Sunday, November 26, 2017

Germany to Jump to Russia � U.S. Deep State has Lost

The latest rumblings from Berlin suggest that the SDP is going to cave, once again, and become the junior partner in Merkel's CDU-run government. This comes after the collapse of the so-called Jamaican coalition talks (CDU, Greens, and FDP.) You could smell that fiasco in the middle of North America. But that attempt comes after the SPD and CSU lost significant fractions of their vote in the last election and needed new blood. But Greens and FDP? That would be like Bernie Bros hooking up with the Koch brothers. (It seems to me that any coalition named for Jamaica should be negotiated to the sweets sounds of Bob Marley and good Ganja and the Krauts probably tried it with polka, bier, und schnapps.)

Of course, the interesting question is whether the German government will keep pursuing their hopelessly stupid neoliberal agenda because that is what the crooks at Deutsche Bank want, or will they begin catering to the industrial interests that really keep the economy going. (Producers vs Predators, ja) The problem with running a Producer agenda is that it is exactly what the EU and USA does not want.

My take is that while an economic realignment is seriously overdue, it will face major hurdles. The Neoliberals will not give up easily. On the other hand, there are elements in the German psychic that really like doing business in Russia and so this may lead to Germany abandoning sanctions. Luongo below has thoughts on this.

Germany to Jump to Russia � U.S. Deep State has Lost

Stratfor's George Friedman can't tell you the real story of why Germany has no choice but Russia.

Tom Luongo, 10/24/17

How do I know this? I didn�t write that title for click-bait or SEO purposes. I wrote that title because it�s true. This article will be one part geopolitical treatise and one part tutorial on how to read what isn�t said as much as what is said and, most importantly, who is/isn�t speaking.

We start with none other than Mr. CIA mouthpiece himself George Friedman. Freidman is the head of Stratfor, one of the most influential Washington D.C.-based �intelligence� organizations around. In the past I�ve subscribed to Stratfor simply to find out what narratives the U.S. government wants me to believe.

Deep State Intelligencia

Stratfor�s intelligence is a masterful mixture of the truth wrapped up in a neat little ball spinning you like a fidget spinner. Friedman is the Dumbledore of Stratfor, speaking half in riddles. But as an insider with access to the real story and blithely, almost imperceptibly, not telling you anything of value he guides you towards a particular side of the story.

So, again, how do I know the Deep State is losing? Friedman�s latest piece for John Mauldin�s investment service hit Zerohedge this morning discussing the deplorable state of U.S./German relations.

People like Friedman absolutely need to be read. But, read them with the most skeptical eye. The intelligence is in knowing where the focus will be next. So, Friedman talking about how the Germans are about to be seduced out of necessity by the evil Russians is significant.

The focus of Deep State policy will move away from Syria and even Iran to try and shore up their position in Germany which has deteriorated alongside Chancellor Angela Merkel�s popular support.

Friedman lays out Germany�s choice: figure out a way to salvage the EU or turn to Russia to get what it needs to grow. This is the essence of Germany�s problem. But Friedman lays it out in the most intellectually dishonest way imaginable.

And in doing so he makes the reader feel intelligent. That�s the pernicious part. That�s the �Master Persuader� part that Scott Adams talks about all the time. And that�s the part you have to watch carefully.

Deep State Russian Lies

Friedman uses sleight of hand to tell us that Germany needs Russia because:

Germany needs Russian raw materials. It also needs the Russian market to be far more robust than it is so that it can buy more German goods.

But Russia is incapable of rapid economic development without outside help, and with the collapse of oil prices, it needs rapid development to stabilize its economy. Germany needs Russia�s economy to succeed, and what it has to offer Russia is capital, technology, and management.

In exchange, Russia can offer raw materials and a workforce.

An alignment with Russia could settle Eastern Europe in Germany�s orbit.

This all sounds good. The conclusion is true. But getting there it a lie to suit the narrative. Germany needs strong exports to grow. Russia doesn�t. Germany needs raw materials. Russian doesn�t need technology. It has that technology it hasn�t deployed it to the private sector�. Yet.

Up to this point Germany has used southern Europe as its dumping ground, trading Italian and Portuguese sovereign debt for BMWs.

But that scheme has reached its limit and is tearing the EU apart. Germany doesn�t want to stop this arrangement nor does it want to pay its �fair share� of the burden for its resolution, i.e. debt relief for what it considers the �Club Med� countries.

German politicians like Merkel have exploited this cynically for political gain but, now that we�ve reached the debt limit she�s been exposed as nothing more than mouthpiece for U.S. Deep State policy, not the leader of Germany.

The U.S. wants a united EU, through NATO, to combat Russia geopolitically and so everything is frozen in this Cold War stasis that is resulting in major populist uprisings against Merkel�s enforcement of it. The costs are being paid by the younger generations now born into de facto debt slavery.

Russia, for its part, is not the Russia of even five years ago. It continues to leverage its robust energy sector to fund the broader economy. Putin made the switch from subsidizing Rosneft and Gazprom to agriculture and manufacturing in 2015. Igor Sechin howled. Putin ignored him.

Friedman knows this and yet peddles the same �Russia is a gas station on the way to China� meme that still works on Congress. He also knows that this was always Putin�s plan to first stabilize Russia and then remake it.

And that�s what scares him and the neocons he represents.

Putin used the energy sector to improve the lives of millions of Russians while waging a war of financial and territorial attrition against an aggressive U.S. Then made a stand (Syria) and reversed the entire board while defending the strategic positions of its energy sector.

While that played out, he redirected state funds away from energy at the crucial moment during the ruble crisis, which now can stand on its own, towards the broader economy. That part of the plan is just getting started. See my latest article at Seeking Alpha for a taste of what�s happening.

Once institutional investors realize that Friedman is selling them nonsense, the money will flow into Russia through a multitude of new channels that will help Germany make the right choice.

Germany�s Real Choice is not the Deep State

Germany�s real choice is, as Friedman suggests, to cut a new deal with Russia. Yes, Germany needs access to a vibrant Russian market but that will happen with or without Germany thanks to China�s Belt and Road Initiative and its own dramatic military and diplomatic victories in central Asia and the Middle East.

Germany has no choice looking West. Britain is a shell of a country hanging on by the skin of its financial sector teeth. Western Europe is tapped out and needs to exit the euro, devalue and default on its debt to begin again and the U.S. will struggle with the same problems once Europe is finished working through the worst of theirs.

The only rational choice is Russia with its
  • 17% debt to GDP ratio, 
  • Intelligent trained workforce
  • Access to markets that will be the engines of growth past 2020
  • Its strengthening ties to the �buffer states� of Eastern Europe that will likely exit the EU
It is this choice that was truly reflected in the German election results last month, not the anti-immigration policies of Alternative for Germany (AfD). That certainly played a role, but Merkel�s troubles in Bavaria are her real problems and Bavaria wants normalized relations with Russia.

And if she doesn't craft a cabinet that supports that, she won�t be chancellor for much longer.

And that�s the real story Friedman won�t tell you because it admits defeat. more

Saturday, November 25, 2017

The Non-Partisan League dramatized

Based on the diaries of a former Non-Partisan League organizer, 94 yo Henry Martinson, Northern Lights is an exquisite examination of the hardships and challenges of organizing arguably USA�s most successful economically progressive movement. Filmed in NW North Dakota by John Hanson in 1978, it would win the Cam�ra d�Or award (best first feature) at the 1980 Cannes Film Festival.

Only four of the actors in this film were professional. The rest were locals. As someone who once lived less than 50 miles from where this film was shot, I can assure everyone that they are very authentic. One of my favorite films�EVAH!

(Sorry, they took down the linked video. Apparently there's a reason a copy of this film is so hard to find.)

Thursday, November 23, 2017

This ain't no new fight - The Nonpartisan League, 1919

1919 cover of the Nonpartisan League�s newspaper, The Nonpartisan Leader, portraying �organized farmers and workers� standing tall against big business interests. (Wikimedia Commons).

Something I can give thanks for is the many episodes of history Jon has brought to my attention. One of the most relevant for our time, with our desperate need to reform and revitalize the political system of the USA, is the Nonpartisan League of the upper plains states. The NPL gained political control of North Dakota in the 1910s, and created a lasting legacy which includes the only state owned bank in the country; the largest flour mill in the country, also state owned; and the best rate of internet access in the country.

This evening I found that some scans of the League's newspaper, The Nonpartisan Leader, on Google Books. I thought it would be a wonderful Thanksgiving post, which will hopefully encourage more people to read about the League. A number of pages of Robert Morlan's excellent book, Political Prairie Fire, are also available on Google Books. In July 2016, Bill Moyers' website featured the League in an article entitled, How to Make a Political Revolution, which includes an important description of how the League's legacy is still improving the lives of people today.

The League was heavily slandered, so be discerning as you research more.

Tuesday, November 21, 2017

On Veblen and Puritanism

Well, folks, I keep trying. Someone whose stated qualifications for interest in Veblen was that he had been assigned to read The Theory of the Leisure Class in college, asked me to address his little group of the socially and politically interested called the Minnesota Branch of the Sons and Daughters of the Pilgrims (I am NOT making this up.) Apparently, to be a member one has to be able to trace his or her genetic roots to the Mayflower.

This didn't sound like a good match but I gave the prospective appearance a good faith effort. I drove the event coordinator around the Veblen house and Valley Grove cemetery for almost three hours. Because the meeting site had no AV equipment, I got real 8 x 10 color photos produced. He even informed me I had to wear a jacket and wonders, I found one in a dusty corner of my closet. By this time, I had invested so much time and energy that I arranged for a friend with a NICE camera to record my efforts�a move that was allowed only with great reluctance and promises that the members would not be photographed.

As the proceedings got under way, I began to understand why these good children of Pilgrims didn't want to be identified. They had a quasi-religious ritual that included the Lord's Prayer and the Pledge of Allegiance. I come from a religious background but I had never seen these two combined in one ceremony. Most of the people I know would consider this blasphemy (along with a being a serious violation of the separation of church and state.) It reminded me of the scene in the 2006 movie called the Good Shepard where the Skull and Bones crowd gathered to control the world. They also mixed in Christianity with Angelina Jolie as the Senator's daughter noting that it was first Bones THEN God. I guess it is just easier to run the world if you think that God is on your side.

The guy sitting next to me informed me that he was going to be especially skeptical about my presentation because he was a BIG fan of von Hayek. Oh joy, someone who actually believes that old Hapsburg toady had anything interesting to say about economics. von Hayek was the guy who taught that socialized medicine was the Road to Tyranny. If you want to blame one person for the disaster that is USA medicine, von Hayek is a damn good candidate. I tried not to let this bother me because under any objective standards, von Hayek was not intellectually qualified to wash Veblen's shorts. Which of course, is the main reason von Hayek is treated as a god at the University of Chicago.

It got worse. At the end of my talk, I was subjected to questioning. The event planner asked the final question. He wanted me to comment on the rumors of Veblen's sex life. Veblen wrote 10 books and 100 papers. And this clown wanted to talk about the fact that Veblen lost his job at the Rockefeller-Baptist University of Chicago because he got a divorce. That's Puritanism for you�don't grapple with a man's ideas when you can talk about his sex life. Talk about getting stuck in puberty. It's no damn wonder this nation has become a cesspool of ignorance.

As I prepared to leave, the von Hayek fan made the claim that without government subsidies, Elon Musk (who I had used as an upper-level member of the Producing Class in my talk) would be nowhere. Of course, as Tony could have informed him for days without resorting to notes, virtually ALL scientific and technological advancement in USA was initially funded by the government. In my mind, people with the vision, imagination, and organizational ability of an Elon Musk should be told by the Federal government that we would be providing $20 billion per year to spend on any project he found interesting�especially projects that would help us transition us out of the Age of Fire.

Anyway, I thought I gave a good talk and friend Fabre captured fine video. So while I was busy casting pearls before swine, I think the effort was ultimately useful. Fortunately for me, this blog has readers who are anything BUT swine so I hope you enjoy the effort. I added a 2 minute 40 second graphic animation on my view of Veblen's distinction between business and industry which starts at about the 19 minute mark. This was a LOT of work.

Sunday, November 19, 2017

15,000 scientists warn of scientifically predictable global destruction

This is one of those bad-news�worse-news stories. The bad news is that the science on climate change in 1992 was damn near flawless already. And we have gotten a LOT better at it in 25 years. And the science says that without a radical alteration in business-as-usual, we are doomed on this planet. No ifs, ands, or buts.

The worse news is that the brightest minds of the species seem to believe that warnings lead to action. Not without a plan they don't. Preachers have been warning about hell-fire and brimstone for thousands of years and I have yet to see how all that fear-mongering has ever led to a better society. Why is it any better when our best scientists believe that if only their warnings are dire enough, someone in the greater audience will somehow come up with a solution?

We get the point. Climate change is dangerous. Now, oh bright ones, lay out some reasonable possibilities for remediation. I don't want to get all worked up about a problem unless there is something  I can do to help. Otherwise, screaming headlines about the world coming to an end is just meaningless motivation.

Also, I am not at all certain it actually requires 15,000 scientists to tell us we are in deep shit. It seems like 500 could monitor our ride in the handbasket so that 14,500 could work on what to do next. Just a thought.

15,000 scientists just signed the largest-ever warning about Earth�s destruction

Scientists worldwide are getting heated over global warming.

Ephrat Livni, 11/14/17

There�s no place like home, our warm and watery planet Earth. But we won�t be living here long if humans don�t change their ways, say 15,365 scientists from 185 countries who want your attention.

On Nov. 13, the journal BioScience published the �World Scientists� Warning to Humanity: A Second Notice� in four languages�English, French, Spanish, and Portuguese. The first warning was issued in 1992 when 1,700 members of the Union of Concerned Scientists argued that humans are �on a collision course with nature.� That group, which included numerous Nobel laureates, urged the world to save the Earth from extreme climate change by burning fewer fossil fuels, preserving forests, limiting population growth, and improving food production.

�On the twenty-fifth anniversary of their call, we look back at their warning and evaluate the human response,� contemporary scientists write.

Brace yourselves�we didn�t respond well, the scientists find.
Since 1992, with the exception of stabilizing the stratospheric ozone layer, humanity has �failed to make sufficient progress in generally solving foreseen environmental challenges, and alarmingly, most of them are getting far worse,� the paper states. Its authors say they are especially troubled by �the current trajectory of potentially catastrophic climate change�from burning fossil fuels, deforestation, and agricultural production�particularly from farming ruminants for meat consumption.

They also point out that this rapid heating has �unleashed a mass extinction event, the sixth in roughly 540 million years.� Scientists predict many current life forms could be annihilated or near extinction by the end of this century.

Still, there�s some hope. Humans have shown that, with concerted effort, we�re able to make positive and sustainable changes. The global decline in use of ozone-depleting substances shows progress is possible and destruction isn�t inevitable, the scientists argue. Overall, humans have made advancements in reducing extreme poverty and hunger, declines in deforestation in some regions, and rapid growth in the renewable-energy sector.

But more must be done. The paper calls on all to help by being informed consumers and voters, lest we find ourselves homeless. Time is running out, the scientists remind us:

To prevent widespread misery and catastrophic biodiversity loss, humanity must practice a more environmentally sustainable alternative to business as usual. This prescription was well articulated by the world�s leading scientists 25 years ago, but in most respects, we have not heeded their warning�We must recognize, in our day-to-day lives and in our governing institutions, that Earth with all its life is our only home. more

Five Hundred Million Dollar Negative Yield Bond Issued

I have permission from Mr. Welsh to repost anything he writes after waiting at least a day or two from his original posting. TW.
by Ian Welsh, Nov. 17, 2017

No, central banks aren�t screwing the economy up with their purchases:
Veolia (Paris:VIE) has issued a 500 million 3-year EUR bond (maturity November 2020) with a negative yield of -0.026 %, which is a first for a BBB issuer.
To be clear, central banks didn�t buy those bonds, investors did. But central bank purchases of government debt are a large part of what is causing this issue.

The ECB (European Central Bank) has been buying SEVEN times the issuance of government bonds. Seven times. Seven times.

They are straight up financing governments (which, done right, could be a good thing, but isn�t in this context).

The problem in the world today is the same as it was 15 years ago, before the financial collapse: There is too much money chasing not enough returns. Because there isn�t enough real growth, that money moves into bubbles and fraud, and destroys companies through leveraged buyouts and so on, but it also means that, if there isn�t enough fraud or predation going on, it sits and stagnates and does nothing worthwhile.

What the developed world actually needs is stuff to invest in, high marginal tax rates (higher on capital gains than on earned income), distributive policies to the bulk of the population to create wide-spread demand, and moderate inflation of about five percent a year to get people to actually invest in new businesses, not in financial speculation.

The problem with this solution set is that if it doesn�t also include effective regulation, it can have to environmentally devastating effects; for instance, because solar is not fully online, the above solution set could lead to oil price spikes.

Those problems, however, are not why this isn�t being done. This isn�t being done because current leadership does not believe in high taxes, wide distribution, or regulation. They are neoliberals, and 40 years of neoliberal disasters cannot convince them to engage anything other than neoliberalism, because neoliberalism has made them and their friends very very rich.

But the game is coming to an end. They want to tax the middle class and poor people, sparing the rich but they are now starting to tax the rich through the back door of negative interest rates. Meanwhile, the poor and middle class, especially the young ones, are losing patience and are willing to go either straight-up socialist or straight-up fascist (the Polish 50K rally).

This is going to get a lot uglier before it gets better.

There will be three choices for countries: Fascism, left-wing populism, or dystopic surveillance/police states.


Tuesday, November 14, 2017

Trump's New Fed Chairman--Meet the New Boss; Same as the Old Boss

Trumpster's choice as next chairman of the Federal Reserve is Jerome Powell, who is not an economist, but a lawyer. Powell, a Republican, has been on the Fed Board of Governors since 2012 when he was appointed by that paragon of unrequited bipartisanship, Barack Obama.

Actually, I myself missed the news: Powell's appointment was on November 2, 2017. I just learned of it via one of today's postings at Naked Capitalism: Powell�s Federal Reserve, a melange of reactions from various economists, including Kenneth "dangerous debt cliff" Rogoff, and Joseph Stiglitz, one of the precious few high-profile but decent economists in the world, who "wonders whether Trump has captured the Fed." The best line in the piece linked to by NC is "Tho Bishop at Mises Wire argues that with the nomination of Powell the �swamp wins again�." This is one time the libertarians get it right: a quick perusal of Powell's profile on Wikipedia shows that Powell is a swamp creature, a Wall Street financial predator, and nothing else.

Powell started his career clerking for a federal judge, followed by joining the big Wall Street law firm of Davis Polk & Wardwell in 1981. This firm was a central legal player in the leveraged buy outs (LBOs) of the 1980s, which laundered hundreds of billions of dollars of dirty money by taking over and asset-stripping thousands of U.S. industrial and other companies.

In 1984, Powell moved to Dillon, Read & Co., one of the most established of the Wall Street establishment investment banks. A few years ago, a former managing director of Dillon Read, Catherine Austin Fitts, made her public mea culpa by posting details of the firm's involvement in dirty money laundering that will make your eyeballs pop. Dillon Read was involved in what was by far the largest LBO of the time, the $25 billion buyout of RJR Nabisco by Kohlberg Kravis & Roberts in 1988. (KKR has been a top funder of the Republican Party and conservative political infrastructure for decades now). Fitts writes that the RJR Nabisco LBO made no business sense at all, since it was impossible for RJR Nabisco to service the buyout debt piled on it within the limits of its stated cash flow. The LBO only made sense after she read a European Union lawsuit against RJR Nabisco, which alleged that RJR Nabisco was engaged in multiple long-lived criminal conspiracies, including business with Latin American drug cartels, Italian and Russian mafia, and Saddam Hussein�s family. There were literally billions of dollars in additional cash flow, but it was all dirty money.

Fitts also provides lots of detail on the role of Dillon Read in launching the private prison industry. It's worth taking an hour or so to read through what Fitts has posted. Save some of it before it disappears from the net as "fake news."

I remember the RJR Nabisco buyout was an inflection point in my own career as a community organizer, when I was compelled to learn that "the left" was a morass of useless airbags who wanted to debate theory rather than deal with reality. Lefty organizations such as the Socialist Workers Party were not interested in hearing about dirty money flows because such obvious criminality simply did not conform with their preferred ideological explanation of capitalist exploitation. The deindustrialization and decapitalization caused by dirty money being laundered through buying control of legitimate industrial companies was not a problem that could be solved simply by building a "workers movement." It would require a thorough application of the police, military, and intelligence apparatus of nation states to investigate, track, apprehend, confiscate, and eliminate -- the very apparatus that lefties argue need to be "overthrown" for the victory of a "workers movement."

Dillon Read chairman Nicholas Brady became Ronald Reagan's Treasury Secretary in 1988. (In hind sight, it's amazing that anyone was surprised the Reagan administration decided to ignore U.S. law and aid right-wing para-military organizations in Latin America by shipping them weapons bought with illicit narcotics money.) Powell followed Brady to Treasury as an Undersecretary. He reportedly had a hand in keeping the Salomon Brothers bond scandal under control.

After Treasury, Powell became a managing director for Bankers Trust in 1993, but left two years later after BT's new fangled financial derivatives almost destroyed a number of clients, including Proctor & Gamble. Apparently, Powell got out before Bankers Trust itself went boom.

Powell went back to work for Dillon Read, before joining another big name in the history of USA's deindustrialization and decapitalization, The Carlyle Group, which specialized in purchasing the services of former heads of state and ministers to peddle their political influence to assist and promote various financial schemes.

In 2005, Powell had enough money and connections to establish his own "investment" firm, Severn Capital Partners, which " focused on specialty finance and opportunistic investments in the industrial sector," according to Powell's Wikipedia profile. There are more details there, including the past few years, when Powell made himself a palatable "bipartisan" choice for Obama to appoint to the Fed board.

Now sit back and look at this guy. Is he qualified to head the Federal Reserve?

Depends on what kind of future you want for society. If you're content to blunder on with the deindustrialization and decapitalization of the USA, and the continued reign of dirty money launderers and financiers, the answer is: "Yes, certainly, Powell is qualified." He has been at or near the center of every major dirty financial development of the past three decades: LBOs, KKR, Dillon Read, private prisons, Bankers Trust, Salomon Brothers. [What's happened to Dillon Read the past couple decades involves a complete roster of the most powerful, and, corrupt, financial entities in the world, with long ties to old European oligarchs: acquired by Barings Bank in 1991; then by Swiss Bank Corporation in 1997, which in turn was acquired by UBS (Union Bank of Switzerland) in 1998. All these outfits have figured prominently in investigative accounts of the world's dirty money flows and secret tax havens.] With Powell, you will definitely get "business as usual," not any "draining the swamp."

But if you want a society that squarely confronts 1) the problem of increasingly concentrated wealth consolidating oligarchical control over nations states that were formerly constitutional republican democracies, and 2) the problem of environmental destruction and climate change, which is going to require at least $100 trillion to build new industries, energy systems, and transportation networks all around the world, then Powell, or anyone like him, is not your guy.

Powell has done nothing constructive in his entire life. He has never designed or built anything useful, and his concept of common prosperity involves only letting the rich get richer so they can pee more on everyone else. But then, you could say that exact same thing about every other major appointment by Trump.

The evidence, including polls, indicates that this truth is even beginning to seep into the crippled consciousness of some Trump supporters. But convincing Trump supporters to see the errors of -- their ways, hell, of their thinking -- is not our path to salvation. Getting Democrats and independents out to vote is the key, and that requires the Democrats put forward a bold vision for building a better future. Like a $100 trillion program to solve climate change. $100 trillion is a lot of jobs. A LOT of jobs. More than enough to make a real, immediate positive difference in the lives of every person on the planet. And there is plenty of money to do it. Problem is, most of it is dirty, and -- as the new Paradise Papers show -- hidden away from the reach of citizens and their governments.

Sunday, November 12, 2017

Porsche admits electric car investment to take on Tesla will be very expensive

Anyone who doesn't understand the role of institutional inertia in the foot-dragging that shows up whenever an industrial company must upgrade its offerings to cope with changing environmental circumstances should pay attention to the tears being shed these days at Porsche. This a company that feels it must get into the business of building electric cars but clearly does NOT want to do it.

Porsche's most fundamental problems stem from the fact that no one has a good reason for owning their cars. They are expensive and downright dangerous to drive at their design speeds. Here in Minnesota it is now a FELONY to drive over 100 mph (160 kph). A Porsche is barely warmed up at that speed. So in USA, all the performance action is acceleration. Unfortunately for Porsche, their fastest accelerating cars are not as quick as a 5-passenger Tesla because electric motors produce maximum torque at zero rpm. Absent this fact, it would be highly likely that Porsche would just keep building what they know how to make.

The other obvious reality is that Porsche is just a minor branch of the very large corporate tree that is Volkswagen. The corporate pooh-bahs have decided that little Prosche should meet fixed profit targets as part of the plans to make VW the kind of conservative investment beloved of pension funds. Unfortunately, a decision to make a completely different type of car involves spending big money. In such a situation, Tesla just eats up their capital because it is a company run by someone who understands that an enterprise is never profitable when it is seriously innovating.

Corporate mandates tell Prosche that they cannot go into a temporary loss situation to finance the tooling for a new line of cars. Sounds like an impossible situation. Either Porsche takes the financial hit, or they don't build electric cars. And if they do not build electric, they won't be the fastest cars on the street. And if they aren't the top dog, they pretty much lose their reason to exist.

Porsche admits EV investment to take on Tesla is an �enormous burden�

By Gene
November 3, 2017

It�s no secret that Porsche is looking to soak up market share away from Tesla when the automaker releases its long range, all-electric Mission E in 2019. Arguably one of Tesla�s strongest potential competitors, with decades of manufacturing expertise and support from parent company Volkswagen AG, the German automaker specializing in high performance vehicles is preparing to face financial headwinds as it aims to electrify its fleet.

Porsche�s CFO, Lutz Meschke, recently spoke with Automotive News Europe about the company�s plan to stay profitable as it invests billions into its electric vehicle program.

�Today Porsche packs 8,000 to 10,000 euros in added content into an electrified vehicle, but those costs cannot be passed on via the price. The customer won�t accept it, just the opposite, in some parts of the world there�s a certain hesitation,� said Meschke in his interview with Automotive News Europe.

As Porsche looks to invest more than 3 billion euros ($3.5 billion USD) into the development of EVs and plug-ins, the automaker will continue to build internal combustion engine vehicles in parallel and implement company-wide cost-cutting measures to retain its profit margin. �That�s an enormous burden for a company of our size.� says Meschke.

When it comes to digital transformation (DX), the future belongs to the fast�and laggards risk being left in the dust.

�To protect your margin, you have to look at substantial fixed cost cuts, but there�s only so much potential since the biggest chunks are personnel and development. As sales shift toward EVs, a temporary drop in profitability in the midterm may be expected.�

For context, Porsche�s investment into its EV program amounts to roughly 70% of what Tesla�s Gigafactory will cost when complete. It�s a massive undertaking that Porsche admits will require company restructuring along with financial incentives to its workforce. �We need to structure the company so that it is in position to sustainably achieve that. There can always be years when it might drop to below 15 percent due to exchange rates or an economic crisis, but every worker has to know we are not letting up.� says Porsche�s CFO. �There�s even a pension component.�

By setting a fixed margin target of 15% on a company-wide basis, Porsche�s entire workforce is able to work towards a single goal as looks to maintain a steady CapEx and R&D ratio. �It�s better for Porsche to work with a fixed margin target. It�s really an internal steering instrument. That�s why everyone in the company from the manager to the assembly line worker knows the goal is 15 percent. If we work with a range, that effect is diluted.�

When asked by Automotive News Europe on whether Porsche will need to implement a deep cost-cutting program to maintain the company�s high margins, Meschke responded �Under our Porsche Improvement Process, we aim for annual savings of at least 3 percent in indirect areas and 6 percent in direct ones.� Moreover, Porsche�s exec notes that the company performs a cross-department review each year to see if they were able to maintain a 10% savings. �There can always be a time when we need to pull on all levers, but identifying and extracting efficiencies is our everyday business. That way we don�t have to resort to major savings programs at the slightest headwind.�

Maximizing efficiencies across the organization is something Tesla CEO Elon Musk has long talked about. By �building the machine that builds the machine�, Tesla looks to utilize an army of manufacturing robots to achieve mass volume production of its product line that consists of vehicles, solar products and battery storage solutions. It�s the company�s key differentiator over other manufacturers that largely have robots augmenting human personnel as opposed to replacing them.

The goal to achieve full automation is Tesla�s biggest strength, yet also the company�s weakest link, as made evident when Musk announced that production of its mass market-intent Model 3 vehicle was facing issues. The downside to implementing a highly automated production line is the need to have robots that work in perfect harmony with one another. Any misconfiguration or general issue around a specific machine in the process becomes amplified across all other machines that rely on it. There�s less tolerance for errors in an automated process, explained Musk during the company�s third-quarter earnings call.

Porsche�s strategic entry into a market that�s been largely dominated by Tesla is an interesting match up that pits David versus Goliath. With two very different approaches to reaching mass volume production from two very distinct companies, it�s anyone�s guess who�ll come out ahead in the race to electric mobility. Regardless, competition helps stimulate innovation, productivity and growth prospects in the electric car sector, and that can only be a good thing. more

Wednesday, November 8, 2017

Oh goody�another dirty climate conference

Someday soon, humanity must make organizing and attending climate conferences a capital crime. These things are worse than useless but they grind on because the folks who like these sorts of things are convention planners. It's what they do. This year's climate extravaganza is being held in Bonn Germany. No one knows why or what they hope to accomplish. An estimated 23,000 people are descending on a tiny little backwater that is obvious ill-equipped to handle them�belching thousands of tons of CO2 on their sacred journeys of self-importance.

If anyone suggests that anything important could be accomplished with video-conferencing, the face-to-face crowd reacts in horror. According to them, those who would eliminate these conferences are the worms of humanity�the introverts. Since the only legitimate way to call these conferences a success would be the ability to point at falling CO2 levels, and that clearly has not happened after 23 years of conferencing, a sane person would try something else. But these folks cannot even progress to video conferencing. And since few or none of them seem willing to grapple with the problems of progressing from legislating outcomes to funding outcomes, we can assure ourselves that no meaningful progress will happen anytime soon.

Climate change is a Producer Class problem that will only respond to Producer Class solutions. Climate conferences are extreme manifestations of Leisure Class behavior. Pretty much explains why they are useless. After all, useless is the primary goal, the heaven, of the Leisure Class.

COP23: Is the Bonn summit worth the trouble?

Dave Keating (Bonn, Germany) 08.11.2017

In the first part of our COP Secret series, we take a look at how UN climate summits have become mammoth events with high carbon emissions - which is why there's some grumbling that the yearly ritual has become a circus.

In 1995, at the first UN climate �conference of the parties' (COP) in Berlin, about 4,000 people gathered in a small venue to begin hashing out the rules of the Kyoto Protocol, which would be agreed two years later.

This week, 23,000 people are flooding into the small city of Bonn, Germany for what has become an incredibly complex, expensive and emissions-intensive yearly event. It's costing Germany �117 million ($135.5 million). Bonn has built two tent cities along the river Rhine the size of eight football fields. Participants must take a shuttle bus to travel between them.

"It's so confusing!" gasps one delegate as she rushes by with a rolling suitcase. "And nobody can tell me where to go!"

Two days in, the city's infrastructure is already under strain � and most people haven't even arrived yet. Bonn's public transport system was overwhelmed on Tuesday, with trams becoming so packed some people were forced to get off. Bonn's 9,000 hotel beds have been booked out for months, motivating many to stay in the nearby - and bigger - city of Cologne. But construction work on the tracks between the two cities has made traveling between them a nightmare.

This isn't the first time the former German capital, home to the UN's climate secretariat, has hosted a COP. In 1999, delegates worked together in Bonn to devise the rules of the already-agreed upon Kyoto Protocol. But just 4,188 people came to town for that summit � much more manageable.

The fact that so many delegates are attending this conference, in an interim year where no major decisions will be taken, shows just how important these summits have become. It's nowhere near the record 38,000 that came to Paris two years ago, but it is strikingly close to the 27,000 people who came to Copenhagen for the previous attempt to clinch a deal in 2009.

Too big?

Some are concerned about how enormous the climate summits have grown to become, saying they are too polluting and too expensive � requiring too much sponsorship by big corporations.

According to the UN, the 2009 Copenhagen summit emitted the equivalent of about 26,000 tons of CO2. But this does not include travel. According to an analysis by Wired Magazine, transportation for the Paris delegates emitted 300,000 tons of CO2. If the emissions can be avoided, wouldn't it be better to do a virtual conference?

The hosts are sensitive to these concerns. Germany held a press conference this morning explaining that the summit is "the greenest UN climate conference ever."

"The emissions have been really managed down, from the food that is served�right to the emissions that are coming from travelers all around the world coming to Bonn," UN climate spokesperson Nick Nuttall told DW.

A consultancy has been hired to calculate how much emissions were produced by the summit, and the result will be published afterwards. Those emissions will then be offset through climate financing from Germany, something undertaken by all hosts in recent years.

Still, wouldn't it be better to keep emissions down and not spend all of this money in the first place?

'We need the face-to-face'

Delegates at the summit told DW that although the logistics of attending such a huge summit can be difficult, it's worth it. "Nothing beats face-to-face time," said Hannah McKinnon from the NGO Oil Change International. "This is my tenth COP, and there's something very familiar about them at this point. You come and it's a nice reunion, you see a lot of your colleagues and friends that you really only see once a year."

But McKinnon didn't have to come far. She lives 400 kilometers up the Rhine in Freiburg, Germany, just two hours away by train. Her roundtrip journey will produce just 0.04 tons of carbon.

For Seydun Kane from Senegal, the journey was much longer and more stressful. He flew from Dakar to Paris, then to Dusseldorf � a journey which will emit two tons of carbon.

"We had some problems when we arrived in Dusseldorf, there was no translation, only German, and we cannot speak German," he said, adding that they then had train problems getting from Dusseldorf to Bonn. "We lost a lot of time."

He says the set-up of the enormous tent city, with two different locations separated by a shuttle bus, has been inconvenient.

"Everything is nice when you're inside the pavilion, but the problem is the transportation between the Bonn Zone and the Bula Zone," he said. "You need to leave the other side to come here, and sometimes you miss important events."

The organizers have said the event's massive size necessitates two separate zones for the negotiators and for the NGOs and businesses. But McKinnon says this can create symbolic difficulties, compared to previous smaller COPs where the two sides were closer and interacted more.

"With the Bonn and Bula zones being quite a ways apart, what does that mean for the interaction of the different constituencies?" she asked. "Will negotiators ever be over here? Those are questions that are not unique to Bonn."

A clean COP

McKinnon is an experienced COP attendee. For 20-year-old Kiran Ooman, a student at Seattle University, this is the first climate summit. His journey will emit 3.3 tons of CO2. He is one of the plaintiffs in a lawsuit against President Trump and the US government for its inaction on climate change. He sees no problem with the fact that the summits have grown to such a huge size.

"I think it's a great thing, the more people are talking about this the more people might actually do something," he said. "I have been very impressed, meeting all of these incredible people from all over the world."

Savitree Srisuk, a specialist on environmental education from Thailand, says she thinks her German hosts are making an effort to mollify the environmental effects of the summit. A roundtrip flight from Bangkok to Bonn emits four tons of carbon.

"I feel like the German organizers are really concerned about the environment, and how people at this event can show their action in protecting the climate," she said.

"They're very concerned about the garbage, and how we use products in the pavilion. Anything that we use every day, like water and food, these things have to be eco products."

Hans Naome with the campaign group Nuclear for Climate had a much shorter journey. He drove from neighboring Belgium, a trip that will emit 0.17 tons of carbon. He had to take vacation days off work to come for the summit to advocate for the place of nuclear power as part of a zero-emissions energy mix. But he says it's worth it, especially for a cause like his which can encounter skepticism.

"If I wouldn't come to the COP, I wouldn't talk to the people I talk to � and most people have very little knowledge about nuclear," he said. "In general most of the people are willing to listen, and in the end it sometimes happens that we say, ok let's just agree to disagree. But most people are friendly. They've come here to talk and learn, and to broaden their horizons." more

Saturday, November 4, 2017

Ein feste burg ist unser Gott�Luther's Reformation at 500

To perform a good deed once or twice is easy. But to avoid becoming bitter from the ingratitude and wickedness of those for whom you have done good deeds, that is difficult.

If I knew the world would perish tomorrow, I would still plant my apple tree today.

One should not dispute with quarrelers. They won't be bettered thereby, but become all the more furious. They are not seeking truth, but glory and triumph.

Martin Luther
My junior year of high school was just incredibly painful. My nominally Lutheran preacher father had relocated the family to an ugly little oil town in northwestern North Dakota. Now there ARE people who are in love with vast and very bleak vistas of the "Peace Garden" state, but there aren't many of them, and I was certainly not one of their club. The wind howled all the time. Temps of -30�F (-35�C) in the winter were routine and while the brief summers were a lot warmer, the season brought clouds of hungry biting bugs.

The survivors of this natural brutality tended to be vicious and narrow-minded and my father had barely arrived before involving himself in one of those church fights that show the truly ugly side of Protestant Christianity. Since the preacher's kids were assumed to be part of the traveling salvation show, my behavior became fodder for about 300 gossiping church ladies. One of the charges was that I wouldn't join the high school basketball team�which really needed help (like losing 109-17 help). And while it was true that at 6'3" (190 cm) with large hands, I did look something like a basketball player, the problem was that I could NOT play the game. Not. Even. Close.

Perfect strangers would walk up to me and ask accusingly why I wouldn't help out the basketball team. My assurances that I would be no help�at all�fell on deaf ears because they all assumed the real reason was that I hated their town (and yes, I DID hate their little town.) To avoid these lovely encounters (and others like it) in a town that was obviously intent on running my father out of Dodge, I basically spent my time away from school hiding out in a cold, dark, but quite spacious, basement.

I had decided on an ambitious project that ate up major blocks of time�I would build the most beautiful model airplane I could build with the resources available in my remote little corner of the world. It would be a red and white biplane of my own design and would feature wheel pants, an engine cowling, an inverted fuel system, laminated balsa tail feathers, etc. From October to early April, I had something to do to escape the madness of a church fight in a minor burg that often smelled like ripe farts because the oil refinery at the edge of town would flare their sulfur gasses making enough hydrogen sulfide to stink up a whole corner of a state.

And then it was done. I did something I had never done before�I hung a completed model from the ceiling of my bedroom. I invited several people to see it. Got a few "That's really nice!" type comments but really, I wanted to take it out and fly it. Spring takes its time in arriving on the high prairies so waiting for a warm enough day to start a glow engine�that also included winds light enough so as not to just blow a model biplane from the sky�was an exercise in a patience I did not really have.

Finally, a day arrived where it was occasionally sunny with temps around 50�F (10� C). The winds were gusty but included long periods of calm. Close enough! So during a patch of sunlight, I started the engine and prepared for flight. Long story short, the flight lasted less than 15 seconds and the resulting crash essentially broke every part of the plane. I picked up the pieces and put them in a couple of grocery bags believing that somehow the beautiful biplane could be repaired. But by the time I got home, the reality had sunk in that seven months of pretty intense craftsmanship had been destroyed beyond any repair that used less effort than building a new plane from scratch.

That plane deserved a post-mortem and I discovered the cause of the crash. The method I had selected for securing the control rod to the elevator was just stupidly wrong. I had lost control almost immediately on take-off. It was obviously my own fault but soon I was raging at the heavens because I thought the punishment wildly exceeded the crime. "How could it be," I demanded of no one in particular, "that one small error in over 2500 operations could destroy seven months of work? And why isn't there an appeals process? Certainly I deserve a do-over."

Not surprisingly, as I was in the midst of an intensely stupid church fight, I began to see the crash of my beautiful biplane in theological terms. The god of the Old Testament was a mean old codger who insisted on complete obedience. Jesus, the god of the New Testament, was all about the forgiveness of mortal failings. He was the heavenly appeal process. He was the god of the do-over. If one were to call the scientific laws of nature the laws of god, then my airplane crashed because the Old Testament god demanded sinless perfection and I had sinned in my pushrod connection choice.

Suddenly, I began to understand why Martin Luther spent so much time trying to answer the question, "How can we love an absolutely just god?" His answer was that such a love was very unlikely but that god had provided a means to be saved even if someone is not perfect�the grace of Jesus. My problem was that by building an airplane, I had left the world of forgiveness and atonement. I was now in the world where if you make the tiniest error, you are destroyed. If you want to fly, you must obey ALL the natural laws�NO EXCEPTIONS, no appeals, no do-overs. The upside is that if you do love the god of natural laws, you can FLY (along with doing thousands of other nearly-magical acts.)

For me, this was a stunning lightening-bolt of an idea. By teaching themselves how to fly, humans had figured out how to be "perfect" in significant areas of their lives. And the more I thought about it, the more I wanted to live in the world where perfection is not only possible, but sometimes routine. And as the ugly church fight proved�the world that pursues sinless perfection is a remarkably superior alternative to the folks who argue about the best routes to forgiveness. Or as Toyota taught us�the route to high quality production isn't about being careful and hiring more inspectors, it's about getting it right the first time, every time. It's about designing the process so production "sinning" is impossible.

Anyway, I stopped going to devout observances at the first opportunity. But getting over the craziness of being a preacher's kid was going to be a long and drawn-out process. Mostly, I was furious at all the time and brainpower that I had wasted learning and defending utter bullshit. My intellectual breakthrough in the healing process came when I discovered that even (especially?) if religion is stripped of unbelievable claims like water into wine, it is still a fascinating demonstration of cultural anthropology. I still wish I could have back the wasted time and energy devoted to religion, but it turns out there is much to appreciate about my Lutheran / Nordic culture.

So in light of the 500th anniversary of the Protestant Reformation, I have compiled a list of those things about my cultural upbringing that have added to my understanding and appreciation for life.

Top seven reasons to be a (cultural) Lutheran

The notion of true moral courage. Martin Luther taught us that there were causes worth dying for. He stood up to some real bullies like the Pope and the Holy Roman Emperor�folks who could have had him killed in truly hideous ways. Luther knew what he faced and seemingly never flinched. There are never many people like that�and most of them die in obscurity. Luther survived and thrived and created a singular role model for his followers.

The concept of vocation. Easily the best explanation for why Lutherans create remarkably successful societies, the glorification of vocation means you believe all work is honorable and should be rewarded fairly. In turn, you believe your own work is your contribution to the glory of god. Your work may be lowly but it should never be shoddy. As my father would thunder, "If it is your job to slop the hogs, then slop the hogs to the glory of god."

The belief in equality before God. This one is very important. It means you believe that everyone, no matter their social standing, should be subjected to the same rules used to control the poor.

The real virtue of honesty. Some folks seem to believe that honesty is an optional form of behavior. Such folks have some nifty-sounding names for their dishonesty like calling it "bullshit" or "enhancing the narrative." The Leisure Class swims in this world of lying with gradations. On the other hand, there is no Producer Class job that can be done well by dishonest people. Luther hated lying and lairs. The most famous Lutheran philosopher, Immanuel Kant, made honesty the categorical imperative. Not surprisingly, the Nordic Lutheran countries are nations of world-class builders where political corruption is extremely rare.

The role of literacy. By making literacy a requirement of the faith, Luther solved many problems simultaneously. By creating best-sellers like the Luther Bible, he paid back the printers who had supported his movement. He inspired courage and confidence by giving his people a great method for figuring things out for themselves. He offered his poor followers a way to cope with their social standing. Even the very poor can be rich in knowledge�something my ancestors believed to their very marrow (especially when times were hard such as during the Dust Bowl in Kansas.)

The importance of music. Yes indeed, it is good to teach Bach to children. Learning to sing parts means your music can go with you at minimal expense. It is interesting to note that in secularized Scandinavia, church attendance may have collapsed but there are hundreds of singing societies. A cultural Lutheran is someone who is pretty sure there is no god, but IF there is, Bach was his court composer.

The glorification of science and humanism. There are flavors of Protestantism that have turned "humanism" into a swear word. They are NOT Lutheran. Luther was a highly educated man who surrounded himself with some of the finest humanists of the day. Science, technology, and industrialization found receptive homes in the Lutheran cultures. Even the artistic preference for music spawned economically valuable skills as Lutheran churches went on a buying binge of pipe organs�the moonshots of their day.

Every year around the time of my birthday, my mother would retell just what a hassle my birth had been. It had been one of the hottest Julys in history and air conditioning in Minnesota was still very rare. But according to her, it was all worth it because my parents had been praying for a son who would grow up to be a great man of god (no pressure there, huh?) I was assured that I had come into the world to the sounds of my mother reciting the 23rd Psalm. (And yes, religious families do indeed talk like that.)

So on this 500th anniversary of an Augustinian monk finding 95 theological objections to the practice of selling indulgences, I have been wallowing in the various tellings of how the Protestant Reformation happened. Youtube has been my friend. And occasionally I would ask myself, "if Luther had been the prototype for my mother's 'great man of god,' how did I turn out?" Well, I had nowhere near the moral courage of Luther who was up against folks who burned people alive for amusement. I am not nearly so literate as someone whose translations are still beloved after nearly 500 years.

As for those other principles listed above, I think I could convince Dr. Martin to give me an A in both conviction and execution. I have seen them in action and can attest to their success. And if there is one area where I have the jump on Luther it is this: Because of all the natural laws that have been discovered since his time, I have been given thousands of reasons to love that no-appeals god he found so hard to love. I wonder how Luther's theology would have changed if he had been able to understand oxygen or electricity.

So this celebration has been fun. And now like a good Lutheran, I will slide back into my natural state�invisibility.

Climate Grief

Below is a pretty good description of what the author calls "climate grief"�the crushing realization that everything at all lovely...