Solar-hybrid air conditioner from LG
LG Electronics announced yesterday the debut of the first eco-friendly solar hybrid air conditioner in Korea. This new product provides up to 70 watts of power per hour via solar cell modules attached to the top of this outdoor unit.
According to the Korean manufacturer, this new hybrid system is capable of reducing around 212kg of CO2 over 10 years, equivalent to 780 pine trees (over the same period).
Source: designboom via akihabara news
Scale of BP oil leak revised up to 40,000 barrels a day - The Guardian
Scientists this week doubled the official estimate of the size of the Gulf of Mexico oil spill, with more than 40,000 barrels of oil feared to be leaking from the seabed every day – but no one knows for sure.
BP has consistently played down the size of the spill. But with each new technique it deploys to siphon off more oil, the scale of the disaster and BP's hopelessly optimistic estimates become ever more apparent.
The new figure of between 20,000 and 40,000 barrels dwarfs the original estimate by US authorities – based on information provided by BP and endorsed by the oil company – that the spill was just 1,000 barrels of oil per day. As recently as the end of last month, the official estimate was still as low as 5,000 barrels. This was only revised following the release by BP – under pressure from scientists and the US Congress – of new video footage of the leak at the sea bed.
The most accurate way to measure the size of the spill is against the amount BP is collecting in its attempts to contain the leak. If next month BP starts to collect 50,000 barrels of oil per day, this will confirm that the original estimates massively understated the scale of the environmental catastrophe.
Democrat Ed Markey has accused BP of lying about the size of the spill to limit the financial impact on the company, an allegation that BP not surprisingly denies. The company faces fines of up to $4,300 for each spilt barrel.
BP has always admitted publicly that the official estimates were impossible to verify but in private briefings to the press it has quoted the figures with more certainty. When the Guardian challenged BP on the accuracy of the 5,000-barrel estimate last month, Kent Wells, a senior vice-president based in Houston, admitted that there was no way of knowing for sure how much oil was spewing into the Gulf. "It could be 1,000 barrels or 5,000 barrels," he said, but at no point did he specify that the amount could be higher than the official estimate.
If oil has been flowing at the top end of the current estimate – 40,000 barrels per day – a total of 2m barrels will have gushed into the Gulf to date. This would make it eight times worse than the Exxon Valdez spill in 1989.
The Gulf of Mexico spill is currently about a fifth of the size of the 1990 Persian Gulf spill caused by Saddam Hussein blowing up the Kuwaiti oilfields.
In August, the first of two relief wells is expected to be completed, which BP hopes will mean the leaking reservoir can be plugged permanently.
Police to 'pay Kingsnorth climate protesters compensation'
Police searched people entering the camp site near the power station
Kent Police are to pay compensation to three people who were unlawfully searched during a demonstration at a power station, lawyers have said.
Twins, then aged 11, and campaigner David Morris were attending a "climate camp" at Kingsnorth power station in 2008 when they were searched.
At the High Court in January, police admitted the searches were unlawful.
The solicitor who led the case called the police action a "massive violation of the human right to protest".
The twins, a boy and a girl who cannot be identified, and Mr Morris were among protesters who were processed through airport-style "checkpoints", their lawyers told the High Court.
They were taking part in the climate camp demonstration against plans for a new coal-fired facility at the power station near Hoo.
'Disrupt power'Lawyers for Kent Police told the High Court there had been a "misapplication of a clear policy by officers on the ground" which led to the unlawful searches.
Solicitor John Halford, acting for the demonstrators, said: "Kent Police has been forced to make a remarkable admission, thanks to this test case.
Colouring books were among the items police removed in searches
"It is that the outcome of one of the most expensive policing operations ever in the UK was a massive violation of the human right to protest."
Kent Police Assistant Chief Constable, Andy Adams, admitted on Thursday that "a number" of searches should not have happened at Kingsnorth.
But he added: "The publicly declared aim of some protesters was to break into Kingsnorth power station, an action which could have had the consequence of disrupting power supplies to a great number of people in Kent and could also have caused death or serious injury to anyone trespassing on the site.
"The police operation itself was very successful in preventing criminality and harm, while at the same time enabling a protest around an issue of genuine public concern to go ahead.
"We have accepted that many people were searched as a result of officer briefings which took place at the time of Climate Camp.
"A number of these searches should not have happened."
'Intimidation and violence'The news of the payout comes after heavy criticism of Kent Police from demonstrators and politicians in the wake of the climate camp.
The Liberal Democrats claimed in a report that police had used sleep depravation tactics and threatening behaviour to compile data on protesters.
And the then police minister, Vernon Coaker, apologised in the House of Commons for telling parliament that 70 officers were injured dealing with the protests.
Police made 100 arrests during the week-long climate camp
His comments came after it was revealed that injuries Kent Police claimed had been sustained during the climate camp included insect stings, toothache and heat exhaustion.
It was also revealed that among items confiscated by officers during searches were a clown outfit, blankets, balloons and colouring books.
Sarah Horne, who took part in the climate camp, said: "We held a week-long public camp, packed with workshops, talks, action planning and demonstrations of sustainable living.
"We were met by a policing operation based on harassment, intimidation and violence.
"It wasn't just the unlawful searches - hundreds of people's possessions were seized, from walking sticks to crayons to health and safety supplies.
"This week, Kent Police have offered compensation to three people, but thousands of members of the public were searched, attacked or otherwise harassed at the 2008 camp.
"Are Kent Police going to compensate and apologise to them all?"
Don’t sign to a major label — they’re dying, Radiohead singer warns young musicians
Radiohead frontman Thom Yorke has warned budding music stars to abandon any dreams of signing with a major label, claiming the mainstream recording industry is dying.
Yorke, 41, who made his fortune from six albums recorded with EMI, has told talented young musicians to make it on their own without the help of massive recording contracts.
He offers the pessimistic advice in a rare interview for a new school textbook in which he is asked what advice he would give teenagers who wanted to make a difference with their music.
Yorke claims the mainstream music industry is dying and that this will be "no great loss to the world" before telling aspiring musicians not to tie themselves to the "sinking ship".
Yorke suggests it will be "only a matter of time -- months rather than years -- before the music business establishment completely folds". After recording six albums with EMI, Radiohead split acrimoniously from the label when they failed to agree new terms.
In 2007, the band released their seventh album, In Rainbows, as an internet download for which fans could pay whatever they felt was appropriate.
Yorke was speaking to the authors of a new textbook for citizenship studies, The Rax Active Citizenship Toolkit, which aims to inspire young people to become more politically literate.
EMI's new executive chairman today claimed the label was on a "firm foundation for growth" despite its debts. Charles Allen said EMI, which owes its bank, Citigroup, about £3 billion, has more than trebled cash generation at its recorded music division.
What caused the deficit? revisited
Molly Scott Cato (the Green Party's economics speaker) wants "A Brief Word, Mr Cameron" about government debt:
The class war has been launched, and not by the Labour Party. Cameron's speech today sets the scene for a principled stand in favour of the interests of his owners rather than earners. This should be greeted with no surprise - why else was he elected in the bungled events of last month? Certainly not on the basis of his charisma or incisive intelligence. This speech will be followed up by attacks in the media on the plans for strike actionsby working people defending their living standards before these have even be discussed much less voted through.The political implication is that the public sector has enjoyed massive investment during the Labour years and that it will now pay the price while the private sector and the interests of capital see their just returns. The problem is that this is an outrageous untruth. My argument rests on the two pictures that are included with this post. Between them they demonstrate how the need for the shocking levels of public borrowing arose and where that money was spent.
The first graph demonstrates perfectly how we got into this mess by tracing public-sector borrowing from February 2007 to December 2008. It shows the steep rise that followed the banking crisis when our money was extracted in various ways to prevent the collapse of global finance. We didn't cause this, we didn't benefit from it, and yet the graph shows clearly that we paid for it.The second graph shows the same variable - public sector net borrowing - between February 2009 and April 2010. If you compare the graphs you can see that we are on a totally different axis here. Annual borrowing of £35bn. in Feburary 2007 had, by April 2010, been massively increased to £160bn. This is not the result of pointless spending on government bureaucracy, or the overpayment of nurses and teachers, its precise location in time makes clear its origin in the bank bailout.Perhaps as some sort of weak demonstration of honesty to justify his claim to have introduced a new type of politics Cameron does, in a subtle way, identify where the money went:'The global financial markets are no longer focussing simply on the financial position of the banks. They want to know that the governments that have supported the banks over the last eighteen months are taking the actions to bring their own finances under control.'This implicit admission of the massive transfer of value from public to private, from us to them, and the corresponding transfer of their debts to our public balance-sheet is the real political issue here. It is vital that working people defend their interests, and most importantly do not follow the divide-and-rule strategy that the attacks on public-sector pay suggest will accompany the inevitable summer of discontent.
What caused the deficit? - The Guardian
The mess in Britain's finances has three main causes. The first is that the crisis of 2007 arrived when the budget was in relatively poor shape. Tax receipts during the bubble years were weaker than the Treasury expected, which meant that even with the economy booming the deficit stood at close to £40bn.
The second factor was the depth and duration of the recession. Deficits tend to rise during downturns because tax receipts fall and spending on unemployment and other welfare payments rise. In Britain's case, the economy contracted by more than 6% over six successive quarters from early 2008 to late 2009. By the time growth resumed national output was 10% lower than it would have been had the economy continued to expand at its normal rate of around 2.5% a year. That punched a hole in the public finances.
Finally, the VAT holiday and help for the unemployed, designed to mitigate the effects of the recession, cost around £25bn, or around 1.5% of GDP, much smaller in relation to the size of the UK economy than the packages used to support growth in the United States or China.
Part of the deficit is deemed to be cyclical – it will disappear once the economy grows strongly. The other part, the £70bn structural element, is what the government wants to eliminate during the current parliament.
The bank bailouts have little impact: the Treasury does not count money used to buy bank shares because it assumes it will get it back.
Avon Wildlife Trust - Bath otter sightings
There was great excitement in Bath last week when reports of otter sightings on the river Avon near the city centre were referred to Avon Wildlife Trust. And only the week before we had had an excited phone call from a cyclist on the Bristol to Bath cycle path who heard what he thought was the plop of a large fish as he ate his sandwich by the river bank – only to find himself staring into the eyes of a large otter.
This is all great news for this magnificent river creature, says James Field, the Trust's otter specialist, who welcomed the recent sightings, and said: "The fact that there appear to have been a number of sightings from the same stretch of river may indicate that a female has taken up residence nearby and may have cubs. This is really exciting news!"
He explained that in the 1980s otters had been all but eradicated through a combination of water pollution and habitat loss. However, thanks to strict legal protection, improving habitats and a lot of work by conservation bodies like the wildlife Trusts, we have been seeing welcome signs in recent years that they have been starting to recover. On the river otters are top predators. They are natural explorers and will travel freely through the South West's network of rivers, streams and canals where they hunt fish and eels (along with the odd amphibian, small mammal or even duckling!). For an otter, the River Avon is a motorway, with plenty of service stations, running through the South West, and it's unthinkable that they wouldn't be using it.
However, it is still a rare privilege to actually see an otter in the flesh. Just being in the right place at the right time to catch a glimpse is a lottery with long odds. Any record of an otter is still an important piece of information that we can use to make sure that the catastrophe of the 20th century doesn't happen again. Becoming an otter spotter requires sharp eyes; they are shy, solitary, mainly nocturnal, very accomplished swimmers, and may occupy a territory including 40kms or more of watercourse. Otters use their droppings – spraint – to mark their territories and communicate with other otters.
James is always interested to hear about 'spraint' finds but he is especially keen to know if anyone finds a dead otter
He says: "It sounds macabre but, sadly, the bodies of otters killed in traffic accidents are sometimes found lying at roadsides and we can learn a huge amount from autopsies. As with spraint, the message is don't move or touch it. Just tell us where the body is, and we'll collect it."
James welcomes volunteers in the Avon and Somerset area where they can contribute to the North Somerset Otter Group – email jamesfield@avonwildlifetrust.org.uk or send sightings of otters to your local Wildlife Trust via www.wildlifetrusts.org.uk.
I saw an otter in the Avon near Victoria Bridge at 6am on
April 29th, 'towing' what looked to be a large fish, heading
westwards. It turned half around in the water to have a look at me -
which was delightful!
2010 on track to become warmest year ever | Environment | The Guardian
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Arctic icebergs float in a bay near Ammassalik island, Greenland. US figures show that arctic sea ice is now at the lowest extent ever recorded for the time of year. Photograph: John McConnico/APNew data from some of the world's leading climate researchers and institutions suggest that 2010 is shaping up to be one of the warmest years ever recorded.
Scientists at the US National Snow and Ice Centre Data Centre (NSIDC) report today that Arctic sea ice – frozen seawater that floats on the ocean surface – is now at its lowest physical extent ever recorded for the time of year, suggesting that it is on course to break the previous record low set in 2007.
Satellite monitoring by the NSIDC in Boulder, Colorado, shows that the melting of sea ice has been unusually fast this year, with as much as 40,000 sq km now disappearing daily.
The melt season started almost a month later than normal at the end of March and is not expected to end until September.
Meanwhile, research from the polar science centre at the University of Washington suggests that the volume of sea ice in March 2010 was 20,300 cubic km, 38% below the 1979 level when records began.
Global surface temperatures may also be at a record high, according to leading climate scientist James Hansen and colleagues at the National Aeronautic Space Administration (Nasa).
In a paper which is yet to be peer-reviewed but has been submitted to the journal Reviews of Geophysics, they suggest that the Earth has been 0.65C warmer over the past 12 months than during the 1951 to 1980 mean, and that the global temperature for 2010 will exceed the 2005 record.
Hansen, credited with being one of the first scientists to study climate change, dismisses sceptics' claims that global warming "stopped" in 1998.
"Record high global temperature during the period with instrumental data was reached in 2010," he writes.
"It is likely that the 2010 global surface temperature ... will be a record.
"Global warming on decadal timescales is continuing without let-up ... we conclude that there has been no reduction in the global warming trend of 0.15-0.2C/decade that began in the late 1970s."
The Nasa research backs up findings by the US National Oceanic and Atmospheric Association (NOAA), the US national climate monitoring service that measures global temperatures by satellite. This has recorded the hottest ever first four months of a year.
As a result of high sea surface temperatures, the Atlantic hurricane season – which officially started this week – is expected to be one of the most intense in years.
Last week NOAA predicted 14 to 23 named storms, including eight to 14 hurricanes – three to seven of which were likely to be "major", with winds of at least 111mph.
This is compared to an average six-month season of 11 named storms, six of which become hurricanes, two of them major.
Government review to examine threat of world resources shortage - The Guardian
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The review will examine a potential shortage of resources including timber. Peter Essick/Aurora/Getty Images
Ministers have ordered a review of looming global shortages of resources, from fish and timber to water and precious metals, amid mounting concern that the problem could hit every sector of the economy.
The study has been commissioned following sharp rises in many commodity prices on the world markets and recent riots in some countries over food shortages.
There is also evidence that some nations are stockpiling important materials, buying up key producers and land and restricting exports in an attempt to protect their own businesses from increasingly fierce global competition.
Several research projects have also warned of a pending crisis in natural resources, such as water and wildlife, which have suffered dramatic losses due to over-use, pollution, habitat loss, and, increasingly, changes caused by global warming.
Professor Bob Watson, the chief scientist for the Department for Food, Environment and Rural Affairs, the leading department in the initiative, said every sector of the British economy was directly or indirectly vulnerable to future shortages.
These could be caused either by resources running out or becoming harder to access because of geopolitical factors from war to tighter environmental regulation on resources such as timber and palm oil – the latter being found in an estimated one in 10 products, from chocolate to cosmetics, sold in Britain.
"One of the roles of government is to provide information ... come up with a shared vision of moving forward and working with the private sector so we have competitiveness, a viable economy moving forward," Watson said.
AEA, the consultancy commissioned to carry out the study, said resources at risk included timber, water, fish, precious metals and minerals such as phosphorus, which is widely used in fertiliser.
One area of particular concern is "rare earth elements", important for defence and many green technologies from low-energy lightbulbs to wind turbines, as well as industries as varied as electronics and lasers, film and lighting, aircraft engines, nuclear reactors, and pain-relieving drugs, Phil Dolley, AEA's resource efficiency director, said.
Elsewhere, the US, the EU and Mexico have announced that they want to bring a World Trade Organisation case against Chinese restrictions on exports of nine key raw materials, including coke, bauxite, magnesium and fluorspar, all important for producing steel, aluminium and other chemicals.
Resources under scrutiny by the UK government do not include the already heavily studied oil industry, nor ecosystem services such as flood defences, but the range was still "vast", Dolley, said.
"It's a hot topic because other countries are also thinking of this [and] doing a lot of work," he added.
For years, experts have warned of the threat of peak oil to both the world economy and international political stability if countries go to war to secure access to fossil fuels.
However, there is now also increasing concern about a range of other resources, including a report by the World Business Council for Sustainable Development in December that the European commission has commissioned a review of 49 strategically important resources it believes are at risk.
Among the countries known to be stockpiling resources, Japan has said it is storing supplies of seven rare metals it believes are "essential to modern life and industry".
Writing in the Wall Street Journal earlier this month, James Bacchus, the chairman of the WTO's appelate body, said China was also "hoarding rare elements and other raw materials", but so were many other countries and there had also been a "sharp increase" in actions to protect national resources worldwide.
The international affairs thinktank Chatham House, which is carrying out its own review into the resource crunch, has also compiled a list of deals signed by Chinese state-owned companies for special access to oil and gas reserves and the purchase of stakes in oil and coal producers covering South America, Australia, Russia and the Middle East.
The Guardian has also reported on the growing trend for buying land in African countries to gain access to water and space for crops – particularly by Chinese and Middle Eastern companies, sometimes backed by their governments.
However there is not yet firm evidence that many resources seen to be at risk will run out or be disrupted, or cannot be replaced or supplemented by new supplies, Bernice Lee, Chatham House's research director for energy, environment and resource governance, said.
For example, lithium – which will be increasingly in demand for electric vehicle batteries – is mostly mined in Bolivia and Chile, but there are vast supplies elsewhere if the technology can be found to extract it at a reasonable cost, Lee said.
"It [the resource issue] is important because it's seen to be important – countries are already imposing policies," she added.
AEA's initial report is due to be completed in the autumn, Dolley said.
In a written statement to the Guardian, the Department of Business, Innovation and Skills, which is also on the report's steering group, said: "The Department for Business looks forward to reading the report from the AEA on the future of material resources.
"It is important to assess the long-term viability of resources to help protect businesses in the future."
In Defense of Deficits - James K. Galbraith in The Nation
The Simpson-Bowles Commission, just established by the president, will no doubt deliver an attack on Social Security and Medicare dressed up in the sanctimonious rhetoric of deficit reduction. (Back in his salad days, former Senator Alan Simpson was a regular schemer to cut Social Security.) The Obama spending freeze is another symbolic sacrifice to the deficit gods. Most observers believe neither will amount to much, and one can hope that they are right. But what would be the economic consequences if they did? The answer is that a big deficit-reduction program would destroy the economy, or what remains of it, two years into the Great Crisis.
For this reason, the deficit phobia of Wall Street, the press, some economists and practically all politicians is one of the deepest dangers that we face. It's not just the old and the sick who are threatened; we all are. To cut current deficits without first rebuilding the economic engine of the private credit system is a sure path to stagnation, to a double-dip recession--even to a second Great Depression. To focus obsessively on cutting future deficits is also a path that will obstruct, not assist, what we need to do to re-establish strong growth and high employment.
To put things crudely, there are two ways to get the increase in total spending that we call "economic growth." One way is for government to spend. The other is for banks to lend. Leaving aside short-term adjustments like increased net exports or financial innovation, that's basically all there is. Governments and banks are the two entities with the power to create something from nothing. If total spending power is to grow, one or the other of these two great financial motors--public deficits or private loans--has to be in action.
For ordinary people, public budget deficits, despite their bad reputation, are much better than private loans. Deficits put money in private pockets. Private households get more cash. They own that cash free and clear, and they can spend it as they like. If they wish, they can also convert it into interest-earning government bonds or they can repay their debts. This is called an increase in "net financial wealth." Ordinary people benefit, but there is nothing in it for banks.
And this, in the simplest terms, explains the deficit phobia of Wall Street, the corporate media and the right-wing economists. Bankers don't like budget deficits because they compete with bank loans as a source of growth. When a bank makes a loan, cash balances in private hands also go up. But now the cash is not owned free and clear. There is a contractual obligation to pay interest and to repay principal. If the enterprise defaults, there may be an asset left over--a house or factory or company--that will then become the property of the bank. It's easy to see why bankers love private credit but hate public deficits.
All of this should be painfully obvious, but it is deeply obscure. It is obscure because legions of Wall Streeters--led notably in our time by Peter Peterson and his front man, former comptroller general David Walker, and including the Robert Rubin wing of the Democratic Party and numerous "bipartisan" enterprises like the Concord Coalition and the Committee for a Responsible Federal Budget--have labored mightily to confuse the issues. These spirits never uttered a single word of warning about the financial crisis, which originated on Wall Street under the noses of their bag men. But they constantly warn, quite falsely, that the government is a "super subprime" "Ponzi scheme," which it is not.
We also hear, from the same people, about the impending "bankruptcy" of Social Security, Medicare--even the United States itself. Or of the burden that public debts will "impose on our grandchildren." Or about "unfunded liabilities" supposedly facing us all. All of this forms part of one of the great misinformation campaigns of all time.
The misinformation is rooted in what many consider to be plain common sense. It may seem like homely wisdom, especially, to say that "just like the family, the government can't live beyond its means." But it's not. In these matters the public and private sectors differ on a very basic point. Your family needs income in order to pay its debts. Your government does not.
Private borrowers can and do default. They go bankrupt (a protection civilized societies afford them instead of debtors' prisons). Or if they have a mortgage, in most states they can simply walk away from their house if they can no longer continue to make payments on it.
With government, the risk of nonpayment does not exist. Government spends money (and pays interest) simply by typing numbers into a computer. Unlike private debtors, government does not need to have cash on hand. As the inspired amateur economist Warren Mosler likes to say, the person who writes Social Security checks at the Treasury does not have the phone number of the tax collector at the IRS. If you choose to pay taxes in cash, the government will give you a receipt--and shred the bills. Since it is the source of money, government can't run out.
It's true that government can spend imprudently. Too much spending, net of taxes, may lead to inflation, often via currency depreciation--though with the world in recession, that's not an immediate risk. Wasteful spending--on unnecessary military adventures, say--burns real resources. But no government can ever be forced to default on debts in a currency it controls. Public defaults happen only when governments don't control the currency in which they owe debts--as Argentina owed dollars or as Greece now (it hasn't defaulted yet) owes euros. But for true sovereigns, bankruptcy is an irrelevant concept. When Obama says, even offhand, that the United States is "out of money," he's talking nonsense--dangerous nonsense. One wonders if he believes it.
Nor is public debt a burden on future generations. It does not have to be repaid, and in practice it will never be repaid. Personal debts are generally settled during the lifetime of the debtor or at death, because one person cannot easily encumber another. But public debt does not ever have to be repaid. Governments do not die--except in war or revolution, and when that happens, their debts are generally moot anyway.
So the public debt simply increases from one year to the next. In the entire history of the United States it has done so, with budget deficits and increased public debt on all but about six very short occasions--with each surplus followed by a recession. Far from being a burden, these debts are the foundation of economic growth. Bonds owed by the government yield net income to the private sector, unlike all purely private debts, which merely transfer income from one part of the private sector to another.
Nor is that interest a solvency threat. A recent projection from the Center on Budget and Policy Priorities, based on Congressional Budget Office assumptions, has public-debt interest payments rising to 15 percent of GDP by 2050, with total debt to GDP at 300 percent. But that can't happen. If the interest were paid to people who then spent it on goods and services and job creation, it would be just like other public spending. Interest payments so enormous would affect the economy much like the mobilization for World War II. Long before you even got close to those scary ratios, you'd get full employment and rising inflation--pushing up GDP and, in turn, stabilizing the debt-to-GDP ratio. Or the Federal Reserve would stabilize the interest payouts, simply by keeping short-term interest rates (which it controls) very low.
What about indebtedness to foreigners? True, foreigners do us a favor by buying our bonds. To acquire them, China must export goods to us, not offset by equivalent imports. That is a cost to China. It's a cost Beijing is prepared to pay, for its own reasons: export industries promote learning, technology transfer and product quality improvement, and they provide jobs to migrants from the countryside. But that's China's business.
For China, the bonds themselves are a sterile hoard. There is almost nothing that Beijing can do with them. China already imports all the commodities and machinery and aircraft it can use--if it wanted more, it would buy them now. So unless China changes its export policy, its stock of T bonds will just go on growing. And we will pay interest on it, not with real effort but by typing numbers into computers. There is no burden associated with this, not now and not later. (If the Chinese hoard the interest, they also don't help much with job creation here. So the fact that we're buying a lot of goods from China simply means we have to be more imaginative, and bolder, if we want to create all the jobs we need.) Finally, could China dump its dollars? In principle it could, substituting Greek bonds for American and overpriced euros for cheap dollars. On brief reflection, no Beijing bureaucrat is likely to think this a smart move.
What is true of government as a whole is also true of particular programs. Social Security and Medicare are government programs; they cannot go bankrupt, and they cannot fail to meet their obligations unless Congress decides--say on the recommendation of the Simpson-Bowles Commission--to cut the benefits they provide. The exercise of linking future benefits and projected payroll tax revenues is an accounting farce, done for political reasons. That farce was started by FDR as a way of protecting Social Security from cuts. But it has become a way of creating needless anxiety about these programs and of precluding sensible reforms, like expanding Medicare to those 55 and older, or even to the whole population.
Social Security and Medicare are transfer programs. What they do, mainly, is move resources around within our society at a given time. The principal transfer is not from the young to the old, since even without Social Security the old would still be around and someone would have to support them. Rather, Social Security pools resources, so that the work of the young collectively supports the senior population. The effective transfer is from parents who have children who would otherwise support them (a fairly rare thing), to seniors who don't. And it is from workers who do not have parents to support, to workers who would otherwise have to support their parents. In both cases this burden sharing is fair, progressive and sustainable. There is a healthcare cost problem, as everyone knows, but that's not a Medicare problem. It should not be solved by cutting back on healthcare for the old. Social Security and Medicare also replace private insurance with cheap and efficient public administration. This is another reason these programs are the hated targets, decade after decade, of the worst predators on Wall Street.
Public deficits and private lending are reciprocal. Increased private lending generates new tax revenue and smaller deficits; that's what happened in the 1990s. A credit collapse kills the tax base and generates more spending; that's what's happening now, and our big deficits are the accounting counterpart of the massive decline, last year, in private bank loans. The only choice is what kind of deficit to run--useful deficits that rebuild the country, as in the New Deal, or useless ones, with millions kept unnecessarily on unemployment insurance when they could instead be given jobs.
If we could revive private lending, should we do it? Well, yes, up to a point there is good reason to have a robust private lending sector. Government is by nature centralized and policy driven. It works by law and regulation. Decentralized and competitive private banks have much more flexibility. A good banking system, run by capable people with good business judgment who know their clients, is good for the economy. The fact that you have to pay interest on a loan is also an important motivator of investment over consumption.
But right now, we don't have functional big banks. We have a cartel run by an incompetent plutocracy, with its long fingers deep in the pockets of the state. For functional credit to return, we'll have to reduce the unpayable private debts now outstanding, to restore private incomes (meaning: create jobs) and collateral (meaning: home values), and we'll have to restructure the big banks. We need to break them up, shrink the financial sector overall, expose and prosecute frauds, and create incentives for profitable lending in energy conservation, infrastructure and other sectors. Or we could create a new parallel banking system, as was done in the New Deal with the Reconstruction Finance Corporation and its spinoffs, including the Home Owners' Loan Corporation and later Fannie Mae and Freddie Mac.
Either way, until we have effective financial reform, public budget deficits are the only way toward economic growth. You don't have to like budget deficits to realize that we must have them, on whatever scale necessary to restore growth and jobs. And we will need them not just now but for a long while, until we've shaped a strategic program for investment, energy and the environment, financed in part by a reformed, restored and disciplined financial sector.
It's possible, of course, that all the deficit hysteria is intended to divert attention from the dysfunctions of private banking, and so to help thwart calls for financial reform. Is that giving them too much credit? Maybe. Maybe not.


Police searched people entering the camp site near the power station
Colouring books were among the items police removed in searches
Police made 100 arrests during the week-long climate camp


