these rapid stock swings, you compete with banking supercomputers that act in a millisecond timeframe, so you would have to be alert night and day for the point when the crash will come because of the world economy not being able to take the oil price anymore. As a conservative long term investor, this can only mean to get out of these stocks as soon as possible, while risk-loving investors can try to make a quick buck on the coming stock volatility, with the world economy crashing a couple of times due to ongoing undersupply in oil.

For the climate, this is excellent news, because the adoption of electric vehicles and clean transport in general will get a major boost and surely blow all current predictions out of the water. As an investor this is imho, where your money should be.

About the author: Dr. Harry Brinkmann got a Ph. D. in Physics in the working group “Applied Physics” from the Justus-Liebig-University in Gießen. In his free time he is contributing to working groups of Bündnis90/Die Grünen such as Bundesarbeitsgemeinschaft Energie (Federal working group energy) and likes arguing with people online over energy solutions and a sustainable future. Based in Berlin, he also writes and publishes German novels. 

Musings on motoring……

21 11 2018

It’s been pouring rain here in the last 24 hours, and the quagmire is making it rather difficult to do much around the place, especially grass cutting, which I have been doing almost non stop for two weeks now…. I need a day off, and so I’m writing…

The trip down in Glenda’s Little Suzi had me thinking about just how much cars have improved since I was a boy. My first memory of any car in the family was when my father got a job as a rep selling something or other, and his ‘company car’ was a Renault 4CV. I just cannot imagine anyone today being given anything remotely as small as that as a ‘company car’!

4CVI remember my dad raving about how good this car was with petrol and how enthusiastically he used to drive it around, even rolling it on its side once on icy roads in Haute Savoie…..  it was so light, he and his companion simply lifted it back on its wheels and drove off, with hardly any damage. No one got hurt either, even though seat belts hadn’t even been thought of back in ~1957, let alone air bags……..

To cut to the chase, when I was 16, my grandmother bought me one of these cars – I was too young to even get a learner’s permit, but back then you could get away with murder!

It cost the grand sum of $90. I learned to drive in this car, covering untold miles before eventually getting my licence.

My only memories of this little car was just how crude it was. Three speed gearbox, no heater, terrible handling, no power whatsoever, with a top speed that doesn’t allow it to even get a nought to sixty time! By today’s motoring standards, it was a total piece of crap, especially compared to the Suzuki Alto.

So out of interest, I thought I’d look up just how well this car did regarding fuel consumption, and to my amazement, they average 5.7L/100km. There was only one other car that could better that back then, Citroen’s 2CV which was even smaller and cruder, sporting a 360cc air cooled flat twin engine. They had a top speed of 80km/h (down a mine shaft) and returned 4.6L/100km…… The Suzi easily returns 4 to 4.5, even with a full load! I remember the Renault was so light (650kg), I could stand in front of it, grab the bumper with both hands, and lift the front wheels right off the ground!  Of course, the engine’s in the back, but still….

Compare with the Suzi, which weighs 800kg, has a bigger engine (1000cc vs 750) way more power (67BHP vs 19~21 depending on model) a top speed of 150km/h vs 98km/h, aircon, airbags, really comfortable seats you can sit in all day long without compromise, etc etc……. the Suzi would go faster in its third gear, with two more to go.

The Renault engine is OHV with a carburettor, the Suzi is DOHC with 4 valves per cylinder and fuel injected…… none of those things were remotely on the drawing boards of Renault car designers of course.

ALL these technological improvements, sadly, have gone into building bigger and heavier cars that, for their size, are of course much more economical than say a 1960’s Holden that would consume more fuel than a ot too big SUV.

Imagine if everyone drove Little Suzis instead…..