California Free Press

Solar Energy: Centralized, Corporatized, Commodified or Power To, Of and For the People?

The next US administration, hopefully under Democratic leadership, will make a big push toward solar energy. But as always the devil will be in the details. Whether or not there will be energy independence from foreign nations will be a function of how they go about it. There are basically two models. The government will subsidize the development and application of solar energy either way.  Which model is chosen will determine which direction the US will go in for many years. There will be those who will complain about government subsidization of the solar energy field saying it should be left to private enterprise. But what do you call the $16 billion government subsidies given to the oil companies at a time they are experiencing record profits? It's OK to subsidize large corporations but not OK to subsidize individual citizens? It's OK to subsidize rich farmers and pay them not to grow crops as was enacted again in the recent farm bill?

But there are also big subsidies and tax breaks for farmers. Despite the fact that commodity prices are through the roof, up 126% for wheat, 57% for soy and 47% for corn, which is in just about everything from plastics, sweeteners and ethanol to, well, corn. And yes farmers are still being paid not to farm their land to the tune of about 30 billion a year. ... ... with less than a couple percent of Americans still working the land, it's not struggling farm families but huge agribusiness firms that till the land and rake in the profits. And guess what the new farm bill offers them? I mean aside from endless earmarks favoring race horse owners (courtesy of Kentucky's Senator Mitch McConnell) and Western Salmon fisheries? What it offers them is continuing tax breaks on farm income up to -- unhuh -- $750,000 per farmer. President Bush asked to lower the limit to $200,000 but was ignored. Farmers who make more than $750,000 in farm income who don't want to be taxed have an option - get yourself a wife and your non-taxable income goes to $1.5 million.

Basically the government is subsidizing everyone and everything that can mount a huge lobbying effort in Washington. That means corporate subsidization, but when the little guy complains that he or she can't afford gas, food or health care, the Republican right and their corporate lobbyist shills come forward with their propaganda campaign saying that helping the little people would amount to socialism, and, although corporate socialism is OK (they wouldn't exactly put it in those words), we can't have government subsidizing individuals and families - especially poor and middle class - because that would be socialism of the worst sort - socialism that benefits the people instead of the large corporations.

But I digress. Barack Obama or Hillary Clinton or both will have a chance (especially if they have a filibusterproof Senate) to redirect the US away from corporate socialism and towards the empowerment of noncorporate individuals and families. The real issue about solar energy is not whether we'll have it (we will) but who will control it. One model is where government sibsidizes individual homeowners to install solar panels on their homes and property as Germany is doing.

An average German household, for example, can earn over 2,000 euros ($A3,130) a year from subsidies to install solar panels - double their electricity bill - and pay off all costs within 10 years and earn a pure profit for a further 10.

This is a decentralized model in which power generation and distribution is spread over the whole population. One could even say it was democratic power generation or Power to the People! The other model is the one Exxon Mobil and British Petroleum are hankering for: centralized solar power generation and distribution brought to you by the same folks who are now selling you oil. They just want to diversify into other methods, but they want to retain centralized corporate control over US energy needs. They want an energy policy in which energy can be commodified and sold to you in units and priced in such a way that they have control over it. It doesn't matter whether it is solar power or oil generated power so long as they commodify it, meter it, price it and control the distribution of it.

And the absolute worst aspect of centralized corporate control is that solar futures (like oil futures) will be bought and sold on Wall Street and in the London financial district so that speculators can bid up the price of solar energy like they're doing now with oil futures. Hedge funds and other speculators will then control the price of energy like they do now. They don't care what the source of the energy is, only whether it can be commodified, bought and sold and speculated on so they can make their 20% annnual returns to capital at the average person's expense I might add. Where do you think your gas money is going? Now if the government subsidizes individual homeowners to install solar panels, then individual families can generate their one energy both for their homes and for their plug-in electric cars. There will be no middlemen to bid up the price of energy. It will be essentially free once the solar panels are paid for. That's where government subsidization comes in. Instead of corporate profits and speculator profits, there will be a savings to individual families who will be paying essentially nothing for their energy needs. Instead of paying at the pump, paying for heating oil, paying the power and light company, families will be able to diminish their monthly expenses by those amounts. And they may even make money by putting power that they don't need back on the grid like they do in Germany. That would represent a demo- cratic approach to energy generation and distribution as opposed to the corporate approach. If you wanted to make a fine distinction, it wouldn't be socialized energy production because the government would not own the means of production. Individual citizens would. It would be economic democracy and individual empowerment as opposed to government socialism. And it wouldn't be corporate socialism where large corporations, subsidized by the government, owned and controlled the means of energy production. So conservatives how ya going to spin that? How are you going to turn the voters away from decentralized  ownership of the means of energy production and convince them that large corporations should own and control it? 

The absolute worst aspect of corporate control and commodification of energy is that energy independence will turn out to be a farce. Dependence on foreign oil in a globalized market will turn out to be dependence on oil companies who now generate solar energy that will be owned by the same Arabs and Chinese who now provide oil and from whom we borrow money. In a globalized capitalist system, actual corporate ownership in publicly traded corporations can be anyone, anywhere. It doesn't have to be Americans. And who do you think has the money to invest? So dependence on foreign oil will be replaced with dependence on foreign ownership of solar power production in the American market. That's globalization for you. But the results would be the same whether it's American corporations that own the means of energy production or globalized corporations that own the means of energy production. And why do I think foreigners would still control the means of production if this model were to succeed? Because they own a vast amount of American debt at the present time. They're swimming in dollars. The US has gone from the world's largest creditor nation to the world's largest debtor nation in just a few short years. Financially speaking, the Arabs and the Chinese are in the cat bird's seats. They own American debt big time. They can buy up publicly traded shares in any corporation they choose to including those who provide energy (whether oil or solar) to the American market. So the US will still be in the hands of corporatists, speculators and foreigners if we end up with centralized, corporatized, commodified solar energy.

The Democrats, if they should win the White House and control the Senate, will have a chance to turn this country around by rebuiding infrastructure and putting the nation on the path of decentralized, decorporatized and decommodified energy production that will benefit more or less equally every US citizen instead of enriching corporations and speculators. Non-outsourcable jobs will be created and the cost of living will go down. Instead of pouring money into wars and the largest military-industrial complex in the world, that money could be redirected into more profitable (for the people) pursuits. Instead of trying to bring democracy to the rest of the world, why not try to bring a little democracy here at home? However, control of Congress by lobbyists in order to elicit government largess for corporations needs to be eliminated. There will still be a need for oversight of the energy grid and this is a legitimate government or regulated utility function. There will still be a need for pricing of solar units so that energy can be put out on the grid by individuals and credited to them and vice versa. When enough silicon solar collectors are in place, energy should be virtually free - something that is anathema to the commodifiers. Now free energy to power homes, transportation and businesses. Wouldn't that be something? POWER TO THE PEOPLE!

The Rapacious Prescription Drug Industry

There are two recent books that expose the unsalutary practices of the drug industry. One is "Our Daily Meds," by Melody Peterson  (left) and the other is "The Truth About the Drug Companies," by Marcia Angell (below). A recent study found that half the Americans that have health insurance are on some kind of prescription drug! Ever since drug advertising became legal in the US in 1997 (one of two nations in the world that allow it), the drug industry has beaten a drum to the tune that there is a prescription drug for every malady perceived or otherwise that will take care of the problem. They have even created diseases for which there was no prior awareness.

USA Today on Tuesday examined the "political clout of the pharmaceutical industry," which since 1998 has spent $758 million on lobbying efforts -- more than any other industry, according to the... Center for Public Integrity. The pharmaceutical industry in 2003 spent $143 million on lobbying activities. At that time, there were 1,274 registered pharmaceutical lobbyists in Washington, D.C. -- more than two for every member of Congress, USA Today reports. Of those, 476 were former federal officials, including 40 former members of Congress. Former Rep. Billy Tauzin (R-La.) earlier this year was named CEO and president of the Pharmaceutical Research and Manufacturers of America. According to USA Today, Tauzin's move to the private sector is "testament to the industry's power." Prior to taking his position with PhRMA, Tauzin helped pass the Medicare prescription drug benefit as chair of the House Energy and Commerce Committee. Currently, Senate Majority Leader Bill Frist (R-Tenn.) -- the "gatekeeper for legislation that comes to the Senate floor" -- is a "key lobbying target" for the industry, USA Today reports. During the 2004 election cycle, the drug industry contributed at least $17 million to federal candidates, including $1 million to President Bush and $500,000 to former Democratic presidential nominee Sen. John Kerry (D-Mass).

The pharmaceutical industry would have you believe that they need to charge such high prices for their wares so that they can do research to come up with more and better drugs. In point of fact their research budgets are meager compared to their outlays for advertising, lobbying and executive compensation packages. They've found that a "me too" drug can make them more money than a drug that they've developed from scratch. A "me too" drug is one that they've copied from a success by another drug company, but offers nothing new or original. As for research, they won't hesitate to put a drug on the market whose negative side effects almost outweigh the positive effects of the drug, and those positive effects may be little more than a placebo. As a result, US citizens are loading up on drugs in their systems which may be doing them more harm than good.

Doctors are totally in bed with the drug industry which offers them all kinds of money and perks to go along with the program. The drug industry will even ghostwrite the research papers for them (as well as the congressional legislation) and see that they are published in what used to be independent, unbiased journals. All the doctor need do is put his name on it. (All Congress need do is pass the legislation.)

The newer and scarier material in “Our Daily Meds” concerns the increasingly serious consequences of Americans’ dependency on prescription drugs. Disagreeing with Iowa’s nosologist, Ms. Petersen says the lethal consequences of overprescribed or misprescribed drugs are too readily accepted as “natural” death. She cites the unwillingness of pathologists to question the wisdom with which doctors dispense medications. The reluctance of hospitals to perform autopsies, she says, has impeded medical research into what these interactions can do.

So the accumulation of drugs is a person's system and the encouragement by the drug companies to increasingly rely on pills to cure every perceived pain or ailment goes hand in hand with the public's laziness and unwillingness to take responsibility for their own lives and to seek a panacea by altering their lifestyles - in particular diet and exercise. Dieting and excercise require work and a willingness to undergo pain and discomfort. Instead why not avoid the pain and discomfort by taking a pill? And if a particular drug does not solve the problem ... ? Not to worry, the doctor will simply prescribe another drug. If that one doesn't work, then another and another... In this way the profits are multiplied. So a failure is actually a success ... in terms of profits.

But while the rhetoric is stirring, it has very little to do with reality. First, research and development (R&D) is a relatively small part of the budgets of the big drug companies—dwarfed by their vast expenditures on marketing and administration, and smaller even than profits. In fact, year after year, for over two decades, this industry has been far and away the most profitable in the United States. (In 2003, for the first time, the industry lost its first-place position, coming in third, behind "mining, crude oil production," and "commercial banks.") The prices drug companies charge have little relationship to the costs of making the drugs and could be cut dramatically without coming anywhere close to threatening R&D. Second, the pharmaceutical industry is not especially innovative. As hard as it is to believe, only a handful of truly important drugs have been brought to market in recent years, and they were mostly based on taxpayer-funded research at academic institutions, small biotechnology companies, or the National Institutes of Health (NIH). The great majority of "new" drugs are not new at all but merely variations of older drugs already on the market. These are called "me-too" drugs. The idea is to grab a share of an established, lucrative market by producing something very similar to a top-selling drug. For instance, we now have six statins (Mevacor, Lipitor, Zocor, Pravachol, Lescol, and the newest, Crestor) on the market to lower cholesterol, all variants of the first.

Not only that but when a study shows that a drug such as Vioxx causes more harm than good or has disastrous side effects, the FDA allows them to keep it on the market, to keep selling it and to keep endangering peoples' lives. A conclusive study found that Vioxx was causing heart attacks and strokes, but it's still being sold as well as other drugs which have been found to be harmful.

The moral is profits first, human lives second and our government is in the pockets of the drug lobby.

How US Government Screws Senior Citizen Social Security Recipients

By fiddling with statistics, the US Government is able to come up with any figures it wants to, and, of course, it wants to come up with the figures that make it look good. Therefore, unemployment rates and inflation are doctored to make them lower than they actually are. GDP is doctored to make it seem larger than it actually is. The pernicious part is that seniors count on their cost of living adjustments (COLAs) which are pegged to the inflation rate to help them keep their heads above water. By understating the inflation rate seniors have been cheated out of their COLAs to the tune of 70% of their entire check by some estimates.

And, of course, the Bush Administration does not have to admit that we're in a recession by understating the inflation rate at 2% whereas by assuming the inflation rate is 5% (which is more in tune with reality), we would definitely be in a recession. So a recession - like beauty - is in the eyes of the beholder and the government technocrats who lie with statistics have a different definition of beauty than you or I do. Why does understating the inflation rate get the government out of a recession? Because when you adjust for inflation, it lowers the GDP to the point that we've had negative growth for two straight quarters and - bingo - that's the "definition" of a recession. Of course, you could define it in a different way...

Kevin Phillips has done an excellent job in running down the inflation boondoggle:

Billionaire California bond manager Bill Gross calls it "a haute con job." Bloomberg News columnist John Wasik describes it as "a testament to the art of economic spin." More and more shoppers and consumers simply disbelieve it. The subject of this scorn is the federal government's vaunted Consumer Price Index or CPI. Americans are now beginning to understand that this indicator has its own share of gimmicks not unlike a sub-prime mortgage or the six pages of fine print that accompanies your credit card agreement. Some of these CPI ingredients -- product substitution weightings, "hedonics" (price reductions for added product quality or satisfaction), and use of owner's equivalent rent (instead of home ownership costs) -- have a comic aspect suitable to mockery by Bill Maher, Stephen Colbert or Jon Stewart. But in a larger sense, they're not remotely funny. That's because the federal minimalization and misrepresentation of inflation, pursued statistically over the last 25 years, has been the main buttress of Washington's over-favorable and self-serving portraiture of the U.S. economy.

Understating the inflation rate has meant that the government has limited payouts to seniors whose social security COLAs are linked to the CPI. It also means that wage contracts tied to the CPI have saved corporations tons of money while underpaying workers. According to Phillips some $250 billion a year could be involved. Understating inflation also means that savers get a lower rate of return on their savings accounts while banks get to borrow money more cheaply.

Now anyone who has purchased gas or food recently - isn't that all of us ... hello! - knows that the price of these commodities has skyrocketed. Although the price of housing has deflated recently, anyone who bought a house say in the years from 2000 to 2006 knows that the cost of buying a house increased tremendously during those years. Yet neither housing costs nor food nor gas has been included in the CPI by the government.

Oil is up over 80 percent in the last twelve months. The New York Times' consumer reporter, W.P. Dunleavy, wrote on May 3 that his own groceries now cost $587 a month, up from $400 a year earlier. That's a 40 percent increase. Reports in the financial press make frequent reference to foreign investors who distrust the U.S. dollar because they calculate true U.S. inflation at 6% to 9% including food and energy. California economist John Williams, who runs an organization called Shadow Statistics, contends that if Washington still used the CPI measurements applied back in the 1970s, inflation would be in the 10 percent range. My own analysis, set out in much more detail in an article in the May issue of Harper's, comports with that of the cynical foreign investors. Therein lies the danger. If the current inflation rate is really 6-9 percent instead of the 2-3 percent claimed by government and most U.S. money managers, then Washington's official estimates that the economy still grew at a rate of some 0.6 percent in the first quarter of 2008 become nonsense. Subtracting a 6-9 percent inflation rate from nominal GDP growth would identify an economy that was deteriorating and shrinking, not growing. Concerned foreign dollar-holders would become even more concerned.

The deception started in the Kennedy Administration where the jobless statistics started taking a toll on the "Camelot" image. What to do to get the jobless rate down? Well, how about this? Stop counting "discouaged workers" or those who had "dropped out of the labor force" or "those who were not actively looking for work." I suppose all those had also decided to drop out of the eating and drinking force as well. Lyndon Johnson continued the deception by combining the social security budget with the general budget in the "unified budget". This masked the budget deficit. 

Now Richard Nixon topped them all by defining inflation downward and excluding food and energy costs from the CPI because they were too "volatile". In this way he arrived at "core inflation." What? Excluding the most essential aspects of economic life in order not to be embarrassed by the inflation rate? Yes, this is what Nixon actually did. Consequently, why should any American believe what the government tells them about inflation, recession, unemployment etc.? And why shouldn't social security recipients demand back payments on all the money they've been cheated out of by the government's redefining of statistics? Oh, and don't forget all that economic activity the government talks about is largely confined to the top 1% of income earners while the vast majority see their economic situation deteriorate.

In 1983, under the Reagan Administration, inflation was further finagled when the Bureau of Labor Statistics decided that housing, too, was overstating the Consumer Price Index; the BLS substituted an entirely different "Owner Equivalent Rent" measurement, based on what a homeowner might get for renting his or her house. This methodology, controversial at the time but still in place today, simply sidestepped what was happening in the real world of homeowner costs. Because low inflation encourages low interest rates, which in turn make it much easier to borrow money, the BLS's decision no doubt encouraged, during the late 1980s, the large and often speculative expansion in private debt—much of which involved real estate, and some of which went spectacularly bad between 1989 and 1992 in the savings-and-loan, real estate, and junk-bond scandals. Also, on the unemployment front, as Austan Goolsbee pointed out in his New York Times op-ed, the Reagan Administration further trimmed the number by reclassifying members of the military as "employed" instead of outside the labor force. The distortional inclinations of the next president, George H.W. Bush, came into focus in 1990, when Michael Boskin, the chairman of his Council of Economic Advisers, proposed to reorient U.S. economic statistics principally to reduce the measured rate of inflation. His stated grand ambition was to move the calculus away from old industrial-era methodologies toward the emerging services economy and the expanding retail and financial sectors. Skeptics, however, countered that the underlying goal, driven by worry over federal budget deficits, was to reduce the inflation rate in order to reduce federal payments—from interest on the national debt to cost-of-living outlays for government employees, retirees, and Social Security recipients. ... Nothing, however, can match the tortured evolution of the third key number, the somewhat misnamed Consumer Price Index. Government economists themselves admit that the revisions during the Clinton years worked to reduce the current inflation figures by more than a percentage point, but the overall distortion has been considerably more severe. Just the 1983 manipulation, which substituted "owner equivalent rent" for home-ownership costs, served to understate or reduce inflation during the recent housing boom by 3 to 4 percentage points. Moreover, since the 1990s, the CPI has been subjected to three other adjustments, all downward and all dubious: product substitution (if flank steak gets too expensive, people are assumed to shift to hamburger, but nobody is assumed to move up to filet mignon), geometric weighting (goods and services in which costs are rising most rapidly get a lower weighting for a presumed reduction in consumption), and, most bizarrely, hedonic adjustment, an unusual computation by which additional quality is attributed to a product or service. The hedonic adjustment, in particular, is as hard to estimate as it is to take seriously. (That it was launched during the tenure of the Oval Office's preeminent hedonist, William Jefferson Clinton, only adds to the absurdity.) No small part of the condemnation must lie in the timing. If quality improvements are to be counted, that count should have begun in the 1950s and 1960s, when such products and services as air-conditioning, air travel, and automatic transmissions—and these are just the A's!—improved consumer satisfaction to a comparable or greater degree than have more recent innovations. That the change was made only in the late Nineties shrieks of politics and opportunism, not integrity of measurement. Most of the time, hedonic adjustment is used to reduce the effective cost of goods, which in turn reduces the stated rate of inflation. Reversing the theory, however, the declining quality of goods or services should adjust effective prices and thereby add to inflation, but that side of the equation generally goes missing. "All in all," Williams points out, "if you were to peel back changes that were made in the CPI going back to the Carter years, you'd see that the CPI would now be 3.5 percent to 4 percent higher"—meaning that, because of lost CPI increases, Social Security checks would be 70 percent greater than they currently are. Furthermore, when discussing price pressure, government officials invariably bring up "core" inflation, which excludes precisely the two categories—food and energy—now verging on another 1970s-style price surge. This year we have already seen major U.S. food and grocery companies, among them Kellogg and Kraft, report sharp declines in earnings caused by rising grain and dairy prices. Central banks from Europe to Japan worry that the biggest inflation jumps in ten to fifteen years could get in the way of reducing interest rates to cope with weakening economies. Even the U.S. Labor Department acknowledged that in January, the price of imported goods had increased 13.7 percent compared with a year earlier, the biggest surge since record-keeping began in 1982. From Maine to Australia, from Alaska to the Middle East, a hydra-headed inflation is on the loose, unleashed by the many years of rapid growth in the supply of money from the world's central banks (not least the U.S. Federal Reserve), as well as by massive public and private debt creation.

70%?!! That means that seniors should be getting almost twice what they're getting now in their monthly checks. And since what seniors need most - food and energy - isn't even counted in the CPI - thanks to Nixon - the statistical deceit is appalling! Core inflation? Schmore inflation! The American public is being deceived - about unemployment, economic growth, inflation - you name it. The government's incentive is to misrepresent all these indices because it puts them in a more favorable light and it masks the economic distortions going on in this economy, the massive transfer of wealth from the poor and middle class to the rich and the increasing economic inequality. Economic activity looks good because most of it takes place among the very wealthy. Exclude the top 1% of income earners and the picture for the rest of the population looks dismal.

The real numbers, to most economically minded Americans, would be a face full of cold water. Based on the criteria in place a quarter century ago, today's U.S. unemployment rate is somewhere between 9 percent and 12 percent; the inflation rate is as high as 7 or even 10 percent; economic growth since the recession of 2001 has been mediocre, despite a huge surge in the wealth and incomes of the superrich, and we are falling back into recession. If what we have been sold in recent years has been delusional "Pollyanna Creep," what we really need today is a picture of our economy ex-distortion. For what it would reveal is a nation in deep difficulty not just domestically but globally. Undermeasurement of inflation, in particular, hangs over our heads like a guillotine. To acknowledge it would send interest rates climbing, and thereby would endanger the viability of the massive buildup of public and private debt (from less than $11 trillion in 1987 to $49 trillion last year) that props up the American economy. Moreover, the rising cost of pensions, benefits, borrowing, and interest payments—all indexed or related to inflation—could join with the cost of financial bailouts to overwhelm the federal budget. As inflation and interest rates have been kept artificially suppressed, the United States has been indentured to its volatile financial sector, with its predilection for leverage and risky buccaneering. Arguably, the unraveling has already begun. As Robert Hardaway, a professor at the University of Denver, pointed out last September, the subprime lending crisis "can be directly traced back to the [1983] BLS decision to exclude the price of housing from the CPI. . .With the illusion of low inflation inducing lenders to offer 6 percent loans, not only has speculation run rampant on the expectations of ever-rising home prices, but home buyers by the millions have been tricked into buying homes even though they only qualified for the teaser rates." Were mainstream interest rates to jump into the 7 to 9 percent range—which could happen if inflation were to spur new concern—both Washington and Wall Street would be walking in quicksand. The make-believe economy of the past two decades, with its asset bubbles, massive borrowing, and rampant data distortion, would be in serious jeopardy. The U.S. dollar, off more than 40 percent against the euro since 2002, could slip down an even rockier slope.

And then, as long as we're talking about social security, there is the little issue of funding it. I have blogged previously about the unfairness of capping social security contributions at around $100,000, annual income, when CEOs and hedge fund managers are making $100 million and more per year. These annual incomes are far in excess of anything remotely resembling what a person needs to live on. And then they charge self-employed people 15% of their earned income for their social  security contribution even if the person is receiving social security and still working because they can't live on what they're getting in social security. Of course, the rich have to make absolutely no social security contributions on their unearned income - income from rents, interest and dividends. And then there's the little issue of rich people who have sky high retirement incomes still receiving social security.  It's insane. They don't need it. It should be means tested. All in all the whole program from start to finish which ever end you want to look at is a total botch job, thanks to the Republicans whose goal is to eliminate it altogether.

Amid World Food Shortages, Texas Rice Farmers Paid Not to Farm

While millions are starving throughout the world because of a lack of rice, the US Government is paying subsidies to Texas rice farmers whether they plant and harvest rice or not just so long as rice had been planted there some time in the past. Some of this land has even been developed as "cowboy starter kits," divided into tracts and sold to people who build on one acre and collect farm subsidies on the remaining acreage. Tenant farmers have been put out of business by landlords who raise their rents in order to "capture" the farm subsidy as by law it has to go to whoever actually farms the land, in this case the tenant.

In an article, "Farm Program Pays $1.3 Billion to People Who Don't Farm," the Washington Post reports:

Even though Donald R. Matthews put his sprawling new residence in the heart of rice country, he is no farmer. He is a 67-year-old asphalt contractor who wanted to build a dream house for his wife of 40 years. Yet under a federal agriculture program approved by Congress, his 18-acre suburban lot receives about $1,300 in annual "direct payments," because years ago the land was used to grow rice. Matthews is not alone. Nationwide, the federal government has paid at least $1.3 billion in subsidies for rice and other crops since 2000 to individuals who do no farming at all, according to an analysis of government records by The Washington Post. Some of them collect hundreds of thousands of dollars without planting a seed. Mary Anna Hudson, 87, from the River Oaks neighborhood in Houston, has received $191,000 over the past decade. For Houston surgeon Jimmy Frank Howell, the total was $490,709. ... In 1981, the Texas rice belt extended over about 600,000 acres. By last year, USDA records show, the amount of planted rice had shrunk to 202,000 acres, partly because landowners were able to get farm payments even if no rice was grown on their land. In fact, so many landowners and farmers are collecting money on their former ricelands -- $37 million last year alone -- that the acres no longer used for rice outnumber the planted ones.

Not only that but wealthy landowners can get property tax reductions on that portion of their land considered "agricultural" even though they have no intention of growing anything on it. In addition they can get "emergency disaster relief" even though they have not suffered a disaster.

On a clear, cold morning in February 2003, Nico de Boer heard what sounded like a clap of thunder and stepped outside his hillside home for a look. High above the tree line, the 40-year-old dairy farmer saw a trail of smoke curling across the sky -- all that remained of the space shuttle Columbia. Weeks later, de Boer was startled to learn that he was one of hundreds of East Texas ranchers entitled to up to $40,000 in disaster compensation from the federal government, even though the nearest debris landed 10 to 20 miles from his cattle. The money came from the U.S. Department of Agriculture as part of the Livestock Compensation Program, originally intended as a limited helping hand for dairy farmers and ranchers hurt by drought. Hurriedly drafted by the Bush administration in 2002 and expanded by Congress the following year, the relief plan rapidly became an expensive part of the government's sprawling system of entitlements for farmers, which topped $25 billion last year. In all, the Livestock Compensation Program cost taxpayers $1.2 billion during its two years of existence, 2002 and 2003. Of that, $635 million went to ranchers and dairy farmers in areas where there was moderate drought or none at all, according to an analysis of government records by The Washington Post. None of the ranchers were required to prove they suffered an actual loss. The government simply sent each of them a check based on the number of cattle they owned. ... Then, on Feb. 1, 2003, the shuttle exploded. To ensure recovery of the debris and pay for emergency costs, President Bush issued a federal disaster declaration. As an unintended result, most of East Texas was then eligible for livestock funds. Denton County's livestock owners collected $433,000, records show. "Speaking personally, I didn't think it was necessary at that point in time," said Calvin Peterson, an 81-year-old rancher who heads the local farm committee. "It might have been more political than anything." In Henderson County, about 100 miles southeast of Dallas, Nico de Boer felt the same way. When he arrived from the Netherlands 17 years ago, de Boer had 90 acres, a house, one barn and fewer than 200 cows. Today, he has 1,000 acres, multiple cow barns and sheds, 650 cows that produce 3 million pounds of milk monthly, a BMW in the driveway, a swimming pool, and two more farms in neighboring counties. The rolling hills surrounding his sprawling farm receive a generous average of 40 inches of rain annually. When the shuttle exploded, pastures were full and there hadn't been a drought or any other type of weather disaster in years, records show. But after the presidential disaster declaration, John Reeves of the local USDA office informed livestock owners in Henderson County they were eligible. They eventually collected $751,083 despite no shuttle damage. Reeves said he had no choice but to write the checks. "Congress passed legislation and approved us for that Livestock Compensation Program, and that's what it was," he said. "The closest debris I heard about was 10 to 20 miles away. There wasn't anything here," de Boer said. "Believe me, we would be better off if the government got out of the business and limited the payments to those who really need them."

Politicians in Washington have no respect for the taxpayers' money. It's all about getting special financial favors for constituents in their districts. There's no account- ability and very little transparency. Boondoggles such as this are rarely reported in the mainstream media. In addition to pissing away money to farmers or those who don't even farm under the aegis of a farm subsidy bill, they pour billions down the rathole of the war in Iraq and additional billions supporting the military-industrial complex to build boats the military doesn't even want. America surely is a nation in decline. The Republicans have set out to destroy government, and they have largely succeeded, destroying the American empire in the process. Meanwhile, Congress has come up with an even more costly farm subsidy bill.

Oil Speculators Drive Up Gas Prices at the Pump

It's not enough that speculators and hedge funds have wreaked havoc in the economic system first with the internet bubble of 2000, then with housing bubble (still bursting), but now they've turned their attention to oil and food and are currently in the process of running up prices and creating bubbles in those arenas. It represents the Enronification of food and oil in much the same way that Enron caused huge increases in electricity prices for Californians and others a few years ago by manipulating the market. By the way this isn't what caused the collapse of Enron - charging Grandmas in California outrageous prices for their utility bills. That was all perfectly legal. It was their accounting practices that brought them down. Now oil speculators are manipulating an unregulated futures market causing huge increases in the cost of vital products like food and oil. But this time they've found the perfect vehicle for making a killing in more ways than one. The demands for food and oil are only going to increase so they can bid up the prices for those commodities endlessly. The only way they can lose is if demand were actually to decrease. Then prices might come down, and they would be sitting with overpriced futures contracts. But this is unlikely to happen any time soon. The likliest scenario is that, thanks to them, oil and food prices are likely to continue to rise in a virtually unending upward spiral causing widespread food riots worldwide and pain at the pump here at home which will pauperize the middle class.

Thanks to the deregulation of the commodities markets in 2000, no one knows the mechanics of how these financial instruments are traded or in what quantities or by whom. Some have said that perhaps 60% of today's oil prices are due to pure speculation. It's not a function of supply and demand because the world's oil producers are pumping their hearts out although they can control supply if they want to. The fact that there is abundant supply points to speculation as the factor that's driving up gas prices.

The price of crude oil today is not made according to any traditional relation of supply to demand. It’s controlled by an elaborate financial market system as well as by the four major Anglo-American oil companies. As much as 60 percent of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. How? First, the crucial role of the international oil exchanges in London and New York is crucial to the game. NYMEX in New York and the ICE Futures in London today control global benchmark oil prices which, in turn, set most of the freely traded oil cargo. They do so via oil futures contracts on two grades of crude oil: West Texas Intermediate and North Sea Brent. ... All this is well and official. But how today’s oil prices are really determined is done by a process so opaque only a handful of major oil trading banks such as Goldman Sachs or Morgan Stanley have any idea who is buying and who selling oil futures or derivative contracts that set physical oil prices in this strange new world of “paper oil.” With the development of unregulated international derivatives trading in oil futures over the past decade or more, the way has opened for the present speculative bubble in oil prices. Since the advent of oil futures trading and the two major London and New York oil futures contracts, control of oil prices has left OPEC and gone to Wall Street. It is a classic case of the “tail that wags the dog.” A June 2006 US Senate Permanent Subcommittee on Investigations report on “The Role of Market Speculation in rising oil and gas prices,” noted, “ . . . there is substantial evidence supporting the conclusion that the large amount of speculation in the current market has significantly increased prices.” What the Senate committee staff documented in the report was a gaping loophole in US government regulation of oil derivatives trading so huge a herd of elephants could walk through it. That seems precisely what they have been doing in ramping oil prices through the roof in recent months. The Senate report was ignored in the media and in the Congress. The report pointed out that the Commodity Futures Trading Trading Commission, a financial futures regulator, had been mandated by Congress to ensure that prices on the futures market reflect the laws of supply and demand rather than manipulative practices or excessive speculation. The US Commodity Exchange Act (CEA) states, “Excessive speculation in any commodity under contracts of sale of such commodity for future delivery . . . causing sudden or unreasonable fluctuations or unwarranted changes in the price of such commodity, is an undue and unnecessary burden on interstate commerce in such commodity.” Further, the CEA directs the CFTC to establish such trading limits “as the Commission finds are necessary to diminish, eliminate, or prevent such burden.” Where is the CFTC now that we need such limits? They seem to have deliberately walked away from their mandated oversight responsibilities in the world’s most important traded commodity, oil. Enron has the last laugh . . . As that US Senate report noted, “Until recently, US energy futures were traded exclusively on regulated exchanges within the United States, like the NYMEX, which are subject to extensive oversight by the CFTC, including ongoing monitoring to detect and prevent price manipulation or fraud. In recent years, however, there has been a tremendous growth in the trading of contracts that look and are structured just like futures contracts, but which are traded on unregulated OTC electronic markets. Because of their similarity to futures contracts they are often called 'futures look-alikes.' "The only practical difference between futures look-alike contracts and futures contracts is that the look-alikes are traded in unregulated markets whereas futures are traded on regulated exchanges. The trading of energy commodities by large firms on OTC electronic exchanges was exempted from CFTC oversight by a provision inserted at the behest of Enron and other large energy traders into the Commodity Futures Modernization Act of 2000 in the waning hours of the 106th Congress.

Now it is indeed ironic if not demonic that Wall Street can interject itself in the commodities markets, make millions for hedge funds and speculators while causing widespread pain and starvation in the rest of the world. And it's all perfectly legal! It's Enron's dream become reality. Wall Street produces nothing, sells nothing but paper, but yet can enrich itself at the expense of poor people the world over. By driving up prices on vital necessities, it provides a disservice to humanity while enriching itself. Capitalism has indeed run amok.

Why We Need a Fighter, Not a Uniter

It looks like the long, drawn-out Democratic Presidential primary season will be over tomorrow after the superdelegates weigh in. Obama's quest to be a "uniter not a divider" is nieve at best since he could have all the people united behind him and still not sway the Republicans in the Senate who will filibuster every piece of Democratic legislation unless the Democrats have at least 60 seats in the Senate which seems unlikely. He will never unite the Republican Senators with the Democrats, and, despite having united "the people," it will all be for nought. That's why we need a fighter not a uniter, and Hillary is much more suited to that job. Task number one on day one of a new Presidency should be taking the Republicans head-on over the filibuster rules that allow them to filibuster just by threatening to do so. They don't have to give long-winded speeches to all hours of the night; they just have to say "we're going to filibuster" and whatever legislation is before that august body will be taken off the table and thrown in the circular file. That legislation is dead just on the Senate Republicans' say-so.

Obama's quest to be a uniter is a pipe-dream; it's pie in the sky. He doesn't know what determined fellows these Republicans are. They are fueled by the money heaped on them by wealthy interests represented by tons of lobbyists all pushing the agenda of the wealthy. A Democratic House and Senate combined with a Democratic President might actually get something done. But it would be necessary to have a filibuster-proof Senate. Otherwise, the Republicans will sit there and filibuster every piece of legislation not favored by the lobbyists to death. This is the fight the next (Democratic) President needs to take on right out of the starting gate. Otherwise, his or her Presidency will be for nought. I think Hillary (hopefully) understands this. Obama doesn't seem to have a clue. Sure he hasn't taken any PAC money himself. So what? How does this change the legislative proclivities of the Senate?

Bill Clinton was put in this same position because he faced a Republican Congress. It's now apparent that the Republicans can accomplish their ends even with a Democratic Congress by means of the filibuster rules. They told Bill Clinton "Either you cooperate with us (triangulate) or you'll accomplish nothing. You'll be a do-nothing President." They'll tell Obama the same thing, and he'll be pressured into triangulating. However, history has shown that it didn't work all that well for the first Clinton. He signed tons of Republican inspired legislation including the repeal of the Glass-Steagall act which led directly to the sub-prime mortgage crisis. Hopefully, President Hillary wouldn't let the same thing happen to her as happened to her husband. Anyway I'd bet she'd be more successful, having been around the block once, at taking on the Republicans than Obama would be.

The first step is using the nuclear option on the filibuster rules - obliteration of the filibuster - which the Republicans have perverted from its original purpose in order to serve their interests. And there are enough self-serving Democrats in the pockets of lobbyists that a Democratic President cannot even count on all of them. The Democratic Congress elected in 2006 has largely failed in its efforts because of its refusal to take on the Republicans over this issue. That makes it even more critical to take on the filibuster in 2009 and destroy it. The revolving door facilitates politicians who pander to lobbyists obtaining lucrative jobs with the corporations whose interests they represent once they leave "public service" if you want to call it that. For them though it's "special interest service." Their whole intention is to make a killing once they leave the government.

So, in conclusion, the stronger candidate in my opinion is Hillary Rodham Clinton. Both she and Obama want to do the right things for the US. The question is who has the better prospects for actually being successful at it. And who is willing on Day 1 to be a fighter, trim the Republicans' wings and put them in their place. There is a lot of money in Washington almost all of which is betting that neither Obama or Hillary will be able to do so.

Commodities Speculators

Gas prices are going up with no end in sight. Food prices are rising. We're obviously in an inflationary period and a recession. Wages aren't going up so we have stagflation plus a recession or to coin a term - recesstagflation. It's the worst of all economic worlds. The speculators and hedge fund managers, having profited from the stock market bubble of 2000 which later burst and the sub-prime mortgage bubble which is still bursting, have now turned their attention to the commodities market, driving up prices much as they did in the stock market and real estate. Originally the commodities market had a simple raison d'etre: payday advance for farmers. Farmers could sell their crop whether it be corn, wheat or pork bellies on the futures market before the crop was even in the ground or the animals had even been led to slaughter at a set price. The crop or animal part was to be delivered at a future date, thus the name - futures. Now in most cases the buyer of the futures contract had no intention of taking delivery. He or she was just a middle man or woman. They made their money by selling the contract to someone else for an even higher price than what they paid. Finally, the end user would buy the shipment of the actual product having paid more or less than what the farmer received in the first place. The same principles apply to the oil market.

Now just as in the mortgage market, the commodities market was deregulated making all kinds of financial chicanery possible without any government snooping or looking over their shoulders. This led to disastrous results in the mortgage market as we are seeing unfold in real time. The difference between the mortgage market and the commodities market is that homeowners who were not able to make their payments could default on their loans and walk away with their home going into foreclosure. Commodities speculators have a market for which the end product can not be walked away from. People have to eat no matter what.

So that brings us to the second key difference between the housing crisis and the food crisis: the scale of consequences. When a housing bubble inflates till it pops, people lose their homes. But when a food bubble grows till it bursts, people starve. The problem with booms is they're almost inevitably followed by busts. Worse news is that what we're seeing right now-skyrocketing food prices and growing hunger-are still the effects of the boom. If the weather turns bad, commodity prices could still double over the next few months. But with the stability of the food and agriculture system left up to the whims of mother nature's next crop yield, or how Cargill, ADM and the venture capitalists spin the roulette wheel, the bust is in the making. If the rural farm economy tanks, we're set to see farm foreclosures, another banking crisis, and global hunger that will make the sub-prime mortgage effects look like a drop in the bucket.

So as they pour money in, they know that the futures price will only go up, never down because there are always more mouths to feed, never fewer. Much as in the case of Enron jerking around the energy market, the speculators have latched onto something consumers will pay any price for: gas and food. So just as Enron caused the price of electricity to go sky high by manipulating the market, commodities speculators can trade futures contracts back and forth driving up the prices of gas and oil without pesky government intervention.

From the Washington Post:

Farmers and food executives appealed fruitlessly to federal officials yesterday for regulatory steps to limit speculative buying that is helping to drive food prices higher. Meanwhile, some Americans are stocking up on staples such as rice, flour and oil in anticipation of high prices and shortages spreading from overseas. Their pleas did not find a sympathetic audience at the Commodity Futures Trading Commission (CFTC), where regulators said high prices are mostly the result of soaring world demand for grains combined with high fuel prices and drought-induced shortages in many countries. The regulatory clash came amid evidence that a rash of headlines in recent weeks about food riots around the world has prompted some in the United States to stock up on staples. Costco and other grocery stores in California reported a run on rice, which has forced them to set limits on how many sacks of rice each customer can buy. Filipinos in Canada are scooping up all the rice they can find and shipping it to relatives in the Philippines, which is suffering a severe shortage that is leaving many people hungry. While farmers here and abroad generally are benefiting from the high prices, even they have been burned by a tidal wave of investors and speculators pouring into the futures markets for corn, wheat, rice and other commodities and who are driving up prices in a way that makes it difficult for farmers to run their businesses. "Something is wrong," said National Farmers Union President Tom Buis, adding that the CFTC's refusal to rein in speculators will force farmers and consumers to take their case to Congress. "It may warrant congressional intervention," he said. "The public is all too aware of the recent credit crisis on Wall Street. We don't want a lack of oversight and regulation to lead to a similar crisis in rural America." ... The upswing in prices has been exaggerated by the massive influx of investors and speculators seeking to profit from rising prices for corn, wheat, oil, gold and other commodities. Big Wall Street firms and hedge funds have taken huge positions in futures markets that once were dominated by relatively small operators such as farmers and grain-elevator owners. Small investors, who see fast-rising commodities as good hedges against inflation and a falling dollar, also are getting a piece of the action by investing in index funds that are tied to commodity prices.

Now the speculators know there are world wide food shortages so by the law of supply and demand and because of inflationary pressures on the American dollar, they are only going to make money by buying a fixed quantity of a commodity now and selling the contract before the delivery date to an end user. This drives up the price of the commodity whether it be food or oil because, unlike the housing market, people need to eat and drive. Now some people think this is creating another bubble. Exchange-traded funds and index funds allow speculators to place bets that commodities will go up or down in the future. Money has flooded into these funds mostly on the long side. In other words most people are betting that the prices of commodities will continue to go up, hence the bubble. The "smart money" is betting that at some time there will be a correction and prices will tumble. However, increased demand for meat (it takes 8 pounds of grain to produce one pound of meat) and ethanol means that less food is available to those in poorer countries who are dependent on the grains to avoid starvation. This has produced food riots in some parts of the world.

So just as speculation in the housing market drove up the cost of houses to unsustainable heights providing homeowners with gains in equity that caused them to think that they could refinance unendingly, pull equity out and spend it, money pouring into the commodities market is driving up the cost of gas and food, two essentials that are consumed immediately and thus have no inherent equity value. The homeowner profited by riding the mortgage bubble at least till it ended, but there is no profit for the consumer who must pay higher prices for staples driven by speculators and investors. And poor people are the most vulnerable to rising prices. But this may be the greatest boon to investors who may profit endlessly from rising demand on the backs of increasingly desperate poor people.

None of this speculation is really necessary. If the farmer needs a payday advance, why can't he get it from a commercial bank rather than Wall Street? I'm sure his equity in his farm would justify a loan. There's no need for a futures market in which the farmers themselves participate in order to get the highest price. All the financial middlemen are just driving up the cost of food and gas and ultimately will cause starvation among the world's poor. Let the farmer sell directly to the end user and finance his crops with a loan from a commercial bank if need be. This is just another example of capitalism run amok. The answer is not more regulation; it's making speculation illegal!