Dream of the Machine

SUBHEAD: A universe made totally transparent to the human mind and totally subservient to the human will.

By John Michael Greer on 1 July 2015 for Archdruid Report -
(http://thearchdruidreport.blogspot.com/2015/07/the-dream-of-machine.html)


Image above: Cover illustration by Ralph McQuarrie for book "Robot Dreams" by Isaac Asimov. From (http://hermiene.net/books/author/377).

As I type these words, it looks as though the wheels are coming off the global economy. Greece and Puerto Rico have both suspended payments on their debts, and China’s stock market, which spent the last year in a classic speculative bubble, is now in the middle of a classic speculative bust.

Those of my readers who’ve read John Kenneth Galbraith’s lively history The Great Crash 1929 already know all about the Chinese situation, including the outcome—and since vast amounts of money from all over the world went into Chinese stocks, and most of that money is in the process of turning into twinkle dust, the impact of the crash will inevitably proliferate through the global economy.

So, in all probability, will the Greek and Puerto Rican defaults.

In today’s bizarre financial world, the kind of bad debts that used to send investors backing away in a hurry attract speculators in droves, and so it turns out that some big New York hedge funds are in trouble as a result of the Greek default, and some of the same firms that got into trouble with mortgage-backed securities in the recent housing bubble are in the same kind of trouble over Puerto Rico’s unpayable debts.

How far will the contagion spread? It’s anybody’s guess.

Oh, and on another front, nearly half a million acres of Alaska burned up in a single day last week—yes, the fires are still going—while ice sheets in Greenland are collapsing so frequently and forcefully that the resulting earthquakes are rattling seismographs thousands of miles away. These and other signals of a biosphere in crisis make good reminders of the fact that the current economic mess isn’t happening in a vacuum.

As Ugo Bardi pointed out in a thoughtful blog post, finance is the flotsam on the surface of the ocean of real exchanges of real goods and services, and the current drumbeat of financial crises are symptomatic of the real crisis—the arrival of the limits to growth that so many people have been discussing, and so many more have been trying to ignore, for the last half century or so.

A great many people in the doomward end of the blogosphere are talking about what’s going on in the global economy and what’s likely to blow up next. Around the time the next round of financial explosions start shaking the world’s windows, a great many of those same people will likely be talking about what to do about it all. I don’t plan on joining them in that discussion.

As blog posts here have pointed out more than once, time has to be considered when getting ready for a crisis. The industrial world would have had to start backpedaling away from the abyss decades ago in order to forestall the crisis we’re now in, and the same principle applies to individuals. The slogan “collapse now and avoid the rush!” loses most of its point, after all, when the rush is already under way.

Any of my readers who are still pinning their hopes on survival ecovillages and rural doomsteads they haven’t gotten around to buying or building yet, in other words, are very likely out of luck. They, like the rest of us, will be meeting this where they are, with what they have right now.

This is ironic, in that ideas that might have been worth adopting three or four years ago are just starting to get traction now. I’m thinking here particularly of a recent article on how to use permaculture to prepare for a difficult future, which describes the difficult future in terms that will be highly familiar to readers of this blog. More broadly, there’s a remarkable amount of common ground between that article and the themes of my book Green Wizardry.

The awkward fact remains that when the global banking industry shows every sign of freezing up the way it did in 2008, putting credit for land purchases out of reach of most people for years to come, the article’s advice may have come rather too late.

That doesn’t mean, of course, that my readers ought to crawl under their beds and wait for death. What we’re facing, after all, isn’t the end of the world—though it may feel like that for those who are too deeply invested, in any sense of that last word you care to use, in the existing order of industrial society.

As Visigothic mommas used to remind their impatient sons, Rome wasn’t sacked in a day. The crisis ahead of us marks the end of what I’ve called abundance industrialism and the transition to scarcity industrialism, as well as the end of America’s global hegemony and the emergence of a new international order whose main beneficiary hasn’t been settled yet.

Those paired transformations will most likely unfold across several decades of economic chaos, political turmoil, environmental disasters, and widespread warfare.

 Plenty of people got through the equivalent cataclysms of the first half of the twentieth century with their skins intact, even if the crisis caught them unawares, and no doubt plenty of people will get through the mess that’s approaching us in much the same condition.

Thus I don’t have any additional practical advice, beyond what I’ve already covered in my books and blog posts, to offer my readers just now. Those who’ve already collapsed and gotten ahead of the rush can break out the popcorn and watch what promises to be a truly colorful show.

 Those who didn’t—well, you might as well get some popcorn going and try to enjoy the show anyway. If you come out the other side of it all, schoolchildren who aren’t even born yet may eventually come around to ask you awed questions about what happened when the markets crashed in ‘15.

In the meantime, while the popcorn is popping and the sidewalks of Wall Street await their traditional tithe of plummeting stockbrokers, I’d like to return to the theme of last week’s post and talk about the way that the myth of the machine—if you prefer, the widespread mental habit of thinking about the world in mechanistic terms—pervades and cripples the modern mind.

Of all the responses that last week’s post fielded, those I found most amusing, and also most revealing, were those that insisted that of course the universe is a machine, so is everything and everybody in it, and that’s that.

That’s amusing because most of the authors of these comments made it very clear that they embraced the sort of scientific-materialist atheism that rejects any suggestion that the universe has a creator or a purpose.

A machine, though, is by definition a purposive artifact—that is, it’s made by someone to do something. If the universe is a machine, then, it has a creator and a purpose, and if it doesn’t have a creator and a purpose, logically speaking, it can’t be a machine.

That sort of unintentional comedy inevitably pops up whenever people don’t think through the implications of their favorite metaphors. Still, chase that habit further along its giddy path and you’ll find a deeper absurdity at work. When people say “the universe is a machine,” unless they mean that statement as a poetic simile, they’re engaging in a very dubious sort of logic.

As Alfred Korzybski pointed out a good many years ago, pretty much any time you say “this is that,” unless you implicitly or explicitly qualify what you mean in very careful terms, you’ve just babbled nonsense.

The difficulty lies in that seemingly innocuous word “is.” What Korzybski called the “is of identity”—the use of the word “is” to represent "=", the sign of equality—makes sense only in a very narrow range of uses.

You can use the “is of identity” with good results in categorical definitions; when I commented above that a machine is a purposive artifact, that’s what I was doing.

Here is a concept, “machine;” here are two other concepts, “purposive” and “artifact;” the concept “machine” logically includes the concepts “purposive” and “artifact,” so anything that can be described by the words “a machine” can also be described as “purposive” and “an artifact.” That’s how categorical definitions work.

Let’s consider a second example, though: “a machine is a purple dinosaur.” That utterance uses the same structure as the one we’ve just considered. I hope I don’t have to prove to my readers, though, that the concept “machine” doesn’t include the concepts “purple” and “dinosaur” in any but the most whimsical of senses.

There are plenty of things that can be described by the label “machine,” in other words, that can’t be described by the labels “purple” or “dinosaur.” The fact that some machines—say, electronic Barney dolls—can in fact be described as purple dinosaurs doesn’t make the definition any less silly; it simply means that the statement “no machine is a purple dinosaur” can’t be justified either.

With that in mind, let’s take a closer look at the statement “the universe is a machine.” As pointed out earlier, the concept “machine” implies the concepts “purposive” and “artifact,” so if the universe is a machine, somebody made it to carry out some purpose.

Those of my readers who happen to belong to Christianity, Islam, or another religion that envisions the universe as the creation of one or more deities—not all religions make this claim, by the way—will find this conclusion wholly unproblematic.

My atheist readers will disagree, of course, and their reaction is the one I want to discuss here. (Notice how “is” functions in the sentence just uttered: “the reaction of the atheists” equals “the reaction I want to discuss.” This is one of the few other uses of “is” that doesn’t tend to generate nonsense.)

In my experience, at least, atheists faced with the argument about the meaning of the word “machine” I’ve presented here pretty reliably respond with something like “It’s not a machine in that sense.”

That response takes us straight to the heart of the logical problems with the “is of identity.” In what sense is the universe a machine?

Pursue the argument far enough, and unless the atheist storms off in a huff—which admittedly tends to happen more often than not—what you’ll get what amounts to “the universe and a machine share certain characteristics in common.”

Go further still—and at this point the atheist will almost certainly storm off in a huff—and you’ll discover that the characteristics that the universe is supposed to share with a machine are all things we can’t actually prove one way or another about the universe, such as whether it has a creator or a purpose.

The statement “the universe is a machine,” in other words, doesn’t do what it appears to do. It appears to state a categorical identity; it actually states an unsupported generalization in absolute terms. It takes a mental model abstracted from one corner of human experience and applies it to something unrelated.

In this case, for polemic reasons, it does so in a predictably one-sided way: deductions approved by the person making the statement (“the universe is a machine, therefore it lacks life and consciousness”) are acceptable, while deductions the person making the statement doesn’t like (“the universe is a machine, therefore it was made by someone for some purpose”) get the dismissive response noted above.

This sort of doublethink appears all through the landscape of contemporary non-conversation and non-debate, to be sure, but the problems with the “is of identity” don’t stop with its polemic abuse.

Any time you say “this is that,” and mean something other than “this has some features in common with that,” you’ve just fallen into one of the core booby-traps hardwired into the structure of human thought.

Human beings think in categories. That’s what made ancient Greek logic, which takes categories as its basic element, so massive a revolution in the history of human thinking: by watching the way that one category includes or excludes another, which is what the Greek logicians did, you can squelch a very large fraction of human stupidities before they get a foothold.

What Alfred Korzybski pointed out, in effect, is that there’s a metalogic that the ancient Greeks didn’t get to, and logical theorists since their time haven’t really tackled either: the extremely murky relationship between the categories we think with and the things we experience, which don’t come with category labels spray-painted on them.

Here is a green plant with a woody stem. Is it a tree or a shrub? That depends on exactly where you draw the line between those two categories, and as any botanist can tell you, that’s neither an easy nor an obvious thing.

As long as you remember that categories exist within the human mind as convenient handles for us to think with, you can navigate around the difficulties, but when you slip into thinking that the categories are more real than the things they describe, you’re in deep, deep trouble.

It’s not at all surprising that human thought should have such problems built into it. If, as I do, you accept the Darwinian thesis that human beings evolved out of prehuman primates by the normal workings of the laws of evolution, it follows logically that our nervous systems and cognitive structures didn’t evolve for the purpose of understanding the truth about the cosmos; they evolved to assist us in getting food, attracting mates, fending off predators, and a range of similar, intellectually undemanding tasks.

If, as many of my theist readers do, you believe that human beings were created by a deity, the yawning chasm between creator and created, between an infinite and a finite intelligence, stands in the way of any claim that human beings can know the unvarnished truth about the cosmos.

Neither viewpoint supports the claim that a category created by the human mind is anything but a convenience that helps our very modest mental powers grapple with an ultimately incomprehensible cosmos.

Any time human beings try to make sense of the universe or any part of it, in turn, they have to choose from among the available categories in an attempt to make the object of inquiry fit the capacities of their minds.

That’s what the founders of the scientific revolution did in the seventeenth century, by taking the category of “machine” and applying it to the universe to see how well it would fit. That was a perfectly rational choice from within their cultural and intellectual standpoint.

The founders of the scientific revolution were Christians to a man, and some of them (for example, Isaac Newton) were devout even by the standards of the time; the idea that the universe had been made by someone for some purpose, after all, wasn’t problematic in the least to people who took it as given that the universe was made by God for the purpose of human salvation.

It was also a useful choice in practical terms, because it allowed certain features of the universe—specifically, the behavior of masses in motion—to be accounted for and modeled with a clarity that previous categories hadn’t managed to achieve.

The fact that one narrowly defined aspect of the universe seems to behave like a machine, though, does not prove that the universe is a machine, any more than the fact that one machine happens to look like a purple dinosaur proves that all machines are purple dinosaurs.

The success of mechanistic models in explaining the behavior of masses in motion proved that mechanical metaphors are good at fitting some of the observed phenomena of physics into a shape that’s simple enough for human cognition to grasp, and that’s all it proved. To go from that modest fact to the claim that the universe and everything in it are machines involves an intellectual leap of pretty spectacular scale.

Part of the reason that leap was taken in the seventeenth century was the religious frame of scientific inquiry at that time, as already mentioned, but there was another factor, too.

It’s a curious fact that mechanistic models of the universe appeared in western European cultures, and become wildly popular there, well before the machines did. In the early seventeenth century, machines played a very modest role in the life of most Europeans; most tasks were done using hand tools powered by human and animal muscle, the way they had been done since the dawn of the agricultural revolution eight millennia or so before.

The most complex devices available at the time were pendulum clocks, printing presses, handlooms, and the like—you know, the sort of thing that people these days use instead of machines when they want to get away from technology.

For reasons that historians of ideas are still trying to puzzle out, though, western European thinkers during these same years were obsessed with machines, and with mechanical explanations for the universe.

Those latter ranged from the plausible to the frankly preposterous—René Descartes, for example, proposed a theory of gravity in which little corkscrew-shaped particles went zooming up from the earth to screw themselves into pieces of matter and yank them down.

Until Isaac Newton, furthermore, theories of nature based on mechanical models didn’t actually explain that much, and until the cascade of inventive adaptations of steam power that ended with James Watt’s epochal steam engine nearly a century after Newton, the idea that machines could elbow aside craftspeople using hand tools and animals pulling carts was an unproven hypothesis.

Yet a great many people in western Europe believed in the power of the machine as devoutly as their ancestors had believed in the power of the bones of the local saints.

A habit of thought very widespread in today’s culture assumes that technological change happens first and the world of ideas changes in response to it. The facts simply won’t support that claim, though.

As the history of mechanistic ideas in science shows clearly, the ideas come first and the technologies follow—and there’s good reason why this should be so. Technologies don’t invent themselves, after all.

Somebody has to put in the work to invent them, and then other people have to invest the resources to take them out of the laboratory and give them a role in everyday life.

The decisions that drive invention and investment, in turn, are powerfully shaped by cultural forces, and these in turn are by no means as rational as the people influenced by them generally like to think.

People in western Europe and a few of its colonies dreamed of machines, and then created them.

They dreamed of a universe reduced to the status of a machine, a universe made totally transparent to the human mind and totally subservient to the human will, and then set out to create it.

That latter attempt hasn’t worked out so well, for a variety of reasons, and the rising tide of disasters sketched out in the first part of this week’s post unfold in large part from the failure of that misbegotten dream.

In the next few posts, I want to talk about why that failure was inevitable, and where we might go from here.

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Sierra Club on Mauna Kea

SUBHEAD: Significant scarring and erosion of the Mauna Kea summit as well as threats to delicate habitats.

By Nelson Ho on July 1 2015 for Malama i ka Honua -
(http://sierraclubhawaii.org/pdf/Sierra%20Club%20Newsletter%20JULY%202015%20Email.pdf)


Image above: Current scarring of summit ridge by erosion along access roadway to observatory sites. From original article.

Mauna Kea has garnered significant media and celebrity attention over the past few months, but the Sierra Club has had its eyes focused on the summit for decades.The controversy over telescope development atop Mauna Kea actually began with the first University of Hawaii facility in the 1968. From the start, the Sierra Club and the broader environmental community were key critics of development on and around the summit.

It was Club member Mae Mull, a Volcano resident and energetic environmentalist, who brought her concerns to this author’s attention, back in 1980. She was recruiting anyone who could make the arduous trip to the summit and speak for the Hawaii Audubon Society or Sierra Club.

Through numerous meetings, Mull made allies among the hunters concerned about access to hunting areas, which the Honolulu-based Institute for Astronomy attempted to limit. Mull kept boxes of newspaper clippings and documents from the many DLNR hearings back then. She was very vocal
about the urbanization of the summit as telescopes began sprouting up like weeds.

Her opinion was shared by many islanders upset with the proliferation of domes. Even Hawaii County Mayor Herbert Matayoshi called them “pimples” blemishing the beauty of the mountain.

During the late1970s Mauna Kea’s upper slopes were the testing ground for a series of moon vehicles. The field activities were reported in a 1979 issue of Science magazine. The article claimed that the volcano’s harsh stone environment was as bare and lifeless as the surface of Mars. Three Hawaii biologists scoffed at that superficial pronouncement and began their own field surveys to see what biology actually was on Mauna Kea.


Image above: Excavation in 1986 for the Keck facility on of Mauna Kea required 40 foot deep removal of summit material to make large enough area for construction. From original article.

Dr. Frank Howarth was an entomologist working at the Bishop Museum who specialized in cave biology. Dr. Wayne Gagne was an entomologist and a key volunteer leader on the Sierra Club of Hawaii’s Chapter Executive Committee. Dr. Steve Montgomery was the third entomologist in this group and was also very active on the Executive Committee. Howarth, Gagne, and Montgomery were friends of Bill and Mae Mull.

Together this volunteer team explored the alpine, aeolian (wind-driven) stone desert ecosystem. In 1979, they discovered a complex web of life, finding 15 species of native arthropods, including the endemic wekiu bug, nysius wekiucola, found nowhere else on the planet.

The wekiu bug is adapted to a habitat limited to the upper reaches of the Mauna Kea conservation district. This complex ecosystem, to this day, has not been studied, monitored nor protected from the industrial changes to the summit region.

Howarth and Dr. Fred Stone conducted an entomology study for the proposed Keck telescope area in 1982, and by the next year they were disturbed by the damage done to the summit habitat. They made recommendations for biological inventory, habitat mitigation, and monitoring. The wekiu bug habitat is easily altered by vehicular traffic and construction activity, as tephra cinders preferred by the bug are easily crushed into dust-sized particles, which fill their living spaces.

Prime habitat can be quickly degraded to compacted silt and mud by use of off-road vehicles. wekiu habitat may also be altered by dust blown up from road grading and other construction activities. Concerns about the urbanization and industrialization of the summit prompted the University to prepare a master plan in 1983. The University has still not fulfilled some of the promises made in that plan two decades ago.

Club members Deborah J. Ward and the author accompanied Dr. Fred Stone on a visit to the summit. The Japanese Subaru facility had seriously altered the top and inner cinder slopes of Puu Hauoki and was that day trenching, with heavy machinery, into the outer slopes of the cone (high-quality wekiu bug habitat) for optical and electrical cables. The DLNR had no idea this industrial activity was going on, let alone in prime wekiu habitat.


Image above: Excavation into cinder slope for construction of Japan's Subaru facility. From original article.

Was this the kind of activity and lack of oversight that Gov. David Ige and UH President Dave Lassner apologized for on May 26, 2015?

In 1996, the Sierra Club of Hawaii adopted a policy calling for;
“a moratorium on any further development in the Mauna Kea Science Reserve until... [certain] conditions, designed to re-establish a prudent balance between astronomy and the cultural, religious, biological, eological, and recreational attributes of the mountain, are met...”
To date, most of the conditions have not been satisfactorily met.

The Sierra Club’s concerns back then—and today—include the visual impact of construction on sensitive cultural view planes from both the summit and the lowlands, the industrialization of conservation district land, the impact on cultural resources and historic sites, the impact on wekiu habitat, and the failure of the State to collect the fair market value of lease rents from foreign and mainland entities thatuse public trust lands.

The Sierra Club of Hawaii intervened in two contested case hearings: expansion of the Keck telescope facilities and the UH Comprehensive Management Plan.

For decades, Sierra Club has worked side by side with the Conservation Council for Hawaii and KAHEA: The Hawaiian-Environmental Alliance to correct bad land-use management practices for this vulnerable land. It also challenged the acceptance of the latest management plan.

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A Commons Based Economy

SUBHEAD: Presentation by Michel Bauwens of what a Commons based economy will look like.

By By David Bollier on 27 June 2015 for Bollier.org -
(http://www.bollier.org/blog/michel-bauwens-heres-what-commons-based-economy-looks)


Image above: Michel Bauwens photographed for article about the Catalan Integral Cooperative. From (http://commonstransition.org/catalan-integral-cooperative/).

So what might a commons-based economy actually look like in its broadest dimensions, and how might we achieve it?  My colleague Michel Bauwens of the P2P Foundation offers a remarkably thoughtful and detailed explanation in a just-released YouTube talk, produced by FutureSharp. It’s not really a video – just Michel’s voiceover and a simple schematic chart – but the 20-minute talk does a great job of sketching the big-picture strategies that must be pursued if we are going to invent a new type of post-capitalist economy.

Michel focuses on the importance of three specific realms that are crucial to this new vision – ecological sustainability, open knowledge and social solidarity. Each is critical as a field of action for overturning the existing logic of market capitalism.

Fortunately, there are many promising developments in each of these realms. Many parts of the environmental movement seek to go beyond the standard “market-oriented solutions.” There is a growing body of open source-inspired projects for software code, information, design and physical production, which is now spawning new types of global sharing of information with distributed local production.

And there are many advocates and initiatives for social justice and fairness in the economy, such as cooperatives and the solidarity economy movement.

The problem, says Bauwens, is that these movements do not generally connect with each other or coordinate internationally. He therefore sees the need for “meta-economic networks” to bridge these fields of action.

So, for example, we need “open cooperativism” enterprises to bridge open knowledge systems and cooperatives, so that open network (or licensed) systems are not simply dominated by large corporations in the way that Google, Uber and Airbnb have done.

We also need to develop an “open source circular economy” to bridge the worlds of eco-sustainability and open knowledge.  We will never address major environmental problems if the technological and product solutions are based on proprietary knowledge; open circulation of knowledge can change that.

Bauwens also sketches a compelling scenario by which commons-based projects can begin to develop a new politics through such vehicles as a new “ethical entrepreneurial coalition,” a “Chamber of Commons,” and “Commons Assemblies.”

He calls for new types of cooperative finance that can support sustainable production (based on the idea of sufficiency shared by all) as well as the mutualizing of knowledge (vs. its privatization via patents and copyright) and social solidarity (to ensure just and fair distribution of any surplus value created).

While the overall vision may strike skeptics as utopian, the truth is that many of the ideas in Bauwen’s scenario are already underway, if not well-developed.  What’s mostly missing is a wider orientation and commitment to a coherent, shared vision such as this one.

There is also a need for new bridges of social practice and coordination among the three key fields of action.


Video above: Michel Bauwens presentation. From (https://www.youtube.com/watch?v=sO-QJLDpHQ0).

You can also check out several short short videos introducing the basic concepts of peer production here.

Anyone who is especially interested in this topic should know that the P2P Foundation plans to host a three-day summer school on “The Art of Commoning,” from August 25-27, in Cloughjordan ecovillage in Tipperary, Ireland.  Details here and here.

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BIS negative outlook

SUBHEAD: Bank for International Settlements says “The world is unable to fight next global crash”.

By Mike Slavo on 29 June 2015 for SHTF Plan  -
(http://www.shtfplan.com/headline-news/central-bank-of-central-banks-says-the-world-is-unable-to-fight-next-global-crash_06292015)


Image above: Headquarters of the Bank for International Settlements in Basel, Switzerland .From (https://www.flickr.com/photos/simply-mo/4889743841).

According to the Bank for International Settlements (BIS), the shadowy “central bank of central banks,” the world as it stands is incapable of combating another global financial crash – a crash that there is every reason to think is coming.

That’s because the economy remains in the hands of the Federal Reserve and other central banks. The financial wizards in THIS VIDEO went so far to say that “we are all slaves to the central banks.” It wasn’t exactly hyperbole.

According to the BIS, central banks have already “used up their ammunition” by driving interests to below zero, freezing investment for the important stuff like production and infrastructure, and instead fueling huge bubbles for wonder kids on Wall Street to play in.

Now, everything is basically teetering on the edge until the music stops. According to the BIS, it will soon be time to pay the piper – as “persistent ultra-low rates” are poised to unleash destruction upon the economy like King Kong set loose on Manhattan:
The BIS report described the threat of a new bust in advanced economies as a “main risk”, with many reaching the top of the economic cycle.

The economies worst hit by the last crisis are now suffering the costs of persistent ultra-low rates, the organisation said, which could “inflict serious damage on the financial system”, sapping banks and weakening their balance sheets and their ability to lend.
And worse, the advanced countries will be unable to fight back against the serious consequences, according to their 2015 annual report :
• The world will be unable to fight the next global financial crash as central banks have used up their ammunition trying to tackle the last crises.
Central banks have backed themselves into a corner after repeatedly cutting interest rates to shore up their economies.

Central banks may have contributed [to the coming crisis] by fuelling costly financial booms and busts and delaying adjustment.”
In past years, the BIS has painted a clear picture of the bleak financial landscape brought on by central bank policy since the 2008 crisis.

It warned in 2013 that:
Fresh action from central banks to kick-start growth may do more harm than good, by distorting financial markets and jeopardising stability.

“Unfortunately, central banks cannot do more without compounding the risks they have already created.” (source)
In 2014, it found that central banks have failed to achieve a recovery, and are incapable of doing so:
Robust, self-sustaining growth still eludes the global economy… Central banks cannot solve the structural problems that are preventing a return to strong and sustainable growth.
“Most of all, central banks cannot enact the structural economic and financial reforms needed to return economies to the real growth paths authorities and their publics both want and expect.”
What central bank accommodation has done during the recovery is to borrow timeBut the time needs to be used wisely, as the balance between benefits and costs is deteriorating.” (source)
Given the unique insider position of the Bank of International Settlements in the global financial power structure, these are foreboding words to be met with mature concern. This is a tacit admission that the powers that be know the next big crisis is around the corner, and they are ready to watch us drown in it – this time, without reaching down to offer us up.



BIS Warning

SUBHEAD: Monetary policymakers have run out of room to fight the next crisis with interest rates unable to go lower.

By Peter Spence on 29 June 2015 for the Telegraph  (http://www.telegraph.co.uk/finance/economics/11704051/The-world-is-defenseless-against-the-next-financial-crisis-warns-BIS.html)

The world will be unable to fight the next global financial crash as central banks have used up their ammunition trying to tackle the last crises, the Bank of International Settlements has warned.

The so-called central bank of central banks launched a scatching critique of global monetary policy in its annual report. The BIS claimed that central banks have backed themselves into a corner after repeatedly cutting interest rates to shore up their economies.


These low interest rates have in turn fuelled economic booms, encouraging excessive risk taking. Booms have then turned to busts, which policymakers have responded to with even lower rates.

Claudio Borio, head of the organisation’s monetary and economic department, said: “Persistent exceptionally low rates reflect the central banks’ and market participants’ response to the unusually weak post-crisis recovery as they fumble in the dark in search of new certainties.”

“Rather than just reflecting the current weakness, they may in part have contributed to it by fuelling costly financial booms and busts and delaying adjustment. The result is too much debt, too little growth and too low interest rates.

"In short, low rates beget lower rates."

The BIS warned that interest rates have now been so low for so long that central banks are unequipped to fight the next crises.

“In some jurisdictions, monetary policy is already testing its outer limits, to the point of stretching the boundaries of the unthinkable,” the BIS said.

Policymakers in the eurozone, Denmark, Sweden and Switzerland have taken their interest rates below zero in an attempt to support their economies, contributing to a decline in bond yields.

Extraordinarily low interest rates are not a “new equilibrium” said Jaime Caruana, general manager of the BIS, rejecting the theory of so-called “secular stagnation” which some economists blame for the continued decline in global lending rates.

“True, there may be secular forces that put downward pressure on equilibrium interest rates … [but] we argue that the current configuration of very low rates is neither inevitable, nor does it represent a new equilibrium,” he said.

Mr Caruana said that interest rate hikes “should be welcomed”, as global economies have started to grow at close to their historical averages, and a slump in oil prices has provided the global economy with a boost.
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The BIS report described the threat of a new bust in advanced economies as a “main risk”, with many reaching the top of the economic cycle.

The economies worst hit by the last crisis are now suffering the costs of persistent ultra-low rates, the organisation said, which could “inflict serious damage on the financial system”, sapping banks and weakening their balance sheets and their ability to lend.

And the continued misallocation of resources during busts prompted by central banks’s rock-bottom interest rates has also hammered productivity growth, the BIS said, as a prolonged reliance on debt had been used in its place.

This problem is compounded as the world’s populations continue to age, the organisation warned, making debt burdens harder to bear. Yet politicians have relied too much on temporary growth boosts by using debt, rather than making painful choices, said the BIS.

Mr Caruana said that during booms, workers and capital are shifted to slow-growing sectors, with a “long-lasting negative” impact on productivity growth. “Misallocated labour needs to move from these sectors to other parts of the economy,” he said.

The BIS said that the current turmoil in Greece typified the kind of “toxic mix” of private and public debt being used as a solution to economic problems, rather than making the proper commitment “to badly needed” structural reforms.

Mr Caruana said that policymakers must now focus on the supply side of the economy, introducing the right reforms, rather than continue to lean on debt which will inevitably undermine growth.

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Systemic Turmoil - Structural Reform

SUBHEAD: Today may not be the event horizon for our diseased status quo, but may be the coming attraction trailer.

By James Kunstler on 29 June 2015 for Kunstler.com -
(http://kunstler.com/clusterfuck-nation/systemic-turmoil-structural-reform/)


Image above: We love to watch movies that detail an apocalyptic future as long as afterwards we can drive home to a microwaved pizza and a cold beer. From (http://theodysseyonline.com/washington-state/consequences-watching-scary-movie/93164).
The problem with the post-2007 world is that we are not in a cyclical recovery; we are in a structural depression defined as a sustained period of below-trend growth with no end in sight. The U.S. has caught the Japanese disease. Structural depressions are not amenable to monetary solutions, they require structural solutions.”
–James Rickards
Can anyone stabilize this bitch? At daybreak, anyway, the Federal Reserve governors were all bagging Z’s in their trundle beds. Maybe after a few pumpkin lattes they’ll jump in and tell their trading shills to BTFD (Buy on The Failed Dip).
 
The soma-like perma-trance among those who follow markets and money matters appears to be ending abruptly with the recognition that sometimes robots and humans alike run shrieking to the exit. A pity when they get to the door and discover it opens onto a cliff-edge. Look out below.

All this trouble with money comes from one meta problem: aggregate industrial growth has ended. It has stopped more in some parts of the world than others, while in the USA it has actually been contracting. The cause is simple: the end of cheap energy, oil in particular. At over $70-a-barrel the price kills economies; under $70-a-barrel the price kills oil production.

The bottom line is that, in the broadest sense, the world can no longer count on getting more stuff, except waste, garbage, political unrest, and the other various effects of entropy.

From now on, there is only less of everything for a global population that has not stopped growing. The folks on-board are still having sex, of course, which has a certain byproduct.

This dynamic was plain to see a decade ago, but the people who run finance and governments thought it would be a good idea to maintain the appearance of growth via the usufruct mechanisms of central banking: ZIRP, QE, market intervention, and universal accounting fraud. It’s not working so well.

Debt was generated in place of the missing growth, and now there is too much of it that can’t be repaid on a coherent schedule.

Many nations, parties, and entities are in trouble with debt and the prospective defaults are starting to pile up like SUVs on a fog-bound highway. Greece is just the first one fishtailing into a guard-rail.

The magic moment will come when it becomes obvious that these systemic quandaries have no solution. The system itself is programmed for implosion, in particular and most immediately the banking sector, where most of the untruth and illusion is lodged these days.

As it stands exposed, the people are compelled to shake off their faith in what it represents: order, authority, trust. Institutions fail and each failure acts as a black hole, sucking air, light, and even time out of the system.

In the natural course of things, structural reform can occur, but that natural course entails some degree of disorder and loss. If Deutsche Bank or Goldman Sachs founders a lot of people will be living in their cars — a first stop perhaps to not living at all.

Sooner or later, though, the survivors will all have to live differently. Structural reform means, for instance, that you can no longer count on getting food the way you were used to getting it. No more 3000-mile Caesar salads and take-out tubs of Kung Po Chicken. That will be very traumatic in the early going.

Eventually in the places where it is possible to grow food on a smaller scale, it will be done. Maybe not so much in the Central Valley of California anymore, but in other places: Ohio, Michigan, even New Jersey (“the garden state”). And once grown, it will be sold by means that differ from the supermarket.

Americans think that WalMart and its brethren are here to stay. They’re mistaken. Structural reform means reorganizing many layers of commerce around town centers — Main Streets — while the disintegrating strip malls await the salvage crews. Are we ready for that? Rebuilding local economies would put a lot of people back to work doing real things.

All the blabber about “job creation” for the moment is only about increasing the share price of predatory corporations and the bonuses of their mendacious executives. Will the world miss them?

Can we still make some things and move them around and put them up for sale? I think so.

Are you disturbed about the pervasive racketeering in health care (so-called) and higher education. Well, those grifts are eating themselves alive.

Structural reform probably means far fewer and smaller colleges and far more and smaller local clinics free of the stupendous insurance chicanery that mystifies the public while it swindles them. There will be a lot of useful work for people who want to take care of other people, and certainly fewer MRIs.

Do you fear the end of mass motoring and the suburban infrastructure that it operates in? Maybe your children and their children will be happier in walkable neighborhoods — outlandish as that sounds.

There is a hell of lot of rebuilding to do. It may not involve materials like strand-board and vinyl siding, but the newer and smaller buildings will probably last a whole lot longer and look better. And a lot of hands will be needed to do the work.

Will we ever again know banking on the JP Morgan scale? Not on any horizon I can imagine. But there are other ways to establish mediums of exchange, stores of value, and pricing mechanisms. You can be sure that banking will never again occupy 40 percent of gross economic activity in this land.

Today may not be the true event horizon for our diseased status quo, but it is probably, at least, the coming attraction trailer. Try not get puked on.


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BlackRock's Dangerous Warning

SUBHEAD: They wish to shift risk because of a future they fear. Get your money out of Blackrock.

By Staff on 29 June 2015 for Investment Research Dynamics -
(http://investmentresearchdynamics.com/blackrocks-warning-get-your-money-out-of-all-mutual-funds/)


Image above: In the last quarter century BlackRock has become the world's biggest investment company - crushing competition. From (http://www.economist.com/news/leaders/21591174-25-years-blackrock-has-become-worlds-biggest-investor-its-dominance-problem).
BlackRock Inc. is seeking government clearance to set up an internal program in which mutual funds that get hit with client redemptions could temporarily borrow money from sister funds that are flush with cash. – Bloomberg News
We may have been early on warning about leaving your savings in the financial system. It’s okay to be too early getting your money out of the system but it’s fatal to be just one second too late.  The gates are already in place in money market funds just waiting for the signal to be lowered
BlackRock’s filing with the SEC to enable “have cash” funds to lend to “heavy redemption” funds should send shivers down the spine of anyone with funds invested in any BlackRock fund.  In fact, it should horrify anyone invested in any mutual fund.
Larry Fink, BlackRock’s chief executive officer, said in December that U.S. bond funds face increased volatility, adding that he expected a “dysfunctional market” lasting days or even weeks within the next two years.   – Bloomberg

I warned last summer when the money market funds received authorization to put redemption gates in place that it was time to remove your money from these instruments.  The only reason a gate would be needed is if the people running the funds believed that there were risk events coming that would necessitate the gates.

BlackRock has already arranged credit lines from banks to cover the possibility of a redemption stampede from its riskier funds.  It’s clear the elitists running BlackRock now foresee events coming that will trigger a redemption run because the fund company is seeking SEC approval for the ability to take cash from funds with cash and lend that cash to funds that will need cash when the redemption rush begins.

Rather than let the market decide the value of the investments in BlackRock’s riskier funds, Larry Fink is going add even more leverage to the equation by enabling riskier funds to take on debt in order to avoid having to sell positions into a market that won’t be able to handle the selling.   This adds yet another layer of fraudulent intervention to a system that is ready to blow up from what’s already been done to it.

And let’s not forget, as I pointed out last summer, that BlackRock funds are already riddled with OTC derivatives, which is why Vice Chairman Barbara Novick has been running around Capitol Hill working to get a bailout mechanism in place for the Depository Trust Company’s derivatives clearing unit.

BlackRock Changes The Rules Of The Game Because Of An Outcome It Fears


This move will, in effect, transfer a portion of the risk of BlackRock’s riskier mutual funds – derivative-laced high yield and equity funds – to its more “conservative” funds, like high grade, short duration fixed income funds.

Anyone who invested in less-risky funds did so with an understanding of the definition and risk parameters of the funds at the time of investment.  But now BlackRock is changing the rules and risk parameters of those funds by exposing them to the counterparty risk of the riskier funds in the BlackRock fund complex which will be able to borrow money from the less risky funds.

This means that the Treasury fund in which your IRA or 401k is invested will now be “invested” in any fund that borrows money from the fund with your money.  The risk profile of your “conservative” fund assumes the risk profile of the riskier fund.  

There is absolutely no reason  to leave any of their money in any of BlackRock’s funds.

The SEC should deny BlackRock’s filing.  But it won’t because Wall Street is the SEC.

This move by BlackRock also signals that the elitists at BlackRock foresee an event that will disrupt the markets and trigger “bank” run on mutual funds.  What or when is anyone’s best guess.  But the fact that Larry Fink has decided to implement internal lending among funds indicates that he and his band of merry criminals believe an event will happen sooner rather than later.

To me, this is the signal that everyone should call up their mutual fund company, financial adviser or 401k administrator and get all of their the money out of any mutual fund.  Larry Fink has done everyone invested in any mutual fund a favor:  he’s unwittingly signaled that it’s time to get out – now.   Anyone who is aware of this and does not take action immediately is either a complete idiot or simply does not care about having their money taken from them by the criminal elite.

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Oases on a future Eaarth

SUBHEAD: It may seem like slow motion, but the unraveling is happening as quick as it can go.

By Juan Wilson on 28 June 2015 for Island Breath -
(http://islandbreath.blogspot.com/2015/06/oases-on-future-eaarth.html)


Image above: One of the eighteen lakes of Ounianga, an oasis in the heart of the Sahara Desert supported by an aquifer created in a wetter climate in north Africa. From (http://gallery4share.com/o/oasis-geography.html) (http://itcolossal.com/lakes-ounianga-sahara-desert/).

It has taken me almost a decade to come to a resting place - to find some peace - in contemplating the future after first reading "The Long Emergency" by James Howard Kunstler (2005).

THE TURMOIL
Kunstler's book identified the onset of "Peak Oil" and it's following ramifications that pointed to the Great Recession of 2008 just ahead that crashed America's suburban consumer middle-class economy-  to be followed by a permanent impoverishment our economy and lifestyles. See more of Kunstler at (http://kunstler.com/).

Kunstler's observations and predictions were soon followed by Al Gore, Guy McPherson, Bill McKibbon, Albert Bates and many other fine minds who warned of catastrophic Climate Change and potentially mass extinctions that might include ourselves - if we did not act to permanently change our habits of consumption.

Needless to say, these warnings have by and large gone unheeded for too long to make a difference. Cheap coal has continued to be burned and as long as fuel was expensive enough it has been economical to frack oil and gas out of the ground to make up the loss in production of cheap easy to get fossil fuels.

Coal has poisoned China and India and fracking has used untallied amounts of water and harmful chemicals injected into American in order to allow the industrial engine to rumble onward.

Industrial society's complacence and indifference have resulted in allowing several negative feedback loops to take over increase in the destructive heat trapping gases in the atmosphere - including frozen methane releases in Siberia;  melting ice sheets in the Arctic; reduced cloud cover associated albedo changes to surface water that absorb additional heat; etc.

Observers of the scene have begun to realize that after twenty years of United Nations Climate Change Conference of Parties (COP) that the industrial nations of the world have "shit the bed" and have waited too long to save us from the worst of the downside consequences. What ever happens at this years COP21 confab in Paris this December it won't save us from the harsh realities already on the way.

THE TROUBLES
If you want to look into a microcosm of the troubles ahead look to California. The entire state is in a drought. About 3/4 of California is in an Extreme to Exceptional Drought (http://droughtmonitor.unl.edu/Home/StateDroughtMonitor.aspx?CA). For some years that extreme drought has included all of the Central Valley of California (where all that food we eat is grown). There is paltry snow in the Sierra Nevada Mountains that supplies the aquifers that are being pumped dry by ever deeper wells. Even the rich will watch their landscaping blow away on the wind.

The entire Southwest of the United States will likely be lost in the sense of supporting large population of suburban sprawl. In a generation you won't recognize cities like Phoenix, Las Vegas and Los Angeles. 

Whereas other regions, like the still forested North East will be by comparison, blessed. Yes, the region will have its share of climate trouble, but its food growing season will likely be lengthened and its harsh winters be milder. Even with its large urban populations areas I suspect the North East will do better than the South West in the future described by Bill MCKibbon in his book "Eaarth"  Making a life on a tough new planet. 

Our popular culture is, to a degree, reflecting that future. The popularity of fantastically ridiculous movies like last years Intersteller ("A team of explorers travel through a wormhole in space in an attempt to ensure humanity's survival") and this years Mad Max: Fury Road ("In a stark desert landscape where humanity is broken, two rebels just might be able to restore order") and the up coming The Scorch Trials ("Facing a new set of challenges on the open roads of a desolate landscape filled with unimaginable obstacles").

What are these iconic cultural myths telling us? That you messed up the planet and you better be finding a friendly place to live soon.

That planet will be hotter and dryer in many places as we face
widespread desertification. Major shoreline cities will be eroded and inundated by rising oceans in the lifetime of many alive today. And many alive today won't be in the future.

Mega fauna (the big animals) are going extinct as fast as they dinosaurs were disappearing 65 million years ago. Elephants, rinos, tigers, and polar bears may be gone in a few decades.

FUTURE OASES
Will humans muddle through? Possibly, but we will be will be brought to the edge of extinction. Our adaptability has been our calling card. And we have done it before. See "One Time Through the Bottleneck" -
Almost 200,000 years ago humans faced extinction. Only a few hundred were saved along the coast of Cape Horn.

There will be pockets of the world's current living environments that will continue on in new forms where it is cool enough and moist enough for some things to thrive -like an oasis in the desert. It may be the rim in the Great Lakes area of upper Michigan or a pocket valley on Kauai. It may be isolated from other nearby "Live Zones" but none the less that is where you will want to be when the crunch comes.

My advise is to be in that place now. As a first priority b
e prepping for sustainable resilience there: water, food, shelter, energy. It may seem like slow motion, but the unraveling is happening as quick as it can go.

See also:
Ea O Ka Aina: Growing Growing Gone! 6/15/15
Ea O Ka Aina: Food • Water • Energy • Shelter 1/31/13


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The Greek Butterfly Effect

SUBHEAD: Angela Merkel wanted a concluded Greek deal before markets open on Monday. Now she has a mess.

By North Man Trader on 27 June 2015 for NorthManTrader -
(http://northmantrader.com/2015/06/27/the-greek-butterfly-effect/)


Image above: An illustration of the "Butterfly Effect" in Chaos Theory. From (http://ledaza.com/blog/how-many-butterflies-do-you-have-in-your-company/).

Many times nothing happens for a long time. Then all of a sudden everything happens at once. Like a dam break. It builds slowly and then it bursts. Example: Who would have ever thought the Confederate flag would be taken down across the South during the same week that a rainbow flag is symbolically hoisted across the entire country? Just because things seem unthinkable doesn’t mean they won’t happen.

Take the global debt construct as another example. For decades the world has immersed itself in ever higher debt. The general attitude has been one of indifference. Oh well, it just goes higher. Doesn’t really impact me or so the complacent rationalize.

When the financial crisis brought the world to the brink of financial collapse the solution was based on a single principle:

Make the math workable.

In the US the 4 principle “solutions” to make the math workable were to:
  1. End mark to market which had the basic effect of allowing institutions to work with fictitious balance sheets and claim financial viability.
  2. Engage in unprecedented fiscal deficits to grow the economy. To this day the US, and the world for that matter, runs deficits. Every single year. The result: Global GDP has been, and continues to be overstated as a certain percentage of growth remains debt financed and not purely organically driven.
  3. QE, to flush the system with artificial liquidity, the classic printing press to create demand out of thin air.
  4. ZIRP. Generally ZIRP has been sold to the public as an incentive program to stimulate lending and thereby generate wage growth & inflation. While it could be argued it had some success in certain areas such as housing, the larger evidence suggests that ZIRP is not about growth at all.
No, ZIRP’s true purpose is actually much more sinister: To make global debt serviceable. To make the math work without a default.

Here’s the reality: If we had “normalized” rates tomorrow the entire financial system would collapse under the weight of the math. In short: Default.

Which brings us to Greece the butterfly, the truth and indeed the future:

Greece for all its structural faults is the most prominent victim of fictitious numbers. From the original Goldman Sachs deal to get them into the EU based on fantasy numbers and to numerous bail-outs, the simple truth has always been the same: The math doesn’t work.

It never has and it never will until there is a default on at least some of the debt.

And in this context the Greek government’s move to call for a public referendum on July 5 may be a very clever strategic move as it forces the issue of math.

Here’s the strategic frame-up:

Ultimately what Greece needs is debt relief. Big time debt relief to make the math work.

The global cabal of creditors, ECB, EU, and IMF do not want that. Why not? Because the very second they do this everybody else would want a cut on their debt starting with Italy, Spain, Portugal etc. and the dominos would be rolling.

No, they do not want this as a default would require acknowledging that debt matters.

What are the alternatives?

Greece’s referendum move risks putting a debt deal up for a vote to citizens. When has that ever happened? Have Americans every voted on their government’s debt spree? Have citizens ever had a say on their central bank’s policies and balance sheet expansions? The answer is no. This so ever important element of our global economic system is completely removed from voters.

And so Yanis Varoufakis is very much correct in highlighting this open secret on Twitter:

Democracy deserved a boost in euro-related matters. We just delivered it. Let the people decide. (Funny how radical this concept sounds!) 2:55 PM - 26 Jun 2015
No, voters are very much not permitted to participate in this decision making process. And hence the only reason a Greek referendum may actually proceed is this: To make an example of Greece. You want to default? Watch what we will do to Greece.

But that’s a big gamble for the EU, for the ECB, the IMF and everybody else including China and the US.

Why? Because all of them have carefully orchestrated a construct that they do no want to see disturbed. It’s not an accident that we have seen 46+ rate cuts this year. It’s not an accident that China announced another rate cut just a day after Chinese stocks plummeted 7% this past Friday. It was no accident that the Fed’s Bullard talked about QE4 in October the moment US stocks got close to a 10% correction.

No, you see their primary mission in their timed actions and their words: To make the math work. And to continue to make the math work.

And hence Janet Yellen is not delaying rate hikes because she is “data dependent”. She is dealing in reality: Over $18 trillion in US debt (and ever growing) a large portion of which needs to be refinanced over the next 5 years. And higher rates will become an ever larger burden on the discretionary budget of the US. And the world, heavily indebted that it is, has the same problem:
Math.
So this next week is not so much about Greece the butterfly, but it is about keeping the butterfly from becoming a hindrance to the math working globally. And the Greek government knows this. They are negotiating on the basis that a bad Greek deal from Europe’s point of view is better than a default.

Angela Merkel wanted a concluded Greek deal before markets open on Monday. Now she has a mess.

And in the world of gamesmanship every percentage drop in the #DAX will enhance Greece’s negotiation stance.

This past week saw a massive rally in the #DAX in the hopes that a deal would certainly be positively concluded. Now this weekend all this bullish sentiment may find itself tested come Sunday night and Monday morning unless Europe blinks quickly. China is doing its part to support the construct with this latest rate cut, but the ECB can’t be happy about its QE program challenged by the constant Greece distraction. As we outlined in technical charts a default of Greece would risk a structural repeat of 2011.

And it couldn’t come at a worse time. No, odds are they’re not going to let Greece default. They can’t afford to. The math has to work.



Greek Black Monday

SUBHEAD: G-7 and EU banking officials hold emergency calls ahead of Black Monday

By Tyler Derden on 28 June 2015 for Zero Hedge -
(http://www.zerohedge.com/news/2015-06-28/g-7-eu-banking-officials-hold-emergency-calls-ahead-black-monday)


Now that the Greek parliament has given PM Alexis Tsipras’ euro referendum the go ahead (the vote will effectively be a poll on euro membership or, on the choice between sovereignty and servitude if you will, because as the IMF flatly noted on Saturday, the proposal that was supposed to form the basis for the referendum will be null and void by the time Greeks go to the polls) and now that Greeks have pulled another €1 billion plus from the ATMs, capital controls are all but certain early next week, especially now that the ECB has frozen the ELA cap. This means the crisis, to use Irish FinMin MIchael Noonan’s words, “has now commenced” and a “Lehman weekend” is indeed underway.

Against this backdrop, multiple “emergency” meetings have been scheduled for Sunday as EU officials scramble to figure out how best to deal with what is likely to be a turbulent week and to consider the financial impact a potential Grexit will have on the currency bloc, its member nations and institutions, and on the global financial system as a whole. Here’s Bloomberg with more:
G-7 deputies to hold conference call Sunday to discuss development of Greek crisis, Handelsblatt reports, citing unidentified euro region official.

Purpose is to inform non-European govts

European banking supervision officials also will hold conference call on situation of Greek banks and possible impact of Greek developments on European financial system

Euro Working Group to hold evening conference call

European Systemic Risk Board to convene immediately after ECB Governing Council meeting: Skai TV

And more from Handelsblatt (via Google translate):

Because of the impending bankruptcy of Greece are on Sunday a series of crisis talks planned. The most industrialized countries (G7) wanted throughout the day to advise on a conference call, said a representative of the Euro zone the Handelsblatt.

The conversation should at Deputy level, ie between the state secretaries, take place. It serves mainly to inform the non-European governments on the developments in the Greek crisis.

In addition, was also a Sunday teleconference of European Banking Supervisors (SSM) planning, told the Handelsblatt. There are representatives of the European Central Bank (ECB) and the national supervisory authorities. In the Phone Unlock should be advised on the situation of Greek banks and the possible impact on the European financial system, it said.

Meanwhile, German Chancellor Angela Merkel is set to confront lawmakers in Berlin on Monday and apprise them of the latest developments in the Greek drama. Over the course of the last two months, political support for continued aid to Athens has worn thin among German MPs, while influential Finance Minister Wolfgang Schaeuble has at every turn expressed reservations about the lengths Europe has gone to in order to keep Greece afloat. Here's Bloomberg again:
"German Chancellor Angela Merkel will brief leaders of German parties and parliamentary groups on Monday at 1:30 p.m., her spokesman Steffen Seibert says in e-mailed ."
Expect some lawmakers to ask how exposed Germany is to a Greek default. After all, given Berlin's role as the EU paymaster and the country's massive TARGET2 credit with the ECB, Germany stands to lose the most (financially anyway) from a potential Grexit, considering EFSF contributions and the country's share of committed ECB credit lines. Once more, via Bloomberg:
German public coffers face loss of at least EU80b from a Greek default, lawmaker Gunter Krichbaum, chairmanof European Affairs Committee in lower house of parliament, tells Leipziger Volkszeitung newspaper. Amount includes exposure to bailout mechanisms, ECB measures.
And indeed, Germany's financial 'obligation' to assist its ailing EU 'partner' may persist long after Grexit, because as we've warned repeatedly, the economic malaise that will almost certainly accompany default and redenomination will create a political and social crisis, the magnitude of which will likely necessitate outside intervention. With that, we'll leave you with the following, again from Bloomberg, citing Gunter Krichbaum:
Lower house of parliament may have to meet during summer recess to vote on measures related to Greece. German lawmakers may need to approve “humanitarian aid” because a Greek default may ignite unrest.



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Another Superferry Story

SUBHEAD: Only someone who lives on overcrowded Oahu could have a vision of resurrecting a vehicle carrying ferry in Hawaii.

By Dick Mayer on 25 June 2015 in Island Breath -
(http://islandbreath.blogspot.com/2015/06/another-superferry-story.html)


Image above: On Kauai qbout 250 demonstrators gathered to block resumption of Superferry service on 4 November 2007 during simultaneous protests on Maui and the Big Island. Many attending brought surfboards and kayaks to practice entering the water to block the ferry.   Photo by Juan Wilson. From (http://islandbreath.org/2007Year/09-access&transport/0709-50_HSFdemonstration.html).

Below is "ANOTHER SUPERFERRY STORY" that totally ignores the fact that the Hawaii Superferry was unable to operate economically.  Although it stopped operations shortly after losing the EIS battle at the Hawaii Supreme Court, it had already become clear that the ferry could not get a full load of passengers and freight, even with its reduced fares. The Superferry NEVER once operated at a fare level that would allow it to be economically viable.

It was never intended to operate as a practical, efficient interisland service. The Hawaii Superferry was an ultra-high-speed “prototype for a military vessel” that the shipbuilder (Austal) was interested in using to sell its military version to the US Navy. It was also a way to train a workforce in Alabama to build the Navy vessels using a new (aluminum) technology.  Austal got the Navy contracts and Hawaii was never paid the amounts due for the docks.

And there were many other problems: the severe sea-sickness of many passengers; the cost to the State to build the special docks/piers; the damage to the piers from waves;  the need to cancel voyages due to high waves (What does a farmer do with their truckload of harvested produce when the voyage is suddenly cancelled?); the stripping of neighbor-island resources by Oahu residents who no longer had the resources on their island; etc.

And there is the enormous opposition among many neighbor island residents who fought the ferry in the water (Kauai) and in the courts (Maui).  You fail to recognize that the 87% in favor of a ferry was in a newspaper that does not circulate widely on the neighbor islands and therefore from primarily Oahu residents who wish to vacation on the neighbor islands because their island is too crowded.

• Dick Mayer is a resident of Maui who was deeply involved for years with defeating the operation of the Hawaii Superferry in court almost a decade ago. 

[IB Publisher's note: We're fine with the idea to "kamaaina" discounts for residents flying between islands, and we are fine with interisland passenger service. It's the cars and trucks we don't want and the high speed that could kill whales that we oppose. Eric Pape imagines that a new Superferry would be good for "stimulating the economy and creating jobs" throughout Hawaii. If by that he means to bring to the outer islands the kind of "success" Oahu has experienced in providing low paying jobs, suburban sprawl and traffic congestion, then I'd say we on Kauai don't need a Superferry.]


Ferry Between the Islands

SUBHEAD: An interisland ferry system and kamaaina discounts on air travel could stimulate economic activity, create jobs and lower prices — especially on the neighbor islands.

By Eric Pape on 25 June 2015 for Civil Beat -
(http://www.civilbeat.com/2015/06/living-hawaii-bridging-the-space-between-islands-could-lower-costs/)


Image above: An almost empty foward cabin during a Superferry voyage. "There is little nostalgia for the Superferry, which offered airplane, and lounge-style seating". From original article.

Rightly or wrongly, people often bring up Hawaii’s geographic remoteness to explain our nation-leading high prices.

But there is another geographic element that costs us: We live in America’s most fractured state — and the space between islands comes at a price.

On neighbor islands this has many effects. For one, it aggravates the frequent lack of competition. When there is limited — or a total absence of — competition, a seller of goods or services can more easily jack up prices. This partly explains how a jar of cashews can cost $26 on Molokai or, more importantly, spare car parts can be even more expensive beyond Oahu.

Things could be different. Imagine an archipelago where more people could pass more efficiently — and affordably — between islands. Now imagine that they could transport the tools of their trade or on-sale goods with them. Basic economics suggest this would translate into more economic activity and, likely, job opportunities and improved salaries. “That’s the entire theory of trade in economics,” said former Bank of Hawaii Chief Economist Paul Brewbaker.

Increasing interisland competition — if done at a large enough scale — might just lower the cost of living, or at least make it more manageable for more residents.

To do that requires finding ways to further intertwine the economies of the various islands. In our digital era, this can be done by improving Internet capacities that allow people to work remotely. In regulatory terms, policymakers can make it easier for businesses to have a foot in multiple counties by simplifying bureaucratic requirements. But the most effective ways to combat the high cost of living on those islands is likely to be more practical; travel between islands needs to become more efficient and affordable to a lot more people.

Accomplishing this would come at a cost.

That said, pretty much all transportation on or between the islands is subsidized in one way or another. This includes the bus system, roads, ports and airports on every island, which were built by and are maintained by the state. (Honolulu International Airport was recently granted an additional $16.5 million for infrastructure improvements from the U.S. Department of Transportation.)

If investing in bridging the space between the islands is calibrated to help residents, especially the middle class, better cope with the cost of living, it could help the economy to grow well beyond that investment.

States usually have intrastate highways. In Hawaii, the ocean fills that role.

It would feel like a very different and much more connected Hawaii if a local could load up a truck, drive down to the harbor and roll onto a commuter ferry. After arriving on another of the more populated islands several hours later, the driver could pull out some tools and ply his or her trade or sell goods.

The idea is hardly revolutionary. It is done all the time in states like Alaska, New York, Washington and many others. Internationally, ferries work the open seas from Samoa to Spanish archipelagos in the Atlantic Ocean.

But in a state like Hawaii, an interisland ferry system could have a special impact. It could better integrate the more populated islands’ economies, diversify deliveries and shake up the calcified pricing habits of some stores and companies.

From a cost-of-living perspective, it is difficult to think of a more effective way to integrate the various island economies, job markets and salaries. Too many job opportunities end at the water’s edge of Oahu.

This, of course, is where we need to talk about the Hawaii Superferry. As those who loved it — and those who battled it — will recall, the Superferry began traveling between Oahu and Maui in 2007. It was supposed to expand to Kauai, but surfboard- and canoe-mounted protesters helped to prevent the vessel known as the Alakai from docking in Nawiliwili Harbor.

By the time the Hawaii Supreme Court ruled in 2009 that the Superferry — which was capable of carrying more than 200 vehicles and more than 800 passengers — couldn’t operate until after it completed an environmental impact study, the company behind the venture was struggling mightily. It declared bankruptcy soon after.

While elements of the Superferry, and then-Gov. Linda Lingle’s workaround to keep it running without getting the mandated impact study, were problematic, it seems clear that many people in the islands want an interisland ferry system. A non-scientific Hawaii News Now/Star-Advertiser poll in 2014 found that 87 percent of people would like to see a ferry system, with just 11 percent saying no. (Two percent had no opinion.)

At this point, getting a new ferry going would require creativity and commitment. Funding is the biggest challenge. Private companies don’t seem to be pining to leap in where Hawaii Superferry lost tens of millions of dollars, and the state isn’t exactly sitting on huge piles of cash.

But discussions have begun anew with people putting forward ideas about public-private partnerships, a slower ferry and creative ways to finance it.

There is something else that probably wouldn’t have as profound of an impact, but it could happen more easily: More affordable air interisland air travel.

It could happen in several ways. Lower oil prices have led to decreasing airline fuel fees around the country. (That said, oil prices might well be recovering from their recent lows.)

Prices also tend to come down, as several local economists noted in interviews, when a new company enters a market where there is little competition. But those same economists question whether Hawaii has a large enough interisland air travel market to sustain another company.

That’s a problem because past competition likely helped to drive Hawaiian Airlines to do something that, if repeated, might benefit the state now. Until about 15 years ago, the company offered discounted travel to locals. These days, it offers deals that allow frequent travelers to lock in lower rates, but that is unlikely to get people who aren’t hardcore travelers to fly more often. And getting more people to move between islands is what might generate more economic activity.

A return to the days of kamaaina discounts would make it easier for people to travel between islands, whether to check on family members or to work. The lower the rates were, the more likely people are to go more often. The more they go, the more they are likely to spend — or the more interisland business they are likely to be a part of.

As it stands, Hawaiian Airlines travel within the islands increased in price by 34 percent between 2004 and 2014 — just less than inflation, according to numbers supplied by the company.

Further competition, whether from another airline or from a ferry system, might add pressure on Hawaiian to limit further price increases going forward. The greatest economic benefit for Hawaii likely involves ticket prices that allow locals to travel between islands less expensively and, as a result, more often. Policymakers, of course, could encourage this.

The islands’ history has long been about overcoming its geographic remoteness, to get necessary resources from the outside world to supplement what was here. “Hawaii now is more connected to the world, its economy more intertwined with its global counterparts than ever before,” said Brewbaker.

It just needs to get more connected to itself.

Eric Pape is the Deputy Editor of Civil Beat. He’s written extensively for Newsweek magazine, the Los Angeles Times, Foreign Policy and Spin magazine. 

• Marina Riker contributed to this report.



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Buying the Farm

SUBHEAD: I want more farmers than there were when I came in. And I see with the organics that we can do it.

By Dean Kuipers on 26 June 2015 for Orion Magazine -
(https://orionmagazine.org/article/buying-the-farm/)


Image above: Ross Wilken, and fiancee Daniele Milazzo in Iroquois Cty, Illinois. Ross purchased 61 acres in Oct. and leases another 396 with his father, Harold. From (http://cleanyield.com/iroquois-family-farms-keeping-family-farms-going-next-generation/).

Ross Wilken, twenty-three, and his father, Harold Wilken, don’t look much like starry-eyed radicals as they inspect their fields of black beans just west of Danforth, Illinois. The hot, wet afternoon sun beats down on their greasy jeans and tired eyes like it does on any other farmer. But their twenty-three hundred acres of organic crops, surrounded by millions of acres of genetically modified corn and soybeans, are nothing short of an insurgency.

“These look really good,” says Ross, examining plants heavy with purplish pods. “I wish I had more acres in these.”

The black beans in this eighty-acre patch, just one of the Wilkens’ many nonadjacent fields scattered around the area, will fetch eighty cents per pound when sold in Munger, Michigan, and afterward might end up in your Chipotle burrito.

That’s a tall premium compared to conventional beans, which fetch about fifty cents. The Wilkens get similarly good prices for their organic wheat, corn, pumpkins, soybeans, and alfalfa hay.

So it’s no surprise this family enterprise is steadily expanding its operation in every way possible—building barns and grain bins, buying heavy equipment, experimenting with software, and taking in a son-in-law, a nephew, and a neighbor down the road as partners.

The challenge is finding the land. Like most farmers in Central Illinois, the Wilkens lease the majority of the land they farm. Now they need to buy or lease new fields to take through the three-year transition to organic. And they need to get there before Wall Street does.

New players with deep pockets have appeared in farm country—investors looking to buy up prime farmland and turn a profit on the steady upward trend of land prices and farm incomes. There have always been family offices and private investors who owned farms, but the scale has changed: in the last decade, huge pension funds, university endowments, banks, sovereign wealth funds, hedge funds, and new exchange-traded companies have sunk an estimated $25 billion into U.S. farmland.

That only represents about 1 percent of the $2.4 trillion in farmland in this country. But some activists already see a battle looming for the control of our nation’s food production, pitting multigenerational farmers with a long-term vision of sustainability against the short-term needs of large, conventional investment funds.

The stakes are very real. According to the Oakland Institute, a policy think tank specializing in social, economic, and environmental issues, the profits-first emphasis of these megascale investments can lead to the worst kind of absentee landlordism, resulting in badly managed farms, poor labor practices, disempowerment of farmers, and increased speculation in land prices. Investors could even choose to frack the land, or sell it to a golf course developer, if that’s more profitable than leasing to a local farmer.

This investment phenomenon shows no sign of slowing. Farmland has become a hot new asset class, and investment advisors say they’re getting loads of requests. Reports estimate there are investors with at least $10 billion looking for deals.

“These investors are looking for an asset class that gives them some real protection; in other words, a ‘real’ asset as opposed to a paper asset,” says Philippe de Lapérouse, managing director for agriculture consulting firm HighQuest Partners, which has helped drive this international phenomenon with its popular Global AgInvesting conference series. Farms are a tangible asset, but also produce dividends in the form of crops—like gold with yield.

And it’s an international phenomenon: a study by the International Land Coalition found that between 2000 and 2011, large investors bought or leased more than 500 million acres—an area eight times the size of Britain—in Africa, Asia, and South America. But de Lapérouse says there’s still plenty available, adding, “The investable universe for farmland for institutional investors is probably at about $1 trillion.” Which leads to serious questions about what investors intend to do with this land.

“As an organic farmer, we’re not interested in an investor who’s just in it for the dollar,” Harold Wilken says. “If they are, they’re not in it like us; we’re not in this for the dollar. So we don’t want to work with people who are only in it for that either.”

He’s not talking about profit; the Wilkens, father and son, are making money. He’s talking about time and the condition of the soil, environmental impacts, and the quality of the food he provides to human beings. Harold needs an investor that will put him on land he’ll never have to leave, and not force him to “mine” it—his term—for the sake of predictable profits.

When he first started to expand his organic operation about a decade ago, there was no source of money available with that kind of patience—so he had to help invent one. In 2007, he became the first farmer to team up with a new triple-bottom-line investment company called Iroquois Valley Farms.

When you ask one of our third- or fourth-generation farmers—How long do they want to be on that land?—they’re looking to stay on it for life,” says Iroquois Valley Farms (IVF) CEO David Miller from his office in the Chicago suburb of Wilmette, Illinois. “They’re looking for their kids to be on that land. The capital’s got to think the same way.”

A former banker, Miller talks about Iroquois Valley Farms as a radical alternative to institutional investors—a radically profitable alternative, he is quick to point out, as his company is making “over a double-digit return on an annual basis, since the inception.” That would put it on par with the institutional funds, which are averaging, according to de Lapérouse, somewhere from 7 to 12 percent annual returns. But Miller’s approach is based on long-term capital and not on “trading capital.”

Iroquois Valley Farms, which is a certified B Corporation—a corporate structure that obligates businesses to be accountable for creating positive social and environmental impacts—does a lot of what other investors are doing in this same space: with money from high-wealth, accredited investors it buys and holds farmland, leases it to farmers, and shares in the profits in good crop years.

The difference, however, is that IVF prefers the sustainability and high crop prices of organic farms, and will weather the sometimes-lower yields and the three years required to transition a piece of ground from conventional to organic production. They will also sell a property to the tenant farmer after seven years. Or, if the farmer’s not ready to buy, will just keep on leasing it to him or her indefinitely. Allegedly, for generations.

That sort of talk, Miller says, makes his attorneys nervous. It’s not the exit favored by Wall Street, which always reserves the option to cut and run, usually at ten-year intervals. “But common-sense economics dictates that you want the farmer to have an option to buy the land that you’re leasing to him,” Miller explains. “If you don’t, it’s not sustainable agriculture. And it’s just bad business.”

There aren’t many farmland companies with similar missions today, but there are a few, including Grasslands LLC, a ranch- purchasing fund set up by holistic grazing advocate Allan Savory; and Farmland LP, a six-year-old San Francisco–based company named as one of the “Best for the World” among B Corps and one of the “World’s 50 Most Innovative Companies” by Fast Company.

“We’re demonstrating that sustainable agriculture is more profitable than chemical-dependent agriculture,” says Farmland LP CEO Craig Wichner, whose company has already closed one $50 million fund and is now offering a $250 million real estate investment trust, or REIT, buying property in California and Oregon, also for accredited investors.

“We have a great business: we buy farmland, we improve how it is managed, and we improve the cash flow. But, from an environmental standpoint, from a future standpoint, we really want to have a world that works. We want people to have healthy food on the table. We want people to live in environments where they shouldn’t be afraid to live downstream from a farm—because we all do, one way or another.”

Sustainable, organic, and regenerative agriculture investment is still a small slice of the $25 billion pie in the U.S., says Renee Cheung, an independent consultant who works with companies trying to find these opportunities. That’s because, frankly, the returns aren’t yet proven.

“I don’t think that I have really come across too many sustainable farm systems where you see the returns stack up just as well as conventional ones,” Cheung says. Farmland LP and IVF are notable exceptions, but, she adds, “The organic model doesn’t necessarily match the investment profile that most traditional investors look for.”

Investors, Cheung notes, usually want to own, but not operate. They want returns in year one, not in three or four years. They want deep, established markets, and they’ll trade or ganics’ higher prices for the giant yields of big row-crop operations. Quantity over quality, basically.

Cheung points out that sustainable farming, however, is more resilient and may turn out to be the big winner in the long run. Conventional farming relies on crop subsidies, cheap oil, and draining aquifers without restraint, among other delicate conditions. When those conditions change, sustainable operations will be positioned to grow where conventional methods may fail.

Both Wichner and Miller agree with Cheung about resiliency, but they also point out that they are offering “very competitive” returns right now, even during conventional farming’s best years. “We know that it works now,” Wichner says of his system. “We’ve increased revenues per acre by 54 percent per year.” That means other ecologically minded investment firms can’t be far behind.

“When I did my due diligence, and I looked around at some of the larger companies that were doing this, I was really dismayed at the fact that they were monocropping,” says Alexandra Dest, whose investment firm in Western Massachusetts is launching a regenerative agricultural fund that will rehab conventional farmland in the Northeast and take it “beyond organic” to permaculture, biodynamics, and other systems. “I was dismayed at the way they were acquiring their land. I don’t want to be in soy and corn. I want to be in something that feeds people.”

Every one of these stories begins with a conversion experience. The idea for Iroquois Valley Farms began in 2005, when Miller bought some land from his uncle’s estate in Iroquois County, Illinois, just outside of Danforth. When he decided to take that land organic, he started talking to a cousin, who was leasing some land to Harold Wilken.

Wilken had been a conventional farmer for decades, but after a bout with cancer that he attributes directly to “chemicalized farming,” and the death of his daughter in a car accident, he went organic. He showed Miller a 142-acre farm in the area that he wanted to transition, and Miller got ten friends to ante up, buy the property, and lease it to Wilken. The LLC was born.

Today, with over $20 million in assets, IVF owns more than 3,330 acres in Illinois, Indiana, Michigan, New York, Kentucky, Maine, and West Virginia—tiny compared to the massive expenditures of institutional investors, some of whom don’t bother with land purchases of less than $50 million. By contrast, IVF invests mostly via word of mouth; organic farmers bring the company parcels that are available to buy. “We now have more people coming to us with these opportunities than probably we can realistically fund,” Miller says.

That’s because he’s just as careful about taking money as he is about finding land and farmers. Any investor jumping in with IVF has to be ready for the long ride. You can’t even vote your shares for seven years. You can sell your shares, but you can’t expect the company to sell land to cover losses. It’s not the get-out-quick scenario that most investors prefer. “We’re trying to get to the point where we say, ‘Never sell the land. Unless the farmer wants to buy,’” Miller explains.

The overwhelming majority of investors trolling for grandpa’s farm isn’t looking for sustainability. And that, says Anuradha Mittal, executive director of the Oakland Institute, is a very big problem. “These firms are driven to get into agriculture in order to get high returns. High returns as fast as possible,” she says. “We believe agriculture is all about sustaining livelihoods, increasing production, food security, stewardship of the land—all of that is displaced.”

Mittal’s not talking about Farmland LP or Iroquois; if they’re B Corps, they’re part of the solution, as far as she’s concerned (she herself sits on the board of Ben & Jerry’s, a B Corp).

She’s talking about the giants driving global agricultural investment, such as: UBS AgriVest, a division of the biggest bank in Switzerland, which owns more than half a billion dollars of farmland in the U.S. alone; Hancock Agricultural Investment Group (HAIG), a subsidiary of the biggest insurance company in Canada, which has $2.2 billion in global farmland; or the Teacher Insurance and Annuity Association—College Retirement Equities Fund, better known as TIAA-CREF, one of the world’s largest pension funds, which has $3 billion in agriculture worldwide.

After the global food crisis of 2008, land acquisition in the developing world jumped 200 percent as huge firms snapped up farmland in a kind of frenzy, with little regard to local farmers already working the land. This led the United Nations to release rules for “Responsible Agricultural Investment” in October 2014, but those have been criticized by food security activists as simply validating what they call “land grabs” that prevent local people from feeding themselves.

According to reports published by the Transnational Institute and other groups monitoring international agri-investment, these companies, and the international trade agreements that support them, are structured to insulate the investor from actual responsibility for the farm, its management, and its products. This is also true inside the U.S.

In one publicized case, farm workers on three of HAIG’s farms in Washington State sued—and won—in federal court over abusive work conditions. In court it was revealed that, using Texas public pension fund money, HAIG had contracted the farm work to a company, which subcontracted it to another company, which broke the law. Hancock claimed it wasn’t responsible. Everyone added fees all down the line and took profits, but no one wanted to be the actual “farmer.”

Mittal claims that this low level of engagement is typical of the field. “We’re talking about retirement funds, university endowment funds—they know nothing about agriculture, they know nothing about agri-quality or what foods feed communities,” she says. “What they’re looking at is the speculative values, and of course the investment gurus who say that it is better than gold.”

Wichner, who was in real estate long before launching Farmland LP, points out that a lot of these problems are not related to a new buyer coming into the space, but are problems simply attributable to conventional agriculture—using loads of herbicides, pesticides, and fertilizer to mine the land for maximum profits. Even small farmers can be bad farmers, he explains. “You can’t blame it all on the institutional investors,” he says. “But there’s clearly a better way of doing business.”

Both Wichner and Miller say their companies hope to sell stock in a public offering, maybe in as little as three to five years in the case of Farmland LP. Wichner sees the public offering as the ultimate triumph of a sustainable system. “That way, anyone can invest in farmland and help convert more of it to sustainably managed farmland,” he says. “And that, to us, is really the way to turn farmland back into a commons. Back into a common good.”

True to the company promise, in late 2013 Iroquois Valley Farms sold 62 acres of one of its Danforth farms to young Ross Wilken, and also bought an additional 156 acres to lease to him to transition to organic. The land includes a 2-acre homestead high up on a scenic hillside where Ross intends to build a house one day. Just twenty-three, and already a partner in a successful and expanding farming enterprise, Ross’s future is bright.

Ross wouldn’t have had this opportunity, he says, if the family hadn’t made good money in organics and gone into business with Iroquois Valley Farms. He might have been able to help his dad, but he wouldn’t have been able to own his land and make his own living.

Out on the open market, where Danforth-area dirt is going for $9,000 an acre and up, Wilken would have probably been greatly outbid by the many giant conventional farmers next door hungry for more turf, or a large conventional investor buying Illinois farms. IVF’s Young Farmer Land Access program, however, gave him nice terms. Wilken secured half of the financing for the 62 acres using a USDA Farm Service Agency loan, and got the rest from the local farmers bank.

Meanwhile, his father has the opportunity to watch his farm and farming practices pass on to another generation.

“I am a spiritual person,” says Harold Wilken, walking to the big new barn on his home farm, which is named Janie’s Farm after his daughter who died. “We’re not out here to get rich; we’re out here to make a living and to make a difference. We want to do what works for everybody.

It seems like the goal of every farmer around here is to eliminate somebody. I want more farmers than there were when I came in. And I see with the organics that we can do it.”

• Dean Kuipers is the author of Operation Bite Back and Burning Rainbow Farm. He lives in Los Angeles.

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