Martin C. Winer

In the past few months we’ve witnessed remarkeable events in the market. First we have the Fed bail out of Bear Stearns. What wasn’t widely covered or discussed was that this was effectively a result of a run on a bank.

Modern banking practices partial reserve banking. That is to say that the bank relies on the fact that not every customer requires their funds in cash at any one time. As a result the bank invests your funds during the intervals where you don’t need the cash in your hands. Banks in the US are required to maintain only 10% reserves. A banker can then invest 90% of the banks funds to turn a profit. This is called banker’s reach.

A run on the bank occurs when customers or investors lose confidence in your banking facility and demand their cash back. If enough customers demand their cash, the bank exhausts its reserve and enters a liquidity crisis. This is exactly the fate that befell Bear Stearns. It is interesting to note that Bear Stearns was a financial institution which survived the Great Depression of the 30′s. Had the Fed not acted as it did to bail out Bear Stearns, we may well have been in a greater depression at this very moment.

Please don’t infer from the previous sentence that I agree with the Fed. I think they served to cure the disease by killing the patient. They’ve borrowed excessively from the taxpayers and the US currency to temporarily asuage the bleeding, but haven’t sutured the severed arteries. The Fed’s own actions of forever creating bubbles and taking hindsight corrective half-measures is the very cause of our current problems, not in any way a solution.

There is no doubt that we live in ‘interesting times’ intended in the confucian sense. Just this week we’ve witnessed a second run on the bank in as many months.  This time we’re witnessing a run on the food bank.  Reports are coming in of rationing at Costco stores of rice, flour and cooking oil.  We’re not talking about Costco stores in third world countries.  We’re talking about the continental United States.

What has happened is that large commercial bakeries and other such chains have panicked at the rapidly increasing price of these staples and snapped up local supply.  Yes, eventually this will all work itself out, but the question is, why is this happening in the first place.  There are a few answers:

• The price of oil.  The price of oil affects the food supply in two ways. First it increases the shipping costs which are passed on to the consumer.  Next, it creates a surplus of money in the Middle East which then funnels its way back into the US economy as speculation.  Hedge funds use this money to invest in grain futures which artificially drives up their price.
• Biofuels.  Biofuels are a useless ‘environmentally friendly’ measure which were put in place by politicians to placate the populace.  Corn and other staples are diverted to be converted into biofuels taking food out of the food supply and putting it into our gas tanks.  There has been worldwide rioting especially in regions where food constitutes a large percentage of the general publics’ expenditure.
• Loss of farmland.  Farmland is being lost to urban sprawl and to environmental measures whereby farmers are being subsidized not to plant crops.  Sure environmentalism is great, but it turns out that humans are animals too, and our suffering should figure into environmental equations.
• Malthus.  Malthus famously argued that populations grow geometrically (2,4,8,16, …) while the food supply grows arithmetically (1,2,3,4,5,..) .  We live in a world of approximately 6 billion which is expected to rise to 9 billion by 2050.  Further the billions of China and India are no longer content to eat simple rice and vegetables but also want cars, beef and the more excessive lifestyle of their North American Counterparts.  As a result, we can expect more shortages of gas and food until we learn to live within our means.

Ahmadinejad wearing his trademark white jacket and pointing to the Farsi phrase Ma Mitavanim (We Can) on a blackboard.

Canadian Link:  http://watch.thecomedynetwork.ca/the-daily-show-with-jon-stewart/full-episodes/#clip185688

US Link: http://www.thedailyshow.com/video/index.jhtml?videoId=231561&title=reza-aslan

Reza Aslan was interviewed on the Daily Show on June 24, 2009 lauding the response of Barack Obama during the recent and ongoing revolution in Iran.  Aslan notes strong parallels to ’79 noting that this revolution is likewise a battle for the future of Iran.  Starting at time index 4:48, Aslan applauds Obama’s response:  “Thank you God for President Barack Obama” says Aslan.

“Obama played this perfectly.  During his campaign Iran never left his mouth.  This worked to the disadvantage of Ahmadinejad’s because he couldn’t use his ‘America is going to attack any minute now’ rhetoric.”

Aslan notes that Ahmadinejad’s campaign slogan was “Ma Mitavanim” which is Persian for “Yes we can”.

Responding to opposition calls to make stronger statements or take stronger actions in regards to Iran Aslan warns:

“The US has a long sordid history of meddling in Iranian affairs. … If you want to pu and end to this movement, this revolution tomorrow, let’s listen to Bill Bennett, let’s listen to John McCain.”

Aslan recommends that the US continue its current approach.  “The best thing that we can do is shut up.”  He goes on to say that “Obama has changed the equation in that region.  He is taking the long view on issues, looking ahead 10 years from now.”

Aslan is certain that Iran will emerge a different country from what it is now, but he is concerned as to what form of change will come.  “Iran is on a precipice between North Korea and China; with isolation and militarization on one hand and a preservation of the oligarchies while opening to commerce and contact on the other.”

When asked what US citizens can do to help the revolution, he suggests encouraging and pressuring the EU and UN to act who do have influence in the region.  As for the US, he contends “you have to have a relationship with someone in order to punish them more.  … We have no influence there.  … We can’t punish them any more.  What are we going to do sanction them more?”

—

Reza Aslan’s most recent book is “How to Win a Cosmic War”:
http://www.rezaaslan.com/cosmicwar.html

Canadian Bill C51 purportedly proposes sweeping changes to the herbal supplement and naturopathic/homeopathic remedies market.  The following excerpted from an anti Bill C51 website, although not independently confirmed, suggests that the bill would (amongst other things):

1) Fasttrack pharmaceutical drug approval and
2) Make over 70% percent of current herbal drugs illegal.

Now, this was taken from an opposing website so all claims must then be taken with a grain of all natural sea salt.  The Government claims that your access to Vitamin C and Echinacea is safe. 

“Under Bill C-51, Canadians will continue to have access to natural health products that are safe, effective and of high quality. The Bill will not limit access to natural health products nor does it call for a change in their regulatory status (from over-the-counter to prescription)” says Health Canada spokesperson Paul Duchesne.

Source :: http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20080509/C51_protests_080509/20080510?hub=TopStories

From that simple quote we are forced to ask the question, who and how will products be determined to be ‘safe, effective and of high quality’?  The contention seems to be over semantics and the definition of exactly which products will and will not be regulated.  Putting semantic issues aside, it looks as though the combatants are missing the more global issue and that is in addressing the manner in which the allopathic (mainstream) and alternative medicine operate.  The issue is probably more complex than first fathomed.  Both paradigms operate under different modi operandorum. 

Big pharma operates under the model of providing drugs and therapies with validated claims.  The drug’s claims and safety are established by clinical drug trials.  The benefits here should be obvious but the weaknesses of this system may not be.  The first failure of the big pharma model is that drug trials can be flawed either intentionally or just by simple lack of scope or experimental design.  Take for example the drug VIOXX which did pass clinical trials and FDA approval which was later associated with heart disease and voluntarily withdrawn by its manufacturer Merck. http://en.wikipedia.org/wiki/Rofecoxib#Withdrawal  The second failing of the big pharma model is even more subtle in that  only patentable therapies need apply.  Take for example the research Dr. Evangelos Michelak out of the university of Alberta who has come up with a cancer treatment using the chemical DCA. http://www.depmed.ualberta.ca/dca/  This treatment has been conclusively shown to remove or eradicate all manner of cancers in test animals.  It is a hugely promising therapy with suprisingly few side effects.  One would expect this drug to be in human trial by now.  However, since DCA is not patentable, (almost as common as table salt) the drug companies have no interest.  DCA will go to human trial nonetheless, but only after Dr. Evangelos Michelak is able to scrape together enough money from other philanthropic investors.

Now let’s examine the world of home or natural remedies.  You can pick up a bottle of an herbal remedy which can make all manner of claims.  These claims need not be validated and, indeed, the only validation you’ll receive is either from the smiling face of the salesperson at your natural foods store or the recommendation of a friend or naturopatic practitioner.  However, you probably won’t be able to rely on any study and you’ll have to adopt a ‘take it and try it’ approach.  The failings of this system are two fold.  First, hearkening back to the days of the snake oil salesmen, there is the potential for you to waste your time and money on ineffective remedies.  Second, in wasting your time on these remedies, you may delay seeking appropriate medical treatment for a potentially serious condition.  The first failure – the lack of study based findings — is compelling.  The natural health product industry needs to provide better support for their claims and adhere to some standard as for quality of composition. The second failure is not as compelling as people typically resort to natural health products only after the failure or reticence of allopathic medicine.

Looking at both paradigms, there is a measure which could marry their strengths and divorce ourselves of their weaknesses.  The summary of bill C51 reads as follows:

This enactment amends the Food and Drugs Act to modernize the regulatory system for foods and therapeutic products, to strengthen the oversight of the benefits and risks of therapeutic products throughout their life cycle, to support effective compliance and enforcement actions and to enable a greater transparency and openness of the regulatory system.

Source :: http://www2.parl.gc.ca/HousePublications/Publication.aspx?DocId=3398126&File=19

If this is indeed the goal of the Federal Government, then wouldn’t their time and efforts be better spent in implementing a system of subsidized and facilitated human trials?  A subsidized and facilitated human trials system would raise the bar for natural health food products to better support their claims.  Since the studies would be subsidized and facilitated we wouldn’t deny ourselves access to any reasonable therapy but as consumers, claims of product effectiveness and quality of composition could be properly backed by more than a friendly smile.  All therapies, herbal and pharmaceutical would be subject to the same level of testing.  This testing would be reasonably affordable for any given company.  This would satisfy the allopathic community’s demands for rigorous proof and testing while at the same time allow the allopathic community to consider previously unprofitable yet promising treatments such as DCA.

There is a petition circulating to stop bill C51.  http://www.thepetitionsite.com/1/StopC51  I would be willing to sign it if it could be proved it would make 70% of current natural health care products illegal.  Would I sign a petition to have the Federal Government fund and facilitate human trials of all health care products?  In a heartbeat.

Dumb:

Project Lifeline is a Bush administration initiative to give distressed mortgagees an additional month before their homes are foreclosed upon. This reprieve goes not only to subprime borrowers but to all distressed borrowers. The subtext to this move is that not only are subprime borrowers in distress. One month’s grace is dumb because the amount of debt that we’re dealing with coupled with the loss of equity from falling housing prices is not something that is going to resolve itself that quickly. This is akin to giving a starving man a rice cake. We all know that rice cakes are good only as coasters, so too is Project Lifeline.

Dumber:

Interest rate cuts are an even dumber idea. Last month the Fed cut rates by a staggering 1.25%. There is strong rumour that more cuts are coming. This is a dumber idea for a few reasons. First interest rate cuts are the cause of debenture spending. The reason we’re in the mess we’re in is because people are/were spending money they didn’t have. Next, lowered interest rates cause economic bubbles such as the housing bubble which is just in the process of bursting. Finally, interest rate cuts increase government debt. The way that the Fed lowers interest is by buying treasury bills with printed money. This devalues the currency and increases government debt. Thus, interest rate cuts are the cause of the current economic quagmire, and certainly aren’t the cure.

Dumbest

The US Stimulus Package is the dumbest possible idea. Under the package, people could see $600 to $1200 in tax rebates. First off, the amount itself is a pittance. Next, where is the money coming from? The money is being borrowed from China to be repaid with interest. Where is the money going? The money, it is hoped, will be spent into the economy to buy ‘stuff’. Where does all the stuff come from? The stuff comes from… China. The real underlying problem is that the US economy has shifted from a production based economy to a consumer based economy. Until you address that problem, any attempts to throw money at the problem will simply throw money in other people’s pockets. I’ll give the government some credit though, the US Stimulus Package does manage to stimulate an economy; perhaps the government will fund moving its citizens to Beijing where the positive effects can be felt.

In 1979 Jimmy Carter delivered a televised speech bemoaning the increasing US dependence on foreign oil.  In it he outlines his Energy Policy for the coming decades.

“[Foreign Oil is] a cause of the increased inflation and unemployment that we now face. This intolerable dependence on foreign oil threatens our economic independence and the very security of our nation. The energy crisis is real. It is worldwide. It is a clear and present danger to our nation.”

– Jimmy Carter  (http://www.pbs.org/wgbh/amex/carter/filmmore/ps_crisis.html)

Today the US relies on 60% foreign oil (http://www.fueleconomy.gov/FEG/oildep.shtml) in strong defiance of president Carter’s prescient warning.

As far as the US dependence on foreign oil, nothing has changed since the Carter’s clarion call aside from the problem getting far worse.  However, president Carter didn’t live in a world threatened by Global Warming (at least it wasn’t commonly known).   President Carter also didn’t live in a world with two superpopulations, India and China weighing in at a billion people each who are poised to ramp up their consumption.

Clearly oil will no longer do as a source of energy.  Luckily science has provided an alternative: The Hydrogen – Aluminum Cycle.  To be clear, I’m not speaking of hydrogen power alone.  Hydrogen power alone is a red herring of alternative energies.  The catch is that hydrogen is hugely expensive to make and today largely comes from the demethylization of hydrocarbons; ie oil.  No, the Hydrogen – Aluminum cycle is something different entirely.

When we think of hydrogen, some horrible images from the past might emerge.

Here we see the Hindenburg which was filled with hydrogen bursting into flames.  Many see the risks of hydrogen in cars and decry ‘oh the humanity!’.  Well there are no such worries with the hydrogen – aluminum power cycle because the hydrogen is produced in micro amounts and only as needed.  Hydrogen need not be stored in a cryogenic canister with motorists barrelling down the highways with a bomb on board.  This in situ or just in time production solves the danger of using hydrogen in a car.

Next, we must solve the problem of where to find our hydrogen.  Clearly deriving it from oil simply won’t do.  The other current method for obtaining hydrogen is through a process called hydrolysis which splits water into hydrogen and oxygen.  Regrettably, this process is too inefficient to be used on a wide scale.

Enter into the picture aluminum.  Aluminum has a high affinity for oxygen.  Whenever you hold a piece of aluminum it has a skin of oxidation.  This skin, once formed, prevents any further oxidation which is why you never have to worry about rust in components built of aluminum.  Aluminum likewise reacts with water;  A jealous lover of oxygen, it bonds strongly with it, ousting the hydrogen.  While a jealous lover aluminum may be, it is quickly satiated and forms a skin failing to react any further.

Jerry Woodall, a professor of Computer Science and Electrical Engineering at Purdue, discovered in the 60′s that when aluminum, gallium and water were mixed, the aluminum oxidized fully, liberating massive amounts of hydrogen.  It would seem that the gallium acts as a mediator in the reaction and prevents the formation of the oxidation skin on aluminum.  The end results of this reaction are hydrogen gas, aluminum oxide (aka alumina) and gallium.  The gallium is not consumed, and thus can be recycled.  The alumina can be electrically converted back into aluminum and thus recycled.  Burning hydrogen produces only water.

The idea of using hydrogen to power a vehicle is certainly not a new one.  While Woodall was experimenting with gallium in the 60′s, GM was trying to prototype a hydrogen fuel cell vehicle: The Electrovan.  It is recognized as the first hydrogen fuel cell prototype.  The prototype was scrapped due to the high cost of the rare (precious) metals used in its fuel cells and the complexity of storing hydrogen.

The aluminum-gallium-hydrogen cycle may allow us to succeed where the Electrovan failed.  So now, let’s put the pieces together: How does this get you to work in the morning?  Your new, non-polluting car has two fuel tanks, one containing water, the other containing aluminum and gallium flakes.  As hydrogen is needed the water and the flakes are mixed.  The hydrogen is harvested and runs the engine.  Also the heat produces by the chemical reaction may be harvested for energy by a Stirling Engine which is a type of engine which can run off of temperature differentials.

When it comes time to fuel your vehicle, the new filling station attaches three hoses to your car.  One removes the slurry of used alumina to be recycled.  The other two replenish your supply of water and aluminum-gallium flakes.  When it comes time to pay for your aluminum flakes, will it be competitive with gasoline?

“Since standard industrial technology could be used to recycle our nearly pure alumina back to aluminum at 20 cents per pound, this technology would be competitive with gasoline,” Woodall said. “Using aluminum, it would cost $70 at wholesale prices to take a 350-mile trip with a mid-size car equipped with a standard internal combustion engine. That compares with $66 for gasoline at $3.30 per gallon. If we used a 50 percent efficient fuel cell, taking the same trip using aluminum would cost $28.”

–  (http://www.purdue.edu/UNS/x/2007b/070827WoodallNanotech.html)

Next, some may wonder where the aluminum will come from.

Enough aluminum exists in the United States to produce 100 trillion kilowatt hours of energy. That’s enough energy to meet all the U.S. electric needs for 35 years.  If impure gallium can be made for less than $10 a pound and used in an onboard system, there are enough known gallium reserves to run 1 billion cars.”

–  (http://www.purdue.edu/UNS/x/2007b/070827WoodallNanotech.html)

Recall that alumina (aluminum oxide, the waste product) can be recycled electrically back into aluminum.  So it’s not like oil where, once burnt, we can’t reclaim it.  We can electrically reclaim the waste alumina back into aluminum.

Ecologically this is a dream come true.  When thinking ecologically it’s important to think in terms of cycles.  Everythings output must be something’s input cycling back to the original source.  Here we have aluminum going to aluminum oxide (alumina) going back to aluminum.  The alumina to aluminum step can be powered by non polluting nuclear or renewable sources such as solar or wind etc.  The water turns to hydrogen which combines back with oxygen to produce water.  Gallium is never consumed and is recycled continuously.

So there you have it: president Carter’s dream some thirty years later, but not too late.  With the skyrocketing prices of oil the need for this change has never been more clear.  The only missing ingredient in this equation is the political motivation to fund and accelerate the conversion process.  This may prove to be the trickiest part of the equation to balance.

Further reading:

Please don’t take my word on this matter, feel free to do your own research:

http://www.google.ca/search?hl=en&sa=X&oi=spell&resnum=0&ct=result&cd=1&q=aluminum+gallium&spell=1

http://youtube.com/results?search_query=aluminum+gallium&search_type=

There is also a similar approach using boron

http://www.google.ca/search?hl=en&q=boron+hydrogen+car&meta=