White House Chronicle

News Analysis With a Sense of Humor

Merkel Finds German Engineering not Good Enough for Nuclear

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Question: What is Germany most famous for these days? Answer: engineering.

In light of the worldwide respect for German engineering, precision and management, why has Chancellor Angela Merkel taken up arms against her most admired national talents?

For that is what she has done in turning Germany against its nuclear future — a future she endorsed last fall. She has closed seven reactors permanently and has the 10 others set to cease operating sequentially by 2022.

Ostensibly, she has taken this draconian action in light of the Fukushima-Dai-ichi crisis in Japan; but more especially because her conservative-led Christian Democratic Union party and its coalition members have taken a drumming from the Green party in local elections.

Since the Japanese crisis, the German Greens have mobilized large anti-nuclear demonstrations throughout Germany. Indeed, the party was formed immediately after the Three Mile Island accident in Pennsylvania in 1979. Since then it has been a force to be reckoned with in German politics — always there, but sometimes more vocal than others.

To German commentators, Merkel’s about-face speaks of just one thing: opportunism. Fearing the dissolution of her fragile coalition, she gave the Greens what they wanted: complete surrender on the nuclear issue.

While buying a political-life extension, Merkel has cast a shadow over Germany’s future as the economic engine of Europe. Without nuclear, Germany will face severe economic and even environmental challenges ahead.

Merkel says that the nuclear slack will be taken up by boosting its renewable energy sources – wind, solar and hydro — from 17 percent of the mix today to double that. Nuclear has been providing 25 percent of German electricity. It would take about 20,000 windmills alone to replace that.

Also, Merkel says, electricity consumption will be cut by 10 percent.

Quite how any of this will be achieved is uncertain. Already, conservation is a high priority in Germany and alternative energy has been a high priority for years.

Most likely there will be electricity shortages in parts of the country, mostly in the south; there will be more brown coal burned; and Russia will further extend its energy hegemony over Northern and Eastern Europe by upping the amount of gas provided to Germany for electricity production. Another ironic likelihood is that as Germany will have to import more electricity and it will have to do so from countries with a large nuclear base like France.

The three German utilities that own various nuclear plants are in a state of shock, even disbelief. One, Eon, already is talking about billions of euros of compensation for loss of business and capital goods. The others are likely to follow suit. There is likely to be litigation in the German and the European courts.

Early polls show that while the German people do not want nuclear, they also see the Merkel move as political and cynical. One poll found that 70 percent of the electorate found the chancellor’s actions to be opportunistic.

First calculations, not denied by Merkel’s administration, expect electricity prices – already among the highest in Europe – to bound by nearly 20 percent.

The untold damage is to the concept of the invulnerability of German engineering – that something special that has made German cars the gold standard of the world. If Germany does not believe that it can engineer its reactors to levels of safety and manage them with Prussian zeal, then what has happened to the German ethic?

Brown coal — the dirtiest there is, being somewhere between bituminous coal and peat in its makeup — is the default position in German energy. Dirty to burn but plentiful, it may now make a comeback with severe environmental consequences for Germany and its neighbors.

When Merkel talks about alternatives, she is really talking about wind and at thousands more turbines will now have to be added in a country with limited land area for diffuse energy sources.

Although the Germans have been more successful than thought possible with solar, it remains a cold, gray northern country that requires a lot of reliable affordable electricity to keep its place in the global economy. Merkel appears to have put her own future above that of her country. –For the Hearst-New York Times Syndicate

Natural Gas Is not Exactly Environmentally Clean

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If you live in the United States — almost anywhere in the U.S. — there may be a gas well coming to a site near you. Even on property you think you own, a gas well may be on its way.

Then there is the problem of how much air and water pollution that neighborhood gas well will bring with it. So far pollution has brought the most public outcry, largely because it is the issue that environmentalists are concerned with.

The new abundance of natural gas is a bonanza, but it is not a free lunch. Gas wells near or in your backyard are dividing communities, particularly in rural areas, and could eventually divide the environmental movement.

For decades natural gas has been the benign fuel without the pollution of coal, the geopolitical ramifications of oil, or the politics of nuclear. In fact, natural gas is almost too good to be true — or it has been until this latest chapter in its history opened. New supplies and new ways of liberating them are tarnishing the image of gas as the best energy available.

Traditionally, drilling for gas was like drilling for oil. A hole went deep into the ground until it penetrated a big cavern of gas with tributaries, which would yield more gas if the rock there was broken up. This rock-breaking was called hydraulic fracturing, and this was accomplished by injecting various liquids including water, chemicals and gas that had seeped to the surface outside of the piping.

Fifty years ago, there were even two experimental programs to use nuclear detonations for fracking gas. That method didn't go forward.

Since then, things have come a long way in the search for more gas and new technologies have evolved. Chief among these are seismic mapping and horizontal drilling. The former gives geologists a very exact picture of what is underground, and the latter makes the collection of it much more efficient.

Horizontal drilling finds the lock and fracking turns the key. Whereas once drillers put down one straw and sucked, now they put down one straw and then send out others horizontally in many directions.

Thus enabled, gas can now be exploited where it was previously unreachable — in shale rock. But to get the rock to give up its harvest, fracking is essential. With it come problems, and gas — if you will — loses its innocence.

Fracking is environmentally contaminating:

a. The fracking agent along with the methane could seep into drinking water and alarm farmers and communities.

b. Methane tends to escape around the well and is a major greenhouse gas.

c. A gas well using fracking demands millions of gallons of water. Many pollutants, like mercury and nitrates, are borne to the surface with the discharged water, which is then held in leach ponds.

This negates the big environmental virtue of gas that it burns with half the carbon dioxide emissions of coal and none of the nitrous oxides. The lunch tab has gone from nearly free to quite pricey.

The problem for the environmental movement is that it has favored natural gas for electricity production over its bete noirs: nuclear and coal.

The problem of an unwanted gas well landing on land you thought you owned is an historical one which recognizes "split estates." This was a concept in law that the land had two values: the surface and the oil and gas contained under the surface.

These two estates could be split and a landowner could sell the rights to the subterranean estate. Historically, many have done so. Now with the value of shale gas rising in 30 or more states, homeowners are finding that grandpa or a previous owner may have tried to capitalize too early by selling the underground rights.

As Amy Mall of the Natural Resources Defense Council told a meeting on fracking in Washington this week, the law's results can be devastating. A family in Wise County, Texas, lost all value in their 10-acre holding when a gas company, which leased the mineral rights from neighbors who had bought them earlier, set up a rig and occupied five acres of land for their operations.

This is part of the back story on the new bonanza of natural gas that is giving so many so much hope for our energy future. The new gas is not your father's gas and while it is a boon, it is not all blessing.  — For the Hearst-New York Times Syndicate

What Ails the Press? It Ails Itself

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It was Thomas Carlyle who told us that Edmund Burke, in a parliamentary debate in 1787 on the opening of press coverage of the House of Commons, declared, “there were Three Estates in Parliament; but, in the Reporters' Gallery yonder, there sat a Fourth Estate more important far than they all.”

In the context of Parliament, the other three estates would have been the Lords Spiritual, the Lords Temporal and the Commons.

Burke's phrase stuck. More than two centuries later, the Fourth Estate is preserved, but is it powerful?

Here in Washington, it is losing respect rapidly. Today Burke, who was praising the independence of the reporters in ushering over two centuries of media standing up to authority, might wonder if he had overstated their zeal. Three and a Half Estates he might have decided.

The crisis in the media, as some of us believe, is not in the decline of newspapers, the shrinking of viewership for traditional television news, or the growth of partisan cable news, but rather in two other unrelated but dangerously coincidental trends.

The first of these is that the establishment in Washington now believes it doesn't need the media in the way that the media was believed to be needed traditionally. No longer do those hoping to influence Congress begin by selling their point of view to the media by lunching reporters, persuading editorial boards and courting columnists. Instead lobbyists go straight to Congress, where the game is to buy the votes they need with campaign contributions. Who needs the media to stir up popular support when the deed can be done with silver?

Gerald Cassidy, maybe the most successful K Street lobbyist of them all, lamented this change to me at lunch about 10 years ago. It has simply gotten worse.

Cassidy worried about the lack of public support for major legislation passed under lobby pressure. He also lamented how little time a lobbyist got with a member — how little time to dwell on the merits of a course of action.

Cassidy became a very wealthy man lobbying, but he yearned for a fair fight. The old-fashioned way, if you will.

This new state of affairs can be felt in the decline of interest in the general media by public relations firms who used to court every reporter in Washington. Now they “counsel” their clients; offer “strategic planning” and — oddly, as they take little notice of the media — a strange hybrid called “media training.” What media? Their other big new product is to keep reporters away from influential people: the people reporters need to talk to.

In case you think this is peculiarly a Washington phenomenon, it is not. At a recent meeting of the Association of European journalists in Maastricht, the Netherlands, speaker after speaker from country after country complained about those who allegedly are paid to facilitate press access in business and in government and instead wall off their masters.

The second downward trend is a pervasive pusillanimity that has gripped the media in the last several years. We allow ourselves to be segregated, corralled and de facto licensed.

At the White House, the press briefings are like feeding time for the dolphins at Sea World. We, the correspondents, sit around waiting for the keeper, press secretary Jay Carney, to bring in the dead fish. He throws most of it to the network correspondents, sitting grandly in the first two rows where they engage him in long conversations. Finally, Carney tosses some squid to the print reporters in the back of the room and an occasional minnow to the foreign press.

The problem is not that Carney does that but that we take it.

Likewise we can't walk without an escort to the Eisenhower Executive Office Building, next to the White House, as we used to and a minder sits in on our interviews. And we take it.

The press conferences are rigged. Regular correspondents don't get to ask questions, just a predictable few — yes, those with the fishy breath from the front row.

Some old timers spoke up and lambasted the press at a meeting in Washington this week. Former Washington Post reporter and Pulitzer Prize winner Haynes Johnson said, “It's all very stale, very structured, very pale.” Sid Davis, a former NBC bureau chief, said the press conferences look as though the correspondents are watching a funeral service.

And longtime NBC and ABC correspondent Sander Vanocur said, “You want to know what's wrong with the press? The press is what's wrong with the press.” — For the Hearst-New York Times Syndicate

 

Twitter Rides to the Aid of Britain’s Gossip Press

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A mighty battle is shaping up between the British government and the American-controlled social networking sites, primarily Twitter and Facebook.

The government of Prime Minister David Cameron is committed to extending the harsh libel and privacy laws, with which it attempts to control the notorious tabloids, to social networking sites. The sites not only carry salacious gossip, but also provide tools for circumventing laws on the books for newspapers.

This state of hostilities between the government and the social media is a new front in a war that has raged in Britain since the first tabloids appeared in the 1920s.

The appetite for gossip in Britain is at the heart of the government's schemes to discipline the media, or at least hold it accountable, for the violation of the privacy of the famous, infamous and titled. Notwithstanding Lindsay Lohan, Charlie Sheen, Jennifer Aniston and assorted American glitterati adorning the supermarket tabloids, the British passion for the sex lives of the rich and famous dwarfs its American equivalents by orders of magnitude.

In turn the energy, resourcefulness, deceit and intrusion of the British tabloids is appalling. No electronic device, trick or bribe is overlooked in the endless campaigns to shame the famous, embarrass the wayward and, in general, romp around their boudoirs and places of assignation.

The tradition of paying informants – maids, butlers, nurses and old lovers –handsomely for lurid details (or anything that can be made to sound lurid) means that the prominent love at their own risk. Yes, it is sex, far more than money or corruption, that sells the British tabloids; and sales push up the revenues. The ability with modern technology to eavesdrop on private conversations has made things worse.

Despite the toughness of British libel law, the battle rages, led by two of a bunch of tabloids, the daily Sun and the weekly News of the World, both owned by Rupert Murdoch's News Corp, the parent company of Fox and The Wall Street Journal in the United States.

It is not that these two are more amoral than the rest, but rather they are better at the game than their competitors. They pay more to informants and the paparazzi than the rest.

For these scoundrels, the United Kingdom in general and England in particular, are target-rich. It starts at the top with the monarchy. Yes, the tabloids cheered the royal wedding but they are ready – indeed, anxious – for the first hint of an indiscretion, domestic discord or even wardrobe malfunction. Then there are the aristocrats, often ignored, but center stage at the suggestion of sexual impropriety.

On to the rest, the footballers, the television personalities, the movie stars. Know what “bonking” is? It is the word favored by the tabloids for sex, as in footballer Y is bonking actress X.

No detail is too private or sick-making not to be rushed to millions of breakfast tables. To keep things spiced up, The Sun has a young, busty woman, naked to the waist on Page Three most days. Helps the corn flakes go down.

To protect the private lives of public figures, the British courts enjoin newspapers from publishing specific reports, if the victim is forewarned — and the preemptive “gagging” orders are feared and loathed in the media. They are so restrictive that it is illegal even to say that one has been taken out. But these themselves may have rebounded against the government the courts and the celebrities.

Frustrated journalists and gossip lovers have taken to Twitter and sometimes Facebook to list, often erroneously, which celebrities are hiding behind preemptive injunctions. The implication of such outing is that there are dark goings on.

Now celebrities are taking to the Internet to deny that they have taken out restraining orders or have a need to. So the government is ham-fistedly going after the social networks. It wants them to reveal the names of the Twitter and Facebook account holders.

As with a lot of regulation, the government and courts have made things worse. But if it goes after the American firms that provide Internet services in American courts, they will run into the First Amendment.

Even the European Court has sided in the past with the press. Generally governments are suspected of wanting to curb political speech and investigation, not tales from the bedchamber. Britain rules the sheets, apparently. – For the Hearst-New York Times Syndicate

 

The Joy of Natural Gas, It’s Here Aplenty

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Tired of high gasoline pump prices? Wondering why, with our fearsome energy hunger, all the energy seems to be in the Middle East?

That was yesterday's story.

Almost overnight — well, in a few short years — the energy picture has been changing. We are not energy beggars anymore. We have energy bounty — and that does not include the energy from wind and sun, or the controversial energy from the atom.

Now we have plenty of the most versatile of the hydrocarbons — more versatile than coal, and oil. It is natural gas; and it is going to change the face of America remarkably quickly, whether it is used to make electricity for electric cars or is burned directly in cars.

Natural gas is the new oil, maybe the new gold, and certainly the most exciting energy development in a long time.

Indeed, it is a Cinderella story: a hopeless orphan who is now the belle of the ball. Originally, natural gas was found in conjunction with oil and was regarded as something of a nuisance. It was mostly cursed and “flared” or burned at the well; and it is still flared when there is no way of moving it to market, either in a pipe or as a liquid. Cities favored a low-grade gas made from coal for lamps and heating because coal could be transported by rail.

But natural gas turned out to be a wonderful feedstock for fertilizers and many other manufactures and chemicals. It also demonstrated its superiority over coal gas for heating and cooking, and a network of pipelines spread across the nation.

Even as the usefulness of natural gas spread, so did the political desire to control it. The Federal Power Commission, the predecessor of today's Federal Energy Regulatory Commission, issued what became known infamously as the Permian Basin decision. It said that natural gas in interstate commerce had to have the price regulated by the federal government.

The result was two classes of gas, interstate and intrastate. It was a disaster, coming as the demand for gas was rising.

Then came the 1973 Arab Oil Embargo, which meant that gas was wanted for things oil had been used for up until then. Growing gas demand coincided with severe shortage not only in the pipelines, but also in proven reserves in the ground — low regulated prices had cut into exploration. The outlook for gas was bleak.

By 1977, the Carter administration had declared natural gas a “depleted resource.” There was panic. Newspapers listed all the good things we got from natural gas. Congress decided it was too useful to be burned, and it passed the Fuel Use Act.

Henceforth, gas was to be husbanded. Pilot lights on domestic cooking stoves were banned, as were all decorative uses of flames. Even the eternal flame at Arlington National Cemetery was nearly extinguished.

In 1987 natural gas was deregulated, and the companies started exploring and drilling again. The gas shortage transformed itself into a “gas bubble.” When I told a meeting of Wall Street analysts in the early-1980s that natural gas would again be used for electric generation they were disbelieving. As I left the building, one analyst said to another, “Very droll, but he doesn't know what he's talking about.”

But it did happen, and in a big way; not only was more natural gas being sought, but technology was set to change the amount of gas available and the way it could be used.

The first technological advance was a very efficient, gas-burning machine for utilities, the aeroderivitive turbine. Then came horizontal drilling, which allows a single gas or oil well to stretch out tentacles for miles in every direction. This drilling technology opened up old gas and oil fields for further exploitation and made new ones very profitable.

The final jewel in the natural gas crown was the ability of drillers to start breaking up rocks in the shale band — between 6,000 and 9,000 feet below the surface — in areas that were not before thought to contain gas. The Marcellus field, extending through Pennsylvania, New York, West Virginia and Ohio, may turn out to be the largest shale field currently being developed.

El Dorado enow — except for environmental concern about the chemicals used to break the rock, in a process called fracking. Also, groundwater has been affected in many locations; and there is video of tap water burning.

But proponents of natural gas point out that it has half the greenhouse emissions of coal, and few or no nitrous oxides. Natural gas is set to do for the United States what North Sea oil has done for Britain and Norway.  — For the Hearst-New York Times Syndicate

 

 

How Fear, Greed Factor into the Price of Gasoline

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The fate of the Obama presidency hangs not on a birth certificate or the red ink on the federal budget but by the hose nozzle of your local gas station.

Electoral discontent is measured by the price of a gallon of gasoline. Heading past $4 toward $5, that is a lethal trajectory for President Obama.

Enter the demagogues, especially the clown-in-a-business-suit, Donald Trump. Unfettered by the gravity that goes with facts, Trump says that he would fix the oil price — now around $110 a barrel — by facing down the producers, particularly the Organization of the Petroleum Exporting Countries (OPEC). He told an interviewer on television that he would call OPEC and tell them to pump more or face the consequences. The latter, he did not specify. War? Against whom?

In a compelling book by Leah McGrath Goodman, "The Asylum: The Renegades Who Hijacked the World’s Oil Market," the author lays out the ugly fact that often — in fact, more often as not — the price of oil is set not in Vienna at the headquarters of OPEC, but in downtown Manhattan at the New York Mercantile Exchange (NYMEX).

Tens of thousands of future contracts are traded in nanoseconds at the NYMEX, and the price of oil is set. This price affects not only the price that will be paid when these contracts expire and delivery takes place, but also, according to Goodman, the all-important over-the-counter market, where sellers trade more directly with buyers without government oversight.

Goodman contends that there is little oversight of the NYMEX because the agency charged with the role is the weak and ineffectual Commodities Futures Trading Commission (CFTC), where many staff and commissioners are busy burnishing their resumes so they can cash in later as market executives.

The over-the-counter market is not regulated at all because of a pernicious interference from Congress known as the “Enron Loophole.” How did it get into law? It is one of those pieces of special-interest protection that owes its existence to legislative immaculate conception. It was not in the committee version of the bill; it slipped in along the way without parenthood, but is largely believed to be the work of former Sen. Phil Gramm, R-Texas, whose wife, Wendy, was chair of the CFTC.

In classic theory, a market is where a willing buyer and a willing seller strike a price. In the world of traders, it is something else: It is where volatility is rewarded and myths hold sway.

Today there is no actual shortage of crude oil. Supply and demand, according to those who monitor these things, is in balance. But fear stalks the trading floors because fear is good for traders; and fear is a critical part of the oil price.

Wars and rumors of wars are relished in trading pits. They raise the specter of coming shortage and introduce the instability the traders love. During the electricity shortage in California in 2001, traders, particularly at Enron, sought not only to capitalize on fears of shortage, but also to guarantee shortage by taking generating equipment off line.

Of course, reality must eventually catch up with speculation. The production of oil must meet demand and the price will briefly reach real world equilibrium. This happened in 1986, when the price collapsed because Saudi Arabia opened its spigots after the volatility of the 1970s. Many traders were wiped out and speculative billions were lost.

Some oil industry observers believe that the market is trading on a “fear premium” of about $1 per gallon of gasoline, spooked by the uncertainty in the Middle East and traders exploiting that fear.

Good for Obama. Time for the president to engage in a little market manipulation of his own.

The nation has about eight months of supply of crude oil saved in salt domes, in what is called the Strategic Petroleum Reserve. There is more oil available in the Naval Petroleum Reserve, a set-aside of oil in the ground. Obama needs to say that we are going to start using this oil as soon as it can reach the refineries.

He has to go the whole hog — to set the machinery of using our special reserves in motion. That will humble the traders.

However, any new wars in the Middle East, and all bets are off. Poltergeists would stalk lower Manhattan. – For the Hearst-New York Times Syndicate





More White Mischief

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From the Romans on, wise men, including American humorist Mark Twain and French humanist Michel de Montaigne, have advised: Don't lie unless you have a good memory. This could be updated for conspiracy theorists this way: Don't spout theories of conspiracy unless you have the mind of an historian. Take note, Donald Trump.

Now back to Aug. 4, 1961 and the birth of Barack Hussein Obama in a faraway place, Kenya Colony in East Africa. It is a part of the British Empire that knows that its days as a playground for the English upper class — and often aristocratic playboys and playgirls – is limited. A year and a half earlier, their life in the sun was challenged and the future revealed when Conservative Prime Minister Harold Macmillan told the South African parliament on Feb. 3 that “winds of change” were blowing through Africa.

The settlers on the famous “White Highlands” of Kenya Colony had survived the scandals of the 1930s and early 1940s, when the lover of a particularly beautiful woman, Lady Diana Broughton, was believed to have been murdered by her husband, Sir John Broughton, 30 years her senior. The murder of Josslyn Hay, the Earl of Erroll, took the cover off the aristocrats cavorting in Happy Valley and the famous Muthaiga Club in the capital, Nairobi.

Back in England, where the dark days of World War II were raging, the fun-in-the-sun frolickers were pilloried as a dissolute lot with servants, booze, drugs and a penchant for wife-swapping.

In the 1950s, the brutal Mau Mau uprising by Kenya's Kikuyu led to a loss of faith in the future in all of colonial Africa, including Southern Rhodesia, another British colony with a small white population. Unlike Kenya, which was governed from London, Southern Rhodesia had a greater degree of self- government and was less a playground for wild exiles.

The tone of life in Kenya was summed up by the title of a book about the colony's most famous murder, “White Mischief,” later a movie. Anyway by the time Obama was born, things in Kenya were getting tense.

So in this environment of racial sensitivity, imagine a white American giving birth to a child fathered by an African. The local newspaper, The East African Standard, would have been aghast. Blimpy club men would have sputtered over their Scotch and sodas and their wives would have spilled their tea and moved forward the hour for their evening cocktails, known as sundowners.

The settlers in Kenya may have lived fast but, as in Southern Rhodesia, no issue was more sensitive than white women and black men. In 1957 there was a celebrated case in Southern Rhodesia of a black man, Patrick Matimba, who, while studying in England, had married a white woman from the Netherlands and took her to live in his homeland. The white Southern Rhodesians were enraged. While there might have been many white men who were coupling with black women, the reverse was not tolerated. It terrified the settlers.

Uncomfortably the Matimbas set up house in the only place that they were allowed to, church property in the farming hamlet of Rusape. When Mrs. Matimba suffered a miscarriage, her husband could not visit her in the local white hospital. Around this time a white widow, Mrs. Fletcher Lowe, who had an affair with her African servant, was imprisoned. I covered both stories and knew the players well.

So to those of us who grew up in colonial Africa, it is inconceivable that Obama's mother gave birth to him in Nairobi and that his step-grandmother watched the birth.

More intriguing is how birthers believe that not one but two birth notices were placed in Honolulu newspapers within nine days of Obama's birth. How could that be done without credit cards; the Internet; or in the probability that outside of the American Embassy, not too many people in Kenya knew anything about Hawaii? After all, Hawaii had only been a state for two years and the people of Kenya had other things on their minds, let alone how to post birth notices across two oceans.

No, Donald Trump. The kind of disinformation pedaled by the birthers had a name in Kenya: white mischief.  – For the Hearst-New York Times Syndicate

 

 

 

 

Danger in the Market: The Sharks Have Computers Now

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Jim McTague, Washington bureau chief of Barron's, the stock market newspaper, is as gentle a journalist as pads the halls of Congress or pops into the briefing room of the White House. But he has chosen to poke a tiger with a short stick in his new book, “Crapshoot Investing: How Tech-Savvy Traders and Clueless Regulators Turned the Stock Market into a Casino.”

The book is likely to stir regulators, legislators and traders. It tells a sad and frightening story of inept regulation, congressional good intentions gone wrong, and technological excess.

McTague says a very small number of trading firms, using highly sophisticated computer programs, have upended a once efficient market for the allocation of capital and turned it into a casino operating at electron speed. The losers, he says, are traditional brokers and small investors who

do not stand a chance in a market dominated by trading that moves faster than information can be released to the public. The much-loved New York Stock Exchange “ticker” now lags actual computer trading, McTague says.

Currently, 70 percent of all trades are executed by hugely complex algorithms written in computer code by mathematicians and physicists, who have abandoned their traditional lines of employment for the gigantic rewards of Wall Street.

In a chapter headed “The Road to Ruin,” McTague says, “The history of U.S. investors and their experiences in the equities market has all the earmarks of an abusive relationship, and it will require an eminent psychiatrist several hundred pages to explain why the battered investors return to the market time after time after their previous drubbing, knowing in their hearts that they eventually will be brutalized again.”

The great example of how dysfunctional and dangerous the markets have become is May 6, 2010. It is the day of the “flash crash,” when the so-called high-frequency trading computers lost their electronic minds

There are stories about what triggered that day of disaster; but, in the end, the thing is that it did happen. Computer trading ran away with the market and nearly sank it. In a 10-minute period, many classy blue-chip stocks were nearly wiped out. For example, Accenture, trading at around $42 was reduced to a penny.

When trading was suspended that day, the crafty computers simply moved the trades to other exchanges, such as Frankfurt and London. Eventually most of the lost value was restored, but not the lost confidence.

The computers had outsmarted themselves. Their programs rely not only current trading conditions and knowledge of specific stocks, but also on historical data. “The computers read the newspapers and they have information from historical reporting as well as today's business pages,” McTague says. The problem is they do not have any newspapers from the 1920s; and when the crisis of May 6, 2010 hit, “the computers did not know what to do, so they began liquidating.”

This sad tale begins in the 1970s when Congress, with good intentions, sought to make all stock markets more competitive and the New York Stock Exchange in particular a more open and consumer-accessible place.

In 1975, the reforms were enacted as amendments to the basic securities law of the country. Over the years, the regulatory agencies implemented these reforms. According to McTague, they botched the job.

The reformers also misjudged the impact of computers. Their idea was that they were going to make the markets more egalitarian. Instead, they have favored the greedy few at the expense of the small investor, broker and 401K pensioner.

McTague has no magic solutions, nor does he suggest that people with excess cash stuff it in their mattresses. But he has some tips which he follows himself, including:

  • Do not trade early in the day because that is when most small investors put in their orders, and the sharks are waiting to eat them in the afternoon.

  • Do not leave your research to other people.

  • Be brave and hold on, if you are confident in the stock you have invested in. But do not hesitate to sell it if necessary.

In the short term, computers are making nonsense of the old advice to buy and hold, so investors have to watch their stocks carefully and do their own homework.

Broker-turned-journalist McTague is still trading himself, aware of the dangers. He concludes, “… there is no sure-fire method for a retail investor to beat the market. It has become a shark tank and we are the anchovies. Every time you buy or sell a stock, you are rolling the dice and hoping for a good outcome.” — For the Hearst-New York Times Syndicate

Chronic Fatigue Syndrome: Lives Interrupted

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In 2010, I made more friends than in all of my life. They are scattered across the United States and around the world. But for their sake, I wish they had never heard of me.

Sadly, my new friends know me only because I have taken up their cause. I have written and broadcast about their plight, and they have responded by pouring out their hearts to me.

For very minor service, I have received more gratitude, more praise and more life stories than from anything I have written or broadcast in five decades in journalism.

My sad, suffering new friends are victims of a grossly misnamed disease: chronic fatigue syndrome (CFS). It was once known more robustly as myalgic encephalomyelitis (ME), which at least suggests seriousness even if it isn't quite accurate. Myalgic describes pain in the joints and encephalomyelitis, inflammation in the brain and spinal cord. CFS has no known cure, and varies in intensity during the sufferer's lifetime.

In 1988, the Centers for Disease Control named the disease chronic fatigue syndrome after an outbreak in 1985 at the Incline Village resort on Lake Tahoe, Nev.

As far back as the 18th century there were recorded outbreaks of the disease, which was given various given names. In 1955, there was a major outbreak at the Royal Free Hospital in London.

The 300-case cluster in Nevada is generally recognized to be the largest in the United States. The second-largest cluster occurred in Lyndonville, NY, a northwestern hamlet where 216 cases were confirmed in a population of fewer than 1,000, also in l985.

A Lyndonville physician, David Bell, is regarded as one of the true experts on CFS, as well as one of the most dispassionate in the controversies that swirl around the disease. Bell has resisted pressure from both the medical establishment and patients' groups while retaining their respect.

As I see it, there are four controversies that plague discussion, research and therapies:

  • Is it a psychological disease with severe physical manifestations (a diagnosis favored by the British medical establishment)?

  • Is it caused by the new retrovirus XMRV (first spotted in prostate cancers) as some researchers believe, and nearly all the 1 million patients in the United States pray will lead to a cure?

  • Some charge there is a conspiracy in the medical establishment to downplay CFS out of guilt over past indifference, or pressure from the psychiatric practitioners who are reluctant to surrender jurisdiction.

  • Others fear a threat to the general population — clusters confirm CFS is contagious. But the pathway of the pathogen (air, blood, sexual intercourse, surfaces, food) or how great the risk is unknown.

Thanks to the Harvey Whittemore family — daughter Andrea Whittemore Goad has been a CFS sufferer since childhood — some serious, privately-funded research is being done at the Whittemore Peterson Institute (WPI) in Reno, Nev.

It is from this institute that the most compelling evidence of a retroviral role in CFS has originated. But recently, it has been refuted by British scientists who claim there was contamination in the tests, skewing the results.

Dr. Judith Mikovits of WPI rejects the British conclusions of contamination. She is very confident that she has found XMRV present in a majority of CFS patients, contending that she has used four methods of analysis against one in Britain.

Bell, the hands-on doctor from New York, told me he believes the virus is present. Yet only when XMRV is irrefutably proven to be to blame can the search for a cure take shape.

These are among issues that will be discussed on April 6-7 at a “state of the science” meeting at the National Institutes of Health in Bethesda, Md. But there is no expectation that anything very new will be revealed as the debate rages daily on the Internet.

Deborah Waroff, a gifted New York City author, former securities analyst and CFS sufferer for 22 years, tells the story of her first attack this way: “I have no idea how I got it. I had the symptoms of flu. After a week, thinking I was pretty well, I went back to my normal activities like biking and tennis. Then after a week, I was sick again. This repeated several times that summer [1989], until I got to a point where I was never well again. After a little activity, I would collapse, fold up.” Often, Waroff is bedridden, and nothing has improved permanently.

Her symptoms were classic; fever, dizziness, stomach upset, swollen lymph glands and frequent headaches. She developed cognitive problems such as putting the wrong words in sentences, known as dysphasia.

Waroff introduced me to my new friends and their terrible witness to suffering, abandonment and medical indifference. Their families break up, their spouses and lovers drift off. Infected parents worry for their children. One correspondent told me that they are the “unburied dead.” Others said they were “living in coffins.”

They have no celebrity spokesperson. They have no Washington lobby fighting for research dollars. They have no hope that a cure is just around the corner; and little confidence that government research organizations are trying hard enough, if at all, to find one. To know them is to peer into hell. — For the Hearst-New York Times Syndicate



Obama’s Empty Gasoline Tank

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There is a piece of doggerel which goes:

They said it couldn’t be done.

So I went right to it — that thing they said

Couldn’t be done.

And I couldn’t do it.

And that is the way it has been with presidents since the 1973 oil crisis. All of them – from Richard Nixon to Barack Obama, who has just joined the club — have wrung their hands and exhorted us to use less oil in general and less foreign oil in particular.

Nixon had his commerce secretary, Peter G. Peterson (he of enormous wealth these days), promise far reaching and revolutionary “initiatives” to tame our thirst for oil. But Nixon was out of office before these palliatives were revealed.

Gerald Ford, caught up in vicious inflation, partly linked to the cost of oil, launched the Energy Research and Development Administration (ERDA), combining the Atomic Energy Commission, the Office of Coal Research and other energy entities in the federal government. ERDA initiated many programs, while politicians invoked the Manhattan Project and the Apollo 11 moon landing. But the search for the Fountain of Eternal Energy failed.

Jimmy Carter wanted not only to solve the energy challenge, but to be seen to be solving it. Ergo, he expanded ERDA into the Department of Energy (DOE) and created a separate Synthetic Fuels Corporation. The latter failed after a short and unhappy life. No oil reached the pumps.

When the price of oil collapsed in the 1980s, so did hopes for many of the alternative energy sources, including ocean thermal gradients and flywheel energy storage.

To its credit, though at great cost, DOE, through its chain of national laboratories, kept searching. The result has been evolutionary improvements in many fields, and some really revolutionary ones in how we find oil and drill for it; these include seismic mapping, new drill bits and horizontal drilling.

These evolutionary developments brought more oil to market and have contributed to the recent improvement in domestic production that Obama likes to point out. It has enabled us to cut our imports slightly, so they now stand at 11 million barrels per day out of consumption of 20 million barrels per day.

Obama wants us to cut those imports by a third. To do this, he has no magic bullet.

In fact, he has no ammunition: solid numbers and research. His speech at Georgetown University was founded more on hearsay than science or economics.

Because he criticized them for taking out leases they have not drilled, the oil industry disliked the oil component of the speech, but thrilled at the emphasis on natural gas. When it comes to leases, the industry hankers not for those it holds, but for the plums that have not been leased for political reasons:  the eastern Gulf of Mexico and Alaska.

Sadly, Obama seemed to have learned the wrong lesson on his recent trip to Brazil because he is brimming with enthusiasm for ethanol. In Brazil, this is made from sugar cane, of which the Brazilians have a lot and cheap labor to farm it. Here, it is made from corn with devastating results on all the food products that come from corn. George W. Bush shoved the country down that slippery slope, and Obama wants to add more lubricant.

Another Obama tool is mandated fuel-economy standards. Problem is the market will start circumventing the regulations. It works like this: If you mandate 40-miles-per-gallon fleet average instead of floods of new small hybrids of the Toyota Prius type, the market will supply small, regular cars and large, luxury hybrids. Better, but not everything the president might want.

Real oil savings come with high prices dictated either by taxes or shortage. Presidents, however, have to placate voters by holding down the price of oil, signaling that it is all right to consume. That leaves presidents — and Obama has just proved it — with that last resort of the impotent in office: exhortation. — For the Hearst-New York Times Syndicate