Below I have plotted the average annual income here in the US back to 1815 for the US Senate and 1967 for us little people. I mean that in all seriousness, because if ever there was a graph that said it all it is this one. The inset simply shows the same data for the period between 1967 and 2009, which is the timeframe where data is available for all percentiles. You will note the inset also has a number followed by the letter x, which if you remember back to any statistics or math courses you may have taken is simply the slope of a given trend (i.e., in this case it is a linear regression). The # that proceeds each x corresponds to the annual increase in each percentile’s average annual income. There are two extremely disquieting trends in this data: 1) the “haves” (i.e, Top 5^th percentile) and “have nots” spread is widening at an ever great clip, with annual income increases for the former 2.3 to 22× that of the latter percentiles and 2) the DC fat cats are gaining on this nation’s net-worth “elite” at a pace that one would hope would cause them a mild case of opprobrium. Fat Cat Fat Chance!

Maybe those Tea-Partiers are on to something if you strip away their bigoted, xenophobic, and often hypocritical bluster. The gentlemen and women that occupy the The Dirksen Senate Office Building have seen their wallets explode “George Costanza” style, however, only poor George who’s wallet was stuffed with junk our esteemed senators have jammed their wallets, pocketbooks, or man-purses full of Cold Hard Cash. Yet, in an effort to to not appear crooked – like Mr. Costanza did when he stuffed his other pocket with napkins – these folks shower us with patronage in the form of huge defense contracts, agricultural subsidies, and a static retirement age even though life expectancy in this country has risen to 148% of what it was at the turn of the 20^th century.

To those on the right that preach against Obama’s predilection for industrial policy I would challenge them not to avert their eyes when the next defense or farm bill comes their way, because if they don’t they will see plenty of industrial policy in these two massive pieces of legislation. The fact is that when we hear senators and their little brothers and sisters in the House talk about putting a freeze on non-discretionary spending they appear to be including their own salaries in the non-discretionary portion of the ledger. It seems to me that one of the reasons The Capitol Hill Gang doesn’t really attack everyone from Lloyd Blankfein and Rex Tillerson to their buddies Warren Buffett and Monsanto CEO Hugh Grant because they know that the only way they can maintain their excessive $3,676 annual salary increase is if they cajole the club they are set to surpass within the next ten years.

If you will humor I would like to return briefly to the George Costanza analogy vis à vis DC Motley Crue in order to put a bow on this portion of the story. As this particular episode of Seinfeld came to an end Mr. Costanza’s wallet suffered a tragic end at the hands of its greedy owner who decided to stuff a guitar lesson advertisement in it. This was the last item placed in the poor wallet as it exploded due to an excess of everything from hard candy and coupons to the requisite cash and receipts. Unfortunately the only people in this country willing to expose congress for its glutinous ways, both personal and as it relates to the aforementioned ill-apportioned largesse, are the Tea Partiers on the right and the folks I have marched proudly with at The UN, The Capitol, The RNC in St. Paul, etc. Both sides have heroes and when you scrape away the veneer each makes valid points. However, they (we) couch our arguments in so much irrational exuberance and non sequitur attacks that the message and the facts that directly - or indirectly – back them up are easily marginalized or out-and-out mocked by the media and the lawmakers alike.

There really is no need to say any more as the title says it all.

U.S. Identifies Vast Mineral Riches in Afghanistan

I wonder if Big (What a..) Dick Cheney knew about this one! He couldn’t have otherwise he would have insisted on a more concerted and muscular presence in Afghanistan throughout the War On Terror. Oh well chalk one up to good ol’ fashion Mullah Omar misdirection. Something tells me you will be hearing that Freeport-McMoRan (FCX)out of New Orleans will be getting their grubby nefarious hands involved in this operation given their robust play in the global copper market. Okay you heard it hear folks with FCX’s near monopoly on the global copper market and a large presence in gold we will absolutely see a strong push by them into this nascent opportunity. Just for the record FCX shares are currently trading at $65.26 on the NYSE, traded as high as $87 on January 8th, 11, and April 5th of this year, BUT are far below highs of $114 and 122 on October 10, 2007 and May 19, 2008, respectively. These two dates and the general peak in copper prices happened to coincide with a commercial and residential housing construction boom in China and lead some to believe that we had reached Peak Copper, although the latter has yet to be proven, but it stands to reason we will reach some sort of peak given the finite nature of copper availability, the world’s insatiable appetite for it, and the fact that last I checked creating it out of thin air ain’t an option! I will keep a keen eye on this and I suggest anyone reading this do the same as I demonstrated with an earlier posting on Roche and it’s share skyrocket in the weeks leading up to and after The Great H1N1 scare.

I would just say to the Pashtuns of Southern Afghanistan caveat emptor with Exhibit A being FCX’s Grasberg copper and gold mine in Indonesia, where the natives are restless and growing more so by the day. FCX is determined to see this mine to it’s complete exploitation given that it accounts for $4 Billion of FCX’s $6.5 Billion operating profit (i.e., Nearly 2/3). Some have even decided that peaceful protest is no longer helpful resorting instead to primitive but effective methods of “Message Delivery”. However, when the Indonesian government equips the mine bosses with a security force of 3,000 troops and police the odds are stacked against the indigenous peoples of Papua and Papua New Guinea (See Map courtesy of The Economist).

Thanks to a great article by Nelson D. Schwartz in The New York Times. Can you believe this?

Of course we have been doing the same here in the US since September of 2008 when Lehman Brothers collapsed. This type of mixing and matching would make even the most devious street hustler blush given the trickle down, up, left, and right of a group of greedy bankers and profligate sovereign governments. The idea that this type of thing couldn’t have been stopped is nonsense and to go one step further the Greenspanian idea that you don’t prick a bubble is pure hubris mixed with a large dose of Cigarette Smoking Man “After all, villains don’t think they are villains”.

What was it that John Maynard Keynes said about capitalism run wild. Oh yeah…“Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.“

Well say what you want about Lord Keynes politics and the bastardization of his work and theories by the left and the right, but the fact remains we have never seen a paradigm proved so faulty, so often, in so many disparate economies, and with so many casualties than we have with Capitalism. Don’t even think I am espousing Socialism across the board I am not and would never, but a reexamination of the facts when they change should lead us to change our minds about Capitalism as it’s universal application is clearly misguided and when you wipe away the muck and bombast very dangerous for lots of folks.

BOTE stands for Back-Of-The-Envelope and is a common phrase applied to macroscale or overly coarse calculations done kinda haphazardly. Well given this caveat I came across an article from The Telegraph (UK) titled “Detroit to Bulldoze Thousands of Homes in Fight for Survival”, which quoted the following statistic:

“Almost a third of the city’s 139 square miles is vacant or derelict, though its land area would comfortably fit Manhattan, San Francisco and Boston, cities with combined populations of three million.”

I thought it would interesting to apply some of my dissertation data to figuring out how much of Detroit’s CO2 footprint could potentially be offset if this land was reforested. So, here it goes step by step.

(33%*139 Sq Miles)=45.87 Sq Miles of vacant or derelict land

Convert to Hectares=45.87*259>11,880 Hectares

Hectares to Square Meters=11,880*10,000>118,803,229 Square Meters

Grams of Carbon per Square Meter Per Year (From my Thesis work we assume the average for Great Lakes forests is 10,849 g C m-2 yr-1)=118803229 Square Meters*10,849 g C yr-1>1,288,896,240,464 g C m-2 yr-1

Metric Tons Per Year=1,288,896,240,464 g C m-2 yr-1*0.000001>1,288,896 Metric Tons of C captured Per Year IF the 45.87 Sq Miles of vacant or derelict land was reforested!

NOW lets put this number in perspective relative to Detroit’s actual emissions.

If we assume Detroit’s population (For Now!) is 951,270 and residents of the city emit approximately 23.4 Tons of CO2 per person per year that comes out to 22,260,764.4 Tons of CO2 per year for the city of Detroit, which means……..

The figure calculated above for potential carbon captured by reforestation of vacant and derelict land (i.e., 1,288,896 Tons of CO2 per year) equals 5.80% of total city-wide emissions. This number while not jaw dropping is far from trivial and any efforts to implement such plans should be encouraged locally and nationally as 5.8% of anything at that scale adds up and would greatly increase the quality of life in Detroit. Similar projects are sprouting up in neighboring F lint, Michigan as well as places as far off as Chilibre, Panama. Likewise we have data on those areas as well and could do similar BOTEs in an effort to quantify the impact of reforestation, both above- and belowground.

We have an interesting love affair with shopping in this country and I thought it would be illustrative to quantify its influence on our land to capture carbon. First lets quickly look at how much we love shopping and how much our economy (and by association China, Japan, the EU, etc etc) depend on our insatiable appetite for stuff. It is true that we have come down off our Great Depression high of 83% Consumption as  a percent of GDP, but for the better part of the last 63 years we have maintained a relatively static 65% of GDP attributable to consumption.

However, this figure has risen substantially in the last 20 years from 62% in 1981 to 70.8% in 2009.

You might say well what does my local strip mall have to do with CO2? Well your local strip mall displaced some sort of native ecosystem that, up until the big trucks and earth-moving equipment came, was drawing down CO2 via photosynthesis and decomposition of biomass to produce soil carbon.

Well that has had a cumulative effect and I have attached a couple of graphs to demonstrate this phenomenon. Using Gross Leasable Area (GLA in sq feet) per person data back to 1990 we can calculate above- and belowground carbon displacement via shopping center expansion (Blue Line), which sums to about 218 Million Metric Tons between 1990 and 2009, which when subtracted from Total US CO2 Emissions gives us the inset in the figure below.

How you might ask does this relate in-terms of percentages? Well it turns out it is quite similar in magnitude to what I described for Detroit. If we assume - based on EIA assumptions - that Residential emissions is 6.65% of the story here in the US with respect to CO2 emissions than the above removal of native ecosystems for shopping centers translates to anywhere from 2.78 to 3.31% of Residential CO2 emissions across the entire US. However, if we had implemented the type of plain they are considering in Detroit across all fifty states beginning in 2005 we would have had the opportunity to “offset” 3.13% of our emissions per year as opposed to 2.85% between 1990 and 2004. You may say what is the big deal about 2.85 to 3.13%? Well when you consider we are measuring our fiscal and monetary peril here in the US with values like 3 to 12% of GDP and the fact that US GDP is expected to grow by 3.0% in 2010 v. 0.18, a decline of 1.83, and 2.53% in 2009, 2008, and 2007, respectively…Then the numbers I present here start to take on a whole new meaning. The harm inflicted by shopping centers - never mind the removal of capital and liquidity from local markets via large multinationals like Wal-Mart and Best Buy - is not just skin or in this case soil surface deep. It impacts the ability of communities and watersheds to withstand flooding, retain nutrients that would otherwise pollute reservoirs and aquifers, moderate temperature and moisture volatility, and propagate a sense of ownership among residents. The data back it up. Chalk another one up for BOTEs!

I just read an article at Project Syndicate by Heizo Takenaka former Minister of Economics, Minister of Financial Reform, and Minister of Internal Affairs and Communications under former LDP Prime Minister Junichiro Koizumi; of Japan. Who cares you may ask? And you would be right for asking that….BUT the reason we should care is that if you replaced Japanese people and places with US people and places this article would read like a John Boehner or Mitch McConnell manifesto replete with the privatization, deregulation, reduced government spending, and lower taxes (See Friedman, M) mantra of these 2 esteemed leaders of the Republican party. This would be awesome and totally worth considering if it weren’t for 1 conveniently downplayed FACT….Mr. Takenaka’s party - prior to the current DPJ government that can’t get out of its own way with respect to broken promises - had had complete autonomy in Japan for the better part of 50 years. Likewise Messrs. Boehner and McConnell along with a moderate agenda going back to Gerald Ford have been running the show since the early seventies. Okay I know there was a brief hiccup by the name of Jimmy Carter, who decided the American people needed to hear certain truths that would prove hard to swallow. Well we canned his ass the next chance we got! The point is that these Monday morning quarterbacks are incapable of acknowledging their participation in the games to which they refer. Until they do this their rhetoric and bombastic critiques of current and future regimes will - in my humble but certain opinion - be comedic at best and counterproductive to the point of being obstructionist at worst. Do the current folks in office in Japan and the US and the soon to be Green administration in Columbia have problems? Sure lots of them and their growing by the day, but to say that the trouble a/o irresponsibility starts with them, while simultaneously ignoring their own malfeasance is the reason why I just can’t imagine why anyone would give such biased and myopic voices any type of local or global platform. Enough with the sectarian rhetoric!

So it appears that Arizona successfully decoupled its laws from those of advanced society when Gov. Jan Brewer (R) signed into Law SB 1070 last Friday whose “…aim is to identify, prosecute and deport illegal immigrants.” The criteria police officers will use rely on something the law calls “reasonable suspicion”, which is about as big an umbrella category is you will find anywhere. Anyone with dark skin (THAT MEANS YOU JOHN BOEHNER!) will be forced to carry with them wherever they go documentation speaking to the validity of their residence in the United States. I find it amazing that the very same folks that pushed this bill out of one side of their mouth are on the other side accusing Barack Obama of being a Fascist. This DoubleSpeak is right out of George Orwell’s opus “Nineteen Eighty-Four” and is the type of rhetoric that has slowly but steadily been percolating up from right-wing hate groups since President Obama’s election. It is even creeping – overtly and covertly – into national politics with Pat Bertroche (R) vying for the 3^rd District Congressional primary seat in Iowa noting that “I actually support microchipping them. I can microchip my dog so I can find it. Why can’t I microchip an illegal?” That’s very True Pat why don’t we just make a minor incision in everyone with dark skin, implant a microchip, and send them on their merry way. That makes complete sense and it doesn’t sound prima facie like it violates anyone’s human rights!

This uptick dovetails into The Southern Poverty Law Center’s documentation of mushrooming phenomena in their latest report “Rage on the Right”, which quantified a 244% increase in the number of “Patriot’ groups, from 149 in 2008 to 512 in 2009. This came at the same time as racist hate groups rose from an all-time high of 926 to 932 in 2009 and “nativist extremist” groups – vigilante organizations that go beyond advocating strict immigration policy and actually confront or harass suspected immigrants – grew from 173 to 309 (+80%) between 2008 and 2009.

This type of trend does not speak well for border states writ large. If Vermonters think that this type of sentiment will not rear its ugly head here with respect to Canadians in general and Québécoise specifically we’re fooling ourselves. The recent legal battle between the Rainsville’s of Franklin County and The Department of Homeland Security is in my opinion the opening salvo in a nascent fortification and potentially militarization of our border with Québéc. Janet Napolitano & Co. feel it is imperative that we fortify a crossing that experiences 2.5 cars an hour or 21,900 per year. If you consider that the monies allotted to this project amount to $5 million that averages out to $228 per car or with respect to the Rainville’s about 4.9 acres we’re talking about $1.02 million per acre. Either way you cut it I am sure Governor Douglas or his successor could find markedly more important things to do with this “stimulus”. For anyone interested in reading more about the Rainville matter I would refer you to Secretary Napolitano’s letter to Senator Leahy on March 10 of this year.

Needless to say we are seeing a growing sense of paranoia and misguided attempts at securing 1,969 miles (3,169 km) of Mexican- and 5,525 miles (8,891 km) of Canada-US borderland. We should work hard here in Vermont to insure that the 90 mile border we share with Québéc never even faintly resembles what those in Arizona are trying to construct. After all it is not immigrants, illegal or otherwise, forcing US-based multinationals to outsource thousands of jobs under the guise of globalized capitalism. How about a little more job protectionism and a little less racism cloaked in pseudo-patriotism.

“Size is not the appropriate restriction,” said Senator Mark Warner, Democrat of Virginia and a member of the banking committee, who helped draft the regulatory bill. “The real question should be the level of inter-connectedness and the risk-taking we saw in the crisis of 2008.” Mr. Warner added, “The Dodd bill does provide ability for these banks to be broken up.”

So let me see if I have this straight Senator Warner your not concerned about the size of bangs with respect to Senator Kaufman and Senator Browns Safe Banking Act of 2010 - which would have limited the size of individual bank’s assets to 3% of GDP (6 Largest banks currently account for 63% of GDP) and the all important leverage factor to 16 to 1 (It had risen to 30 & 40 to 1 at places like Bear Sterns and Lehman) -  but you want to minimize inter-connectedness?

Well let me ask you a simple question: If you go to a family reunion and their are only 6 Warner’s - or whatever your mother’s maiden name was - at the shindig are you more or less likely to be “inter-connected” with those individuals than if that reunion instead included 100 of your nearest and dearest relatives?

See this is classic talking out of both sides of your mouth. As Stephen Roach likes to say you can’t have both decoupling and globalization at the same time. Pick your Poisson Senator Warner: Inter-connectedness or TBTF?

“You can’t be a real country unless you have a beer and an airline—it helps if you have some kind of a football team, or some nuclear weapons, but at the very least you need a beer.”

“There will never be a nuclear war; there’s too much real estate involved.“

Frank Zappa

Goldman Sachs paid back the TARP money no doubt and that is exciting, but here are the other 2/3 of the bailout pie they don’t like to talk about.

First the Federal Reserve discount window where they borrowed >$30 Billion at 0.75% interest and turned around and lent it to businesses and governments at 3-4% interest….THAT MY FRIENDS IS CALLED MINTING MONEY!

Also the AIG bailout basically funneled a large amount of liquidity to Goldman and a variety of other large multi-national financial “institutions” (See below). So those smug smiles are indicative of Foxes In The Hen House. The graph below is another reason why Tim Geithner, Hank Paulson, et al are complicit in this fiasco. TOO CONNECTED TO FAIL!

Data rarely lies especially Pie Charts.

Ever heard of the Gini Coefficient? Yeah I thought not who has and frankly who cares? Well in reading Stephen Roach’s “Stephen Roach on the Next Asia: Opportunities and Challenges for a New Globalization” I came across this measure of income dispersion within and across economies of all shapes and sizes. When I went to the US Bureau of Labor Statistics looking for a historical record of US Gini coefficients I was disappointed (but not surprised) to see a very disturbing trend developing.

First let me note that the Gini Coefficient is a decimal between Zero and One (The Grey Between Binary!), with One being absolute inequality (i.e. The Rich Have Everything) and Zero being completely equitable distribution of income across any given economy.

What I saw when I plotted the Bureau of Labor’s data was a sharply upward trending slope from left (1967) to the present (2007). At the current trend we will have a Gini Coefficient of 0.537 in 2025, 0.652 in 2075, 0.767 in 2125, and 0.939 in 2200. That is unless the world ends. OR H1N1 kills us all. This should disturb those on the left and the right equally, because believe you me the folks benefiting from this trajectory have no religion or aspirations for any type of greener planet, rather they are driven by Financial Weapons of Mass Destruction and really big yachts. This points towards a New America, which when we think about income equality or meritocracy we see that it is becoming more and more a Zero Sum Game or what what 18th/19th Century British economist David Ricardo called Comparative Advantage (See Below). Although in this instance we are talking about intra-country or -region income disparities.

Comparative Advantage (According to the US Bureau of Labor Statistics): When one nation’s opportunity cost of producing an item is less than another nation’s opportunity cost of producing that item. A good or service with which a nation has the largest absolute advantage (or smallest absolute disadvantage) is the item for which they have a comparative advantage.

I think that this trend and the data it describes to are two more examples of why across-the-board capitalism does not work. Do aspects of capitalism work? OF COURSE no one (not least of which me!!) is saying differently, but to assume that any “-ISM” in its entirety is suitable for an entire country or across the board is foolish, arrogant, dangerous, and short-sighted. BEWARE OF THE -ISM PEOPLE!!!

Lets briefly put this trend and Gini in some perspective. First it is worth noting where the US sits globally with respect to Gini. As you can see below we (US in Red) are somewhere in the middle of the 153 global average of 0.409±0.103. Some of the esteemed nations with a more equitable distribution of wealth include Russia, Myanmar (That’s Right Myanmar!), Cuba, and Saudi Arabia. Our neighbors on the Gini scale include Irag, Petro States like Iran and Nigeria, not exactly paragons of freedom. Given the projections I calculated above we will join nations like Zimbabwe (Hint: You know the nation with inflation >1 quadrillion %) by 2025, systemically corrupt nations like Sierra Leone, Equatorial Guinea, and Namibia in 2075, AND…..Drumroll Please…………..We will be off the current distribution by 2125 at a Gini of 0.767. Not bad huh? So with all the huffing and puffing from the right about our dept and deficit climbing as a % of GDP I think it is worth paying credence to this much maligned index, given its current value and projected trend. Sure we need to consume less and save more, but the fact is that many in this country are under the impression that “Compared with people in other rich countries, Americans tend to accept relatively high levels of income inequality because they believe they may move up over time. The evidence is that America does offer opportunity; but not nearly as much as its citizens believe.”

So the final point that many on the way- and intermediate-right, along with countless centrists and Efficient-Market Hypothesis ideologues make is that this type of asymmetrical wealth distribution is a product of and promoter of competition. The idea that a rising tide lifts all boats with respect to consumption, investment, government spending, and export-import (ie GDP = C+I+G+(Exp-Imp)). However, if we look at GDP as a function of the Gini Index across the aforementioned 153 nations we see ZERO RELATIONSHIP! Let me say that again there is no relationship between an increasing Gini (ie, Rich Getting Richer!) and GDP growth. So, what are we to make of this? Well the answer is that The Great Decoupling with respect to income inequality has spread geographically and will prove insidious and along with an increasing redistribution of water rights another reason why bottom-up “concern” should and will grow. We’re not talking about astroturf revolution, but rather empirical and well-thought out multi-angle reform.