Friday, February 26, 2010

The US Senate Fracks The US Constitution In The Rectum

We had a perfectly reasonable means to do these things before the Patriot Act. All law enforcement needed to do is get a warrant. They even had the power to begin surveillance, without a warrant, so long as they got one within 48 hours.

The purpose of the Patriot Act is to allow these activities with no oversight or accountability. And Congress passed it, because Bush didn't want law enforcement to get warrants.

Some folks have argued that some law enforcement activities need to be secret and that you can't trust judges to be discreet. Well if you can't trust judges, how can you trust law enforcement? Especially when they are engaging in anti-constitutional / illegal activities.

And that's the real stickler here. Much of the Patriot Act is unconstitutional, and those that use the powers granted by it, are committing felonious crimes.

But just as bankers have had to adopt fraud as part of their business models to make a profit, I guess it makes sense that law enforcement officials have to commit crimes to uphold the law.

Patriot Act Elements Extended
Published: February 24, 2010

The Senate on Wednesday extended for a year key provisions of the nation’s counterterrorism surveillance law that are scheduled to expire at the end of the month. One provision authorizes court-approved roving wiretaps that permit surveillance on multiple phones. A second allows court-approved seizure of records and property in antiterrorism operations. A third permits surveillance against a noncitizen suspected of engaging in terrorism who may not be part of a recognized terrorist group. In agreeing to pass the bill, Senate Democrats retreated from adding new privacy protections to the USA Patriot Act. The Senate approved the bill on a voice vote with no debate. It now goes to the House.

Wednesday, February 24, 2010

Why Energy Matters

Over on the Automatic Earth, folks are still debating the points I iterated about how energy drives everything, including finance. That in this view, finance is reactive. The dominant view is that finance is driving our crisis and we can ignore energy until we can't.

For my position, I argued that energy and finance interact dynamically, but that energy provides the constraints as to what gets done in the physical world.

Ilargi says this is false. That energy doesn't drive our economy. At times it does, but right now, finance dictates events.


One point I tend to give short shrift to in my arguments is the 'Eureka!' moment that led me to realize that everything happens in reaction to energy.

And that understanding is fairly simple, and very profound.

1. Almost all of the energy that we consume is either fossilized, or incoming solar energy.
2. We know pretty accurately, how many BTUs of energy we have available to us.
3. The quantity of available energy determines the limits of industry.

Now in the interest of keeping this short, I'm not going to discuss efficiency improvements as a means of regaining growth in a declining environment at length. Just consider that to keep growing, while feedstocks decrease, requires rapid and continuous improvement forever. Very quickly you get to the point where you need to do infinite work, with zero energy. Diminishing returns, very quickly ends this avenue of exploration.

4. Worldwide, oil production is in a 6% annual decline.
5. Gas and coal are increasing at barely 1% per annum.
6. The production of energy in aggregate is likely then to be in a 3%-4% decline.
7. The quantity of workers continues to grow.
8. Everything we do, all that we are is determined by energy flows. We eat, we work, we produce, we reproduce. All of it requires the consumption of energy.

So our entire world, our lives, our jobs, homes, economy, finance, all of it, is bound by the quantity of energy we have to power it.

Nothing in our lives takes place without consuming energy. Not even thinking.

Nothing in high finance takes place without the consumption of energy.

Everything we do in commerce is a competition to control or consume energy.

Every product is produced by consuming energy. The use of every product, requires the consumption of more energy.

If energy increases, then commerce can increase. If energy is flat, commerce remains flat. If energy declines, commerce must decline.

This isn't an opinion though, many people may think it is one. This is how thermodynamics looks when applied to commercial activities. This is actually a 19th century understanding of the world. That Nobel Prize winning chemist, Frederick Soddy understood this long ago.

And this is the 'Eureka!' thing that I figured out on my own, only to discover like many other exciting ideas, was old and worn before I was born. But this knowledge, pieced together, all of the stuff I learned in school, that didn't fit together. The things that seemed random and disconnected, suddenly had relationships.

And even better, it gave me a framework to do simple modeling from and to make predictions with.

Ilargi believes that our current energy production decline is determined by economics. The only problem with this is that enforced production declines (esp OPEC) typically follow supply gluts which drop the price of oil. I don't know what economics text book he's gotten his learning from, but I'm not aware of a school of thought that says that when prices rise, you should cut production to make less money.

Ilargi refuses to explain why producers are slowing production to make less money as prices keep going higher. I don't think he can explain it. He doesn't know why this is happening. But he can ignore it.

Then there's the little problem that there is broad consensus in the industry that most of the biggest fields are in decline. In this view producers are working harder and harder to backslide. This view fits the declining production / increasing price relationship we are seeing, and doesn't require the suspension of belief.


Now this should be enough theory and evidence to support the notion that economies are bound by available energy, and that our energy supply is contracting.

So what does this mean? How does this prove the economy is reacting to energy flows?

The next thing to understand is that our economies depend on growth. Almost every business borrows money to power growth, then repays that that money with interest. Historically those that best use this model, are able to out compete their steady state or slower growth rivals.

In a zero sum economy, one company's growth is dependant on another company's contraction. We are taught even this simple concept in the theory of market share. If you want more market share, then someone else has to lose some market share.

In the energy bound economy, we go outside the market model to understand that expansion of one company means that the price of energy goes up, as it outbids others to get more energy.

If you consider that energy can come in the form of matter, you'll understand how far reaching this concept is. It's not just electricity to power the lights or turn lathes, operate computers etc... The product that is bought and sold is also produced by consuming energy and represents an embodied investment in energy. A steel mill isn't just trading the energy needed to power tools, it's also trading the energy that went into smelting the iron, and refining it into steel.

So in a fixed economy, the expansion of one company's business, drives up costs for everyone. As each jockeys for growth, those that succeed, do so by beating down the competition. But as they grow, they increase their own costs also.

In this struggle, companies often turn to loans to pay up front for the costs of growth. But in aggregate, if every company in a fixed market grows, then predictably, there will be a lot of defaults on the loans. If there is only one winner, then that company will be the only one with a chance to pay off the note.

Only in a situation where energy growth continues indefinitely, can everyone see continued growth, and use that growth to pay interest on loans.


Now we're in a contracting energy bubble. The odds of growth for any company are very slim. The competition has to go bankrupt at a rate that exceeds the energy decline rate, in order to leave room for those that are left, to grow.

At some point, everyone in finance will catch on that all of their customers are having trouble making payments on their loans. So they'll stop making loans to those customers. Well that's gonna be almost all of them.

In the traditional banking sense, making loans is how you do business.

So what do you do? You must keep making loans, or you lose future revenue.

The government now, doesn't like the slowdown they are seeing across the board. States and municipalities are seeing erosion in their tax rolls.

Everyone wants growth to continue. The Federal Government wants to grow. The State and local governments want to grow. Politicians want to help, and they find innovative ways to stimulate growth.

The bankers say it's an erosion of trust. That they are afraid that their customers can't pay them back. Politicians change laws, and promise in public and private to back loans to stimulate lending and growth.


The road to hell is paved...

So the banks know industry is going out, but real estate hasn't seen a bubble in a while. With government backing they start making loans willy nilly to drive up the market.

Further they get government complicity in unregulated many forms of financial transactions. Banks find still other ways to grow without making traditional loans. They sell that 80s invention, derivative contracts, to governments then, knowing
these will blow up. They take out insurance to cover the costs when they explode.


Now the tightening energy constraints, certainly didn't make any particular event happen.

But it did force the banks to find creative avenues for growth, in a period when real growth was flat and beginning it's decline.

If the banks had not invented phony ways to produce profits from nothing, then they would've been forced to contract with the rest of the economy. There was no legitimate means for them to make increasing quantities of money from sound business practices, and this problem continues today. The only way to make profits is in Ponzi scheme style finances.

And our government knows this to be true. The regulators would rather govern fraud, than a complete economic meltdown.

Those banks still trying to compete with the Ponzi fraudsters will go bankrupt. Soon enough the Ponzi fraudsters themselves will be competing for ever increasing government assistance, to grow faster as the economy as a whole degrades.

In such a view, the fraudsters are self selecting. Their emergence is completely predictable. If they aren't fraudsters, then they are bankrupt or going bankrupt.

As these financial institutions grow in a declining economy, it becomes quite logical and rational that a two tiered economy would manifest.

The first would be the traditional banking and industrial economy. As this economy is in decline, it will slowly deflate, as interest and loans are repaid without new loans being made.

The second economy is the fraud driven banks and their interactios with the Fed, the Federal Government, and government supported industries. As this economy has the power to continually create money and paper over debts, it will keep growing. Defense industries and military agencies certainly fit in this economy.

But in aggregate the two economies will balance when it comes to energy. The two combined in energy consumption must remain at a negative growth rate, even though the fraud economy continues to grow.

This means that the traditional economy that produces jobs, must decline faster, to provide the energy and materials needed to keep the fraud economy growing.


This view in my opinion, provides the needed understanding to see the interconnectedness of our physical view of the world with it's relationships between energy and matter, and that of the world of high finance. It provides a view of cause and effect that makes sense of events in differing partsof our economy. It also provides a rational framework for understanding the wheels of high finance, and why our leaders make the decisions they make.

Further, if this view is correct, then it doesn't say anything good about our future. The players in this drama don't have to understand the forces at work, to react to events in their lives. It's unlikely that they do see the bigger trends and the rules of nature at play.

So there's no chance that our policies will adapt to account for the changes in the physical world.

So these trends must continue. The players in charge will make them continue. And the logical progression leads to massive unemployment, with no hope of turning it around without dramatic changes in our government.

This view is only bolstered by independant analysis from some very bright people, looking at our economics issues from other perspectives.

In the next few years, I expect that world energy production will decline at faster rates. With that, we should see an increasing frequency in economic disruptions.


And once again, I'm going to boldly make my prediction, that in May we'll see another economic dislocation. I base this on the fact that oil prices continue to rise and that realization is dawning that the economy is not getting better. We should have some really crappy numbers reported for the end of this quarter. By the middle of the next quarter, something is going to give.

Another round of bailouts will likely follow.

Of course, if Obama wanted to distract the public, he coudl start another televised invasion of a soveriegn nation.

Pretend You Meant To Do That

h/t FTW

Saudi Oil Exports to US Lowest in 21 Years From Emirates Business

Oil giant Saudi Arabia is gradually reducing crude oil exports to its largest trading partner the United States as it is pushing deeper into China and other fast-growing Asian markets, according to official data.

A decision by Washington to limit its hydrocarbon imports from the Middle East and other Opec producers also contributed to Riyadh cutting down on oil supplies to the US market to their lowest level in more than two decades.

Estimates by the Energy Information Administration (EIA) of the US Department of Energy showed Saudi Arabia's crude exports to the US plummeted to about 837,000 barrels per day in November, their lowest level in 21 years.

Saudi Arabia's crude exports to US have remained above one million bpd for most of the years in the past three decades as the two countries had maintained strong political and economic relations. But they have started to decline rapidly over the past months because of Opec quota restrictions on Saudi oil output, plans by the US to cut hydrocarbon imports from the Middle East, strained ties between the two countries and a drive by the kingdom to expand its exports of oil and other products to the Asian markets.


Of course the US Government has decided it wants to restrict imports... Of course OPEC is in charge... Why would they say otherwise? That would make the players look weak.

And worse, would suggest that the US doesn't need a growing or even a flat supply of oil. A declining supply of oil is exactly what the USA needs.

But that's more of an indicator of how badly our economy is declining. If it were healthy, consumption of oil would be increasing.

But in spite of the decline in oil consumption in the US, the price remains high and is trending upwards.

Now the media loves to blame speculators on every price move. And of course a lot of folks on the internet parrot this line. But it's good to note that speculators have the biggest impact when supply and demand are tight. If supply exceeds demand, then we get a pricing slump. If they are even, we get oscillations in pricing. This is the point where the efforts of speculators become amplified. When demand is higher than supply and price is rising, the speculators pile on.

It's important to note that their is a relationship here. The speculators pile on in response to the price signals, that begin with demand closing in on supply.

So soon, we'll hear lots of happy media talk about how speculators are driving up the cost of gasoline at the pump.

Exciting times are coming!

Citigroup Is Engaging In Acts Of Desperation

h/t FTW

Citigroup warns it may refuse to withdraw money to customers

On Friday, Citigroup sent statements to customers across the U.S. to inform them that they could be required to submit an advanced notice of seven days if they want to withdraw money from checking accounts, according to the Business Insider. Canada Free Press reports that the move will take effect as of April 1 of this year, “We reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change.”

We should expect to see more and more of this. Of course, if Citigroup decides to freeze your account, they'll be happy to charge you hot check fees. Further, this is your warning that they may do it. The next warning you get, may be a multipage statement of overdraft fees.

We should see a lot more of this kind of activity spreading through the banking system. As oil supplies continue their 9% annual decline and China continues to drive it's industrial growth through monetary means, the economic dislocations will continue to grow.

The current banking growth is all smoke and mirrors at this point. There is no underlying industrial growth to support the financial growth that the bailouts produced. And now that our policy makers are beginning to feel confident they dodged the bullet, they are going to loosen the supports and see which banking institutions will survive.

Even Goldman Sachs seems to be agreeing, that oil prices are going to spike again. but they don't talk about the aftermath. The current high oil prices are destructive to the underlying economy. They prevent businesses from repaying loans, and ultimately, from getting them. The high cost of crude continues to drive bankruptcies. The upcoming spike in price will drive many more, underwater.

But that's why I'm here. I'm still calling for an economic dislocation in May. Conditions are being set up to trigger another wave of bank failures. Citigroup evidently, is in the know and expects to survive it.

And we'll see a repeat of the last event. The not too big to exist banks, will get hammered, closed and given as tribute to Intergalactic Black Hole Banks. The Giant Sucking Banks will then get another round of bailouts. Policy makers will then find many other ways to shovel our money, and the nation's remaining bits of prosperity into the Black Sucking Pits of their Voracious Maws.

Here's hoping that we all have jobs through the end of the year.

Friday, February 19, 2010

Oil And Fed Rates Are Up!

Oil is inching back up past $80 / barrel today, as the Fed's confidence in our economic strength improves.

Because the banks have regained strength by continuing the practices that caused the crisis to begin with, the Fed is now ratcheting up interest rates.

If we couple this with reports that China and a few other nations are focusing on there industrial economies, I think it's very likely that we'll see crude oil prices continue to rise.

Based on this, I'm going to predict that the next economic dislocation in the US will hit in May. This is a month out from the next business quarter.

This gives bankers and businesses time to digest the increasing costs that will be reported for this quarter, and to see that projections for the next quarter look worse.

The Fed will soon be dropping the discount window rate.

Dick Armey and Joe Stack

In the late 1980s when Dick Armey, Ronald Reagan were working hard to eleminate American jobs and export them to Asia, Dick remarked that the American People were likely to get very angry about what they had done.

And many of us are. The H1B Visa program and the singling out of hi-tech professionals for special lesser treatment, under our tax and legal system, has made many of us angry. Most of us just live with it.

I've seen a lot of comments about how he was a private contractor and failed in his businesses and the assumption that he tried to start a church as a tax dodge. The folks writing those things I'll assume, have the same information to work from that I do. And that's suicide letter he wrote before engaging in his suicide attack on the US Government. And make no mistake, he is a terrorist. Engaging in a suicide attack to make a political statement is a terrorist attack. I guess Home Land Security says it isn't, in order to continue lying with statistics... But I digress.

As I read it, an alternate set of explanations occurred to me. But then, I've been in the same industry for almost as long as he was.

First off, in Dick Armey's war on American jobs, corporations get tax breaks and subsidies for hiring non-American workers. Our government intentionally makes it more expensive to hire Americans, than to hire workers from India, Japan or China. But only for a limited time. Workers can't stay in the US too long or they lose their H1B status. They have to be recycled. Further, our government actually pays corporations to move jobs overseas. This is intended to offset the higher costs of spending less money for labor.

This is one of the issues he was mad about.

The other is that before Dick Armey began his war on the American economy, software engineers that worked as contractors could take advantage of tax breaks given to small businesses. This allowed many entrepreneurs to start as a one man operation and grow their business on a shoestring, hiring workers as their workload increased. the restrictions on this is that engineers had to keep their books as if they were a business. They essentially had a set of books for the business, and kept one account for that, then paid themselves payroll and put that in the books for their personal account. This allowed them to accumulate capital as a business and take advantage of tax breaks designed to help small businesses. They could write off the computer systems, servers, software purchases etc... as business expenses.

Plumbers can still do this... It's only hi-tech people that are banned from filing as a small business in this fashion.

Now as I mentioned, many software companies got started in this mode. But after they became rich and powerful, they of course wanted to close this option and make it harder to create a startup. The Ronald Reagan administration as a great enemy of small business, was more than happy to do this.

This is where I think Joe Stack got screwed.

Now a lot of folks get the contracting side our business wrong. After Dick Armey's work to destroy American jobs got going, big corporations needed more tax dodges to improve profits. One simple way to do this is to hire people with disabilities and minorities into most of your full time employee positions, and then fill up the rest of your staff with 'contractors'. This way, you get tax breaks and subsidies for being a small corporation that satisfies the various public assistance programs, and you can have thousands of off the books employees doing the heavy lifting.

Further, you don't have to provide them with insurance or pay taxes on them. This really cuts costs and overhead.

This is a great way for corporations to cheat the tax man and taxpayers.

Those workers never earn any meaningful form of seniority. And even better for the Federal Government, if they are let go, they aren't actually fired, because they weren't actually employed. So when you kick them to the curb, they aren't unemployed. They paid into unemployment, but they get no benefits. They don't effect government stats on unemployment. It's another way for the government steal from us without providing a service.

It looks like Joe Stack had finally gotten tired of just sucking it up. Dick Armey made the seemingly mild mannered Joe Stack so angry that he engaged in a terrorist attack on the IRS, and Dick predicted this anger as he signed those bills. Dick Armey knew he was screwing us, and screwing America, and he did it anyway.

In fact, when his legislation really started kicking American jobs in the ass, he fled the D/FW metroplex and moved to Hawaii. He was afraid of the people who's careers he worked very hard to destroy. And likely for good reason. He knew it wasn't safe to stay within driving distance of tens of thousands of workers who blamed him for his deliberate acts of sabotage against the US economy.

Considering this, I doubt that Dick Armey is in any way surprised at what Joe Stack has done.

Again, I want to reiterate to my readers, than what Joe did, was in the end, a meaningless and futile act. The government is not afraid. It's simply a machine that will continually ratchet up the pressure and destroy little by little, the livelihoods of the people it is supposed to represent. As a machine, it doesn't feel fear. Eventually it will destroy so many jobs that people will riot in the streets and the armed forces will start gunning them down.

The system is collapsing. Peak Oil ensures that. And no act of violence or desperation on our part will change that. When our government is changed, it will likely be a military coup, run from the Pentagon. And that new government will be even more brutal than what our existing one can hope to become. 'We the People', really will have no say in how this comes about, as sociopaths have the authority and the guns, and they enjoy using them.

Keep your head down, your nose clean and make your differences felt in the community. The rest is already scripted and you don't have a say in editing.

Thursday, February 18, 2010

Joe Stack

If you’re reading this, you’re no doubt asking yourself, “Why did this have to happen?” The simple truth is that it is complicated and has been coming for a long time. The writing process, started many months ago, was intended to be therapy in the face of the looming realization that there isn’t enough therapy in the world that can fix what is really broken. Needless to say, this rant could fill volumes with example after example if I would let it. I find the process of writing it frustrating, tedious, and probably pointless… especially given my gross inability to gracefully articulate my thoughts in light of the storm raging in my head. Exactly what is therapeutic about that I’m not sure, but desperate times call for desperate measures.

We are all taught as children that without laws there would be no society, only anarchy. Sadly, starting at early ages we in this country have been brainwashed to believe that, in return for our dedication and service, our government stands for justice for all. We are further brainwashed to believe that there is freedom in this place, and that we should be ready to lay our lives down for the noble principals represented by its founding fathers. Remember? One of these was “no taxation without representation”. I have spent the total years of my adulthood unlearning that crap from only a few years of my childhood. These days anyone who really stands up for that principal is promptly labeled a “crackpot”, traitor and worse.

While very few working people would say they haven’t had their fair share of taxes (as can I), in my lifetime I can say with a great degree of certainty that there has never been a politician cast a vote on any matter with the likes of me or my interests in mind. Nor, for that matter, are they the least bit interested in me or anything I have to say.

Why is it that a handful of thugs and plunderers can commit unthinkable atrocities (and in the case of the GM executives, for scores of years) and when it’s time for their gravy train to crash under the weight of their gluttony and overwhelming stupidity, the force of the full federal government has no difficulty coming to their aid within days if not hours? Yet at the same time, the joke we call the American medical system, including the drug and insurance companies, are murdering tens of thousands of people a year and stealing from the corpses and victims they cripple, and this country’s leaders don’t see this as important as bailing out a few of their vile, rich cronies. Yet, the political “representatives” (thieves, liars, and self-serving scumbags is far more accurate) have endless time to sit around for year after year and debate the state of the “terrible health care problem”. It’s clear they see no crisis as long as the dead people don’t get in the way of their corporate profits rolling in.

And justice? You’ve got to be kidding!

How can any rational individual explain that white elephant conundrum in the middle of our tax system and, indeed, our entire legal system? Here we have a system that is, by far, too complicated for the brightest of the master scholars to understand. Yet, it mercilessly “holds accountable” its victims, claiming that they’re responsible for fully complying with laws not even the experts understand. The law “requires” a signature on the bottom of a tax filing; yet no one can say truthfully that they understand what they are signing; if that’s not “duress” than what is. If this is not the measure of a totalitarian regime, nothing is.

How did I get here?

My introduction to the real American nightmare starts back in the early ‘80s. Unfortunately after more than 16 years of school, somewhere along the line I picked up the absurd, pompous notion that I could read and understand plain English. Some friends introduced me to a group of people who were having ‘tax code’ readings and discussions. In particular, zeroed in on a section relating to the wonderful “exemptions” that make institutions like the vulgar, corrupt Catholic Church so incredibly wealthy. We carefully studied the law (with the help of some of the “best”, high-paid, experienced tax lawyers in the business), and then began to do exactly what the “big boys” were doing (except that we weren’t steeling from our congregation or lying to the government about our massive profits in the name of God). We took a great deal of care to make it all visible, following all of the rules, exactly the way the law said it was to be done.

The intent of this exercise and our efforts was to bring about a much-needed re-evaluation of the laws that allow the monsters of organized religion to make such a mockery of people who earn an honest living. However, this is where I learned that there are two “interpretations” for every law; one for the very rich, and one for the rest of us… Oh, and the monsters are the very ones making and enforcing the laws; the inquisition is still alive and well today in this country.

That little lesson in patriotism cost me $40,000+, 10 years of my life, and set my retirement plans back to 0. It made me realize for the first time that I live in a country with an ideology that is based on a total and complete lie. It also made me realize, not only how naive I had been, but also the incredible stupidity of the American public; that they buy, hook, line, and sinker, the crap about their “freedom”… and that they continue to do so with eyes closed in the face of overwhelming evidence and all that keeps happening in front of them.

Before even having to make a shaky recovery from the sting of the first lesson on what justice really means in this country (around 1984 after making my way through engineering school and still another five years of “paying my dues”), I felt I finally had to take a chance of launching my dream of becoming an independent engineer.

On the subjects of engineers and dreams of independence, I should digress somewhat to say that I’m sure that I inherited the fascination for creative problem solving from my father. I realized this at a very young age.

The significance of independence, however, came much later during my early years of college; at the age of 18 or 19 when I was living on my own as student in an apartment in Harrisburg, Pennsylvania. My neighbor was an elderly retired woman (80+ seemed ancient to me at that age) who was the widowed wife of a retired steel worker. Her husband had worked all his life in the steel mills of central Pennsylvania with promises from big business and the union that, for his 30 years of service, he would have a pension and medical care to look forward to in his retirement. Instead he was one of the thousands who got nothing because the incompetent mill management and corrupt union (not to mention the government) raided their pension funds and stole their retirement. All she had was social security to live on.

In retrospect, the situation was laughable because here I was living on peanut butter and bread (or Ritz crackers when I could afford to splurge) for months at a time. When I got to know this poor figure and heard her story I felt worse for her plight than for my own (I, after all, I thought I had everything to in front of me). I was genuinely appalled at one point, as we exchanged stories and commiserated with each other over our situations, when she in her grandmotherly fashion tried to convince me that I would be “healthier” eating cat food (like her) rather than trying to get all my substance from peanut butter and bread. I couldn’t quite go there, but the impression was made. I decided that I didn’t trust big business to take care of me, and that I would take responsibility for my own future and myself.

Return to the early ‘80s, and here I was off to a terrifying start as a ‘wet-behind-the-ears’ contract software engineer... and two years later, thanks to the fine backroom, midnight effort by the sleazy executives of Arthur Andersen (the very same folks who later brought us Enron and other such calamities) and an equally sleazy New York Senator (Patrick Moynihan), we saw the passage of 1986 tax reform act with its section 1706.

For you who are unfamiliar, here is the core text of the IRS Section 1706, defining the treatment of workers (such as contract engineers) for tax purposes. Visit this link for a conference committee report ( regarding the intended interpretation of Section 1706 and the relevant parts of Section 530, as amended. For information on how these laws affect technical services workers and their clients, read our discussion here (


(a) IN GENERAL - Section 530 of the Revenue Act of 1978 is amended by adding at the end thereof the following new subsection:

(d) EXCEPTION. - This section shall not apply in the case of an individual who pursuant to an arrangement between the taxpayer and another person, provides services for such other person as an engineer, designer, drafter, computer programmer, systems analyst, or other similarly skilled worker engaged in a similar line of work.

(b) EFFECTIVE DATE. - The amendment made by this section shall apply to remuneration paid and services rendered after December 31, 1986.


· "another person" is the client in the traditional job-shop relationship.

· "taxpayer" is the recruiter, broker, agency, or job shop.

· "individual", "employee", or "worker" is you.

Admittedly, you need to read the treatment to understand what it is saying but it’s not very complicated. The bottom line is that they may as well have put my name right in the text of section (d). Moreover, they could only have been more blunt if they would have came out and directly declared me a criminal and non-citizen slave. Twenty years later, I still can’t believe my eyes.

During 1987, I spent close to $5000 of my ‘pocket change’, and at least 1000 hours of my time writing, printing, and mailing to any senator, congressman, governor, or slug that might listen; none did, and they universally treated me as if I was wasting their time. I spent countless hours on the L.A. freeways driving to meetings and any and all of the disorganized professional groups who were attempting to mount a campaign against this atrocity. This, only to discover that our efforts were being easily derailed by a few moles from the brokers who were just beginning to enjoy the windfall from the new declaration of their “freedom”. Oh, and don’t forget, for all of the time I was spending on this, I was loosing income that I couldn’t bill clients.

After months of struggling it had clearly gotten to be a futile exercise. The best we could get for all of our trouble is a pronouncement from an IRS mouthpiece that they weren’t going to enforce that provision (read harass engineers and scientists). This immediately proved to be a lie, and the mere existence of the regulation began to have its impact on my bottom line; this, of course, was the intended effect.

Again, rewind my retirement plans back to 0 and shift them into idle. If I had any sense, I clearly should have left abandoned engineering and never looked back.

Instead I got busy working 100-hour workweeks. Then came the L.A. depression of the early 1990s. Our leaders decided that they didn’t need the all of those extra Air Force bases they had in Southern California, so they were closed; just like that. The result was economic devastation in the region that rivaled the widely publicized Texas S&L fiasco. However, because the government caused it, no one gave a shit about all of the young families who lost their homes or street after street of boarded up houses abandoned to the wealthy loan companies who received government funds to “shore up” their windfall. Again, I lost my retirement.

Years later, after weathering a divorce and the constant struggle trying to build some momentum with my business, I find myself once again beginning to finally pick up some speed. Then came the .COM bust and the 911 nightmare. Our leaders decided that all aircraft were grounded for what seemed like an eternity; and long after that, ‘special’ facilities like San Francisco were on security alert for months. This made access to my customers prohibitively expensive. Ironically, after what they had done the Government came to the aid of the airlines with billions of our tax dollars … as usual they left me to rot and die while they bailed out their rich, incompetent cronies WITH MY MONEY! After these events, there went my business but not quite yet all of my retirement and savings.

By this time, I’m thinking that it might be good for a change. Bye to California, I’ll try Austin for a while. So I moved, only to find out that this is a place with a highly inflated sense of self-importance and where damn little real engineering work is done. I’ve never experienced such a hard time finding work. The rates are 1/3 of what I was earning before the crash, because pay rates here are fixed by the three or four large companies in the area who are in collusion to drive down prices and wages… and this happens because the justice department is all on the take and doesn’t give a fuck about serving anyone or anything but themselves and their rich buddies.

To survive, I was forced to cannibalize my savings and retirement, the last of which was a small IRA. This came in a year with mammoth expenses and not a single dollar of income. I filed no return that year thinking that because I didn’t have any income there was no need. The sleazy government decided that they disagreed. But they didn’t notify me in time for me to launch a legal objection so when I attempted to get a protest filed with the court I was told I was no longer entitled to due process because the time to file ran out. Bend over for another $10,000 helping of justice.

So now we come to the present. After my experience with the CPA world, following the business crash I swore that I’d never enter another accountant’s office again. But here I am with a new marriage and a boatload of undocumented income, not to mention an expensive new business asset, a piano, which I had no idea how to handle. After considerable thought I decided that it would be irresponsible NOT to get professional help; a very big mistake.

When we received the forms back I was very optimistic that they were in order. I had taken all of the years information to Bill Ross, and he came back with results very similar to what I was expecting. Except that he had neglected to include the contents of Sheryl’s unreported income; $12,700 worth of it. To make matters worse, Ross knew all along this was missing and I didn’t have a clue until he pointed it out in the middle of the audit. By that time it had become brutally evident that he was representing himself and not me.

This left me stuck in the middle of this disaster trying to defend transactions that have no relationship to anything tax-related (at least the tax-related transactions were poorly documented). Things I never knew anything about and things my wife had no clue would ever matter to anyone. The end result is… well, just look around.

I remember reading about the stock market crash before the “great” depression and how there were wealthy bankers and businessmen jumping out of windows when they realized they screwed up and lost everything. Isn’t it ironic how far we’ve come in 60 years in this country that they now know how to fix that little economic problem; they just steal from the middle class (who doesn’t have any say in it, elections are a joke) to cover their asses and it’s “business-as-usual”. Now when the wealthy fuck up, the poor get to die for the mistakes… isn’t that a clever, tidy solution.

As government agencies go, the FAA is often justifiably referred to as a tombstone agency, though they are hardly alone. The recent presidential puppet GW Bush and his cronies in their eight years certainly reinforced for all of us that this criticism rings equally true for all of the government. Nothing changes unless there is a body count (unless it is in the interest of the wealthy sows at the government trough). In a government full of hypocrites from top to bottom, life is as cheap as their lies and their self-serving laws.

I know I’m hardly the first one to decide I have had all I can stand. It has always been a myth that people have stopped dying for their freedom in this country, and it isn’t limited to the blacks, and poor immigrants. I know there have been countless before me and there are sure to be as many after. But I also know that by not adding my body to the count, I insure nothing will change. I choose to not keep looking over my shoulder at “big brother” while he strips my carcass, I choose not to ignore what is going on all around me, I choose not to pretend that business as usual won’t continue; I have just had enough.

I can only hope that the numbers quickly get too big to be white washed and ignored that the American zombies wake up and revolt; it will take nothing less. I would only hope that by striking a nerve that stimulates the inevitable double standard, knee-jerk government reaction that results in more stupid draconian restrictions people wake up and begin to see the pompous political thugs and their mindless minions for what they are. Sadly, though I spent my entire life trying to believe it wasn’t so, but violence not only is the answer, it is the only answer. The cruel joke is that the really big chunks of shit at the top have known this all along and have been laughing, at and using this awareness against, fools like me all along.

I saw it written once that the definition of insanity is repeating the same process over and over and expecting the outcome to suddenly be different. I am finally ready to stop this insanity. Well, Mr. Big Brother IRS man, let’s try something different; take my pound of flesh and sleep well.

The communist creed: From each according to his ability, to each according to his need.

The capitalist creed: From each according to his gullibility, to each according to his greed.

Joe Stack (1956-2010)

Wednesday, February 17, 2010

Argentina On The Mediterranean

HIGHLIGHTS-Greek FinMin unveils tax reform, wage policy

There's likely some good in the austerity measures being imposed on Greece, but this one smells like Argentina.

"From 1. Jan. 2011, every transaction above 1,500 euros between natural persons and businesses, or between businesses, will not be considered legal if it is done in cash. Transactions will have to be done through debit or credit cards"

Next we may see freezes on savings accounts and limits on withdrawals. I think the slide is picking up steam.

The other proposals listed in the article smell like half measures and concessions.

Good luck Greece.

Tuesday, February 16, 2010

Still Another Surge To Win All Surges

“The way to defeat the Taliban is to show the people that they are better off being with the government of Afghanistan than they are with what the Taliban have to offer,” Major Gen Carter said.

The latest surge in the series is promising to be one of the best. It looks like some changes are being made and we're no longer going to be killing the people of Afghanistan as nicely as we've been killing them in the past.

For one, gone is the notion that we're in Afghanistan to help the people. We're there to occupy their nation indefinitely.

“Where we go, we will stay. Where we stay, we will build,” he told to the troops in Camp Bastion.

Those people that don't want the US to be their overlords will be destroyed.

“For those who will not shake our hand they will find it closed into a fist. They will be defeated.

Unfortunately for the people of Afghanistan, it looks like Obama has figured out that only overwhelming force and complete brutality can make a nation our slaves. The people of Afghanistan have held out longer than the Iraqis did. We had to kill over a million Iraqis and drive three million of them out of the country, in order to turn that nation into a slave state. Now it's Afghanistan's turn.

The people of Afghanistan that want to stay alive, need to learn from Iraq's example and give their country up. Obama is intent on turning that nation into another slave plantation. And he has the military might and the will to get it done.

Prediction On Greece...

I'm currently working on a long winded article about energy and economics. No target date is currently set.

In it, I intend on laying out my reasoning for many of the ideas that I've propounded on in
piecemeal, here and on many other blogs and groups. It's intended to be a theory based article, but real world examples don't hurt. If anyone has specific questions about my prognostications that they'd like to see addressed in more detail, let me know.

But to the title topic...

I'll assume you've already heard that GS helped Greece hide their debts.

I think it's safe to assume that most, if not all Euro nations have done this. Merckel and the rest are unlikely to sanction GS in any meaningful way. If they did, GS would pull the trigger on the finances of another nation, and make an example of their power.

Greece is likely to suffer austerity measures. The nation is going to be looted. The rest of the European nations will watch in horror and wonder, "Who among them will be next?"

This giant financial monster must keep taking nations down, to keep control of the economy. This is a controlled demolition. After Greece, another nation will be targeted.

This is the same pattern repeated since the 1970s, where it began in Africa. Predators need prey. There are a finite quantity of nations to eat.

Tuesday, February 09, 2010

Moving On from TAE

He who will not be named, blasted me for not being hard enough on the TAE commentators. Frankly I haven't seen much harm in what they do.

If their sin is that they focus on issues that are less pertinent to our real crisis, some in their audience at least, will give us an occasional reminder.

I think I see what Anonymous is bothered by. Stoneleigh is going on tour and folks are fawning all over themselves to get her to come to their country/state/town etc...

Big deal.

Is that something to get bothered by?

Would Anonymous like to go on tour?

Heck, would anyone want Weaseldog to go on tour? If so, stock up on Isle of May Scotch, and be prepared to put up with a obstreperous middle aged fart. Hrmmm, that might look good on a brochure!

One Night Only! The Obstreperous Middle Aged Fart! In Person!

I had a chance to get into the Peak Oil speaking circuit. I was encouraged back in 2000 to write a book on it. The more I thought on it though, the more that this seemed like a fruitless enterprise. IT was my belief by that time, that the 1970s were our last opportunity to make the changes, that would avert the worst of the upcoming crisis. If I believed that, what kind of book would I be writing? "2001 Ways To Know You're Screwed" or "The End Of Oil And You".

Ultimately, any such book would write would be woefully short, and end in gloom. Much like Greyzone's new article, "Wither Human Population".

Ilargi and Stoneleigh are welcome to fill the celebrity doomer void. I don't think hope matters enough any more, to worry that it is a destructive force. Which some of you may remember my previous arguments on. It's no worse than mixing alcohol and fast cars. We're all checking out sometime. We might as well go out partying like it's 1999!

For me, I've got a garden to start, chickens to care for. I need to keep my focus on constructive activities.

If I do wish to chase the spotlight, then you may find me on stage performing old songs in darkened bars.

May the road rise to meet you
May the wind be always at your back
The sun shine warm upon your face
The rains fall soft upon your fields
And until we meet again,
May God hold you in the hollow of his hand.

Friday, February 05, 2010

Further Ruminations On Responsibility

Right wingers have made the arguments to me, that because they didn't depose Saddam, Iraq children deserve to have their limbs blown off by cluster bombs or to be burned to death by phosgene.

On now liberals on Automatic Earth are making the same arguments about how we are all war criminals, because our leaders are. And so it follows, that our children deserve to be slaughtered and burned alive.

Sorry, no matter how you couch it or how many double standards you believe in, I don't buy it. I do not believe that this is a moral or ethical way to view ourselves or others.

Who Rates the Ratings Agencies?

Open Letter To Moody's

For years you folks have been rubber stamping every turd that floats by, with a AAA rating.

I can see how that saves time and money. With one stamp, there are no decisions to make. Trained monkeys could do it. all of those funds and derivatives that crashed and burned were all Triple A. Even though many of us outside of the realm of finance understood that not every bet is a winner, you folks went on rating everything Triple A. You rated both sides of every bet as a winner!

Heck there were times when I half expected that after I put out the garbage, you'd come by and stamp it AAA.

So I wonder, what has inspired you to buy another stamp? Why do you have other ratings now? Doesn't that make your jobs harder, now that you have to make decisions? Didn't you make big bucks labeling all of the best investments and the toxic crap AAA?

Has the well run dry? Does it need a little priming? Is that your strategy?

Wednesday, February 03, 2010

Judgement, Guilt and Hypnosis

It's been proposed on another forum that I'm too busy judging others, to judge myself, thus have I been judged...

It's an interesting point. I was accused of being a wealthy american who buys crap at Walmart, that was assembled by twelve year old children in other countries. By this token, I'm as guilty of the crimes committed by Bush and Cheney as they are. The argument proposed is that the Nuremburg trials demonstrated the concept of mass guilt.

This got kicked off, when someone argued that we are all guilty of the sins committed in our names. I disagreed and argued that we can only be guilty of the things we do, and the lives we lead. We are not responsible for what others do, when we have no influence over their actions.

in the view of mass guilt, even the children who died in the ovens, were as guilty of Nazi crimes as Amon Goeth. I wholly reject that view. Though the Nuremburg trials were as much spectacle and theater as justice, it had at least the pretense of dispensing justice. The people put on trial, were people who had authority in the system and made choices that led them to becoming willing participants in the crimes that they committed.

This is a far cry from blaming a citizen that abhorred the system, as being a culpable criminal. Prosecuting the people who actually committed terrible crimes, is not the same as blaming the common man for the sins of others.

What got me into the argument, and likely led to a misunderstanding is that I argued that those gaming the system, and controlling the message, have more culpability than those who are going about their daily lives. These people know what they are doing and have made the decision to participate in the fraud and the crimes. They have made this their career and life's work.

The common man shares some guilt and responsibility, insofar as they could do much better. Our apathy is the sin that leads to other sins.

The counter argument is that apathy and or ignorance makes one just as guilty, as those that choose an active life of crime.

I still disagree. Our culture and the hypnotic training provided by television and radio, are powerful forces of control. People should, if compelled by a higher reasoning of ethics, work to break this cultural and societal hold. But the masses don't. And the reason is simple science. The quickly flashing images and simple messages that the televisions project, goes straight to the core of our being, to the reptile part of our brains. People spend their lives learning to manipulate other people, into accepting political slogans and buying a specific brand of flavored sugar water.

It's an intentional act of manipulation, backed by sound science. People shouldn't fall for it, but most do.

The folks that frequent this forum and similar one, are a self selected group. Most of you, like myself are likely misfits by some definition or another. You're all likely to have above average intelligence. And you're all likely finding it easier to walk away from the television, than most can. Some of you may not even own televisions. For myself, from college on to marriage, I didn't have a television. I played games, guitar and vinyl discs that were popular in that era. I didn't have many friends hanging out at my place. It was too boring without a TV.

I'm sure though that many of you have experienced the brain numbing qualities of television. When I married my first wife, the continuous noise and imagery from the television would in fact, cause me to lose track of time. I would get home from work, the TV would be on, and as part of my communal activities, I was expected to stare at the television with my wife and step daughters. I burned out on that fast. The dog and I spent a lot of time walking the neighborhood.

But in millions of homes in the USA, families stare at the television for hours every night. Sometimes, they even watch the same exact television.

The power and influence it has, is nothing short of incredible.

Now, back on that other thread, I probably really kicked it into the let's teach Weaseldog a lesson mode, when I argued about self selection, and that for each reader present, there was someone in the country on the other side of the IQ scale. A person who wouldn't understand most of the articles and comments written, and wouldn't care. Obviously, I'm not a PC Liberal, though I do believe in the Golden Rule.

I don't think I argued anything that isn't factual. After, I've known people all of my life that are representatives of the TV Zombie Culture. These people have opinions that they get from the television. And they use them to make judgments when they go to the polls.

There are precious few in this group that I would characterize as being evil. Most are decent and moral people. I cannot, therefore make the logical leap in assigning them the same culpability that I would give Dick Cheney.

Dick Cheney I would wager, doesn't watch much television. He is a hard worker. And he has openly committed crime after crime in the pursuit of personal profits. Openly obviously, as in elephants wandering in a circus tent kind of openly and obviously. It's hard to feel guilty about being judgmental when crimes are committed in plain view.

But 'judgmental' I have been labeled. I think I'm good with that.

And this leads in our round about journey to a concern that I have with the Democratic Party, or is it just liberals as defined by liberals? What drives the fear of being judgmental? Is it really as the Dark Wraith has recently argued, a product of our educational system? He argues that we a have a whole generation of people brought up to believe that no one should be judged, out of a sense of fairness. I'm heavily paraphrasing. Mosey over and see if you get that impression from the professor yourself.

And this is why they buy the idea that you don't prosecute politicians for war crimes, because it might produce discord, or harm our nation or some other bullshit excuse, on that order. This is why the Democratic Party has no spine and can't defend it's constituents. It can't stand up to bullies, for fear of hurting their feelings.

Bush and Cheney killed well over a million human beings (likely more than three million), right out in the open. in plain site. Lie after lie after lie produced atrocity after atrocity. War crimes pile upon war crimes. And the Democratic Party gives token speeches of disapproval, then acquiesces. Then puts their stamp of approval on this ghastly state of affairs and adopts these crimes as their own.

And they do it, so that they won't cause discord, or hurt a war criminal's feelings.

Barak Obama may have well over a million human beings slaughtered on his watch. His party tells us, it's okay, because we should not judge people. It's not our place.

To hell it is. When a crime is committed in public, before our eyes, we have a duty to recognize it and if we can, do something to prevent it.

In this case, I don't think is a god dammed thing we can do. But I will not, sit back and pretend that Emperor has no clothes, for fear of hurting somebody's feelings on the internet.

The crimes continue. I can see them. I am not at fault. I do not share responsibility, as I am opposed to them. I am helpless to stop Obama from committing crimes in my name, but I will not acqueiese and take credit for his decisions.

Yes, I am guilty of buying shoes made in China. I will accept responsibility for the things I have done. But it is too much to ask me to share the sins of the world. I reject the myth of original sin. I reject the view that I am a war criminal by an accident of the geography of my birth. I reject the belief in mass guilt.

I am only responsible for those thing that I can control. And the same goes for my critics, my friends, my friends that are my critics, Democrats, Republicans...

People, you are not Jesus! You don't bear the sins of the world. You do not have the power absolution. And when you see an elephant in a circus tent, it's okay to say so out loud.

A person kissed by the moon

Last Monday, I met a young man from Nepal. we had a short conversation and exchanged email addresses. He is a poet and sent me this wonderful poem and gave me permission to publish it.

A person kissed by the moon
by Viplob Pratik

This rhododendron
this rose this marigold
these orchids and amaranths
Have you ever looked at flowers?

And the stream with its babbling waters
The acacia tree
at the saddle of that mountain
The himals and above them
clouds that drift, gather, tear apart—
Have you looked at them?
Have you seen the rainbow?
Have you seen birds dipping and soaring?
Have you seen the sunrise and also the sunset?
Then you’ve likely also seen fog
A person who has seen the sun
you must have touched rays of light—
but did you finger the soil?
Did you embrace the earth?
Did the moon really kiss you?
If so, then tell me the stories of
Neptune, the sun, Saturn, Mars, Venus and Uranus
Did a flower really sprout from your lap?
Was the rainbow entwined in your arms?
And how did it feel to kiss the moon?

It is a marvel
By some grace I have met you
a person kissed by the moon.


Math Lesson For Politicians

Obama has been bragging lately that the banks repaid TARP.

And now he's saying that the $30 billion repaid, will be put to good use. Of course, that money was borrowed from our grandchildren.

But wait!!!!

TARP was officially a $700 billion program. $700 billion does not equal $30 billion.

But time and time again, Rush Limbaugh, Sean Hannity and others have bragged that the banks paid back all of the money and that's why their employees that crapped away many hundreds of billions of dollars, deserve giant bonuses! The crappier you are at business, the more money you should get from the government!

And why not? In their view, $700 billion and $30 billion are the same number. and if you're that crappy with math, then shouldn't you be on section 8 disability?