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Historian warns of sudden collapse of American ‘empire’
Brent Gardner-Smith, aspendailynews
Harvard professor and prolific author Niall Ferguson opened the 2010 Aspen Ideas Festival Monday with a stark warning about the increasing prospect of the American “empire” suddenly collapsing due to the country’s rising debt level.

“I think this is a problem that is going to go live really soon,” Ferguson said. “In that sense, I mean within the next two years. Because the whole thing, fiscally and other ways, is very near the edge of chaos. And we’ve seen already in Greece what happens when the bond market loses faith in your fiscal policy.”

Ferguson said empires — such as the former Soviet Union and the Roman empire — can collapse quite quickly and the tipping point is often when the cost of servicing an empire’s debt is larger than the cost of its defense budget.

“That has not been the case I think at any point in U.S. history,” Ferguson said. “It will be the case in the next five years.”..
(6 July 2010)

The greatest con since 1776
Ilargi, the automatic earth
Right. So Fannie and Freddie have now been delisted from the New York and Chicago Stock Exchanges. They’ll still be traded though, in the over-the-counter (OTC) market. If any knows of any valid reasons why government entities should be traded at all, never mind very profoundly bankrupt ones, do pray tell. Buying and selling broke government agencies can only be profitable if the taxpayer gets stuck with the difference, as far as I can make out.

Bruce Krasting has noticed that the Fed has moved $4.4 trillion of F&F’s "assets" onto their respective balance sheets. While the two GSE's have not, so far. What's that rumble I hear in the distance? Yes, the Republicans have called for all these "assets" to be put on the government's balance sheet, and they're right of course, that's where they belong. Bank of America has just confessed that they’ve pulled the same Repo 105 stunts that Lehman had, and the SEC is "going after them". Fine, good, though far too late, but what moral standing does a government have that pulls its own versions, and on a massive scale, of Repo 105s?

”Repos are short-term financing arrangements that allow banks to take bigger risks on securities trades. Classifying the transactions as sales instead of borrowings—as in the Repo 105 strategy—allows a bank to take assets off its balance sheet and thus reduce its reported leverage.”, writes Michael Rapaport in the WSJ.

You tell me how that differs from what the US government is doing with Fannie and Freddie. Sure, there's one main difference with Lehman and Bank of America: the scale of creative accounting/fraud. $4.4 trillion is real money. If Washington would do for itself what it pretends to demand from the financial industry, the US would be -technically- broke. But let’s be honest: is it really such a grand idea to keep alive a government and a banking system that can only keep their heads above water by flouting the laws of the land? Is that truly in the best interest of the citizens of the country, or does it in truth only scam those citizens ever more for the benefit of an elite that isn't even clever enough to not lose bigtime at the nation's crap tables?...
(11 July 2010)

We scare people off by talking about 'degrowth'
Molly Scott Cato, the ecologist
The French have a much better word for it: 'decroissance'. Using ugly and frightening terms like 'degrowth' won't help pave the way for a new and exciting economics

For an orthodox economist, ‘growth’ is an article of faith. In his book The Growth Illusion, Richard Douthwaite reveals the almost religious awe in which this holy of holies of capitalist economics is held. Its conceptual power is so all-encompassing that an economist would have to call a decline in economic activity, such as that seen in 2009, an example of ‘negative growth’ rather than shrinkage or recession.

Plotting economic growth since 1955 on a graph makes clear how extraordinary is the situation in which we now find ourselves. It shows the consistently upward trend of economic activity in the UK since the end of the Second World War. Economic growth has been increasing exponentially since then. The recession following the financial crisis of 2008 is a dramatic break in the trend, clearly demonstrating a sudden reverse of the continuous series.

Cash = carbon

Although it is apparent to any economist who also has an interest in the environment that all economic activity has a carbon impact, this decline in production is not greeted with delight amongst our policy-makers—quite the reverse. Adair Turner cautioned against celebrating the 8.6 per cent fall in GHG emissions calculated for the second report from Climate Change Committee, of which he is the chairman, since these were only the consequence of the recession and so could not really count. I was reminded of my wicked temptation during the election period to encourage people to vote Tory, since their chainsaw attack on the economy would inevitably push us back into recession.

Turner and his ilk, true believers in the neoclassical way, simply cannot see this from the other end of the telescope and realise that, not only is there an inevitable relationship between economic activity and carbon emissions, but that this means we have to move into a new economic paradigm where we can thrive without being in a state of perpetual expansion.

Fortunately, we are not all wedded to the capitalist growth model. A recent conference in Leeds held a practical working session on developing the alternative, a series of workshops where we revisioned key aspects of life—consumer behaviour, money, employment and population—in a no-growth world...
(14 July 2010)
The Conference Molly is referring too was run by the Center for a Steady State Economy, whose blog we pick up regularly at EB -KS