Friday, October 28, 2011

Cold Fusion in Brussels

According to an article a friend made me aware of, today is the day when Andrea Rossi will demonstrate his Energy Catalyzer (E-Cut) producing energy by cold fusion*. Will this be the final breakthrough to free energy as alluded to in a Dilbert cartoon or just another of those many failures not to say hoaxes?

If Rossi is successful he would not be the first to achieve the multiplication of something essential to mankind. Yes, you are all familiar with the miracle of the loaves and fishes but even then Rossi will miss second place with his free energy.

The honor of the silver medal goes to the European leaders as two nights earlier in Brussels they miraculously created euros in excess using the leverage technique enlarging the original euro rescue parachute (Rettungsschirm) from 750 to 1000 billion. The ESFS (European System of Financial Supervision) will both operate and supervise the leverage but who will be judge? Hey, did somebody in the audience mumble: Separation of power?

Needless to say that these miracle euros are not free like Rossi's energy is supposed to be. If the leverage works it will only prolong the agony of indebted mankind, if it does not, the fall into nowhere will be even deeper than at present. It does not help that we in Germany like in the States have anchored a debt brake (Schuldenbremse) into our constitution. We Europeans were mesmerized watching the two Houses in Washington raising the US debt ceiling at the very last minute. Would you think that Germany will not do alike when all the chips are down?

Hurra, we are safe! Merkel is using the Rettungsschirm in an unorthodox way.
Of all the Europeans in the boat you may recognize Sarkozy.
Cartoon by Haitzinger, ©Badische Zeitung

Is there any escape? Well, there is an inherent solution built into the leverage system that is called inflation. Creating more money means just that. One recent example is Switzerland. Since investors rallied the Swiss franc as an ersatz for gold - that had become too expensive - the exchange rate of the franc had nearly approached parity to the euro, a disaster for the Swiss economy based on export and tourism. At that moment the Swiss government intervened switching on the money press a measure bringing the franc to and keeping it at a minimum rate of 1.20 to the euro. Is printing more money the solution? Not for the German man in the street. We suffered inflation twice in the last century and are running from it like the devil runs from holy water.

*Note added: Apparently - subject to confirmation by others – Adrea made it in achieving 480 compared to the planned 1000 kW. However, to sustain the euro a 480 billion parachute compared to the 1000 billion promised would not be sufficient.

Sunday, October 16, 2011

Socialism now?

The movement that started in New York and is called somewhat imprecisely Occupy Wall Street made me think about a talk I listened to in 2010. At that time the possibility of social unrest in the States was discussed but the majority in the audience considered that traditional American values will detain people from demonstrating against the over boarding capitalist system.

In the context of the NY demonstrations Nobelprize winner Joseph Stiglitz had coined the following expression on American Inequality: Of the 1%, by the 1%, for the 1% referring to the distribution of wealth in the States. However, going back to Lincoln’s original Gettysburg address: A government of the people, by the people and for the people  NYT-blogger Bernard E. Harcourt  claims that social inequality frequently quoted is not the main reason for those protests. It is rather the misgiving about the way we are governed turning into political disobedience. In fact, the NY protests unite people demonstrating against the financial system, those demanding a greener America, long time workless and young educated people unable to find jobs and many others.

One of those many 99% persons in Sidney
During the weekend people around the globe occupied parts of Sidney, Tokyo, Madrid, Rome, Los Angeles, the place in front of the Reichstag in Berlin, and many other cities. Men and women in the street feel that in spite of existing democratic structures they are badly governed. It is long known that most politicians are incompetent and their unique interest is to be reelected.

Adam and Eve in front of the Reichstag in Berlin
Now we see those few we up to now considered to govern us swimming helplessly in a sea infested with financial sharks. While banks - some subsidized with taxpayer's money - still pay ample bonuses to their CEOs, governments around the globe try hard to squeeze down on expenses thus killing jobs and the economy like in the case of Greece.

Occupy LA protesters:
Will taxation of the Rich be the solution? 

Populist statements across the Atlantic that the others should do their homework don't solve the financial crisis. These remarks only show how helpless governments are in dealing with the problem. Are we too severe with our leaders when even financial gurus see no solution for the present situation? Still government officials claim that they are able to bail out the existing system and this without hurting their electors.

However, people are not dumb. They are full of apprehension mixed with angst for their future articulating their mistrust in our democratic structures that so far had been unable to act in the interest of Joe Public. In what kind of society are we living?

Slogans shown in Frankfurt read: Ihr verzockt unsere Zukunft (You are gambling our future) and Schranken für Banken (Barriers for the banks). Will those protests help? I doubt. Goethe once had written in Faust: Benefit depends on the money, but urges all (Am Golde hängt, zum Golde drängt doch alles).