It is fertility. Euphoria, that is εὐφορία in the Greek, means the state of bearing easily. Eu- means beautiful or good. The state of bearing well. From this, is a long road to our word, which was only used in 1882. Euphoria in medicine is the state of excited joy, and is often associated with intense emotional states, it dates in English from 1727. The secret to long term happiness, according to a silly paper published recently, is to never have been happy. Euphoria, is to be stoned. We are high, on misery's end.

This is the state we are being told is coming for us. It is the state of O-phoria. We are not going to be happy, but instead, happy that we are no longer unhappy. Happy that we are no longer living under a regime that allows cities to sink under the sea, or denies obvious scientific fact. This state is one which is visible in almost every layer of society. On facebook, count the people who have processed their personal picture to being a rendition of the iconic orange and blue Obama. Mike Tomlin, coach of the Pittsburgh Steelers concisely states: "Obama is selling hope. And I am buying." But it is not the hope of improvement, but the hope of merely subsisting.

To reference a thinker who is more appropriate for our age than we admit: it is not that there is more existence, but merely that existence is stretched out. Tolkien, writer of the twilight of the British Empire, has much to say about our state of Ophoria. It is, to note a new world in the OED, a part of eucatastrophism.

Let me be precise. I do not live in the present, as most people do, and living in the almost present, which is where profit is to be made, is a tiresome activity. Thomas Friedman - Spouting Thomas - has made a career of telling the dull and largely inarticulate managerial class, who filter feed on bits of information dropping in from above, what it is they need to be selling right now. What their immediate problem is, what their next batch of snake oil is. He is now all over global warming and nationalizing the credit system. He has no idea of how to do it, because he doesn't know what revenue, versus asset, money is, but he is now there. And he is paid very well to tell people, now that it is too late, how to save the old system.

About six months ago, many near present thinkers were all over the "Obama moment." There is no Obama moment. Instead, there is a moment created by a convergence of forces which Obama has adopted for his own purposes. It is a eucatastrophe - an unravelling turned to good account. The more common term for a eucatastrophe is "the shock doctrine."

In the present and near present, the story is Obama. But this is the tail end, the late majority of the "S" curve. Obama is omega-phoria, because he is the bearer of bearing the end of an old curve, not the begining of a new era, but the theory that the old era can be stretched out. As was said of Wagner's music, not a sunrise, but a sunset. Obama's blazing orange and blue is not the color of dawn, but the color of dusk. His election not that of a new generation, but the last election which is "about" the 1960's. Every Presidential election since 1960 has been about the 1960's. First the 1960's as future, then the 1960's as moment, then the 1960's as undoing, and finally the long twilight cultural war over the 1960's.

Eucatastrophism produces "Ophoria" in Tolkien's Lord of the Rings, there is a brief period of late happiness, which then is the fading away of the world that it is a part of. It is written into the structure, and Gandalf warns the people of the time that there era is over for good or ill.

I am known as an Obama doubter, but those that have criticized me for being too early do not understand that this is precisely the moment where acquiesence is not possible, and is not advisable. The structure of the argument is as follows: we are at the end of an old S curve, however, unlike the smooth part of the S-curve, we were just in a frenzied period of pushing that curve to far. The easing back from this frenzied peak will produce a moment of respite - this is based on both physical and economic factors. The Obama theory is two fold, first, to shift the headroom from the frenzied peak, and to do a certain amount of cram down in the rest of the economy. It is not to restructure the economy itself. This is a two way bet: the bet is that if the new S curve appears, then the holders of the current S curve will get the benefits, since they own the equity, and if it does not, then the poor will be crammed down. The progressive movement needs to understand that this bet is, in fact, anti-progressive, and doomed to fail in the larger sense, since it is still making the "eat babies" bet. Hence, I am a doubter of Obama, because he has shown clear indications that he is not willing to use this catastrophic moment to turn towards the new S curve, but is, instead, attempting to make an omega bet.

To explain this argument I need to talk about a few technical things. One is the nature of martingale driven bets, the second is the nature of climate change and peak oil. One of my continual topics is how these factors: finance and the limits of the petroleum energy system interact. There are many writers on each, and some people write about both, but so far it has not penetrated the intellectual, and certainly not the pseudo-intellectulal, discourse on what this means. Finance is about permission to use existing resources. Finance breaks down at the transitions, precisely because of a conflict in the nature of resources: the physical resource, versus the relative value of it. Are people borrowing so much capital, and are expected to return it, or are they borrowing a certain percentage of total output, and are expected to return a larger share of total output. The first can be done forever: one can return more capital than received forever. However the second cannot be done, since it is a zero sum game. One can get x dollars of real productive capacity and return x + y. One cannot have everyone getting x% of GDP and returning x% + y%, because 100% is all there is by definition.

The other important point that needs to be argued is the nature of progressivism itself, and the failure of the consumer culture. We are, today, in this inuauguration moment, at a pinnacle of consumption. Obama is a brand, and people are buying that brand. The consumerate is incapable of fixing our problems, precisely because the consumerate is only willing to make marginal changes. And as explained above, marginal changes are not sufficient.

Α "And so we shall go to war, Glaucon. Shall we not?"

To understand the ophoria, one must understand precisely what the George W. Bush play was. It was a play that even people who hated George W. Bush bet heavily on. Bob Rubin loathes George W. Bush, in that Bush is everything that Rubin sees as wrong with a certain part of the moneyed world. George W. Bush offends Rubin's meritocratic sensibilities, and his sensibility of making the best judgments in an uncertain world. Yet, Bob Rubin had Citibank bet heavily that the economy that George W. Bush headed, would work out. He is far from alone. The British loathed George W. Bush, and yet, they backed his war, and made their economy a carbon copy of America, and made their financial system the back room of Sweeney Todd, the place where the pies were made.

Americans, even as they hated Bush more and more, continued to buy surburban houses and flip them, and borrow money.

Since watching what people do, and not what they say, is important, there is an inevitable and inescapable conclusion, one which Obama the politician understands: Americans do not hate George W. Bush, they hate that he fucked up. Americans would re-elect George W. Bush if given the chance, merely, they want someone who can do it right.

Obama is not a rejection of Bush, not a change from Bush, but "Smart Bush." That is why the financial community flocked to him. Progressives mistook Obama's identified race, and that he is more easy going about social issues than Bush seemed to be, for Obama's membership as a progressive. In fact, if one watches body language, George W. Bush is more comfortable around gay men than Obama is, and is less comfortable with overt homophobia. While Bush preaches being a born again Christian, he has not made a point of sharing the stage with the overtly homophobic. Ken Mehlman, to take only one example, is one of the gay men without whom Bush would not be able to function. The Republican Party hierarchy, one could almost say, is against gay marriage, becuase it wants gay men to be closeted and married to their jobs.

This bluntness will offend many people who are self-spinning. That's unfortunate, but such self-spinning on the part of progressives is a luxury which we can not afford, because time is running out. The period of Ophoria is going to burn yet another piece of irreplaceable time. To riff off a line from a not very good movie: fake boobs are a luxury we have, iPods are a luxury we have. Time is a luxury we do not have.

The nature of the George W. Bush play was to burn a great deal of the tail end of the petroleum S curve, in order to concentrate the remaining oil in a few hands. This concentrated period would allow prosperity, and that prosperity, carefully directed, would allow the single thing that the Republican and Conservative movement has wanted since the 1950's: Liberalism without Liberals.

The Liberalism without Liberals thesis comes from people such as Milton Friedman. They recognized the Liberal critique of the old conservative order as correct: the macro-economy is not self-regulating. They hated the kind of people who rose to regulate the macro-economy. They therefore tried to postulate a system which would replace the modern Liberal form of regulating the macro-economy, with a different group of people. This different group of people is composed of three groups who would form a political alliance. The structure they proposed is out of Plato's Republic.

In Πολιτεία, Plato postulates the evolution of the Polis, or city-state. One phase is the feverish city. That phase then leads to the establishment of the war state. The war state, that is the modern liberal state, balances the needs of a multitude of tasks which have no "natural" drive, that is, no obvious driven good. For the Leo Straussian Platonist, this state is unstable, and must be brought to the conservative static equilibrium by the enshrinement of a guardian class that is inoculated from the temptations of the feverish city by false beliefs, and the philosopher-king class that balances them. In our time these three classes composed the Conservative alliance: feverish city libertarians, military guardians, and elite philosopher-kings who grant permission and create the illusion of belief.

The Republican Party in America then is exactly this alliance. Attempts to explain it in other ways lead to beliefs in false cleavages, and predictions of social and economic conservatives unravelling. Instead, what is missed, is that the feverish city Libertarians understand, recognize, and approve of the existence of the guardian class. Thus William F. Buckley wanted to smoke pot, but wanted a police state to prevent others who were not capable of handling it to be forbidden it.

For those who want the original, this is book II of the Republic.

Leo Strauss, as I noted, is the architect of the overt intellectual apparatus of political theory, however, what he stated was not particularly new, and the gut level understanding of a three fold state of partying, fighting, and enforcing works even to the uneducated. In fact, it is an entirely natural state of being to the lower disorganized working class: work like a dog, drink like a lord, get busted like a perp. While this class perpetually intoned the need for fiscal responsibility, austerity, sobriety, they financed the mushrooming growth of Las Vegas, porn, a vast national deficit, and a binge drinking culture. Among other perversions.

The Bush play was to impose this system in a period of feverishness. But it was a constructed feverishness, and the reason for that construction is based on a rationality. That rationality is an end of the S-curve burst of inflationary pressure which can be called "the stasis fever."

What is the stasis fever? Let's talk about the S-curve and decisions.

Β The stasis fever

Consider a technology or any skill. First there is a period of flailing about, then there is a point where mastery begins. This represents a take off point, and advances follow swiftly. Then there is a point where all of the concepts are mastered, and everything is about the "chasing of the last sigma."

This curve is the curve of Poisson, of "arrivals." It is something I have spent a great deal of time teaching others over the last year or so, because it is particularly relevant now. When do people decide to join a technological curve? When the expectation of waiting is no longer worth while The underlying technology does not have to be an s-curve in its own application, instead, consider that each person has a list of things they want, and which seem possible. When the list of things available at a price that is affordable is met, they decide whether that is worth buying, or whether among the list of possible features in the future there is one they are waiting for. This creates an s-curve of adoption. When the list of future features is exhausted, the last flat part of the s-curve is reached.

Now, why would this create a frenzy? Because at the point where the list of possible wins seems to be exhausted, true or not, there is no rational reason to wait. In fact, there are rational reasons to not wait. In many respects the best time to buy a technology or system, is right at the moment where all the wins are out, and there has not yet been the relentless degradation in quality, and the next innovation that disrupts is a long way away. Consider the person who bought a 40" television and VCR in 1980. Expensive, but those were acceptable technologies until very recently, and the quality of those high end sets was higher and the objects lasted longer. I just helped a friend throw out a set of this type from that era.

This means that at the point of flattening, there is a rational rush. However, as we've just said, all the good news is out, the only way to meet that rush of demand, is by raising prices and lowering quality. The Great inflationary spikes have happened, then, not when the underlying resources has reached it's capacity, but when the curve has flattened, and there is the longest possible time to exploit that flat curve. The great war for water resources, was fought 1789-1815, well before the limits of sailing and water technology were reached, but at the point were all future changes seemed incremental. The great war for coal occured just as the last great coal innovation, electricity, was spreading rapidly, but long before coal had peaked. The great rush for petroleum and its inflationary spike occured in the 1970's, when the petroleum industrial economy had peaked in real wages.

The frenzy spike that accompanies perceived "S-curve" flattening is a normal feature, and it should be expected.

What happens then after this stasis spike? Eventually there is an equilibrium, when the only people who need new things come in and depletion takes over. Depletion is a feature of the tail end of s-curves. Consider, for example, a dam. Over time, not only will all good dam sites be taken, but the dams that exist will siltrate.

During the frenzy spike the problems of depletion are, temporarily, made more visible.

Γ Peak Peak

As I write this, gasoline is driving true deflation. Global warming, while still continuing, is no longer surprising to the upside. In the peak community many of the voices that have gained the most credibility the fastest are the "long emergency" types. These predict a true physical peak now, and a period of continual crisis and emergency. This misreads both the underlying physical facts and the economic facts. Instead what we have just seen is a "frenzy" peak - the war in Iraq, and attempt to militarized the US economy, along with the political need in developing nations to push forward quickly created a short period of over consumption of carbon fuels, and the creation of a para-industrialized sector which accelerated global warming.

Let me go over this a bit. While carbon dioxide is the long term engine of global warming, there are two important para-factors which are not well explained. Indeed, I was treated with contempt and insulted when I tried to explain these facts some years ago to climate scientists, who were not ready to think about the picture in larger terms.

One of these facts is that while CO2 is the mainstay of global warming, the effects on people will be heavily driven by the hydrologic cycle. One reason that climate scientists of 2004 were assholes about this is that they were used to global warming deniers using hydrologic cycle arguments as excuses. Instead, what I was trying to point out was that it is the hydrologic cycle equilibrium which produces the visible economic disruption, and that global warming risks were far higher than "average" climate change models presented, because even small changes in the hydrologic cycle could have very large changes in both tempertares, and in how those temperatures played out. In terms of heat content, water vapor is where it is at.

One such is storm cycles. The most economically important storm cycle for it's size is the Norther equatorial Atlantic-Carribean basin. There are two other basins in the atlantic, the relatively quiet South Atlantic Basin, and the oceanic Atlantic basin. However, for damage to human activity, storms that form along a J shaped belt that goes from the Ivory coast of Africa to the Gulf of Mexico, are the ones that land and do damage, or rip across oceanic infrastructure, particularly oil rigs.

This cycle probably peaked in 2005. The ACE projection of a double peak year meaning a peak to the cycle made me write this in early 2006. So far that prediction has been born out. It is not that the Atlantic Hurricane problem has gone away, but the ebbing of the natural cycle is going to be used as proof that we do not need to worry about it.

It is a template for the period we are entering: what we have just seen was a natural peak of activity, plus a frenzied peak of activity, with a low investment in technology. This brought us much closer to the total peak of the petroleum period than we will see for some time. It is not that the underlying facts or trends have changed, but, instead, we had an acute outbreak of the diseases that will eventually kill us. People have confused, both as alarmists and as placationists, the curve of this acute peak with the longer term trend.

One driver for this is the para-industrialized world and "soot." Soot is large particulate carbon. It is produced by things such as the wear of tire treads, and burning raw sources of feul such lignites, wood, carbon sourced fuels and so on. As the US went to war, it imported more. These greater imports caused a burst of global prosperity as the rest of the world supplied the consumer goods that the US could not produce at home in order to produce enough bombs, tanks, bullets, logistical capabilities and so on. Also we engaged in an orgy of consumption housing - suburban real estate is consumption housing. National effort flowed to these, and therefore we bought more from others.

These others developed quickly, and around the edges of moving from under developed to developed are people who are just barely attached to the new system. These people do not have the money to buy gasoline heaters, good vehicles, or good houses. They instead use cheap scooters, burn wood and charcoal for both heating and reworking of broken parts, engage in fire based land clearing, and so on. This, combined with the burning effects of war, the soot effects of people driving more and faster in a frenzied real estate boom, plus the particulates produced by shipping things by low grade diesel engines and residual oil driven ships, creates a wave of soot.

It is this soot that will be found to be at the root of global warming's breaking of expectations to the upside. The "soot boom" of war, driving, shipping and para-industrialism is what added to global warming above projects. With the ebbing of these factors, the soot boom will end. Soot falls out of the atmosophere faster than CO2. This will create, again, the appearance of a slowing of problems. In fact, the soot boom will still be with us. As the soot falls out of the atmosphere, it darkens the ground, and adds less, but still measurable, amounts to global warming.

This reality also applies to peak carbon energy sources: in the last decade we have been burning them much faster in a stasis peak situation. The reality is that just as the post-modern economy had peaked in the luxuries and quality of life it could afford, there was no reason to wait to buy your McMansion and fill it with McTheatre. The reason we fought a war over oil in Iraq now, is that that oil is most valuable to determine where luxury-infrastructure - luxistructure - was made.

The ebbing of these two factors will create an illusory fall away from a peak, and it will be used to argue that "the problem is solved" and that from here on in, only marginal choices need to be made to fix things. By marginal, I mean that present economic choices can be left in place, and that only new choices need to be influenced. This view is incorrect, we need, instead, "disruptive" rather than "marginal" change. However, this reality will be more obscure to the general public, and they will be sold on marginal solutions to the problems.

This effect will be the heart of the "Obama Spring" and the root of Ophoria. The "hope" that he is selling is that someone else will have to "change" their behavior.

Δ Change we can deceive in.

The illusory peak, similar to the peak of secondary extraction oil that we saw from 1978-1984, and it's ebbing, are very much of a piece, and very much why Obama the Reaganite was selected and is riding a late S-Curve wave of popularity. Having outlined the Bush play - use the stasis frenzy to create a neo-Platonic Republic, and the Obama Spring - take the falling away from that frenzied peak as proof that marginal change in future being sufficient, it is time to talk about neo-classicism and elite unaccountability.

The neo-classical synthesis combines the liberal critique of the conservative era - basically, it doesn't self-regulated - with the micro-economic idea of emergence. The neo-classical synthesis policy theory is to identify bottlenecks, slow consumption demand while policy and technology meets the bottleneck, and then resume consumption. Take the punch bowl away from the party before it gets going to well, as McChesney observed. In liberal hands, for example in a Solowian context, the government invests heavily in technology, but keeps powerful regulatory tools in place.

The neo-conservative view of this policy is different: allow bubbles, profit from the, allow them to burst, bail out, and then pass regressive taxes to distribute the pain widely.

From this we can see why Obama is not pursuing what Perlstein and others (hat tip to Digby for doing the digging on the history of this) call a "Progressive Shock Doctrine" but instead why they are pursuing a "Centrist Shock Doctrine."

Let me put this together. We have just had a frenzied peak attempt to establish a neo-Platonic state. That frenzy however, failed to gain the oil that it promised. We have not shifted from Chicago School neo-Platonists to something else, we have shifted from Chicago School Neo-Platonists focused on the noble lies part of the equation, to Chicago School Neo-Platonists focused on the incentives side of the equation. Cass Sunstien, for example, is an incentives Straussian. We have switched graduate students, not professors.

That is, Americans are still attempting to make the Bush play work: that of a rush to gain long term control over stasis assets.

Within the context of neo-conservative neo-classical synthesis, it is then possible to outline why elites are not responsible. Namely, their job is not to supply technology to get buy bottlenecks, since, in their Julesian view, that happens naturally and cannot be accelerated. Instead, the correct balance is to allow frenzied consumption, as this will create maximal support for the regime, and then distribute the pain. This is why, in elite speak "No one could have forseen" is the equivalent of "I was drunk at the time." Elites are not responsible for the cycles, and therefore avoiding disaster is not their job.

Unaccountable elites frustrate the public, the public thinks, instead, that they place blind faith in the system - the diet, the sports team, the company, and the great wise leaders of the system protect the little people from harm. What is only gradually becoming obvious is that elites do not have this function. What function they do have is not clear to ordinary people. That function, is, of course, to make the poor pay. It is not that Obama's job is to protect ordinary citizens from the financial system, it is to protect the financial system, from ordinary people.

In his inauguration speech Obama told the public not one thing that Bush could not have said. His ideology is the same in every poetic detail. Hope, past, change, hard work. Let me say that Americans do not know what hard work is. There are people around the world right now who work harder than Americans, longer, and risk more. America is not America because of "hard work." While Obama can deliver a football coaches exhortation to forwardness and work, he does not have an idea, beyond the neo-classical synthesis, and a game theory idea of an unbalanced stag hunt. If not to cooperate is disaster, then people must cooperate, however badly they do as the result. In this area of the solution graph, the only motto elites need is "vote for us serfs, or it is so much the worse for you." Right now the Democratic Congress is having it's proxies go forth and tell opinion leaders to back a bad stimulus bill, or they will make it worse. They are doing so with a brute arrogance that radiates from the top. It is the conversation that a dean has with a wayward student, a principal of a high school has with a tardy genius, the boss with the one employee who sees that the numbers do not work. Vote for us, serfs, or it is so much the worse for you.

Obama's inaugural address: those of you who have little, will give what little you have, so that those who have much will keep all that they have.

This is not an idle observation. Instead it is built on Obama's long track record, and his consistent pattern of actions. Let me outline his past.

Ε "Yes we're canned."

People will not remember anything from Obama's inaugural address, there is no phrase, no word, not guiding moment. We will not ask what Obama did for the country, he was telling the country what we were going to do for him. This is not out of character.

Last year, as the Congress debated various ineffectual stimulus bills, Obama came out with his proposal. It was small, and wrongly designed. We know in hindsight that the trivial stimulus driven by tax rebates did nothing but generate some inflationary pressure, and a small lurch of the economy from war spending that petered out in Augst. Obama was late and wrong on stimulus then, but he remained so. Even into this fall, his "stimulus" bill was 125 billion dollars. He was pushing a middle class tax cut from his first days of campaigning. Clearly, as Krugman has observed about Republicans, but has not yet had the courage to do about Obama: Obama pushes tax cuts no matter what the problem. This means it is not a policy, but an ideology.

The same is true of his health care arc: he has consistently been late and wrong on health care policy, and his new obsession, "entitlement reform" is to dismantle the only part of health care which is currently comprehensive: Medicare.

The next major economic act of Barack Obama was the TARP bill. He whipped for it, and when it was in trouble he took two actions. One was to side with the Senate in its intercine conflict with the House on a tax bill, the other was to make a few late, and marginal promises to a few progressives. Then he appointed someone closely associated with the old order to run Treasury, and when Congress began to think about changing TARP - which everyone admits has failed to start lending to the public - he issued a veto threat to Democrats. Again, Obama has been wrong, and steadfastly wrong, and manifestly wrong, on policy.

We then look at his stimulus bill. He had Roper and Bernstein, two solid liberal economists, cook the books in the Roper-Bernstein report, by claiming 3.75 million jobs to be created, and reporting it as 4 million. That these numbers were wrong can be seen from the simplest of measures: even the Obama core has backed off of them and gone back to 2-3 million as the range, far more supportable given reasonable use of the underlying economic models.

The stimulus bill he has proposed is too small based on simple macro-economics, this has been noted by Clive Crook, Dean Baker, Paul Krugman, Martin Wolf, Nouriel Roubini. Among others. The list is long because the math is simple: the present economic stimulus package does not absorb the slack capacity in the economy, and according to Obama's own numbers does not lead to a win/win higher economic equilibrium. That is, Roper and Berstein - who aren't just economists, but really good ones - could not find a way to cook these numbers into producing a closer to Pareto optimal employment situation on the other side. That is, it fails as Keynesian stimulus, and is merely "deficit spending."

Now, given these things, what is next on Obama's agenda? "Entitlement Reform." That is, Social Security, which is not in crisis, as even many of the deficit doomsayers admit, and Medicare, which is best solved by comprehensive Universal health care. Thus, on stimulus last year, stimulus this year, tax cuts, health care, TARP, and budget priorities, Obama has been late and wrong. This is an unbroken track record. It must be underlined that McCain and Bush are far worse: they were positively insane on priorities, but it is not enough to prefer the stupid to the crazy.

Obama's stimulus bill, with it's focus on tax cuts and infrastructure, outlines what he was elected to do: and that is continue the Suburban Industrial Complex. Obama's proxies have been iron clad in their conviction of their inevitable rightness, despite a string of failures. This is because they judge themselves by one standard: if catastrophic meltdown does not occur, they are right. Not the end of the world, is all they demand of themselves.

In mathematics, epsilon is a quantity which is very small, but not quite zero.

Ϝ The Suburban Industrial Complex.

So what is Obama supposed to do? In a single phrase, he is to run more cheaply the Suburban-Industrial Complex using marginal, rather than disruptive, change. This is the essential pair of disputes with progressivism that Obama has: that Suburbanism is not sustainable, and that marginal decisions are, largely, sufficient.

Here is the place where it is possible to explain the flow from carbon/peak oil problems through to the suburban industrial complex by way of finance.

Carbon production is the essential engine of petroleum, this much is clear to people. However, in the late 1970's and early 1980's neo-conservative thought came to an idea. That idea was this: if investment was reduced in the developed world, it would be possible to cut wages and thus control inflation, without cutting consumption in the short term. Consumption would be financed, first by getting producers of carbon to not develop their own economies and investing in the west, and then by off shoring consumption production to cheaper countries. The key then was to lift limits on financial flows, and create the American Thermidor cycle - America would generate paper, trade this for oil, and package the risk of developing consumption production to generate more paper. Because Americans would be trading future paper for present consumption, they would notice that their wages were flat far less than if they had to invest at the same rate.

So in a nutshell the neo-conservative idea was to trade future autonomy, which is what the paper represented, in return for present consumption, and give present consumption to the public as a trade for their control over the economy. Since in the economic theory of efficient markets and rational expectations, this did not change the total output of society, future investment being traded away was free.

The success of the west would then not be based on the creation of technology that others did not have, but control of the key pieces of the paper for oil economy. These two pieces are fiat and the financial pipes. Fiat because it is both used to collect the rents of development arbitrage - collecting from dead beat countries - and the financial pipes for packaging risk as paper, and collecting the difference between the returns on that paper in a market context, and the risks of that paper in the context where the US can send an aircraft carrier to collect. That is why the US just put the down payment on the second Gerald R. Ford Class carrier. It should be named something appropriate, like the Herbert Hoover, or the Warren G. Harding.

The advantage of the paper for oil economy was that the Americans in the present consumed far above their income. The disadvantage is that it created a large zone of people who saw money rolling in, and rolling back out again. It is this zone of under-developed people in the Islamic world who, correctly, understand that if that money had been used to develop the Islamic world, they would be living much better right now. It is this reason that they Hate the US - not because we are free, but because we are getting what they see as a free ride.

This money flow is then put into banks in the US. They lend. This is used to build houses. Suburbanites buy these houses, and flip them for profit, and to eventually use as the nut for their retirement. The system by which paper for oil, because money for lawns, which becomes paper again, is the Suburban Industrial Complex' financial flow. However, to work it requires a social reality. That social reality is separating people's living space from their productive space. The metropolitan system requires that people live close to where they work, as does the agrarian space. There is no such thing as a commute on a farm, unless you mean driving the tractor down to the south 40.

Thus the limits of the carbon economy are also the limits of the financial system. At the point where the carbon based money cannot be made to roll over, the entire system comes to a halt, as it just has.

The neo-conservative neo-classical synthesist looks at this, and says the obvious "make the poor pay." This is why elites have suddenly become enamored of global warming. Not because they are going to do anything about it - after all, Washington DC just passed up a chance to buy Detroit and put an end to transportation driven global warming, and instead put the condition of cutting wages on Detroit, not cutting carbon. This was Obama's decision. Watch what people do, not what they say.

A "carbon tax" as an input tax on rent, is the perfect neo-conservative neo-classical synthesist solution: it has buy in from liberals, but really is visible as reducing the income of ordinary people, by increasing the rent they pay. The money? Get's shuffled to the kinds of consumption that the Suburban-Industrial Complex prefers. They think that the world can never have too many American Nuclear Powered Aircraft Carriers.

Liberals, the real kind, believe in output taxes on rent. An output tax subsidizes rental inputs, such as access to education, health care, food, land, water, and safety - all sources of rent - and then taxes heavily the output profits. Instead of taxing everyone regressively, as conservatives want, it taxes everyone lightly, and then assumes that if someone made a great deal of money, then it was because of some rent that they established. The conservative believes, from first principles, that property is rent, and a right to property is a right to rent.

The suburban-industrial complex rests on collecting rent from people coming into the developed world system: for houses, education, access to health care. It trains its young people to submit to rental disciplines, on pain of expulsion from the system, and condemnation to a life without money, position, or progeny.

The suburban-industrial complex then, needs terror to stay in place, because it seeks to link submission to an artificial power structure, in that the paper for oil suburban economy has lost money for a generation. This terror is why it inflicts terror on outsiders, because, since they are not offered any off the carrots, we haven't made Iraq a consumer paradise, and it isn't happening in Afghanistan either, we must use even more brutal sticks. The Israeli government came out and said this: they punished the Gazans for voting for Hamas. This is a war crime, and a crime against humanity. However, it is the ordinary course of business in the suburban-industrial complex, which now treats shyness as a medical condition, and must medicate it's own population heavily to perform in the suburban-industrial complex system. There is a good reason why the US has elected two successive presidents with cocaine use in their personal history.

Withing the suburban industrial complex, threats of termination of economic life are usually sufficient. At it's peripheries, it requires large scale incarceration, the US now has 4 million people in prison, jail, on probation, or on parole. That's approaching 1.5% of the population. Or almost 1 in every 50 adults. The only question is, how can we lock up the other 49? All apologies to the Lord of War.

Ζ Welcome to the Post-Partisan Depression.

The Paper For Oil economy rested on a situation which can be described as Ricardan Equivalence Hypothesis on Reality. In theory, if the government runs a short term deficit, then the wealthy should buy government bonds to finance it, to pay the eventual taxes. However, the macro-reality is that these individuals also know that there is a spread between corporate and government bonds. They want, not the true risk free rate of return, but what can be called the Lack of Moral Hazard rate of return.

The mathematics of risk rests on the nature of the semi-martingale. A martingale is a 50/50 bet where if you lose, you double your bet and try again. A semi-martingale is a region where one can do this, to some limit. For example a craps table with a 5000 dollar limit.

As long as there is a martingale, one can treat risk as being neutral, because it is possible to recover loss by doubling up.

However, at the limit, loss is catastrophic.

The catastrophic loss point either means the system becomes bankrupt, or the government must step in.

This allows those running the system to collect the corporate bond rate, while paying in effect the government rate for money. That spread, on enough money, is enough fees and profit for both the wealthy and their bankers.

When that spread goes away, the ultimate producers - such as carbon sources - stop rolling the money over until there is a new game.

This is what happened now: with the death of the mortgage paper market, those who drove the deal flow are simply buying treasuries, and waiting for some new game.

The first attempt, pushed by Rahm, Schumer and others, was to have China consume.

The Chinese, however, understand that they have about 40 trillion in investments to make, and they are not served by spending the 2 trillion of government savings they have.

Thus Obama and others have fallen back on raiding social security. That is "entitlement reform." Then wait for a new game to emerge.

Η The Progressive Revolt bubbles.

Obama's belief is that by changing marginal incentives, and doing a moderate cram down, the entire system can be kept alive for long enough to reach a new game. The progressive movement believes that disruptive change is necessary. Obama believes that the elite classes that are in power now, and the means by which they are selected, should continue. The progressive movement believes that there must be a true entrepreneurial system for selecting elites. Obama believes that the electronic world exists to make it easier for the top to press ideas down to the bottom, and mine the folk process for talking points. The progressive movement believes that ideas are generated widely in a variety of hothouses, not simply from the top.

These are fundamental differences. The ophoria people feel - no longer of a government of the insane, by the insane, and for the insane - does not erase these fundamental differences. For Obama and the powers that be, disruptive moments are "cram down" moments: removing some group from their expectation of profit, in the short period of time when the normal procedures for protecting interest are suspended.

If Obama were a progressive, then the stimulus bill would have been larger, and it would have had about 200 billion for training medical personnel, and shifting effort away from health pollution, to health production. There would be a dismantling of the industrial food system, the system which turns oil into corn, and corn into virtually everything else, and the establishment of a traditional agricultural system based on organic methods. We seen none of these things, but instead small bribe sized billion bites that hit check lists.

Since Obama has not pursued agenda items as part of his "shock" moment that are progressive, a time when history and practice show that he could, he is not a progressive. Since he has not sought to liberalize the system, but is now pursuing the conservative "bad bank" strategy where the public will, in essence, eat the cram down for the bad bets of the mortgage credit game, he is also not a liberal. Since his proxies engage in arrogant bombast and threats to opinion leaders, he will not listen to progressive and liberal ideas.

This is realism. When Bush was at 90% approval, after 9/11, I looked at policy, and at facts, and determined that Bush had to fail. I now do the same with Obama. People want Obama to work, they are in a state of ophoria, believing that he can dump the cost of past failure on people who follow - marginal choices. Since there is not enough marginal change in his wedge to pay back the money that is owed, nor enough to convert the present industrial system, he must fail. There is not enough money on the planet to pay back what is owed. Every hour of work, every barrel of oil, every house, every factory, every gallon of water has been promised to someone.

On this day of celebration, it would be far happier to say happy words and look forward with optimism. The reality is that Obama's Presidency began when he whipped for the TARP bill, and it has shown that he believes that by cramming people down, and by having regressive taxation which, because it is hidden is inescapable, this will be enough. He has saved the banks, but consumers are still paying 20% for their money.

Θ Think.

Thus I outline again: we are going to get an Obama spring based on the shift from a neo-platonism of belief, to a neo-platonism of management. The backing away from the stasis frenzy of the last year will both contain inflation, and slow the progress of global warming and depletion. It buys the world time. Obama is intent on squandering that time, and believes that by cramming down ordinary people, the neo-conservative neo-classical, that is to say Reaganite, solution, he can shift enough effort to escape the trap of the end of the S-Curve. Since he has not changed the control of future investment, this will not work.

The progressive movement has come to realize that the suburban-industrial complex, and it's means of finance, do not work. There is a parallel social argument to make about the nature of carrots and sticks within the suburban-industrial complex.

What then do progressives see? What they see is that the costs of control are, in themselves unbearable. That the top-down system requires very large expenditures for carrot and stick allocation. Defense spending, wars, health insurance profits, the profits of finance, executive compensation, the environmental costs of factory farming, the costs of political campaigns, are all top-down costs. The progressive movement's ideas are simple: reduce the costs of control, and there is sufficient effort to convert the society from the petroleum top down system, to a new system. That new system will rely on decentralized and emergent structures. This is a fundamentally humanist idea: humanism argues that people can organize for the good without arbitrary and dictatorial control. Whether this is democracy, science, capitalism, art, or social good, the idea is the same: emergent structures are better and cheaper than top down structures. The second part of the idea is that it is necessary to have a core which maintains the emergent environment, but does not dictate it's results. The purpose of a modern liberal government, is to remove the very distortions that having a government creates in an economy, making it seem to most participants, that the government is invisible in their decisions.

Thus the progressive movement is the movement of ideas, and it is the most dangerous force in politics, because it has ideas. These ideas are a threat to every collector of rent in the world, because the rentalists want to collect rent, but do not want to provide the stabilization that rent is supposed to provide. Obama has, for the moment, sided with rent over both capital and labor. He has not done so with the odious policies of an odious regime, but he has been elected to preserve the same Suburban-Industrial Complex that Bush made a play on. Since the Suburban-Industrial Complex rests on an impossible financial theory, and a physically limited set of resources, and a socially unsustainable weight on punishment, and on an exponentially growing cost of control, it cannot long work. While it is going to have a short spring, because it is, on the margins, going to be run by people who are more competent, more intelligent, more diligent, more effective, more honest, and more talented than those they replace, they are still trying to do the wrong thing.

This long essay will win me few friends, and will make me many enemies. I write it because the numbers dictate each of these conclusions. People can point to polls of American Approval all they like. The 54 trillion dollar global economy does not agree. And it is that which I listen to. The atmospheric dynamics do not agree. The mathematics of finance does not agree. No matter how much Americans approve of escalation in Afghanistan, this will not level the mountains, nor bend it's people. It will not magically make bombs more effective.

We stand here then, on a very simple precipice, and while there is every reward for those who bend to the spirit of Ophoria, intellectual integrity requires that I write that Obama is already a failure, and that his policies will bring more harm than good to millions of people, and that once he has finished failing, the swing of the pendulum will be to another Bushite, who will find some excuse for some war for oil, perhaps in Iran, or a reinvasion of Iraq, that will seem, at that time, to be the fix for an economy mired in a deep slump.

Ω

Not thoughts uplifted, nor words intoned, shall sway the world in its course. No weight of opinion shall bend the momentum of a single quantum of light. No fixed course shall fix the stars in their place. The Pope may say the earth stands still, but never the less, it moves.

Obama can promise bribes, and make threats - however, one cannot bribe or threaten the dead.