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Who L’eggo My Eggo?
Asher Miller, Post Carbon Institute
This is old news, but new news to me: Eggo Waffles Facing Shortage Until Mid-2010.
My brother and his family are in town for the weekend and we were talking last night about their breakfast plans. Eggo waffles were a staple of their sons’ breakfasts until the shortage forced them, like millions of other American households, to look for alternatives. (Apparently, Eggos had 73% of the waffle market.)
What’s interesting to me in all of this is not humanity’s great loss of Eggos, which I think taste like sugar sprinkled, waterlogged cardboard. It’s the cause of the shortage–emblematic of the intersection of globalized, ultra-efficient supply chains with health epidemics and climate change.
… We’ve built highly efficient, global supply chains that are almost miraculous in their ability to deliver things like hundreds of millions of frozen waffles to locations throughout the world each year. But they are also incredibly brittle and susceptible to breaks in the chain. Two events impacting a Kellogg plant and no more Eggos for six months. Snap. Just like that. With the shocks of peak oil and other resource limitations, along with climate changes and economic contraction, it’s likely that we’ll be needing to l’eggo of a lot more than just our Eggos in the coming days.
(20 February 2010)
The Fat Lady Has Sung
Thomas L. Friedman, New York times
… Welcome to the lean years.
Yes, sir, we’ve just had our 70 fat years in America, thanks to the Greatest Generation and the bounty of freedom and prosperity they built for us. And in these past 70 years, leadership — whether of the country, a university, a company, a state, a charity, or a township — has largely been about giving things away, building things from scratch, lowering taxes or making grants.
But now it feels as if we are entering a new era, “where the great task of government and of leadership is going to be about taking things away from people,” said the Johns Hopkins University foreign policy expert Michael Mandelbaum.
Indeed, to lead now is to trim, to fire or to downsize services, programs or personnel. We’ve gone from the age of government handouts to the age of citizen givebacks, from the age of companions fly free to the age of paying for each bag.
Let’s just hope our lean years will only number seven. That will depend a lot on us and whether we rise to the economic challenges of this moment
(20 February 2010)
Germany’s Choice
Marko Papic and Peter Zeihan, Stratfor
After years of profligate spending, Greece is becoming overwhelmed. Barring some sort of large-scale bailout program, a Greek debt default at this point is highly likely. At this moment, European Central Bank liquidity efforts are probably the only thing holding back such a default. But these are a stopgap measure that can hold only until more important economies manage to find their feet. And Europe’s problems extend beyond Greece. Fundamentals are so poor across the board that any number of eurozone states quickly could follow Greece down.
And so the rest of the eurozone is watching and waiting nervously while casting occasional glances in the direction of Berlin in hopes the eurozone’s leader and economy-in-chief will do something to make it all go away. To truly understand the depth of the crisis the Europeans face, one must first understand Germany, the only country that can solve it.
Germany’s Trap
The heart of Germany’s problem is that it is insecure and indefensible given its location in the middle of the North European Plain. No natural barriers separate Germany from the neighbors to its east and west, no mountains, deserts, oceans. Germany thus lacks strategic depth. The North European Plain is the Continent’s highway for commerce and conquest. Germany’s position in the center of the plain gives it plenty of commercial opportunities but also forces it to participate vigorously in conflict as both an instigator and victim.
Germany’s exposure and vulnerability thus make it an extremely active power. It is always under the gun, and so its policies reflect a certain desperate hyperactivity. In times of peace, Germany is competing with everyone economically, while in times of war it is fighting everyone. Its only hope for survival lies in brutal efficiencies, which it achieves in industry and warfare.
Pre-1945, Germany’s national goals were simple: Use diplomacy and economic heft to prevent multifront wars, and when those wars seem unavoidable, initiate them at a time and place of Berlin’s choosing.
…There are catches, of course — most notably that even a demilitarized Germany still is Germany. Even after its disastrous defeats in the first half of the 20th century, Germany remains Europe’s largest state in terms of population and economic size; the frantic mindset that drove the Germans so hard before 1948 didn’t simply disappear. Instead of German energies being split between growth and defense, a demilitarized Germany could — indeed, it had to — focus all its power on economic development. The result was modern Germany — one of the richest, most technologically and industrially advanced states in human history.
(8 February 2010)
Millions of Unemployed Face Years Without Jobs
Peter S. Goodman, New York Times
Even as the American economy shows tentative signs of a rebound, the human toll of the recession continues to mount, with millions of Americans remaining out of work, out of savings and nearing the end of their unemployment benefits.
Economists fear that the nascent recovery will leave more people behind than in past recessions, failing to create jobs in sufficient numbers to absorb the record-setting ranks of the long-term unemployed.
Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives — potentially for years to come.
Yet the social safety net is already showing severe strains. Roughly 2.7 million jobless people will lose their unemployment check before the end of April unless Congress approves the Obama administration’s proposal to extend the payments, according to the Labor Department.
…Every downturn pushes some people out of the middle class before the economy resumes expanding. Most recover. Many prosper. But some economists worry that this time could be different. An unusual constellation of forces — some embedded in the modern-day economy, others unique to this wrenching recession — might make it especially difficult for those out of work to find their way back to their middle-class lives.
Labor experts say the economy needs 100,000 new jobs a month just to absorb entrants to the labor force. With more than 15 million people officially jobless, even a vigorous recovery is likely to leave an enormous number out of work for years.
Some labor experts note that severe economic downturns are generally followed by powerful expansions, suggesting that aggressive hiring will soon resume. But doubts remain about whether such hiring can last long enough to absorb anywhere close to the millions of unemployed…
(20 February 2010)
Long significant article and part of a series called The New Poor by the NYT. -KS
Chinese Labor Costs, Tea Partiers as True Believers
Stuart Staniford, Early Warning blog
…The assumption behind these proposals is the following diagnosis: the great recession was like the great depression of the 1930s or Japan in the 1990s – massive overborrowing by individuals and overleverage of financial institutions followed by insolvency of the financial system causing depression (if the financial system is allowed to collapse) or prolonged stagnation (if not). The underlying problem is a lack of aggregate demand for goods and services, and this can be improved by the government taking up the slack on the borrowing front, and using the money to do something-or-other more-or-less useful (such as fixing up the infrastructure) and providing an alternative source of demand while everyone else works down their debt and gets in a position to begin demanding more goods and services again.
Clearly, this was pretty much an accurate analysis of what happened in the US great depression. And it clearly contains a significant element of truth now: no question we are in the aftermath of a binge of overleverage. However, it’s not clear that it’s the only problem we have, or even the worst.
In particular, let’s think about this: what is it going to take for Errol, our gentle 28 year old machinist above, to have a long and fulfilling career in his chosen line of work? He’s in Pennsylvania. As Bob Herbert relates in the New York Times recently, there is plenty of infrastructure in need of fixing in Pennsylvania.
Gov. Ed Rendell likes to tell a story that goes back to his days as mayor of Philadelphia.
As he recalled, the city had a long cold snap with about a month and a half of below-freezing temperatures. Then, abruptly, the mercury rose into the 60s, he said, “and 58 of our water mains broke, causing all sorts of havoc.”
The pipes were old. Some were ancient. “My water people told me that some had been laid in the 19th century,” said Mr. Rendell, “and they were laid shallow, without much protection. So with any radical changes in temperature, they were susceptible to breaking. We had a real emergency on our hands.”
Infrastructure, that least sexy of issues, is not just a significant interest of Ed Rendell’s; it’s more like a consuming passion. He can talk about it energetically and enthusiastically for hours and days at a time. He has tried to stop the hemorrhaging of Pennsylvania’s infrastructure, and he travels the country explaining how crucially important it is for the United States to rebuild a national infrastructure landscape that has deteriorated so badly that it is threatening the nation’s economic viability.
Alright, so the federal government could continue to run a big deficit, fix a bunch of old infrastructure in Pennsylvania (and elsewhere) and Errol might find a job in that effort for a while. But clearly, the US, with its strong political resistance to paying taxes, can only increase it’s national debt up to a certain point, and so after a few years such a government program would have to cease (if indeed it were politically feasible even to start it). So that gets Errol to, say, his mid thirties as a much more experienced and capable machinist. Then what is he to do?
It seems to me that Errol has a much deeper problem: what is it that some US company can employ Errol to make that cannot be made much cheaper in China? And do not the data on Chinese steel production (above) and Chinese transportation and housing, make it clear that the Chinese have every intention of building industrial production capacity that completely dwarfs that of the US?…
