Wednesday, June 30, 2010

The Country's Birthday and Indulgent Parenting

Conservatives and conservative-leaning people frequently pass around forwards bemoaning the lack of discipline and responsibility among today's youth, with forwarded emails purporting to be from such people as Bill Cosby, Bill Gates, George Carlin, Robin Williams etc. (Just Check These emails are transparent attempts to undercut liberal ideas and reduce nuanced discussions to seemingly logical but actually illogical sound bites.

However, when one considers the nation to be a creation of the people, it stands to reason that the nation is our child, and if the nation is our child- our trust and responsibility-, whom we want to be the best it can be, and achieve great things, conservatives as parents seem to be sorely lacking. By retreating into hyperbole when discussing the nation, conservatives fall afoul of their very premise that holding a child (or nation) accountable for its failing is the best path to improvement. Some examples of "indulgent parenting":

Tuesday, June 29, 2010

The World Cup or the World of Woes

Soccer/Football fans are avidly watching the World Cup as it takes place in South Africa right now. The glamor and hoopla associated with it is supposed to excite everyone across the globe, including of course South Africans. What’s missing from the story is the tragedy, not the glory, that FIFA’s sports tournament really represents.

Sunday, June 27, 2010

Blackwater? Again? Really?

Blackwater (or Xe, as it is currently called - they changed their name to try and avoid attention after all the negative press they got from Jeremy Scahill's outstanding work on them, amongst others) recently recieved a $100 million contract for work in Afghanistan. CIA Director Panetta took to the airwaves on Sunday to defend the contract. Part of the reason why Blackwater got the contract is they presented a bid that was $26 million less than the nearest competitor. The contract is for a year, and could run up to 18 months. So...America's professional mercenary army, viewed very negatively in many parts of the world (Iraq is obviously the key sore spot, as they were banned from the country as a result of numerous incidents where they killed unarmed civilians), now gets a nice contract in Afghanistan. Raise your hand if you think this will go well? Anybody? Anybody?

Thursday, June 24, 2010

DISCLOSE Act Passes the House, Now on to the Senate

The DISCLOSE Act has passed a major hurdle tonight as the House of Representatives passed the major reforms to campaign finance law with a final vote of 219 to 206 in favor. Unfortunately, however, only two Republicans -- Rep. Mike Castle (R-Del.) and Joseph Cao (R-La.) -- had the gonads to cross party lines, which is likely an indication of the party line treatment the bill will get once it reaches the Senate. Of course the irony there is that the legislation was introduced by the Senate and not the House.

On April 29th of last year, democrats launched the DISCLOSE Act, a bill intended to soften the powerful effect of the Citizens United ruling, which relaxed campaign advertising rules for corporations, unions, and other companies. The ramifications of the Supreme Court ruling has been widely covered, so I will not go into detail here, but you should absolutely search the Net for information about the case if you are not familiar with it, as it stands to change everything about the way we are governed, live, work, and vote. The influence of money on politics in this country is astounding already, but the Citizens United ruling removes all boundaries, essentially making it so that there really is no limit to what money can buy.
If the DISCLOSE Act were to be passed by the Senate,

The Great Recession? Not for Apple (Or Any of the Peeps Waiting in Line for the Iphone IV)

Talk about the haves and the have-nots. Apparently this web-developer is out of touch with reality because I cannot for the life of me comprehend how a sane person would camp overnight to by a stupid cell phone. Yet, all around the world reports are coming in regarding the lines outside of Apple stores that wrap around blocks.

Really? Are you serious? I was so sure that this was a publicity stunt for Apple--some kind of gorilla marketing campaign--that I

The More Things Change, The More They Stay The Same: What does General McChrystal's Ouster Mean for America's Longest Running War?

As Obama Relieves McChrystal Over Critical Remarks and Names Petraeus as Replacement, I find myself thinking about what will happen if Obama does not withdraw our war zone troops by July of 2011 as promised. Does it even matter any more? I mean, we all seem to have relinquished control to the point that we accept no responsibility for our elected leaders' actions once we vote them in. Are we responsible? Back in February I posted an essay by Michael Sandstrom (originally written in 2006), titled Boxing, Wrestling, and the American Dream, which attempts to unravel the smoke and mirrors of the entertainment complex that has become America (with references to Roland Barthes). It argues that after taking a backseat to the fake theatrics of of World Wrestling Entertainment (WWE), boxing was trying to make a comeback, and goes on to posit that perhaps the reemerging yearning for boxing (and boxing movies) along with the sudden dismissal of the smoke and mirrors of the WWE, was directly related to the hope and desire to relinquish the "no holds barred" attitude of the Bush Administration.

Yet, as I stated back in February...

Wednesday, June 23, 2010

Is It Raining BP Oil in Louisiana?

Caveate emptor: I have not been able to confirm the validity of this video. I noticed it on one of our twitter friends: The Oil Price.

I did not know that oil could be pulled up into the atmosphere like this. Can anyone confirm if physics allows what this video claims? If it is possible, the ramifications seem pretty horrific.

update: BP Robot May Have Nothing to Do with Cap Removal

According to the Deep Water Horizon Response website:

This morning at approximately 8:45 a.m., "a discharge of liquids was observed from a diverter valve on the drill ship Discoverer Enterprise,which is on station at the MC252 well-site. As a precautionary measure, the lower marine riser package (LMRP) containment cap system, attached to the Discover Enterprise, has been moved off the Deepwater Horizon's failed blow-out preventer to ensure the safety of operations and allow the unexpected release of liquids to be analyzed."

While capture of oil and gas "through the BOP's choke line to the Q4000 vessel on the surface continues," the cap at the site of the blown preventer has been temporarily removed. If this happened at 8:45am, why the story about the robots? Yet again, it seems BP and those involved may not be 100% forthright in the matter of the spill. Was it too much bad publicity to tell the truth, that BP had to intentionally allow more oil to flow into the ocean for a short period of time for safety's sake?

Just when I thought this thing couldn't get uglier. By the way BP, what is the status of the relief well. Your company has gone on record saying it will be complete by early to mid August. What happens if its not done until September or October?

Breaking News: BP Robots Collide, Forcing Removal of Cap: Oil Gushing at Fastest Pace Yet

Within the past hour, BP has been forced to remove the cap that was the center of much drama earlier this month when they initially cut the tube wide open to fit the cap, which as is the case now, left the gaping hole free to pump out oil at maximum speed without the possibility of any containment whatsoever.
Coast Guard Adm Thad Allen explains that the underwater robot slammed into the venting system damaging key evidence. The collision sent gas rising through the vent, which carries warm water down so that ice-like crystals do not form on the cap. The damage caused by the colliding robot has made the vent ineffective raising the likelihood of an explosion.

Separately, according to Fox: Admiral Allen said two people have been killed in a clean-up effort. More to come as soon as we learn additional details.

Remember you can always view the live PBS video of the Oil Spill on the right hand side of any page on our blog, or at the link above.

Tuesday, June 22, 2010

Remember Afghanistan?

"Hey! Are you even listening to me?" Afghanistan snapped her fingers at American Media to get her attention. "What's wrong? It's like you don't even remember me. We used to be so close and now, you' distant," she muttered to her old friend as she looked away in confusion. "Did I do something wrong?"

"No, I've just been busy. You know, Helen Thomas' chair, LeBron James, Lady Gaga, the new iPhone, and oil on some animals," replied American Media, still looking away from Afghanistan and focusing on something in the horizon.

"But, you forgot about the anniversary."

"Anniversary?" American Media had a puzzled look on her face.

"Yeah...the anniversary. Just this past month, your conflict here surpassed Vietnam as America's longest war."

", that can't be right. How is that possible?" American Media started pacing around the room, nervously. She finally looked at Afghanistan in the eyes. "How did this happen? How did I forget?"

Saturday, June 19, 2010

Dreams of 1984 (Or, Lieberman Is a Donkey, Step Off My Internet Access)

The past week has been full of distractions, some sad (Celtics losing to the LA Lakers in a nail biting game 7), some depressing (the continued spewing of oil in the Gulf and associated congressional testimonies implying criminal negligence on the part of BP which led the CEO of BP partner Anadarko Petroleum Corp. to Blast BP's 'Reckless Decisions And Actions' ) and some just downright ugly (Robbie Findley being called for a handball inside the 6-yard box when replays from multiple angles incontrovertibly showed the ball hitting only Findley's face).

Yet, even as the gladiators fought hard to entertain the mob--and did they ever--the new and very significant powers being envisaged by our "friendly" politicians on Capital Hill were not completely obscured. The latest reach for power comes from our lovably loquacious party-switching Joe Lieberman, the former running mate of Al-"I took the initiatives in creating the internet"-Gore and current chair of the Homeland Security committee. Senator Lieberman (along with Sen. Susan Collins, a Republican from Maine, and Democratic Sen. Tom Carper of Delaware) sponsored a bill on Thursday that proposes to give the president the authority "to seize control of or even shut down portions of the Internet."

Dictatorship, Transparency, and the NBA (or: How Chairman Stern has destroyed pro basketball)

So, one of the potentially great NBA Finals series just ended, with the Lakers topping the Celtics. The series, however, was a huge disappointment, largely because of the one issue that has plagued the NBA for the past few seasons: the officiating. The timing is interesting, to say the least. The league has lost a lot of money the past few years, and each extra playoff game, particularly a Celtics-Lakers NBA Finals game, generates a decent amount of change for the league. Throw in the fact that NBA Commissioner David Stern runs the league like a dictator, allowing no real dissent or questioning about anything, particularly refs, and allows essentially no transparency in the process, and it's not hard to see why there is a mounting view that there is a conspiracy in place, whereby the league does what it can with the refs to extend playoff series as much as possible to make sure they get as much money as they can. Even my mom, who doesn't follow basketball, called me up to tell me she thought the Lakers huge free throw advantage in Game 7 was very suspicious. But those who don't believe there is a conspiracy, read the whole post - I don't know that I believe in it myself!

Thursday, June 17, 2010

The Continued Failure in Gaza

The recent Israeli raid on the flotilla bringing aid to Gaza, that resulted in the deaths of nine civilians, more injuries, and near-global condemnation for Israel's actions, has brought a lot of attention to Gaza in the past few days. Unfortunately, much of the discourse has centered around the specific incident itself (who fired first, whether Israeli troops were right to protect themselves, etc.), and not about the politics and conditions in Gaza overall. There's a larger debate about the occupation itself that I won't get into here (there are obviously countless sources you can look to for that debate), which is quite crucial to this whole thing. However, the situation in Gaza itself is one that has been largely neglected by the Western press, particularly the politics of Gaza.

Restoring the Fourth Amendment: How We the People Can Win Over Washington

Despite promises of change, the Obama administration has proven itself either unwilling—or unable—to shift the paradigm driving increasingly invasive surveillance, or increasingly pervasive profiling according to race, religion, and national origin. Nearly halfway through the Obama administration's term, the battle to banish the Bush administration's policy legacy remains largely unfought, let alone won.

But this is no time for progressive and libertarian constitutionalists to throw in the political towel. While "change you can believe in" may have been a premature promise from our president, we at the grassroots enjoy ample opportunities to shift the landscape in DC.

Whether concerned by government spying, or the guilt by association apparent in profiling Latinos, African Americans, and Muslims, Arabs, and South Asians for various so-called "signature crimes," limits on local law enforcement authorities offer the potential to galvanize solidarity among communities of color. Measures restricting domestic intelligence operations can also attract the support of libertarians—including some elements of the Tea Party—disaffected by the Washington consensus favoring expanding executive power.

Wednesday, June 16, 2010

Congratulations Congresswoman Betty McCullum

There Is No Spoon would like to congratulate and thank Congresswoman Betty McCollum (MN-04) for introducing the Nonprofit Sector and Community Solutions Act, which is landmark legislation to improve the relationship between the federal government and nonprofit organizations. The bill will strengthen America's communities by making the federal government a more productive partner with nonprofit organizations through the establishment of better federal coordination, greater support for the work of nonprofit organizations, and the collection of meaningful data and research about nonprofits.

At the press conference this morning, Representative McCollum said:

"Every community in America, every congressional district is strengthened by the work of non-profit organizations. Government and all of us rely on the non-profit sector to implement and support public policies; however, as powerful and productive as the non-profit organizations are, their needs are not being addressed by congress or the Administration and that must change."

Representative McCollum, previously sat on the House State, Foreign Operations, and Related Programs Appropriations Subcommittee, which funds State Department exchange programs. She is a strong supporter of exchanges and the Fulbright program, which I had the honor of being a part of in Berlin, Germany during the 07-08 academic year. One of the few representatives who was outspoken this year when Obama axed $250,000 from the Fullbright Program, she was also one of the only representatives to correspond with us Fulbrighters while we were abroad. In a short but sweet message to us, she wrote, "I am very proud of the work you do to make a difference in the lives of others." Its amazing how a simple moment of recognition reminds one of the part they play in this complex and interwoven world. I certainly took my responsibilities as a "cultural ambassador" more seriously. I also have followed McCollum ever since and very grateful to have her in the House. From all of us at There is No Spoon: "Keep up the good work!"

President Obama's Oval Office Speech about BP Oil Spill: (and What the Hell Does Jack Welch Know About Keeping A Country from Rioting?)

Since we've been recording this saga since day 1, it only makes sense to embed a copy of Obama's Oval Office response to the spill. For what it's worth, as one of the authors of this blog, I think Obama is doing the best he can. There is so much backlash regarding his response to this disaster, and I understand the overwhelming anxiety and frustration associated with pain that JUST WON'T STOP. I also am very disappointed with some of Obama's other broken promises regarding habeas corpis and maranda rights readings, not to mention Gitmo. I am not going to defend the President because he is "one of ours." I consider myself a Lincoln Republican. But politics aside, all the talking heads trying to use this catastrophe as a rallying point against the President are frankly disgusting. The latest bitching and moaning session by Jack Welch on CNBC is a perfect example of what I'm talking about. How does this guy, who built up his company's financial opacity to the limits before handing the reigns over to his successor at the very moment his company had nothing left to gain, have a right to say anything about Obama or any President's ability to keep the masses from outright strike? Don't get me wrong, I'm aware of the God-like tenor of Mr. Welch in business circles, and I will give the man respect for running GE into and through its most prosperous times in history. However, Six-sigma standards, whereby you get to axe the bottom 10% of your already elite workforce is not an option for the President of the United States. For better or worse, President Obama must keep peace in this country and ensure that the "bottom 10%" of a population that is not pre-filtered does not find meaning in their lives by rallying against the government and the rest of the elite (like Mr. Welch) over something they do not fully understand. Mr. Welch implies that a business man (presumably like himself) is able to handle this crisis better than a politician:
"Here's the difference between a businessman and a politician: Businessmen focus on solutions. Politicians focus on 'who can we blame?'" he said. "We have to be managers right now, not politicians. No photo ops."

Well, Mr. Welch, this is what I have to say in response to you: First off, as of 2008, BP was the 15th largest company in the entire world by market capitalization. So I think it is safe to say that it has some of the best and most qualified "business men" in the world representing them, running the triage for this catastrophe--and as several previous posts on this blog have revealed (consider Lies, Lies, and More Lies: Hey BP, Does It Pay to Not Tell the Truth When So Many People Are on to You?), these same business men have not been all that honest about the extent of damage this crisis is causing; secondly, the way this country works, if you have not noticed, Mr. Welch, is government cannot really get into a private company's business unless they do something utterly wrong. That is, unless of course, the government is helping your profits (consider the Cheney Halliburton Connection). Thus, if business men such as BP and the rest of the execs from the other companies involved in this mess are better equipped with dealing with this mess, then why the heck is it exacerbating further after nearly two months. If you do not want politicians involved then do not cut corners--lest they cause catastrophes that garner public scrutiny--and when a mess occurs be honest, forthright, and throw your entire weight into the problem--as opposed to spending three weeks calculating what the most profitable "solution" to the problem is. Lastly, Regarding politicians focusing on "who to blame" as opposed to "finding a solution," I posit that BP's inability to find a solution has created a much bigger problem than you disgustingly rich CEO's can possibly fathom because you live in a bubble of largess only achievable in the first place because the skilled politicians of this country manage to mitigate the backlash of the people when $hit like this hits the fan. Rather than ripping on the President, Mr. Welch, you should be shaking his hand, thanking him, and offering whatever support you can to solve the problem--since that's what business men do so well.

Full Disclosure: I have owned GE stock in two separate accounts for 11 years and up until about 7 years ago thought of Jack Welch as a God, until I learned about some of the shady business practices and accounting tricks he engaged in while serving as Captain of the falling ship that is GE.

Pictures of BP Catastrophe- Day 1 to Day 50

A friend of mine just sent me a link to a page that makes a historical time line of the effects of the first 50 days of the BP Oil Spill. It is pretty intense, and worth looking at:

Monday, June 14, 2010

Hospital Rwanda

I can hold a grudge like no other. As a result, I have not done more than skim through the headlines of the New York Times in years. And I used to read the Times and several other papers, granted the electronic versions, cover to cover every day. In all fairness to the Times, several years ago I had a job that allowed me to read several papers a day. Now, particularly at this time of year when I’ve got wall-to-wall interviews day in and day out, skimming the headlines is about all I have the time for.

All of which is a long winded way of saying, I came across this article on health insurance in Rwanda which I had to stop and read. To the dismay of my colleague this means that last Tuesday’s election results get short shrift. My quick two cents on that, much ado is being made about nothing with regards to the appearance of the anti-labor/progressive positions taken by the White House and former President Clinton in stumping for Blanche Lincoln. They did their job in campaigning for the incumbent from their party, and one sitting in a fairly important committee chair. We can argue about whether that’s how it should be or not, but that’s politics. Don’t like it, vote and convince the people you know to vote and hold elected officials accountable for the positions they take. Which is most likely what’s going to happen to Senator Lincoln. Back to Rwanda.

139th out of 181. 139th out of 182. 141st out of 190. That’s where Rwanda ranked on the IMF’s 2009, World Bank’s 2008, and 2009 CIA World Factbook list of countries by GDP. The United States ranked number 1. 92% of Rwandans have health insurance. 85% of Americans have health insurance according to last year’s annual report by the Census Bureau. Why is it that Rwanda can figure out how to bring near universal health care to its population for $2 a year and we can’t, or more to the point won’t, figure out a public option? Right, politics. Something Blanche Lincoln is learning cuts both ways.

Muslims can Change our Energy Future

To me, the BP oil spill in the Gulf of Mexico is a reminder that people of faith have a special responsibility to protect the planet. I believe my faith or “Deen” of Islam is intrinsically connected to the environment. In Arabic, “Deen” is defined as a religion or a creed, a faith or a belief, a path or a way. Christianity is a Deen. Judaism is a Deen. Buddhism is a Deen. A “Green Deen” is the choice to practice one’s religion while affirming the synergies between faith and the environment.

My inspiration to write the book, “Green Deen: What Islam Teaches About Protecting the Planet,” comes from my desire to highlight the contributions of Islam and Muslims to the environmental movement. The book shares how the Islamic teachings of Oneness, trust, and justice can guide all of humanity to transform our pollution-based way of life to one that prioritizes the planet.

Oneness, or Tawhid, is the understanding that everything comes from God. We all emanate from the same source; therefore, harm to one person, one animal, one part of the planet, is a harm to all of creation. The millions of gallons of oil gushing into the Gulf of Mexico is an example of how interconnected we are. Animals are losing their lives, humans are losing their livelihood. The economic repercussions will be felt around the world. Had we truly understood that taking from the Earth is taking from ourselves, we might not have allowed big oil companies to drill with little oversight and regulation.

Trust, or Amana, is a promise to protect the planet and it comes with the gifts of speech, knowledge, and the freedom to make decisions over the land and the animals. God trusts us to be responsible with these gifts. Unfortunately, too many have taken this trust with God as a license to pillage and destroy. The oil spill serves as an example of what can happen when we violate this sacred trust.

Justice, or ‘Adl, starts with the recognition that people can have a negative impact on the planet. “Corruption has appeared on the land and in the sea because of what the hands of humans have wrought. This is in order that we give them a taste of the consequences of their misdeeds that perhaps they will turn to the path of right guidance.” (30:41) Scholars have interpreted corruption in this verse to mean pollution. In the case of the BP oil spill, we have taken from the Earth without just return; in fact, we’ve returned the epitome of injustice.

As Muslims, now is the time for us to stand up and choose a Green Deen and restore justice to the Gulf of Mexico. “O you who believe! Stand out firmly for justice, as witnesses to Allah, even as against yourselves, or your parents, or your kin, and whether it be (against) rich or poor: for Allah can best protect both. Follow not the lusts (of your hearts), lest you swerve, and if you distort justice or decline to do justice, verily Allah is well-acquainted with all that you do." (4:135)

CAMP along with other Muslim professionals and the Green Deen Team are supporting a variety of efforts to help the Gulf and to save the planet from more acts of injustice. The Sierra Club is organizing the Beyond Oil campaign to stop all offshore oil drilling. is urging Americans to defend the Clean Air Act. As Muslims, it is essential that we join the ranks of those who are fighting to change our energy future. Write to your congressman. Sign the petitions. Go to the rallies. Organize. It is our divine duty.

ibrahim abdul-matin is a green economy consultant, media personality on WNYC’s “The Takeaway,” and author of “Green Deen: What Islam Teaches About Protecting the Planet,” due in stores October, 2010. For more information, please visit

(from, by ibrahim abdul-matin)

Thursday, June 10, 2010

About Helen...

So, by now, I think everyone knows about veteran White House correspondent Helen Thomas' comments about Israel. Thomas, one of the few in the White House press corps that actually challenged the office, rather than kowtowing to them, said some unfortunate things about Israel in response to the Gaza flotilla raid. Whether or not you support or condemn Israeli actions, saying that they should go back to Poland and Germany is a bit harsh. I get that she was speaking out of anger about the situation, but she should have known better. There's a more intelligent way to speak against Israeli policy if you oppose it. That being said, the coverage about her has gotten a bit out of hand. And nobody illustrated that better than Jon Stewart last night. (video after the jump). Stewart took his shots at her as well, but his segment about it on the Daily Show also addressed the problems with the media coverage of Thomas better than anyone else. Again, Mark Twain has to play the role of Edward R. Murrow, as I've lamented on before.

In the US, it seems Helen Thomas has become a bigger story than the raid itself. And the raid itself became a bigger story than the discussion about the Gaza blockade in the first place (more about that in an upcoming post). She was forced to retire because of the comments. Now, again, I think what she said was problematic, but I also understand she spoke out of anger. I think her words pale in comparison to the actions of the White House press corps in general. Instead of asking real questions, they often play nice to gain favor with the administration. See where that got us with that whole Iraq war? A lot of Americans and Iraqis aren't here today because the press didn't care to ask hard questions. Thomas was one of the few.

Some are (predictably) adopting the reactionary response, calling Thomas a long-time anti-Semite. She was obviously critical of Israeli policy. That doesn't make her anti-Semitic. That makes her a critic of Israeli policy, like a lot of people. Could she have articulated her arguments better? Sure. That's different than saying she's anti-Semitic.

So, yeah, instead of using this as a way to discuss the broader issues about the raid or the blockade or the US media's view of the Middle East in general, we go after the 89 year old. Good job, you worthless charlatans. Even a Fox News piece said enough is enough about the way people are going after Thomas. So...get 'em, Jon.

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Wednesday, June 9, 2010

Politics and the World Cup

So, the World Cup is upon us. The great celebration of soccer/football (depending on if you live in the US or not - I will just go ahead and call it soccer in the rest of this piece...don't take it personally, non-Americans, because I don't get the name, either) across the globe that comes around every four years. Everyone gets into it. I was in Pakistan in 2002, and people were out in public places extra late at night to see some of the games - and they didn't even have a team in the tourney! Of course, there's a lot of mainstream discussion about how soccer brings the world together. You've possibly seen the Bono-voiced commercials about, is that guy promoting everything??? ESPN has had a bunch of segments suggesting the same theme - unity and peace from the game. I don't doubt it has some effect, actually. But, these games are also being held in South Africa. That by itself makes it a really big deal, even for the World Cup. There's also the whole FIFA-is-a-thug-gangsta thing, which is really wreaking havoc on South Africa, and might do the same in Brazil in 2014. Yeah, that's right, there are TONS of politics in the World Cup coming up! Shocker, right?

The South Africa angle by itself makes for a really conflicting story, actually. On the one hand, there is a general feeling of pride, especially in the global South, and with non-white folks around the world, that this is a huge deal. It is. A World Cup in a formerly-colonized land? A non-white country? South Africans have to be very proud of this, and I can attest that lots of people around the globe are as well. And if an African team can make a good run, like Senegal in 2002, that would be incredible. So, yeah, lots of positive vibes about South Africa being the site.

Of course, South Africa isn't a well-off country, either, and FIFA does some serious dirty work on those countries. 24% of the population is unemployed, and 50% live below the poverty line. It's also got a decent amount of debt right now - almost 40% of its GDP. So, not exactly a fantastic economic story. Now, this is where Babyface comes in.

So, South Africa actually had pretty good stadiums. I mean, they hosted the Confederations Cup there in 2009 for two weeks and didn't seem to have many problems. But, for the World Cup, they had to build new stadiums, on their own dime. Total costs? 1.12 billion dollars. The costs for building new transportation systems? 1.2 billion dollars. Not cheap at all, and seemingly an insane amount of money to spend when nothing seemed terribly bad the previous year for a major soccer tournament. These are MAJOR expenses, especially for a country that doesn't have a lot of money to throw around. I get that FIFA wants to ensure everything is top-notch for the World Cup, but come on - I remember games in Giants Stadium (which, btw, is in New Jersey, not New York - Jersey represent!) in 1994, and Giants Stadium wasn't a Rolls Royce by any means. There had to be a much cheaper way - upgrades on the stadiums from the previous year seemed reasonable. This doesn't. It's like the debate on public financing for US sports stadiums, a hot-topic at all times. These sweetheart deals usually cost the public dearly - no real economic analysis shows building a stadium improves the local economy, even though advocates always claim that's the case. In this case, these new stadiums are even more costly, given South Africa's economy, compared to the US. For a good discussion about public financing of stadiums in America, check out Field of Schemes.

People were displaced from their homes to make way for the new stadiums. FIFA tried to brush away any signs of poverty from sight. As Dave Zirin points out, "thousands have been forced from their homes into makeshift shantytowns, to both make way for stadiums and make sure that tourists don't have to see any depressing scenes of poverty. The United Nations even issued a complaint on behalf of the 20,000 people removed from the Joe Slovo settlement in Cape Town, called an "eyesore" by World Cup organizers."

FIFA has also cracked down on the informal economy around the stadium. Many people work right around the stadiums, selling food, drinks, souvenirs, etc., to make a living. In light of the World Cup, many had been increasing their sales slightly. However, FIFA has made all of that illegal. They have set up a 1 kilometer barrier - merchants unlicensed by them cannot operate within 1 km of the stadiums now. Those who run stores around the stadiums also cannot make any money off the event, unless they are willing to pay a steep price to become authorized to sell items. No merchants can use any World Cup logos without paying a large fee as well. So, FIFA essentially killed off the chance for poor South Africans merchants to make some money off the World Cup by getting the government to change the laws for them.

There's also the issue of labor. Instead of using South Africans to formulate and produce the merchandise, FIFA farmed most of that out to foreign firms, despite its claim to want to distribute the economic gains from the World Cup to ordinary South Africans. There's the issue of soccer ball production, largely done in foreign countries, particularly Pakistan and India, where labor laws have been ignored. Not a huge concern to FIFA. There's the fact that the mascot toys for the World Cup were also not produced in South Africa, which would have been a boost to their economy, but rather in a Chinese sweatshop via a subcontract from Global Brands Group.

The World Cup will make a hell of a lot of money. The TV deal alone is worth more than the revenue from the previous two World Cup TV deals combined. South Africa will see little of it, while they foot the bill. FIFA only pays the prize money, and expenses for travel and preparation for the teams. FIFA will get up to $4 billion from the event. (This is a lengthy report, but goes through the issues quite thoroughly). South Africa, not so much. For instance, they get ZERO percent of the TV revenue (which is about $2b). FIFA gets to pocket most of the money. Back in 2005, 1 in 3 South Africans hoped to personally benefit from the World Cup. Tellingly, today, that number is at 1%. This is a reason many of them have been protesting so vigorously. Over 70,000 South Africans have taken part in strikes against World Cup related projects since 2007.

So, despite all the warm and fuzzy stories you're likely to hear in the next few days and weeks (and many of them are completely legitimate - a World Cup in an African nation is an incredible thing), don't forget that there are a lot of ugly politics involved in this World Cup. Like most others. FIFA has done what it usually does, act all gangsta and extort everything from a host nation while pocketing most of the money. In this case, the host nation happens to be a poorer one, in the global South, which means the debt it will likely incur, and the expenditures for the World Cup that were diverted from other critical areas of national spending, will have much greater consequences. And guess what - in 2014, FIFA takes its act to Brazil. Don't expect things to get any better - unless people understand what exactly happened in South Africa (and, honestly, most World Cups).

It is an incredible event, no doubt, but FIFA does some horrible things to host nations. When it steps on a poorer country, things can get very bad very quickly. Host governments also go along with this, so it's not like they're not complicit in the problem as well. For all intents and purposes, FIFA rents these governments to do what it pleases. Now, they obviously want the World Cup, so they're sort of held hostage, but is the price worth it? That's what they should ask themselves. If it is not (it doesn't seem to be), then they shouldn't play ball. So, shame on these governments for giving in to FIFA. Of course, you get FIFA to stop being such a bully, the problem goes away. Also, this creates a major advantage for richer countries to host such events, since FIFA's economic extortion doesn't cause as much relative damage in their nations as it does in poorer ones. But, it is a fair point to say the host governments are also responsible for letting FIFA do what it does.

However, if people know what happened, they can raise awareness, watch the games while protesting FIFA through acts of civil disobedience (or simply writing letters to editors, telling their friends, etc.), and supporting those on the ground taking action against FIFA and the South African government. Hey, Chicago residents knew that the IOC for the Olympics work the same way. They wanted no part of that, which they shouldn't. You deal with dirty actors like FIFA and the IOC, you'll get burned. Their protests scared the IOC enough to not bring the games to Chicago. And who knows, with enough pressure and education, maybe we can force corporate sports conglomerates like FIFA and the IOC to stop their game of extortion. There's another way to put on these great events without killing the host nations. We don't need any more sad stories like South Africa, Invictus in reverse, as Zirin calls it.

Edit: For another great piece on the World Cup, read this.

Where is Sarah Palin's and the rest of the Republican's "Drill Baby Drill" now?

Lest we forget the Vice-Presidential debate in 2008:

(image courtesy of Mark Fiore, San Francisco Chronicle)
Palin to Biden: "You even called...environmentally friendly drilling offshore as raping the outer continental shelf. With new technology, with tiny footprints even on land, it is safe to drill and we need to do more of that."

On her own Blog, Sarah Palin now wants everyone to think that she truly cares about all the men and women whose livelihood is being devastated by the "environmentally friendly drilling offshore" that she and her drill-baby-drill friends supported two years ago:
As an Alaskan, I can speak from the heart about the tragedy of an oil spill. For as long as I live, I will never forget the day the Exxon-Valdez ran aground on Bligh Reef and millions of gallons of North Slope crude poured into the waters of our beautiful Prince William Sound. The spill was devastating to so many Alaskans who, like my own family, make their living on the water from our commercial fishing industry. “Heartbreaking” was the word my husband Todd, an Alaska Native and trained oil spill responder, used to describe the scene as we watched it unfold on land and water that we feel is sacred.

In the event that Sarah Palin attempts to make a presidential run in 2012, we can come back to this post and review her previous stance on the matter: *Note, the author of this post is well aware of the propagandistic elements in the following video, but believes they are no more or less powerful than the propaganda spewing from the opposing opinion, which inspired the artist who put it together (unaffiliated with There Is No Spoon) to share with all.

Drill Baby Drill... Drill Baby Drill... Drill Baby Drill... Drill Baby Drill... Spill Baby Spill... Spill Baby Kill... Kill Baby Kill... Drill Baby Drill

Tuesday, June 8, 2010

Upset About BP Oil Spill, Obama says--and I quote--"I Want To Know Whose Ass To Kick"

Some will say the interview showed Obama at his realist. Others will say it was a Holywood attempt at populist empathy. Honestly, I cannot make up my mind what I think (and that does not happen often). One thing is for sure, this video clip reveals just how deeply and powerfully the anger, sadness, and frustration goes for the American people (especially those closest to the gulf) regarding to the British Petroleum accident that took place 49 days ago when one of BP's leased offshore deep water rigs exploded and killed eleven people. Unlike most cataclysmic events, it is difficult to point figures this time. Sure, we can say its BP's fault, and it is. We can say its Transocean's fault, and it is. We can say it's Haliburton's fault, and it is. But then what? None of it changes the fact that oil is still filling up our oceans and killing wildlife at an unfathomable rate. None of it changes the fact that when this is all over, it will easily eclipse the previous worst oil spill in history and go down in the record books for all to remember. It is impossible for long-term political and industrial changes not to take place. In the end, however, this whole event, as ugly and painful as it is, was the result of a horrific accident. Perhaps that is the most frustrating thing about Obama's words. Even the Prince of Cool is breaking down.

Lies, Lies, and More Lies: Hey BP, Does It Pay to Not Tell the Truth When So Many People Are on to You?

As indicated in a previous post regarding the long-nosed press releases coming out of BP's office of public relations, we are learning today from various sources that the oil gushing out of BP’s busted oil well may be spewing at a rate that substantially dwarfs estimates released by British Petroleum media relations. While BP continues to strain its already heavily overworked political muscle to various lesser known papers in order to once again announce how much progress it is making with the capping of the oil, more and more analyses from experts contesting BP's numbers are surfacing. Yesterday, June 6, 2010, an expert on NPR on discussed his own calculations which amount to flow estimates of over 70.5 million gallons of oil having thus far been released into the waters of the Gulf of Mexico since April 20.

Previous estimates, based on BP's own publicly released statements have amounted to a spill of approximately at 5,000 barrels, or 210,000 gallons per day. However, Steve Wererly, Associate Professor of Mechanical Engineering at Purdue University has created a program that tracks the particle flow of material from the busted pipe, and has calculated that the open flow of particles released from the well approximates 70,000 barrels or 2.9 million gallons a day, within an accuracy of 20%. Although a fairly large margin of error, with a deviation between 56,000 barrels (2.4 million gallons a day) and 84,000 barrels (3.5 million gallons per day), it is still significantly higher than any of the estimates released by BP. Indeed, even using Wererly's most conservative calculations, the total gallons spilled so far comes to 115,000,000 gallons, which, if true would make it nearly twice as large as the 1978 Amoco Spill, which is officially the world's largest oil disaster ever recorded at 68.7 million gallons.

Wereley, who is an expert in the field of fluid mechanics, and has co-written a book called Particle Image Velocimetry: A Practical Guide (Experimental Fluid Mechanics). In other words, he's no dummy, and since he does not have nearly as much to gain by down playing the amount of damage the spill is causing as does BP, it may serve the public well to consider his expert opinion [reported to the Los Angeles Times]:

“I spent a couple of hours this afternoon analyzing the video, and the number I get [using my program] is 70,000 barrels a day coming out of that pipe. BP has said you can't measure this. I agree you can't measure [the flow] to a very high degree of precision, but that doesn't mean you can't get a good estimate. This estimate, I think, is much better than the 5,000 barrels a day they have previously been floating.”

Wereley’s estimate is based upon a video released by BP on Wednesday, May 12 which shows the flow of only one of two separate leaks--another bit of information also not being widely publicized. According to Werely, although the leak certainly shows methane being released in addition to the oil, the oil is by and large the most prominent material being ejected.

It is important to note to that Steven Wereley is not the only expert calculation slowly filtering out into the ether. NPR recently reported an estimate by Lamont-Doherty Earth Observatory scientist, Timothy Crone, of at least 50,000 barrels or 2.1 million gallons per day. Another legitimate voice in the field, Astrophysicist, Eugene Chaing calculates the volume at anywhere from 20,000 and 100,000 barrels, or 840,000 to 4.2 million gallons per day.

Previously, when Florida State University professor of oceanography, Ian MacDonald, publicly questioned the 5,000 barrel (210,000 gallon) a day estimate purported by BP official statements, he was harshly criticized. It may turn out, however that even his estimate of at least 20,000 barrels per day may prove conservative. I strongly encourage you to watch a video of his interview that took place on May 21, 2010 (see above).

If anyone has any creative ideas for showing how ugly this mess has become, there is a movement to create and share a new corporate identity for BP.

Monday, June 7, 2010

New Property Rights Laws in the People's Republic of China (came into effect in 2007) -- Translated into English

POSTED: 6/7/2010 UPDATED: 6/8/2010

The original post was too long for Blogger and was cutting off all posts that came before it, so we at There Is No Spoon have decided to divide it into five sections, corresponding with the natural organization of the original document.

Disclaimer: the following document is an UNOFFICIAL English translation of the Property Rights Laws in the People's Republic of China that went into effect in May of 2007. This document and all concepts represented herein have no legal binding in the People's Republic of China, nor in the United States of America. We are providing this information as an educational resource only.

Normally I would just upload a PDF to a technical document like this, but due to the importance of the material that follows and to the dearth of relevant results when searching Google or Bing for "Property Rights in China," I thought it would be more prudent and beneficial to all if I just posted the entire text as a separate HTML post so that all search engines will be able to pick it up in all of its glory. What follows is an English translation of China's newly minted Property Rights that set off the fast and furious Real Estate Bizarre currently underway in the Peoples Republic of China. I am in the process of analyzing this information as part of my series on the historical and cultural differences of real estate in the United States and China, but I thought I would share while I gather more information since so few people interested in the the magic of China Miracle realize how new this real estate fad is to this communist country. Up until now, an English translation of the new laws was hard to come by. Enjoy!

A full English translation of the 2007 Property Rights Law of the People's Republic of China "signed" into law on March 16th, 2007 follows:

Property Rights Law of the People's Republic of China
Promulgation date: March 16, 2007
Effective date: October 1, 2007
Department: National People’s Congress
Order of the President of the People’s Republic of China (No. 62)
The Property Rights Law of the People’s Republic of China, adopted at the 5th Session of the 10th National People's Congress of the People’s Republic of China on March 16, 2007, is hereby promulgated and shall come into effect on October 1, 2007.
Hu Jintao
President of the People’s Republic of China
March 16, 2007
(click "read more" to see Table of Contents with links to the 5 parts)



Chapter I Fundamental Principle
Chapter II Establishment, Modification, Transfer and Lapse of Property Rights
Section I Real Property Registry
Section II Movable Property Delivery
Section III Miscellaneous
Chapter III Protection of Property Rights


Chapter IV General Stipulations
Chapter V State Ownership, Collective Ownership and Individual Ownership
Chapter VI Building Distinction Ownership of the Owner
Chapter VII Neighborhood Relationship
Chapter VIII Joint Ownership
Chapter IX Special Regulations Pertaining to Attainment of the Ownership


Chapter X General Stipulations
Chapter XI Right to Land Contractual Management
Chapter XII Right to the use of the Construction Land
Chapter XIII Right to the use of the Residential Housing Land
Chapter XIV Easement on Land


Chapter XV General Stipulations
Chapter XVI Mortgage Right
Section I General Mortgage Right
Section II Maximum Mortgage Right
Chapter XVII Right of Pledge
Section I Pledge of Movable Property
Section II Pledge Rights
Chapter XVIII Lien


Chapter XIX Possession

BP Logo ReDesign Contest

Will BP face criminal charges for the Deepwater Horizon disaster? Will the latest effort to stop the leak with a LMRP cap actually work? Will it be years or decades until the Gulf recovers environmentally, economically and spiritually from the damage done by the chain of events set off by BP's arrogance and irresponsibility?

Take a creative stab at BP by participating in the BP Logo ReDesign Contest. Deadline is June 12th so you still have over 129 hours to top the sample submissions below - or simple appreciate the talent and community of others around the world who want BP to be held accountable for the billion-dollar-and-growing disaster.

The contest sponsor challenges you to revise BP's current logo - by incorporating these three ideas:

#1 Oil spill disaster - Toxic
#2 Death of wildlife
#3 Incompetence

Real Estate in China vs. the United States: How Two Giants Spar (Part I)

This is part 1 of a multi-part post (probably 3), in which I will discuss the very different roles real-estate has played traditionally in both China and the United States. I will later discuss the global impact of what appears to be a severely overheated real-estate market in China and how the binary stop-go control system of China’s communist leadership is largely incapable (even less so than the US government) of effectively dealing with this segment of its economy, which unlike many other segments that are directly controlled by the State, is much more difficult to manage from a central location. I posit that, as China continues to take on the semblance of a fully capitalist system, with a rapidly growing middle-class modeled after the US economy, they are inevitably going to face a conundrum: to protect their new, thriving, economy by adopting more democratic principles of government; or protect their present form of government at the very large cost of their impressive economic progress, whereby to reestablish totalitarian control over the people, they will inevitably be forced to squash the new found visceral freedoms of its burgeoning middle class. I will argue that the myopic nature of a centrally managed system of government makes it nearly impossible to gauge the ripple effects (and the echoes of those ripples) of an economy as large and widespread as China’s. More importantly to the rest of the world, I will also make the case that the lack of understanding of property rights on the part of the Chinese government threatens not only that particular economy but all others that do substantial business with them (i.e. the entire world). Most of us are familiar with the the expression: "If the U.S. economy sneezes, the the rest of the world catches a cold." Well, for better or worse, there is a new germ in town and the medicine to deal with that germ is not well-known. China does not do things like the United States, and lest we all get too eager to welcome another giant into the room to compete with the current alpha male, it might serve us well to remember that the style of government in the United States is integrally connected to a powerful set of checks and balances that simply do not exist in China. Moreover, China's publicly stated desire to build a middle-class by allowing private ownership of real-estate is not only at odds with the central tenets of communism but also, more specifically, with the enduring power of the Communist Party in China. Nonetheless, to address such an important topic with such a wide brush does the subject no justice, and so I will focus this post and those that follow on the significance of real-estate in both countries and economies and how the development of both may effect us all moving forward.

Before we delve into the intricacies of the changing real-estate landscape in China, it will serve readers well to become familiar with or review the inner workings of the real-estate in the United States. The reason for focusing first on the US real-estate market (which comprises roughly 12% of GDP in the world's largest economy) is three-fold: first, China has recently attempted to adopt (at least in principle) the real-estate-based economic model of the United States (and Japan) without implementing property taxes (which might change in the very near to intermediate future); secondly, because unlike the multi-faceted control system of the U.S. and Japan, China’s centralized, top-down, stop-go system is unsuitable for effectively reaching and slowing all parts of their country's economy with equanimity; and lastly, because, while China seems to be trying to emulate the United States in the way of growing a large middle-class through real-estate ownership, China does not seem to fully realize that the real-estate market in the United States functions (cough-cough) as well as it does largely in part because the US is run via democracy.

Although much of what I am purporting is theoretical in nature and likely will not work itself out in the real-world for many years, it is nonetheless worth considering the possible ramifications of a country adopting an economic system from another country whose political governance is not only contra-stance to its own, but is indelibly linked to a history of oppression and harsh rule and law changes. The United States, for all of its ails, was conceived through hundreds of years of subtle, evolving, organic and natural "progress" that is inextricably tied to the democratic constitution that makes all of its citizens equal in a way that is not possible in communist China. A government that is truly of the people can only be modified in a significant way by the people and through an extremely resistant process (consider, for example, Byrd Rule), whereas with a totalitarian regime, he who giveth can taketh away. For better or worse, these facts leave those who invest in real-estate in the United States and those with similar investments in China with very different levels of risk. The individuals governing China seem to want the best of both worlds for themselves without reconciling that to get the “best of both worlds” they must relinquish some of their control and establish a system that more or less runs itself. For capitalism to work, every individual that belongs to the relevant society must believe that they not only have the ability to achieve capital appreciation, but that the appreciated capital is safe from confiscation and government interference. (*Side note to readers questioning the assertions being made here regarding variant liberties of the US vs. China: this post will not even be accessible from Chinese IP addresses--indeed, a few months back when Google stopped filtering its results in mainland China, we at learned that, like most uncensored content on the web, our blog was (is now again) blocked. In fact, it was impossible not to know it was blocked since, on the day Google announced it had stopped filtering results, the traffic on our blog--specifically for FB's post on Tiananmen Square--increased by a whopping 520% in one day, and then abruptly returned to our average once Google announced that they had been forced to resume filtering and were pulling out of the country.)

I suspect we will see a lot of discontinuity in policymaking over the next few years, especially in the Western World, amid lots of panicking and last ditch efforts to save the world from financial Armageddon II. Meanwhile, during the same time-period, Beijing has grown increasingly worried--and rightfully so--about signs of overheating, and after trying unsuccessfully to pare growth carefully, it has given up the scalpel and brought out the sledgehammer.
This is very significant, because private property in China is a very new concept and it is growing into a very significant portion of China's economy. To underestimate the significant unknowns involved in a country/culture that is thousands of years in the making, is a grave mistake. Indeed, the history of financial cycles itself has changed dramatically during the past 200 years. During this relatively short time period economists have begun to think of the ups and subsequent downs as part of the same process (as opposed to viewing them as emergent consequences of external shocks, such as war or famine). For those interested in learning more about modern thinking on the subject, the Luwig Von Mises Insitute has an excellent article on the business cycle in general and how the subordinate cycle of credit expansion and contraction effects it. This is super relevant to the subject of this post because the birth and growth of the United States, and of its private real estate sector, largely coincides with the inflection point that marks the changing views of the financial cycle. One of the first published acknowledgements of credit cycles in relation to their impact on the greater economy was the 1838 edition of the Encyclopedia Americana where under Credit it states: “The history of every industrious and commercial community, under a stable government, will present successive alternate periods of credit and distrust, following each other with a good deal of regularity.” Clearly this is true in the United States, but we are witnessing more and more evidence that a similar ebb and flow is beginning to make its way east with China experiencing its own periods of credit lust followed by distrust. The two key differences being 1) the fluid complexity of the U.S. political and economic system incorporates self-governing checks and balances that do not exist in China, which allows the US economy to be a living, organic creature that is not so much controlled, but rather guided; 2) due to the self-governing aspects of the US system it is very difficult (though not impossible) to successfully blame a single governing body, institution, or other entity for the ails that may result from the credit contractions that inevitably occur.

I fear that the financial high that many involved in China's economy are experiencing will soon reach a level of intoxication too powerful for those same individuals to feel the ground beneath their feet. Indeed, the credit boom that has been building in China during the past decade is looking more like a tsunami than anything we've seen in the U.S. Some might ask, "who cares? What does that have to do with us?" It has everything to do with all of us. Long gone are the days when nations effect only their own economy and perhaps their most proximate neighbors. Globalism is no longer a buzzword: It is real, it is powerful, and it is here to stay. We need only look at the domino-effect that the small country of Greece (with a GDP of $356 Billion) is having on Europe and the rest of the world to begin to see the potentially catastrophic ramifications of the world's third largest economy (China with a GDP of $4.3 Trillion) slowing or expanding "too rapidly," a phrase whose meaning in relation to China we do not really have the tools to measure. We are in unchartered waters regarding the intricate interconnectedness of global economies. Meanwhile, the rules, laws, and politics of these countries do not have the equivalent international reach as do their economies, which in turn creates an intriguing albeit awkward intimacy. Thus far, such a relationship, with both countries' inextricably connected mutual interests, seem to be inspiring diplomacy and stability. Still, it is important to note that although some economic ties have been strained during the past several years due to the global financial mess through which we currently find ourselves muddling, we have not witnessed (and hopefully never will!) a situation where a political leader of either country has attempted to dictate or mandate policies or laws of the other directly.

... that concludes Part 1. Part II of this post will focus almost entirely on the very particular nature of property rights in the United States. For those who cannot wait, I urge you to pick up a copy of James W. Ely, Jr.'s thoughtful book on the topic The Guardian of Every other Right: a Constitutional History of Property Rights.

United States GDP by Industry

I realize this is a little dated. Once I have access to updated figures I will re-post.(Source: U.S. Department of Commerce, Bureau of Economic Analysis)

Percentage point
Industry 2003 change

Manufacturing 12.7 -2.7
Wholesale trade 5.9 -0.4
Transportation and warehousing 2.8 -0.3
Agriculture, forestry, fishing, and hunting 1.0 -0.2
Utilities 1.9 -0.1
Administrative, waste management services 2.8 -0.1
Accommodation and food services 2.6 -0.1
Other services, except government 2.4 0.0
Construction 4.4 0.1
Educational services 0.9 0.1
Arts, entertainment, and recreation 1.0 0.1
Management of companies and enterprises 2.0 0.2
Government 12.7 0.2
Mining 1.1 0.3
Retail trade 7.2 0.4
Professional, scientific, and technical
services 6.9 0.4
Information 4.9 0.5
Finance and insurance 7.9 0.5
Real estate and rental and leasing 12.4 0.5
Health care and social assistance 6.8 0.7
Total Gross Domestic Product** 100.0 0.0

**Does not sum 100 exactly due to rounding.
Source: U.S. Department of Commerce, Bureau of Economic Analysis

Friday, June 4, 2010

WSJ Reports "China's Property Market Freezes Up"

If we didn't already know that China's top-down stop-go economic policies weren't dangerous already the Wall Street Journal gives us evidence. (side note, I've been working on a detailed post about this issue over the past two weeks and will try to get it up later today or tomorrow.)

From the WSJ article
: "Government policy changes have thrown China's booming property market into a period of paralysis that some industry executives say will last for several months, weighing on global growth prospects already battered by the turmoil in Europe."

"A rebound in China's property market has been central to the nation's rapid recovery from the financial crisis, but surging housing prices had led to increasingly open discontent from middle-class families in major cities. After months of indecision, Beijing in mid-April announced a package of policies intended to blow the froth out of the market by restricting speculative purchases."


"China's economic growth was already widely expected to slow in coming months, as the impact of last year's stimulus policies fade. Some forecasters, seeing weaker prospects in a key industry, are now further marking down their numbers for this year. China International Capital Corp. now expects the economy to expand 9.5% in 2010 as a whole, rather than the 10.5% it previously forecast."

My initial take on the matter is that first of all, with the rest of the world dealing with very low inflation and in some places deflation, 10% economic growth for the largest exporter seems not only unsustainable, but also very dangerous. There have already been talks about China manipulating its currency in order to hold up its competitive advantage in manufacturing and exports. If this is true, we are already looking at a squeeze to its burgeoning middle-class before its really clear that the country truly has a middle class. On the other hand, as is also widely reported, China's savings rate, historically around 40%, has edged up over the past several years to 50% of GDP. Clearly the only individuals saving 50% of their earnings are those wealthy enough to do so. Nonetheless, it is an indication of the incredible cushion China has built to protect itself should the economy spiral into a free-fall. I suppose the question then becomes, how long can that cushion support them if cheap exports go to the wayside? (more to follow)

Thursday, June 3, 2010

Enough is Enough. Time to Get Real BP (and that Means "Honest")

A Catalog of the Long-term Implications of the BP Gulf Spill

Enough time has passed at this point that as a national and global society we need to consider the worst case scenarios regarding the BP oil gusher. When the top energy adviser to the White House, Carol Browner, says in a live interview “This is probably the biggest environmental disaster we have ever faced in this country,” (CBS’s “Face the Nation”) and the situation is getting worse not better, it is necessary to consider the long-term implications of simply allowing a morally corrupt corporation remain in control of fixing the (ongoing) mess they have caused.

In a worst case scenario Browner explained , "There could be oil coming up 'til August [and…] we are prepared for the worst." The worst case scenario, of course, would be that the gushing well is not able to be capped at all and we will all be forced to wait until BP is able to finish drilling the two relief wells they began working on several weeks ago. As far as I know, however, that does not necessarily mean that the oil will stop leaking completely though either, merely that the pressure pushing it out will be relieved (hence, "relief well"). If I am misunderstanding the net result of this operation and an expert in the field can explain what I am missing, “There is No Spoon” would love to learn a thing or two in the comment section of this post.

Seriously though, have not we been trolled enough already by “Beyond Petroleum?" I think it is time that government resources be used more judiciously and the bill slapped on BP’s treasury desk. In fact, I couldn’t help but think about Bush’s Mission Accomplished fiasco--I mean speech—back in 2003 regarding the successful end of the US-Iraqi war (for those who don’t know, our men and women are still over there).

Please do not get me wrong, I am not so na├»ve as to think that during the first few weeks after the explosion, the execs at BP headquarters would have been so quick to tell the truth, (i.e. admitting that they didn’t have a clue and needed help from the US government as soon as possible). That is just not how the world works, as the Oil Giant’s biggest investors would be skinned alive if Virgil were to come loose so early in the crisis--don't forget how many politicians have money in oil either (a la Cheney and Co). They needed to buy time. Okay, fine. I get it. Yet, by May 10th we were on our 6th attempt at solving this issue having already been told that the big steel box thing-a-ma-bob contraption was going to work--then it wasn't going to work--uh, uh, yes it is--nope Terry farted again, it isn't. On to plan F comrades: let's stick a 4-inch pipe down the busted steel well pretend like that will siphon off enough oil to call it progress. After three days of failed attempts BP Says Latest Scheme to Halt US Oil Leak Working Well. In fact, if you watch the video on that BBC page you will very quickly be under the impression that all is solved and we can all go home for "it has succeeded," claims the reporter. “Significant amounts of oil [were] being siphoned via this mechanism.” The next day we learned that "BP, is finally getting a handle on stemming the tide of some of the leak. BP engineers have used a pipe fitted into the leaking well head and have been able to divert some of the oil up to the surface to a drill ship." At the time of reading this, I turned to my partner and asked, "Does that mean that if I turn a flashlight on at midnight it's suddenly almost dawn?" On May 19th we learned that the pipe had freezed up due to ice crystals and was no longer having an impact.

On May 26th BP’s effort to plug the hole with “junk and mud” was going as planned

Then it wasn't.

Then BP's Junk Shot wanted not.

Today, June 3, 2010, we learned that the company finally cut the pipe and is preparing to cap it. As a result the stock climbs 5% while the rest of the market goes up less than half a per cent.

For the record, I would not be nearly so hard on the Execs if “[they] really [were] doing everything in their power to fix this thing,” but they just aren’t.

So enough bitching and moaning on my part, I just wanted to refresh my memory a bit on what has gone on thus far so that I might begin to understand what we can expect from this ugliness moving forward.

First, BP will most definitely not go bankrupt. I expect the company will be much smaller in 5 years or so, but after 101 years of paying fines, British Petroleum has figured out how to work the system and then some.

Second, the nearest state to BP's gushing undersea well (42 miles away), Louisiana, has been the most impacted by the spill so far, and as we all know the aftermath of Hurricane Katrina and the horrible response of the then President is ongoing. Unfortunately Louisiana’s pains are about to get more acute as Governor Bobby Jindal said this week that "more than 100 miles (160 km) of Louisiana's 400-mile (644 km) coast had so far been impacted by the spilled oil. State officials have reported that “sheets of oil” are wrapping the precious wetlands and seeping into marine and bird nurseries, not to mention the oyster beds that serve as the economic motor for many small communities there. Sticky sludge stains cover the marsh cane that binds the wetlands together and promises to endanger the wildlife for quite some time.

In Mississippi and Alabama, “tar balls and surface sheen,” have been reported, while last week National Coast Guard officials spotted tar balls on some beaches in the Florida Keys, raising fears that the Loop Current, which sends water and wild life from the Gulf of Mexico through the Florida Straits may have already brought oil from the spill far to the southeast. Apparently, however, laboratory tests subsequently showed the tar balls were not from the BP spill. (Where else would they be from?) Perhaps what is more scary, however, is that Pensacola was reportedly struck by the rich black goo yesterday, drawing the possibility (illustrated in the simulation embedded in the previous post) that if not contained very soon, small bits—followed by heavy streams—of oil could find its way as far north as North Carolina.

DERIVATIVE IMPLICATIONS (more detailed analysis of the impact of the BP oil spill)

FISHERIES— Having declared a "fishery disaster” in the seafood-producing states of Louisiana, Mississippi and Alabama due to the oil spill, the US government has made these states eligible for federal funds to offset the impact on fisherman and their communities of the oil pollution in their fishing grounds.
Louisiana's $2.4 billion seafood industry supplies up to 40 percent of U.S. seafood supply and employs over 27,000 people.

The state provides more shrimp, oysters, crab and crawfish than any other state in the country and is the second-biggest U.S. seafood harvester. As of Friday, the NOAA extended the area closed to fishing in the Gulf of Mexico to 25 percent of Gulf U.S. federal waters—an area covering 60,683 square miles (up from 20 percent previously, with a warning that more closures should be expected. Mind you, all of these economic effects are for a single state, currently receiving a lot of attention. I can only imagine the more subtle effects of this crisis.

As reported, Oil—in thick sheets, surface sheen and tar balls--has come ashore in Louisiana wildlife reserves like the Breton National Wildlife Refuge in the offshore Breton and Chandeleur Islands, and the Pass-a-Loutre refuge further to the south. Large amounts of methane gas has also been released from the source having an unseen/unknown impact. However, during the 43 days since the spill started, wildlife officials report that 491 birds, 227 turtles and 27 mammals, including dolphins, have been collected dead along the U.S. Gulf Coast, according to an update released on Sunday by the oil response unified command.

Tourism operators in Louisiana, Mississippi, Alabama and Florida-- from hotel owners to restaurateurs and boat charterers -- have reported cancellations as a result of the oil spill.

From we learn that “Tourism officials and hotel operators in Gulf of Mexico coastal regions say they are struggling with occupancy and reservations, but some areas are suffering more than others.”

We have had some cancellations. It is hitting the beachfront properties hard and the casinos have seen some impact … and the charter boat companies,” said Richard Forester, executive director of the Mississippi Gulf Coast Convention and Visitors Bureau in Biloxi. The timing is unfortunate, since many hotels and casinos had been experiencing an uptick in business earlier this year as the U.S. economy started to improve, he added.


The National Oceanic and Atmospheric Administration said on Friday it has begun surveying a new ship anchorage site at the mouth of the Mississippi River for ships to undergo inspection and oil decontamination before entering ports. This is a subtle if significant development as we are beginning to see the outlier impacts of the BP spill moving forward.

U.S. authorities are anxious to sustain Gulf shipping operations as the Mississippi Delta is extremely vital to U.S. exports and imports. NOAA says the Lower Mississippi River ports export over 50 million metric tons of corn, soybeans and wheat per year, more than 55 percent of all U.S. grains inspected for shipment.

If the bursting of the housing and commercial real estate bubble wasn’t weighing on the real-estate already, it is hard to believe that anyone would desire to buy up oil-front property. This particular point might seem far off at the moment, but remember that the source of this oil is over 1 mile below the surface of the water. It will take time, even after the oil well is successfully and completely capped, for all the oil that comes out, to find its way to the surface.

There is likely to be a significant impact to the oil industry moving forward for a number of reasons. The most obvious will be the immediate cost to BP to clean up the physical mess—estimated by Credit Suisse to be 37 Billion—but that does not include what it will take to repair their image after this colossal crisis. The expectations of these profit losses has not only brought down BP’s market value, but the entire oil industry as it is a major component of the S&P500 and nearly all energy indexes. Also weighing on the industry are expectations of new costly regulations that will be put in place to make sure this never happens again. The end result amidst a continuing debt crisis in Europe is more strain on an already weak recovery.