Is Standard and Poor’s Manipulating US Debt Rating to Escape Liability for the Mortgage Crisis?

By Scarecrow and Jane Hamsher

“The Politico headline says it all:

U.S. credit downgrade worries Obama, Congress more than default

It’s not the default that strikes the most fear in the White House and Congress these days. It’s the downgrade

As Robert Reich notes, Standard and Poors is the “biggest driver in the deficit battle.” Why would anyone care what the corrupt and disgraced organizations who quite nearly brought down the world economy think about anything at this point? And yet, that is where elite opinion is focused right now:

[W]hat really haunts the administration is the very real prospect, stoked two weeks ago by Standard & Poor’s, that Barack Obama could go down in history as the president who presided over his country’s loss of its gold-plated, triple-A bond rating.

[]

Financial analysts say such a move would hit Americans with more than $100 billion a year in higher borrowing costs, but it’s not just that. It would be a psychic blow to a nation that already looks over its shoulder at rising economic powers like China and wonders, what’s gone wrong? And it would give the president’s Republican rivals a ready-made line of attack that he’s dragging the country in the wrong direction.

“This rumbling has been coming from Capitol Hill for a while, which made us start asking questions about what was really going on with Standard and Poors.  It  felt like there’s a story-behind-the-story driving S&P’s actions in the debt ceiling debate, which appear inexplicable at face value and go way beyond what Moody’s or Fitch have done.   And the more we looked at the timeline of events, the more we wondered how the intertwining dramas of a) S&P downgrade threats, b) the liability that the ratings agencies may have for their role in the 2008 financial meltdown, and c) the GOP’s attempts to insulate the ratings agencies from b) are all impacting each other.”

Read full article here.


On July 19, 2011 2700 people across the country pledged to visit the local office of their member of congress and let them know: if they vote to cut Social Security or Medicare (or for a commission empowered to recommend cuts for an up-or-down vote without regular Congressional procedure), we won’t support them in 2012.

Jane Hamsher went to Capitol Hill and visited Congressional offices in DC.

Film and Forum Tonight at Nevada Theater

Excerpts from the CLAIM newsletter:


“A Robert F. Kennedy Jr., Sundance Film Festival nominated film about the dangers of coal mining – and how a small town fought back against a big corporation – will be featured at public forum here to educate the community about the environmental threats of reopening the Idaho Maryland Mine in Grass Valley.

“Sponsored and hosted by a myriad of local environmental and activist organizations, the forum will be held July 27 (Wednesday) at 6 p.m. at the Nevada Theatre (401 Broad St.), Nevada City.

[…]

“Community groups have said the plan to reopen the mine is questionable, and would increase Nevada County’s electricity usage by 50 percent and gas consumption by 100 percent, and that it would bring significant air pollution, truck traffic, risks to local wells, and the potential of toxic cyanide accidents. ”


Panelists will include members of APPLE (Alliance for a Post-Petroleum Local Economy), CLAIM-GV (Citizens Looking at the Impact of Mining, Grass Valley), WCCA (Wolf Creek Community Alliance), Sierra Fund, Yubanet and NCGP (Nevada County Green Party).

Tickets on sale starting Thursday July 14th at Briar Patch and Booksellers in Grass Valley. $5 advance $7 at the door.

New Economic Analysis Needed for Idaho-Maryland Mine Project

by Jane and Don Pelton

The Grass Valley City Council has the authority to invest the life of our community in a proposal by a junior Canadian mining company to re-open the Idaho-Maryland Mine (IMM).  But no prudent investor would proceed with re-opening a massive hard rock gold mine in a populated area without first requiring a current and thorough economic analysis from a qualified and credible third party.

Such an analysis would have to include a current assessment of Emgold’s ability to honor the promises made by its CEO, David Watkinson, given Emgold’s declining stock prices, debt, no cash flow from mineral sales, and the glaring reality that Emgold, having never actually operated a mine, has no track record.

The fine print in every Emgold press release is illuminating.  Mineral resource estimates are based on a number of hefty assumptions, and “such statements are not guarantees of future performance, and actual results or developments may differ materially from those in the forward-looking statements”.  Caveat emptor.

Much has changed since the Bay Area Economics (BAE) 2005 economic viability study. For one thing, Emgold stocks are now trading on Canada’s TSX Venture Exchange at around 14 cents (or 1.4 cents if they had not done a rollback in 2009), down from a high of 60 cents pre-rollback in 2005.  For another, the Price Waterhouse Cooper independent audit of Emgold’s financial statements posted on Emgold’s own website points to “material uncertainties” concerning Emgold’s ability to continue as a going concern, specifically lack of adequate operating funds, no proof of economically recoverable reserves, and low stock price.

A thorough economic viability report must include an analysis of the economic impacts that a return to the extractive model of economic development would have on Grass Valley’s existing and future development plans. These factors could significantly impact Grass Valley’s economic future, and must be objectively quantified and measured by a disinterested third party against “expected” (not guaranteed) jobs.

For example, what would the long-term economic impacts be if:

* Residential property values decline within a mile, 2 miles, and 5 miles of the mine, and within  miles of downtown;

* We are unable to attract sustainable industries and entrepreneurs, who will take their businesses and families elsewhere;

* Retirees divest their property and flee the County, and we are unable to attract new residents to buy real estate;

* Tourism and recreation revenues decline due to the presence of an industrial hard rock gold mine and tile factory within city limits;

* Diminished air quality further impacts health costs;

* The City is sued in the event of subsidence and chemical accidents;

* The City is burdened with the costs of infrastructure for the huge energy and water resources required to operate the mine, and the costs for repairing roads and bridges due to heavy truck traffic 24/7, when Emgold defaults;

* Taxpayers get the bill for cleaning up contaminated soils and polluted water in perpetuity;

* The mine operates for only a few years rather than the projected 20 years if the so-far unproven reserves do not “pan” out and/or the remaining gold is not “economically recoverable” due to higher than anticipated operating costs or a drop in gold prices, or both;

* The experimental Ceremext process cannot be scaled up to dispose of 1200-2400 tons of mine tailings daily, and there is no market for tiles made of melted mine waste (note that the tile factory accounts for half of the jobs estimate);

* The tile factory fails to provide a sound method for disposing of mine waste, and Emgold turns to stockpiling waste on the surface for years;

* Emgold defaults, declares bankruptcy, and blows town.

The Grass Valley Planning Commission and members of the City Council cannot afford to be lulled by the best-case scenarios put forth by Mr.Watkinson, who asserts that the IMM would be an environmentally and socially responsible project.  Of course he would say that, wouldn’t he?  However, recent history shows us that although mining companies talk about environmental and social responsibility, most don’t actually walk the talk.  A recent report obtained by Mining Watch Canada reveals that “Canadian mining companies are implicated in four times as many violations of corporate responsibility standards as mining companies from other countries” including Australia and India.   Further, a Toronto newspaper reported in 2009 that Canadian miners are “so reviled in some places that travelling Canadians mask their citizenship by wearing American flags on their caps and backpacks.”

Consider this: on average, for just one gold wedding band, 20 or more tons of rock must be unearthed, crushed, and processed with toxic chemicals in order to separate the trace amounts of gold from enormous amounts of rock waste.

Emgold plans to mine for 20 years, but we have only their word for the accuracy of their resource estimates (read the fine print).  Emgold’s unproven plan to turn half of the mine waste into tiles for homes and bury the rest is extremely risky, at best.  Where are the market studies to back up their assumptions? The gold mining industry has already left its mark on Nevada County – abandoned mines (300 in the Wolf Creek watershed alone), remnant piles of mine waste, contaminated soil, and polluted water.

The City Council must separate fact from fiction and represent the long-term interests of home owners, businesses, and all residents of Grass Valley.  But relying on the self-interested promotion and best-case scenarios from the mine company’s CEO is not going to help that cause.

Due diligence requires that the City obtain a current and complete economic viability report for the Idaho Maryland Mine project and its projected economic impact on the City of Grass Valley and (since this massive project will impact the entire region) Nevada County.

We want to see Grass Valley thrive, and we are very concerned about the long-term economic climate for business here, as long as the cloud of the IMMC project hangs over our heads.

With Luck, This is Only a “Lesser Depression”

Editor’s Note: Paul Krugman, as usual, clearly describes the economic illiteracy that rules on both sides of the Atlantic. If we’re lucky, this will only be a “lesser depression.”

The Lesser Depression

by Paul Krugman

July 21, 2011

“These are interesting times — and I mean that in the worst way. Right now we’re looking at not one but two looming crises, either of which could produce a global disaster. In the United States, right-wing fanatics in Congress may block a necessary rise in the debt ceiling, potentially wreaking havoc in world financial markets. Meanwhile, if the plan just agreed to by European heads of state fails to calm markets, we could see falling dominoes all across southern Europe — which would also wreak havoc in world financial markets.

“We can only hope that the politicians huddled in Washington and Brussels succeed in averting these threats. But here’s the thing: Even if we manage to avoid immediate catastrophe, the deals being struck on both sides of the Atlantic are almost guaranteed to make the broader economic slump worse.

“In fact, policy makers seem determined to perpetuate what I’ve taken to calling the Lesser Depression, the prolonged era of high unemployment that began with the Great Recession of 2007-2009 and continues to this day, more than two years after the recession supposedly ended.”

Read the full article here

There’s a Solution to the Debt Fight That Could Avert Catastrophe — Why Is Everyone Ignoring It?

Reprinted from Alternet.

By Joshua Holland

When you’re this far down the rabbit-hole, who’s to say which ideas are crazy and which are serious?

Another day, another round of leaks about a potential debt ceiling deal in the making. Yet this ludicrous standoff could be brought to a conclusion tomorrow, without concessions or the specter of legal challenges. It wouldn’t require Congress to take any votes, or a “Gang of Six” to haggle over any backroom deals.

But here’s an interesting thing: while it is now considered within the “mainstream” that a small group of intractable reactionaries might hold the economy hostage by threatening not to pay the tab that Congress itself ran up, ending the theatrics by creative but legal means isn’t. It’s a telling example of how our discourse is narrowed, policed by the Very Serious People who populate the Beltway media.

The escape hatch nobody at the Washington Post or the New York Times is talking about is called coin seignorage. It’s based on Title 31 of the U.S. code, which authorizes Treasury Secretary Tim Geithner to “mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.”

So tomorrow, Geithner could order the mint to manufacture a couple of trillion-dollar platinum coins and swap them for public debt now held by the Federal Reserve. The coins, unlike the bonds held by the Fed, don’t count as debt, so the transaction would bring us $2 trillion below the debt ceiling and the manufactured “crisis” would be averted.

Some Democratic senators – and former president Bill Clinton – have kicked around what they’re calling the “Constitutional option” for avoiding catastrophe. Obama would cite Section 4 of the 14th Amendment (“the validity of the public debt, duly authorized by Congress, shall not be questioned”), declare the debt ceiling unconstitutional and order the Treasury to continue issuing bonds. While it may provide a way out of the mess, it’s a legal theory that has never been tested in court, and would potentially create a crisis between the executive branch and Congress. Several Republicans have promised to attempt to impeach Obama if he uses the maneuver. Coin seignorage, on the other hand, leaves the debt ceiling intact, and simply steers around it (much more detail on coin seignorage is available here).

The idea has bubbled up within the blogosphere in recent months. Economist Warren Mosler writes that “it does work operationally…the US Treasury is already legally empowered to simply mint its own platinum coin in any denomination it wants and effectively deposit it in its Fed account, rather than sell bonds to the public to fund its Fed account.”

This process doesn’t change actual government spending, so doing it this way doesn’t add to inflation, nor does it change the fact that govt deficit spending adds income and net financial assets to the other, non government sectors. It’s just that the new financial assets will simply be new reserve balances at the Fed, rather than new Treasury securities (which are also simply accounts at the Fed).

Given that Congress is hurtling at breakneck speed toward the cliff of default, one might imagine that a neat accounting trick with the potential to avert an economic catastrophe would get some attention in the corporate media. But as of this writing, none of the country’s leading media outlets have touched it.

It has gotten a little mainstream attention on a few news outlets’ blogs. Marketwatch called it “the wacky talking point of the day,” and said it sounded “crazy,” even as the post’s author acknowledged that “the proposal has got it right that the U.S., as issuer of a fiat currency, can create any amount of cash it wants and doesn’t really need to borrow money to spend it.”

Felix Salmon wrote on Reuters’ blog that “tools like the 14th Amendment or even crazier loopholes like coin seignorage would be signs of the utter failure of the US political system and civil society,” and claimed that it could lead to “the loss of America’s status as a safe haven and a reserve currency.” But he never bothered to explain why avoiding a debt ceiling crisis would make us less trustworthy in the eyes of the world than Congress’ inability to govern, never mind all the theatrics around the non-question of whether it will pay off its debts.

Think Progress blogger Matt Yglesias dismissed coin seignorage as “an idea that’s circulating in Modern Monetary Theory circles” that, in his view, is “legally mistaken.” But he didn’t bother to explain why. He later updated his post with a note: “I now think this might be legal after all, provided the coin is made of palladium.” He was likely referring to a law passed last year authorizing the mint to produce palladium coins, but it specifies a face-value of $25 for the coins. (A response to both Yglesias and Salmon’s post can be found here.)

The idea of minting a few trillion-dollar coins to skirt the debt ceiling is certainly unprecedented, and it’s possible that Yglesias is right and there is some legal issue of which proponents of the idea are unaware. Perhaps it’s accurate to call it a “radical” proposal. But all of that needs to be viewed in the context of what are, today, considered relatively “mainstream” positions – positions that are reported and analyzed daily by the Washington Post and the New York Times.

Consider the debt ceiling debate itself: Congress has the power to authorize any amount of spending and raise any amount of tax revenues it wants, and it chose to spend $1.5 trillion more this year then it will take in in taxes. Many of those holding up the debt ceiling were members of Congress when the budget passed – some voted for it. That debt has already been incurred, and now the hard-right flank of the GOP – the party of purported “fiscal responsibility” – is threatening to simply stiff our creditors, despite the fact that doing so would not only cause extreme economic pain on “Main Street,” it would also send the deficit skyrocketing.

Some within the “suicide caucus” are brazen enough to claim, beyond all reason, that nothing much would happen if the U.S. government were in fact to default. A Democratic president has offered them a deal that is well to the right of where even Republican voters stand, but they are steadfast in their opposition to it. Eighty Republican members of the House have also vowed to oppose an alternative crafted by their own party’s leaders.

While the debt ceiling has been raised without fuss under both Democratic and Republican presidents, today it’s considered an acceptable conservative position for a minority to insist on gutting popular safety-net programs like Social Security and Medicare – programs overwhelming majorities of Americans across the political spectrum support – in exchange for a “deal” on something everyone knows will happen eventually. (The debt ceiling needs to be raised under every budget proposal, including Rep Paul Ryan’s, R-Wisconsin, draconian plan.)

And the sheer insanity of cutting spending — taking money out of people’s pockets – in the midst of the worst economic downturn to hit the country in generations has become so mainstream that it is now a bipartisan position with which virtually every “serious” pundit agrees. Perhaps a headline appearing this week in the  satirical news outlet the Onion captured this political moment best: “Congress Continues Debate Over Whether Or Not Nation Should Be Economically Ruined.”

What’s sane about any of this? It’s a “wacky” situation that just may be crying out for a similarly “wacky” solution. When you’re this far down the rabbit-hole, who’s to say which ideas are crazy and which are serious?


Joshua Holland is an editor and senior writer at AlterNet. He is the author of The 15 Biggest Lies About the Economy: And Everything else the Right Doesn’t Want You to Know About Taxes, Jobs and Corporate America.  Drop him an email or follow him on Twitter.

Poy Sippi, Wisconsin: Important Message for All Americans

Obama Must Read This: FDR’s Speech at Forbes Field, Oct. 1, 1936

ROOSEVELT: Mr. Chairman, Governor Earle, my friends of Pennsylvania:

A baseball park is a good place to talk about box scores. Tonight I am going to talk to you about the box score of the Government of the United States. I am going to tell you the story of our fight to beat down the depression and win recovery. From where I stand it looks as though the game is pretty well “in the bag.”

I am convinced that when Government finance or any other kind of finance is honest, and when all the cards are on the table, 4 there is no higher mathematics about it. It is just plain, scoreboard arithmetic.

When the present management of your team took charge in 1933, the national scoreboard looked pretty bad. In fact, it looked so much like a shut-out for the team that you voted a change of management in order to give the country a chance to win the game. And today we are winning it.

When the new management came to Washington, we began to make our plans—plans to meet the immediate crisis and plans that would carry the people of the country back to decent prosperity.

You and I and everybody else saw the millions out of work, saw the business concerns running in the red, saw the banks closing. Our national income had declined over 50 percent—and, what was worse, it showed no prospect of recuperating by itself. By national income I mean the total of all income of all the 125,000,000 people in this country—the total of all the pay envelopes, all the farm sales, all the profits of all the businesses and all the individuals and corporations in America.

During the four lean years before this Administration took office, that national income had declined from eighty-one billions a year to thirty-eight billions a year. In short, you and I, all of us together, were making forty-three billions—spelled with a “b,” not an “m”—forty-three billion dollars less in 1932 than we made in 1929.

Now, the rise and fall of national income—since they tell the story of how much you and I and everybody else are making-are an index of the rise and fall of national prosperity. They are also an index of the prosperity of your Government. The money to run the Government comes from taxes; and the tax revenue in turn depends for its size on the size of the national income. When the incomes and the values and transactions of the country are on the down-grade, then tax receipts go on the down-grade too. If the national income continues to decline, then the Government cannot run without going into the red. The only way to keep the Government out of the red is to keep the people out of the red. And so we had to balance the budget of the American people be-fore we could balance the budget of the national Government.

That makes common sense, doesn’t it?

The box score when the Democratic Administration came to bat in 1933 showed a net deficit in our national accounts of about $3,000,000,000, accumulated in the three previous years under my predecessor.

National income was in a downward spiral. Federal Government revenues were in a downward spiral. To pile on vast new taxes would get us nowhere because values were going down-and that makes sense too.

On top of having to meet the ordinary expenses of Government, I recognized the obligation of the Federal Government to feed and take care of the growing army of homeless and destitute unemployed.

Something had to be done. A national choice had to be made. We could do one of two things. Some people who sat across my desk in those days urged me to let Nature take its course and to continue a policy of doing nothing. I rejected that advice because Nature was in an angry mood.

To have accepted that advice would have meant the continued wiping out of people of small means—the continued loss of their homes and farms and small businesses into the hands of people who still had enough capital left to pick up those homes and farms and businesses at bankruptcy prices. It would have meant, in a very short time, the loss of all the resources of a multitude of individuals and families and small corporations. You would have seen, throughout the Nation, a concentration of property ownership in the hands of one or two percent of the population, a concentration unequaled in any great Nation since the days of the later Roman Empire.

And so the program of this Administration set out to protect the small business, the small corporation, the small shop, and the small individual from the wave of deflation that threatened them. We realized then, as we do now, that the vast army of small business men and factory owners and shop owners—together with our farmers and workers—form the backbone of the industrial life of America. In our long-range plan we recognized that the prosperity of America depended upon, and would continue to depend upon, the prosperity of them all.

I rejected the advice that was given to me to do nothing for an additional reason. I had promised, and my Administration was determined, to keep the people of the United States from starvation.

I refused to leave human needs solely in the hands of local communities—local communities which themselves were almost bankrupt.

To have accepted that advice would have been to offer breadlines again to the American people, knowing this time, however, that in many places the lines would last far longer than the bread. In those dark days, between us and a balanced budget stood millions of needy Americans, denied the promise of a decent American life.

To balance our budget in 1933 or 1934 or 1935 would have been a crime against the American people. To do so we should either have had to make a capital levy that would have been confiscatory, or we should have had to set our face against human suffering with callous indifference. When Americans suffered, we refused to pass by on the other side. Humanity came first.

No one lightly lays a burden on the income of a Nation. But this vicious tightening circle of our declining national income simply had to be broken. The bankers and the industrialists of the Nation cried aloud that private business was powerless to break it. They turned, as they had a right to turn, to the Government. We accepted the final responsibility of Government, after all else had failed, to spend money when no one else had money left to spend.

I adopted, therefore, the other alternative. I cast aside a do nothing or a wait-and-see policy.

As a first step in our program we had to stop the quick spiral of deflation and decline in the national income. Having stopped them, we went on to restore purchasing power, to raise values, to put people back to work, and to start the national income going up again.

In 1933 we reversed the policy of the previous Administration. For the first time since the depression you had a Congress and an Administration in Washington which had the courage to provide the necessary resources which private interests no longer had or no longer dared to risk.

This cost money. We knew, and you knew, in March, 1933, that it would cost money. We knew, and you knew, that it would cost money for several years to come. The people understood that in 1933. They understood it in 1934, when they gave the Administration a full endorsement of its policy. They knew in 1935, and they know in 1936, that the plan is working.

All right, my friends, let us look at the cost. Since we could not get the money by taxes we borrowed it, and increased the public debt.

President Hoover’s Administration increased the national debt in the net amount of over three billion dollars in three depression years, and there was little to show for it. My Administration has increased the national debt in the net amount of about eight billion dollars and there is much to show for it.

Put that figure of eight billions out here on the scoreboard, and let me tell you where the dollars went.

Over a billion and a half went for payment of the World War Veterans’ Bonus this year instead of in 1945. That payment is now out of the way, and is no longer a future obligation of the Government.

As for the other six and a half billions of the deficit we did not just spend money; we spent it for something. America got something for what we spent—conservation of human resources through C.C.C. camps and through work relief; conservation of natural resources of water, soil and forest; billions for security and a better life. While many who criticize today were selling America short, we were investing in the future of America.

Contrast those expenditures and what we got for them with certain other expenditures of the American people in the years between 1920 and 1930. During that period not merely eight billions but many more billions came out of American pockets and were sent abroad—to foreign countries where the money was used for increasing foreign armaments, for building foreign factories to compete with us, for building foreign dwellings, swimming pools, and slaughter houses, for giving employment to the foreign unemployed—foreign boondoggling, if you will.

Those dollars, billions of them, were just as good American money—just as hard-earned—just as much the reward of our thrift—as the dollars we have spent during these three years at home giving work to the unemployed. Most of those dollars sent abroad are gone for good. Those billions, lost to us under previous Administrations, do not, by the way, include the other billions loaned by the United States to foreign Governments during and immediately after the War.

I ask you the simple question: Has it not been a sounder investment for us during these past three years to spend eight billion dollars for American industry, American farms, American homes and the care of American citizens?

I have used the figure of eight billion dollars as representing the net increase in our national debt. Immediately people will rush into print or run to the microphone to tell you that my arithmetic is all wrong. They will tell you that the increase in the national debt is thirteen billions instead of eight. That is technically and morally just as correct as if someone were to try to scare you about the condition of your bank by telling you all about its liabilities and not telling you about its assets.

That is technically and morally just as correct as telling you good people here in Pennsylvania that none of your bank deposits or insurance policies is sound.

When you are told that the United States Treasury has thirteen billions more of liabilities than it had in 1933, you should also be told that it has six billion dollars of increased assets to set off against these liabilities.

In three years our net national debt has increased eight billions of dollars. But in two years of the recent war it increased as much as twenty-five billion dollars. National defense and the future of America were involved in 1917. National defense and the future of America were also involved in 1933. Don’t you believe that the saving of America has been cheap at that price? It was more than defense—it was more than rescue. It was an investment in the future of America.

And, incidentally, tonight is an anniversary in the affairs of our Government which I wish to celebrate with you and the American people. It is October first, and it marks the end of a whole year in which there has been not a single national bank failure in all the United States. It has been fifty-five years since that kind of record has been established. You and I can take this occasion to rejoice in that record. It is proof that the program has worked.

Compare the scoreboard which you have in Pittsburgh now with the scoreboard which you had when I stood here at second base in this field four years ago. At that time, as I drove through these great valleys, I could see mile after mile of this greatest mill and factory area in the world, a dead panorama of silent black structures and smokeless stacks. I saw idleness and hunger instead of the whirl of machinery. Today as I came north from West Virginia, I saw mines operating, I found bustle and life, the hiss of steam, the ring of steel on steel—the roaring song of industry.

And now a word as to this foolish fear about the crushing load the debt will impose upon your children and mine. This debt is not going to be paid by oppressive taxation on future generations. It is not going to be paid by taking away the hard-won savings of the present generation.

It is going to be paid out of an increased national income and increased individual incomes produced by increasing national prosperity.

The deficit of the national Government has been steadily declining for three years running, although technically this year it did not decline, because we paid the Bonus this year instead of 1945. Without the Bonus the deficit would have declined this year also.

The truth is that we are doing better than we anticipated in 1933. The national income has gone up faster than we dared then to hope. Deficits have been less than we expected. Treasury receipts are increasing. The national debt today in relation to the national income is much less than it was in 1933, when this Administration took office.

The national income was thirty-eight billions in 1932. In 1935 it was fifty-three billions and this year it will be well over sixty billions. If it keeps on rising at the present rate, as I am confident that it will, the receipts of the Government, without imposing any additional taxes, will, within a year or two, be sufficient to care for all ordinary and relief expenses of the Government—in other words, to balance the budget.

The Government of this great Nation, solvent, sound in credit, is coming through a crisis as grave as war without having sacrificed American democracy or the ideals of American life.


Citation: John T. Woolley and Gerhard Peters, The American Presidency Project [online]. Santa Barbara, CA. Available from World Wide Web: http://www.presidency.ucsb.edu/ws/?pid=15149.

Carousel Horse Race (The Bunny Wins!)

A sample of the pure joy of Improv Everywhere.

GOP Governors’ Plummeting Approval Rates

And here’s a comment from a viewer on Flikr:

“Just to update this graph: Scott Walker’s approval rating has since slipped by an additional 6%. He’s now at 37% approval. He’s at 33% if you look at “likely voters”.

UWSC released results 7/13 – www.uwsc.wisc.edu/BP32PressRelease1_WIpols_FI NAL.pdf

Here’s my post on it: www.bluecheddar.net/?p=11007

Remarkable Commencement Address by Former Nevada Union Student

Editor’s Note: I first ran across this essay, a commencement address given by Paul Hawken to the lucky University of Portland graduating class of 2009, in a beautiful book of inspirational essays called Hope Beneath our Feet. When I wrote to Hawken to get permission to reprint it, his reply included this postscript: “I went to Nevada Union High School between Nevada City and Grass Valley!” As I explained to him, occasionally a work of art is so moving that I get what I call the “aesthetic response” (really just goosepimples). I’ve had that happen with Georgia O’Keefe paintings, frequently with music, and again to my surprise with Hawken’s wonderful words in this memorable speech.

by Paul Hawken

When I was invited to give this speech, I was asked if I could give a simple short talk that was “direct, naked, taut, honest, passionate, lean, shivering, startling, and graceful.” No pressure there.

Let’s begin with the startling part. Class of 2009: you are going to have to figure out what it means to be a human being on earth at a time when every living system is declining, and the rate of decline is accelerating. Kind of a mind-boggling situation… but not one peer-reviewed paper published in the last thirty years can refute that statement. Basically, civilization needs a new operating system, you are the programmers, and we need it within a few decades.

This planet came with a set of instructions, but we seem to have misplaced them. Important rules like don’t poison the water, soil, or air, don’t let the earth get overcrowded, and don’t touch the thermostat have been broken. Buckminster Fuller said that spaceship earth was so ingeniously designed that no one has a clue that we are on one, flying through the universe at a million miles per hour, with no need for seatbelts, lots of room in coach, and really good food—but all that is changing.

There is invisible writing on the back of the diploma you will receive, and in case you didn’t bring lemon juice to decode it, I can tell you what it says: You are Brilliant, and the Earth is Hiring. The earth couldn’t afford to send recruiters or limos to your school. It sent you rain, sunsets, ripe cherries, night blooming jasmine, and that unbelievably cute person you are dating. Take the hint. And here’s the deal: Forget that this task of planet-saving is not possible in the time required. Don’t be put off by people who know what is not possible. Do what needs to be done, and check to see if it was impossible only after you are done.

When asked if I am pessimistic or optimistic about the future, my answer is always the same: If you look at the science about what is happening on earth and aren’t pessimistic, you don’t understand the data. But if you meet the people who are working to restore this earth and the lives of the poor, and you aren’t optimistic, you haven’t got a pulse. What I see everywhere in the world are ordinary people willing to confront despair, power, and incalculable odds in order to restore some semblance of grace, justice, and beauty to this world. The poet Adrienne Rich wrote, “So much has been destroyed I have cast my lot with those who, age after age, perversely, with no extraordinary power, reconstitute the world.” There could be no better description. Humanity is coalescing. It is reconstituting the world, and the action is taking place in schoolrooms, farms, jungles, villages, campuses, companies, refuge camps, deserts, fisheries, and slums.

You join a multitude of caring people. No one knows how many groups and organizations are working on the most salient issues of our day: climate change, poverty, deforestation, peace, water, hunger, conservation, human rights, and more. This is the largest movement the world has ever seen. Rather than control, it seeks connection. Rather than dominance, it strives to disperse concentrations of power. Like Mercy Corps, it works behind the scenes and gets the job done. Large as it is, no one knows the true size of this movement. It provides hope, support, and meaning to billions of people in the world. Its clout resides in idea, not in force. It is made up of teachers, children, peasants, businesspeople, rappers, organic farmers, nuns, artists, government workers, fisherfolk, engineers, students, incorrigible writers, weeping Muslims, concerned mothers, poets, doctors without borders, grieving Christians, street musicians, the President of the United States of America, and as the writer David James Duncan would say, the Creator, the One who loves us all in such a huge way.

There is a rabbinical teaching that says if the world is ending and the Messiah arrives, first plant a tree, and then see if the story is true. Inspiration is not garnered from the litanies of what may befall us; it resides in humanity’s willingness to restore, redress, reform, rebuild, recover, reimagine, and reconsider. “One day you finally knew what you had to do, and began, though the voices around you kept shouting their bad advice,” is Mary Oliver’s description of moving away from the profane toward a deep sense of connectedness to the living world.

Millions of people are working on behalf of strangers, even if the evening news is usually about the death of strangers. This kindness of strangers has religious, even mythic origins, and very specific eighteenth-century roots. Abolitionists were the first people to create a national and global movement to defend the rights of those they did not know. Until that time, no group had filed a grievance except on behalf of itself. The founders of this movement were largely unknown — Granville Clark, Thomas Clarkson, Josiah Wedgwood — and their goal was ridiculous on the face of it: at that time three out of four people in the world were enslaved. Enslaving each other was what human beings had done for ages. And the abolitionist movement was greeted with incredulity. Conservative spokesmen ridiculed the abolitionists as liberals, progressives, do-gooders, meddlers, and activists. They were told they would ruin the economy and drive England into poverty. But for the first time in history a group of people organized themselves to help people they would never know, from whom they would never receive direct or indirect benefit. And today tens of millions of people do this every day. It is called the world of non-profits, civil society, schools, social entrepreneurship, non-governmental organizations, and companies who place social and environmental justice at the top of their strategic goals. The scope and scale of this effort is unparalleled in history.

The living world is not “out there” somewhere, but in your heart. What do we know about life? In the words of biologist Janine Benyus, life creates the conditions that are conducive to life. I can think of no better motto for a future economy. We have tens of thousands of abandoned homes without people and tens of thousands of abandoned people without homes. We have failed bankers advising failed regulators on how to save failed assets. We are the only species on the planet without full employment. Brilliant. We have an economy that tells us that it is cheaper to destroy earth in real time rather than renew, restore, and sustain it. You can print money to bail out a bank but you can’t print life to bail out a planet. At present we are stealing the future, selling it in the present, and calling it gross domestic product. We can just as easily have an economy that is based on healing the future instead of stealing it. We can either create assets for the future or take the assets of the future. One is called restoration and the other exploitation. And whenever we exploit the earth we exploit people and cause untold suffering. Working for the earth is not a way to get rich, it is a way to be rich.

The first living cell came into being nearly 40 million centuries ago, and its direct descendants are in all of our bloodstreams. Literally you are breathing molecules this very second that were inhaled by Moses, Mother Teresa, and Bono. We are vastly interconnected. Our fates are inseparable. We are here because the dream of every cell is to become two cells. And dreams come true. In each of you are one quadrillion cells, 90 percent of which are not human cells. Your body is a community, and without those other microorganisms you would perish in hours. Each human cell has 400 billion molecules conducting millions of processes between trillions of atoms. The total cellular activity in one human body is staggering: one septillion actions at any one moment, a one with twenty-four zeros after it. In a millisecond, our body has undergone ten times more processes than there are stars in the universe, which is exactly what Charles Darwin foretold when he said science would discover that each living creature was a “little universe, formed of a host of self-propagating organisms, inconceivably minute and as numerous as the stars of heaven.”

So I have two questions for you all: First, can you feel your body? Stop for a moment. Feel your body. One septillion activities going on simultaneously, and your body does this so well you are free to ignore it, and wonder instead when this speech will end. You can feel it. It is called life. This is who you are. Second question: who is in charge of your body? Who is managing those molecules? Hopefully not a political party. Life is creating the conditions that are conducive to life inside you, just as in all of nature. Our innate nature is to create the conditions that are conducive to life. What I want you to imagine is that collectively humanity is evincing a deep innate wisdom in coming together to heal the wounds and insults of the past.

Ralph Waldo Emerson once asked what we would do if the stars only came out once every thousand years. No one would sleep that night, of course. The world would create new religions overnight. We would be ecstatic, delirious, made rapturous by the glory of God. Instead, the stars come out every night and we watch television.

This extraordinary time when we are globally aware of each other and the multiple dangers that threaten civilization has never happened, not in a thousand years, not in ten thousand years. Each of us is as complex and beautiful as all the stars in the universe. We have done great things and we have gone way off course in terms of honoring creation. You are graduating to the most amazing, stupefying challenge ever bequested to any generation. The generations before you failed. They didn’t stay up all night. They got distracted and lost sight of the fact that life is a miracle every moment of your existence. Nature beckons you to be on her side. You couldn’t ask for a better boss. The most unrealistic person in the world is the cynic, not the dreamer. Hope only makes sense when it doesn’t make sense to be hopeful. This is your century. Take it and run as if your life depends on it.


Paul Hawken is an environmentalist, entrepreneur, and author. His work includes starting ecological businesses, writing about the impact of commerce on living systems, and consulting with heads of state and CEOs on economic development, industrial ecology, and environmental policy.

He has appeared on numerous media including the Today Show, Larry King, Talk of the Nation, Charlie Rose, and has been profiled or featured in hundreds of articles including the Wall Street Journal, Newsweek, Washington Post, Business Week, Esquire, and US News and World Report. His writings have appeared in the Harvard Business Review, Resurgence, New Statesman, Inc, Boston Globe, Christian Science Monitor, Mother Jones, Utne Reader, Orion, and many other publications.

He authors articles, op-eds, and peer-reviewed papers, and has written seven books including four national bestsellers The Next Economy (Ballantine 1983), Growing a Business (Simon and Schuster 1987), and The Ecology of Commerce (HarperCollins 1993) and Blessed Unrest (Viking, 2007). The Ecology of Commerce was voted in 1998 as the #1 college text on business and the environment by professors in 67 business schools. Natural Capitalism: Creating the Next Industrial Revolution (Little Brown, September 1999) co-authored with Amory Lovins, has been read and referred to by several heads of state including President Bill Clinton who called it one of the five most important books in the world today. His books have been published in over 50 countries in 27 languages. Growing a Business became the basis of a 17-part PBS series, which Mr. Hawken hosted and produced. The program, which explored the challenges and pitfalls of starting and operating socially responsive companies, was shown on television in 115 countries and watched by over 100 million people.

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