Harvard Magazine has a good article up online called Debtor Nation. The four pages give an overview of the current situation with the US economy and currency and its dependence on debt.

The global imbalances created by this dynamic of American borrowing and foreign lending appear stable for now, but if they slip suddenly, that could pose serious dangers for middle- and working-class Americans through soaring interest rates, a crash in the housing market, and sharply higher prices for anything no longer made domestically.

“We are at full employment, maybe more than full employment.” Furthermore, he notes, we have large liabilities ahead of us associated with an aging workforce, due not so much to Social Security as to the rising healthcare costs covered by Medicare. “There is absolutely no excuse to be running a government deficit of even 2 percent in the federal account, as we are doing now, when we are at full employment and the retirement of the baby-boom generation is right around the corner”

I did a 45 minute dive at the La Jolla Cove kelp beds this morning with a buddy. Visibility was only 5-10 feet. But the surface temp was 74, and the coldest water we hit was 64 degrees. We saw a lot of kelp bass and a few large schools out, but no large fish like sheephead or giant black sea bass. We did see a horn shark… but it doesn’t count, since it was dead and becoming food. Near the end of the dive we found a huge California spiny lobster, much larger than I’d ever seen here. It was hard to tell exactly how large it was, since it was holed up. But I would guess that head to tail it was over two feet long. The smallest tips of its legs were the size of my thumb. They can live up to 150 years old, so this guy was probably older than me.

This is hardly surprising:

Two Chinese officials at leading Communist Party bodies have given interviews in recent days warning, for the first time, that Beijing may use its $1,330bn (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress. Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China’s “nuclear option” in the state media, such action could trigger a dollar crash at a time when the US currency is breaking down through historic support levels.

You can’t expect someone to buy up all of your debt, prop up your currency, and then not use it as a bargaining chip.

The threats play into the presidential electoral campaign of Hillary Clinton, who has called for restrictive legislation to prevent America being “held hostage to economic decisions being made in Beijing, Shanghai or Tokyo”. She said foreign control over 44pc of the US national debt had left America acutely vulnerable.

Exactly what restrictive legislation would prevent America from being held hostage? Stop China from buying US debt? They are the only ones that want it! Here is the situation for you Hillary:

The US govt has been spending a hell of a lot more than it makes, a good chunk of that being for war. China wanted the US to keep buying goods, so it picked up the slack and bought up all the US debt. The US continued to finance the housing bubble. China now holds enough US cash to decimate the dollar, and a big enough trade deficit that they are under little threat from protectionist measures. If the US makes any moves this way, China holds all the cards.

Near as I can tell, the only solution is to get our financial house in order. Cut spending, raise taxes, and get out from under the massive debt that *my* generation and younger will be left dealing with.

Hillary, check your head.

“Mrs Clinton proposed expansion of the groups among measures to tackle weaknesses in the mortgage market and ­support homeowners. She vowed to clamp down on “unfair lending practices” and create a $1bn federal fund to help homeowners avoid foreclosure. Mrs Clinton said fixing the mortgage crisis would be among the priorities of Democratic lawmakers when Congress returns.“

Uhg. So lets break this down.

1) Fed drops rates and creates a bubble
2) Speculators and anyone that can fog a mirror are given loans
3) Loans go bad and growth dies.

The solution is not to reward these horrible investments with tax payer money and bail this situation out. The solution is to let this shit storm play out, and correct the many years of manipulation and speculation.

Where were these people years ago when the regulations should have been put in or enforced on crazy loans? No where. No one wanted to rock the boat when the money was rolling in. Who in their right mind thought this kind of growth in housing was sustainable? Why are they shocked about it now?

I finally got around to doing a couple dives at La Jolla Cove this morning with a friend. We got in the water a bit after nine, and the visibility had already started to go, but it was still a great dive. We headed out to the yellow buoy, then towards the gray one before heading back. Aside from a few sand spots, most of it is thin kelp forest, and a lot of fun to explore. There was a lot of life out there this morning. We were barely on the bottom a few minutes before a 2 foot male California sheephead decided to adopt us. He seemed to follow us around for about half an hour. There were quite a few large kelp bass, lobsters sharing holes, and the other usual suspects about. But I was also able to see eight 4-5 foot tope/school/soupfin sharks. They were skittish and the visibility was only about 10 feet, so I didn’t get a good look at them. But it was pretty cool to watch them cruse through the kelp.

The second dive we headed out a bit deeper to the other set of kelp beds. Unfortunately the tides had started to change at that point, so the vis had dropped to about six feet, and the surge was picking up. Much less life on this dive. Just some garibaldi and a few schools of the inch long half orange half purple fish. Quite a few large star fish though. It was great to swim through the kelp, but man, those La Jolla Cove stairs are a killer after an hour of swimming and fifty pounds of gear on. I should get in on a boat dive to the Point Loma kelp beds – I’ve heard are quite thick and a very different experience.

RollingStone has a great article called Ethanol Scam: Ethanol Hurts the Environment And Is One of America’s Biggest Political Boondoggles. If you aren’t familiar with the subject, this article is a great introduction.

This is not just hype — it’s dangerous, delusional bullshit. Ethanol doesn’t burn cleaner than gasoline, nor is it cheaper. Our current ethanol production represents only 3.5 percent of our gasoline consumption — yet it consumes twenty percent of the entire U.S. corn crop, causing the price of corn to double in the last two years and raising the threat of hunger in the Third World….

…Corn is already the most subsidized crop in America, raking in a total of $51 billion in federal handouts between 1995 and 2005 — twice as much as wheat subsidies and four times as much as soybeans. Ethanol itself is propped up by hefty subsidies, including a fifty-one-cent-per-gallon tax allowance for refiners. And a study by the International Institute for Sustainable Development found that ethanol subsidies amount to as much as $1.38 per gallon — about half of ethanol’s wholesale market price….

…ethanol made from sugar cane has an energy balance of 8-to-1 — that is, when you add up the fossil fuels used to irrigate, fertilize, grow, transport and refine sugar cane into ethanol, the energy output is eight times higher than the energy inputs. That’s a better deal than gasoline, which has an energy balance of 5-to-1. In contrast, the energy balance of corn ethanol is only 1.3-to-1 – making it practically worthless as an energy source.”

Bonus link: CBC On the Map Ethanol: Green Hope?