1. With “Ignoring Reality Has a Price“, the NY Times attempts to analyze how bad of a hole we’re in. “All told, the Federal Reserve has pumped $800 billion into the financial system” and that doesn’t include buying short-term debt, nor does it include “any of the money the Treasury Department is laying out, like the $700 billion bailout fund or the $200 billion” to prop up Fannie Mae and Freddie Mac.

   After 14 months of crisis, the federal government – meaning you and me – has put serious money on the line. As a point of comparison, the entire annual federal budget is about $3 trillion.

   Just how are we going to pay for all this?

   The short answer is that the budget problems the country seemed to have a year ago are now even worse. Next year’s deficit (relative to the economy’s size) will probably be the biggest since 1992, and maybe since 1983. Taxes will have to rise or government spending will have to fall, if not both. Trying to contain the mess created by a bubble no doubt costs serious money.

   And it gets worse from there. I think we Americans are really going have to take a look at our defense spending on offensive war capacity and make serious cutbacks. Our failing economy no longer can support having the largest (by serveral factors) armed force in the world.

Four at Four continues with a federal judge ordering 17 men released from Guantanamo Bay, an update from Afghanistan, and news that we’ve stopped evolving and why that’s a good thing.

1. The Washington Post reports Studies lift hopes for Great Lakes wind turbine farms. The Michigan State University Land Policy Institute “analyzed wind potential in the Great Lakes and found that 30,000 turbines off Michigan’s coasts could produce 321,000 megawatts of energy.”

   But it is unlikely that the 100,000 wind turbines needed will ever rise from the Great Lakes off Michigan’s shores, “because of the cost and environmental and other considerations.”

   The production estimate of 321,000 megawatts cited in the Michigan State study includes turbines at all depths. Existing offshore wind turbines are in water 197 feet deep or less. At that depth, the study says, 103,000 megawatts could be generated with 33,861 turbines. Concerns about environmental impacts and opposition from residents would significantly reduce that potential. But, said study co-author Soji Adelaja, that still means a lot of potential wind power.

   The drawbacks are not stopping some communities from acting. In Ohio, Cuyahoga County has proposed a “wind farm in Lake Erie several miles from Cleveland”. The county is preceeding with an ongoing $1+ million study on the project’s feasibility. “If the study continues to yield positive findings, construction of two to 10 wind turbines and a research station could start in about two years.”

Four at Four continues with a Yahoo employee in India being a suspected terrorist, The resurgence of Latin in NY schools, and Seattle’s sidewalk cafes.

1. CNN reports Paulson names bailout chief. Treasury Secretary Henry Paulson had appointed Neel Kashkari to oversee the $700 billion dollar bailout. “Kashkari, a former executive at Goldman Sachs, is the assistant Treasury secretary for International Economics and Development.”

   The Deal Journal blog at the Wall Street Journal has some background in Meet Neel Kashkari: The Man With the $700 Billion Wallet. “The full appointment would need Senate confirmation, which is unlikely to come given the short remaining tenure in this Administration. The move essentially puts a new title on what Kashkari he has been doing since he joined Treasury in 2006-examining the consequences of an economic housing fallout.”

   Kashkari… is an Indian-American who has a few things in common with Paulson… Both are former Goldman Sachs bankers, though Kashkari, at 35 years old, is much younger and was just a vice president-level banker in Goldman’s San Francisco technology banking effort when Paulson tapped him to join Treasury. Both also are Midwesterners. Kashkari grew up in Stow, Ohio, and earned a bachelor’s and master’s degree in engineering from the University of Illinois at Urbana-Champaign. Paulson was raised in Barrington Hills, Ill. And both sport similar hairstyles- or lack thereof…

   Kashkari didn’t take a conventional route into banking. He started out as an aerospace engineer… He earned an M.B.A. at the University of Pennsylvania’s Wharton School of Business…

   Paulson likes to surround himself with people he’s comfortable with: people, mostly, from Goldman Sachs… Kashkari’s appointment is another example of how deep those Goldman Sachs ties go. In fact, Paulson himself was recruited by a former Goldman Sachs banker: former White House Chief of Staff Josh Bolten.

   Doesn’t putting a person with only 6 years of financial experience in charge of $700 billion ring any Iraq-type alarm bells!?

   Meanwhile, the NY Times reports the Credit crisis drives stocks down sharply. The Dow dipped below 9,600 points before pulling back.

   In Washington, executives of Lehman Brothers were testifying before the House Oversight and Governmental Reform Committee. The NY Times reports Lehman managers are portrayed as irresponsible. “One Lehman document among thousands reviewed by the House committee showed that four days before the bank filed for bankruptcy protection, Lehman’s compensation committee was asked to grant $20 million in ‘special payments’ for three executives who were leaving”.

Four at Four continues with extinction projections, planning for climate refugees, and Iraq still not safe.

1. The NY Times reports the U.S. sheds 159,000 jobs, making September the 9th straight monthly drop in employment and “the worst month of retrenchment in five years”. 760,000 jobs have been eliminated in the U.S. since the beginning of 2008, according to the Labor Department. “Most economists have concluded that, even in the rosiest outlook, the economy will continue to struggle well into next year.”

   “This is an economy in recession, and every dimension of the report confirms that,” said Ethan S. Harris, an economist at Barclays Capital. “This has been preceded by a slow-motion recession. Now we’re going into the full-speed recession that will last somewhere between three and five quarters.”

   In their coverage of the drop in employment, the LA Times reports, “The bad employment report was expected to heighten pressure on Congress to pass an economic rescue package designed to ease the credit crunch that has frozen Wall Street and shut off credit flows to businesses across the country.”

   A story from Bloomberg news suggests the earlier Paulson-Bernanke Steps Created ‘Big Ripples’ that lead to the rescue. “The $700 billion rescue that the U.S. House considers today reflects the unintended consequences of decisions made by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke since March.“

   Each decision to bail out or not created more instability, leading to further runs on securities firms, banks and insurers.

   “Every time you tinker with this delicate system even small changes can create big ripples,” said Dino Kos, former head of the New York Fed’s open-market operations and now a managing director at Portales Partners LLC in New York…

   The Treasury is gambling that the $700 billion plan now being debated in Congress will kick-start capital markets and lending. If the government is a buyer of mortgage securities, they will trade higher, Paulson told Congress. If the banks are cleansed of bad assets, they will find new capital and the cycle of lending will start again.

   Investors say once again the government’s big-footing in the financial markets could create more problems than it solves.

   Officials “have designed a financial bailout plan that is not only misdirected, but may further exacerbate problems in the housing market,” says Eric Hovde, chief investment officer at Hovde Capital LLC, which manages $1 billion in financial services stocks. “Just as foreclosure sales are pressuring housing prices today, government sales will only make matters worse.”

   The House passed the Wall Street bailout by a 263-171 vote. McClatchy Newspapers report Maybe $64 million for Washington D.C. politicans explain the bailout vote.

   Since 2001, eight of the most troubled firms have donated $64.2 million to congressional candidates, presidential candidates and the Republican and Democratic parties, according to data from the nonpartisan Center for Responsive Politics…

   Both political parties have become beholden to Wall Street.

   How the bailout will positively impact job creation and rescue the U.S. economy remains to be seen. Personally, I am highly skeptical.

Four at Four continues with the military consequences to shipping U.S. manufacturing jobs to China, what the Republicans are up to in the final weeks of the presidential campaign, Canada’s Green Party, and a rather depressing story about penguins.

So in the 2008 vice presidential debate, Alaska Governor Sarah Palin said:

Well , first, McClellan did not say definitively the surge principles would not work in Afghanistan. Certainly, accounting for different conditions in that different country and conditions are certainly different. We have NATO allies helping us for one and even the geographic differences are huge but the counterinsurgency principles could work in Afghanistan. McClellan didn’t say anything opposite of that. The counterinsurgency strategy going into Afghanistan, clearing, holding, rebuilding, the civil society and the infrastructure can work in Afghanistan. And those leaders who are over there, who have also been advising George Bush on this have not said anything different but that.

And you know, she’s absolutely correct. However, she is only correct because she blew the name of the commanding general in Afghanistan.

1. In the proving ground for Internet spying, the NY Times reports Surveillance of Skype messages has been found in China. “Canadian human-rights activists and computer security researchers has discovered a huge surveillance system in China that monitors and archives certain Internet text conversations that include politically charged words.”

   Researchers in China have estimated that 30,000 or more “Internet police” monitor online traffic, Web sites and blogs for political and other offending content in what is called the Golden Shield Project or the Great Firewall of China…

   The list includes words related to the religious group Falun Gong, Taiwan independence and the Chinese Communist Party, according to the researchers. It includes not only words like democracy, but also earthquake and milk powder. (Chinese officials are facing criticism over the handling of earthquake relief and chemicals tainting milk powder.)

   The list also serves as a filter to restrict text conversations.

   And make no mistake, if the Chinese government can snoop text messages, then the U.S. government will not be far away.

   In 2005, … the National Security Agency was monitoring large volumes of telephone and Internet communications flowing into and out of the United States as part of the eavesdropping program, intended to hunt for evidence of terrorist activity, that President Bush approved after the Sept. 11 attacks.

Four at Four continues with another deadly day in Iraq, bailout grows by $110 billion in tax cuts, and the HIV virus found to be 100 years old.

A couple days ago, the permanent secretary of the Swedish Academy — the body that decides who will be the laureate for the Nobel Prize in Literature — stated Europe was the center of the literary world and America was “too isolated, too insular”.

This is what Horace Engdahl said in an interview he gave exclusively to the AP:

“Of course there is powerful literature in all big cultures, but you can’t get away from the fact that Europe still is the center of the literary world … not the United States.”

1. Our involvement in Afghanistan is not going to end prettily. The AP reports Top U.S. general in Afghanistan wants more troops ASAP. Gen. David McKiernan wants more troops and other aid “as quickly as possible” because, in my assessment, NATO is losing the occupation.

   Speaking to Pentagon reporters, the head of NATO forces in Afghanistan said there has been a significant increase in foreign fighters coming in from neighboring Pakistan this year – including Chechens, Uzbeks, Saudis and Europeans. And he said he needs the more than 10,000 additional forces he has requested, in part, to increase his military campaigns in the south and east where violence has escalated.

   While the AFP adds General says reconciling with Taliban a political decision. McKiernan has now called “for enlisting tribes to help pacify the country and did not rule out reconciliation with ousted Taliban leader Mullah Mohammad Omar.”

   “Asked whether dealing with the man who harbored Al-Qaeda leader Osama bin Laden was beyond the pale, McKiernan said, ‘I think that’s a political decision that will ultimately be made by political leadership.'” So, will more U.S. troops really help then?

   Meanwhile the LA Times reports that a Trio of warlords blamed for surge in Afghanistan violence.

   The escalating insurgency in Afghanistan is being spearheaded by a trio of warlords who came to prominence in the CIA-backed war to oust the Soviets but who now direct attacks against U.S. forces from havens in Pakistan, according to U.S. military and intelligence officials.

   Militant groups led by the three veteran mujahedin are behind a sharp increase this year in the number and sophistication of attacks in Afghanistan and pose a major challenge to President Bush’s hope of stabilizing the country by deploying thousands of additional troops…

   The three warlords are Mullah Mohammed Omar, the former leader of the Taliban government in Afghanistan; Gulbuddin Hekmatyar, an Islamic hard-liner who briefly served as prime minister in the 1990s before ordering his forces to bomb the Taliban-run capital; and Jalaluddin Haqqani, a onetime Taliban Cabinet minister whose tribal group has accounted for some of the most brazen attacks this year.

   U.S. officials said there was little evidence of substantial collaboration among the three, though there are indications that despite their past differences, they communicate and occasionally share information and resources.

   The warlords are generally not blamed for a surge of violence in Pakistan. Instead, they are seen as exporters of violence to Afghanistan…

   The three warlords have long-standing ties to Pakistan’s powerful spy service, the Inter-Services Intelligence agency, which U.S. officials have accused of collaborating with insurgent groups and tipping them to American strikes.

   The Taliban does not fight alone against NATO forces in Afghanistan.

Four at Four continues the Fall of Wall Street’s dominance, Palin’s Big Oil-backed vendetta against polar bears, and trainspotting.

1. The Chicago Tribune reports Obama-sponsored mercury-storage bill sent to President Bush. The legislation would ban export of mercury as of 2013.

   Stockpiles of toxic mercury kept by industry soon will be stored safely in the United States instead of ending up on the world market where it might pollute the environment.

   Under bipartisan legislation Congress sent to President George W. Bush Monday for his expected signature, mercury exports would be banned in 2013 and the Energy Department would be required to store the heavy metal permanently.

   The bill’s chief sponsor, Sen. Barack Obama, introduced the bill in response to a 2005 Tribune series about mercury contamination in fish.

2. McClatchy Newspapers report Those who remember the Depression fear its return. “For those who lived it, the Great Depression has been seared into them like a scar or worn like a talisman they can touch any time they want… At the depths of the Depression, over one-quarter of the American workforce was out of work.”

   Geneva Spickard is pretty sure America today couldn’t do again what America did to live through its hardest economic times and reign as the financial power it has.
   

   Turner Hinkle agrees. We simply don’t know how.

   “I’m afraid if the next depression that hits is like the one in the ’30s, we would not long have a democracy,” says Turner Hinkle. “I don’t think the government can let it be. People are too used to having everything handed to them.”

   At 91, she is plagued by arthritis of the spine. She is proud of her two sons, one who became a stockbroker, one who became a doctor.

   But a woman who was never afraid during the Depression is afraid now. She is afraid for her great grandchildren and for the world they have been born into.

   She calls it “cruel.”

   Then adds, “God help them.”

Four at Four continues with young Chinese losing their religion and the Brazilian government facing criminal charges for Amazon deforestation.