The 1% Simply “Shed” Their Obligations
Posted on November 29th, 2011 at 2:18 pm by Steve

Corporations are legal “persons,” and, like you and me, enter into binding legal contracts. One difference is, when they go bankrupt, they just “shed” their obligations and move on. You and I aren’t usually so lucky.

A case in point is extreme financial distress. For a person, this might be caused by a loss of employment, or sudden illness; for a corporation, it could be a drop in business, excessive operational costs, or bad planning. In either case: revenue is down, costs are up, and the balance sheet is negative.

If you’re a person, this kind of crisis means that you’ll suffer direct hardships: the things you own get taken away, and if you actually still earn money, your future earnings are pledged to your creditors. If you have a mortgage, you’re typically foreclosed and lose your home. Your car gets repossessed. Your belongings are sold off to pay your debts.

Ah, but if you’re a corporation, things are different! You can simply “shed” those expensive obligations and soldier on! Well, you can’t shed all your contracts – just the ones you made with your employees:

AMR [American Airlines’ parent company] was determined to avoid Chapter 11 as air travel fell and losses mounted after the 2001 terrorist attacks, even as peers used bankruptcy to shed costly pension and retiree benefit plans and restructure debt.

(Source: Bloomberg Business Week, November 29, 2011)

Of course, the obligations you made to your peers (i.e., other corporations) must still be honored. These debts will be “restructured.” But your contractual promises to pay for the doctor visits and medicine for the thousands of people who gave you 30 of the best years of their lives? Those you can “shed” like a tired skin you’ve outgrown.

“You would expect a leaner, stronger company to emerge from bankruptcy,” Chris Logan, an analyst at Echelon Research & Advisory LLP in London, said today by telephone. “As they are in Chapter 11, it will be more easy to demand concessions from the labor force.”

Ah yes, “concessions from the labor force!” In other words, the executives hold a gun to the heads of the employee unions and offer them a choice: either some of you lose your jobs and the rest lose your benefits and even more of your salary, or all of you lose your jobs and your benefits and all of your salary. Some choice.

It’s not like we haven’t been down this road before, with this very company. American’s pilots, flight attendants, mechanics, gate agents, baggage handlers – you know, the people who actually make the planes fly and keep the passengers safe – these very employees took a 30% pay cut back in 2003 in hopes of avoiding a bankruptcy proceeding. Those poor saps! Now, instead of regaining the $1,600,000,000 that they gave up eight years ago, they’re being told that they’re still earning too much, and that if they don’t make further sacrifices, they’ll all lose their jobs.

While the workers have already taken huge pay cuts, given up their pensions, and paid more in health insurance premiums, American’s executives have somehow managed to escape harm. In 2008, the same year his airline lost more than $2 BILLION the boss’s compensation package topped $5 million. But, pity poor Gerald Arpey: that $5 mil was a 22% drop over his 2007 compensation.

A quick glance at the headlines will tell you that, even through huge losses and now bankruptcy, The 1% at AMR are doing just fine: “Despite losses, American Airlines CEO’s compensation climbs” – Fort Worth Star-Telegram, Apr. 21, 2011; “Executive compensation at American Airlines raises eyebrows” – Tulsa World, April 19, 2010; “AP says Arpey earned $6.6 million in 2007” – Dallas Morning News, April 19, 2008.

Thus do the executives of the corporate entity continue to prosper and thrive, continuing to do their “jobs” of running the business, while thousands of employees are laid off, and tens of thousands more lose the only hope they had of actually being able to, you know, survive their retirement years on something other than handouts and cat food.

Although all of that can change.

What Could *Possibly* Go Wrong?
Posted on June 21st, 2011 at 1:24 pm by Steve

So, rising floodwaters in Nebraska have completely surrounded two nuclear power plants. But, hey, don’t worry! The plant at Fort Calhoun Station (a full 19 miles from Omaha – stay put, Warren Buffet!) has been in “cold shutdown” since April. The plant’s managers decided not to restart the nuclear chain reaction, given the impending floods.

Of course, they did have a “small fire” that…well, actually, it only knocked out the cooling water pumps in the “spent fuel” storage pool for 90 minutes, during which time the temperature in the pool rose “a few degrees.” But, hey, at that rate of temperature increase, it would’ve taken days (well, 88 hours) for the water in the pool to start boiling away. What happens then? The fuel melts… it oxidizes… it can catch fire and spread radioactive materials over a large area.

But, don’t panic! How could a nuclear plant possibly lose all of its power? I mean, they have grid power and backup generators, right? How could the grid connection fail? (Certainly not due to a massive regional flood!) How could the diesel generators fail? (Certainly not due to being submerged by the aforementioned flood!) After all, the operators of Fort Calhoun have planned ahead! They installed a giant rubber innertube around the plant to hold back the waters:

[Plant spokesman] Gates said an Aqua Dam currently protects the switchyard and substation at Fort Calhoun, tall enough to withstand floodwaters at a 1,010 elevation (the river level is currently at an elevation of 1,005 feet, 7 inches).

[Source: OPPD: Nuclear station “safe and will continue to be safe”, The Washington County Pilot-Tribune and Enterprise, June 17, 2011]

How could the river rise another four feet, five inches? I mean, it’s not like the levees and dams upstream are stressed and starting to breach? It’s not like it might rain any more than it already has…

Perhaps the most significant impact of the [June 20] storm was the large area of 1 – 4 inches of rain it dropped on Nebraska and South Dakota. This rain will run off into the Missouri River, further aggravating the flooding that has breached two levees and overtopped two other levees in the past week. The large, slow-moving low pressure system responsible for the rains and severe weather will bring additional heavy rains of 1 – 3 inches over portions of the Missouri River watershed today [June 21], and will touch off a new round of severe weather today and Wednesday as the storm progresses slowly eastwards.

[Source: Jeff Masters, Ph.D., founder and chief meteorologist of the Weather Underground, Inc.]

Well, the good thing is that nuclear plants in the United States are designed with extremely conservative assumptions, so there’s a very high margin of safety! Oh, and also… even for plants that were built 37 years ago, like the Cooper Nuclear Station, just downstream from Fort Calhoun (and also inundated with floodwaters), they’re subject to constant inspections and tough regulations!

Failed cables. Busted seals. Broken nozzles, clogged screens, cracked concrete, dented containers, corroded metals and rusty underground pipes — all of these and thousands of other problems linked to aging were uncovered in the AP’s yearlong investigation. And all of them could escalate dangers in the event of an accident.

Yet despite the many problems linked to aging, not a single official body in government or industry has studied the overall frequency and potential impact on safety of such breakdowns in recent years, even as the NRC has extended the licenses of dozens of reactors.

[…]

Records show a recurring pattern: Reactor parts or systems fall out of compliance with the rules. Studies are conducted by the industry and government, and all agree that existing standards are “unnecessarily conservative.”

Regulations are loosened, and the reactors are back in compliance.

[Source: “U.S. nuke regulators weaken safety rules,” by the Associated Press, June 20, 2011]

As Harry Shearer says, “Safe! Clean! Too cheap to meter! Our friend, the atom.”

Nuke New England!
Posted on April 18th, 2011 at 3:03 pm by Steve


Imagine a “station blackout” occurs at the Pilgrim Nuclear Generation Station in Plymouth, MA. Within days, a hydrogen explosion shatters the secondary containment building, possibly breaching primary containment as well. The government orders a mandatory evacuation for areas within 20 km of the plant, but the BBC World Service is saying that the British government has advised their citizens not to travel within 50 miles of Plymouth.

This catastrophe at Plymouth (or Seabrook, or Vermont Yankee, or Millstone in Connecticut) hasn’t happened…yet. But the notion that “it can’t happen here” has taken quite a beating over the last month. If and when a disaster like this strikes, we’ll have hours to evacuate. Think for a moment what it would take to evacuate just the inner “exclusion zone” around one of these reactors. Where are we going to put all the people from Brockton, Plymouth, Taunton, Fall River, Buzzards Bay, Sandwich…? And what about the more than a million people that live within 50 miles? Remember that, even now, the US government is advising Americans not to travel within 50 miles of Fukushima, a month after the crisis began. How can we avoid travel to the entire Boston metro area?

Of course, Pilgrim only has one reactor, where Fukushima Daiichi has six. On the other hand, Pilgrim has more than TWO MILLION POUNDS of radioactive spent fuel assemblies stored on site. A loss of coolant water in the tightly-packed spent fuel pool at Plymouth – which has far less containment, and far more fuel, than the reactor core – could quickly lead to a fire and a massive excursion of radioactive isotopes of cesium, strontium, iodine, and others. An explosion could spread deadly plutonium and uranium particles for miles (as happened at Fukushima). In other words, even with fewer reactors, a station blackout at Plymouth could have worse radiological consequences than the ongoing disaster in Japan.


The spent fuel pool at Vermont Yankee

The reactor at Plymouth is a General Electric Mark I Boiling Water Reactor, the same design and vintage of the “troubled” reactors in Japan. Of course, America’s Nuclear Industry and Regulators (is there a difference?) are quick to point out that American reactors have strict safety standards and have been upgraded and so on. Ask them about the spent fuel pools. Ask them how long they can run the pumps to maintain sufficient cooling in the event of a station blackout (whatever the cause). Ask them the consequences of allowing the operator to store 2,918 spent fuel assemblies in a pool that was designed and originally licensed to hold just 880 assemblies.

Of course, the spokesman for Vermont Yankee is quick to assure us, “We believe pools are perfectly safe. It was designed to be safe and there are redundant systems so there is never a loss of coolant.” Indeed. For some reason, those fools in Japan neglected to design their pools to be safe, and that’s why they suffered a complete loss of coolant and melting of the fuel rods in the spent fuel pool. Silly Japanese!

Ghosts of Discount Retail Past
Posted on April 14th, 2011 at 11:35 am by Steve

Spotted on Somerville Avenue next to McGrath Highway… once the haunt of Mrs. B and a long-departed Stop & Shop; later the home of electronics retailer Fretter; and, most recently, host to the lowest rung of the TJX retail hierarchy, the now-defunct A.J. Wright.

Compared To What?
Posted on October 23rd, 2010 at 1:30 pm by Steve

John Legend and The Roots have a new album out, and one of my favorite songs is “Compared To What.” I played it for some musician friends of mine, and one of them said, “Wow, this is a lot slower than the original!”

There ensued some discussion of “the original.” One person said Common (the hip hop artist); someone else said, “I thought it was from The Seventies.” After a visit to The Google, I found a wealth of information about this interesting, important song of protest, and its circuitous pop history.

Mark Anthony Neal, a music writer and professor at Duke University, gives the best breakdown of the song’s history in a March, 2003 article for Pop Matters. He notes that, indeed, Common did record a version of “Compared to What,” with the singer Mya. But the only lyrics from the original song that remain are, “Tryin’ to make it real, compared to what?” Everything else is a rap by Common that includes lines like “the real can’t be bought or sold.”

The irony (which you knew was coming)? The rapper was remaking Eugene McDaniels’s 1960’s-era anti-war song as part of a Coca-Cola marketing campaign called “Coca-Cola…Real:”

The original version of the song is a powerful example of black pop that wasn’t afraid, echoing Audre Lorde, to speak truth to power, an element sorely missing in contemporary black pop music.

Many of the so-called hip-hop generation’s artists have been remarkably silent, while Bush, Rumsfeld, Rice, and Powell march lockstep to war with Iraq. Thus it is terribly ironic that in the midst of major antiwar protests around the world, one of the most “conscious” of hip-hop artists [Common] referenced one of the great protest recordings in the pantheon of soul music to sell brown caffeinated fizz.

[flvplayer http://www.noiselabs.com/blog/audio/mya_common_comparedToWhat.flv 400 320]

That remake of the song is particularly distasteful when you compare it to the most famous of the 60’s-era versions. You Tube user Dr. Greez had uploaded the classic recording of pianist Les McCann and saxophonist Eddie Harris doing “Compared to What” live at the 1969 Montreux Jazz Festival:

That version really cooks.

It’s interesting to hear John Legend and The Roots, who share enough of an affinity with Common that he appears elsewhere on the same album (Wake Up!), offer their take on this anti-war song. Unlike Common in the Coca-Cola ads, John Legend sings the original lyrics more or less as written. The Roots provides a much more stripped-down, slower base for the song. Overall, it’s a stirring version.

As we’re in the midst of two “overseas contingency operations” that continue to kill and maim on a daily basis, the potent protest lyrics of “Compared To What?” remain sadly relevant. John Legend, ?uestlove, and the Roots have taken a small step toward restoring the honor, and the power, of Eugene McDaniels’s original.

Have a listen below.

[audio:http://www.noiselabs.com/blog/audio/roots_what.mp3|titles=Compared to What|artists=John Legend and The Roots]
A Bare-Knuckled Bucket of Does
Posted on June 4th, 2010 at 2:11 pm by Steve

Lawrence Yang documents the obvious problem with Verizon’s $100 million integrated ad campaign for the Google/Droid phone. He was inspired by Nancy Friedman, who is a delight to read.

(Be sure also to read Nancy’s linked discussion of anthimeria, which is, loosely speaking, when someone verbs a noun.)

(Below: the actual $100 million ad campaign.)

The True Cost of Wind Energy
Posted on May 2nd, 2010 at 11:20 pm by Steve

The problem with wind energy is that it drives prices down! From Bloomberg news:

After years of getting government incentives to install windmills, operators in Europe may have become their own worst enemy, reducing the total price paid for electricity in Germany, Europe’s biggest power market, by as much as 5 billion euros some years, according to a study this week by Poeyry, a Helsinki-based industry consultant.

Jerome a Paris has an excellent discussion of the article over at The Oil Drum. He also links from there to an excellent (and entirely wonky) discussion of the proper pricing of wind power. It is a great article – one key takeaway is that wind power actually brings electricity prices down! Understanding that assertion requires a discussion of marginal costs, initial investments, demand curves, spot pricing, intermittency, externalities, and Spitzenlast (see above), but it’s totally worth it.

Another key point is that “market” pricing actually tilts the playing field toward fuel-based generation of electricity, because of its lower capital and debt-servicing requirements:

selecting market mechanisms to set electricity prices (rather than regulating them) is, again, not technology neutral: here as well, deregulated markets are structurally more favorable to fossil fuel-based generation sources than publicly regulated price environments.

So while I definitely wanted to highlight the issues around wind power (and point you to some excellent, informed commentary), I mostly just wanted an excuse to show that graph! SPITZENLAST!

Yes, Mr. President, You Showed the Insurance Industry Who’s Boss!
Posted on March 26th, 2010 at 12:44 pm by Steve

President Obama is now out on tour daring the Republicans to try to repeal the new health care reform law. Here’s what he said yesterday:

“If they want to have that fight, we can have it. Because I don’t believe the American people are going to put the insurance industry back in the driver’s seat.”

Yeah, not after we worked so hard to shove the insurance industry aside, right? I mean, before the law passed, if you wanted to buy insurance, you paid whatever the Insurance industry demanded.

Whereas now, you will be obligated by law to give your money to a private insurance company, at whatever price they name, or else pay a tax penalty.

Yessirree Bob, we certainly wouldn’t want to let the insurance industry back in the driver’s seat! We showed them who’s boss!

…Now, to be fair: eliminating lifetime payout caps, limiting annual payout caps, and requiring the companies to accept customers regardless of pre-existing conditions are all good reforms. But there are currently no provisions for limiting the costs of insurance premiums! And, if you earn more than 400% of the Federal poverty limit, you receive NO FINANCIAL ASSISTANCE from the government (this year, the magic 400% number is about $43,000).

So, the government is mandating that you buy insurance, but they’re not setting limits on what the companies can charge for it.

I seem to remember one of the Presidential candidates opposing this idea… saying something about how it wouldn’t work, and it wasn’t fair… Now let me see, who was it again…?

Never mind, I can’t remember that far back!

The Biggest Con in History EVAH!
Posted on March 3rd, 2010 at 3:31 pm by dr.hoo

the con

Matt Taibbi breaks it down (once again). Make the time to read this and you’ll get a much better grasp on the insane shit that’s gone down over the past year of “recovery”. This “bailout” has been like having the guy who mugged you sending you his dry cleaning bills for getting your blood on his shirt AND THEN charging you interest for the bill ($1billion).

It seems to me that the calling this a “Recession” is a misnomer and misdirection. It kind of implies that this is some sort of natural dip to the economic flow. What we are really witnessing is the largest and most egregious transfer of wealth from the American tax-payers to a few large players on Wall St.

As Warren Buffet said in 2006, “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”

In Case You Were Wondering…
Posted on February 22nd, 2010 at 11:44 am by Steve

…the masters of the American economy (and, thus, the people whose largely unaccountable decisions determine the material fortunes of most people in our country) don’t give a flying fuck about you, me, or anyone else we know:

“American business is about maximizing shareholder value,” said Allen Sinai, chief global economist at the research firm Decision Economics. “You basically don’t want workers. You hire less, and you try to find capital equipment to replace them.”

(Source: New York Times, “The New Poor: Millions of Unemployed Face Years Without Jobs”)

What a shame that the structure of our economic and political life is simply a force of nature that is immune to modification. If only there were some way to structure a society so that the primary economic activities were directed toward something else in addition to “maximizing shareholder value.”

Or, wait…

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