Thursday, November 20, 2008

DEFLATION?

Perhaps it was two weeks ago. I was browsing in the sports department of an unnamed large department store and found myself in front of the big display of golf balls. I was looking for a softer ball, better for shots around the green and for putting. I had planned to go home with a box of new, shiny, non-scuffed golf balls. But something had changed in my decision-making process. In the past I might have just picked what I thought was the best ball, or perhaps the one I would just like to “try out” and, not thinking much about the price, I would drop it into the shopping cart and be off. But for some reason that day, I began to look more carefully at the little yellow price tags above the stacks. They ranged from $9.98 for twelve, soft, Maxi-fly Noodles to $35.00 for Pro V 1 Titleists. There were many choices in between. I was irritated and puzzled or perhaps puzzled and irritated. I could not make up my mind. I felt a resistance to simply picking a set of golf balls based on only what I wanted. Something else was brewing. Now for some reason the price was a factor and so without thinking much about it I found myself doing a mental cost-benefit analysis which included factors such as the number of balls (12 or 15?) their type (long for distance, long and soft, or soft for greenside control?) and of course the price of each type. In the end, I picked up a box of Maxi Fly Noodles at $9.98 and dumped them in the basket. But then I hadn’t gone more than a short pitching wedge shot from the display, when I decided that I really didn’t need these balls. I returned them to the display. What had happened? A short time later it struck me that were you to multiply that episode at the golf-ball display a few hundred million times over (for our 300 million population) and you’d have an economic crisis.

This morning I clicked on my favorite morning web site “Market Watch” to read where the stocks on the NY exchange had fallen precipitously again. The DOW hovered about the 8000 mark. And I found that that dirty word that no one would dare mention “recession” has become more common. The other “no-no” word “de de depssion”, (aw shucks, you know what I mean!) has actually raised it’s ugly head like a snake in the woodpile, appearing in print here and there. But this morning my eye caught a piece entitled: “Is deflation in the cards?” (See Market Watch, Nov 19, 2008.) Perhaps it was the strange word “deflation”. Is'nt it inflation we worry about? That’s when your money loses purchasing power and over time is worth less and less. Yeah, that’s why traditionally Americans don’t save much. Our experience is only with inflation. We all know that if you stuff $100 dollars in the mattress one year, and take it out at the same time the following year you will have only $94.50 in buying power of the original “C” note. We always worried about inflation. That I could understand. But now the new scary word is “deflation”.

But what’s to worry? That’s the opposite of inflation, so prices fall. Yeah, that’s good right? Gas prices have dropped down so fast I can’t keep up with them. Who is selling at the lowest price? The guy on the corner is now pumping gas at $2.25, I bragged to my wife. Who retorted casually, without looking up from her book, “Conoco Service Station on Rt 25 is lower, they had a price posted yesterday at $2.17 and today its $2.15." The newspapers report falling prices for nearly everything, from corn to soybeans and even gold!. All the local stores are slashing prices too. I learned from my wife that Kohls has a sale planned for the day after Thanksgiving, Black Friday Sale. “They are cutting some prices by as much as 75%,” she announced, with a big anticipatory grin. She’s happy, why are we supposed to be worried about this..this… deflation?

The word, of course, makes one think of an auto tire going flat, and that’s what it is. It is a “flattening out” of consumer demand and the lowering of prices of goods in general over a sustained period of time. It is the deflation of the “demand tire” on the vehicle of the economy, and of course, like a flat tire on a speeding automobile (and in an economy) makes the car slow down to a thumping, rubber-flopping, rim-grinding crawl—that gets you not to where we were going, but straight to the nearest repair shop! So deflation is the lowering of prices in general over the board…all prices. But what causes the decline is that demand (like my demand for a box of golf balls) dries up during a deflationary period. Without demand the economy does not roll.

Lest’s look at that more closely. Because if the price of goods falls regularly, consumers have an incentive to delay purchases until prices fall further. So instead of rushing in to Kohls to snap up the sale stuff, customers may pass up the big “Prices Slashed” signs on the window, with the assurance that prices will probably be lower after the sale. After Kohl’s first day of desultory sales, the manager might call up its supplier and cancel an order it had for next month delivery. If Kohl’s can’t sell its present inventory of stock how can it order more? Imagine that happening throughout the nation’s economy, to other Kohls stores, or to the meat-market, the gas station, the corner drug store, the home appliance outlet, and, of course, the automobile dealer on the high road. But as well, the companies which supply all those retail stores are also idled. The suppliers have no orders to fill and perhaps must lay off employees. The manufacturers who serve the suppliers have a glut of unsold goods and therefore cut their raw material orders—and to stay in business must cut expenses by firing employees.

Finally, investors who loan the cash for purchasing stock, paying bills or long term expansion, are sensitive to these circumstances and instead of lending or investing they now hold on to their cash. For them, the such circumstances are high risk, so they tend to hoard cash rather than risk investment, in a deflationary time the purchasing power of the cash they hold is rising and they don’t have to take risk to increase the value of their holdings. Their decisions to hoard money all add to the decline in available money supply and with less money to “chase goods” in the markets prices fall even lower. This leads to the vicious cycle of lowered demand leading to lowered prices, leading to less available cash, leading to lowering demand. Do you see the problem? It’s demand that drives the vehicle of the economy, and without it, all comes to a crawl. The lower demand and the vicious cycle may reduces over-all economic activity so much to contribute to what is known as a deflationary spiral. Now that sounds familiar, like something that happend as an aftermath of the 1929 crash.

For other evidence of lowered demand see: China shifts course and export demand slows, Int Herald Tribune, Oct 20 2008; Economic crisis slows gadget spending, blue-ray adoption, http://www.switched.com/2008/10/20/economic-crisis-slows-gadget-spending-blu-ray-adoption/

But what causes the slow-down in demand in the first place? Now there’s the question! Was it the high gas prices earlier in the year? The strains on the economy of the Iraq War? The credit meltdown on Wall Street which reduced confidence in the economy? Whatever it was..consumer’s perceptions have changed. Hey I’m going back to that sports department and try again!

For an answer to the above question "...what caused the slow-down in demand?" Nuriel Roubini in his piece in Forbes (Nov 19, 2008) entitled "Twenty Reasons Why We're Not Consuming" gives a twenty part list why demand is down and the nation is not consuming as it did in the past.
Some of his reasons briefly stated: the US consumer is shopped out, debt-burdened, and without adequate savings. They own homes with negative equity or of falling value, while MEWs (mortgage equity withdrawls) had been as high as $700 billion dollars in 2005, in the third quarter of this year they are at $20 billion dollars, so homes can no longer be used as ATM machines, real wage growth has been stagnant for several years, employment has been falling over the last 10 months, the recent inflation due to gas price and food cost hikes (now abated) has used up reserves especially for low-income workers, the glut of housing, durables, and autos on the market will take a long time to work out of the system, and finally, rising rates on credit (such as mortgages, autos, credit-cards and student loans) as well as reduced availability of credit have sharply curtailed the ability of consumers to borrow and spend. See" http://www.forbes.com/opinions/2008/11/19/consumer-debt-savings-oped-cx_nr_1120roubini.html

Sometimes known as "Dr.Doom", Roubini is a professor of economics at NYU. He forecast the Wall Street crisis well before it happened, but of course no one believed him, hence the epithet "Dr Doom".

Wednesday, November 19, 2008

COMMENTS ON STIGLITZ'S SEVEN DEADLY DEFICITS

In his article “The Seven Deadly Deficits,” Dr. Joseph Stiglitz (Nobel Prize Winning Economist and co-author of "The Three Trillion Dollar War”) lays out the causes of our economic crisis and the action we must take to extricate ourselves. Stiglitz begins where we all began-- in January 2000. We were upset at the inconclusive election, and unhappy with the two candidates (Bush and Gore) and uncertain of the future, but not too worried. We were secure in the structure of our government’s internal checks and balances and in the traditional Democratic-Republican gridlock in Washington which would prevent even Bush from causing too much havoc. I remember thinking that Bush seemed unprepared for the task, lacking in curiosity and not too bright, but he seemed a nice guy—but then, he had a strong VP in Cheney! Wow how wrong could we be?

Seven Deadly Deficits explains how the federal money squandered on the wars, wasted on the housing pyramid scheme, lost as a result of the recession, as well as the gap between what our economy actually produced and what it could have produced..say under a Gore administration was enormous. Had we not suffered through “Bush Years” we might be now sitting pretty, our people working productively in “green technology”, our citizenry all insured by a universal health care system, cars running efficiently on natural gas and our infrastructure (bridges and roads),our schools (and teachers) in shape to face the 21st century. Compare that to where we are today and you get the picture of what I call the “Bush Deficit”.

The following are Stiglitz’s Seven Deadly “Bush” Deficits. I have freely interspersed my own comments.

The Values Deficit. Is the difference between what Bush-Cheney meant by “innocent until proven guilty”, and what the rest of us thought: that government can’t just throw someone in a cell and forget about them (and throw out“habeas corpus”) as well the” rule of law”.

The Climate Deficit: The difference between Bush's statement: “global warming is fiction”, and what the rest of the world and US scientists thought:“its real”!

The Equality Deficit: The difference between rich and poor has grown immensely under Bush due to tax codes that reward those at the top.

The Accountability Deficit: Bush’s encouragement of deregulation of markets led to high risk practices which were supposed to “disperse” risk (by mortgaged based securities and hedge funds, the latter have grown over the Bush years from a thousand funds to ten thousand). instead they disguised and hid risk. Thus the markets did not function properly as a vehicle to direct funds into the economy, but only as a means of enriching the moguls—then when the system failed..they walked away (with their golden parachutes) leaving the taxpayers to pay the bill.

The Foreign Deficit: With both US citizens and the government unable to save money, the US is forced to seek cash on the foreign markets. The foreign deficit is the money we must beg for over-seas now at about ten billion dollars per day!

The Budget Deficit: In just eight years the Bush Deficits have grown the national debt by a third, from $6 trillion dollars to $9 trillion. But Stiglitz reminds us that these numbers do not include yet to be paid Iraq war bills (i.e. life benefits, rehabilitation of injured, payments to survivors, etc.) and the trillion dollar bail-out of late 2008, and the social-security and Medicare bills for “boomers” yet to retire. But why did Bush grow the deficits with such abandon?

Stiglitz gives two theories, one is based on the fantasy of “supply-side economics” (a Reagan pet-theory..sometimes called the “trickle down” theory) which states that if the “engines” of the economy..i.e. big business…are growing and prospering they will generate forces which buoy the entire nation’s economy. Of course this theory is tied in with the other side of this fantasy equation, the idea that lower taxes for the wealthy generate economic stimulus..for all. The last nearly thirty years of government policy slavishly followed such policies and have demonstrated the wrongheadedness of this idea to everyone’s satisfaction.

The second theory is known as the "Starve the Beast theory, but I've added a bit of my own. I believe it is less just an economic theory and more to do with political infighting-- a strategy of political power. Republicans see domestic spending as a source of political power for the Democrats. After-all, better schools, roads, levees, bridges and health care probably do encourage citizens to vote for the party which encourages such expenditures…but they also are a “good” for the nation as a whole, and its citizenry too. (And then let's remember that no one prevents Republicans from encouraging expenditure in those areas. Do they?) Thus at least in recent Republican theory..domestic spending is an option that must somehow be denied the Democrats. How can that be accomplished? One way is through generating public fear. If the nation is threatened by real attack, or simply by fear of an attack (perhaps engenered by creative use of CIA information), legislators are much more likely to pass bloated defense budgets. The ballooning defense spending squeezes domestic expenditures out of the budget. (Just see a summary of our recent budget in my blog entitled:"About those big numbers" below.) Since the executive branch of governement prepares the budget, it can, by manipulating “necessary” defense side of the budget, an executive like Bush can squeeze the Democrats into the unpleasant choice of having to either cut useful and needed domestic spending to the bone (and deny their constituents) or spend for those projects anyway, and grow the deficits. Thus big big deficits were a “plus” to Republican political power theorists…since it limited the power of their adversaries , while at the same time shoveled massive funds—by way of government military procurement contracts-- toward industries and institutions which were natural constituents of the Republican Party. Thus, the ballooning annual budgets were a “win-win” for Republicans, but a disaster for the nation as a whole.

The Investment Deficit: Good government investments help reduce budget deficits. For example, investment in in better schools and education helps generate new ideas and new technologies, while sound levees in New Orleans might have reduced or prevented the disaster there and had a similar result in the Minneapolis bridge collapse. But the government did not make that type of positive investments in US infrastructure. Partly for reasons outlined above. But it can! To do so, it can either cut expenses or raise taxes. Wealthy corporations and individuals can afford higher rates. European rates are higher than ours--the GDP of the EU at $16 trillion dollars is greater than ours at $14 trillion, yet we have similar sized populations and their industires compete with ours very effectively. But higher taxes alone can’t do it. Expenditures must be cut. But where? Under Bush, domestic spending has been cut to the bone. According to Stiglitz the only area to cut is defense spending. Our so called defense budget is by far the biggest in the world, accounting for one-half of all the world’s military expenditures. Bush’s last budget had military spending (Defense spending plus war costs) at 700 billion dollars (See my blog below “About those Big Numbers”) out of a total $2.8 trillion dollar budget. That’s about one quarter of the total budget and its biggest component in direct costs, Stiglitz calculates that we spend 42 cents of each federal dollar on direct or indirect defense spending. “With so much money spend on weapons that don’t work against enemies that don’t exist, there is ample room to increase security at the same time that we cut defense spending,” states Stiglitz in the Mother Jones piece. And I agree with that whole heartedly.

Stiglitz adds: “The laws of nature and the laws of economics are unforgiving. We can abuse our environment, but only for a while. We can spend beyond our means, but only for a while. We can free ride on the investments made in the past, but only for a while. Even the richest country in the world ignores the laws of nature and the laws of economics at its peril.”
Read the entire article at http://www.motherjones.com/news/feature/2008/11/the-seven-deadly-deficits.html

Monday, November 17, 2008

MELAMINE SURFACES AGAIN! NOW IN US?

Questions of the contamination of US food, feed and fertilizers with the industrial substance known as "melamine" are reviewed in this NYT piece by McWilliams in:http://www.nytimes.com/2008/11/17/opinion/17mcwilliams.html?_r=1&hp&oref=slogin

Read my earlier (September 2008) blog on this page concerning the "Melamine Milk Mess" to get the background and a clear picture of this problem. To reach that blog activate "September" on this page below right, and then on the new page, scroll down to the "Melamine" blog.

Monday, November 10, 2008

BROADBAND INTERNET IN THE USA: WE LAG BEHIND

What is broadband internet access? And why are we so far behind the Europeans. Didn't we invented the thing?

According to Wikipedia, broadband is a high rate of internet data access, generally described in terms which indicate the data (or 'bits') delivered or sent per second. A kilobit (kb) is defined as 1000 bits, while a delivery speed of 1kbit/s is a rate of 1000 bits per second, while a megabit/sec (Mbit/s) is a rate one million bits per second.

For example, a typical telephone modem is capable of a maximum of 56kbit/s or 56,000 bits per second. Not much, considering modern Internet sites with photographs, maps, streaming imagery, etc. Some providers have used the term "broadband" to indicate services which range from 64kbit/sec to up to 1Mbit/sec. However, the Organization of Economic Cooperation and Development (OECD) a group of developed nations (including North America,Western Europe, Japan, Australia, New Zealand and others) generally defines broadband Internet as equal to or faster than 256kbit/s and the USA FCC defines broadband as anything above 768kbit/s. By the way, a "gigabit" is a thousand times faster than a megabit or a billion bits/s. You may not have that fast of a service in your home but might come across this term in discussions of Ethernet fiber optic or copper twisted wire services.

"Broadband penetration" is a recent term indicating what percentage of the population of a nation has broadband access. It is now commonly used as a key economic indicator.

Though the USA invented the Internet (not Al Gore), the US is now listed by OECD as 15th in the world in access to broadband, having fallen from 12th place recently. The reason: we do not have a coherent national plan. Furthermore, we now rank behind nations like the Czech Republic, Mexico, Hungary, and Poland in cost of broadband service. Not wanting to sound like a blatant frankophile, but I must say that the French have a system that is four times faster than our standard, and their (better) service costs one half of ours. In general, the broadband penetration, is greater, and access, speed and the overall system is better in western Europe than it is here. Some reasons stated for our lagging position. We developed the technology first and while we tried out various options..shared telephone lines, then devoted-telephone lines and finally fiberoptic cables and wireless. One example: At Suffolk CC College--where when finally a thin line was snaked into our offices just when technology had advanced to the wireless stage and the worthless lines were abandoned. So they profited from our early experiments, then chose the best options and are now ahead of us. That's understandable and correctable. But don't accept the excuse that the reason for our lagging position is that we (USA) are so much bigger than western Europe. I've heard that one. Some one with a Sarah Palin view of geography tried to use that as an excuse. Not true. For from west to east from Spain to the Russian border it is about 2,300 miles and from Sicily to Finland south to north is about 2,400 miles. Those distances are greater than continental USA. Thus Europeans systems cover a larger area and do it cheaper and better.

See:http://www.informationweek.com/news/services/data/showArticle.jhtml?articleID=207801621

For further information on broadband and how is broadband provided See:
http://en.wikipedia.org/wiki/Broadband_Internet_access#Broadband_worldwide

WHAT THE ELECTION TOLD US: FRANK RICH NYT

Frank Rich NYT:
Cliches that fell on Tuesday Night.
Every assumption by media before election was proved wrong after Tuesday night.

Obama's election put to rest these ideas: whites would lie to pollsters about their support (Bradley Effect)....but the polls were almost exactly right ( In fact Nate Silver who writes the fivethirtyeight.com site and whom I followed religiously before the election got the outcome exactly right-- to the tenth place) and white men voted for Obama at a higher percentage than any Democrat since Jimmy Carter. He won those states where the desperate beer swilling Hillary attempted to raise the race card and claimed: "He can't win!"

Jews wouldn't support a black named Obama..he got 78% of their support.

Hispanics were claimed to have "little affinity" for a black candidate, but Obama took their votes by 67 to 31-- a big jump over both Kerry and Gore in earlier elections.

For those who said the youth vote "would not show up"...but they did and in greater numbers than ever before!

And for those who thought that Sarah Palin was a brilliant "McCain coup" because (though she was a bumptious naive, unprepared air head) she "spoke the language" of the people and unsophisticated Americans would support her in droves. But they didn't and all the polls and the final one agree she cost McCain votes and as Rich states it: "she morphed from savior to scapegoat overnight".

Finally in Rich's own words:"The post-Bush-Rove Republican Party is in the minority because it has driven away women, the young, suburbanites, black Americans, Latino-Americans, Asian-Americans, educated Americans, gay Americans and, increasingly, working-class Americans. Who’s left? The only states where the G.O.P. increased its percentage of the presidential vote relative to the Democrats were West Virginia, Tennessee, Louisiana and Arkansas. Even the North Carolina county where Palin expressed her delight at being in the “real America” went for Obama by more than 18 percentage points.

The actual real America is everywhere. It is the America that has been in shell shock since the aftermath of 9/11, when our government wielded a brutal attack by terrorists as a club to ratchet up our fears, betray our deepest constitutional values and turn Americans against one another in the name of “patriotism.” What we started to remember the morning after Election Day was what we had forgotten over the past eight years, as our abusive relationship with the Bush administration and its press enablers dragged on: That’s not who we are.

So even as we celebrated our first black president, we looked around and rediscovered the nation that had elected him. “We are the ones we’ve been waiting for,” Obama said in February, and indeed millions of such Americans were here all along, waiting for a leader. This was the week that they reclaimed their country."

Read the whole piece at:http://www.nytimes.com/2008/11/09/opinion/09rich.html?_r=2&ref=opinion&oref=slogin&oref=slogin

Sunday, November 9, 2008

MICHAEL MOORE'S ADVICE TO OBAMA

Poor President-elect Obama is being swamped with ideas, requests, and reminders of what he said on the campaign trail and what we now expect of him. Myself, I had a fuzzy, unformulated idea of what Obama should do next. Having a sense of his person..I expected the best. But yesterday, I happened to turn on the TV and caught Michael Moore on Larry King Live. Moore always looks so seedy, and rumpled and he is not a great speaker. Like many of us he stumbles and works perhaps too hard with the spoken word..but he has ideas and thankfully, a gift with formulating and expressing them on film. His films changed the way the our nation thinks. As the award-winning director of the famous "Sicko" which perhaps more than any other single media event changed how we look at the health-care system, Moore transcends his looks and his words. So I stopped surfing awhile and listened. As usual, Moore was worthwhile.

When Larry King asked what he expected of Obama's presidency, Moore answered with the follwoing short statement which I recommend to you. Hopefully you might even post the lines up somewhere on the refrigerator or the bathroom mirror. It's what we all want of the Obama presidency in a few short sentences. (See: http://www.youtube.com/watch?v=w-KawFvrcw4).

Moore began : "Well I hope he's listening, if he takes my advice...here's what I'd say. Hit the ground running. We don't have that much time...the Republicans will be back and these things have to get done. End that war in Iraq and bring back the troops. We can use that ten billion dollars a month here in the US. Start a Manhattan project for energy like FDR..
And make sure the rich pay for that mess of Wall Street.! Revisit that $800 billion slush fund that Bush agreed to. When you make a mess..you gotta clean it up. Don't put the burden on the people who didn't cause the problem. And get us all the universal health care we need. "

Main ideas:

1-END THE WAR IN IRAQ--BRING THE TROOPS HOME
2-START A MANHATTAN PROJECT FOR ENERGY INDEPENDENCE
3- FIX THE MESS ON WALL STREET AND MAKE THE "PERPS" PAY FOR IT, NOT THE PEOPLE.
4-MAKE HEALTH CARE UNIVERSAL

These few lines cleared up my fuzzy expectations. And if enacted, they would certainly be an awsome accomplishment!

Saturday, November 8, 2008

ABOUT THOSE PESKY BIG NUMBERS AND FACTS ABOUT THE USA

As informed citizens it is necessary to make decisions. The recent economic crisis is a prime example. Is that $700 billion dollar bail-out sensible or reckless? Was it wise or appropriate for President Bush to submit that massive $2.7 billion dollar budget for 2007, in which he cut $36 billion dollars from Medicare and called for a bloated defense budget ($481 billion dollars) then had the nerve to add a "supplemental war budget" of $141 billion dollars on top for the conflicts in Iraq and Afghanistan. As citizens we should be able to evaluate these expenditures as needed, appropriate or excessive. But we have to have some figures at hand first. The following is only the "back of an envelope" sketch of our economy, but perhaps it is a beginning that may encourage you all to follow these important lines of evidence further.

First let's get these big numbers straight. We all know how big a million is. Take one thousand $1000 dollar bills and stack them up into a neat pile. That is a pile of a million dollars. Collect a thousand piles like that to form a bigger one to add-up to one billion dollars, then put together a thousand of those billion stacks to form a one-trillion dollar one. So that's all there is to those "big" numbers you hear bandied about when using below. So think of a trillion as one thousand billions and a billion as one thousand millions. But caution here, when translating for in France and the UK the terms million and billion may not be the same numerically.

Let's go on then.

President Bush's 2007 Budget

Total receipts: $2.4 trillion dollars from:

$1.1 trillion - Individual income tax
$869.6 billion - Social Security and other payroll taxes
$370.2 billion - Corporate income tax
$65.1 billion - Excise taxes
$26.0 billion - Customs duties
$26.0 billion - Estate and gift taxes
$47.2 billion - Other

See: http://en.wikipedia.org/wiki/2007_United_States_federal_budget

Expenditures:
Military Spending (Defense plus two war expenses) =$699 billion
Social security=$586 billion
Medicare= $394 billion
Interest on debt=$244 billion
Others....
Total = $2.8 trillion
See:http://en.wikipedia.org/wiki/2007_United_States_federal_budget


GDP
The USA, gross domestic product (GDP) is a value we often see posted or hear referenced. It is often associated with a big number next to it. The concept of GDP is useful in that it provides a single descriptive term which can used to compare our economy over the years or relate it economies of other nations. But what does it mean? Imagine an hotel (or any other business) let's call this hotel the "Imperial Arms". It is a diverse enterprise with one hundred rooms to let, there are ten small stores on the ground floor that are rented, it has a barber shop, and hair salon that produce income, a small bakery, as well as a restaurant in the hotel. The "GHP" or gross "hotel" product of Imperial Arms is the value of all the goods and services the hotel produces from all its rents and other enterprises. In like manner if you were to tally up all the enterprises of the USA as a nation, the value of all its goods and services we could generate a term called the gross domestic product or GDP. For 2008 the USA GDP is estimated to be about $14 trillion dollars (14,000,000,000,000).

Since the term is a useful comparison, one may note here that this value ($14 trillion dollars) is equal to approximately 23% of the world gross national product (or the total of all the world- nation's GDP ). That is, the USA's economy produces 23% or nearly 1/4 of all the goods and services in the entire world. That's why it is the world's largest economy. In 2007, the next largest economy in the world Japan (if we were to exclude the EU which is a group of nations)with a GDP (in US dollars) of $4 trillion dollars, then Germany with $3.3 trillion, and China $3.2 trillion, while the UK, France, and Italy follow with around 2.5 trillion each. See http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal).

As the world's biggest economy the USA is the largest importer of goods and the third largest exporter. Canada, China, Mexico, Japan and Germany are the USA's top trading partners.
The USA economy is termed "postindustrial" that is, the US does not manufacture much anymore...but it concentrates its activities on money-management and other services. These "services" in the private sector account for @ 68% of its GDP, while government services account for @12%. The remaining 20% is in part accounted for by manufacture of chemical products. In addition,it is a leading producer of electrical and nuclear energy, liquid natural gas, sulfur, phosphates and salt, as well as a leader in world production of corn (maize) and soybeans. The agricultural sector accounts for only 1% of GDP.

Some other interesting facts and numbers about the USA. Only 12% of its labor force is unionized (as compared to more than 30% in western Europe). The US ranks first in the world in hiring and firing workers. However, labor productivity per hour is lower than top ranking Norway, France, Belgium and Luxembourg. A year's employment for a US worker grew by 200 hours from 1973 to 2003. The US welfare state is the most austere ("close fisted") in the entire developed world. There is little of a "security net" for workers in the US. For example, of 21 industrialized nations the US came up last in a ranking of children's well-being. In general, US corporate income tax rates are generally higher, while labor costs and consumption tax rates are lower. In 2007 the median income of US citizen was $50,203 (ranging from a high of $68,080 in Maryland to a low of $36,338 in Mississippi). Between 11-15% of Americans fall below the poverty level ($21,027 for a family of four) each year and nearly 60% of the population spends at least one year in "poverty" between the ages of 25 and 75 years. The US has the greatest income inequality among developed nations. (In 2000 the United States had the most highly concentrated wealth distribution (10% of population held 70%@ of the wealth, UK 56% , Germany 44%, Finland 42%) of any Western democracy except Switzerland.) That is its wealth is not distributed across the population but concentrated at the top. For example in the USA the richest 10% possess nearly 70% of the country's household wealth, while the top 1% possess more than one-third of the net wealth of the nation. Thus the vast majority of the population, 90% of US wage earners and workers scramble for only one-third of the nations largess, while the other seven-tenths of the wealth had been garnered by the privileged few. The fact is that the vast majority of Americans have little of no wealth other than their houses of those that have their own homes. See http://sociology.ucsc.edu/whorulesamerica/power/wealth.html

Though the US health care system far outspends any other nation in the world, the level of expenditure is not reflected in the relative ranking of the health of the US population which has a shorter life-span, higher incidence of disease (morbidity) and higher mortality in the comparisons to the rest of the industrialized nations. In 2000 the World Health Organisation (WHO) ranked the USA health care system as 37th in the world in overall performance. Remember this is for a nation that is the richest in the world. The health care system is a mix of privately funded and government sponsored services. In 2004 private insurance paid 35% of personal health expenditures, 15% was paid by the individual and 44% was paid by government. In 2005, 47 million citizens in the US remain uninsured. Consequently, these factors have an effect of the well being of the citizenry. In the US, life expectancy at birth is 78 years while in Western Europe in general it is approximately 79 years and in Norway, Switzerland, and Canada it is higher at approximately 82 yrs. Over the past two decades US life expectancy has dropped in the US from 11th to 42nd in world ranking. The US infant-mortality rate ranks with its life expectancy rates, at 42nd in the world. In addition, one third of the population is obese and obesity has doubled in the last 25 years. In the USA obesity-related type-2 diabetes is considered epidemic by medical professionals. The US adolescent pregnancy rate of @80 per 1000 women is four times that of France and five times that of Germany. In the USA, one in 67 women in the child bearing age (14-44 years) will have an abortion---a rate higher than most western nations. As for abortions thought they are more common in the US many states ban public funding, require waiting periods and demand parental notification for minors.

Federal or National Debt
What about US Debt? See:http://www.brillig.com/debt_clock/ The present US National debt is, as I write this, $10.6 trillion dollars and growing. The national debt has continued to rise by nearly 4 billion dollars a day since September 2007.

The US Federal Debt is the amount of money owed by the US Federal government to holders of US debt-instruments, i.e. bonds and promissory notes or similar paper. Early in November 2008 the US federal debt passed the $10 trillion dollar mark for the first time in US history. Thus with the GDP at $14 trillion dollars and the debt at $10 trillion 10/14 = 0.714 we conclude that the US now owes to creditors about 71.4% of the amount of goods and services we produce each year. That would be the equivalent of a man who earns about $50,000 annually, having debts totaling about $35,000. Banks normally investigate into such matters prior to granting a loan or mortgage A standard or "conforming" loan would generally require a debt to income ratio (DTI) of 28/36 or consider that your total debt obligations should be between 36 to 40% for a sound domestic economy.


Deficit
What about the US budget deficit?
A deficit is as it sounds the opposite of a surplus. When a government spends more than it collects in taxes it incurs a deficit. Before the development of bonds and other promissory notes a government's with a deficit could only turn to wealthy individuals (as the Rothschild family of Frankfort Germany) or the church in the Middle Ages, or other countries.

For example: In 2004 the US (federal) government had a GDP of $11.7 trillion dollars) and had tax revenue (income) of $1.862 trillion dollars (td) but the government spent $2.338td that year or$2.338 td-$1.862 td= $0.476td or $476 billion dollars or nearly five hundred billion dollars more than it took in. That is it had a budget deficit of $476 billion dollars! The government actually spent 476/1862 = 0.256 or nearly 26% more than it received in taxes. How can it spend more than it took in in taxes? It borrowed the money ($500 billion) from other countries which purchased bonds or promissory notes for that amount. They give the money and the USA then pays them interest on the borrowed money.

Let's us examine this in terms of our typical wage earner who earns $50,000 dollars annually. To operate in a similar fashion as the US government, this wage earner would have had to somehow borrowed (50,000 x 0.256 = 12,800) $12,800 dollars that year to spend a total of 50,000+12.800=$62,800. This wage earner would have a spending deficit of 25.6% as in the actual US government case for 2004 above. But that would add on to the 35,000 debt this person had and now his total debt would be $35,000 + $12,800= $47,800. We can see that continued deficit spending would of a similar amount in the following year would carry this wage earner to a point where he or she would owe more than they are earning. That is not a strong financial position to be in. A bank looking at these figures (well a bank after the banking collapse of Fall 2008) would certain not see this person as a perspective candidate for a loan. And that's where we find ourselves today as a nation.

Review: 2008 GDP= @$14trillion dollars,
Estimated 2008 Budget deficit =$1 trillion dollars,
Federal Debt: nearly $11 trillion dollars.

Now when you hear those numbers...they will seem familiar.

Wednesday, November 5, 2008

OBAMA'S WIN--WE ALL WIN

As I listened late last night to the returns, I finally heard them call Pennsylvania and then a bit later Ohio into the Obama column. I felt relieved and settled back. I was now pretty certain that Obama was going to make it. We had a new President and he will be Barak Hussein Obama and I was happy for my nation and proud too.

I took a deep breath and settled back into the deep couch. Milos snuggled against my feet. November gets chilly around here. As I stared at the TV my mind drfited back to a full 21 months ago and I was back in our Florida winter-home. As I recall it was Sunday, February 11 2007, and I had jsut been reading a disturbing news report from the BBC on my laptop computer about the US military accusing Iran of supplying sophisticated roadside bombs to insurgents in Iraq. I seemed to me that the US was setting the stage for a larger war...probably including Iran. I was terribly angry with the Bush administration's always expanding war and its reactionary policies at home. For a change, and to lower my blood pressure, I switched to a piece in the Boston Herald about a black Illinois Senator who was running for the Presidency. His name was Barak Obama and he had been at a political rally in Ames Iowa. The report mentioned that he had spoken out against the war in Iraq, even stating that he thought that President Bush had "wasted lives" on the war in Iraq. This was a sentiment that I could agree with. I was unhappy with the campaign of Senator Hillary Clinton, who seemed to me to be positioning herself to be as thick-headed on the war as Bush, and that she was taking a positon I termed, "Bush lite". I knew that this Obama person was up against Hillary Clinton and John Edwards. As I read the piece, I was interrupted by the phone ringing. When it did rang, it booted me off of the wire I was using for a computer connection. I had to answer it.

"This Mr. Kalin?" asked a male voice with a liquidy north-Florida style, southern accent.

"Yes?" I said, questioning to myself whether I should actually identify myself.

"Mr. Kalin, I'm working for the Barak Obama campaign here in Jacksonville, and I am calling to urge you to support Senator Obama's campaign." The man had a straight forward approach and sounded honest to me. I'm big on my sense of trust. He got right to the point as he went through a short litany of Obama's credentials and legislative history.

"Oh...?" I paused. I generally had a way of putting off these pesky calls and was running through my mental roll-a-dex attempting to settle on an appropriated statement to get this guy off my line.

"Mr. Kalin, you there?"

"Yes, yes I am." My mind was racing, I knew that if I wanted to have some impact on this election, I had an opportunity now. The phrase, "Money talks" and "Put up or shut up" came to mind.

"Obama?"

"Senator Obama, he is running for the Presidency..."

"Yeah...I read about him."

"How much?"

"Anything you can give..."

I fumbled in my back pocket for my credit card. It was quick and easy. In a few minutes I had supported my first political candidate. It was about what I would have spent on a fancy dinner down A1A at my favorite dinner spot.

Much later, after having donated again, I learned from the campaign that I had been among the first one million small donors to Presidnet Obama's campaign. I followed his progress through all of the early nomination campaigns, the debates, more debates, and even read his two books.

I am very proud to have been an early supporter.

What about why he was successful?

Well it wasn't because he is a man with a black skin--as some would have it. I think the election results prove conclusively that most of us (excepting a few regions of the country we need not mention) looked beyond that and saw that under Obama's short, neat, curly hair he has a large and well-functioning brain. That's what I voted for--his brain, and that is gray in color..the same shade of gray we all have. The difference is that his gray matter seems to work better than most.

But the underlying reason for the success of Obama was George Bush: the people rightly rejected the ideologue-George Bush and his government. This President Bush lied (yes the exact and proper word for his deed) to involve this nation in a disastrous and unnecessary war. While engaged there, he squandered our reputation and the lives of thousands of our young men. Most of my countrymen leave out here the fact that his ill advised war alsokilled hundreds of thousands of innocent Iraqi citizens...mostly women and children. His actions weakened our nation rather than strengthened it. Bush made us less safe. His incompetence, his use of torture, his illegal renditions, his disgraceful gulags, as well as his penchant for domestic spying and his revocation of the ancient right of habeus corpus, his hubris, and yes his stupidity all worked to the detriment of all of his countrymen and women. All those who supported his policies or who sat by silently by or who were conspirators in his malfeasance and deceit were rightly tarnished and deserve the evil that befalls them. The only legacy that George Bush will or should have is that he helped run his nation and his party into the ground. Thankfully, the people rose up against this demi-tyrant and deposed of him and his cohorts in the election rout that was the Obama revolution. Hurrah!

A second reason for President-elect Obama's success stems from the the political front. The Obama revolution is also the refutation of the vaunted Republican election scheme of "divide and conquer which was employed so effectively by Republicans as far back as Nixon in 1968 (Remember the "silent majority?"). The Republican election scam was designed to obfuscate and confuse voters so real issues need never be discussed. The real issues such as a faltering economy, the need for regulation in the markets, the massive deficit, the decay of the nation's infrastructure, health care, and the need for a truly functioning government were left undisclosed and not discussed. The old Republican wedge issue themes: small government, taxes, crime, "social security reform", abortion, gay marriage, all served only to divide up the electorate and garner votes.

But it did not work this time. Why? Perhaps because each of their wedge issues were overwhelmed by events or the policies of George Bush himself. On the issue of small government it was apparent to all that it was GWB who presided over the greatest expansion of Federal government in our recent history. That issue had little traction with voters. The "cut taxes issue" became moot when voters were faced with the fact that Bush's income tax cuts were simply pouring money into the open hands of the super wealthy while the government literally had to borrow two billion dollars a day from willing lenders abroad--just to stay afloat. Thus to make Bush's tax cuts permanent we would have been in the indefensible position of having to borrow money from abroad (and pay interest on it to boot!) so we could give it away as a tax break to the giant corporations and the super wealthy. The "fight crime" issue was a non-issue when there appeared to be more crime and corruption within government halls than on the streets. While the old "reform social security" political-saw seemed small potatoes when Bush proposed giving away hundreds of billions of dollars (for a total of an estimated one trillion dollars) to Wall Street Investment houses. The well-used abortion plank was employed as usual to split out the Catholics and conservative Christians, but these groups may have had more pressing economic issues laid out on their kitchen tables each night, such as how to pay the mortgage, fill the car's gas tank and heat the house this winter. So the Republican agenda was finally revealed as the scam that it is and how it would have us argue senselessly over who marries whom, over private issues between a woman and her physician, and similar smoke screens while eschewing real issues, such as the need for more inclusive and better health care, clean air, clean water, better schools and greater opportunity for our children.

Why? The oligarchs, plutocrats, titans of industry, barons of oil, and denizens of Wall Street and the privileged classes care little for or are simply unaware of' hoi plloi and their middle class' concerns. As a result, the mainstream Republican agenda is no longer a winner.
By today the election results have sunk in to Republican consciousness. Obama's landslide win of 349 vs 169 electoral votes and an eight million plurality in the popular vote over McCain struck home. Obama promised us change and change is on the way for the opposition party as well. The old wedge issues are not working. The electorate has "swept the bums out" and good riddance. We applaud the wise electorate.

Monday, November 3, 2008

THE THREAT OF DEFLATION?

Peter S. Goodman, of the New York Times wrote an interesting piece entitled "Fear of Deflation Lurks as Global Demand Drops (NY Times Oct 31, 2008) Goodman states that "...a new threat may be gathering force within the American economy..the prospect that goods will pile up waiting for buyers and prices will fall.." The results, called "deflation" suffocates fresh investments and cause joblessness and may lead to a long-term economic downturn.

The word "deflation" itself gives economists the jitters. Why? Because it was deflation that caused the greatest hardships of the Great Depression of the 1930s. The same phenomenon accompanied Japan's "lost decade" when its stock boom collapsed and its real estate bubble burst at the end of the 1980s.

Deflation is a general and sustained decline in the price level of an entire kind of asset or commodity and is the opposite of inflation. According to classical economic theory it is an economy in which both money-supply and availability of credit decrease. That sounds a lot like what might be occurring here in the US--too much production in relation to available resources. During the classic era of British economics, Adam Smith (1723-1790) and David Ricardo (1772-1823) described this phenomenon as a "general glut". I like that term, since it is so descriptive of what actually is occurring. In 19th century Britain, as labor became specialized, it sought a higher standard of living and to achieve that end, produced more and more product. Because increased amount of goods lowers prices, producers had to raise production to increase income, which in turn, lowered prices further. The process begins a vicious cycle or feedback loop which moves the economy increasingly toward deflation or a "general glut". Whether that simple scenario can occur in a modern economy is questionable, however, there is a very recent and well known example.

It is the Japanese "baburu keiki" or "bubble economy" of 1986 to 1990. The aftermath of this event continued on into the early part of this century and is chilling in its similarity to our present economic situation. Japan, a nation of hard-working frugal people with a strong tradition of saving, pulled themselves out of the ashes of WWII to become the Miracle Economy of the east. By the early 1980s, the USA and Japan accounted for 40% of the entire world economy (See: Jim Impoco, NYT Oct 18, 2008). For the post-WWII Japanese government it was easy to employ tariffs and taxes that encouraged people to save--since it was something that Japanese tended toward naturally. As a consequence, during this period banks were flush with cash and credit was cheap and easy to obtain. By 1986 with easy credit and a surging economy, Japanese companies could more easily invest in capital improvements-- than their overseas competition. With their highly efficient production, came lower prices for their goods and a larger share of overseas markets. The trade surplus increased to engorge banks with money---money which was then available for investment and of course for speculation. Speculators and investors were particularly active in the Tokyo Stock Exchange where shares surged, and later much of the income was reinvested in the real estate market as well. At the zenith of the real estate bubble it is said that some choice properties in the Ginza district in Tokyo were selling for a whopping $139,000 per square foot! (According to www.urbandigs.com the present average price per square foot for a Manhattan apartment (2008) is $964 (http://www.urbandigs.com/2006/03/price_per_squar.html). The result of this massive growth was that between 1986 and 1991 Japan had expanded its GNP by nearly one trillion dollars, or about the value of the entire French GDP of that period.

Then early in the new millennium, both the stock bubble and the real estate bubble burst at the same time. The government mostly denied there was a problem. The were no major outward signs of great distress. The economy spluttered along, but there was little growth. There were periods where the economy appeared to grow, then it would stall and contract a little. That situation continued for more than a decade. Called in Japan, "the lost decade" only in 2003 has the economy fully recovered.

Could that happen to us? It's possible but there are some differences...they Japanese were not aware of deflation and let it happen. We are forewarned by their experience. There are some other differences too. But nothing that can reassure us. Japan was the world's largest creditor nation when their twin stock and real-estate bubbles burst...but we are the world's greatest debtor nation. (In fact, today we (USA) had to borrow $2 billion dollars just to keep the US government running. No that is not just for today. That is what we do every day...we are borrowing each day to keep our nation afloat. Let's see 360 days x 2 billion dollars = 720 billion...Yep that's what our deficit is.)

If a general glut, deflation era and "lost decade hits" us, we face problems that the Japanese didn't have. We owe foreign nations lots of money, at the same time we borrow heavily from these same creditors and instead of fanatical savers and frugal spenders, Americans are profligate spenders and scanty or negative savers. The picture doesn't look too promising.

THE CULTURE WARS..UPDATE

Peter Beinart, a senior fellow at the Council on Foreign Relations, wrote a thought-provoking column in the Washington Post today (November 3, 2008) entitled 'Last of the Culture Warriors. See http://www.washingtonpost.com/wp-dyn/content/article/2008/11/02/AR2008110201718.html?hpid=opinionsbox1

Beinart asks the question, Why has America turned away from Sarah Palin? Scandals in Alaska, her grasp of basic national issues, and those Couric interviews didn't help, but according to Beinart her troubles ran deeper. "Palin's brand is culture war", states the author, 'and in America today culture war no longer sells."

Beinart takes us back to the 1920s when evolution, prohibition, immigration dominated election after election. The reason: Republicans were then, as they are today--a minority party devoted toward the needs of the big banks, big business and elite, they could only win by motivating (and deceiving) the electorate by the use of "wedge" issues. In the 1920s, Beinart reminds us that the Republicans "pitted the newly arrived, saloon frequenting, big city Catholics against old-stock, tea totaling, small town Protestants." But then in the 1930s the culture war died. The Great Depression put the question of economic survival forefront into the voter's minds...in 1932 the Democrat, Franklin Roosevelt was elected. The culture wars were over. The Republican "brand" was out of favor and remained in the wilderness for decades.

In the 1960 election Kennedy beat Nixon narrowly. But Nixon didn't go awat. In the 1968 election Nixon returned with an appeal to the "silent majority" the socially conservative Americans who were repulsed by the Hippie counter-culture, anti-war, and what they saw as anti-American sentiments. He was successful in dividing the electorate and won handily with a nearly 500,00 vote plurality over Humphrey, his opponent. Since that time, with only a few exceptions (Carter's one term and Clinton's two-terms) the Republicans have continued the divide and conquer strategy.

According to recent Newsday polls referenced by Beinart, in this election, issues such as abortion, same sex marriage, guns, and abortion--past 'wedge issues" used by the Repubicans, represent only about 6% of the electorate's concerns, while the economy looms up at 44%. In this environment a culture warrior like Palin is out of tune with the electorate's concerns. Her championing of small town America , her efforts to link Obama to domestic terrorism (Bill Ayers), to question his Americanism and patriotism and "depicting the campaign as a struggle between the culturally familiar and culturally threatening" is a well worn Republican strategy. But they seem to have limited traction with the electorate. The attacks have had their effect--on some. But in this election to the clear-eyed majority who are focused on real problems to which the Republicans and the fresh face of Sarah Palin have no real answers.

Perhaps our system really does work. We'll see tomorrow!

Sunday, November 2, 2008

THE OPERA DR ATOMIC AT THE NY MET

Comments on the Opera, Dr Atomic, a work by John Adams (libretto by Peter Sellars) performed at the New York Metropolitan Opera, October 30, 2008. Penny Woolcock directed.

The opera centers on the work and life of J(Julius) Robert Oppenheimer a prominent physicist and his wife Kitty during the period when he was in charge of the Manhattan Project at Los Alamos, New Mexico. The site, a desolate desert valley known to the early Spanish as Jornada del Muerto (Journey of the Dead Man). The time is a few weeks before the testing of the first atomic bomb. The Met playbill states that John Adams took up the task of creating a modern opera around the Dr Faustus myth. Adams confesses that when he was approached to do the project J Robert Oppenheimer popped into his mind as the protagonist. Vibhuti Patel, (Time Magazine, Vibhuti Patel, Oct 15, 2008) states that Oppenehimer was the leader of a team of scientists who in "pursuit of the ultimate knowledge, essentially made an infernal compact with the US government and its military to deliver the world's most powerful WMD." The opera's music is not the atonal, discordant modern music I expected, but is complex and dark. The score includes the sounds of running motors, moving vehicles, industrial sounds, 1940s pop music, and at the stunning end--the plaintive voices of Japanese victims of the bombings over Hiroshima and Nagasaki. The Oppenheimer character's major aria is based on a line from John Dunne's sonnet: "Batter my heart, three person'd God." It was my personal favorite of the production. Overall, the work is not one in which a patron would be found leaving the opera house humming his or her favorite tune. It is a serious thought provoking work. The libretto by Sellars is powerful statement concerning the two-weeks leading up to the emergence of the world into the atomic era in July 1945, and of the ethical dilemma facing those who offered their technical skills to their government and the military in their belief that they were in a race with the Nazis for the doomsday weapon. Too late, once Germany had been defeated, they realize that their efforts and discoveries were to be used against humanity in a horrible new way.

(Recent discoveries have proved that General Grove was all along aware that there was no real program in Nazi Germany for a nuclear bomb. The weapon was sought by the administration and the military as a way to buffalo Russia who was seen as the major threat to the US plans.)

The main characters are Robert Oppenheimer, Kitty his wife, General Leslie Grove the military commander at Los Alamos, Edward Teller a physicist and Robert Wilson, a young scientist whose qualms of conscience concerning the planned bombing of Japanese population centers leads to him attempting to circulate a letter of explanation to President Truman . The voices of the performers were uniformly appropriate and powerful.

I wondered at the beginning about the question of whether this was a worthy subject for an opera..thinking perhaps the material could be better explored as a play...but at the end, it was clear that the opera was the best vehicle. Since Dr Atomic is not a factual retelling of an historical event or even an investigation into the ethical and emotional aspects of the characters..but as Pamela Rosenberg stated at a talk at the Berkeley Public Library (September 29th 2005) but an "acute" treatment of subject that goes to the emotional spaces." The opera With its powerful viusal impact, its use of music, sounds and the human voice as a component of the overall emotional statement which still reverberates in my head, this opera worked. It clearly connected with the New York audience emotionally charged by tragic events of a terrorist attack (the tragedy of 9-11 occurred only a short distance away), as well as the disgust with the horrible, wasteful wars in Iraq, and Afghanistan and the emotional turmoil of the on-going Wall Street meltdown (again happening within a very short distance of the opera house) all seemed to reverberate in emotional unison with the walls of the Met in the last act, as the bomb was dropped on the Trinity site with ear-splitting and chest-vibrating sounds.

"Opera has a curious ability to handle life's biggest themes as no other art form can." stated, John Adams (http://www.newsweek.com/id/164067) and that is a statement with which one can fully agree after seeing Dr Atomic.

An underlying theme, maybe a not so subtle one, is Oppenheimer's ethical and moral lapses as he pursues his Faustian goal of scientific discovery. During his pursuit of his goal to know the truth Oppenheimer is given a chance at moral redemption in the play at the point where, learning of the defeat of Germany (the primary cause of the effort of the project) he could have made some move to halt the actual building and testing of the bomb, or helped modify or deny its ultimate use against Japanese cities. One such event occurs in 1945, after the surrender of Germany, which had been touted as the main purpose to build the bomb by the military , particularly when it was learned how far behind the German effort had progressed. It was at this juncture that young Robert Wilson (head of the Cyclotron Group and a fovorite of Oppenheimer) who upon discovering that the bomb was planned to be used against dense population centers in Japan as a means of infliciting psychological terror, attempts to circulate a letter to President Truman about the real impact of a nuclear attack on humanity. But Oppenheimer, instead sides with General Leslie Groves and intervenes to prevent the letter from circulating or reaching the President, stating that it was not the purview of science to make such decisions..but of the politicians.

At the end of the opera, the plaintive calls of a Japanese victim of the bombing, a mother, calling for help and begging for water are heard in the silenced opera house. The play has ended and the USA had entered the atomic age as the first nation to use weapons of mass destruction and psychological terror on another nation.

Oppenheimer's later life is not one of redemption and appears to in some ways follow the Faustian myth. After the end of the war, Oppenheimer is breifly lionized as as a war hero but soon evidence regarding possible connections with Communists arise, and he falls under suspicions of un-American sympathies. His government clearance is revoked. He is called to the Senate, McCarthy hearings where he is successfully pressured to reveal names of Communist sympathizers. Eventually he retires into partial obscurity.

I found the interrelationship of myth-story of Dr Faustus and Dr Atomic an interesting and illuminating relationship, and though Adams and Sellars seem to prefer distancing themselves from this idea, the relationships are inescapable. See below.


The Tragical History of Dr Faustus (1604)

Christopher (Kit) Marlowe (1564-1593)


Faustus who is born of lower class parents is inelegant and seeks knowledge. He pursues studies in Divinity as the epitome of knowledge and in which he eventually receives a doctorate. His sin is that of excessive pride. (And it is thought that Marlowe visualized a relationship between Faustus and of the Greek mythical Icarus, son of Daedalus (engineer and artisan who built the Labyrinth on Crete for King Minos) who, after a warning from his father who built their wings to escape from the tower where they were being held, Icarus, caught up in his fascination with heaven ignored the warning and flew too close to the sun which his waxen wings. Excessive pride was the cause. In the beginning of Marlowe's play Faustus tells us that he has exhausted each of the subjects he has studied. Logic, he states, is simply a weak tool for argument, medicine is a farce it can not raise the dead, law is petty and below his talents, Divinity is useless since all humans sin and salvation can not be guaranteed and thus (Che sara sara) or "what will be will be". Faustus calls on his servant Wagner to bring to him two famous magicians Valdes and Cornelius. They convince Faustus that magic would continue to excite his interest if he devotes himself to it. Soon afterward Faustus, using magic incantations calls on the devil to appear and Mephistopheles, a servant of Lucifer appears before him. Mephistopheles enchants Faustus with tricks and magic. Using Mephistopheles as a messenger to Lucifer, Faustus strikes a deal with the devil. Faustus is to be allotted 24 years of life with Mephistopheles as his personal servant. At the end of that time, he will give his soul over to Lucifer as payment and spend the rest of his life damned to hell. As the play progresses Faustus learns much about the sciences, astronomy, and the mysterious "nine spheres" by way of Mephestopheles' gifts. When he commands Mephistopheles to show him the personification of the seven deadly sins, Lucifer's agent finally begs the doctor to "leave these frivolous demands" but Faustus does not listen and persists in his demand. At the appearance of the seven sins Faustus is repulsed by their horrible aspect, and, as well, the fact that they recall to him of his own life. But he rejects the warnings of his conscience and, seeming set on his soul's damnation, he continues on his quest. Later, a good angel appears to him and begs him to repent, urging him to break his pact with Lucifer, but again he rejects this entreaty for his salvation and forges ahead to hell and damnation. In the end, nothing truly worthwhile comes from Faustus' pact with the devil and finally the 24 years have elapsed and Mephistopheles comes to collect Lucifer's payment. In the last scene Faustus' dismembered body is discovered by his friends strewn over the stage as a sign that his soul has been removed and of his damnation.

The play has an oft-quoted scene when Faustus summons the ghost of Helen of Troy:

Faust: "Was this the face that launched a thousand ships,
And burnt the topless towers of Illium?
Sweet Helen make me immortal with a kiss.."


Some thoughts on why we dropped the atomic bombs on Japan.

"A long habit of not thinking a thing wrong gives it a superficial appearance of being right, and raises at first a formidable outcry in defense of custom." (Thomas Payne "Common Sense" 1776)
We've all heard the shibboleths about why we did it and the outcrys in defense of "custom" when these are questioned...but did you know this?

According to Admiral William D. Leahy, Chair of the Joint Chiefs of Staff and President Truman's Chief of Staff: "The Japanese were already defeated and ready to surrender because of the effective sea blockade and the successful bombing with conventional weapons... In being the first to use it [the atomic bomb], we had adopted an ethical standard common to the barbarians of the Dark Ages."

Think of it. We were the first terrorist nation. Let's try to do better in the future.