Thursday, May 20, 2010

Way Out

The way out of the present Great Depression should have three axes:

1) a higher inflation target, around 4%. The European Central Bank targeted 1%, which is 1% removed from deflation, which is a trap with no exit.

2) government organized stimulus, New Deal style. It worked in the 1930s, in the USA and Germany.

3) national banks investing in the real economy (an old European trick now used by China and India)


Let's notice that Japan would be in depression, if not for massive government spending. Now, of course Japan has a total debt of 200% of GDP, nearly twice the one of Greece.

The American plutocrats' obsession about Greece not be ready for the euro is neither here nor there.

The drachma was converted at the wrong rate.

Moreover, the present crisis is made to bring the euro down to parity with the dollar quickly. Europe is punishing China and the USA for atrocious behavior at the Copenhagen climate conference. The euro is still more than 20% overvalued right now (mid May 2010).

American economists may have to enjoy the future double dip, if they do not mind USA plutocracy more than they do the European Union.


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Monday, May 10, 2010

American Plutocrats No Pasaran Mañana.

Paul Krugman, playing half clueless, bemoans that the Euro did not head back up in the stratosphere, where it can't breathe: "Yes, I know — the point is not to lift the euro. Still, the exchange rate is a quick measure of the impact on eurozone confidence, which bounced with the policy announcement but doesn’t seem to be staying up …"

OK, let's repeat slowly, so Krugman can learn the half of the lesson he did not quite digest yet:


To relaunch growth in Europe, the Euro, and its poodle, the Pound, have to come down big time. So rescue all you want, but go down. Go down at a more sedate pace, but go down. Down is a long way down.


The Euro was established by fixing parity against the very long term value of the French Franc. More recently, under the EMu and the Ecu, the long term average was a bit higher, at 1.07.


In any case, the support of the European Union for the economy of the USA is over: time to care about number one, namely Europe. The modern version of Smoot Hawley bill, Obama's ill conceived plan to double USA exports, will not pass. No pasaran.

Smoot-Hawley, passed in July 1930, boosted tariffs by 50%, and caused the Great Depression of the 1930s. To lift the Euro by 60% belongs to the same sort of ilk. Fortunately this time Europe is unified and democratic, and, while the somewhat confused Merkel went to find solace with her Russian friends, Sarkozy and company did what needed to be done (OK, they may have started the whole thing as a device to lower the Euro, agreed, so they were well placed to stop what they started...)


Notice that, last time this battle cry was offered, by "La Pasionara" during the attack against the Spanish republic by the fascist forces of Italy and Germany, with a rebel army from spanish Morocco headed by traitor general Franco,they passed nevertheless. And stayed for several decades.

But they passed, because they flew overhead, fueled by Texas oil (it was one of the rare things that made Adolf Hitler laugh). The Spanish Navy had blockaded Africa, where the fascist rebel force was, so Hitler's Luftwaffe organized an aerial bridge into Spain. That is also what we are talking about when we defend the Euro.


Nowadays, though, the risk has come down. There is less oil in Texas, and we know where the Gulf oil goes, and the US Army is searching for oil in all the wrong places...


Those who bathe in crude shall drown in it too.

PA

Monday, May 3, 2010

Fusion-Fission Solution

Oil and the like can be extracted at increasingly unbearable cost (same holds for coal and sand oil, shale oil, etc...). It's not just a question of CO2, but of exhausted technology. Something similar happened to the Romans: they called it: "the world is getting old".


A program to build Fusion-Fission thermonuclear power plants program should be started in a hurry. Besides enormous clean energy production, it would allow to get rid of nuclear waste, all over the world, and produce plenty of electricity to run an electrical economy (besides renewable energies).

All indicates that, differently from PURE thermonuclear fusion plants, the technology exists already, it's just a matter of putting together the details. Existing thermonuclear reactor (such as the JET, Joint European Torus) can produce plenty of fast neutrons to split, among other things, conventional, not very radioactive U 238. Future reactors such as ITER aim at producing ten times as much energy thermonuclearly as is put in. But the walls will take a beating.

In a fusion-fission reactor, the walls are made of a fissionable materials (U238 split under fast neutrons, as produced by thermonuclear fusion; enriched in U235 uranium splits under slow neutrons). So the walls get destroyed, made progressively less radioactive (I simplify), but that produces energy. This way all nuclear waste can be burned.

The reason why fusion-fission has not been pushed so far is that Beyond Pain (BP) companies such as BP have zero interest to see it appear.
PA

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