In their “World in 2010″ annual almanac of predictions, the Economist looks at whether this will be a year of social unrest, and included is the map below as a helpful guide to countries at the greatest risk:

I highly recommend you purchase this almanac for a good overview of where the world is more-or-less heading.  In the accompanying article on this particular topic, Laza Kekic of the Economist Intelligence Unit writes the following:

[A] congruence of calamities could prove politically tempestuous: a sharp rise in unemployment, increased poverty and inequality, weakened middle classes and high food prices in many countries. Austerity is also on the agenda in 2010 following the extreme fiscal relaxation of 2009.

Historically, political reactions to economic distress have tended to come with a lag. The same is true of labour-market developments: even once the recession ends, unemployment continues to rise. According to Economist Intelligence Unit (EIU) estimates, in 2010 there will be 60m more unemployed worldwide than in 2008. The International Labour Organisation reckons some 200m workers are at risk of joining the ranks of people living on less than $2 a day.

Declines in incomes are not always followed by political instability. Vulnerability to unrest depends on a host of factors. These include the degree of income inequality, the state of governance, levels of social provision, ethnic tensions, public trust in institutions, the history of unrest and the type of political system (“intermediate” regimes that are neither consolidated democracies nor autocracies seem the most vulnerable).

Something to watch.

Brazil’s position in the low combustibility category mirrors the magazine’s recent profile of the continuing boom of the country:

Latin America’s largest economy is enjoying its best moment for a long time. One of the last countries to enter the global downturn started by the financial sector in 2007, Brazil was also one of the first to come out of it. For the first time in its history it has found a combination of economic growth, low inflation and full democracy—and the good fortune looks set to continue.

The story reminded me of a 2007 article I read in the New York Times about Brazilian immigrants to the U.S. who were emigrating back to Brazil:

That decision — to give up on life in the United States — is being made by more and more Brazilians across the country, according to consular officials, travel agencies swamped by one-way ticket bookings, and community leaders in the neighborhoods that Brazilian immigrants have transformed, from Boston to Pompano Beach, Fla.

No one can say how many are leaving. But in the last half year, the reverse migration has become unmistakable among Brazilians in the United States, a population estimated at 1.1 million by Brazil’s government — four to five times the official census figures.

To explain an often wrenching decision to pull up stakes, homeward-bound Brazilians point to a rising fear of deportation and a slumping American economy. Many cite the expiration of driver’s licenses that can no longer be renewed under tougher rules, coupled with the steep drop in the value of the dollar against the currency of Brazil, where the economy has improved.

Brazil’s ascendency is nothing but good news for the Western Hemisphere.

I’m an avid reader of The Economist, and in this week’s edition the article that jumped out at me was “A needier era“, which details how some–including me–think the new global economic realities are going to re-shape our politics:

THE 1990s was “the age of abundance”, argued Brink Lindsey in a book of that title. Round the world, incomes were rising; capital markets were processing endless flows of money and investment; technological gains meant that ever more information was available ever more cheaply. And politics in the age of abundance, Mr Lindsey claimed, was all about values. In America this was the period of the “culture wars” over abortion and gun ownership; internationally, there was a huge expansion in concern over human rights.

One of the biggest problems America faces is that many of its citizens, both liberal and conservative, are stuck on culture wars that feed their anger, instead of focusing on the reality that our current economic system is unsustainable.  Our focus on voting for people for their views about abortion, gun rights and gay marriage has given us a crop of leaders who are ill-prepared to take on the real challenges that we face.

The 2010s, it is sometimes said, will be an age of scarcity. The warning signs of change are said to be the food-price spike of 2007-08, the bid by China and others to grab access to oil, iron ore and farmland and the global recession. The main problems of scarcity are water and food shortages, demographic change and state failure.

One of the challenges America faces as a country is how we choose to inform ourselves, which is mostly by the cable news channels.  Fox News and MSNBC (as well as the rest of them) are corrosive influences on all of us.  For those like myself, who don’t watch them, we still have to deal with the foolish liberals and conservatives who do and form their opinions based upon cable news demagoguery.

[Authors of a report at the Center on International Cooperation] claim that the current global system is ill-designed for such a world. It is not just that the foreign policies of big countries are in flux. Rather, the way states deal with new threats is, in the jargon, “stove-piped”.  As a UN panel said in 2004, “finance ministers tend to work only with the international financial institutions, development ministers only with development programmes.”

The authors say that what is needed is not merely institutional tinkering but a different frame of mind. Governments, they say, should think more in terms of reducing risk and increasing resilience to shocks than about boosting sovereign power. This is because they think power may not be the best way for states to defend themselves against a new kind of threat: the sort that comes not from other states but networks of states and non-state actors, or from the unintended consequences of global flows of finance, technology and so on.

What’s the first thing that you, as an individual, can do to start preparing for this new world?  Stop watching the cable news channels.  Stop listening to the Olbermanns and Hannitys, who do little else but incite your rage (and I have it too, but it has to be tempered).  Right now, we don’t need an angry populace.  We need a calm citizenry that takes time to learn about the economic issues that we face, rolls up its sleeves and gets to work fixing them.  You might not like abortion, and you may think gay marriage is all about equal rights, but if there is widespread economic collapse, these issues are going to be irrelevant to the world we face.

Do yourself and the rest of us a favor:  Stop watching cable news.

President Eisenhower tried to warn us; Frank Rich tries to remind us.

This blog often cites Frank Rich as one of the most astute thinkers and critics of American society and politics.  His New York Times column is required reading for anyone who wants to know what is going on in the United States today.  He is, simply, the best.

Yesterday’s column is worth recapping, because Rich explores the sense that Americans are starting to wake up to the feeling that they have been “punked”, or taken for what they are worth.  He looks at Obama’s promises, and the reality of his administration thus far.  He also looks at the Original Punkers, the Republicans, who have made a habit of flat-out lying to their constituents during the current healthcare debate.  From Steven Pearlstein in the Washington Post:

The recent attacks by Republican leaders and their ideological fellow-travelers on the effort to reform the health-care system have been so misleading, so disingenuous, that they could only spring from a cynical effort to gain partisan political advantage. By poisoning the political well, they’ve given up any pretense of being the loyal opposition. They’ve become political terrorists, willing to say or do anything to prevent the country from reaching a consensus on one of its most serious domestic problems.

Back to Frank Rich, who watched this and other long-term developments in our political dialogue to write this column.  Below are some excerpts, with their original links:

What the Great Recession has crystallized is a larger syndrome that Obama tapped into during the campaign. It’s the sinking sensation that the American game is rigged — that, as the president typically put it a month after his inauguration, the system is in hock to “the interests of powerful lobbyists or the wealthiest few” who have “run Washington far too long.” He promised to smite them.

[....]

What disturbs Americans of all ideological persuasions is the fear that almost everything, not just government, is fixed or manipulated by some powerful hidden hand, from commercial transactions as trivial as the sales of prime concert tickets to cultural forces as pervasive as the news media.

That the system is “fixed” is no longer just the concern of conspiracy theorists.  American General and President Dwight Eisenhower famously warned the American public about a growing military-industrial complex in his farewell address:

This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence — economic, political, even spiritual — is felt in every city, every statehouse, every office of the federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society. In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

The influence of corporations and the groups that profit from war, defense and the banking system can be seen daily on our cable news programs, which Frank Rich also explores as a cause for the cynicism that the electorate can’t seem to change the system:

It’s a cynicism confirmed almost daily by events. Last week Brian Stelter of The Times reported that the corporate bosses of MSNBC and Fox News, Jeffrey Immelt of General Electric and Rupert Murdoch of News Corporation, had sanctioned their lieutenants to broker what a G.E. spokesman called a new “level of civility” between their brawling cable stars, Keith Olbermann and Bill O’Reilly. A Fox spokesman later confirmed to Howard Kurtz of The Post that “there was an agreement” at least at the corporate level. Olbermann said he was a “party to no deal,” and in any event what looked like a temporary truce ended after The Times article was published. But the whole scrape only fed legitimate suspicions on the right and left alike that even their loudest public voices can be silenced if the business interests of the real American elite decree it.

The tone of Rich’s column hearkens back to Eisenhower; Rich shows that the news you watch is only the news the power structure deems fit to be packaged and consumed:

The revelation of that scandal did not end the practice. Last week MSNBC had to apologize for deploying the former Newsweek writer Richard Wolffe as a substitute host for Olbermann without mentioning his new career as a corporate flack. Wolffe might still be anchoring on MSNBC if the blogger Glenn Greenwald hadn’t called attention to his day job. MSNBC assured its viewers that there were no conflicts of interest, but we must take that on faith, since we still don’t know which clients Wolffe represents as a senior strategist for his firm, Public Strategies, whose chief executive is the former Bush White House spin artist, Dan Bartlett.

Looking to the Democrats to help staunch this hemorrhage of influence in American corridors of power?  Don’t.  The screaming matches at town-hall meetings, while as astro-turf as tea-bagging, are only aimed at the ‘least worst’ of the pigs at the trough:

As Democrats have pointed out, the angry hecklers disrupting town-hall meetings convened by members of Congress are not always ordinary citizens engaging in spontaneous grass-roots protests or even G.O.P. operatives, but proxies for corporate lobbyists. One group facilitating the screamers is FreedomWorks, which is run by the former Congressman Dick Armey, now a lobbyist at the DLA Piper law firm. Medicines Company, a global pharmaceutical business, has paid DLA Piper more than $6 million in lobbying fees in the five years Armey has worked there.

But the Democratic members of Congress those hecklers assailed can hardly claim the moral high ground. Their ties to health care interests are merely more discreet and insidious. As Congressional Quarterly reported last week, industry groups contributed almost $1.8 million in the first six months of 2009 alone to the 18 House members of both parties supervising health care reform, Nancy Pelosi and Steny Hoyer among them.

Welcome, America, to your system of governance and information.

Michigan could learn from Gotham's rebirth.

Miriam Greenberg’s piece in the Brooklyn Rail on New York City is a fascinating read about re-branding a hellhole.  Greenberg illustrated New York’s bottom with a brilliant anecdote: upset over a series of Alitalia Airlines ads in 1971 predicting that New York City was going to disappear (and specified a date).

The airline was promoting its new non-stop Philadelphia service.  The ads displayed ominous images such as the Statue of Liberty sinking in a national media campaign to alert passengers that they no longer needed to connect through Kennedy:

That these over-the-top ads were at once so strangely believable and politically volatile reveals both the deep anxiety that they tapped into and the wider, inter-textual universe in which they emerged. They invoked the trepidation, even dread, with which the “average tourist” now boarded their New York City-bound planes, buses, and trains. And they were only the latest addition to a vivid and disturbing set of images portraying New York City as a sinking, dying metropolis, imagery that was seen repeatedly in magazines, newspapers, movies, and the TV news, and which—in combination with real events on the ground—was to help shape the public perception of the city for a generation.

New York City’s huge comeback from the 1970’s is now the standard playbook for how places with damaged reputations can bounce back (the Israeli government uses it as a model).

The Economist had a story about struggling Michigan, one of the worst-off states in America, and their attempts to re-brand and attract tourists:

The news out of Michigan has been relentlessly gloomy. The one area in which Michigan leads the country has been its unemployment rate—15.2% in June, compared with a national average of 9.5%. But in recent months Michigan has tried to present a more cheerful message. A $10m tourism campaign, aired on national television from March to June, was the state’s most ambitious yet. Though Michigan faces a $1.7 billion deficit, new bills propose to raise money for more promotion.

Here’s one of the commercials that is part of the new campaign, Pure Michigan:

Confused about Obama’s new regulatory proposals for the financial industry that virtually destroyed the global economy?  One is a Consumer Protection Agency.  John Ydstie, National Public Radio’s economics correspondent, does an excellent job of explaining it all.

This new agency would look at [things like interest-only balloon payment mortgages] and, I guess sort of modeled after the Consumer Product Safety Commission, which says, ‘Hey, you can’t sell a toaster that burns down a house,’ and they would say, ‘Hey, you can’t sell a mortgage that makes someone lose a house.’ – John Ydstie, National Public Radio’s economic correspondent

Listen to the the full explanation at NPR here.

Is this the end of lawns and cul-de-sacs?

The economic depression George Bush delivered to the United States has reached even the suburbs of his new home, Dallas.  According to the Dallas Morning News, suburban north Texas cities are contending with lower sales tax revenues have slowed, mixed with home foreclosures and job losses.

Urban theorist Richard Florida, who raised a lot hairs on necks with his controversial book, The Rise of the Creative Class, believes that this is not a temporary situation.  Florida thinks the economy needs to “reset” itself, and in Class he argues that compact cities full of creative people will be the engine of economic growth this century.

I came across Florida years ago when Class was a hot topic.  Recently, though, I found my photograph of the Colorado Springs suburbs–a vast aberration known as “Briargate” that is populated with evangelical megachurchers–over on Slog in a post about Florida.  Charle Mudede highlighed Florida’s piece in the March issue of The Atlantic, “How the Crush Will Reshape America”.  In it Florida argues that now is the time to push policies that benefit urban centers at the expense of the suburbs:

The solution begins with the removal of homeownership from its long-privileged place at the center of the U.S. economy. Substantial incentives for homeownership (from tax breaks to artificially low mortgage-interest rates) distort demand, encouraging people to buy bigger houses than they otherwise would. That means less spending on medical technology, or software, or alternative energy—the sectors and products that could drive U.S. growth and exports in the coming years. Artificial demand for bigger houses also skews residential patterns, leading to excessive low-density suburban growth. The measures that prop up this demand should be eliminated.

Mudede jumps on this.  He launches into a prediction that the suburbs are going the way of the Dodo:

We are watching the twilight of sprawl. Experts, from the treasurer down, understand that America is entering another form of capitalism (or socialism, which is the truth of capitalism—the moment capital does not need the social forces of production and consumption, the general intellect, is the moment I’ll call it capitalism for real), and the economic restructuring will have an actual impact on the production of space—how and where land is used. In the near future, we can expect (or hope) that suburban houses, the monsters of the earth, will be the dinosaurs of an extinct economic age.

I am all for people living in cities for all the same reasons as Florida, but I think Mudede overshoots his load with this prediction.  There is just no evidence that people want to give up their lawns.  People absolutely love them, and they love envisioning their children riding bikes down the cul-de-sac.

Recent surveys show that suburbanites are happier than their companions in the cities, and that they like their communities.  Political power remains in the hands of the suburbs, and they are the ones who elected Barack Obama.  No smart politician will pursue a policy that will penalize them.

While housing growth in the last decade was strong in urban areas, the suburbs still far surpassed them.  But with the mortgage crisis, many suburbs around the country are becoming ghost towns, like Elk Grove, Calif., and Windy Ridge, N.C.   That leaves a lot of McMansions and new developments totally empty.  What will happen to them?   Michael Cannell at Fast Company writes:

Already low or middle-income families priced out of cities and better neighborhoods are moving into McMansions divided for multi-family use. Alison Arieff, who blogs for The New York Times, visited one such tract mansion that was split into four units, or “quartets,” each with its own entrance, which is not unlike what happened to many stately homes in the 1930s. The difference, of course, is that the 1930s homes held up because they were made with solid materials, and today’s spec homes are all hollow doors, plastic columns and faux stone facades. There is also speculation that subdivision homes could be dismantled and sold for scrap now that a mini-industry for repurposed lumber and other materials has evolved over the last few years. Around the periphery of these discussions is the specter of the suburb as a ghost town patrolled by squatters and looters, as if Mad Max had come to the cul-de-sac.

The demise of the suburb has been predicted and hoped for since Levittown’s first white family.   Even today with people like Richard Florida barnstorming the blogosphere, dreamers still envision the future perfect suburb.  According to TheMoveChannel, an outfit in Victoria, Australia called The Lab wants to plan a Melbourne burb with no cars, an 80 per cent reduction in carbon emissions and the ability to grow its own food.

Instead of the suburbans declining, I see a parity between them and the cities.  The suburbs have dominated America’s cultural and political landscape for the fifty years at the expense of the cities.  But just because the cities have rebounded, it does not mean the suburbs are going anywhere.  People like that lifestyle.

Credit card defaults may be “the next meltdown,” according to Gregory Larkin at research firm Innovest Strategic Value Advisors.    MSNBC reports that Innovest estimates credit card issuers took a $41 billion hit from defaulted debt in 2008 and that they’ll face a whopping $96 billion loss in 2009.

It’s no small secret that Americans have been living beyond their means for a long time.   Even while they wallow in debt, Americans continue to see a spot of spare credit as “found money”, even after the disaster of home equity loans.  Just as worrying as the home mortgage crisis is the spouting spigot of credit card debt that the banks unleashed upon the masses.  No surprise: the big banks are the ones who have been the loosest with lending consumer loans.  CNN spotlights the problem:  $76 billion in credit card loans in 2008, nearly $46 billion came from Bank of America, JPMorgan Chase and Citigroup alone, according to credit rating agency Moody’s.   :

Of the nearly $76 billion in credit card loans in 2008, nearly $46 billion came from Bank of America, JPMorgan Chase and Citigroup alone, according to credit rating agency Moody’s.  Fearing a wave of credit card-related losses, banks have been aggressively setting aside funds to help cushion the blow. One problem, note analysts, is that banks aren’t quite sure just how severe the losses will be.   Industry charge-offs, or loans a bank considers to be uncollectable, climbed to a historic high of 7.73% in December. Most analysts expect that figure to head higher as more and more people find themselves out of work.  Unemployment rates, widely viewed as the most reliable indicator of future credit card losses, climbed to 8.1% in February – its highest level in 25 years.

The credit rating agency Fitch has already predicted a record number of delinquencies, with U.S. Consumer ABS Senior Director Cynthia Ullrich stating that, “As the unemployment rate accelerates and consumers’ ability to service their debt weakens, Fitch anticipates that gross chargeoffs will surpass 8.5% by mid-year and approach 9% by year end.”

That’s pretty huge.  Already the Minneapolis Star-Tribune has reported that there are record numbers of credit card defaults in Minnesota, 39 percent more than in 2007 (a record year) and 133 percent higher than 2006.

What are the banks doing?  Raising interest rates on the hardest hit, which makes no sense.  From MSNBC:

Yet banks and credit card companies may be contributing to their own problems by raising interest rates, suggests BusinessWeek, pushing already-struggling consumers even further toward default or debt relief options like credit card debt settlement and bankruptcy. A survey of major credit card issuers by consumer advocacy group Consumer Action found that 37 percent of companies have raised their interest rates across the board, even for consumers with relatively strong credit histories.

Some card companies are trying a different approach:  paying high-risk debtors to reduce the amount they owe or paying them to close their accounts.  USA Today reports that American Express is giving some of its consumers $300 if they pay off their balances and close their accounts;  Citigroup and CompuCredit are offering a credit to reduce debt for borrowers who agree to pay far higher minimums than they are required to do.

PORTSMOUTH, NEW HAMPSHIRE – A few years ago the headlines were about chocolate-fueled trucks in Timbuktu.  Now Lindt USA and Public Service of New Hampshire want to use chocolate to light your homes. 

The chocolate maker, based in nearby Stratham, and its utility together devised and tested a new fuel mix comprised of one part cocoa bean = 33 parts coal.  In all, they burned 18 tons of beans to see how well it produced electricity in a boiler.  If the test results are positive, they may fire up the cocoa power plant and turn the bean shells into garden mulch, making this the only cocoa bean-to-energy project in the United States. 

According to the Portsmouth Herald News, the plant was two years in the making and required a lot of state permits for the test, which, if successful.  According to Peter Breed, manager of engineering at Lindt, based in nearby Stratham, the company hopes for success.  "If not, the beans would be going into a landfill or possibly composted, but then (we) have to find someone who wants to deal with them," said Breed.

However, CleanTechnica.com remains skeptical about how clean this chocolate power plant will be for the air:

Consultants spent the day testing emissions and it’s not immediately clear when results will be available. But the mixture is still 33 parts coal to one part shells, so it’s hard to imagine results will be too radically different. And after all, we’re still talking about burning coal. You can cover the coal in a scrumptious chocolate shell, but it’s still coal.

Biofuels, once seen as the next wave in energy advancement, are now controversial.  Some, such as corn ethanol, simply do not produce enough energy to merit the energy that goes into make the fuel itself.  Some critics argue that producing biofuels–particularly the high-energy output sugar ethanol–encourages the destruction of rain forests.

Somebody has to clean it...

The folks in Ludington, Michigan like to turn lemons into lemonade.  According to local ABC television affiliate WZZM, over a year ago the SS Badger, the Lake Michigan car ferry that shuttles between Ludington and Manitowoc, Wisconsin, wanted the Discovery Channel’s “Dirty Jobs” program to spotlight this floating historic site.  But the producers said they would only come to Ludington if there was more than one dirty job.  Now Ludington is tap-dancing in front of the Dirty Jobs producers again, hoping to score some national exposure with local businesses involved in “removing skunks, packing meat, getting rid of sea lamprey, cleaning heat ducts or making pesticides .

Ludington may want to be careful what it wishes for, because it just might get a flood of immigrants desperate for any job that skunk removal might not be so bad.  According to NPR, the unemployment in the country has made dirty jobs (the ones that used to be described as ones only immigrants would do) are back en vogue.

That was NPR’s point, focusing on the Cascade Humane Society in Jackson, also in Michigan.  According to the non-profit’s executive director, Debra Carmody, they have been inundated with over-qualified people for a few recent jobs:

Jobs are scarce in Michigan and the state’s unemployment rate of 10.6 percent is the highest in the nation.

“They almost all had college degrees, many of them had master’s degrees,” Carmody says of those applying for jobs at her animal shelter. “There were two or three former executive directors of nonprofits.

“The one that really blew me away was we had one attorney.”

Go here to listen to the full story about the return of dirty work.

A sign of the times is the stories about people dumbing-down their resumes to get lower jobs.  Adweek warns that people who might be willing to a take a huge pay cut and a lower status “may not get the job because they’re overqualified“. As if picking up that bugle, McClatchy Newspapers sent out local reporters in its empire to write these stories.  The Cleveland Plain-Dealer ran McClatchy story that told us, “Adapting to lean times, résumés also get leaner”.  The Akron Beacon Journal ran a McClatchy story “Job seekers tone down resumes – Professionals leave out titles, degrees so they don’t seem overqualified”.   The Dallas Morning News re-ran McClatchy’s Charlotte Observer story, “Interview Seekers Omit Details on Resumes”.  The Seattle Times ran a McClatchy story that intoned “Overqualified applicants flooding the job market”.

What’s all this mean?  Probably that people are dumbing down resumes, but only one news company is the main source behind all the headlines.

The news is bad out there.  I predicted back in January that the Dow would hit 6800, at least.  Today for the first time since 1997 the Dow hit below 7000.  This morning it reached a low of 6901.  Then it closed at 6723.   This means that if I predicted it, then it was a highly predictable occurrence.  Ouch.  The question is how low will it go before the end of 2009?  I’m going to be conservative and say it will bounce down to 6,000.  According to some schmuck named Bill Strazzullo, it could hit the 1995-level of 5,000.

But the news is not all bad.  Here are seven things to be happy about this Monday:

1. Fewer kids have high lead levels
2. Obama’s budget offers middle and working class good news
3. Obama pretty much legalizes marijuana
4. Ford restarts Ohio plant
5. There’s a low flood risk in Cedar Rapids this spring
6. More calcium helps women battle cancer
7. The Hoboken Homeless Shelter received enough money to continue their programs