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The Rise of the Billionaires Leaves the Middle Class Stranded

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Saturday, October 04, 2008

RUBBER DUCKIES


I find that as I rush toward old age my view of the oceans has been defined by two cartoon shows from my youth. One was the first episode of ”Johnny Quest” in which he and Bandit battled ”The Mystery of the Lizard Men” in the Sargasso Sea: and the other was the “Rocky and Bullwinkle Show” when the flying squirrel announced he had an important message and the Moose asked if it could be “Fan mail from some flounder?” Call it “The Oceanography of Hanna Barbera”.
The Sargasso Sea was first reported by the Carthaginian navigator Himilco, and first crossed by Christopher Columbus on his way home. It lies in the center of the North Atlantic gyre, trapped between the north and eastern flow of the Gulf Stream, the south bound Canary Islands Current and the westbound Atlantic Tropical Current which brings hurricanes the Americas.
Legend (and Johnny Quest) has it that these “Calms of Cancer” are chocked with sea weed and littered with trapped ships. Of course they are not. The Sargasso sits beneath a weather high pressure zone, where wind driven currents are slow and floating patches of sea weed are common enough to provide shelter for adolescent eels and sea turtles, but hardly so crowded with Sargassum weeds as to foul propellers. But why spoil a legend (or a cartoon show) with reality?
The Sargasso Sea has a counterpart in the infamous “Great Pacific Garbage Patch”. Charles Moore first sailed through this man-made sea in 1988. “As I gazed from the deck…I was confronted, as far as the eye could see, with the sight of plastic….In the week it took to cross the subtropical high, no matter what time of day I looked, plastic debris was floating everywhere: bottles, bottle caps, wrappers, fragments.” It almost sounds as of the Lizard Men could be moving about by stepping on all the empty gallon milk jugs. Actually things in the north Pacific aren’t that bad. In a way they are worse.
What we commonly call plastics are a product of what I call the “Oil Age”, roughly from 1900 to approximately 2035 or so, when petroleum was (is) still common enough to be cheap enough to be 3F - i.e. used as fuel, fertilizer and fat (as in extravagant).
It takes 685 gallons of oil (line at the top of the chart) to make one ton of plastic, which is what makes plastic “fat”. And that is not counting the oil you have to burn to heat the crude to 750 degrees Fahrenheit in the cracking tower (on the left side of the chart), which is when the petroleum molecules line up in endless chains called “polymers”, which is another name for plastics.
Because polymer chains endlessly repeat themselves they never completely break down, they just get shorter. And even if the sun finally degrades the plastic in a six-pack ring so that a sea gull can no longer get her head caught in it, the polymer chain merely becomes small enough to be swallowed by jelly fish or plankton, which can then be eaten by sea turtles, which can then be eaten by sea bass, etc., etc.
About the same time that Captain Moore first laid eyes on the “Great Pacific Garbage Patch” it first occurred to large numbers of people to start wondering where the water went when they flushed their toilets. If you live in Asia, or the West Coast of North or South America, the answer is, eventually, The Pacific Ocean. And it turns out that is a problem.
On January 10, 1992 a container ship crossing the Pacific out of Hong Kong ran into heavy weather as it neared the International Date Line, bound for Tacoma, Washington. A dozen containers stacked on deck washed overboard, and one those 44 foot long boxes cracked open, releasing 29,000 “rubber duckies” beavers, turtles and frogs into the cold Pacific waters. At that point the ocean currents took over.In October of 1992 the duckies, frogs and beavers began washing up on beaches near Sitka, Alaska. Between November ’92 and August of 1993 they washed ashore between Cordova and Coronation Island on the Gulf of Alaska. From here Dr. Curtis Ebbesmeyer has calculated (http://www.seabean.com/ThingsThatFloat/duckies/) that a few of the “floating Friendlies” would be carried northward by the Berring Current into the Artic Ocean, where they might spend as long as four or five years trapped in the sea ice. But eventually, Dr. Ebbesmeyer figured, a few would pass through the Davis Straights and reach the North Atlantic.
And in July of 2007 Ms. Penny Harris, a retired schoolteacher, found one of the duckies washed up at the high tide line of a beach in North Devon, Wales, thus proving that no matter where or when you flush it all ends up in the same place, eventually. Eventually that includes even the very bottom of the ocean: which in the Pacific is the Challenger Deep, a section of the Marianas Trench 35,827 feet below the waves. Mount Everest, dropped into the trench, would still be 8,000 below the surface. The pressure here is a thousand times greater than at sea level. Humans have visited the Challenger Deep just once, on January 23, 1960, when US Navy Lieutenant Don Walsh and Swiss citizen Jacques Piccard spent 20 minutes on the bottom, staring out at the featureless ooze. They did not find a "Rubber Duckie" but a flat flounder did wiggle past their porthole.
It has since been argued that it wasn’t a flounder but a sea cucumber, but I refuse to accept that arguement. You can’t get fan mail from a sea cucumber – that would just be silly.
Just something to think about next time you flush: "Rubber Duckie, you’re the one, You make bath time lots of fun, Rubber Duckie, I’m awfully fond of you; Woo, Woo be doo”. (lyrics by Jeff Moss)
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Friday, October 03, 2008

CAN YOU SAY "PONZI SCAM"?

I doubt that you have ever heard of 67 year old Robert Dean White, but you really ought to hear what he has to say. Federal prosecutors have an extensive library of the imparted wisdom of Mr. White, and my personally favorite “cut” is his description of the parent firm he worked for, “The Petters Group Worldwide”, as “…a Ponzi scheme.” They have recently been replaying that little tune in every hedge fund board room in Greenwich, Connecticut. It has been the Musak of the Bush era Neo-con dead-end investment club we have all recently become investors in. This is what becomes of people who actually start to believe that there isn’t a dime’s worth of difference between the people running for public office. There is always a difference, even if it’s just their price tag.

Charles Ponzi (AKA Charles Ponei, AKA Charles P. Bianchi) was far from the first to invent this kind of scheme. He just put his name on it. He was an Italian immigrant who stumbled upon the International Postal Reply Coupon, a now defunct system of international postage. The price of IPRC stamps varied from nation to nation, and Ponzi convinced investors that he was buying the stamps cheaply in Italy, in huge bulk, and selling them for a profit in America. He promised a 400% return on investments and seemed to be making good on that promise. People actually paid him to take their money. Ponzi went from a penniless ex-con in 1919 to a millionaire in 1920: in July alone he made $420,000. And that was in 1920.

Then in August the Boston Post asked the U.S. Post Office how many IPRC’s Ponzi had actually exchanged and found out the number was zero. He was using new investments to pay off old investors, and pocketing a substantial profit. By September of 1920 Ponzi was in jail. The vast majority of his investors lost everything. A team of accountants searched valiantly for months but were never able to reconstruct where all the money had disappeared to. After serving his sentence and being deported Ponzi told an Italian reporter not to feel sorry for his victims, “Even if they never got anything for it, it was cheap at that price,” he said. “It was easily worth fifteen million bucks to watch me put the thing over.” Tom Petters, the 51 year old High School graduate behind The Petters Group World Wide (“Partnership Defined”), a self described $2.3 billion investment group with 3,200 employees, founded his first company when he was just sixteen. He leased an office in downtown St. Cloud, Minnesota, out of which he sold stereo equipment to college students. When his father found out about the venture the budding entrepreneur was pulled up by his short hairs and forced to close it all down. But Tom was just starting slow.

In 1988 he formed The Petters Group. In June of 2002 Tom and Ted Deikel bought the name and inventory of “Fingerhut” from Federated Department Stores. A year later he bought eBid.com. Two years later he shelled out $246 million for Polaroid. In October 2006 he joined with Whitebox Advisors to buy Sun Country Airlines. In February 2007 he bought the marketing company Juice Media Worlwide, and in November he became sole owner of Sun Country. In 2008 his acquisitions accelerated. He bought EducAsian in January, the magazine conglomerate Metropolitan Media Group in July and the charter airline Southwest Aviation and Enable Holdings, Inc., both in August. And in September of 2008 the F.B.I. raided John’s offices, his home and the home of Mr. Robert Dean White. Tom’s entire house of cards folded like…well, like a house of cards. Just a month prior to his personal Goetterdaemerung, Tom explained to the fawning students of the Carlson School of Management, “You’ve got to figure out how to leverage and move things forward and not backwards. Sometimes sideways and left and not always how you had anticipated.” But evidently Tom did anticipate what was coming because he is heard on one of the F.B.I tapes admitting that that he cheated on his taxes, and used an employee to create false documents for investors, but that he “didn’t know what choice” he had. I guess honesty was not a viable choice.The Feds allege that for ten years Tom has been showing investors purchase orders to prove he was selling merchandise to Walmart. But when one investor finally checked with Walmart they said the P.O. numbers were fake and they had never bought anything from any of Tom’s many, many companies. This revelation led to a Federal audit of PGW that showed $1.9 billion in the “in” drawer and $3.5 billion in bills, the “out” drawer. And since the Feds lack the imagination of the Wall Street types, owing more than you own equals bankruptcy. Ah, if they only had the imagination of Tom Petters or Charles Ponzi they would know that being in debt was just another opportunity. Have you ever noticed that none of these wise guys have any interest in history? To me that explains a lot.

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PS:
Petters' cronies plead guilty in fraud scheme
By DAN BROWNING, Minneapolis Star Tribune October 8, 2008
"...Coleman, 42, of Wayzata, wearing a navy suit with orange pinstripes, ...and pleaded guilty to a single charge of conspiracy to commit mail fraud. Her guilty plea was one of three Wednesday. Robert Dean White, 67, of Excelsior, and Michael Catain, 52, of Shorewood, also admitted to their roles in the scheme, which involved the creation of false bank statements and other documents that were used to trick investors into funding what they called a giant Ponzi scheme...All three defendants said they earned millions of dollars by participating in the scheme. White said he got a salary and generous bonuses,...White has agreed to help prosecutors with the case and could receive a reduced sentence if he provides substantial assistance....Allan Caplan, (Ms. Coleman's) attorney, said Coleman realizes that means she "will be penniless" for the rest of her life..."She wanted to bring it to a screeching halt," Caplan said...(Petters)...was in another courtroom seeking to be released from custody pending his trial on charges of mail and wire fraud, money laundering and obstruction of justice. He lost that bid...."

Thursday, October 02, 2008

INNOCENCE LOST

I am amazed that it took an hour and a half to round up all the men and horses once the decision had been made. They had been scattered because of the threat of an air attack. And as the Australian Fourth Light Horse Brigade made their charge they were not waving sabers but bayonets. Still it may have been one of the most successful cavalry charges in all of history. But oddly enough what is usually written about the charge remembers none of that. What is usually written is that it was the last cavalry charge in history, and it wasn’t the last one at all; not by a long shot. It was October 31st , 1917 – Halloween - when the British Army made a third try to break the Turkish line at Gaza. They had a new General, Allenby, and a new plan. Instead of attacking the barbed wire and trenches close to Gaza, Allenby decided to try the other end of the Turkish defenses, at Beersheba. It was a similar choice to the sweeping left hook sent against Iraq forces in 1991: then, fast armored columns were supported by fleets of fuel trucks. But the limiting factor in 1917 was not fuel but water.
There were 17 wells at Beersheba, and that made capture of the village vital for an army coming across the Negev desert, because the weapon of maneuver in 1917 was not the tank but the horse. It is simply astonishing that a horse, a prey animal, a grass eater, could be so powerful a weapon of war. Since 4000 B.C. humans have trained horses to assist in killing other humans and other horses. We have ridden their backs into close combat where Equus caballus is shot with arrows, pierced with spears and slashed with swords: and beginning in the 18th century, cut by shrapnel and surrounded by deafening gunfire and explosions. And what is most astonishing is that for a horse, such combat is much more frightening than for a human. Horses have the largest eyes per body size of any land animal. The construction of those lovely huge eyes also gives them a field of vision of 350 degrees, far wider than a humans’. Their ears can rotate 180 degrees, giving them the equivalent of hearing depth perception. In short, hoses can see and hear much more of the horrors on a battlefield more accurately than a human can. And the sound of a pistol in their own riders’ hand is more frightening because it is closer. So given this higher level of horror why have horses joined us in war? It has been pointed out that war horses actually lived much more happy lives than their pampered domesticated stabled pets of today because a war horse was constantly surrounded with other horses – a herd. An army was a strict hierarchical social structure that mimicked the herd. And learning to use a horse in battle taught humans how to teach them selves to fight: every combat maneuver used by cavalry is based on herd behavior. A horse in column with willing follow the horse in front rather than run for safety alone, and a horse in a charge will run because all the other horses are running as well. But the actual charge of Napoleonic cavalry (and the Australian Light Horsemen of 1917) was a good deal slower than the paintings might suggest. Sabers might be wildly waving and lances glinting in the sunlight, but charging horses do not slam into enemy troops at the end of a charge. The “shock” effect of a cavalry charge was far more psychological then physical. And that is the great secret of combat; the objective is not to kill your opponent. The objective is to convince him that he is about to be killed or worse, about to be painfully mauled, so that he stops fighting. The reality is that nobody fights to the death, not even a kamikaze pilot or a suicide bomber. They fight until they are convinced they cannot win. And seeing, as one general famously described it, “…a bunch of goo that a moment before was your best friends face…” has proven a very effect way of making people stop fighting. For every soldier killed a dozen will run away. And that is what humans learned by teaching horses to fight. They formed up to the east of Beersheba, the 11th and 12th regiments, behind a ridge out in the Negev desert. They were 800 mounted men under the direct command of Lieutenant Colonel Bourchier, trained to fight as mounted infantry but this afternoon with their rifles slung across their backs and their bayonets gripped tightly in their right hands, they were pure cavalry, straight from the ancient steppes of Eastern Europe and the rolling fields of Belgium.
They crossed the ridge line in three waves at a trot, about 8 miles an hour, and five meters between each horse. The three lines advanced across the open desert toward the Turkish infantry trenches four miles away. After a mile a battery of Austrian artillery began to bark at them. Shells exploded just behind them as the Axis gunners tried in vain to adjust their range to match the horsemen’s advance. About two miles out they broke into a canter, about 15 miles an hour. The Turkish machine guns began to pepper the advancing cavalry. But most of the Turkish infantry were holding their fire, waiting for the horsemen to dismount and attack on foot. But instead, a half mile from the trenches, they broke into a gallop, and fell upon the Turkish soldiers at 30 miles an hour. Trooper Eric Elliot remembered, “It was the bravest, most awe inspiring sight I’ve ever witnessed ...the boys were wild-eyed and yelling their heads off.” And Trooper Vic Smith would write years later, “Of course we were scared, whishing to hell we weren’t there…But you couldn’t drop out and leave your mates to it; you had to keep going on.” In fact the infantry was so stunned by the cavalry’s audacity that they failed to adjust their sights and most of the Turkish fire that finally began went sailing over the horsemen’s heads. And suddenly it seemed to the Turkish soldiers’ that their gun sights were filled with the barrel chests of charging horses, each carrying a screaming mad man directly at each Turkish private and corporal.
The Australian horses leapt across the first trench line. And the Turkish soldiers, brave men and determined, well led and well disciplined, threw down their rifles and ran away. The Australian regiments carried the trench and the wells and the village beyond. The attack captured 38 officers, 700 men, 9 field guns and 3 machine guns. Many more Turkish soldiers, having run into the desert, came back to the wells over the next few days and surrendered. The cost for this triumph was 31 Australians troopers killed and 36 wounded, almost all of them in the fight for the trenches. By five-thirty the battle was over. The Turkish Gaza line had been turned. But so surprised and stunned were the victors themselves that it was almost another hour before anyone thought to send word back headquarters. We have no listing of how many horses were killed or wounded. But afterward a trooper noted, “It was the horses that did it; those marvelous bloody horses.”

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Monday, September 29, 2008

SAY A PRAYER

I have walked the Alder Creek meadows, and the trails around the lake and I found it difficult to conceive of the anguish and horrors that haunt those places. It was mid-May and warm and green and filled with life. Song birds flittered in the tall pines and deer cautiously peeked at me from the shadows. It was only when I paused to read the inscription at the base of the statue that it occurred to me that I had been aiming too low. The inscription explains that the snow that winter was almost as high as the stone base of that statue. The horror at Donner Lake and The Meadows had happened twenty-eight feet in the air, on top of the snow.
It was a romantic’s quest. The Gold Rush would not begin for two years when they set out in April of 1846 from Ohio: George Donner and his brother Jacob and their families, along with the family of James Reed: including hired hands, thirty-three souls all together, with oxen and cattle and chickens, all bound for California. In mid-May while
crossing the Green Rive Basin over the Rocky Mountains they met a misbegotten bunch who had read of a “better way west”, the “Hastings Cutoff”, brainchild of Landsford Hastings, a better author than a trailblazer. And on August 31 the two groups elected George Donner as their leader and turned their backs on the established trail at Fort Bridger, Wyoming. Their numbers had grown to 89. The “Cutoff” was a disaster. It twisted and wound up and through and over the Wasatch Mountains. You cannot imagine the difficulties until you have walked a hundred yards up hill, straight through a dense wood. Now imagine trying to clear a path through those same woods for a Conestoga wagon, five feet wide and sixteen feet long, without springs, with iron sheathed stiff wooden wheels, pulled by four oxen and loaded with seven tons of everything you think you might require to start your life over. At the summit they walked themselves to the very edge of a cliff with no room to turn around, and had to unload the wagons and then lower them and their cargo and their oxen on ropes to the valley below. They rejoined the trail on September 26. The “Cutoff” had left them three weeks behind. After the mountains, came the desert, where, at the “Humboldt Sink”, an entire river is consumed by the heat. By the first week in October the bold romantics had started to die. A sixty year old man known to us only as Mr. Hardcoop, a farmer from Ohio, was the first member of the Donner Party to die. His feet had swollen to bursting, and he was abandoned beneath a sage brush in the Nevada desert. Finally, on October 15 they reached the valley of the Truckee River, and at Truckee Meadows, modern day Reno, they paused, spending six precious days gathering their strength for the hurdle that faced them; the front wall of the Sierra Nevada Mountains. Stand on the shore of Mono Lake (to the south of the Truckee) and you see what gave these romantics pause. An abrupt wall of granite rises 1,500 feet straight into the air. And that is only the first step of a staircase that quickly climbs to over 12.000 feet. The “notch” or “Pass” through the mountains that the Donner party sought out is 7,000 feet high. And there the moist Pacific air climbing the gentle western slope of the Sierra, meets two lakes (Tahoe and Donner) and produces 415 inches of snow in an average year. In an average year winter storms produce ridge line winds of 100 miles an hour and higher, and temperatures down to -45 F. It was into this that the Donner Party began to climb the last days of October, 1846. There was already a dusting of snow in the pass. And this was not to be an average year in the Sierra.It started to snow on October 31, 1846, Halloween. The party was already broken. A wagon had flipped over and snapped an axel, and George Donner and family had stopped along Alder Creek to repair it. Meanwhile the majority had pressed on six miles farther and actually reached the summit. They were at the very edge of safety. Had they been one day, maybe one hour, sooner, they would have made it. They would have all lived. But within hours of that first gentle flake floating down to melt on a human cheek, six feet of snow fell, driving the romantics back to the eastern shore of the lake where there was a cabin and level ground. And there they stayed. And there many of them died.There were ten major storms that winter. A January storm formed ice in San Francisco, and in March it snowed in Monterey. At Alder Creek, where the winter was not quite as harsh as at the summit, George Donner cut trees off at the top of the snow pack, leaving a record of what they faced. At the pass the snow was ten to fifteen feet higher. The wonder is not that so many died, or that they were reduced to cannibalism, but that any at all lived. Out of fifty-five males, thirty-two died, out of thirty-four women just nine died. All the single males over twenty-one years old starved to death. On April 29, 1848, Louis Keseberg was carried into Sutters’ Fort, in the Serra foothills. He was the last survivor of the Donner Party to be rescued. And Iabella Breen McMahon, who had been a one year old infant during that starvation winter, died in 1935 at the age of 79. She was the last survivor of the Donner Party to die. If you get the chance to walk Alder Creek meadows, or the trails around the Eastern edge of Donner Lake please, say a prayer for all of those who preceded her. And for all of us who are destined to follow.
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