Softpanorama Energy Bulletin, 2008

September 30, 2008 | Bigpicture

Is an imperial presidency destroying what America stands for?

Bill Moyers sits down with history and international relations expert and former US Army Colonel Andrew J. Bacevich who identifies three major problems facing our democracy: the crises of economy, government and militarism, and calls for a redefinition of the American way of life.

Part I click for video

Part II click for video

September 26, 2008

BILL MOYERS: Welcome to the JOURNAL.

Here in New York a new season is opening on and off Broadway. But nothing, not even a comic opera, can compete with the spectacle, drama and farce of what's happening in Washington and on Wall Street.

If it is possible for a political system, like individuals, to become deranged, so unhinged from reality there is no longer any regard for the consequences, we saw the process this week. It's nothing but bizarre, and for a supposedly mature democracy, deeply troubling.

For technical reasons we had to tape this broadcast before John McCain finally made up his mind about whether to show up for the debate tonight. So we decided not to try and second guess events.

Instead, we are going to hear some truth-telling from a man who says our country's in deep trouble and needs a renewed commitment to critical thinking, honest words, and hard choices.

In this slim volume on THE LIMITS OF POWER, Andrew J. Bacevich goes to the root causes of our discontent and to our broken and foundering politics. That many people agree with this unsentimental diagnosis was apparent when we first aired this interview a few weeks ago, your emails poured in to pbs.org. In a matter of hours his book had become a best-seller.

Now, with chaos in Washington and the markets, it seems a good time to give this soldier, scholar, and patriot another hearing. He has found an audience across the political spectrum, whether writing for THE NATION or THE AMERICAN CONSERVATIVE magazines, lecturing to college classes or testifying before Congress.

ANDREW BACEVICH: ...fixing our problems before fixing the world's problems.

BILL MOYERS: Bacevich speaks truth to power, no matter who's in power, which may be why those on both the left and right listen to him. Perhaps it's also because when he challenges American myths and illusions, he does so from a patriotism forged in the fire of experience as a soldier in Vietnam.

After 23 years in the army, this West Point graduate has been teaching international relations and history at Boston University.

Andrew J. Bacevich is with me now, welcome to the JOURNAL.

ANDREW BACEVICH: Thank you very much for having me.

BILL MOYERS: It's been a long time since I've read a book in which I highlighted practically every third sentence. So, it took me a while to read, what is in fact, a rather short book. You began with a quote from the Bible, the Book of Second Kings, chapter 20, verse one. "Set thine house in order." How come that admonition?

ANDREW BACEVICH: Well, I've been troubled by the course of U.S. foreign policy for a long, long time. And I wrote the book in order to sort out my own thinking about where our basic problems lay. And I really reached the conclusion that our biggest problems are within.

I think there's a tendency on the part of policy makers and probably a tendency on the part of many Americans to think that the problems we face are problems that are out there somewhere, beyond our borders. And that if we can fix those problems, then we'll be able to continue the American way of life as it has long existed. I think it's fundamentally wrong. Our major problems are at home.

BILL MOYERS: So, this is a version of "Physician, heal thyself?"

ANDREW BACEVICH: Well, yes, "Physician, heal thyself," and you begin healing yourself by looking at yourself in the mirror and seeing yourself as you really are.

BILL MOYERS: Here is one of those neon sentences. Quote,

"The pursuit of freedom, as defined in an age of consumerism, has induced a condition of dependence on imported goods, on imported oil, and on credit. The chief desire of the American people," you write, "is that nothing should disrupt their access to these goods, that oil, and that credit. The chief aim of the U.S. government is to satisfy that desire, which it does in part of through the distribution of largesse here at home, and in part through the pursuit of imperial ambitions abroad."

In other words, you're saying that our foreign policy is the result of a dependence on consumer goods and credit.

ANDREW BACEVICH: Our foreign policy is not something simply concocted by people in Washington D.C. and imposed on us. Our foreign policy is something that is concocted in Washington D.C., but it reflects the perceptions of our political elite about what we want, we the people want. And what we want, by and large - I mean, one could point to many individual exceptions - but, what we want, by and large is, we want this continuing flow of very cheap consumer goods.

We want to be able to pump gas into our cars regardless of how big they may happen to be, in order to be able to drive wherever we want to be able to drive. And we want to be able to do these things without having to think about whether or not the book's balanced at the end of the month, or the end of the fiscal year. And therefore, we want this unending line of credit.

BILL MOYERS: You intrigued me when you wrote that "The fundamental problem facing the country will remain stubbornly in place no matter who is elected in November." What's the fundamental problem you say is not going away no matter whether it's McCain or Obama?

ANDREW BACEVICH: What neither of these candidates will be able to, I think, accomplish is to persuade us to look ourselves in the mirror, to see the direction in which we are headed. And from my point of view, it's a direction towards ever greater debt and dependency.

BILL MOYERS: And you write that "What will not go away, is a yawning disparity between what Americans expect, and what they're willing or able to pay." Explore that a little bit.

ANDREW BACEVICH: Well, I think one of the ways we avoid confronting our refusal to balance the books is to rely increasingly on the projection of American military power around the world to try to maintain this dysfunctional system, or set of arrangements that have evolved over the last 30 or 40 years.

But, it's not the American people who are deploying around the world. It is a very specific subset of our people, this professional army. We like to call it an all-volunteer force-

BILL MOYERS: Right.

ANDREW BACEVICH: -but the truth is, it's a professional army, and when we think about where we send that army, it's really an imperial army. I mean, if as Americans, we could simply step back a little bit, and contemplate the significance of the fact that Americans today are fighting in Iraq and Afghanistan, and ask ourselves, how did it come to be that organizing places like Iraq and Afghanistan should have come to seem to be critical to the well-being of the United States of America.

There was a time, seventy, eighty, a hundred years ago, that we Americans sat here in the western hemisphere, and puzzled over why British imperialists went to places like Iraq and Afghanistan. We viewed that sort of imperial adventurism with disdain. But, it's really become part of what we do. Unless a President could ask fundamental questions about our posture in the world, it becomes impossible then, for any American President to engage the American people in some sort of a conversation about how and whether or not to change the way we live.

BILL MOYERS: How is Iraq a clear manifestation, as you say, of this, "yawning disparity between what Americans expect, and what they're willing to pay?"

ANDREW BACEVICH: Let's think about World War Two. A war that President Roosevelt told us was essential to U.S. national security, and was. And President Roosevelt said at the time, because this is an important enterprise, you, the American people, will be called upon to make sacrifices. And indeed, the people of the United States went off to fight that war in large numbers. It was a national effort. None of that's been true with regard to Iraq. I mean, one of the most striking things about the way the Bush Administration has managed the Global War on Terror, which President Bush has compared to World War Two.

BILL MOYERS: Right.

ANDREW BACEVICH: One of the most striking things about it is that there was no effort made to mobilize the country, there was actually no effort even made to expand the size of the armed forces, as a matter of fact. The President said just two weeks or so after 9/11, "Go to Disney World. Go shopping." Well, there's something out of whack here, if indeed the Global War on Terror, and Iraq as a subset of the Global War on Terror is said to be so critically important, on the one hand. And on the other hand, when the country basically goes about its business, as if, really, there were no War on Terror, and no war in Iraq ongoing at all.

BILL MOYERS: "So it is," you write, "seven years into its confrontation with radical Islam, the United States finds itself with too much war for too few warriors and with no prospect of producing the additional soldiers needed to close the gap." When I hear all this talk about increasing the troops in Afghanistan from two to three battalions, maybe even more, I keep asking myself, where are we going to get those troops?

ANDREW BACEVICH: Well, and of course the answer is, they have to come from Iraq. I mean, as we speak, the security conditions in Iraq have improved a little bit, and in a sense, it's just in time, because what the Pentagon wants to do is to draw down its presence in Iraq to some degree, not in order to give those troops a breather, but in order to redeploy them after a period of retraining to Afghanistan, because Afghanistan is going so poorly. So, we're having a very difficult time managing two wars which, in the 20th century context, they're actually relatively small.

BILL MOYERS: You say, "U.S. troops in battle dress and body armor, whom Americans profess to admire and support, pay the price for the nation's refusal to confront our domestic dysfunction." What are we not confronting?

ANDREW BACEVICH: The most obvious, the blindingly obviously question, is energy. It's oil. I think historians a hundred years from now will puzzle over how it could be that the United States of America, the most powerful nation in the world, as far back as the early 1970s, came to recognize that dependence on foreign oil was a problem, posed a threat, comprised our freedom of action.

How every President from Richard Nixon down to the present one, President Bush, declared, "We're gonna fix this problem." None of them did. And the reason we are in Iraq today is because the Persian Gulf is at the center of the world's oil reserves. I don't mean that we invaded Iraq on behalf of big oil, but the Persian Gulf region would have zero strategic significance, were it not for the fact that that's where the oil is.

Back in 1980, I think, President Carter, in many respects when he declared the Carter Doctrine, and said that henceforth, the Persian Gulf had enormous strategic significance to the United States and the United States is not going to permit any other country to control that region of the world.

And that set in motion a set of actions that has produced the militarization of U.S. policy, ever deeper U.S. military involvement in the region, and in essence, has postponed that day of reckoning when we need to understand the imperative of having an energy policy, and trying to restore some semblance of energy independence.

BILL MOYERS: And this is connected, as you say in the book, in your first chapters, of what you call "the crisis of profligacy."

ANDREW BACEVICH: Well, we don't live within our means. I mean, the nation doesn't, and increasingly, individual Americans don't. Our saving - the individual savings rate in this country is below zero. The personal debt, national debt, however you want to measure it, as individuals and as a government, and as a nation we assume an endless line of credit.

As individuals, the line of credit is not endless, that's one of the reasons why we're having this current problem with the housing crisis, and so on. And my view would be that the nation's assumption, that its line of credit is endless, is also going to be shown to be false. And when that day occurs it's going to be a black day, indeed.

BILL MOYERS: You call us an "empire of consumption."

ANDREW BACEVICH: I didn't create that phrase. It's a phrase drawn from a book by a wonderful historian at Harvard University, Charles Maier, and the point he makes in his very important book is that, if we think of the United States at the apex of American power, which I would say would be the immediate post World War Two period, through the Eisenhower years, into the Kennedy years. We made what the world wanted. They wanted our cars. We exported our television sets, our refrigerators - we were the world's manufacturing base. He called it an "empire of production."

BILL MOYERS: Right.

ANDREW BACEVICH: Sometime around the 1960s there was a tipping point, when the "empire of production" began to become the "empire of consumption." When the cars started to be produced elsewhere, and the television sets, and the socks, and everything else. And what we ended up with was the American people becoming consumers rather than producers.

BILL MOYERS: And you say this has produced a condition of profound dependency, to the extent, and I'm quoting you, "Americans are no longer masters of their own fate."

ANDREW BACEVICH: Well, they're not. I mean, the current debt to the Chinese government grows day by day. Why? Well, because of the negative trade balance. Our negative trade balance with the world is something in the order of $800 billion per year. That's $800 billion of stuff that we buy, so that we can consume, that is $800 billion greater than the amount of stuff that we sell to them. That's a big number. I mean, it's a big number even relative to the size of our economy.

BILL MOYERS: And you use this metaphor that is intriguing. American policy makers, quote, "have been engaged in a de facto Ponzi scheme, intended to extend indefinitely, the American line of credit." What's going on that resembles a Ponzi scheme?

ANDREW BACEVICH: This continuing tendency to borrow and to assume that the bills are never going to come due. I testified before a House committee six weeks ago now, on the future of U.S grand strategy. I was struck by the questions coming from members that showed an awareness, a sensitivity, and a deep concern, about some of the issues that I tried to raise in the book.

"How are we gonna pay the bills? How are we gonna pay for the commitment of entitlements that is going to increase year by year for the next couple of decades, especially as baby boomers retire?" Nobody has answers to those questions. So, I was pleased that these members of Congress understood the problem. I was absolutely taken aback when they said, "Professor, what can we do about this?" And their candid admission that they didn't have any answers, that they were perplexed, that this problem of learning to live within our means seemed to have no politically plausible solution.

BILL MOYERS: You say in here that the tipping point between wanting more than we were willing to pay for began in the Johnson Administration. "We can fix the tipping point with precision," you write. "It occurred between 1965, when President Lyndon Baines Johnson ordered U.S. combat troops to South Vietnam, and 1973, when President Richard Nixon finally ended direct U.S. involvement in that war." Why do you see that period so crucial?

ANDREW BACEVICH: When President Johnson became President, our trade balance was in the black. By the time we get to the Nixon era, it's in the red. And it stays in the red down to the present. Matter of fact, the trade imbalance becomes essentially larger year by year.

So, I think that it is the '60s, generally, the Vietnam period, slightly more specifically, was the moment when we began to lose control of our economic fate. And most disturbingly, we're still really in denial. We still haven't recognized that.

BILL MOYERS: Now you go on to say that there was another fateful period between July 1979 and March of 1983. You describe it, in fact, as a pivot of contemporary American history. That includes Jimmy Carter and Ronald Reagan, right?

ANDREW BACEVICH: Well, I would be one of the first to confess that - I think that we have misunderstood and underestimated President Carter. He was the one President of our time who recognized, I think, the challenges awaiting us if we refused to get our house in order.

BILL MOYERS: You're the only author I have read, since I read Jimmy Carter, who gives so much time to the President's speech on July 15th, 1979. Why does that speech speak to you so strongly?

ANDREW BACEVICH: Well, this is the so-called Malaise Speech, even though he never used the word "malaise" in the text to the address. It's a very powerful speech, I think, because President Carter says in that speech, oil, our dependence on oil, poses a looming threat to the country. If we act now, we may be able to fix this problem. If we don't act now, we're headed down a path in which not only will we become increasingly dependent upon foreign oil, but we will have opted for a false model of freedom. A freedom of materialism, a freedom of self-indulgence, a freedom of collective recklessness. And what the President was saying at the time was, we need to think about what we mean by freedom. We need to choose a definition of freedom which is anchored in truth, and the way to manifest that choice, is by addressing our energy problem.

He had a profound understanding of the dilemma facing the country in the post Vietnam period. And of course, he was completely hooted, derided, disregarded.

BILL MOYERS: And he lost the election. You in fact say-

ANDREW BACEVICH: Exactly.

BILL MOYERS: -this speech killed any chance he had of winning reelection. Why? Because the American people didn't want to settle for less?

ANDREW BACEVICH: They absolutely did not. And indeed, the election of 1980 was the great expression of that, because in 1980, we have a candidate, perhaps the most skillful politician of our time, Ronald Reagan, who says that, "Doom-sayers, gloom-sayers, don't listen to them. The country's best days are ahead of us."

BILL MOYERS: Morning in America.

ANDREW BACEVICH: It's Morning in America. And you don't have to sacrifice, you can have more, all we need to do is get government out of the way, and drill more holes for oil, because the President led us to believe the supply of oil was infinite.

BILL MOYERS: You describe Ronald Reagan as the "modern prophet of profligacy. The politician who gave moral sanction to the empire of consumption."

ANDREW BACEVICH: Well, to understand the truth about President Reagan, is to understand why so much of what we imagined to be our politics is misleading and false. He was the guy who came in and said we need to shrink the size of government. Government didn't shrink during the Reagan era, it grew.

He came in and he said we need to reduce the level of federal spending. He didn't reduce it, it went through the roof, and the budget deficits for his time were the greatest they had been since World War Two.

BILL MOYERS: And do you remember that it was his successor, his Vice President, the first President Bush who said in 1992, the American way of life is not negotiable.

ANDREW BACEVICH: And all presidents, again, this is not a Republican thing, or a Democratic thing, all presidents, all administrations are committed to that proposition. Now, I would say, that probably, 90 percent of the American people today would concur. The American way of life is not up for negotiation.

What I would invite them to consider is that, if you want to preserve that which you value most in the American way of life, and of course you need to ask yourself, what is it you value most. That if you want to preserve that which you value most in the American way of life, then we need to change the American way of life. We need to modify that which may be peripheral, in order to preserve that which is at the center of what we value.

BILL MOYERS: What do you value most?

ANDREW BACEVICH: Well, I think the clearest statement of what I value is found in the preamble to the Constitution. There is nothing in the preamble to the Constitution which defines the purpose of the United States of America as remaking the world in our image, which I view as a fool's errand. There is nothing in the preamble of the Constitution that ever imagined that we would embark upon an effort, as President Bush has defined it, to transform the Greater Middle East. This region of the world that incorporates something in order of 1.4 billion people.

I believe that the framers of the Constitution were primarily concerned with focusing on the way we live here, the way we order our affairs. To try to ensure that as individuals, we can have an opportunity to pursue our, perhaps, differing definitions of freedom, but also so that, as a community, we could live together in some kind of harmony. And that future generations would also be able to share in those same opportunities.

The big problem, it seems to me, with the current crisis in American foreign policy, is that unless we do change our ways, the likelihood that our children, our grandchildren, the next generation is going to enjoy the opportunities that we've had, is very slight, because we're squandering our power. We are squandering our wealth. In many respects, to the extent that we persist in our imperial delusions, we're also going to squander our freedom because imperial policies, which end up enhancing the authority of the imperial president, also end up providing imperial presidents with an opportunity to compromise freedom even here at home. And we've seen that since 9/11.

BILL MOYERS: The disturbing thing that you say again and again in here, is that every President since Reagan has relied on military power to conceal or manage these problems that stem from the nation's habits of profligacy, right?

ANDREW BACEVICH: That's exactly right. And again, this is, I think, this is another issue where one needs to be unsparing in fixing responsibility as much on liberal Democratic presidents as conservative Republican ones. I think that the Bush Administration's response to 9/11 in constructing this paradigm of a global war on terror, in promulgating the so called, Bush Doctrine of Preventive War, in plunging into Iraq - utterly unnecessary war - will go down in our history as a record of recklessness that will be probably unmatched by any other administration.

But, doesn't really mean that Bill Clinton before him, or George Herbert Walker Bush before him, or Ronald Reagan before him, were all that much better. Because they all have seen military power as our strong suit. They all have worked under the assumption that through the projection of power, or the threat to employ power, that we can fix the world. Fix the world in order to sustain this dysfunctional way of life that we have back here.

BILL MOYERS: So, this brings us to what you call the political crisis of America. And you say, "The actual system of government conceived by the framers no longer pertains." What pertains?

ANDREW BACEVICH: I am expressing in the book, in a sense, what many of us sense, even if many of us don't really want to confront the implications. The Congress, especially with regard to matters related to national security policy, has thrust power and authority to the executive branch. We have created an imperial presidency. The congress no longer is able to articulate a vision of what is the common good. The Congress exists primarily to ensure the reelection of members of Congress.

As the imperial presidency has accrued power, surrounding the imperial presidency has come to be this group of institutions called the National Security State. The CIA, the Joint Chiefs of Staff, the Office of the Secretary of Defense, the other intelligence agencies. Now, these have grown since the end of World War Two into this mammoth enterprise.

But the National Security State doesn't work. The National Security State was not able to identify the 9/11 conspiracy. Was not able to deflect the attackers on 9/11. The National Security State was not able to plan intelligently for the Iraq War. Even if you think that the Iraq War was necessary. They were not able to put together an intelligent workable plan for that war.

The National Security State has not been able to provide the resources necessary to fight this so called global war on terror. So, as the Congress has moved to the margins, as the President has moved to the center of our politics, the presidency itself has come to be, I think, less effective. The system is broken.

BILL MOYERS: Yeah, you say no one knows what they're doing, including the President. No one in Washington, as you say, that's the political crisis, as you define it, no one in Washington knows what they're doing.

ANDREW BACEVICH: What I mean specifically is this. The end of the Cold War coincided almost precisely with the first Persian Gulf War of 1990, 1991, Operation Desert Storm. Operation Desert Storm was perceived to be this great, historic, never before seen victory. It really wasn't.

BILL MOYERS: The mother of all battles-

ANDREW BACEVICH: Right, I mean-

BILL MOYERS: Schwarzkopf cam-

ANDREW BACEVICH: Politically, and strategically, the outcome of that war was far more ambiguous than people appreciated at the time. But nonetheless, the war itself was advertised as this great success, demonstrating that a new American way of war had been developed, and that this new American way of war held the promise of enabling the United States to exercise military dominion on a global basis in ways that the world had never seen.

The people in the Pentagon had developed a phrase to describe this. They called it, "full spectrum dominance." Meaning, that the United States was going to exercise dominance, not just capability, dominance across the full spectrum of warfare. And this became the center of the way that the military advertised its capabilities in the 1990s. That was fraud. That was fraudulent.

To claim that the United States military could demonstrate that kind of dominance flew in the face of all of history and in many respects, set us up for how the Bush Administration was going to respond to 9/11. Because if you believed that United States military was utterly unstoppable, then it became kind of plausible to imagine that the appropriate response to 9/11 was to embark upon this global war to transform the greater Middle East. Had the generals been more cognoscente of the history of war, and of the nature of war, then they might have been in a better position to argue to Mr. Rumsfeld, then the Secretary of Defense, or to the President himself, "Be careful." "Don't plunge ahead." Recognize that force has utility, but that utility is actually quite limited. Recognize that when we go to war, almost inevitably, there are going to be unanticipated consequences. And they're not going to be happy ones.

Above all, recognize that, when you go to war, it's unlikely there's a neat tidy solution. It's far more likely that the bill that the nation is going to pay in lives and in dollars is going to be a monumental one. My problem with the generals is that, with certain exceptions, one could name as General Shinseki, with certain exceptions-

BILL MOYERS: Who said, "We are going to need half a million men if we go into Iraq." And-

ANDREW BACEVICH: Right.

BILL MOYERS: -he was shown the door for telling the truth.

ANDREW BACEVICH: By and large, the generals did not speak truth to power.

BILL MOYERS: One of the things that comes through in your book is that great truths are contained in small absurdities. And you use the lowly IED, the improvised explosive device, or roadside bomb, that's taken such a toll of American forces in Iraq, to get at a very powerful truth. Tell me about that.

ANDREW BACEVICH: Well war - wars are competitions. The adversary develops capabilities. Your enemy develops capabilities. And you try to develop your own capabilities to check what he can do to you to be able to, overcome his capabilities.

One of the striking things about the Iraq War, and in which we had been fighting against, technologically at least, a relatively backward or primitive adversary, one of the interesting things is they have innovated far more adeptly and quickly than we have.

BILL MOYERS: The insurgents.

ANDREW BACEVICH: The insurgents have. And an example of that is the IED, which began as a very low tech kind of primitive mine. And, over time, became ever more sophisticated, ever more lethal, ever more difficult to detect, ever more difficult to check. And those enhancements in insurgent IED capability continually kept ahead of our ability to innovate and catch up.

BILL MOYERS: And I think you say, in your book, that it costs the price of a pizza to make a roadside bomb?

ANDREW BACEVICH: That's right. Yeah.

BILL MOYERS: This is what our men and women are up against in Afghanistan-

ANDREW BACEVICH: The point is to say that the reality of war is always a heck of a lot more complicated than you might imagine the day before the war begins. And, rather than looking to technology to define the future of warfare, we ought to look - really look at military history.

BILL MOYERS: And what do we learn when we look to the past?

ANDREW BACEVICH: What we should learn from history is that preventive war doesn't work. The Iraq War didn't work. And, therefore, we should abandon notions, such as the Bush Doctrine of preventive war. We should return to the just war tradition. Which sees force as something that is only used as a last resort. Which sees war as something that is justifiable for defensive purposes.

BILL MOYERS: How, then, do we fight what you acknowledge, in the book, is the perfectly real threat posed by violent Islamic extremism?

ANDREW BACEVICH: I think we need to see the threat for what it is. It is a real threat. It's not an existential threat. The 19 hijackers that killed 3,000 Americans on 9/11 didn't succeed because they had advanced technology, because they were particularly smart, because they were ten feet tall.

They succeeded because we let our guard down and we were stupid. We need to recognize that the threat posed by violent Islamic radicalism, by terrorist organizations, al Qaeda, really is akin to a criminal conspiracy, a violent conspiracy, a dangerous conspiracy. But it's a criminal enterprise. And the primary response to a criminal enterprise is policing.

Policing as in organizations like the FBI, intelligence organizations, some special operations forces. That would undertake a concerted campaign to identify and root out and destroy this criminal conspiracy. But that doesn't require invading and occupying countries. Again, one of the big mistakes the Bush Administration made, and it's a mistake we're still paying for, is that the President persuaded us that the best way to prevent another 9/11 is to embark upon a global war. Wrong. The best way to prevent another 9/11 is to organize an intensive international effort to root out and destroy that criminal conspiracy.

BILL MOYERS: You, in fact, say that, instead of a bigger army, we need a smaller more modest foreign policy. One that assigns soldiers missions that are consistent with their capability. "Modesty," I'm quoting you, "requires giving up on the illusions of grandeur to which the end of the Cold War and then 9/11 gave rise. It also means reining in the imperial presidents who expect the army to make good on those illusions." Do you expect either John McCain or Barack Obama to rein in the "imperial presidency?"

ANDREW BACEVICH: No. I mean, people run for the presidency in order to become imperial presidents. The people who are advising these candidates, the people who aspire to be the next national security advisor, the next secretary of defense, these are people who yearn to exercise those kind of great powers.

They're not running to see if they can make the Pentagon smaller. They're not. So when I - as a distant observer of politics - one of the things that both puzzles me and I think troubles me is the 24/7 coverage of the campaign.

Parsing every word, every phrase, that either Senator Obama or Senator McCain utters, as if what they say is going to reveal some profound and important change that was going to come about if they happened to be elected. It's not going to happen.

BILL MOYERS: It's not going to happen because?

ANDREW BACEVICH: Not going to happen - it's not going to happen because the elements of continuity outweigh the elements of change. And it's not going to happen because, ultimately, we the American people, refuse to look in that mirror. And to see the extent to which the problems that we face really lie within.

We refuse to live within our means. We continue to think that the problems that beset the country are out there beyond our borders. And that if we deploy sufficient amount of American power we can fix those problems, and therefore things back here will continue as they have for decades.

BILL MOYERS: I was in the White House, back in the early 60s, and I've been a White House watcher ever since. And I have never come across a more distilled essence of the evolution of the presidency than in just one paragraph in your book.

You say, "Beginning with the election of John F. Kennedy in 1960, "the occupant of the White House has become a combination of demigod, father figure and, inevitably, the betrayer of inflated hopes. Pope. Pop star. Scold. Scapegoat. Crisis manager. Commander in Chief. Agenda settler. Moral philosopher. Interpreter of the nation's charisma. Object of veneration. And the butt of jokes. All rolled into one." I would say you nailed the modern presidency.

ANDREW BACEVICH: Well, and the - I think the troubling part is, because of this preoccupation with, fascination with, the presidency, the President has become what we have instead of genuine politics. Instead of genuine democracy.

We look to the President, to the next President. You know, we know that the current President's a failure and a disappoint - we look to the next President to fix things. And, of course, as long as we have this expectation that the next President is going to fix things then, of course, that lifts all responsibility from me to fix things.

One of the real problems with the imperial presidency, I think, is that it has hollowed out our politics. And, in many respects, has made our democracy a false one. We're going through the motions of a democratic political system. But the fabric of democracy, I think, really has worn very thin.

BILL MOYERS: The other consequence of the imperial presidency, as you point out, is that, for members of the political class, that would include the media that covers the political class, serving, gaining access to, reporting on, second guessing, or gossiping about the imperial president are about those aspiring to succeed him, as in this campaign, has become an abiding preoccupation.

ANDREW BACEVICH: I'm not - my job is not to be a media critic. But, I mean, one - you cannot help but be impressed by the amount of ink spilled on Obama and McCain compared to how little attention is given, for example, to the races in the Senate and the House. Now, one could say perhaps that makes sense, because the Congress has become such a dysfunctional body. But it really does describe a disproportion, I think of attention that is a problem.

BILL MOYERS: Would the imperial presidency exist were it not for the Congress?

ANDREW BACEVICH: No. I think that the imperial presidency would not exist but for the Congress. Because the Congress, since World War II, has thrust power and authority onto the presidency.

BILL MOYERS: Here is what I take to be the core of your analysis of our political crisis. You write, "The United States has become a de facto one party state. With the legislative branch permanently controlled by an incumbent's party. And every President exploiting his role as Commander in Chief to expand on the imperial prerogatives of his office."

ANDREW BACEVICH: One of the great lies about American politics is that Democrats genuinely subscribe to a set of core convictions that make Democrats different from Republicans. And the same thing, of course, applies to the other party. It's not true. I happen to define myself as a conservative.

Well, what do conservatives say they stand for? Well, conservatives say they stand for balanced budgets. Small government. The so called traditional values.

Well, when you look back over the past 30 or so years, since the rise of Ronald Reagan, which we, in many respects, has been a conservative era in American politics, well, did we get small government?

Do we get balanced budgets? Do we get serious as opposed to simply rhetorical attention to traditional social values? The answer's no. Because all of that really has simply been part of a package of tactics that Republicans have employed to get elected and to - and then to stay in office.

BILL MOYERS: And, yet, you say that the prime example of political dysfunction today is the Democratic Party in relation to Iraq.

ANDREW BACEVICH: Well, I may be a conservative, but I can assure you that, in November of 2006, I voted for every Democrat I could possibly come close to. And I did because the Democratic Party, speaking with one voice, at that time, said that, "Elect us. Give us power in the Congress, and we will end the Iraq War."

And the American people, at that point, adamantly tired of this war, gave power to the Democrats in Congress. And they absolutely, totally, completely failed to follow through on their commitment. Now, there was a lot of posturing. But, really, the record of the Democratic Congress over the past two years has been - one in which, substantively, all they have done is to appropriate the additional money that enables President Bush to continue that war.

BILL MOYERS: And you say the promises of Harry Reid and Nancy Pelosi prove to be empty. Reid and Pelosi's commitment to forcing a change in policy took a backseat to their concern to protect the Democratic majority.

ANDREW BACEVICH: Could anybody disagree with that?

BILL MOYERS: You say, and this is another one of my highlighted sentences, that "Anyone with a conscience sending soldiers back to Iraq or Afghanistan for multiple combat tours, while the rest of the country chills out, can hardly be seen as an acceptable arrangement. It is unfair. Unjust. And morally corrosive." And, yet, that's what we're doing.

ANDREW BACEVICH: Absolutely. And I think - I don't want to talk about my son here.

BILL MOYERS: Your son?

ANDREW BACEVICH: Yeah.

BILL MOYERS: You dedicate the book to your son.

ANDREW BACEVICH: Yeah. Well, my son was killed in Iraq. And I don't want to talk about that, because it's very personal. But it has long stuck in my craw, this posturing of supporting the troops. I don't want to insult people.

There are many people who say they support the troops, and they really mean it. But when it comes, really, down to understanding what does it mean to support the troops? It needs to mean more than putting a sticker on the back of your car.

I don't think we actually support the troops. We the people. What we the people do is we contract out the business of national security to approximately 0.5 percent of the population. About a million and a half people that are on active duty.

And then we really turn away. We don't want to look when they go back for two or three or four or five combat tours. That's not supporting the troops. That's an abdication of civic responsibility. And I do think it - there's something fundamentally immoral about that.

Again, as I tried to say, I think the global war on terror, as a framework of thinking about policy, is deeply defective. But if one believes in the global war on terror, then why isn't the country actually supporting it? In a meaningful substantive sense?

Where is the country?

BILL MOYERS: Are you calling for a reinstatement of the draft?

ANDREW BACEVICH: I'm not calling for a reinstatement of the draft because I understand that, politically, that's an impossibility. And, to tell you the truth, we don't need to have an army of six or eight or ten million people. But we do need to have the country engaged in what its soldiers are doing. In some way that has meaning. And that simply doesn't exist today.

BILL MOYERS: Well, despite your loss, your and your wife's loss, you say in this powerful book what, to me, is a paradox. You say that, "Ironically, Iraq may yet prove to be the source of our salvation." And help me to understand that.

ANDREW BACEVICH: We're going to have a long argument about the Iraq War. We, Americans. Not unlike the way we had a very long argument about the Vietnam War. In fact, maybe the argument about the Vietnam War continues to the present day. And that argument is going to be - is going to cause us, I hope, to ask serious questions about where this war came from.

How did we come to be a nation in which we really thought that we could transform the greater Middle East with our army?

What have been the costs that have been imposed on this country? Hundreds of billions of dollars. Some projections, two to three trillion dollars. Where is that money coming from? How else could it have been spent? For what? Who bears the burden?

Who died? Who suffered loss? Who's in hospitals? Who's suffering from PTSD? And was it worth it? Now, there will be plenty of people who are going to say, "Absolutely, it was worth it. We overthrew this dictator." But I hope and pray that there will be many others who will make the argument that it wasn't worth it.

It was a fundamental mistake. It never should have been undertaking. And we're never going to do this kind of thing again. And that might be the moment when we look ourselves in the mirror. And we see what we have become. And perhaps undertake an effort to make those changes in the American way of life that will enable us to preserve for future generations that which we value most about the American way of life.

BILL MOYERS: The book is "The Limits of Power: The End of American Exceptionalism." Andrew J. Bacevich, thank you for being with me.

ANDREW BACEVICH: Thank you very much.

BILL MOYERS: I have to believe that if Barack Obama and John McCain took time to read THE LIMITS OF POWER, this would be a different campaign. The reality just might sober them up.

A personal word if you will at the end of this frenzied and dangerous week. All week I've thought of my father - and his friend in the White House. My father dropped out of the fourth grade and never returned to high school because his family needed him to pick cotton to help ends meet. The Great Depression knocked him down and almost out. He never made more than $100 a week in his working life, and he made that only when he joined the union in the last job he held. He voted for Franklin Delano Roosevelt in four straight elections and would have gone on voting for him until kingdom come if he'd had the chance. When I asked him why, he said, "Because he was my friend."

Now, my father of course never met FDR; no politician ever paid him much note. But when Roosevelt died, my father wept. I puzzled at how it was a struggling young husband and father, lucky enough to get a job as a day laborer on the highway to Oklahoma City, could believe that the patrician in the White House knew what life was like for people like him.

Then, one day, years later, listening to a compilation of Franklin Roosevelt's speeches, I understood. Listen, and I think you will understand too. Remember, it's 1933-- chaos has descended across the country. Millions are out of work, their savings gone, their pantries empty, and a quarter of the banks are closed. Everything that's tied down is coming loose. And there on the banks of the Red River a young couple with one son and about to have another, sat listening to the radio, listening to the new president being sworn into office, listening to this:

FRANKLIN D. ROOSEVELT: In such a spirit on my part and on yours we face our common difficulties…a host of unemployed citizens face the grim problem of existence and an equally great number toil with little return…Yes, the money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths.

This is preeminently the time to speak the truth, the whole truth, frankly and boldly…let me assert my firm belief that the only thing we have to fear is fear itself…

BILL MOYERS: And so my father took heart. No false promises. No passing the buck. No pandering. Just a simple truth: when the new president said we can do this, my father knew he was included. He never forgot it, never stopped believing his friend in the White House believed in him.

That's it for the JOURNAL.

Before we go, I want to call your attention to a special broadcast scheduled to air on many of these PBS stations next week, as part of the series, "POV." "Critical Condition" is the powerful story of four patients struggling to survive, to survive not only illness but America's failing health care system, where treatment is all too often delayed or denied.

WOMAN: A lot of people are dying, and they're dying because they don't have health care.

I'm Bill Moyers. We'll see you next week.

September

[Sep 20, 2008] Think Progress " The Fish Oil Salesman McCain Pushes Offshore Drilling Because Fish 'Love To Be Around' Oil Rigs

Senility, incompetence or corruption ? We report you decide ;-)

Yesterday in his town hall meeting with Gov. Sarah Palin (R-AK), Sen. John McCain (R-AZ) advocated offshore oil drilling by pushing three myths: 1) Hurricanes won't damage oil rigs, 2) Fish love oil rigs, and 3) Cuba is allowing China to drill near the U.S. coast:

McCAIN: An oil rig off of the Louisiana coast. It survived hurricanes. It is safe, it is sound, and to somehow -

And by the way, on that oil rig - and I'm sure you've probably heard this story - you look down, and there's fish everywhere! There's fish everywhere! Yeah, the fish love to be around those rigs. So not only can it be helpful for energy, it can be helpful for some pretty good meals as well. […]

As far as China and Cuba are concerned, we continue to hear that there is negotiations or conversations or - I'm not exactly sure what the state of play is, but it's not a healthy thing, obviously.

MYTH #1: Hurricanes won't damage oil rigs. The U.S. Minerals Management Service estimates that Hurricanes Katrina and Rita destroyed 113 offshore oil platforms and caused 124 offshore spills for a total of 743,700 gallons. In fact, damage to offshore producers accounted for 77 percent of the oil industry's storm costs. In the wake of Hurricane Ike, there are at least three offshore oil rigs missing and "presumed to be total losses."

MYTH #2: Fish love oil rigs. McCain is pushing an oil industry talking point. While marine biologists have seen fish congregating around oil rigs, it doesn't mean they are good for wildlife. "That's like taking a picture of birds on a telephone wire and saying it's essential habitat," said the Environmental Defense Center's Linda Krop. Without the platforms, fish would likely return to natural reefs.

MYTH #3: Cuba is allowing China to drill near the U.S. coast. The Congressional Research Service has unequivocally concluded that Cuba has not permitted China to drill near the U.S. coastline in the Gulf of Mexico. Even Vice President Cheney has admitted this talking point is false.

McCain's second claim is especially silly. Not too long ago, conservatives were also trying to argue that the United States should start drilling in Alaska's Arctic National Wildlife Reserve because oil pipelines would "become a meeting ground and 'coffee klatch' for caribou." (HT: AMERICAblog)

[Sep 09, 2008] Washington Wants Oil Down, Stocks Up Before Election, Harrison Says

With the nationalization of Fannie Mae and Freddie Mac, it's impossible to argue the Federal government isn't playing a crucial and growing role in the financial markets.

"Call it socialism, manipulation, intervention, [or] desperation. Call it what you will but don't underestimate the mandate," says Todd Harrison, CEO of Minyanville.com.

"The agenda [of policymakers] is very clear," he continues. "They need to stabilize the system [to] avoid the unthinkable -- a crash that's going to suck global capital markets in the abyss."

Certainly there's an economic benefit to avoiding a global financial market collapse. But Harrison has long argued policymakers had two major goals ahead of the election they are still pursuing: lower oil prices to $100 or below, and get equity prices higher.

Given all that's transpired in the past year, from the bailout of Bear Stearns to the Fed's special financial vehicles for Wall Street to this weekend's intervention, one thing is clear: The "invisible hand" in the markets these days belongs to Uncle Sam.

August

An oil standard

naked capitalism

Ok. Oil. Exxon Mobil reported a second-quarter profit of nearly $12 billion -- a number that works out (as many did) to about $39 for every man, woman and child in America; $90,000 a minute etc.

Mark Thoma has a think about the future price of gasoline for us. The punch line:

If past global expansions are a guide, global demand will recede only gradually. This is a direct implication of the model underlying this analysis. This suggests that US gasoline prices will remain high for the time being. Barring a major economic collapse in emerging Asia, prices will stabilise only as the world economy learns to economise on the use of oil and gasoline and as the supply of crude oil expands. Both corrective forces will take time to gain momentum.

As an investor however I believe that there is a definite skew in the probability distribution. Who ever heard of an extra 5 million barrels per day unexpectedly hitting the market? Yet, there is a distinct possibility of that much being unexpectedly withdrawn. Better to own the upper tail than the lower.

Brad Setser revisits the Gulf-inflation story -- single digit interest rates, double digit inflation.

I'd like to see more game theory applied to the oil price analysis. If they did peg their currencies to price, the Gulf could be the world's ultimate monetary authority. They can open the spigots whenever world growth flags below a targeted rate, and pull back when things are running a little hot... I'd rather own a currency based on oil than one based on gold.

Alternatively, they could pull back whenever there is talk of carbon caps, open up when it looks like alternative energy is getting too much interest and investment...

If I were advising them, here's my spin: Gulf states announce that they are voluntarily limiting the production and export of petroleum in order to contain global warming; and coincidentally conserving global oil resources for future generations... Home run.

July

OPEC 2.0, by Tim Wu, Commentary, NY Times

Americans today spend almost as much on bandwidth - the capacity to move information - as we do on energy. A family of four likely spends several hundred dollars a month on cellphones, cable television and Internet connections, which is about what we spend on gas and heating oil.

Just as the industrial revolution depended on oil and other energy sources, the information revolution is fueled by bandwidth. If we aren't careful, we're going to repeat the history of the oil industry by creating a bandwidth cartel.

[Jul 17, 2008] Facing the Hard Truths about Energy - A Report by the National Petroleum Council

[Jul 16, 2008] Falling Oil Prices and CPI

CalculatedRisk

As I noted yesterday, the difference between a moderate and severe recession might be what happens with oil prices:

One of the keys to the base case is that oil prices decline in the 2nd half of 2008 (something I've been predicting for some time). This prediction is based on demand destruction, lower subsidies in certain Asian countries, weaker demand growth in China, and a few other reasons. The fundamentals of supply and demand for oil suggests a small decrease in demand could led to a fairly large decrease in price. If this happens, then that will hopefully lead to Kasriel's "sharp deceleration in inflation".

[Jul 9, 2008] Foreign Policy In Focus End of the Petroleum Age

More and more, the evidence suggests that this is not just a temporary crisis. It is the beginning of the end of the Petroleum Age.

How do we know that the Petroleum Age is drawing to a close? Two key indicators tell us that this is so. First, many of the giant fields that have satisfied our massive thirst over so many years are experiencing diminished output. Second, although the major oil producers are spending more money each year to discover new reserves, they are finding less and less oil. Either of these factors by itself is cause for significant worry; the combination is deadly.

...new discoveries may add one or two million barrels of oil per day to existing output in 2015 and beyond, but by that point output from existing fields is likely to be considerably lower than it is today. Nobody can predict exactly where combined worldwide production will stand at that time. But more and more analysts are coming to the conclusion that the output of conventional (i.e., liquid) petroleum will peak at about 95 million barrels per day in the 2010-2012 time-frame and then begin an irreversible decline. The addition of a few million added barrels from Kashagan or Tupi will not alter this trend.

...none of this can stop the inevitable closing of the Petroleum Age.

Some say that any palliative is worth the expense as we head toward certain disaster. But this is not a logical response. Knowing that the age of petroleum is drawing to a close, it is far better to devote our talents and investment dollars on hastening the arrival of its successor, rather than prolonging the agony of oil's decline.

At this point, we cannot be absolute certain of the dominant energy source of the post-petroleum era. Will it be the Solar Age or the Biofuels Age or the Hydrogen Age? But we do know that it will revolve around some constellation of renewable, climate-friendly, domestically-produced supplies. From now on, America's top priority in the energy field must be to explore all potential components of this new energy future and move swiftly to develop those with the greatest promise.

[Jul 08, 2008] Oil price shock means China is at risk of blowing up By Ambrose Evans-Pritchard

Peak Oil is real, and it isn't going away. Already trans-ocean transportation costs became prohibitive and in many cases they reversed or close to reserved the benefits of outsourcing. Rise in oil prices has gutted the profitability of the Asian trade model for everything but high-value goods (solar panels, semiconductors, etc.) But the transformation of world economy to "post peak oil" situation justp with growing demand and long term price will probably increase from current level. In any case there is no viable substitute for oil... Solar energy is too tiny and biofuels are both tiny and affect fool production (with possible exception of Brazil ethanol).

Telegraph

The great oil shock of 2008 is bad enough for us. It poses a mortal threat to the whole economic strategy of emerging Asia.

The manufacturing revolution of China and her satellites has been built on cheap transport over the past decade. At a stroke, the trade model looks obsolete.

No surprise that Shanghai's bourse is down 56pc since October, one of the world's most spectacular bear markets in half a century.

Asia's intra-trade model is a Ricardian network where goods are shipped in a criss-cross pattern to exploit comparative advantage. Profit margins are wafer-thin.

Products are sent to China for final assembly, then shipped again to Western markets. The snag is obvious. The cost of a 40ft container from Shanghai to Rotterdam has risen threefold since the price of oil exploded.

"The monumental energy price increases will be a 'game-changer' for Asia," said Stephen Jen, currency chief at Morgan Stanley. The region's trade model is about to be "stress-tested".

Energy subsidies have disguised the damage. China has held down electricity prices, though global coal costs have tripled since early 2007. Loss-making industries are being propped up. This merely delays trouble.

"The true impact of the shock will only be revealed over time, as subsidies are gradually rolled back," he said. Last week, China raised internal rail freight rates by 17pc.

BP 's Statistical Review says China's use of energy per unit of gross domestic product is three times that of the US, five times Japan's, and eight times Britain's.

China's factories "were not built with current energy levels in mind", said Mr Jen. The outcome will be "non-linear". My translation: China is at risk of blowing up.

Any low-tech product shipped in bulk - furniture, say, or shoes - is facing the ever-rising tariff of high freight costs. The Asian outsourcing game is over, says CIBC World Markets. "It's not just about labour costs any more: distance costs money," says chief economist Jeff Rubin.

[Jul 5, 2008] American Energy Policy, Asleep at the Spigot

NYTimes.com

Even as politicians heatedly debate opening new regions to drilling, corralling energy speculators, or starting an Apollo-like effort to find renewable energy supplies, analysts say the real source of the problem is closer to home. In fact, it's parked in our driveways.

Nearly 70 percent of the 21 million barrels of oil the United States consumes every day goes for transportation, with the bulk of that burned by individual drivers, according to the National Commission on Energy Policy, a bipartisan research group that advises Congress.

SO despite the fierce debate over what's behind the recent spike in prices, no one differs on what's really responsible for all that underlying demand here for black gold: the automobile, fueled not only by gasoline but also by Americans' famous propensity for voracious consumption.

To be sure, the American appetite for crude oil is only one reason for the recent price surge. But the country's dependence on imported oil has only kept growing in recent years, undermining the trade balance and putting an added strain on global supplies.

Although the road to $4 gasoline and increased oil dependence has been paved in places like Detroit, Houston and Riyadh, it runs through Washington as well, where policy makers have let the problem make lengthy pit stops.

"Much of what we're seeing today could have been prevented or ameliorated had we chosen to act differently," says Pete V. Domenici, the ranking Republican member of the Senate Energy and Natural Resources Committee and a 36-year veteran of the Senate. "It was a bipartisan failure to act."

Mike Jackson, the chief executive of AutoNation, the country's biggest automobile retailer, is even more blunt. "It was totally preventable," he says, anger creeping into his affable car-salesman's pitch.

The speed at which gas prices are climbing is forcing a seismic change in long-held American habits, from car-buying to commuting. Last week, Ford Motor reported that S.U.V. sales were down 55 percent from a year ago, while demand for its full-size F-series pickup, a gas guzzler that was the country's best-selling vehicle for 26 consecutive years, is off 40 percent. The only Ford model to show a sales increase was the midsized Fusion. A Ford spokeswoman says the market shift is "totally unprecedented and faster than anything we've ever seen."

If the latest rise in oil prices isn't just another spike - like those of the 1970s and 1980s - but is instead a fundamental repricing of the commodity responsible for much of modern American life, the impact of that change will affect everyone from home builders and homeowners in exurbs to corporate leaders, landlords and commuters in cities.

... ... ...

A much more effective approach would be to simply raise taxes on gasoline, Mr. Dingell says, because higher prices are the easiest way to change buying habits. Some Europeans agree with this, noting that policy changes engineered through taxation can alter consumer choices without impeding economic growth.

Consumers overseas might not like higher taxes on gasoline, but they've adapted, says Jeroen van der Veer, chief executive of Royal Dutch Shell, the European energy giant. "A society can work, can function and can grow even at higher fuel prices," he says. "It's a way of life - you get used to it."

[Jul 5, 2008] The Mortgage Lender Implode-O-Meter News Pick-ups Debate Over It's Hyperinflation (and US Economic Collapse)

Jun 30, 2008 | ml-implode.com

As far as I am concerned, the "inflation vs. deflation" debate is over: we are already at hyperinflation -- even though certain markets and measures of credit exhibit deflation. If you want to quibble about the definition (how "hyper" the inflation actually is), go somewhere else: my point is that we have embarked on the path from which there is likely to be no return, given the way the system works. And the real kicker is: in response to the crisis, the system hasn't changed.

The big glaring data point backing this argument is oil prices. Oil prices in 2008 have shocked everyone, literally everyone, including me -- and that's saying a lot since I'm a "peak oiler," and already believed high and increasing rates of inflation were in the cards for purely monetary reasons.

[Jul 4, 2008] New York Times Death Spiral Watch (Energy/Speculation/Journalism/Internet Timothy Egan Edition)

Exhibit A: New York Times reporter Timothy Egan in May 2001 on the California energy crisis:

Timothy Egan, May 11: Many Utilities Call Conserving Good Business: Hundreds of miles to the south [of Seattle], the city-run utilities in Los Angeles and Sacramento, have generally managed to avoid the rolling blackouts of recent months by opting out of the state's deregulation experiment and promoting conservation with near-religious fervor.... When Vice President Dick Cheney said last week that conservation could not be a centerpiece of energy policy, he left some utilities -- those that have spent 20 years trying to prove just the opposite -- feeling as though their efforts had been undermined. In his speech, he said, "Conservation may be a sign of personal virtue, but it is not a sufficient basis for a sound, comprehensive energy policy."...

These guys in the Bush administration are doing this manly stuff, putting their horns on to make it sound like conservation is for sissies," Mr. Royer said. "But we know from experience that conservation equals generation. They are the same." Other utilities, even some that embrace conservation, agree with the Bush administration that the nation cannot conserve its way to energy independence....

S. David Freeman, the man named by Gov. Gray Davis to oversee the state's response to its power crisis, said that conservation remained a way not only to get through the difficult summer ahead but also to meet long-term energy needs.... Tom Eckman, the conservation manager of the Northwest Power Planning Council, which was created by Congress to guide major power decisions in this region. "It's common sense. If you can get something for 10 cents, why pay a dollar for it?"...

Mr. Cheney said that the Bush administration would oppose any measure based on a premise that people should do more with less. His remark was echoed this week by Ari Fleischer, the White House spokesman. Asked on Monday if Mr. Bush believed that Americans should change their lifestyles in the face of a power crisis, Mr. Fleischer dismissed the idea of people using less energy as one solution. "That's a big no," said Mr. Fleischer. "The president believes that it's an American way of life, and it should [be] the goal of policy makers to protect the American way of life. The American way of life is a blessed one. And we have a bounty of resources in this country"...

[Jul 4, 2008] World Bank- Biofuels Increased Food Prices 75%

Natural resources constraints will now cause a significant slowdown in global growth.

The Guardian has a leaked copy of a World Bank study that finds biofuels to be the biggest culprit in global food price increases. This finding will not only feed calls to scrap biofuels (save perhaps those derived from sugar) but may lead to a recognition that resource challenges cannot be pursued in isolation. In particular, food, water, and energy scarcity are interconnected problems and need to be addressed on an integrated basis. It also disputes the claim that increased consumption of meat in developing economies played a significant role in food price inflation.

From the Guardian:

Biofuels have forced global food prices up by 75% - far more than previously estimated - according to a confidential World Bank report obtained by the Guardian.

The damning unpublished assessment is based on the most detailed analysis of the crisis so far, carried out by an internationally-respected economist at global financial body.

The figure emphatically contradicts the US government's claims that plant-derived fuels contribute less than 3% to food-price rises. It will add to pressure on governments in Washington and across Europe, which have turned to plant-derived fuels to reduce emissions of greenhouse gases and reduce their dependence on imported oil....

[Jul 3, 2008] High Gasoline Prices- Pete Davis v. Lawrence Kudlow

Yes, gas prices should be kept high enough to create incentives to conserve, find alternatives, etc. If we work together now we'll leave a much stronger economy to our kids and grandkids. Is the problem our dependence on "foreign oil" or on "oil"?

Angry Bear

...In a nutshell, that's why we're 58% dependent upon foreign oil. Every time we have an energy crisis, in 1973, 1979, 1990, and 2008, we rush short-term expedients and cosmetics into law without doing much to solve the long-term problem.

If we were serious about the long-term problem we would never have allowed gas guzzling SUV's onto the road; we wouldn't have starved mass transportation; we would have developed much more renewable energy; we would have done a lot more conservation; and MOST OF ALL we wouldn't have allowed prices to decline after the crisis, killing energy saving investments and leading us right back to profligate energy consumption.

Our energy policy is like our diets. We diet frequently, but we never stick to our diets long enough or change our lifestyles enough to lose weight. Then, when diabetes and heart disease sets in, we rush to our doctors for the miracle cure that isn't there ...

Until we learn to live with somewhat higher energy prices, we'll continue to be at the mercy of OPEC and of periodic energy crises. As long as we demand quick fixes from our political leaders, that's all we will get -- quick fixes that don't work.

[Jul 2, 2008] Commodity Demand to Drop as Growth Slows, Faber Says (Update1) by By Millie Munshi and Monica Bertran

Bloomberg

Demand for industrial commodities including oil will fall, pressuring prices, because the financial sector is in ``disarray'' and the U.S. economy will continue to slump, investor Marc Faber said.

``The industrial-commodity complex is vulnerable because demand will slow down,'' said Faber, publisher of investment newsletter the Gloom, Boom and Doom Report. ``The economy is weakening, corporate profits will disappoint, valuations are not particularly attractive, and the financial sector that serves to channel savings into investment is in disarray.''

Demand for commodities will fall after raw materials including oil, corn, copper and gold touched record highs in the first half, Faber said in an interview on Bloomberg Television. The global economic slowdown will last a ``very long time,'' he said.

``The financial crisis has been the appetizer,'' Faber said, referring to the $400 billion in writedowns at the world's largest banks and securities firms in the past year. ``We still need the main dish.''...

The U.S. economy went into recession last October and current statistics are hiding the ``severity'' of the recession, Faber said. Economists have also understated the rate of inflation as higher food and energy costs impact consumers, he said.

Commodities will face a ``correction'' after a seven-year rally and prices will decline in the next six months to one year, Faber said on June 26. Faber told investors to abandon U.S. stocks a week before 1987's so-called Black Monday crash.

June

[Jun 29, 2008] Energy as a share of nominal consumer spending

Just to put things in perspective. This is through the first quarter so it does not reflect the last pop in energy prices.

It is now 6.6% as compared to a low of 4.2% at the double bottom and the 1970s low of 6.2%.
The peak was 9.3%.

***** [Jun 29, 2008] Envisioning a world of $200-a-barrel oil - Los Angeles Times

Although white-collar workers may be able to telecommute, they could also take a serious financial hit because soaring energy prices tend to wreak havoc on the stock market. The explosion of 401(k) plans and similar retirement accounts in the last few decades -- and the decline of traditional pensions with guaranteed payouts -- have tied workers' financial futures more closely to stocks than they were during the 1970s oil shocks. A prolonged Wall Street downturn could mean a no-frills retirement, or none at all.

[Jun 28, 2008] Ethanol and food prices

Angry Bear It is my understanding that the major byproduct of ethanol is distillers grains that are used as feed for cattle, hogs and chicken with essentially the same nutritional value as feed grains that have not had ethanol distilled out of them. All distilling ethanol does is remove the starch from the food grains and leaves the protein, etc, that animals need to grow.

.... I ran across a very good article by Richard Perrin at the University of Nebraska on Ethanol and Food Prices
http://digitalcommons.unl.edu/ageconfacpub/49/

ABSTRACT:
Food prices in the U.S. rose dramatically in 2007 and early 2008. Given the integration of the world markets for foodstuffs, prices increased around the world as well, leading to riots in a number of countries in early 2008. The popular press has tended to attribute these food price increases to demand for corn by the ethanol industry. Grain prices are one determinant of food prices, but they constitute less than 5% of food costs in the U.S.(a higher percentage elsewhere.) This paper focuses on the likely relationship between ethanol and food prices, ignoring the potential role of other important contributors. It finds that ethanol is responsible for no more than 30-40% of the grain price increases of the last 18 months. Food prices in the US increased about 16% over the last five years,7% over the past 18 months, but rising grain prices have contributed only about a 3% cost increase over these periods. It is reasonable to conclude that ethanol is responsible for increases in US food prices about 1% in the last two years – a relatively small proportion of actual of U.S. food price increases. In food-insecure areas of the world, however, the impact of ethanol on food prices has been higher, perhaps as much as a 15% increase, simply because the typical food basket in those areas contains more direct grain consumption.

so I sent him an email with my question and he was nice enough to respond with this:

You are right. One-third of the corn processed for ethanol is expelled as distillers grains and solubles (DGS.) (One third is ethanol, one-third CO2.) DGS has slightly higher feed value than corn when it's fed to ruminants (I have a publication with an animal scientist on this issue, if you become deeply interested, and could direct you to some others.) Since DGS can be directly substituted for corn, putting a ton of corn into an ethanol plant really only extracts 2/3 ton from the animal feed supply, so it would have been reasonable for me to assert that ethanol has accounted for only 30% of new net withdrawals of the world's coarse grains since 2000 (rather than 40%.) China, Sub Saharan Africa, and South America are each responsible for about 15%.

So the standard treatment of ethanol in the press and blog is significantly misleading.

Comment

Reading the brochures on the subject from various land grant universities in corn country suggest that distillers grain can be used for 10-20% of the feed volume for beef, pork or poultry. So the analysis is more complicated. For example, if corn was 50% of the feed volume before, ethanol-related demand has resulted in a doubling of corn prices, and distillers grain is free but can only replace less than half the corn in the diet, then the total cost of feeding the livestock has still increased.

As others have pointed out, corn starches are the starting point for large quantities of other ingredients that are heavily used -- eg, corn syrups for sweeteners -- and distillers grains are worthless for those applications.
Michael Cain | 06.28.08

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Food is one of the most energy intensive sectors of the economy. I trying to remember this from the 1970s, but it ranks about fourth or fifth after energy, chemicals and transportation.
spencer | 06.28.08

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wish I could give you numbers. We raise steers on our small pasture. They are supposed to be grass eaters, as someone noted above. The guy we buy our boys from has a racket he loves. His herd is grass fed but he hauls off the mash left from a small microbrewery that moved to town. It is free to him and a deal for the brewery because it is waste. He does agree his cows grow bigger eating this mash. ps he's a veterinarian.

A question I think is appropriate to your inquiry is how much mash is recycled like this. I think the point of view you're arguing with states the grain is taken OUT of the feed chain.

Sorry, I'm contributing what I know, but now you have 2 unknown numbers-how much beef you can grow with mash and how much mash is recycled as feed. What does Anheuser Busch do with their mash?
Laurie | 06.28.08

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According to the University of Minnesota some 8 million metric tonnes of distillers grain were used in 2006 and it could reach 10 to 14 million metric tonnes within a few years. It has become a very big deal in the relevant markets..
spencer | 06.28.08

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***Rather the Department of Agriculture and/or Bush Administration argument that ethanol production plays an insignificant role in the current run up in food prices is correct.*** Spencer

First of all, it's the Bush administration, so the odds on bet is that they are dead wrong.

Second, The Law Of Conservation of Energy and Kirchoff's Laws analogs (basically, what goes in must come out) have not been repealed. Every calorie/kilocalorie/BTU/Joule that ends up in ethanol does not end up fueling livestock or people.

A little quick Googling tells me that a bushel of corn contains 314000 BTU and will generate 2.16 gallons of ethanol with 84000 BTU each. That says that assuming no waste heat or anything (unlikely), the most energy that can be contained in the unconverted waste from ethanol production is 314000 - 2.16*84000 = 132560 BTU. Further, the stuff that gets converted into Ethanol is presumably the stuff that is easy to handle -- fructose and starch. I can't imagine that cows don't process those as efficiently as omnivores like ... well ... us. So the 132560 BTU probably contains a relatively high percentage of stuff so indigestable that not even a cow can break it down.

Conclusion: The idea that the waste from ethanol production is anywhere near as nutritious as the corn that goes in sounds pretty unlikely.

BTW, the economics of corn look to be quite complex. More complex than I want to tackle. But my bet would be that the idea that ethanol is not a significant contributor to the run up in food prices strikes me as likely being a crock.
vtcodger | 06.28.08

[Jun 27, 2008] The Impact of $200 Oil

The LA Times has a story on the impact of $200 oil: Envisioning a world of $200-a-barrel oil. The story discusses some possible impacts of higher oil prices on consumer behavior, transportation, trade and the workplace (more telecommuting, fewer work days, etc.)

On housing:

As for the ... beleaguered housing market, prices are falling faster in areas requiring long commutes -- such as Lancaster and Palmdale -- than in neighborhoods closer to job centers.

Sky-high gas prices "would basically reorient society to where proximity would be more valuable," said Tom Gilligan, finance professor at USC.

For trade:

"To put things in perspective, today's extra shipping cost from East Asia is the equivalent of imposing a 9% tariff on East Asian goods entering North America," said Rubin of CIBC World Markets. "At $200 per barrel, the tariff equivalent rate will rise to 15%."

All the same arguments have been made for $140 oil...

[Jun 22, 2008] High oil prices ? Weak dollar ? Blame Bush By MARTIN FROST

"The immediate cause of rising oil prices is the weak dollar. "

6/10/08 | Politico.com

Few issues focus the public's attention on politics like the price of gasoline. It keeps going up, the public wants relief, and politicians are held accountable for not fixing the situation. Yet to solve the problem, you first need to know the cause of the illness.

Why do gasoline prices keep going up? Is it because Congress and President Bush have not fashioned energy policies to reduce our dependence on foreign oil? Clearly that's part of the answer. Our government can do more to reduce demand and increase supply through conservation, auto fuel efficiency standards, tax breaks and subsidies for development of alternative energy sources, and incentives to drill more in the U.S.

But that's not the entire story.

The immediate cause of rising oil prices is the weak dollar. Oil-producing countries are requiring more dollars to purchase the same barrel of oil because the dollar is worth less today than it was a few years ago. Anyone who travels abroad knows about the weak dollar. In 2000, it took $1 to purchase one euro.

Today, it takes close to $1.60 to purchase a euro. A Canadian dollar is now worth the same as a U.S. dollar, whereas eight years ago it was worth considerably less than an American dollar.

And why do we have a weak dollar?

You can start with the economic policies followed by the Bush administration. During Bush's 7½ years in office, we have maintained large trade deficits with the rest of the world and run up large domestic budget deficits to pay for our misadventure in Iraq and large tax cuts for the wealthy. Also, according to a monograph recently issued by the Center for American Progress, the Federal Reserve's low-interest policy has caused a 14 percent decline in the value of the dollar since last September.

The center estimates that "nearly 40 percent of the increased price American consumers are paying for oil is attributable to the weak dollar," even after factoring in the effects of increased global demand from countries such as China.

So what are we to do?

First, the public should demand that Congress pass comprehensive energy policy that adequately addresses both the demand side and the supply side of the issue. Republicans controlled both Congress and the executive branch for most of the first six years of the Bush presidency, and yet nothing was done. So you can't just blame the Democrats for lack of action on the legislative front - even though pre-1995 Democratic Congresses didn't take significant action, either.

Secondicies that shore up the value of the dollar rather than run up big trade and budget deficits. Foreign producers will continue to raise the price of oil as long as the value of the dollar continues to drop. It was Democratic President Bill Clinton who last balanced the federal budget, and it may take another Democratic president to do this again.

Some may want to beat up on Congress for not acting more boldly now on energy policy. But don't forget it's "the man behind the curtain" and his Republican allies in Congress who pursued economic policies that have devastated the value of the U.S. dollar. When the history of this disastrous administration is written, the weak dollar should join the war in Iraq and Hurricane Katrina on the list of the effects of abysmal policy failures.

Martin Frost represented the Dallas-Fort Worth area in Congress from 1979 to 2005. He rose to caucus chairman and head of the Democratic Congressional Campaign Committee. He is now an attorney with Polsinelli Shalton Flanigan Suelthaus in Washington and serves as president of America Votes, a grass-roots voter mobilization and education effort.

[Jun 20, 2008] Economist's View Calvo Exploding Commodity Prices, Lax Monetary Policy, and Sovereign Wealth Funds

Storage Cost is Zero says...

"But allocating into less liquid, unfamiliar categories of assets is slow work if you want to do it well. Perhaps current oil revenues outstrip oil producers' capacity to find good investment opportunities, and they view oil-in-the-ground as a better second-best asset than dollars in the bank."

Storage costs for leaving oil in the ground is essentially zero. From the point of view of a national oil company, why trade a depleting asset for paper that will just be inflated away? Pump just enough to meet current needs, and what can be efficiently invested in inflation hedges.

[Jun 17, 2008] The world gets bigger - Paul Krugman - Op-Ed Columnist - New York Times Blog

Transportation costs will redefine globalization...

Now, the fuel price increase doesn't have that large an effect - at least not yet. But a very back-of-the envelope calculation using CIBC estimates of the fuel cost effect gives me a 17% contraction in trade if oil prices stay at current levels for a long time.

Business travel will also be affected. Via Felix Salmon, airlines are starting to cut long-distance nonstops.

Comments

Perhaps this is a salutary brake on some aspects of excessive globalization. Chasing low labor costs at the expense of national self-sufficiency is not good. I have been wondering when the Army is going to start importing their tanks and heavy weapons from China and Russia. We have lost a lot of manufacturing, and part of that which remains has shown itself very slow to adapt to realities: eg. GM making SUVs and gas guzzlers while killing their first electric car.
Closing SUV plants by US automakers is a great result and might eventually affect the people who decided that fuel efficiency does not matter to them since they can afford it at any price.
Will Congress increase the CAFE levels soon?
Will nuclear energy come back for the US so we can generate 80% of our power with it, like France?
Will people learn or will prejudice and false and fearful information still rule the day?

I find higher fuel prices a good effect to wake up people and government. We must increase that effect by taking away all lawmakers government vehicles and gasoline credit cards. They should feel the pain and let it affect their thinking.

- Posted by Gunther St

[Jun 16, 2008] Why higher prices are here to stay - MSN Money

Don't expect to see any drop in the prices you pay at the pump -- or at the grocery store or anywhere else -- from any decline in the price of commodities. The price of gas at the pump actually climbed to a new high at $3.983 a gallon last week, according to automobile club AAA, even as the price of oil was falling. (And it kept on climbing, to $4 a gallon, on June 8 after a two-day rally in crude oil prices.)

You can expect the same from other commodities that have tumbled in price. Consumer prices will stay high even as commodity costs come down. Wheat prices are down. From a record $13.95 a bushel on Feb. 27, the most actively traded contract on the Chicago Board of Trade had dropped 42% to $7.78 a bushel on June 5. The prices of most other commodities -- well, except for corn, which has soared as heavy rains have held up planting -- have tumbled in recent weeks. See any drop in the price of bread or in a meal at your favorite restaurant?

[Jun 16, 2008] Oil shock is not coming, it is under way Lee J. Miller

June 16 | Bloomberg

Gazprom Aims for $1 Trillion Club on $250 Oil: Chart of the Day

OAO Gazprom Chief Executive Officer Alexei Miller made two forecasts last week that, if they come true, indicate more pain for consumers and a boon for Russia's government.

Oil will reach $250 a barrel ``in the foreseeable future,'' about 85 percent more than the current price, he said at a strategy briefing in Deauville, France, adding that the market value of state-run Gazprom will triple to $1 trillion as early as 2015.

Gazprom wouldn't be the first to reach the latter milestone. PetroChina Co. became the world's first trillion-dollar company on Nov. 5, when Class-A shares tripled on their Shanghai trading debut. PetroChina has since plunged 62 percent.

The chart of the day shows the market capitalization of the top three energy companies by value, Exxon Mobil Corp., PetroChina and Gazprom, since Jan. 23, 2006, when the Russian company began trading on the Micex Stock Exchange. Exxon's day-end peak was $527.2 billion on Oct. 18. The chart also shows the price of crude oil.

``These staggering figures may have been a shock tactic to stress one of the key themes of the day -- that Europe should accept a growing role for Gazprom,'' Morgan Stanley said in a report on June 11. Miller's comments ``seemed to us less a formal prediction than a point to highlight that oil and gas markets were undergoing structural changes,'' the report said.

To contact the reporter on this story: Lee J. Miller in Bangkok at [email protected]

[Jun 16, 2008] $140 oil

June 6, 2008

Jim Hamilton is right: this looks like a major oil shock. At $140, oil would be twice its average level in 2006.

$140 oil for the rest of the year implies an average oil price for 2008 of around $120 (maybe a bit higher)

Concretely, a rough calculation would suggest that this implies that the US will spend about $250 billion more on oil imports this year than last year. I don't quite see how the US trade deficit can improve in the face of that kind of shock.