Ahh, the headache, the nausea, the dry heaves of economic hangover. I hear everyone saying “why should the taxpayer bail out Wall Street?” I ask, why not the taxpayer.

Who else but the taxpayer is responsible for this mess? Back in 2003 we set the precedent by ceding Congress’ Constitutional authority to declare war. We have given Bush endless blank checks in the past- why stop now? Who else but the taxpayer gave the power of the purse to special interests- the Enrons, Haliburtons, Cargills, Monsantos, Bechtels and the like- or approved the tax cuts to rich folks, or tanked the dollar by rubber-stamping Republican irresponsibility in budgets since 2000?

It’s fun to listen to the speechifying on the House floor, as I’m doing right now. The claim that cutting Capital Gains Taxes to 0% is a responsible, free-market approach to solving the crisis that arises out of free-market approaches is, well, laughable. They also suggest an FDIC-style insurance scheme. How to fund it? The FDIC may well be massively over-leveraged, and functions on the idea that Confidence is supported by a 10% asset coverage of deposits. It’s probably no coincidence that they are called “confidence men.”

Our Constitution starts “We the People…” We authorize the state and federal governments and fund them. We bought the Reagan-Thatcher line and haven’t let go yet. Ultimate responsibility lays nowhere else but with us. You and I gave this sucker away- we should take the heat.

Jerome a Paris has an interesting post over at The Oil Drum this morning, suggesting that the $700 Billion is not about propping up the banking sector per se, but is in fact about re-capitalizing the Fed, which is now over-extended due to previous ad hoc moves.

As horrifying as that sounds, it’s not nearly as bad as one of the comments to the story, which suggest that troops are being redeployed from Iraq to USA for duty in case of civil unrest. Is this really happening?

My most recent trip to the Catskills revealed even more frenetic activity than was evident in June. This includes massive infrastructure, especially in the form of pipelines and right-of-way cuts over forested ridges for feeder branches. The new Millenium pipeline, which will run from Corning east then south and eventually to New Jersey is a mammoth 36″ natural gas replacement for a current 12″ line. That’s a 10-fold increase in capacity. Not one well has been drilled in New York State, yet the writing is on the wall.

© 2008 Russell Honicker

What does this sort of approaching resource extraction orgy have to do with the Third World? After all, as a spokesperson for the NYSDEC said, “this isn’t Wyoming; this is New York!” We are the new Third World. Having raped the rest of the world, time to start in earnest at home. Of course there’s a long history of this here: coal, railroads, oil, highways, farming etc.

The so-called economic growth we’ve been experiencing here in the North-and-West has been subsidized by resource extraction over the last 35 years in places like Ecuador, Zambia, Angola, Sudan, East Timor and the like. Murder, authoritarianism, theft, lies, and squalid urban poverty accompany each new “discovery.” Nobel-winning economist Joseph Stiglitz calls this the “Resource Curse.” John Perkins, in Confessions of an Economic Hit Man calls it unofficial U.S. Policy. There was a recent news story about Indian farmers unceremoniously removed from their lands to make way for a new 900 acre Tata plant. This is our real economic engine.

While op-eds to the NYT place the blame for poverty on proponents of biofuels and opponents to Genetically Modified (GM) foods, and praises the efforts of our good friends at the World Bank, the reality is that our wealth has been, and is being stolen from distant parts of the world. We have been exporting poverty to the Third World for decades. While death squads are palatable or at least ignorable in some of these places, somehow the idea of mercenaries in Delaware and Broome Counties seems ridiculous. Nevertheless, residents report that Haliburton and Blackwater have arrived, along with military helicopters performing alarming seismic testing. Exporting poverty is no longer limited to other countries; we’re bringing it to the Catskills and Southern Tier.

Others have made this point before, but our agriculture is now more of a mining operation than anything else. We frack for natural gas to generate nitrogen fertilizer, applied in massive doses to sterile soil as anhydrous ammonia, most of which washes off into the Mississippi and then the Gulf of Mexico, spawning a “dead zone” (one of 150 worldwide) the size of Massachusetts. Phosphate fertilizer is mined in the Caribbean and in Canada.  Diesel and Gasoline comes from Canada, Venezuela, Nigeria and Saudi Arabia, by way of Port Arthur and Beaumont. The irrigation water is thousands of years old, mined from the once-huge Ogalalla reservoir, which is being rapidly depleted. All that produces starchy corn and soy beans that then act as inputs to other industrial food production processes like livestock, vegetable oils, soft drinks, and yeah, biofuels. It’s hard to find any actual food in our food systems- that is food that comes from rain, soil and sunshine. Rather, it’s all predominantly the end product of “drill, baby, drill.”

Finally, let’s tie this all back to the current global financial crisis, which is immediately a crisis of real estate and foreclosures, a crisis of land. Naturally, it is a crisis of much more. Ultimately, it’s a crisis of dissociation of money power from reality. All the working business models involve slavery, theft, monopoly or addiction.

Okay, that’s pretty negative. In order to end on a positive, a huge Greenerminds Congratulations and Thank You to Maura Harrington, who stared down Royal Dutch Shell last week.

[UPDATE 15:30 EDT] The Guardian Weekly has another success story- native Peruvians protect the Amazon basin.

This is going to be a bit of a long post, so let me get quickly to the heart of my thesis. The idea I want to put forward and test is the idea that, from a resource use and allocation standpoint, every natural resource price and therefore every derived commodity price is wildly inaccurate or wrong.

This idea is supported by three arguments. First, as Karl Polanyi points out, natural resources (land) as a factor of production can only be priced as if it were a commodity, when in fact it is not a commodity. Second, costs and values associated with resource extraction are based on the idea of opportunity cost, that is the cost for the next best single use for the resource. Finally, both upstream and downstream costs are externalized and not reflected in the resource price.

Since natural resources such as fossil fuels, metals, water, timber and food drive much of the pricing in the economy, if their prices are wrong, then all prices everywhere are wrong.

The consequence of this basic error, if it is true, explains a number of phenomena, such as Matt Simmons’s assertion that even at $100 a barrel, crude oil is massively underpriced. But I will save that for a later post.

My purpose here is to float an idea and hold it up to see how resilient it is. I will admit that it is only partially formed and not well researched at this point.

(more…)

When are they going to start talking about this instead of pigs, dogs, lipstick, etc?

Just came across these links and wanted to save them for later: Catherine Austin Fitts on Financial Permaculture, and Greg Landua on The New Green Deal including an upcoming seminar at The Farm.

I watched Escape from Suburbia the other night. Phil and Tom are featured in the film, and I wanted learn more about what they are doing in NYC. The movie covers a number of efforts across North America to deal with and find solutions to Peak Oil, and secondarily Climate Change and poverty, mainly through local food production. At least local food production was a theme.

What was most moving to me was the segment on LA’s South Central Community farm, a 14 acre community project at ground zero of urban gardening. This farm had private plots for 350 local families who grew food, medicinals and ornamentals. They started a market because people there were growing things not available anywhere else in LA. Horrifyingly, the city took back the land and sold it to a “logistics” company to build a warehouse there, because “people in South Central need jobs.” Despite community action and protest, the site was bulldozed on camera while the urban farmers could only look on in despair.

Carolyn Baker points out in her review what this means. Relocalization is not currently threatening to the powers that be, but will be soon, and we can expect a very nasty backlash. This example is just a taste of that. I’m relating this to the Archdruid’s post a couple of days ago about the misconception that collapse will somehow mystically be okay, and not too violent. I doubt that. The image I have of collapse is not a bunch of spontaneously emerging ecovillages, but something like New Orleans, post-Katrina, times every major metropolitan area in the world. I see pain in our future.

The conclusion I’m coming to, inescapably, is that food, relocalization and gardening are political. The good news is that gardening also seems to be a great way of organizing people in a way that doesn’t overtly seem political. In other words, like me, it’s only after gardening for some years that one comes to understand that gardening is political.

There seem to be two approaches to fighting the Beast. One is to go head to head, like Gandhi, Mandela or MLK. Another is to go underground like the mycelium network and stay off the radar until there is enough strength or pain to stand and fight. The danger is that being underground can become comfortable and the standing up never happens, or it gets co-opted before the groundswell.

This morning I made my first trip to Rochester’s world famous Public Market in over a year. As part of my family’s attempt to get our finances in better shape, we’re looking at our food spending and cutting back wherever possible. I knew the Public Market was open most days during the week and I could stop by before work, but then I’d have veggies baking in the hot car all day. Y. said, “why not just put a cooler with some ice packs in the car and keep them in there?” Within a day I’d found a free cooler sitting by the side of the road and I was set to go.

So here’s what $13.50 got me this morning:

• five heads of garlic
• three large cucumbers
• seven large carrots
• a pint of limes
• a pint of lemons
• a pint of blueberries
• five plums
• a pound of grapes
• four tomatoes

I believe this is about half the price I’d pay at the local supermarket. Plus, these things I bought today usually taste like fruits and vegetables as opposed to tap-water taste and tennis-ball texture of stuff shipped here from Chile or Bakersfield. This gap in cost highlights the huge chunk of food prices being taken by the supply chain, and the quality gap makes another argument for localization. I’d rather be supporting the farmers and getting good food rather than supporting the BigCos and getting garbage.

Even on a Tuesday morning when the place is really quiet, the Public Market offers a lot of variety- tons of peppers, locally grown beans (including favas), potatoes, apples, annuals and perennial plants, not to mention the garage-sale fare. An added benefit is getting to chat with the vendors, or at least say good morning. Usually the most charitable thing I feel like saying at the supermarket is “can you get that f*&#$@ing restocking cart out of my way!” The Public Market and various farmers’ markets are just so much more friendly and pleasant.

The local paper ran a story on all the markets popping up all over town, and some of the more established players were complaining that there wasn’t the demand to support all these, yet I believe the demand will catch up, especially as they start to become more present and convenient.

This weekend was the last installment of the Permaculture Design Course in Hancock. Five of the original ten graduated and I’ve become very fond of these people. We gave presentations of our design projects on Saturday, held the “talent show” after dinner and ended up Sunday talking about invisible structures like legal, money systems, cultural and social processes. Saturday we’d had a visit from a local organic farmer who, after 20 years of struggle, is now facing the Hobson’s choice of selling out to natural gas drilling interests (like Haliburton ferinstance) or continuing to work endlessly treading water in a system where the full weight of the economy falls on the family farmer. This tied in, in a very real, visceral way, with the discussion of these invisible structures.

What I come away with is the concept of Withdrawal. First, I’m feeling the end of this transition, and it was in many ways life-changing for me. After other such initiations there is the need always for an integration period. It leaves me feeling like I’m coming back to a culture that is in no way plugged into the things we were talking about all winter and spring. I feel depressed. Like I’m withdrawing.

There’s the obvious addiction connotation here, as is often tossed about with terms like “addiction to foreign oil.” Like, as if, it’s no big thing to overcome an addiction! Anyway, that’s a little how I feel- on a very small scale- and I anticipate there is more pain ahead as I start to really look at how I’m living. One of my next steps is to “take inventory” but then maybe there’s a real 12-Step progression to this recovery and I should start with powerlessness. The organic farmer is right there: despair.

Looking at the Haliburtons and Blackwaters and World Banks running around screwing everyone, it’s hard not to despair. But there’s another kernel of hope in the word Withdrawal. As in withdrawing from participation in, cooperation with, cooptation by, apologizing for, rationalizing for, and investing in this s***storm we’ve created. Backing away slowly. And with each tiny, seemingly inconsequential action taken (like pulling the paper coffee cup out of the garbage and taking it home to use as a transplant pot for a cauliflower) I will say, “I’m making a withdrawal.” Each withdrawal goes into another account that accumulates over time. One day, one action, one withdrawal at a time. They add up.

The New York Times has a story today that gave me hope and a warm fuzzy feeling. Apparently, several people are not concerned about a recession at all. Thanks to the American sucker-taxpayer, there’s basically no consequence for the equity traders, hedge fund managers and Bear-Stearns’ chairman, despite what Joseph Stiglitz, Henry Kaufman, and the IMF conclude is a $1 Trillion bust. Party on!