Wednesday, March 12, 2008

Press-Herald "Newspaper" now just "Paper"

According to upstate rival (and generally superior) Bangor Daily News, The Press Herald will be cutting back. According to the BDN,
The Portland Press Herald says it’s eliminating 27 jobs, resulting in 15 layoffs, because of the weakening national economy and a continuing downturn in advertising. reporters are being laid off, but the percentage of the newspaper devoted to news and photographs will be reduced and there will be a cutback in "supplemental" wire news services.

"...the percentage of the newspaper devoted to news ... will be reduced and there will be a cutback in "supplemental" wire news services."

Wire news, of course, includes the AP. So that covers all national news except what they get from the Washington Post (which is most of it). I'm going to go out on a limb here and say we'll still get exciting coverage of the "man bites dog" variety. It's the pointless international news you're going to have to do without. And, apparently, any other news that the AP or Reuters don't cover. You know, like Maine.

Here's a question: How will we be able to tell?

Oil, Debt, and the New American Century

Text message from the Professor:
By the way -- the news is looking damn grim, despite the Fed's efforts, economically speaking. This big time recession, if the "Peak Oil" people are right, is supposed to be part of the plateau phase, prior to the careening downward. Your thoughts?
My thoughts:

There are 2 parts to the coming downturn--one systemic and one structural. Systemically, the economy is based on debt not production. This appears to be true on all levels--not just consumer debt. However, because consumer debt is atomized (much smaller on an individual level, though many millions of individuals), it is more sensitive to marginal fluctuations. The biggest marginal fluctuation we're seeing right now is the increasing cost of energy, particularly oil. That's the structural part.

As the cost of goods increases due to increasing cost-to-market, and personal wealth is put in jeopardy due to the credit pinch, those atomized debt-holders are pinched from both sides. That makes them freeze their spending, which in turn freezes the economy at the retail level. Retail-level movement (even if not growth) is essential to the confidence of the debt-holders. As that motion slows, their confidence decreases, causing them to further tighten at the upper levels (causing the only true trickle-down: concomitant tightening of retail-level debt instruments).

I think it's possible to re-tool the systemic problems, provided we do so quickly. Certain financial industry players will have to get badly stung. A couple of large players will likely have to go out of business, as a true market correction. Our government financial institutions will have to be willing to allow those repercussions in order to truly trim the deadwood and force a market-wide systemic restructuring. ("Capture" is a real problem here.) Probably a good number of ordinaries who have been financing their lifestyles will also have to suffer. Tough shit--you should have read the fine print.

But this has to happen in a structural climate where room for maneuver is rapidly narrowing. Refining capacity is tapped out, even though crude sources are probably not yet flowing as full-bore as they could be. So there's a crimp in the supply chain that our -- I don't want to say "enemies," but -- enemies can exploit if they choose to, a la the 1970's embargo. Combine that with the fact that we're no longer the only player in town (see, China, India), and what ever leverage we once had is totally spent. This is all over and above whatever validity the PO arguments have.

In favor of slowing the collapse is the fact that a high proportion of our debt is held by other nations (notably the far east). They have a huge stake in maintaining the value of those debts and so working to cushion the fall. But it isn't something we should be banking on (no pun intended).

That slow fall (I'm writing my way to this conclusion) is probably going to play out like the 'plateau' market the PO 'optimists' predict. Time is the variable. Someone knows it's value, but I don't know who. With effort, if we're serious, we can probably make the plateau last long enough to prolong it during the coming structural shift. But that doesn't mean it won't express a downward trend during that time. If it's a long-enough time horizon, I don't think we should fully count out the ability of the market to adjust itself to a new reality. The potential is certainly there for an entirely new economy based around alternatives to oil -- on every front. And in this respect, the post oil economy has the potential to be far, far more egalitarian.

I make that assertion based on the 30:1 energy ratio some humans now enjoy from oil. With alternative sources of energy existing more in the 4:1 range, all things will have to involve more humans in sustaining them. If anything, we may be looking at an even more granular economy than we now have. It will take more humans to generate all kinds of goods then it currently does, simply because transfer of all kinds is more costly. Generally speaking, we'll probably see the world economy skew retail, rather than wholesale.

But the key is the length of the time horizon. And in that respect, artificial "propping" of the plateau may be a good thing. Rather than simply delaying catastrophe, it may help us to avoid it? I don't know. I doubt our seriousness. We're placing a lot of hope in the self-interest of the oligarchs. If you want to stay rich in this new world, you're going to have to come up with a structural underpinning that can take the place of oil. You're also going to have to let some of your buddies twist in the wind in order to support a system correction.

Flip a coin, I guess.

Monday, March 10, 2008

Them Negroes Get All the Breaks...

"If Obama was a white man, he would not be in this position," she continued. "And if he was a woman (of any color) he would not be in this position. He happens to be very lucky to be who he is. And the country is caught up in the concept."
You remember Geraldine Ferarro, right? Back in 1984, she helped the Democrats to the White House as Walter Mondale's VP candidate get stomped like a narc at a biker rally.

Hard to know what to say here. This has been covered elsewhere on the 'net, but this kind of thing deserves the airplay, as I think it's important to point out the depth to which Hil is allowing her proxies to sink.