Saturday, January 31, 2009

How to Dry Foods

How to Dry Foods. Deanna DeLong. Recommended.

A food dehydrator was on my Christmas list this year, and as luck would have it, one appeared under the tree. A fairly comprehensive instruction manual accompanied the dehydrator, but I thought I would look for more guidance. This book seems to be a complete guide for home food drying. All major foods are covered: fruits, vegetables, meats, herbs, spices, nuts, and seeds. Not only does the text list foods that are great for drying, but it cautions against others that are only marginal. This will save countless hours of fruitless trial and error.

The recipe section has many jerky marinade formulations and fruit leather mixtures. Also included are many recipes that use the dried products, so you know what to do with all the things you have preserved.

I would highly recommend this if you are interested in food dehydration. Thus far I have made some pretty decent beef jerky and dried pineapple. Perhaps as I gain more skill I will post some of my favorite recipes.


Thursday, January 29, 2009


A WSJ examination of the "stimulus" package currently speeding through the halls of Congress.

In selling the plan, President Obama has said this bill will make "dramatic investments to revive our flagging economy." Well, you be the judge. Some $30 billion, or less than 5% of the spending in the bill, is for fixing bridges or other highway projects. There's another $40 billion for broadband and electric grid development, airports and clean water projects that are arguably worthwhile priorities.

Add the roughly $20 billion for business tax cuts, and by our estimate only $90 billion out of $825 billion, or about 12 cents of every $1, is for something that can plausibly be considered a growth stimulus. And even many of these projects aren't likely to help the economy immediately. As Peter Orszag, the President's new budget director, told Congress a year ago, "even those [public works] that are 'on the shelf' generally cannot be undertaken quickly enough to provide timely stimulus to the economy."


The larger fiscal issue here is whether this spending bonanza will become part of the annual "budget baseline" that Congress uses as the new floor when calculating how much to increase spending the following year, and into the future. Democrats insist that it will not. But it's hard -- no, impossible -- to believe that Congress will cut spending next year on any of these programs from their new, higher levels. The likelihood is that this allegedly emergency spending will become a permanent addition to federal outlays -- increasing pressure for tax increases in the bargain. Any Blue Dog Democrat who votes for this ought to turn in his "deficit hawk" credentials.

This is supposed to be a new era of bipartisanship, but this bill was written based on the wish list of every living -- or dead -- Democratic interest group. As Speaker Nancy Pelosi put it, "We won the election. We wrote the bill." So they did. Republicans should let them take all of the credit.

To the victor go the spoils. Please watch I.O.U.S.A.


Wednesday, January 28, 2009


January's always bitter
But Lord this one beats all
The wind ain't quit for weeks now
And the drifts are ten feet tall
I been all night drivin' heifers
Closer in to lower ground
Then I spent the mornin' thinkin'
'Bout the ones the wolves pulled down

Charlie Barton and his family
Stopped today to say goodbye
He said the bank was takin' over
The last few years were just too dry
And I promised that I'd visit
When they found a place in town
Then I spent a long time thinkin'
'Bout the ones the wolves pull down

Lord please shine a light of hope
On those of us who fall behind
And when we stumble in the snow
Could you help us up while there's still time

Well I don't mean to be complainin' Lord
You've always seen me through
And I know you got your reasons
For each and every thing you do
But tonight outside my window
There's a lonesome mournful sound
And I just can't keep from thinkin'
'Bout the ones the wolves pull down

Oh Lord keep me from bein'
The one the wolves pull down

-Garth Brooks


Tuesday, January 27, 2009

Global Warming Irreversible, Study Says

Not only is global warming most likely inevitable, it is also not easily reversed, says a new study. The press release is here, but I could not locate the actual study at the website listed. Full text of study here.

If CO2 is allowed to peak at 450-600 parts per million, the results would include persistent decreases in dry-season rainfall that are comparable to the 1930s North American Dust Bowl in zones including southern Europe, northern Africa, southwestern North America, southern Africa and western Australia.

The study notes that decreases in rainfall that last not just for a few decades but over centuries are expected to have a range of impacts that differ by region. Such regional impacts include decreasing human water supplies, increased fire frequency, ecosystem change and expanded deserts. Dry-season wheat and maize agriculture in regions of rain-fed farming, such as Africa, would also be affected.


The scientists emphasize that increases in CO2 that occur in this century “lock in” sea level rise that would slowly follow in the next 1,000 years. Considering just the expansion of warming ocean waters—without melting glaciers and polar ice sheets—the authors find that the irreversible global average sea level rise by the year 3000 would be at least 1.3–3.2 feet (0.4–1.0 meter) if CO2 peaks at 600 parts per million, and double that amount if CO2 peaks at 1,000 parts per million.


Saturday, January 24, 2009

Amount of Alternative Energy Needed to Temper Global Warming

Here is an extremely sobering video describing the sheer enormity of the challenge that our planet faces. If anthropogenic greenhouse gasses drive a sharp increase in global temperatures, I fear we may be along for the ride.

See Tragedy of the Commons.


Tuesday, January 20, 2009

I.O.U.S.A. on CNN: Part II


I.O.U.S.A. on CNN: Part I

Thanks to an anonymous tip, here are video files of the showing of I.O.U.S.A. on CNN. I strongly believe every American should watch this documentary.




If you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you
But make allowance for their doubting too,
If you can wait and not be tired by waiting,
Or being lied about, don't deal in lies,
Or being hated, don't give way to hating,
And yet don't look too good, nor talk too wise:

If you can dream--and not make dreams your master,
If you can think--and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build 'em up with worn-out tools:

If you can make one heap of all your winnings
And risk it all on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: "Hold on!"

If you can talk with crowds and keep your virtue,
Or walk with kings--nor lose the common touch,
If neither foes nor loving friends can hurt you;
If all men count with you, but none too much,
If you can fill the unforgiving minute
With sixty seconds' worth of distance run,
Yours is the Earth and everything that's in it,
And--which is more--you'll be a Man, my son!

-R. Kipling


Monday, January 19, 2009


Despite the lame "text talk" name (an obvious attempt to lure in a young target audience), ECON4U actually holds a wealth of information. I have highlighted some of the huge economic challenges that our nation faces, as well as the dearth of economic literacy in our population. Some scary factoids:

  • Though the top 1 percent of income earners pays 40% of the total taxes, a majority of Americans mistakenly believes that middle and lower income citizens pay the highest tax rate.
    -National Public Radio, Kaiser Family Foundation and the Kennedy School of Government survey

  • Nearly two-thirds of those surveyed did not know that in times of inflation money does not hold its value.
    -NCEE Harris poll

  • Most Americans believe that corporate profits average nearly 50% of revenue, when in fact the average is 8%.
    -Kaiser Family Foundation and The Washington Post survey

  • 48% of American credit card owners only pay their minimum monthly payment each month.
    -Senate Resolution 48, 2003
Most parents are unprepared to teach children about money, and the curriculum is simply not required in many states. Heck, most of our elected officials have no formal business or finance training. Those who are not lucky to have an education in money matters are left to figure things out alone.

This website is a great place to start. There are explanations and tutorials for many important topics: Short term loans, Student loans, Car loans, Mortgages, as well as good budgeting tips. Also be sure to check out the quizzes covering a wide range of subjects: Taxes, Investing, Entrepreneurship, Home ownership and Government spending.

While geared toward a young crowd, even the most seasoned economic mind might get stumped on some of the quiz questions. I think there is always room for education, especially in today's economic climate.


Sunday, January 18, 2009

Peanut Butter Recall

For the past week, the FDA has been investigating a Salmonella outbreak in peanut butter. See their website for up to date information and specific product recalls.

January 18, 2009: The Food and Drug Administration (FDA) is conducting a very active and dynamic investigation into the source of the Salmonella Typhimurium outbreak. At this time, the FDA has traced a source of Salmonella Typhimurium contamination to a plant owned by Peanut Corporation of America (PCA), which manufactures both peanut butter that is institutionally served in such settings as long-term care facilities and cafeterias, and peanut paste—a concentrated product consisting of ground, roasted peanuts—that is distributed to food manufacturers to be used as an ingredient in many commercially produced products including cakes, cookies, crackers, candies, cereal and ice cream.
At this time, there is no indication that any national name brand jars of peanut butter sold in retail stores are linked to the PCA recall. As the investigation continues over the weekend, and into next week, the FDA will be able to update the advice based on new sampling and distribution information.
Similar to the tomato outbreak last summer, this highlights one of the drawbacks of an industrial food chain. Pathogens can spread rapidly to millions of people, and attempting to find the ultimate source can be a nearly impossible task. This makes the case for local food even more compelling. While a local food chain is certainly not immune to food-borne illness outbreaks, the impacts are localized, which makes them smaller as well as easier to find and remedy.


I, Pencil

This classic essay
succinctly demonstrates the power of the free market. In the words of Milton Friedman:

I know of no other piece of literature that so succinctly, persuasively, and effectively illustrates the meaning of both Adam Smith’s invisible hand—the possibility of cooperation without coercion—and Friedrich Hayek’s emphasis on the importance of dispersed knowledge and the role of the price system in communicating information that “will make the individuals do the desirable things without anyone having to tell them what to do.”
I, Pencil
My Family Tree as told to Leonard E. Read

I am a lead pencil--the ordinary wooden pencil familiar to all boys and girls and adults who can read and write.

Writing is both my vocation and my avocation; that's all I do.

You may wonder why I should write a genealogy. Well, to begin with, my story is interesting. And, next, I am a mystery -- more so than a tree or a sunset or even a flash of lightning. But, sadly, I am taken for granted by those who use me, as if I were a mere incident and without background. This supercilious attitude relegates me to the level of the commonplace. This is a species of the grievous error in which mankind cannot too long persist without peril. For, the wise G. K. Chesterton observed, "We are perishing for want of wonder, not for want of wonders."

I, Pencil, simple though I appear to be, merit your wonder and awe, a claim I shall attempt to prove. In fact, if you can understand me -- no, that's too much to ask of anyone -- if you can become aware of the miraculousness which I symbolize, you can help save the freedom mankind is so unhappily losing. I have a profound lesson to teach. And I can teach this lesson better than can an automobile or an airplane or a mechanical dishwasher because -- well, because I am seemingly so simple.

Simple? Yet, not a single person on the face of this earth knows how to make me. This sounds fantastic, doesn't it? Especially when it is realized that there are about one and one-half billion of my kind produced in the U.S.A. each year.

Pick me up and look me over. What do you see? Not much meets the eye -- there's some wood, lacquer. the printed labeling, graphite lead, a bit of metal, and an eraser.

Innumerable Antecedents

Just as you cannot trace your family tree back very far, so is it impossible for me to name and explain all my antecedents. But I would like to suggest enough of them to impress upon you the richness and complexity of my background.

My family tree begins with what in fact is a tree, a cedar of straight grain that grows in Northern California and Oregon. Now contemplate all the saws and trucks and rope and the countless other gear used in harvesting and carting the cedar logs to the railroad siding. Think of all the persons and the numberless skills that went into their fabrication: the mining of ore, the making of steel and its refinement into saws, axes, motors: the growing of hemp and bringing it through all the stages to heavy and strong rope; the logging camps with their beds and mess halls, the cookery and the raising of all the foods. Why, untold thousands of persons had a hand in every cup of coffee the loggers drink!

The logs are shipped to a mill in San Leandro, California. Can you imagine the individuals who make flat cars and rails and railroad engines and who construct and install the communication systems incidental thereto? These legions are among my antecedents. Consider the millwork in San Leandro. The cedar logs are cut into small, pencil-length slats less than one-fourth of an inch in thickness. These are kiln dried and then tinted for the same reason women put rouge on their faces. People prefer that I look pretty, not a pallid white. The slats are waxed and kiln dried again. How many skills went into the making of the tint and the kilns, into supplying the heat, the light and power, the belts, motors, and all the other things a mill requires? Sweepers in the mill among my ancestors? Yes, and included are the men who poured the concrete for the dam of a Pacific Gas & Electric Company hydroplant which supplies the mill's power!

Don't overlook the ancestors present and distant who have a hand in transporting sixty carloads of slats across the nation.

Once in the pencil factory -- $4,000,000 in machinery and building, all capital accumulated by thrifty and saving parents of mine -- each slat is given eight grooves by a complex machine, after which another machine lays leads in every other slat, applies glue, and places another slat atop -- a lead sandwich, so to speak. Seven brothers and I are mechanically carved from this "wood-clinched" sandwich. My "lead" itself -- it contains no lead at all -- is complex. The graphite is mined in Ceylon. Consider these miners and those who make their many tools and the makers of the paper sacks in which the graphite is shipped and those who make the string that ties the sacks and those who put them aboard ships and those who make the ships. Even the lighthouse keepers along the way assisted in my birth -- and the harbor pilots.

The graphite is mixed with clay from Mississippi in which ammonium hydroxide is used in the refining process. Then wetting agents are added such as sulfonated tallow -- animal fats chemically reacted with sulfuric acid. After passing through numerous machines, the mixture finally appears as endless extrusions -- as from a sausage grinder -- cut to size, dried, and baked for several hours at 1,850 degrees Fahrenheit. To increase their strength and smoothness the leads are then treated with a hot mixture which includes candelilla wax from Mexico, paraffin wax, and hydrogenated natural fats.

My cedar receives six coats of lacquer. Do you know all the ingredients of lacquer? Who would think that the growers of castor beans and the refiners of castor oil are a part of it? They are. Why, even the processes by which the lacquer is made a beautiful yellow involves the skills of more persons than one can enumerate!

Observe the labeling. That's a film formed by applying heat to carbon black mixed with resins. How do you make resins and what, pray, is carbon black?

My bit of metal -- the ferrule -- is brass. Think of all the persons who mine zinc and copper and those who have the skills to make shiny sheet brass from these products of nature. Those black rings on my ferrule are black nickel. What is black nickel and how is it applied? The complete story of why the center of my ferrule has no black nickel on it would take pages to explain.

Then there's my crowning glory, inelegantly referred to in the trade as "the plug," the part man uses to erase the errors he makes with me. An ingredient called "factice" is what does the erasing. It is a rubber-like product made by reacting rape-seed oil from the Dutch East indies with sulfur chloride. Rubber, contrary to the common notion, is only for binding purposes. Then, too, there are numerous vulcanizing and accelerating agents. The pumice comes from Italy; and the pigment which gives "the plug" its color is cadmium sulfide.

No One Knows

Does anyone wish to challenge my earlier assertion that no single person on the face of this earth knows how to make me?

Actually, millions of human beings have had a hand in my creation, no one of whom even knows more than a very few of the others. Now, you may say that I go too far in relating the picker of a coffee berry in far off Brazil and food growers elsewhere to my creation; that this is an extreme position. I shall stand by my claim. There isn't a single person in all these millions, including the president of the pencil company, who contributes more than a tiny, infinitesimal bit of know-how. From the standpoint of know-how the only difference between the miner of graphite in Ceylon and the logger in Oregon is in the type of know-how. Neither the miner nor the logger can be dispensed with, any more than can the chemist at the factory or the worker in the oil field -- paraffin being a by-product of petroleum.

Here is an astounding fact: Neither the worker in the oil field nor the chemist nor the digger of graphite or clay nor any who mans or makes the ships or trains or trucks nor the one who runs the machine that does the knurling on my bit of metal nor the president of the company performs his singular task because he wants me. Each one wants me less, perhaps, than does a child in the first grade. Indeed, there are some among this vast multitude who never saw a pencil nor would they know how to use one. Their motivation is other than me. Perhaps it is something like this: Each of these millions sees that he can thus enchange his tiny knowhow for the goods and services he needs or wants. I may or may not be among these items.

No Master Mind

There is a fact still more astounding: The absence of a master mind, of anyone dictating or forcibly directing these countless actions which bring me into being. No trace of such a person can be found. Instead, we find the Invisible Hand at work. This is the mystery to which I earlier referred.

It has been said that "only God can make a tree." Why do we agree with this? Isn't it because we realize that we ourselves could not make one? Indeed, can we even describe a tree? We cannot, except in superficial terms. We can say, for instance, that a certain molecular configuration manifests itself as a tree. But what mind is there among men that could even record, let alone direct, the constant changes in molecules that transpire in the life span of a tree? Such a feat is utterly unthinkable!

I, Pencil, am a complex combination of miracles: a tree, zinc, copper, graphite, and so on. But to these miracles which manifest themselves in Nature an even more extraordinary miracle has been added: the configuration of creative human energies -- millions of tiny know-hows configurating naturally and spontaneously in response to human necessity and desire and in the absence of any human master-minding! Since only God can make a tree,

I insist that only God could make me. Man can no more direct these millions of know-hows to bring me into being than he can put molecules together to create a tree. The above is what I meant when writing, "if you can become aware of the miraculousness which I symbolize, you can help save the freedom mankind is so unhappily losing" For, if one is aware that these know-hows will naturally, yea, automatically, arrange themselves into creative and productive patterns in response to human necessity and demand-that is, in the absence of governmental or any other coercive master-minding -- then one will possess an absolutely essential ingredient for freedom: a faith in free people. Freedom is impossible without this faith.

Once government has had a monopoly of a creative activity such, for instance, as the delivery of the mails, most individuals will believe that the mails could not be efficiently delivered by men acting freely. And here is the reason: Each one acknowledges that he himself doesn't know how to do all the things incident to mail delivery. He also recognizes that no other individual could do it. These assumptions are correct. No individual possesses enough know-how to perform a nation's mail delivery any more than any individual possesses enough know-how to make a pencil. Now, in the absence of faith in free people -- in the unawareness that millions of tiny know-hows would naturally and miraculously form and cooperate to satisfy this necessity -- the individual cannot help but reach the erroneous conclusion that mail can be delivered only by governmental "master- minding."

Testimony Galore

If I, Pencil, were the only item that could offer testimony on what men and women can accomplish when free to try, then those with little faith would have a fair case. However, there is testimony galore: it's all about us and on every hand. Mail delivery is exceedingly simple when compared, for instance, to the making of an automobile or a calculating machine or a grain combine or a milling machine or to tens of thousands of other things. Delivery? Why, in this area where men have been left free to try, they deliver the human voice around the world in less than one second: they deliver an event visually and in motion to any person's home when it is happening; they deliver 150 passengers from Seattle to Baltimore in less than four hours; they deliver gas from Texas to one's range or furnace in New York at unbelievably low rates and without subsidy: they deliver each four pounds of oil from the Persian Gulf to our Eastern Seaboard -- halfway around the world -- for less money than the government charges for delivering a one-ounce letter across the street!

The lesson I have to teach is this: Leave all creative energies uninhibited. Merely organize society to act in harmony with this lesson. Let society's legal apparatus remove all obstacles the best it can. Permit these creative know-hows freely to flow. Have faith that free men and women will respond to the Invisible Hand. This faith will be confirmed. I, Pencil, seemingly simple though I am, offer the miracle of my creation as testimony that this is a practical faith, as practical as the sun, the rain, a cedar tree, the good earth.


Saturday, January 17, 2009

Local Harvest

I found a great site for locating "local" food in your area. lists farms and CSAs from around the country, just enter your zip code and they'll point you in the right direction. Also don't forget to check out, as well, for grass fed meats.

I believe that eating local food is a choice that can positively affect many of the problems that we currently are facing. Here are some of the benefits that I see:

Ideally, local food takes less fossil fuel energy to produce. Since the food is produced close to you, it will not have to take cross-continent trips in a semi-truck.

The food should arrive quicker and fresher than that which is shipped long distances. Many industrial food chain produce varieties are chosen for their durability, not flavor. Those huge strawberries at the grocery store are pretty, but many times are rather hard and tasteless. Local producers can grow varieties that are tastier and healthier, and can pick them at peak freshness.

Local, unprocessed food is more likely to be "real" food. As described in In Defense of Food, highly processed food - dense in calories yet light in nutrients - is a major cause of the obesity epidemic in Western culture. Real, whole foods are the true "part of a complete, nutritious breakfast".

Since the food chain is dramatically shortened, much of the obscuration is removed, allowing the consumer to make truly informed decisions. You might actually be able to go to the source and even meet the person who is ultimately responsible for how your food is produced. With all the curtains pulled back, you now can tell how "natural", "sustainable" or "organic" your produce and meat really are, and not rely on a mere label in the grocery store.

More of your food dollar goes to the person who produces the food, rather than the industrial conglomerate that processes and ships it. Every layer of middle men you cut out is more money flowing to the actual producer. Bad for ADM and General Mills, good for the farmer and you.

So, check out these sites, look for farmer's markets in your area and become an active consumer.


Friday, January 16, 2009

Key Concept - Moral Hazard

Moral Hazard is the tendency for a party that is shielded from risk to behave differently than if he was exposed to said risk. It can also occur when a party to a transaction has not entered into the contract in good faith, has provided misleading information about its assets, liabilities or credit capacity, or has an incentive to take unusual risks in a desperate attempt to earn a profit before the contract settles.

Moral Hazard arises because an individual or institution does not bear the full consequences of its actions, and therefore has a tendency to act less carefully than it otherwise would, leaving another party to bear some responsibility for the consequences of those actions.

While the concept has been around since the 1600s, the phrase was first used in a modern context in 1963 by economist Ken Arrow. It has been employed in finance to describe the dilemma that arises when a government helps a financial institution rebound after a self-inflicted failure. The unfortunate consequence is that the government assistance could be interpreted as a new precedent - rather than a one-time occurrence - and lead to increased risky behavior by multiple parties.

The concept has been commonly applied in the fields of finance, insurance, management, and in the social sciences.


Thursday, January 15, 2009

Is the "Bailout" Working?

An interesting look
at the "Wall Street Bailout".

Who has benefited from all this? Every investor, every household and every business in the United States. You may not like the fact that, as a result of these actions, overpaid bankers were allowed to hang on to their jobs or preserve the value of their stock holdings. And you may be unhappy that the financial system remains in such fragile shape that it is still hard for some people and businesses to get loans they think they deserve. But let me assure you that things would have been a whole lot worse if these actions had not been taken.
There is plenty to dislike about the Treasury's bailout program, and no doubt there are lots of ways it can be improved, but it is simply unfair to call it a failure. Given the size of the credit bubble and the excessive leverage that banks were allowed to take on, there was no way to rescue the financial system without injecting new capital, shrinking loan portfolios and shielding bankers from the full consequences of their misjudgments. The standard by which it should be judged is not whether it is fair, which it is not, or whether it has magically prevented foreclosures and restored the normal flow of capital, which it could not, but whether it has sufficiently stabilized the financial system to allow for an orderly restructuring.

By that standard, it has been a qualified success.


Wednesday, January 14, 2009

Squanderville vs. Thriftsville

In I.O.U.S.A., Warren Buffet makes a cameo appearance to lend us a parable of the dangers of a severe trade imbalance. Squanderville vs. Thriftsville, taken from his 2003 Fortune magazine article, is a simplified look at the difference between spenders and savers. He then relates the story to our worsening situation...and his plan to turn things around.

A perpetuation of this transfer will lead to major trouble. To understand why, take a wildly fanciful trip with me to two isolated, side-by-side islands of equal size, Squanderville and Thriftville. Land is the only capital asset on these islands, and their communities are primitive, needing only food and producing only food. Working eight hours a day, in fact, each inhabitant can produce enough food to sustain himself or herself. And for a long time that's how things go along. On each island everybody works the prescribed eight hours a day, which means that each society is self-sufficient.

Eventually, though, the industrious citizens of Thriftville decide to do some serious saving and investing, and they start to work 16 hours a day. In this mode they continue to live off the food they produce in eight hours of work but begin exporting an equal amount to their one and only trading outlet, Squanderville.

The citizens of Squanderville are ecstatic about this turn of events, since they can now live their lives free from toil but eat as well as ever. Oh, yes, there's a quid pro quo -- but to the Squanders, it seems harmless: All that the Thrifts want in exchange for their food is Squanderbonds (which are denominated, naturally, in Squanderbucks).

Over time Thriftville accumulates an enormous amount of these bonds, which at their core represent claim checks on the future output of Squanderville. A few pundits in Squanderville smell trouble coming. They foresee that for the Squanders both to eat and to pay off -- or simply service -- the debt they're piling up will eventually require them to work more than eight hours a day. But the residents of Squanderville are in no mood to listen to such doomsaying.

Meanwhile, the citizens of Thriftville begin to get nervous. Just how good, they ask, are the IOUs of a shiftless island? So the Thrifts change strategy: Though they continue to hold some bonds, they sell most of them to Squanderville residents for Squanderbucks and use the proceeds to buy Squanderville land. And eventually the Thrifts own all of Squanderville.

At that point, the Squanders are forced to deal with an ugly equation: They must now not only return to working eight hours a day in order to eat -- they have nothing left to trade -- but must also work additional hours to service their debt and pay Thriftville rent on the land so imprudently sold. In effect, Squanderville has been colonized by purchase rather than conquest.


In effect, our country has been behaving like an extraordinarily rich family that possesses an immense farm. In order to consume 4 percent more than we produce -- that's the trade deficit -- we have, day by day, been both selling pieces of the farm and increasing the mortgage on what we still own.

To put the $2.5 trillion of net foreign ownership in perspective, contrast it with the $12 trillion value of publicly owned U.S. stocks or the equal amount of U.S. residential real estate or what I would estimate as a grand total of $50 trillion in national wealth. Those comparisons show that what's already been transferred abroad is meaningful -- in the area, for example, of 5 percent of our national wealth.


Tuesday, January 13, 2009

U.S. Oil Import Map

Here's a great look at where our oil comes from - as well as where it came from in the past. The Rocky Mountain Institute created this slick graphical map derived from EIA data. Check it out:


Monday, January 12, 2009

Key Concept - Comparative Advantage

While an absolute advantage in an endeavor refers to the ability to produce at the lowest cost or using the least amount of resources; a comparative advantage is the ability to produce at a lower opportunity cost.

An example: Suppose that two castaways on a desert island gather both fruit and grain, which they then share equally between them. Suppose that Castaway A can gather more fruit per hour than Castaway B, and therefore has an absolute advantage in this good. Nonetheless, it may well make sense for A to leave some fruit-gathering to B. This is because it is possible that B gathers fruit slightly slower than A, but gathers grain extremely slowly.

One needs to look at comparative advantage rather than absolute advantage, to discover how A and B can each best allocate their effort. If A's initial advantage over B in grain-gathering is greater than his or her advantage in fruit-gathering, then fruit-effort should be transferred from A to B, to the point where A's comparative advantages in the two goods are equal. Thus it may be rational for fruit to flow from B to A, despite A's absolute advantage.


Sunday, January 11, 2009

Backstabbing for Beginners: My Crash Course in International Diplomacy

Backstabbing for Beginners: My Crash Course in International Diplomacy is the true story of Michael Soussan during his time as a UN Food for Oil Program Coordinator.

Witty and enthralling, you will not want to put this book down. The book, obviously written by an insider, is severely critical of the UN. It paints a bleak picture of the political infighting that can debilitate the UN. The power players save face by "passing the buck," essentially shirking responsibility on projects to avoid having to make difficult decisions.

As someone who knows little about the UN, I was very surprised at the level of corruption involved with the UN Food for Oil Program. I was appalled to find that France, Russia, and other nations were accepting millions in bribes from Sadam Houssein. Soussan paints a bleak picture of the United Nations but the overlying theme is that of hope, change, and achieving greater good no matter what the odds.

This truly is a must read. Soussan's style keeps you wanting more. You will want to stay up later (or lay out on the beach longer, in my case) to finish this enthralling piece.


Saturday, January 10, 2009

The Upside of Down

The Upside of Down. Thomas Homer-Dixon. Recommended.

This selection was on the short list for my Christmas break reading, and while I moved through it rather quickly, I'm not really sure where to begin in its review. I have begun to shy away from the near bottomless pit of doomsday books - there is only so much time in the day, and I see no need to continue tuning into an echo chamber. I will continue to seek out solutions, however, and this volume seemed to have an upbeat message, which was very intriguing. Could there really be an "upside to down"?

There are three main themes in The Upside of Down. First, the author highlights the many problems that we face. He then draws parallels on how similar problems have destroyed civilizations in the past, namely the Roman empire. Finally, he explores the ways that we might be able to deal with our problems, or position ourselves to rebound from the crash - the "upside", as it were.

The problems we face have been covered quite a bit in recent months, so I'll just summarize them here. The author uses an earthquake analogy, with five "tectonic stresses" building to a large catastrophic release.

  • energy stress, especially from increasing scarcity of conventional oil;
  • economic stress from greater global economic instability and widening income gaps between rich and poor;
  • demographic stress from differentials in population growth rates between rich and poor societies and from expansion of megacities in poor societies;
  • environmental stress from worsening damage to land, water forests, and fisheries; and,
  • climate stress from changes in the composition of Earth's atmosphere.
I've covered several of these stresses quite a bit, especially in the Global Trends 2025 post series. He makes an interesting argument about the collapse of Rome, which I found to be the most memorable portion of the book.

In the second chapter, the author describes the energy requirements of ancient Rome in great detail. There have been countless looks at the fall of Rome, but as far as I know, the supposition that energy concerns caused its downfall is a rather novel idea. The basis of the argument rests in the fact that Rome depended on a solar economy. Nearly all of the energy they used was derived from humans and animals, thus food. Perhaps the most interesting factoid of the book was the calculation of exactly how much energy (in grain and hay) it took to build the Colosseum.

The grain and hay were fed to the humans and oxen who, in turn, built the elaborate structures and the most impressive society the world had yet seen. As the empire spread further from the center, more and more energy was spent in retrieving the energy on the outskirts. This is a common concept in peak oil circles - Energy Return On Energy Invested (EROEI). As the empire collected taxes from farther out, it took more resources to pacify/protect those people and then transport the remainder to Rome.

The city of Rome became dependent on these deliveries. The citizens and social structure were maintained by an elaborate system of food deliveries and taxation systems that kept everything running smoothly. According to the author, as time moved on, the good farmland was exhausted, all the rich neighbors were raided and exploited, the supply lines grew longer and the EROEI dropped to a level that could no longer support the society. The empire inevitably declined.

As for the "upside" of decline, I found the book less clear. After a several chapter diatribe on the evils of capitalism while giving no credible alternative, he gets to the payoff - catagenesis. Like a renewal of a forest after a fire, the author describes catagenesis as a rebirth, of sorts. So we must try to set ourselves up to be able to rebuild our society after the collapse - not exactly the uplifting message I was looking for.

Even still, the book seems to be lacking in concrete examples. The author puts limited faith in "managing solutions", which is no doubt what we will try to do. After it is clear that we must take some action, we will try to manage the problem while changing our way of life as little as possible. The danger of this approach, which I agree with, is that when we delay until the earthquake has happened, it is too late.

So what should we do? We must reduce the "tectonic stresses". As we review that list, however, we remember that they are some doozies. While managing solutions have their place, the author also suggests the "prospective mind". This is where he loses me a bit...I'm not 100% sure what he means, so I'll give you a summation paragraph:
The alternative approach I advocate requires us to adopt what I've termed a prospective mind. We need to be comfortable with constant change, radical surprise, and even breakdown, because these are now inevitable features of our world, and we must constantly anticipate a wide variety of futures. With a prospective mind we'll be better able to turn surprise and breakdown,when they happen, to our advantage. In other words, we'll be better able to achieve what I call catagenesis - the creative renewal of our technologies, institutions and societies in the aftermath of breakdown.
So basically we need to be flexible so we can quickly rebound when TSHTF. It is a really good idea, but I guess I was expecting a bit more...perhaps some more solid examples on what to do. I still see the only "upside to down" is if you really hate our society now and want to rebuild it more to your liking. As I said before, that's not exactly the uplifting story I was looking for, but hey, these are crazy times. Overall, I give the book a reserved recommendation.


Friday, January 9, 2009

I.O.U.S.A on CNN This Weekend

Editors Update: Video files here: Part I and Part II

In this post, I highlighted former US comptroller David Walker's, "Fiscal Wake Up Tour". This is featured in the documentary I.O.U.S.A. as well. A synopsis:

Wake up, America! We're on the brink of a financial meltdown. I.O.U.S.A. boldly examines the rapidly growing national debt and its consequences for the United States and its citizens. Burdened with an ever-expanding government and military, increased international competition, overextended entitlement programs, and debts to foreign countries that are becoming impossible to honor, America must mend its spendthrift ways or face an economic disaster of epic proportions.

Throughout history, the American government has found it nearly impossible to spend only what has been raised through taxes. Wielding candid interviews with both average American taxpayers and government officials, Sundance veteran Patrick Creadon (Wordplay) helps demystify the nation's financial practices and policies. The film follows former U.S. Comptroller General David Walker as he crisscrosses the country explaining America's unsustainable fiscal policies to its citizens.

With surgical precision, Creadon interweaves archival footage and economic data to paint a vivid and alarming profile of America's current economic situation. The ultimate power of I.O.U.S.A. is that the film moves beyond doomsday rhetoric to proffer potential financial scenarios and propose solutions about how we can recreate a fiscally sound nation for future generations.

Creadon uses candid interviews and his featured subjects include Warren Buffett, Alan Greenspan, Paul O'Neill, Robert Rubin, and Paul Volcker, along with the Peter G. Peterson Foundation's own David Walker and Bob Bixby of the Concord Coalition, a Foundation grantee.

Pointedly topical and consummately nonpartisan, I.O.U.S.A. drives home the message that the only time for America's financial future is now.

I have been meaning to rent this for some time, but have yet to see it. It has been rumored to be airing this weekend on CNN. Supposedly it will be on Saturday, January 10 at 2:00 p.m. EST and on Sunday, January 11 at 3:00 p.m. EST. I say supposedly because my DVR listing was less than descriptive. If I am able to catch it, I'll follow up with a review. Otherwise, I'll still have to rent it sometime. Anyone see it yet?


Thursday, January 8, 2009

Word of the Day


In futures or options trading, a market in which longer-term contracts carry a higher price than near-term contracts.
2. The premium accorded to longer maturities is a normal condition of the market and reflects the cost of carrying the commodity for future delivery.
3. (on the London stock exchange) a fee paid by a buyer of securities to the seller for the privilege of deferring payment.

See also Backwardation.


Wednesday, January 7, 2009

Eat Safe

Eat Safe. Bill Statham. Recommended.

I found this book while perusing the new arrivals at the library, and it seems to be quite a good reference. As suggested by In Defense of Food, we should probably only eat foods that have a minimal amount of processing, and we should be able to pronounce and understand all the ingredients. If you've spent much time looking at labels, this can be a daunting task. Certain additives may sound horrible, yet be perfectly safe...and vice versa.

The book lists hundreds of ingredients and gives each a ranking - beneficial ones get two smiley faces, down the scale to two sad faces for dangerous substances. The entire list is also color coded (red, yellow and green) for quick reference. In addition to the rankings, there is a column for function, potential effects, food uses, and other uses.

I would recommend this guidebook for a quick reference, but with some caveats. Food science and medical advice changes over time, so the recommendations may not hold up as research advances. Also, certain substances affect people in different ways, so some "safe" ingredients may be dangerous for a small minority of the population. Overall, however, the book seems well researched and very comprehensive.


Monday, January 5, 2009

Professor Predicts Fall of U.S. in 2010

Bordering on the ridiculous, this WSJ article highlights a Russian professor who claims the U.S. will collapse in 2010.

Mr. Panarin posits, in brief, that mass immigration, economic decline, and moral degradation will trigger a civil war next fall and the collapse of the dollar. Around the end of June 2010, or early July, he says, the U.S. will break into six pieces -- with Alaska reverting to Russian control.
He even has a nifty map:

Even if you suspend disbelief a bit and suppose something like this were to actually happen, I really doubt that we all would break along such clean state boundaries. The last chapter of The Long Emergency envisions a similar scenario, but I feel it is more realistic in taking into account our cultural and societal ties and divisions.

I also highly doubt we would be pulled into spheres of influence of other nations, who would no doubt be reeling just as much as us if such a break down occurred.

That being said: "I, for one, welcome our new Canadian overlords."


Sunday, January 4, 2009

Key Concept - Tragedy of the Commons

I am beginning a semi-recurring series of interesting (to me) topics to further explore and consolidate certain "Key Concepts". Up first is the namesake of this blog: "The Tragedy of the Commons".

The term and concept was first officially coined by Garrett Hardin in a 1968 Science magazine article, which I highly recommend. (article here) It describes the inclination for multiple rational individuals to act in their own self-interest in the short-term, even at the detriment of all over the long-term.

The tragedy of the commons develops in this way. Picture a pasture open to all. It is to be expected that each herdsman will try to keep as many cattle as possible on the commons. Such an arrangement may work reasonably satisfactorily for centuries because tribal wars, poaching, and disease keep the numbers of both man and beast well below the carrying capacity of the land. Finally, however, comes the day of reckoning, that is, the day when the long-desired goal of social stability becomes a reality. At this point, the inherent logic of the commons remorselessly generates tragedy.

As a rational being, each herdsman seeks to maximize his gain. Explicitly or implicitly, more or less consciously, he asks, "What is the utility to me of adding one more animal to my herd?" This utility has one negative and one positive component.

1) The positive component is a function of the increment of one animal. Since the herdsman receives all the proceeds from the sale of the additional animal, the positive utility is nearly +1.

2) The negative component is a function of the additional overgrazing created by one more animal. Since, however, the effects of overgrazing are shared by all the herdsmen, the negative utility for any particular decision-making herdsman is only a fraction of -1.

Adding together the component partial utilities, the rational herdsman concludes that the only sensible course for him to pursue is to add another animal to his herd. And another; and another.... But this is the conclusion reached by each and every rational herdsman sharing a commons. Therein is the tragedy. Each man is locked into a system that compels him to increase his herd without limit--in a world that is limited.
The article raises some very interesting and sometimes rather controversial ideas, the most outstanding being the call to relinquish the freedom to procreate. I'd prefer to highlight some of the other, perhaps less extreme, points:

- There are problems that do not have technical solutions
- It is not mathematically possible to maximize for two (or more) variables at the same time
- Optimal human population is below the maximum population
- The morality of an act is a function of the state of the system at the time it is performed
- An alternative to the commons need not be perfect just to be preferable

While the article is mainly concerned with population growth, the author does mention pollution as an example. In current events, Global Warming certainly fits squarely in the category of a 'Tragedy of the Commons'. The author places global population in the "no technical solution" category; unfortunately, I am more and more inclined to do the same for climate change. Certain parallels are quite striking: as the author cautions against the appeal to conscience, most anti-global warming appeals are decidedly guilt-based. The article posits that these calls are not productive in the long- or short-term.

The long-term disadvantage of an appeal to conscience should be enough to condemn it; but has serious short-term disadvantages as well. If we ask a man who is exploiting a commons to desist "in the name of conscience," what are we saying to him? What does he hear?--not only at the moment but also in the wee small hours of the night when, half asleep, he remembers not merely the words we used but also the nonverbal communication cues we gave him unawares? Sooner or later, consciously or subconsciously, he senses that he has received two communications, and that they are contradictory: (i) (intended communication) "If you don't do as we ask, we will openly condemn you for not acting like a responsible citizen"; (ii) (the unintended communication) "If you do behave as we ask, we will secretly condemn you for a simpleton who can be shamed into standing aside while the rest of us exploit the commons."
My fear is that a solution that is effective, equitable, and enforceable is simply beyond the global community's technical and political ability. This is the true tragedy - "the solemnity of the remorseless working of things".


Saturday, January 3, 2009

A Separate Peace

I suspect that history, including great historical novelists of the future, will look back and see that many of our elites simply decided to enjoy their lives while they waited for the next chapter of trouble. And that they consciously, or unconsciously, took grim comfort in this thought: I got mine. Which is what the separate peace comes down to, "I got mine, you get yours."

Article here.