Mendocino County Today: Tuesday, Jan. 3, 2017

• Wet Ahead
• Woodhouse Expectation
• Noyo Tragedy
• Trash Contracts
• AV Awards
• Drug Kingpins
• Jude Nagle
• Mendo Greens
• Little Dog
• Permit Scam
• Split California
• Yesterday's Catch
• Mormon Rockettes
• Crab Price
• Occupy Inaguration
• ERRP Meeting
• Piano Concerts
• Revolt!
• Printmaking Techniques
• Printmakers Exhibit
• Forecast 2017

WET & COLD AHEAD. Monday saw minor rain accumulations with some light snow on Mendo’s higher elevations. Tuesday is expected to bring heavy rains and squalls most of the day with totals approaching two inches or more in some locations but not as cold. Rain will taper off into Wednesday accompanied by slightly milder temperatures.

THIRD DISTRICT SUPERVISOR TOM WOODHOUSE is expected to submit a formal letter of resignation on Tuesday, January 3, 2017, possibly to avoid facing charges related to the incident in Willits last October when he was “detained” for apparent domestic battery and biting a deputy during an encounter with deputies which was attributed to mental illness not criminal intent. Woodhouse has been in and out of Northern California mental health facilities since then and is reportedly improving.

WOODHOUSE’S APPARENT RESIGNATION seems like the least problematic under the circumstances, considering that while most observers have some sympathy for his mental difficulties, his extended absence has left the position open and in limbo while the Third District went without representation since August with important issues on the Board’s agenda.

SPECULATION now begins about who the Governor’s office will appoint to fill out Woodhouse’s term. Registered Democrats like Hal Wagenet (who held the position for one term in the early 2000s), and former Supervisorial candidate Holly Madrigal would seem to be likely candidates. Both of them have previously lost to former Third District Supervisor John Pinches who, if health and inclination are positive, would be a popular dark horse pick who could move into the position without much of a learning curve — if the Governor wanted to consider qualifications and experience over party affiliation. The Board of Supervisors has no formal role in the selection process, but it’s likely that they’ll be consulted privately and individually. No one knows how long the appointment process would take, but we’d be surprised if it dragged out for months.

NOYO BAY TRAGEDY

by Rex Gressett

The first I knew of it, on the last day of the year, about 11pm, in a gently falling rain, a Coast Guard HH 65 rescue helicopter pounded down the Noyo River headed for the ocean. It was flying low, meaning business.

The Fish and Games, a fishing boat somewhat under thirty feet, had floundered. Rowdy Perkins, a well-known and well-liked Noyo Harbor entrepreneur and fisherman, was in trouble in eight to ten foot seas with two of his crew, Lisa Salisbury and Richard Mottlow.

Like the rest of the working harbor, Rowdy was betting on crab. The delays in the regular crab season along the coastal zone adjacent to the Noyo River, had worked a quiet desperation among the smaller-scale local fishermen. There was a resounding boom in Noyo enterprise when the state lifted the lid on crab and finally let the season proceed. The ocean was and is filled with crab pots and lines and gear.

Last year there were 57 confirmed whale entanglements in crab gear and one confirmed whale drowning. It is presumed there were more. Suffice it to say everywhere that a crab pot could be, there is one.

The delay in opening the season did not affect everyone equally, and some not at all. The bigger boats could forego the proscribed illegal zone just by heading north of Humboldt Bay. To the smaller boats, and the local guys armed only with hustle and a few dozen pots, that distance presented a challenge. For the small boats the opening of the delayed season was just in time.

These days fishing in its generality has been reduced to a painful minimum. Even the urchins, that occur in mass only in conditions of ecological collapse, and have therefore been abundant, are now in catastrophic decline. For decades they were the largest fishery in California but they are going, too.

Crabs, however, are still plentiful. It is almost true that crabbing is about the only game in town. Certainly, it is the only one where earnings look anything like they used to.

The Fish and Games was never pretty and she was loaded with pots. The three of them on board were just a little south of Todd's Point. What is known is that the prop became entangled twice in a crab lines, first south of the cliffs and then, running on secondary power, she got entangled again.

Losing power that close to the rocks is, with no debate at all, big trouble. Rowdy, with his habit of command, went into the water both times to cut the entangling lines. Somehow it all went wrong. The boat swung into the rocks and broke, dumping the crew into the icy water. They got off a call to 911.

Within minutes, the local Coast Guard had put out their rescue ship while other coast rescuers drove in haste to the cliffs. They found Lisa pretty quickly; she had somehow contrived to make land but was caught in a narrow tidal gulch in the surging water, fighting to hold on to the rocks. The waves pounded her and tried to draw her back into the ocean.

The first HH65 rescue helicopter dispatched flew straight down the coast from Humboldt Bay. It got there fast — maybe 30 minutes. But by the time the rescue chopper was over the cliffs, local Fort Bragg was on the scene.

As the word had gone out from the 911, as many as 45 emergency responders from every local agency, were positioned atop the stunningly beautiful Todd Point cliffs, setting up apparatus and moving into position. The Fort Bragg Fire Department rappelled down the cliff to the stranded Lisa, a tough and gutsy survivor if there ever was one.

It took three rappels to get to Lisa and get hold of her, but finally they did.

She was of course hypothermic but was successfully basket-lifted off the rocks by helicopter and flown to the hospital in Humboldt.

Rowdy Perkins is notoriously tough. He is also smart and extremely capable. Somehow before all the rescuers arrived he had already hauled himself out of the pounding surf and was sitting disconsolate with his back against the rocks and the ocean that had taken his boat crashing at his feet. The crew at the top of the cliff got blankets and supplies down to him and on his urging continued calmly, professionally and desperately to look for the third crewman, Richard Mottlow, 67, of Fort Bragg.

There were candles and a little altar set up outside the Tip Top bar this morning. I knew him of course. Richard was solid and capable. He was a gambling buddy of my own good friend Charley. He was disliked by nobody that I knew and always generous when he could be. He had a quality of self-possession and a calm that never failed him. He was comfortable in his own skin, and was no one to mess around with.

Two more helicopters were dispatched from Humboldt. Both failed to locate Richard, and being the gas guzzlers that they are went back to Humboldt after their allotted hour.

One more HH 65 was sent up from San Francisco. The local Coast Guard ship searched till 1am and went out again an hour before dawn. The Fort Bragg Police Department was there in force. The fire department did the actual climb down to the rocks. CDF and deputy sheriffs were there. Even CalFire was on the scene. Basically, everybody that we have locally from every agency that we have gave Richard all they could.

At dawn the Coast Guard found Richard at the foot of the cliffs at Pomo Bluffs Park.

WHEN MIKE SWEENEY locks you into a contract, you can bet you are really locked in. Before Sweeney retired as Mendocino County’s long-serving Trash Czar, he set up the contract which Jerry Ward’s Solid Waste of Willits outfit operates under. Ward essentially IS the County's rural garbage man. He has served us efficiently and, considering the vast distances his trucks travel, inexpensively.

WARD'S CONTRACT requires that he periodically apply for and justify rate increases, including a $33,000 “independent audit” that he has to pay for.

The “audit” must then be submitted to Sweeney’s hand-picked successor at the Mendocino Solid Waste Management Authority, Louisa Morris. Ward submitted his request for a rate increase back in December of 2015 with his own numbers and a request that the County forego the independent audit to speed up the process.

IN HIS REQUEST to the Supervisors, Ward said he was losing money on all five transfer stations and on his recycle/buyback centers (due to a downturn in the market for recyclables). Ms. Morris told the Supervisors that Ward is making more than 12% profit and that that was more than other similar companies make.

WARD RESPONDED that Ms. Morris wasn’t factoring in interest on loans or taxes which turn the alleged 12-plus-percent “profit” into a loss.

THE DISPUTE has lingered for a year while Ward keeps losing money. Supervisor Dan Hamburg, who has apparently been spearheading an ad hoc committee to deal with Ward’s rate increase request, and making no progress, belatedly claimed last week that the lack of the expensive independent audit was the problem — the audit that would cost Ward $33,000.

CLEARLY, the dispute has more to do with Ms. Morris’s tight position regarding what’s allowed as an “operating cost” than what the actual numbers may be. And an audit wouldn’t deal with that problem at all.

REMEMBER, Jerry Ward’s Willits-based, locally-owned business accepted the original contract years ago when the County was facing a messy trash situation with very few bidders and some competition from large, out-of-county haulers.

WARD has since delivered good service, hired competent local workers and effectively removed trash hauling as a County problem. It seems to us that the County should figure out a way to cover his real costs and allow him a reasonable profit — profits which in the past have been plowed back into capital improvements — Jerry Ward is not getting rich off of Mendo’s outback trash.

WARD TOLD THE SUPES last week that his financial situation is so dire that his bank, Comerica, is threatening to call in their note in January of 2017 and won’t offer any more credit, which would mean he couldn't make payroll. This would force Ward to apply for bankruptcy, which would leave both Mendocino and Humboldt counties (which Ward also has a contract with) in the hands of a company in receivership -- or worse.

FOR NOW, the Supes have decided to give the dispute back to Hamburg’s ineffective ad hoc committee which has so far stood firm in making zero progress on the problem.

SEEMS TO US that Ward should at least get a temporary increase to keep him in business — in fact that should have been done months ago — subject to review and negotiation based on actual costs incurred during the period of the temporary increase.

IF THE ORTNER OR REDWOOD QUALITY mental health contracts had been drawn up by Sweeney, they’d have been forced out of Mendo or out of business years ago. Instead, those much more abstract “services” are allowed to bill the County whatever the hell they want without demonstrating that a single person has been genuinely helped.

BUT IF WARD doesn’t get his County-wide trash hauling job done every day, every week, every month, year after year, the public outcry would be loud and immediate.

(Hat tip to Independent Coast Observer reporter Lindsay Smith whose recent summary of the Ward-Mendo impasse provided some useful information for this account.)

* * *

(The above Solid Waste of Willits item is a repost for background to the following reader’s response.)

A READER WRITES: "Your article on Jerry Ward and his requested rate increase was ok as far as it goes but ignores his money losing contracts for hauling Humboldt County's trash and recyclables. Ward was low bidder on those contracts a few years ago, undercutting the local company that had held the contracts for decades. Ward insisted his business acumen and economies of scale allowed him to deliver the service at a significant savings over the local company. Now that he has the contracts Ward is threatening Humboldt County with bankruptcy unless the contracts are re-written to give him higher rates. Sound familiar?

"Ward is also trying to sell the company so the rate increases he wants will increase the value of the company to any new buyer. Hamburg has been acting as a one man ad hoc committee because Woodhouse has been missing in action, so it was really just Hamburg who brought forward the most recent proposal. Hamburg was willing to give Ward $100,000 a year in rate relief, but Ward says he needs $200,000. But the real question might be how much should Mendo County ratepayers be charged to make good on Ward's unprofitable Humboldt venture?"

"Even without the Humboldt contracts, it's hard to know if Ward really needs the extra hundred thou or if it's just a ploy for higher rates. Why? Because garbage companies are set up with a series of companies under a single corporate ownership. One company owns the trucks, one owns the transfer station, one holds the contract to pick up trash, another for the recyclables, and so on. The parent company can juggle the numbers any way they want to show a gain or a loss. And if Jerry Ward is on the brink of bankruptcy like he claims, why did he contribute $20,000 to Howard Memorial Hospital last year? Without an independent audit it is almost impossible to tell if the company is really making money or not."

"Ward provides a good service and no one wants to see a local company fold. But Ward is taking a page out of President-elect Trump's playbook by threatening to walk if he doesn't get his way. Is Ward threatening bankruptcy to save a local company or is it a cynical ploy to increase the sales value of his company before he rides off into the sunset? Caught in the middle are the ratepayers and more pointedly Ward's employees."

END OF THE YEAR AWARDS, ANDERSON VALLEY

COACH OF THE YEAR: Luis Espinoza of Anderson Valley who is also a detective with the Mendocino County Sheriff's Department. Espinoza, when he wasn't out fighting the losing local battle against crime, molded an inexperienced group of football players into a championship basketball team, and he did it without a single reliable outside shooter. Under a lesser coach the AV boys would not have enjoyed a winning season. But the coach got them playing a truly tenacious defense that forced their opponents into numerous turnovers, from which the Panthers bulled their way under the basket to layups. And they played as a team, always a sure sign of able coaching.

FUMBLE OF THE YEAR: The inert 15-person board of directors of the Anderson Valley Health Center for losing us our popular MD, Dr. Logan McGhan.

BEST BOONVILLE COMMERCIAL MAKEOVER; Live Oak Building, owner Tim Mullins.

WORST BOONVILLE COMMERCIAL MAKEOVER: AVA compound, owner Bruce Anderson. (Work in progress, trust me.)

BEST UNICORPORATED STRUCTURAL MAKEOVER: Chris & Stephanie Tebbutts' "Velma's Farm Stand" on Anderson Valley Way, Boonville.

MOST INTREPID RESTAURANTEUR: Lauren Keating of Lauren’s Restaurant in Boonville, which celebrated 20 years in the competitive local restaurant business last fall.

MOST USEFUL GOVERNMENT DATA: The Navarro River Gage On-Line Data-Logger: both depth and flow. The best and simplest indication that the wine industry has trapped so much winter flow in Anderson Valley that the Navarro now has great difficulty even reaching the Pacific (especially when combined with larger than normal sand accumulations and high tides).

SURVIVOR OF THE YEAR! Senior Mendo Logger Dan Kuny who miraculously survived a tree falling on him in the Sierra Nevadas. Kuny is already back to work, rebounding from nearly fatal injuries.

RUNNER-UP: Lorenzo Rodriguez: Took five point blank rounds to the chest and head during his knife-wielding rampage in Philo, but was out of the hospital in three days in time to be arrested and sentenced to state prison.

ARTIST OF THE YEAR: Yorkville’s Ron Black whose uniquely creative concrete and glass sculptures are an absolute marvel.

DEPUTY OF THE YEAR: Craig Walker easily handled what crime occurred in Anderson Valley while covering shifts in Ukiah as well, one of which involved a tussle with a tweaker which put the deputy on light duty.

FREE ENTERPRISER of the year: Lisa Walsh of the Yorkville Market has singlehandedly revived commercial Yorkville, and community along with it.

THE REDWOOD DRIVE-IN'S DONUTS, as always, reign supreme in the donut-munching Redwood Empire.

LEAST WELCOME SYMBOLISM: The Boonville Fairgrounds’s new cartoon logo featuring a bunch of grapes riding a brahma bull.

MOST ANTICIPATED new restaurant: Lizzby’s in the old Lodge complex, Boonville. Runners-up: Whatever new eatery replaces the old Libby’s site in Philo; whatever pub-like enterprise replaces the Buckhorn Saloon, Boonville.

ODDEST NEW BUSINESS: OneTaste, new owners of the old Shenoa property on the Navarro River offering, at three grand a weekend, “orgasmic meditation.” And to think, fifty years ago the Anderson Valley economy was based on logging and farming. The new economy? Dope and booze.

MOST UNWELCOME building permit application: Blackbird Farms, Philo. LA-based fortune derived from public ed-funded charter schools wants a legal transient capacity of 290 persons accessed by a single-lane Ray’s Road on a site without water and fire safety for thirty people.

NOTE OVER THE TRANSOM: “Laytonville big bucks Stewart [Bewley] is also funding the Mendocino Cannabis Industry Association, aka: Yes on AF; MCPC; and Swami/Tim/Casey/Jamie. And what ever happened to Justin? He's disappeared!”

BEATS ME. Don’t know Justin, but he wouldn’t be the first person connected to the Emerald Triangle’s love drug business to disappear.

THERE’S A LOT of jockeying for position in the Northcoast dope business, much of it by powerful outside interests. The Chinese want to set up a huge indoor grow in Willits, for instance. It’s difficult to tell the players, and the players aren’t issuing scorecards.

THE LIFE OF JUDE NAGLE of Laytonville, a beloved medical cannabis activist, will be celebrated at Harwood Hall in Laytonville at 2 p.m. on Saturday, Jan. 14. All are welcome to bring songs, memories, stories or photos of Jude --and a potluck dish to share. For more information, call Erin at 707 972-3536.

PLAINTIVE MESSAGE wafting in out of cyber-space: "Hi neighbors, does anyone know if there is any way to contact the local Mendocino Green Party? It is time to get more involved in this election process thing and breathe some life into the Green Party. I have sent a message to their Facebook page moderator asking to be allowed to post on their page, so far no response, and I cannot find any other contact info. Thanks for your help, probably an email to the CA State Green Party would work, I was curious if anyone locally knows about this."

YES, SIR, we do happen to know about this because the proprietor of this very newspaper called the first Green Party meeting for Mendocino County back whenever it was ('87?) quickly realizing (1) a virtual Who's Who of Mendo lunatics showed up for the inaugural meeting at the Anderson Valley Elementary School and were instantly dominant, as Mr. Newspaper Man found himself arguing with some dwarf nazi of a "vibes watcher" wielding a flute who tootled Mr. Newspaper Man into silence every time Mr. N tried to say something. And to be "empowered" to say something in the first place one had to possess an asparagus fern. From there, the Greens deteriorated into a weird sole proprietorship presided over by a wacky fellow arrested for drunk driving on his bicycle whose fascist personality alienated everyone except the local Democratic Party apparatus who used Wack-Man and his putative Greens as an adjunct to the Northcoast Dems. These Dems, ever alert to any political energy to the left of their candy-arsed identity politics and Billery economics, have managed to ensure no Green Party for Mendocino County, one of the only counties in the state not to have at least a Potemkin left of the greenie-weenie type. If the writer of this inquiry were to call a Green session himself, he would find himself surrounded by a dozen of the most unpleasant so-called "progressives" imaginable, all of whom, in their mingy 70-to-80-year-old hearts, cried themselves to sleep on November 9th. That said, and these awful people either dead or officially senile, or simply ignored by the intelligent young, there is some genuinely progressive energy in the County among some young people, a number of whom are active in the support for Standing Rock.

LITTLE DOG SAYS, Hey! These tight bastards finally got me a new house!

ON LINE COMMENT OF THE DAY — COUNTY POT PERMITS: It is well-known but officially avoided… Nearly everybody applying for permits is selling on the underground market. The county officials should be wrapped up in a federal RICO case for their scam. They are basically extorting money from growers for the fees for a county permit while pretending that the one statement of “only selling to a licensed distributor” is going to be followed when we all know ( and they know too..and the feds also know!) that is just not possible and ludicrous. These county officials running this scam should all be prosecuted to the full extent of federal law and hopefully the new Attorney General Sessions will do so. Enough of this bullshit and scamming and extorting from our elected officials!

BROWN, THEN NEWSOME — TWIN DISASTERS

Editor:

I would like to get something off my chest. It is about the governor of our state of California. He is no different than Hitler back in the 30s and 40s. He is trying to run the state by making laws that the people don't get to vote on. He has people like Mary Nichols who ruined our timber industry with their stupid, ridiculous, business-destroying laws and regulations. Several thousand jobs have been ruined and as well as thousands of businesses, especially contractors and timber companies and transportation industries. The governor and the state are completely out of control. And after Brown here comes Gavin Newsome. Who's worse. We need to cut the state in half at Sonoma County and these people can have Southern California to themselves!

Jerry Philbrick, Comptche

CATCH OF THE DAY, January 2, 2017

JANINE ESTEP, Ukiah. Under influence.

RUSSELL GREEN, Willits. DUI.

JAMES HARNETT, Ukiah. Meth possession, meth sale, possession for sale, drug sales, paraphernalia, pot cultivation, pot possession for sale, probation revocation.

WILLIAM LEE, Boonville. Under influence.

BIANCA LOPEZ, Sacramento/Ukiah. Suspended license.

JOSHUA SHELLY, Willits. Controlled substance.

ERIC WING, Upper Lake/Ukiah. Resisting.

BRIAN WOOD, Willits. Suspended license.

SO PRESIDENT-ELECT DONALD TRUMP is having trouble finding celebrities to entertain at his inaugural celebration. You know you’re in bad shape when Elton John turns you down. Sir Elton played at Rush Limbaugh’s wedding.

Celine Dion turned down Trump. So did the Beach Boys and a host of others.

So who will show up? The Mormon Tabernacle Choir, even though 15,000 Mormons signed petitions against such an appearance. The Radio City Rockettes will perform, after working things out with several dancers who didn’t want to go. Rockettes who don’t want to take the stage won’t have to.

The Trump inauguration committee spokesman told CNN that all this was OK, that “this is not Woodstock.” Trump himself was typically restrained in a tweet on the subject, saying, “The so-called ‘A’ list celebrities are all wanting tixs to the inauguration, but look what they did for Hillary, NOTHING. I want the PEOPLE!”

Well, maybe he’ll get them. Plus a few country-western performers who really need a gig.

It sounds like size is everything for Trump. That being the case, keep in mind that 2 million people showed up for President Obama’s first inauguration in January 2009.

(Willie Brown)

FROM THE HUMBOLDT FISHERMEN’S MARKETING ASSOCIATION:

As of 10:00 AM January 2, 2017 the West Coast Dungeness crab fleet remains tied up. Nearly 1200 boats, captains and crews are holding coast wide for re-establishment of the $3.00/pound price for Dungeness Crabs.

Background

On Monday, December 26, 2016, one very large West Coast fishing industry conglomerate (Pacific Group) instructed its subsidiary Pacific Choice Seafood in Eureka, California to reduce the price paid to fishermen for Dungeness crabs from $3.00 per pound to $2.75 per pound. This attempt to lower the ex-vessel price for crabs was scheduled to take place upon the opening of District 7 (Point Arena to Humboldt Bay) on California’s Northern Coast. Many fishermen believed that Pacific Group picked what was perceived as the weak link in West Coast fishing communities as a way of causing cascading price reductions in all West Coast ports that are fishing crabs north of San Francisco. Other companies buying Dungeness crabs were taken by surprise by Pacific Group’s move to reduce prices paid to fishermen.

Pacific Group may have believed that the fishermen in the ports of Fort Bragg, Eureka, and the minor ports of Shelter Cove and Point Arena would just roll over and accept the lowered price offered by Pacific Group because of winter financial demands on fishermen’s families from having to wait for District 7 in California to open to crab fishing. Instead, those fishermen tied up their boats, refusing to fish for less than the previously agreed on price of $3.00 per pound which Pacific Group and other companies have been paying fishermen since November 15, 2016.

The news of the tie-up in District 7 quickly spread both north and south on the U.S. West Coast. The Dungeness crab fleet is now tied up from Morro Bay, California in the south to Westport, Washington, on the north.

While smaller fish companies are willing to resume buying Dungeness crabs from their fishermen at the original $3.00/pound price, the same companies are concerned about the possibility of retribution or punishment in the seafood market. If, for instance, a smaller buyer purchased $3.00/pound crabs, then processed and flash froze those crabs for later sale, a larger company with substantial cash reserves could, in theory, depress the price for frozen crabs by selling frozen crabs at a loss. This could potentially put smaller companies into a forced position of selling their crab inventory at a significant loss, maybe to the point of financial insolvency for that small fish company. While this speculative example might seem extreme, these things have happened in the past.

While no one can predict the outcome for the ongoing effort by fishermen to regain the original $3.00 price per pound for fresh West Coast Dungeness crab, a number of things have taken place as a direct result of Pacific Group’s action. Fishermen, crews, fish company workers, truck drivers and specialty seafood buyers and exporters have all been relieved of their jobs related to the Dungeness crab fishery over the New Year’s holidays. More importantly, the public, our customers and supporters, have been denied fresh Dungeness crab, a traditional holiday fare on the West Coast.

Fishermen and their families are very concerned that if successful, Pacific Group’s ex-vessel price reduction attempt will depress prices to fishermen for years to come.

DON'T TELL THE CORPORATE MEDIA, BUT IT'S MOS DEF ON FOR THE INAUGURATION!

"We remove our consent to be governed." — Occupy Inauguration

"Until these demands are genuinely addressed, we remove our consent to be governed." [Occupy Inauguration statement of Demands] Fellow Workers, Here is another update on one of the groups/coalitions planning actions on J20 and the weekend. The demands, values statement, and endorsements.

http://www.occupyinauguration.org/ourdemandshttp://www.occupyinauguration.org/values_statementhttp://www.occupyinauguration.org/endorsements

I previously sent you this update from another group planning J20 actions:

https://www.facebook.com/events/1114075848690917/

If you know of other groups/coalitions planning actions in DC/nationally please share a link to it.

— Monty Kroopkin, Fort Bragg

EEL RIVER RECOVERY PROJECT TO SET 2017 AGENDA IN WILLITS

The Eel River Recovery Project (ERRP) is hosting a meeting at the Willits Hub on Saturday, January 14 from noon to 6 PM to create its 2017 Action Plan and to celebrate 2016 accomplishments. An ERRP Board meeting will take place from noon to 2 PM, public scoping from 2-4 PM, and the celebration from 4-6 PM. The Willits Hub is located at 630 South Main Street in Willits. There is no charge for admission but potluck contributions to the celebration would be welcome. For more information see EelRiverRecovery.org on line or call 223-7200.

25TH ANNUAL PROFESSIONAL PIANIST CONCERT JANUARY 6-8

This weekend, January 6 - 8, 2017 marks the 25^th Anniversary of The Professional Pianist Concert at the Mendocino College Big Theatre. In celebration of this momentous occasion, there will be three concerts featuring 12 different pianists. The music will range from classical to jazz, boogie-woogie to Cuban, Broadway to ragtime.....each performance will be different! A special treat this year will be vocalist Paula Samonte joining different performers each evening.

The series features seven pianists on stage each evening in a living room environment throughout the event trading stories and songs with two pianos on stage to accommodate impromptu collaborations. This popular event is an annual sellout because of the diversity, quality of a multitude of styles of music and humor that takes place throughout the evening. There will also be a special 25 year retrospective video presentation.

Friday, January 6 will feature Spencer Brewer, William Beatty, Elena Casanova, John Gilmore, Elizabeth MacDougall, Ed Reinhart and Charlie Seltzer. Saturday, January 7^th’s performance will feature Spencer Brewer Elena Casanova, Wendy deWitt, Tom Ganoung, Chris James, Elizabeth MacDougall and John Simon. Sunday afternoon’s performance will feature Spencer Brewer, Elena Casanova, Tom Ganoung, Frankie J, Chris James, Elizabeth MacDougall and Ed Reinhart. No two concerts will be the same, so if you love piano and piano music, enjoy more than one performance, as they all will be different!

Tickets are on sale at Mendocino Book Co. and dig Music! in Ukiah, Mazahar in Willits and Watershed Books in Lakeport. Tickets are $15 general admission and $25 "I ‘Wanna’ See the Hands" limited seating. For more information call (707) 707-391-8374.

The Ukiah concert benefits the Mendocino College Foundation and the Allegro Scholarship Program. Sponsors are Sparetime Supply, Ken Fowler Auto, Savings Bank of Mendocino, Mendocino College Foundation, Ukiah Civic Light Opera, Willits Furniture Center, Waterman Plants, K-WINE/MAX, KOZT-The Coast and KZYX/Z. There will be autographed CD's by the artists for sale in lobby. Refreshments will be provided by Ukiah Civic Light Opera.

Styles Of Music

• William Beatty- Originals, Jazz, Classical
• Spencer Brewer- Contemporary Classical & Original Compositions
• Elena Casanova- Cuban Classical & Jazz, Classical
• Wendy deWitt- Boogie Woogie & Blues
• Tom Ganoung- Originals, Rock, Classical
• John Gilmore- Traditional Jazz & Bebop
• Frankie J- R & B, Soul, Gospel
• Chris James- Traditional & Swing Era Jazz, Originals
• Elizabeth MacDougall- Classical
• Ed Reinhart- Boogie-Woogie & Blues
• Charlie Seltzer- Broadway & Show tunes
• John Simon- Contemporary Jazz

REVOLT!

Esteemed AVA readers:

I'm still dreaming of the young leading a nonviolent revolution. Why waste our country's rich revolutionary heritage in a moment like this? For us, rebellion has always been self-defense and never more so than now. We've already been through a bloodless coup; why not a bloodless counter-coup? The Trumpites believe we've handed them a blank check. They believe we exalt them in their martial glory. Let's prove them wrong. Educate, agitate, organize. That's how the Oligarchs got theirs, that's how we'll get ours.

B. Patterson, Prineville, Oregon

BE THERE!

First Ambassadors at First Friday

The Grace Hudson Museum will host a First Friday event on Friday, January 6, from 5 to 8 p.m. Bob Rhoades, retired art and printmaking instructor at College of the Redwoods, will provide an informal introduction to a variety of printmaking techniques. Refreshments will be served. Visitors can view the Museum's current exhibit, "They Came to Washington: The First Ambassadors," featuring rare lithographic portraits of Native leaders who visited Washington to negotiate for tribal rights.

PRINT SHOW AT PARTNERS GALLERY, RECEPTION, JAN 6

Multiple Originals: The Fine Print

Kathy Carl. Robert Rhoades, Mary Anderson

January 5-29, 2017

First Friday Reception, Jan 6, 5-8pm

Partners Gallery is pleased to be exhibiting three experienced and lively local fine printmakers exploring an extensive variety of printmaking techniques. Kathy Carl develops images from her unique drawing style to create prints using solarplate, etching, chine colle, linocut, lithograph and monoprint. Robert Rhoades builds prints using several print media and multiple plates, including a series of modular multiples. He uses woodcut, computer generated images, blind embossing as well as aquatint and other print media. Several of the images are derived from sketches while traveling. Sculptor Mary Anderson conveys her love of the fluid line of the figure in her etchings with Japanese paper chine colle. Hand colored solar prints and lino cuts are also included in the show. Partners Gallery is located at 335 N. Franklin Street in Fort Bragg and is open Wednesday through Monday 10 am to 5 pm and Sundays 10 am to 4 pm. 707 962-0233 http://www.partnersgallery.com>

FORECAST 2017: THE WHEELS FINALLY COME OFF

by James Kunstler

“There is no other endeavor in which men and women of enormous intellectual power have shown total disregard for higher-order reasoning than monetary policy. — David Collum

American Notes

Apart from all the ill-feeling about the election, one constant ‘out there’ since November 8 is the Ayn Randian rapture that infects the money scene. Wall Street and big business believe that the country has passed through a magic portal into a new age of heroic businessmen-warriors (Trump, Rex T, Mnuchin, Wilbur Ross, et. al.) who will go forth creating untold wealth from super-savvy deal-making that un-does all the self-defeating malarkey of the detested Deep State technocratic regulation regime of recent years. The main signs in the sky, they say, are the virile near-penetration of the Dow Jones 20,000-point maidenhead and the rocket ride of Ole King Dollar to supremacy of the global currency-space.

I hate to pound sleet on this manic parade, but, to put it gently, mob psychology is outrunning both experience and reality. Let’s offer a few hypotheses regarding this supposed coming Trumptopian nirvana.

The current narrative weaves an expectation that manufacturing industry will return to the USA complete with all the 1962-vintage societal benefits of great-paying blue collar jobs, plus an orgy of infrastructure-building. I think both ideas are flawed, even allowing for good intentions. For one thing, most of the factories are either standing in ruin or scraped off the landscape. So, it’s not like we’re going to reactivate some mothballed sleeping giant of productive capacity. New state-of-the-art factories would require an Everest of private capital investment that is simply impossible to manifest in a system that is already leveraged up to its eyeballs. Even if we tried to accomplish it via some kind of main force government central planning and financing — going full-Soviet — there is no conceivable way to raise (borrow) the “money” without altogether destroying the value of our money (inflation), and the banking system with it.

If by some magic any new industrial capacity were built, much of the work in it would be performed by robotics, not brawny men in blue shirts, and certainly not at the equivalent of the old United Auto Workers $35-an-hour assembly line wage. We have not faced the fact that the manufacturing fiesta based on fossil fuels was a one-time thing due to special historical circumstances and will not be repeated. The future of manufacturing in America is frighteningly modest. We’ll actually be lucky if we can make a few vital necessities by means of hydro-electric or direct water power, and that will be about the extent of it. Some of you may recognize this as the World Made By Hand scenario. I’ll stick by that.

Similarly for “infrastructure” spending touted by the forces of Trump as the coming panacea for economic malaise. I suspect most people assume this means a trillion-dollar stimulus spend on highways and their accessories. Well, that also assumes that we expect another fifty years of Happy Motoring and suburban living. Fuggeddabowdit. We’re in the twilight of motoring anyway you cut it, despite all the chatter about electric cars and “driverless” cars. We won’t have the electric capacity to switch over the Happy Motoring fleet from gasoline. The oil industry itself is already headed for collapse on its sinking energy-return-on-investment. And our problems with money and debt are so severe that the motoring paradigm is more prone to fail on the basis of car loan scarcity and unworthy borrowers before the fueling issues even kick in. Every year, fewer Americans can afford to buy any kind of car — the way they’re used to buying them, on installment loans. The industry has gone the limit to help them — seven-year loans for used cars! — but they have no more room to maneuver. The car financing system is broken. Bear in mind the original suburbanization of America back in the 20th century — along with its accessory automobiles — must be regarded as the greatest misallocation of resources in the history of the world. So, a rebuild of all this stuff would represent more and possibly even greater malinvestment. We could have applied our post-WW2 treasure to building beautiful walkable towns and cities with some capacity for adaptive re-use, but we blew it in order to enjoy life in a one-time demolition derby. Life is tragic. Societies make poor choices sometimes, and then there are consequences.

We also might have been in better shape now if, beginning twenty years ago, we began a major rebuild of our railway infrastructure. But we blew that off, too, and shortly it will be very difficult to get around this geographically large country by any mechanical means. It may be too late now to do anything about that for the financing reasons already touched on — and which I will elaborate on next. The bottom line is that President Donald Trump will be overwhelmed by a sea of financial troubles from the very get-go, and here’s why.

Designated Bag-Holder

The American people have been punked by their own government and their central bank, the Federal Reserve, for years and the jig is now up. In 2017 both will lose their authority and legitimacy, a very grave matter for the survival of this republic.

Insiders surely have seen this coming for a long time. The people running this so-called Deep State of overblown and overgrown institutions probably acted at first with the good intentions of keeping the national lifestyle afloat. But in the end (now approaching) they stooped to too much duplicity and deceit in the desperate attempt to not just preserve the system, but to protect their own reputations and personal perquisites. And now there ought to be some question with the election of 2016 that they have engineered all of this system fragility to blow up on Mr. Trump’s watch, so they can blame him for it. It was going to blow up anyway. But had Hillary Clinton won the election, at least the right gang would have had to take the blame — the people in charge for the past twenty years. Instead, Donald Trump has been elected Designated Bag-Holder.

About That “Big Fat Ugly Bubble” and its Consequences

Part 1: History Lesson

The USA ran out of growth capacity around the turn of the millennium because we ran out ofaffordable energy to run our techno-industrial economy. It was hard to see this with seemingly plenty of oil available. And, of course, the computer tech fiesta was blossoming, but for all that glitzy stuff to attract dwindling real capital, other old stuff had to go, and did go, and when all was said and done the computers did not generate much wealth or social value. In fact, the diminishing returns and blowback of computer tech were arguably more damaging than beneficial to society and its economy. Look at where the middle class is today. Computer tech gave the magical appearance of growth while actually undermining it.

By affordable energy I mean energy with a greater-than 30-to-one energy-return-on-investment, which is the ratio you need for the kind of life we lead. That’s what the now-ridiculed Peak Oil story was really about: not running out of oil, but not getting enough bang for our bucks pulling the remaining oil out of the earth to maintain our standard of living. I’ll return to this issue in more detail later. But that was what provoked America’s 21st century economic malaise. Everything we’ve done in finance since then has been an attempt to compensate for our fundamental problem with debt — borrowing from the future to maintain our current (unaffordable) standard of living. Our debt has grown ever larger and faster each year, and our methods for managing it have become more desperate and dishonest as that occurred.

The culprit at the center is America’s central bank, the Federal Reserve, which is actually not a government agency as it seems, but a consortium of the nation’s biggest private banks, lately known as Too-Big-To-Fail. The Fed was created in 1913, when the complexities of capital finance were multiplying in step with the complexities of industrial production, which, remember, was a new and evolving phenomenon of human history. Mankind had no prior experience with industrialism. We discovered toward the end of the 19th century — decades of unprecedented industrial growth — that the system’s dynamic produced booms accompanied by very destructive busts. The operations of banking usually outran the cycles of trade, industry, and war that were coloring evolving Modernity. So the Fed was created to smooth out these cycles. It had two basic mandates for this: acting as the lender of last resort between banks during financial panics so that some money would always be available in an emergency; and stabilizing the money supply and prices in the system. The Fed failed spectacularly to smooth out the cycles of boom and bust and to maintain the value of the dollar over time.

Sixteen years after the Fed’s creation, America entered its worst economic downturn ever, the Great Depression, which was only mitigated by the colossal abnormality of World War Two. America emerged from that episode as the last industrial society standing amid everyone else’s smoldering ruins. That gave us an extraordinary advantage in world trade lasting roughly thirty years. That high tide of the era of seeming “normality” — the 1950s and 60s, which the Trumpian-minded might recall as “great” — started unraveling in the 1970s, which was not coincidentally the moment of America’s all-time oil production peak.

In 1977, the Fed was given a third mission of promoting maximum employment with a trick-bag of tools for manipulating the money supply and credit creation that have proven to be fatally mischievous. This new task elevated Fed officials, and especially its chairperson, to the status of viziers — magicians using occult mathematical models and formulas — to cast spells capable of controlling the macro economy the way wizards are thought to control external reality. Their pretenses seemed to work for reasons unrelated to the spells they were learning to cast.

It is still largely unrecognized that America recovered from the financial disorder of the 1970s not because of the charms of “Reaganomics” but for the simple reason that the last giant finds of oil with greater than 30-to-one energy-return-on-investment came on line in the 1980s: Alaska’s North Slope, Britain and Norway’s North Sea fields, and Siberia. That allowed the USA and the West generally to extend the techno-industrial fiesta another twenty years. As that bounty tapered down around the year 2000, the system wobbled again and the viziers of the Fed ramped up their magical operations, led by the Grand Vizier (or “Maestro”) Alan Greenspan, who worked the control rods of interest rates as though the financial system were a great nuclear powered pipe organ that could be revved up and tamped down by a wondrous Fed control panel. This period of Fed spell-casting was characterized by ever more systemically complex finance, growing systemic fragility, pervasive institutionalized accounting fraud, and ever-greater bubbles and busts. Deregulation, especially the 1998 repeal of the Glass-Steagall Act of 1932, sealed America’s financial fate.

Debt was the meat-and-potatoes of the Fed’s wizardry, but the “secret sauce” of Fed magic was fraud, in the form of market interventions, manipulations, regulatory negligence, and just plain systematic lying about the numbers that defined the economy. It amounted to nationalized financial racketeering. Under the consecutive Grand Vizierships of Greenspan and Ben Bernanke, control fraud (using official authority to cover up misconduct) was perfected by banking executives, eventuating in the mortgage securities fiasco of 2008, which took down the housing market and the economy. (That housing market, by the way, was made up mainly of suburban houses, the sine qua non of the greatest misallocation of resources in the history of the world.)

Of course, nobody paid a criminal penalty for any of this misconduct besides the maverick Ponzi artist Bernie Madoff, and a few other small fish. The regulators looked the other way, on orders from their bosses. Unlike the earlier Savings and Loan bank crisis of the late 1980s, none of the leading bank officer perps went to jail. The damage of the 2008 crash was epic and never repaired, only papered over with more debt, more deceit, and more racketeering.

The supposed remedy, the Dodd-Frank Act of 2010, was a cover for continued pervasive fraud and the institutional “capture” of government by the banking industry and its handmaidens, really a fascist melding of banking and government, a swindle machine in which anything goes and nothing matters. The frauds have only been rechanneled since 2008 into college loans, car loans, corporate stock buyback monkey business, currency arbitrage shenanigans, private equity asset-stripping, and the gigantic black box of derivatives trading.

About That “Big Fat Ugly Bubble” and its Consequences

Part 2: 2017, the Year of Living Anxiously

Under Bernanke’s successor, UC-Berkeley Professor Janet Yellen, the emphasis in Fed policy has been an elaborate game of “data-dependent” foot-dragging — a lot of talk with no action — with the data itself largely fraudulent, especially the easily gamed employment and GDP numbers that supposedly determine the rise or fall of interest rate policy. In short, the racketeering continues while the authorities quail in the face of accumulated and now inescapable debt quandaries ever more certain to end in systemic collapse.

Get this: the Fed is completely full of shit. It is terrified of the conditions it has set up and it has no idea what to do next. The “data” that it claims to be so dependent on is arrantly fake. The government’s official unemployment number at Christmas 2016 was 4.6 percent. It’s a compound lie. The 4.6 percent does not include the 95 million people out of the workforce, most of them able-bodied, who have simply run through their unemployment benefits and given up looking for work. Nor does it figure in the fact that roughly 90 percent of the new jobs created are part time jobs, many of them held by people working several jobs (because they have to, to pay the bills). Nor does it detail the quality of the jobs created (minimum wage shit jobs.)

That 4.6 unemployment figure is the main pillar of the Fed’s “data.” They interpret it as meaning the economy is roaring and has their full confidence. They‘re lying about that, of course. They have been touting “the recovery” (from the crash of 2008) continually and heralding a program of “normalizing” interest rates upward for two years. In 2015 they didn’t do anything until the very last Fed meeting of the year when they raised the Fed Funds rate 25 basis point (that’s a measly one-quarter of a percent). They raised, they said, because they were “confident” about the economy. No, that’s not why. They did it because they talked about it all year without doing anything and their credibility was on the line. They also promised four rate hikes altogether in 2016, which they then failed to carry out.

After that December 2015 rate hike, the stock markets tanked 10 percent. By springtime, the markets appeared to be bouncing back, so the Fed started talking about more rate hikes again. They talked it up all year without acting, an impressive act of fakery. The surprise Brexit vote gave them the heebie jeebies. They laid low. Meanwhile, the US election season was on. The Fed denies this, but they did not raise interest rates for eleven months in 2016 solely because they wanted to make the Democratic administration look good heading into the November vote, and they knew the economy was fragile. Once Hillary was nominated they were determined to usher her into the White House on a high tide of fake good economic news.

When she lost the election the stock markets surprised everyone by entering a super-bubblicious Trumpxuberance rally. There is a narrative for that too in the media chatter and it is simpleminded nonsense based on the sheer hope that Trumponomics will be great for business. More on that below.

Roaring stock markets were a secondary pillar of the Fed’s economic world-view. The post-election 2000 point upsurge in the Dow, along with the historically low 4.6 unemployment number, gave the Fed the opportunity on December 15 to do the same thing they did the previous year: cover their asses and preserve some credibility by hiking the Fed Funds rate one-quarter percent. You’d think if they were really confident in the economy — especially given the year–end rally — they would venture to raise by half a percent or more. They are not confident. They are lying with their fingers crossed.

The Fed Funds rate is one thing. As it happens, the Fed does not directly control the interest rates on US treasury bonds, and they have been rising shockingly through the second half of 2016. The crucial ten-year treasury rate has gone up a hundred percent since the summer. Because bond values move inversely to bond rates, the price of treasuries has tanked, inducing trillions of dollars in losses to bond-holders around the world. The bond market is many times larger than the stock markets. Bonds have been in a bull market since the early 1980s and that bull rolled over in mid-2016. A bear market is now on, meaning bond-holders are dumping their bonds. China and Saudi Arabia are among the leading dumpers of US Treasuries because they need the money for one reason or another. They will dump more in 2017 because both countries are in deep economic trouble. Too many bond sellers and not enough buyers in the market drive interest rates up. Rates have a lot room to move up, since they started at near-zero. Accordingly, their value has a long way to fall.

Bonds, of course, represent debt. Total US debt has doubled under President Obama from around ten trillion to twenty trillion dollars (as it doubled under Bush Two from five to ten trillion dollars). The reason, as stated above, is that we don’t produce enough to cover the cost of our national way of life, so we have to borrow continually at ever-greater volume. Every year, the Treasury has to pay interest on all that debt. It’s a lot of money. This year, with interest rates starting out at historically unprecedented lows (not seen ever in recorded history), the Treasury paid over a quarter-trillion dollars in interest. By the way, the government borrows money to make these interest payments too. An interest rate rise of one percent, would drive the annual US debt higher by $190 billion. As the late, great Senator Everett Dirkson (R-Ill) once pungently remarked: “…a billion here, a billion there, sooner or later you’re talking about real money.”

A sharply rising interest rate on the ten-year Treasury bond will thunder through the system. A lot of other basic interest costs are keyed to the ten-year bond rate, especially home mortgages, apartment rentals (landlords hold mortgages), and car payments. When the ten year bond rate goes up, so do mortgage payments. When mortgage rates go up, house prices go down, because fewer people are in a position to buy a house at higher mortgage rates, and rents go up (more competition among people who can’t buy a house). Zero Interest Rate Policy (ZIRP), in force for ten years, has driven house prices back to stratospheric levels. They are now primed to fall, perhaps severely, leaving many homeowners “underwater,” with houses worth way less on the market than the amount of mortgage left to pay off. The re-financing market is dead. Housing starts were already down by a stunning 19 percent in November. Automobile sales are rolling over. Manufacturing and retail sales numbers are down at year end. What’s up: stocks, stocks, stocks.

Yet investors did not execute the usual end-of-year profit-taking in the expectation that Trump would lower the capital gains tax in 2017, so why sell now? You can wait until January 3, 2017 to sell, and then not have to pay tax on your profits until April of 2018. Will investors start dumping in the first trading days of 2017? I think so. And will that selling beget a stampede for the exits? And what will happen if the interest rate on the ten-year bond hits three percent? (It doesn’t have far to go). Or maybe even four percent? What happens is the stock markets go down in the first quarter of 2017. My forecast is 20 percent down on the S & P. That will only be a preview of coming attractions once Trump gets his mitts on the levers of power. A still bigger crash ahead later in the year!

Why Trump Can’t Pull a Reagan

When Reagan came into office in 1981, inflation was raging largely because of the effects of the oil crises of 1973 and 1979, which had produced the “stagflation” that confounded the reigning economists’ models (they knew nothing about the relationship between energy dynamics and capital formation). The Fed Funds rate was almost 20 percent in 1981. It had a lot of room to move down. The national debt was less than one trillion (Reagan eventually ran it up to $2.8 trillion). Reagan was able to endure a sharp recession early in his first term — and voodoo economics got him through all the rest of his tenure, with both inflation and interest “normalizing” — as mentioned earlier, he enjoyed the bonanza of the last great non-OPEC oil discoveries coming on-line during his two terms, which ramped up economic activity and growth.

Today, the US is in a box and Trump comes on the scene with nowhere to move. Too much debt can only be managed if interest rates are kept low. Everybody and his mother around the world is dumping US Treasuries. With a bear market in bonds on, the Fed as buyer of last resort will have to sop up whatever comes on the market to keep the interest rate from rising above three percent on the ten-year, and even that may not prevent it. Trump’s vaunted infrastructure stimulus plan will be impossible to carry out without the Fed monetizing the necessary debt. So stimulus implies bigger deficits, which means more bonded debt that nobody wants to buy. The result will be inflation and accordingly further upward pressure on interest rates. Higher interest rates, in turn, will negatively impact economic activity, lowering tax revenue, inducing larger fiscal imbalances and greater instability.

Trump may never even get the stimulus he seeks. The Republican controlled-congress has vowed not to increase the national debt. How can Trump fulfill his pledge to cut taxes and bring on stimulus without hugely increasing the debt? If there is war over spending between Trump and Congress, Congress is likely to win, since they control the fiscal purse strings. Of course, Donald Trump cannot abide not winning. Hostilities between them may become permanent early in Trump’s term and bring on even more dangerous paralysis of governance.

Also early in 2017, the Fed will abandon its “dot plot” talk about further interest rate hikes. They may also surrender their credibility in the process. The system can’t take the strain of three interest rate rises in 2017. It may be that Janet Yellen has raised the Fed Funds rate a total of one-half a percent in two years solely to be able to lower them again when the real economy finally tanks under that strain of incessant central bank chicanery. By the second quarter of 2017, following a 20 percent stock dump, the Fed will start making noises about Quantitative Easing 4 (QE), or they will cook up some other program that accomplishes the same thing under a new cockamamie label. More QE (or something like it) will drive the dollar back down and gold back up. The housing market will be in the toilet and the rest of the economy will follow it down the drain. By the end of Trump’s first year in office, there will another, greater, dump in the stock markets after the initial 20 percent drop in the first quarter. America will be great again, all right: we’ll be entering a depression greater than the Great Depression of the 1930s.

Desperate Measures

One of the other big and dark trends of the past year has been the move of governments around the world — and among the economist / necromancers who advise them — to ban cash from the scene in order to herd all citizens into a digital banking system that will allow the authorities to track all financial transactions and suck every possible cent of taxes into national coffers. It would also be an opportunity for the bank-and government cabal to impose negative interest rates (NIRP) on bank accounts so that money herded into the digital system could be surreptitiously “taxed” by charging account holders just for being there (against their will). It’s a little hard to see how that might happen just now in a broad rising rate environment, but it would be the natural accompaniment to banning cash — and renewed aggressive QE (QE forever!) might do the trick.

Harvard economist Kenneth Rogoff literally wrote the book on this (The Curse of Cash; Princeton University Press, 2016), a mendacious argument that cash money merely enables drug dealers and terrorists to operate and has no useful place otherwise in a regular economy. Rogoff appeared to be angling for the Treasury slot in Hillary’s cabinet, and would have fit in perfectly with this totalitarian assault on the public’s financial liberty — but, as we know, Hillary didn’t make it.

Efforts to eliminate cash are already underway around the world. The EU officially discontinued the €500 note from circulation. Ken Rogoff’s Harvard colleague, Larry Summers, was calling for abolition of the $100 bill a year ago. Sweden is successfully herding its people out of fiat krona. India’s Prime Minister Narendra Modi pulled a fast one in November by banning the 1000 and 500 rupee note (worth respectively $14 and $7), and threw India’s economy into a epileptic seizure. The idea was to discipline tax evaders who operate in a cash economy. The catch was that more than 85 percent of India’s economy operates on a cash basis among people too poor to have bank accounts and credit cards — including millions of truck drivers and ordinary laborers. Naturally, the Indian economy froze. Nobody could get paid. Food rotted in stalled trucks. ATM withdrawals were limited to a few day’s walking-around-money. Citizens could not even exchange their 1000 and 500 rupee notes at the banks without going through onerous time-consuming bureaucratic rigmarole, including fingerprinting and the submission of tax records. The process caused discouraging long queues to form at the banks, and was probably designed to discourage the exchange of the 1000 and 500 rupee notes altogether and instead just retire them from circulation — which means a lot of poor people lost the minimal cash savings they had.

It’s hard to see the US government banning cash as clumsily as India did, but they have other ways to herd the multitudes into the black box of all-digital banking. Financial author James Rickards calls this the “Ice-Nine” program, in reference to the isotope of water in Kurt Vonnegut’s sci-fi novel Cat’s Cradle that freezes the world in a horrifying chain reaction. Rickards’ Ice-Nine financial nightmare would include features like freezing bank accounts, bail-ins (confiscation of accounts), limits on ATM withdrawals, and the “gating” of investment funds. Ice-Nine would be invoked in a banking emergency — say, a derivatives “accident” that took out some Too-Big-Too-Fail giant, or really anything that triggered the extreme fault lines in the ultra-fragile system that the world’s money elites have cobbled together to keep the garbage barge of global finance from sinking. In his recent book, The Road to Ruin, Rickards reminds readers that the emergency act signed by Bush Two after 9/11 has remained in effect under Obama, so that America is “just one phone call away from martial law.”

Another method for depriving citizens of their financial liberty would be for the government to declare that retirement accounts had to contain a set percentage of US Treasury paper — once again herding people into a financial corral against their will — in order to prop up the value of bonds and tamp down interest rates. David McAlvany (his excellent podcast here) makes the interesting point that if herding the public into the digital financial corral was a key ingredient to “making America great again,” who could object? — because now you’d be opposing American greatness! Trump inherited a much bigger problem than Barack Obama did in 2009. Obama still had enough soft-soap left in the machine to blow more bubbles. Trump arrives on the scene with the machine out of bubble-blowing mojo. He’ll be overwhelmed by financial disorder in 2017 and then the nation’s focus will turn to a tumultuous political scene

Wild in the Streets

The public is just plain pissed off, and remains pissed off after the Trump Victory. Their anger has been fermenting for decades as their economic prospects dwindled and they began to understand how it all worked against them. The battered middle class might have gotten a temporary thrill from the election, but an awful lot of them are still out of work, or working at the humiliating shit-jobs that replaced their old lost jobs in the old real stuff economy. Worse is coming their way in 2017. Theirs is a true existential crisis.

Even under the most favorable circumstances, a stimulus program would not likely get out of congress until much later in 2017, and I personally doubt that it will get through at all. The so-far-fortunate retirees plugged into pensions represent another potential trouble spot. Pension funds are going bust all over the country from the incapacity to stay solvent in a near-ZIRP environment. In 2016, fissures started to show in places like the Dallas Police and Firemen’s Pension fund, when pensioners’ redemptions were shut down. There are pension funds all over the country floundering from the same conditions, since the Fed took the “fix” out of “fixed income.” In the absence of decent “yield,” the pension funds have been herded into risky stock markets, and if those markets blow up, the pension funds are going to blow with them… and then the pensioners’ lives are going to blow up… and then maybe civil order dissolves around the country.

That may be the moment when President Trump and his militarily-weighted cabinet appointees opt for martial law. What a goddamned mess that will be. There is no civilized country on earth with as many small arms per capita than the USA, and despite the fearsome appearance of militarized police forces, you cannot overstate how much deadly mischief a small number of pissed-off people can make with automatic rifles, rocket-propelled-grenades, Semtex plastic explosive, and other fun stuff. It could morph easily to a literal war on bankers and Wall Street in particular, especially if Ice-Nine goes into effect. Bear in mind that a lot of veterans of the endless Middle East wars belong to this suffering economic class, and they actually have some training in the warrior arts.

Their political counterparts in the Democrat / Prog coastal elite, hardcore Hillary, PC-and-unicorn crowd are moving through their post-election Kubler-Ross Transect-of-Grief from denial to anger too. So both sides are quite pissed off and primed for conflict. The Left will certainly do everything possible to oppose Trump and try to make him look bad, whether it’s in the public interest to do so or not. They will throw every monkey-wrench possible into the machinery of governance, up to and including the (mostly Democratic Party weighted) Federal Reserve hierarchy, whose interest rate “dot plot” could be truly a plot to exact revenge on Trump. Of course, that would blow up in their faces since proportionately the coastal elites own much more stock than the Trumpenlumpenprole red-staters, and they could be wiped out in a significant market crash triggered by rising interest rates. But that’s the thing about political rage: it’s the opposite of rational.

There’s no sign that the Democrat / Progs have recognized that their poisonous identity politics played a significant role in their electoral defeat. They will not abandon that endeavor in 2017. They will double-down on it. And as that happens, the Democratic Party will go the way of the Whigs in 1856 — with a whimper, not a bang. God knows who or what will replace them as a credible opposition to Trumpist crypto-Republicanism, although Trump himself stands a good chance of leading that party to oblivion, too, if my forecast of a big financial blow-up comes to pass.

The Red Guard-like action on campus may continue, though it’s hard to imagine the “Snowflakes” besting their infantile hijinks of 2016. What they are demonstrating now is that coercive identity politics is just a new form of leisure-time recreation on campus, like Ultimate Frisbee and the beer blasts of old! Have fun wrecking faculty careers and basking in the Facebook feed! A few still-sane people of all political persuasions are sick of their censorious attacks, reckless persecutions, and insults to reality — such as the mandatory “white privilege” trainings and gender identity personal pronoun crusades. I predict that there will be a revolt among the university trustees and boards of directors against college presidents and deans who pander to the Maoist hysteria, as the damage to higher education and intellectual freedom more generally finally manifests in dropping enrollments and the loss of public funding.

There is every sign that black and white racial conflict will grow worse in the year ahead. The week after Christmas 2016 saw an impressive number of shopping mall mass melees of black teens all over the country. For years, the media went along with the hyperbolic story that innocent black men were being killed by police for no reason — when the overwhelming majority of those cases involved victims brandishing guns or grossly misbehaving in some way liable to get themselves in trouble. Victimology still rules in America. It’s a psychological defense mechanism to relieve the Dem / Prog’s shame and anxiety with the outcome of the long civil rights campaign — namely, black family disintegration, educational failure, and a shocking rate of black-on-black murder. A subsidiary grievance industry, lately led by Black Lives Matter, fans the flames of vengeance against the universal villain, Whitey, whose “privilege” keeps other people down (except, notice, immigrants from China, Korea, Vietnam, India, and other places where Whitey is absent.)

So, now Left and Right are both equally pissed off. It also means you have two adversarial groups who might give themselves permission to turn violent to justify their grievances. If the financial markets tank and the economy freefalls, it is easy to imagine the potential for violent conflict between the Dem / Progs with their Black Lives matter proxies against the Trumpista lumpenproles. It would be a terrible tragic distraction from the business of repairing the common weal, the economy, and the common culture — but so was the Civil War

The Oil Quandary

The reports of Peak Oil’s death are exaggerated, to borrow a gag from Mr. Twain. It’s just been playing out in ways that many of us didn’t quite anticipate and it is still at the heart of our economic predicament — which is that you can’t rationalize an annual debt growth rate of 8 percent if your actual economic growth rate is under 4 percent (paraphrasing Chris Martenson at Peak Prosperity.com).

We haven’t run out of oil, but we have run out of oil that is rationally economical to pull out of the ground. The so-called “shale oil miracle” extended the oil age a few years by debt-financed legerdemain. Yes, we drove US oil production way up, almost back up to the 1970 peak production level around 10 million barrels-a-day (b/d). The trouble was that the companies producing it didn’t make a red cent in the process. They just ran up a huge amount of debt to pursue the shale project. The pursuit was on wholeheartedly beginning around 2006, because 1) the Peak Oil story was scaring folks, including folks in the oil industry, and 2) the market price of crude oil soared after 2004 and shale looked like a possibly winning venture — especially since conventional exploration in recent years was turning up almost nothing of significance.

From 2004 the price of oil skyrocketed from around $40-a-barrel until 2008, when it reached a high point of about $140-a-barrel. Then, of course, the price crashed catastrophically for a year, along with Wall Street and the economy. But, by then, the fracking industry was all ramped up in the Bakken fields of North Dakota and the Eagle Ford range of Texas. Plus the industry was learning some additional new fracking tricks to goose more oil out of the “tight” rock. So they were full of confidence, despite the price crash. Then, in 2009 the oil price turned sharply upward again — with central bank ZIRP and QE and other maneuvers to prop up the economy with more debt at lower interest rates. And the price of oil just climbed and climbed again back into the $110-plus range in 2011, and lingered there until 2015, when it crashed again.

Of course, most of the producers weren’t making any money even at the $110-a-barrel, but they expected improved technology to mitigate that eventually. In the meantime, they just produced too much shale oil and the market was flooded and OPEC got into the act and pumped all-out trying to crash the price further to put the US shale producers out of business, and then nobody made a red cent fracking for shale oil. So, you can see there was a pattern.

The pattern nicely describes the dynamic advanced by Joseph Tainter in his seminal work, The Collapse of Complex Societies: namely that over-investments in complexity lead to diminishing returns. That is, as you keep making your systems extra-hyper-complex, you get less value back for doing it, until you get to the point where there’s no benefit whatsoever, and then the system implodes. And that is exactly what has happened with oil and the economy that was engineered to run on it, and the financial system that evolved to manage the wealth it used to produce.

A few other things happened the past few years on the oil scene. The American oil companies bowed out of Arctic drilling. The Canadian Tar Sands went bust. The overthrow of Muammar Gaddafi choked off Libyan production, which was offset by Iran coming back onto the international market, which was offset by political mischief in Nigeria that choked off production, which was offset by increased Iraqi production, which was offset by the collapse of Venezuela. Most of the world’s oil producers had entered decline anyhow.

Don’t be fooled. The low prices at the gasoline pumps only mean that US oil companies are going broke fast, as are American “consumers.” There’s a basic equation I’ve repeated a few times on this blog: oil over $75-a-barrel destroys industrial economies; oil under $75-a-barrel destroys oil companies. That’s were things stand when the energy return on investment falls to 5-to-1, as is the case with shale oil. Steve St. Angelo over at the SRSRocco Report makes the excellent point that it takes at least 30-to-1 energy return on investment to maintain plain vanilla modern life. Anything below that and parts of the economy have to be sacrificed. Trucking, air travel, commuting, theme park vacations, your job…. It’s just another way of describing the pernicious effects of the diminishing returns of over-investments in complexity.

In the fall of 2016, OPEC members tried again to agree on an oil production output limit, as they have done many time before. Each time, they all managed to cheat in order to sell greater volumes of oil and make more short-term money — a classic Tragedy of the Commons story. Consequently, the price of oil went up to about $53-a-barrel by Christmas 2016. Don’t expect that to last. Unless, of course, there is a geopolitical event somewhere out on the oil scene, most likely in the Middle East, though Venezuela’s economy is approaching total collapse. The forecast here is for oil prices to follow the stock markets down in the first quarter of 2017. A lot of junk bonds in the oil space will default as a result, leading to a general crisis in shale oil investment.

Vagrant Thoughts on Geopolitics

As I write just before New Year’s Eve, President Obama is trying to start World War Three with Russia as a parting gift to the voting public. I’m among the skeptics who think that the “Russia Hacks Election story” is a ruse to divert the public’s attention from the stupendous failure of the Democratic Party to win, as expected. Rather, Wikileaks should get the Pulitzer Prize for revealing so much about the nefarious workings of the Clinton Foundation and the Democratic National Committee.

Regular readers know I didn’t vote for Trump, that I heaped considerable abuse on him in the campaign commentaries. But I didn’t take any comfort in the nostrum about being “better off with the Devil you know (Hillary) than the one you don’t know (Trump).” Both candidates were awful, and the condition of the country is pretty awful as we turn the corner onto 2017. Readers also know from these commentaries and from my books that I expect we will have to make big changes in our living arrangements up ahead as the techno-industrial fiesta winds down. I won’t reiterate the particulars here, but 2017 is the hinge year for that. The strains on global finance are so spectacular that something’s got give. President Trump is sure to be overwhelmed by epic dislocations in markets, currencies, debt, and misguided central bank efforts to hold back the tides of a necessary re-set — a re-set which will see a lot of wealth vanish and a lot of pain inflicted on the losers of wealth, including whole societies.

We have three major European elections to look forward to in 2017: The Netherlands and France in the Spring, and Germany in the fall. Geert Wilders (a member of the Trump Big Hair Club), is virulently against the “Islamisation” of his country. He has campaigned previously to leave the European Union and for the return to the old guilder currency. Should the right-wing Marine LePen win in France, the EU experiment will likely end — she has made express promises to take France out of the EU. Angela Merkel has made herself impressively unpopular by opening the gates to a flood of immigrants fleeing the breakdown zones of the Middle East and Africa. And then, because of the Schengen Agreement (free passage across EU borders), the immigrants were unleashed on the rest of Europe.

Those of us paying attention may have easily lost count of the terror atrocities carried out across Europe by Islamic fanatics. Charlie Hebdo, Bataclan, the Bastille Day truck attack in Nice, the Brussels airport, the Berlin Christmas Market were only the most recent and spectacular. For years, individuals have been stabbed, had their heads cut off, throats cut, been blown up, machine-gunned. Take a look at this comprehensive list going back to 2001. You may be astonished. In that light, it’s pretty hard to keep waving the “diversity” banner, and I sense that Europe has had enough of it. One big question is whether the new European right-wing leaders will actually move as far as mass deportations. I rather think they will.

The UK “Brexit” vote was surprise all right. (I hit a white-tailed deer on the Maine Turnpike at 70mph that June morning, uccchhh, and lived to tell about it.) Now there’s a fair chance that Parliament will find a way to wiggle out of Brexit. Noises are also emanating out of Brussels to the effect that the EU could loosen up some of their rules — e.g. the Schengen Agreement — to induce Britain to stay in the EU. But there are so many other fissures and fragilities in that system that the Brexit may not matter anymore. The European banking system is melting down and there is absolutely no way to rescue it on the macro EU scale. Italy was heading for a banking crackup before Christmas. Deutsche Bank has been whirling around the drain for a couple of years. When the US markets and banks shudder in 2017, Europe will get the vapors. Hence, I’ll forecast breakup of the EU by this time next year.

We’ve come to the pass where “all that is solid melts into air,” in the poetic phrase of old Karl Marx. Marx was referring to the “specter” of communism that loomed over burgeoning industrial society of the mid-19th century, and indeed it turned into quite a world struggle through the century that followed. But now communism is down for the count and we begin to see what is truly melting into air: Modernity itself, this colossal, hulking, grinding, machine of destruction that threatens the global eco-system, and all its sub-systems including the human realms of money and politics.

The idea that Modernity itself might go down is inconceivable to those in thrall to the Religion of Progress, which declares that the world (and life in it) only gets better and better every year. This would appear demonstrably untrue, just in the visible damage to the landscape and the living things that struggle to dwell there. The most obvious problem with Modernity has been human population overshoot. The truth is, we’re not going to do a darn thing about it. There won’t be any policy or protocol, despite the good intentions of the groups inveighing against it. It will just go on… until it can’t, to paraphrase the late Herb Stein. Of course, people still have sex under conditions of hardship, so the population may plateau for a while until we are well into the long emergency. But the usual suspects of starvation, disease, and war are all still out there, doing their thing, and will only ramp up their operations.

The reason the Middle East and North Africa are melting down most conspicuously is because they are geographically among the places least well endowed for supporting the swollen populations they acquired over the past two hundred years. Iraq, Syria, the whole Arabian peninsula. Egypt, Libya, et. al. are all deserts artificially supported by the perquisites of Modernity: cheap energy, fertilizers made from that, irrigation, money derived from it, and continuing life-support subsidies from even wealthier modern nations outside the region. In recent years that life-support has flipped into deadly violence imposed from both within and without, as homegrown Sunni ad Shiite vie for supremacy and their puppeteers in the First World rush in with bombers, rockets, and small arms to “help.”

Iraq and Libya were already goners in 2016. They’ll never be politically stable again in the modern sense. Egypt is still headed down the drain despite the grip of General al-Sisi and his army. In all these places the “youth bulge” has no prospects for earning a living or supporting a family. The young men, especially, put their energy into Jihad, revolution, and civil war because there’s nothing else to do. Making war may be thrilling, but it won’t lead to a better future because those benefits of Modernity are running out and there’s nothing to replace them.

Syria is the current goner-du-jour. Whatever it ends up being, either under Assad or someone else, it will not be stable the way it was. The USA ended up arming and funding the Sunni Salafist “bad guys” there because they opposed Shiite Iran and its regional proxy Hezbollah plus Assad. Russia eventually came in on that side on the theory that another failed state is not in the world’s interests. President Obama blinked after he drew his infamous “line in the sand” years ago and now America is too spooked to act directly. In fact, the Russians and Assad have the best chance of restoring a semblance of order, but America’s support for the “moderate” Salafists will necessarily keep undermining that. In the meantime, all this activity has sparked a demographic emergency as refugees flee the country for Europe and elsewhere, creating greater tensions where they land. Trump could stop the flow of US arms to our favored maniacs in Syria. He may see the practical benefit of letting Russia be the policeman on the beat there, and maybe he can sort out the underlying competing interest between the Russian-sponsored gas pipeline proposed to cross Syria and the American-sponsored one — a dynamic underlying all the mayhem there — and make some kind of “deal.” Or maybe he’ll just fuck it up even more.

The situation will grow increasingly acute in Saudi Arabia, where population growth outstrips the ability of oil production to pay for it. Their old “elephant” oil fields are aging out and they know quite well that they cannot depend on oil wealth many decades ahead. The trouble is, they have no realistic replacement for it, despite noises about creating other industries. The truth is, the country was cursed by its oil. It grew its population too much too fast in one of the most inhospitable corners of the globe, and it will take only a modest decline in oil income to destabilize the place altogether. To buffer that, Saudi leaders plan an IPO for shares in Saudi Aramaco — which was originally composed of American and western oil companies nationalized decades ago. That may get them a few hundred billion or so in walking-around money that won’t last very long considering that just about everybody in the nation is on the dole.

The big news in that corner of the world last year was the collapse of Yemen, which occupies a big slab on Saudi Arabia’s southern border. That poor-ass country is the latest Middle East basket-case and Saudi military operations there continue to date, using airplanes and weapons supplied by Uncle Sam — just another case of feeding Jihadist wrath.

Make no mistake — as our Presidents like to say — all these countries are heading back to the Middle Ages economically, maybe even further beyond. Their culture is still basically medieval. The main point is that Modernity inflated them and now Modernity is over and they’re either going to pop or deflate. One wild card for now is what effect climate change may have in ME/NA. If the trend is hotter, than that’s not good news for a region so poorly watered and so hot that air conditioning is mandatory for the pampered urban elites. Last one out, please turn off the lights.

Then there’s Turkey, for decades known as “the sick man of Europe.” Now, of course, it can’t even get into Europe, the EU, that is, and it’s probably too late to sweat that anyway. Back when it was “sick” it was quiet at least. You barely heard a peep from the fucker through the entire cold war and beyond. But now that the countries on its border are breaking down, things have understandably livened up in Turkey. It was, until World War One, the very seat of the Islamic Caliphate, and it controlled much of the territory now occupied by the nations creatively carved out of the Sykes-Picot Agreement. Turkey is still a power in the region, with a lot of well-watered, habitable territory and a GDP half the size of Italy’s, though shrinking. Its current president, Recep Tayyip Erdogan, has shown twinges of megalomania in recent years, no doubt in fear of the radical Islam epidemic so close at hand. Lately, Kurdish extremists have been planting bombs around the country, too. Turkey has a lot to be paranoid about and Erdogan wants to change the constitution so he can act the strongman without a wimpy, pain-in-the-ass parliament weighing him down. He endured a coup last summer and came out of with consolidated power. But he’s capable of making another bonehead move like shooting down a Russian jet (2015). Meanwhile, Turkey’s currency is collapsing. The population is over 80 million. In the event of serious political upheaval, how many of them will try to flee to Europe?

Russia? It’s apparently stable. We hear no end of complaints about “Putin the Thug,” but in this time of altered reality and disinformation fog, it’s honestly impossible to tell what the fuck the score is. Has he bumped off some journalists? So they say. But, not to get to baroque about it, consider the impressive trail of dead bodies said to be left in the wake of Bill and Hillary. That story was so toxic that Google squashed searches for it during the election campaign. Putin seems to me, at worst, a competent and capable Czar, in a country that likes to be ruled by them. That’s their prerogative. He’s hugely popular, anyway, and it’s one of the unsung miracles of recent times that Russia transitioned out of the fiasco of communism into a pretty much normal modern society, with shopping, movies, tourism travel, and everything. The Russian people may look back at these decades as a golden age. They’ve been punished by Western sanctions for a few years now, but it has prompted them to promote their own version of a SWIFT Code for international banking transactions, and their own counterpart to the EU, the Eurasian Customs Union, and to manufacture some products of their own (import replacement).

Personally, I think the meme of “Russian aggression” is not born out by actual recent geopolitical reality. They are castigated constantly for wanting to march back into the Baltic States, Ukraine, and other former Soviet territories. Ukraine was made a basket case with direct American assistance. (Remember Deputy Secretary of State Victoria Nuland: “Fuck the EU!”) Ukraine was rendered an instant failed state. As far as I could tell, the last thing Russia wanted was to take on Ukraine as an economic dependent. Same for the Baltic States. They need to subsidize these places like they need a hole in the head. Russia’s 2015 annexation of the Crimea was a special case, since it had been part of Russia one way or another for most of the past 200 years, except for the period after Khrushchev gifted it to his homeboys in Ukraine around 1957. Anyway, the Crimea was the site of Russia’s only warm-water naval ports. They’d rented it from Ukraine before the US pranged the country. The Crimean inhabitants voted to join Russia (why do we assume that was not sincere?).

Finally, as renowned Russologist Stephen Cohen has said, wouldn’t it make sense for the US and Russia to drop all this antagonism nonsense and make common cause against the real threat of our time: Islamic Jihad? How many Westerners has Russia killed or harmed the past 20 years compared to the forces of Jihad? The tensions in Syria are admittedly complex, but why are we making them worse while Russia attempts to stabilize the joint? Perhaps The Donald can start there….

As I write, Mr. Putin just announced that his country would not take any reciprocal action against American diplomats in retribution for Mr. Obama’s fugue of punishments meted out last week for the still-unproven “Russia Hacks Election” story. Personally, I’m content to wait three weeks and see if relations improve after Mr. Obama departs the Oval Office.

Finally, there’s China. I’m among those who believe China is running the most farkakta banking system on God’s green earth. We should not be surprised if it implodes in 2017, and does so pretty badly, in a way that might shake the foundations of the entire banking system. On that note, I confess that I have run out of forecast mojo for the year, and anyway this bulletin in long enough. If you’ve gotten this far, I commend and admire you hugely for your remarkable patience. Have a happy 2017 everybody, and don’t let our Trumpadelic president get you down.

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