The U.S. Economy: Stand by for more worse news

Steve Forbes Interview: A “Sinning” Federal Reserve Is “Undermining The Dollar”

Steve Forbes has had enough of the Federal Reserve and its "sinning" policies to undermine the dollar. In this brief interview with Birch Gold Group, the publisher and CEO of Forbes, Inc. exposes the damage that the central bank has created, "Bernanke was a disaster...has totally mucked up the credit markets." Blasting Janet Yellen "who needs to go to re-education camp," Forbes explains why he believes so strongly in the gold standard, and the one single scenario under which he would ever sell his gold.

I'm not so much interested in what Forbes has to say, per say, in as much as this serves as yet another example of the crack-pottery that passes itself off as a bonafide "science", that is to say: Economics. It reminds me of psychologists, you have Cognitivism, Behavioral, the Psychoanalytic schools of Freud and neofreudian, various Systems psychology, Functionalism, Humanistic/Gestalt.... Likewise with Economics, there's Classical, Keynesian, Monetarist, Neoclassical, New classical, Austrian and etc....

Want to know where you don't have 50 totally and fundamentally different schools of thought? Biology, Chemistry, Genetics, Physics. Are there disagreements? Yes, of course. But not at the fundamental level.

Bernanke was literally clueless right up until the GFC was upon us. Does this happen in Engineering? Chemistry? No. Where it does happen is in Psychology. Take the Diagnostic and Statistical Manual of Mental Disorders, where homosexuality was at one time a mental disorder. Where millions of Americans children are diagnosed with varying degrees of ADHD and parental bonding issues (nevermind most didn't spend hardly any time with their parents, where hit as a form of 'discipline' and then shoveled into insane asylum Government Schools). Well well well, the Director of the National Institute of Mental Health (NIMH), Dr. Thomas Insel, just stated the DSM5 (the Psychologists "Bible") is useless.

It may take decades and decades, and perhaps the USA will be an even bigger shithole than it's already become. But, sooner or later reality catches up. As far as I'm concerned, the USA economically (which is to say, socially and morally) collapsed decades ago.
 
bernankeput.jpg
To avoid reposting the photo, Billy T is editing to ask:
Is Ben's prayer:
(1) "Dear god thank you for giving me the wisdom to see the US (and world) through what could have been an unprecedented economic disaster."
OR
(2) "Dear god forgive me for what I did. I did best I could and certainly was not trying to send world into an unprecedented economic disaster."
 
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michael said:
Bernanke was literally clueless right up until the GFC was upon us. Does this happen in Engineering? Chemistry? No.
Yes, it does. In engineering with river dams and nuclear power and crude oil extraction, in chemistry with tetraethyl lead gasoline additives and trans fats and CFCs and phthalates, in biology with pesticides and organism transfers and fire suppression, ( and we'll be the luckiest people ever to walk this planet if the oblivious proliferation of GMOs doesn't bite us in the ass).

What do these things all have in common? The same thing the dismissal of Keynesian economic analysis and its centuries of data support as well as directly successful Depression application now features - enormous financial pressure on public and scientific discourse by powerful corporate interests.
 
bernankeput.jpg
To avoid reposting the photo, Billy T is editing to ask:
Is Ben's prayer:
(1) "Dear god thank you for giving me the wisdom to see the US (and world) through what could have been an unprecedented economic disaster."
OR
(2) "Dear god forgive me for what I did. I did best I could and certainly was not trying to send world into an unprecedented economic disaster."

Obviously #1, Chairman Bernanke did a great job.Two, Bernanke wasn't praying. He was sitting before a congessional committee.
The photo has been altered to give the appearance of Christian prayer. bernanke by the way is Jewish.
 
Yes, it does. In engineering with river dams and nuclear power and crude oil extraction, in chemistry with tetraethyl lead gasoline additives and trans fats and CFCs and phthalates, in biology with pesticides and organism transfers and fire suppression, ( and we'll be the luckiest people ever to walk this planet if the oblivious proliferation of GMOs doesn't bite us in the ass).

What do these things all have in common? The same thing the dismissal of Keynesian economic analysis and its centuries of data support as well as directly successful Depression application now features - enormous financial pressure on public and scientific discourse by powerful corporate interests.
No it doesn't and you'll have to elaborate better with your examples.

Economics is behavioral psychology across populations. Jesus, psychologists can't even agree it's useful for a single individual let alone across swaths of the population. Economists can not utilize the Scientific Method. The most they can do is model past events. While biologists and chemists and physicists do create models - they also repeat experiments under as identical as possible conditions with controls and specific variables. There's no 'control' for the economy and there's no repeating it. Which is why the Federal Reserve chairman uses asinine words like 'animal spirits' to describe the Global Financial Crises - along with other 'Economic Phenomena'. Could you imagine if biologists explained evolution as 'animal spirits'?! Or a chemist attempting to explain a chemical reaction as not having enough 'animal spirits'. The ONLY other fields that uses these types of non-scientific expressions is psychologists and sociologists. Which is why you'll also hear Federal Reserve Chairmen/women use "Economic Forecasts".

This is a simple scientific fact.


As for your examples, such as transfats - there's a reason why that information isn't scientifically known. We morally do not perform experiments on humans. But, if we did, we'd discover the answer pretty quickly. Thus, transfats is an example of what happens when you cannot utilize the scientific method. As a matter of fact, all of your apparent examples suffer from similar restrictions and some simply make no sense in context.

GMO proliferation - what is these even supposed to mean? That GMO's proliferate? Yes? And? I bet they don't do so because of 'animal spirits'.
 
No it doesn't and you'll have to elaborate better with your examples.

Economics is behavioral psychology across populations. Jesus, psychologists can't even agree it's useful for a single individual let alone across swaths of the population. Economists can not utilize the Scientific Method. The most they can do is model past events. While biologists and chemists and physicists do create models - they also repeat experiments under as identical as possible conditions with controls and specific variables. There's no 'control' for the economy and there's no repeating it. Which is why the Federal Reserve chairman uses asinine words like 'animal spirits' to describe the Global Financial Crises - along with other 'Economic Phenomena'. Could you imagine if biologists explained evolution as 'animal spirits'?! Or a chemist attempting to explain a chemical reaction as not having enough 'animal spirits'. The ONLY other fields that uses these types of non-scientific expressions is psychologists and sociologists. Which is why you'll also hear Federal Reserve Chairmen/women use "Economic Forecasts".

This is a simple scientific fact.


As for your examples, such as transfats - there's a reason why that information isn't scientifically known. We morally do not perform experiments on humans. But, if we did, we'd discover the answer pretty quickly. Thus, transfats is an example of what happens when you cannot utilize the scientific method. As a matter of fact, all of your apparent examples suffer from similar restrictions and some simply make no sense in context.

GMO proliferation - what is these even supposed to mean? That GMO's proliferate? Yes? And? I bet they don't do so because of 'animal spirits'.

Your ignorance is showing again Michael. I keep hoping one day I will read one completely honest, factual and rational post from you.
 
michael said:
No it doesn't and you'll have to elaborate better with your examples.
Yes it does, and my examples were of such occurrences - public policy confused by supposed "schools of thought" in technical fields which were actually propaganda and marketing operations, financed and otherwise supported by capitalistic corporate interests to protect their power and money. I could go on - cigarette addiction, carbon dioxide emissions, railroad and post office governance, landscape maintenance and restoration, mine tailing management, automobile issues of a dozen kinds, computer software liability and design, etc etc etch - corporate corruption of scientific and technical information presentation to policy makers is quite common in almost all fields of research.

michael said:
Economics is behavioral psychology across populations.
And game theory, demographic analysis, geographical analysis, physical analysis, etc. Or do you claim that the production efficiencies of scale and division of labor are matters of psychological perception only?
michael said:
Economists can not utilize the Scientific Method. The most they can do is model past events. While biologists and chemists and physicists do create models - they also repeat experiments under as identical as possible conditions with controls and specific variables. There's no 'control' for the economy and there's no repeating it.
You are repeating, word for word, a common creationist description of the nature of scientific inquiry underpinning their denial of evolutionary theory. That's your level of analysis - creationism, before the "sophistication" of Intelligent Design vocabulary.

michael said:
As for your examples, such as transfats - there's a reason why that information isn't scientifically known. We morally do not perform experiments on humans.
The reason the effects of the trans fats produced by hydrogenating cheap oils for industrial scale food production were not researched and "known" in good time was that powerful and wealthy capitalist corporations obstructed the acquisition and dissemination of such knowledge, by threat and slander and bribery and media manipulation and political influence. If you don't like that example, learn from the example of leaded gasoline.

Just as they are still doing with basic economic knowledge as we attempt to handle the disastrous crash of one of their enthusiams (Lehman Bros exec internal email, in the last year of its operations: "God help our fucking scam"), and basic biological knowledge as they convert our food supply to their choice of GMOs, and so forth.
 
Obviously #1, Chairman Bernanke did a great job.Two, Bernanke wasn't praying. He was sitting before a congessional committee.
The photo has been altered to give the appearance of Christian prayer. bernanke by the way is Jewish.

We're very fortunate that Chairman Bernanke was at the helm during the financial crisis.
 
Economics is behavioral psychology across populations. Jesus, psychologists can't even agree it's useful for a single individual let alone across swaths of the population. Economists can not utilize the Scientific Method. The most they can do is model past events. While biologists and chemists and physicists do create models - they also repeat experiments under as identical as possible conditions with controls and specific variables. There's no 'control' for the economy and there's no repeating it. Which is why the Federal Reserve chairman uses asinine words like 'animal spirits' to describe the Global Financial Crises - along with other 'Economic Phenomena'. Could you imagine if biologists explained evolution as 'animal spirits'?! Or a chemist attempting to explain a chemical reaction as not having enough 'animal spirits'. The ONLY other fields that uses these types of non-scientific expressions is psychologists and sociologists. Which is why you'll also hear Federal Reserve Chairmen/women use "Economic Forecasts".

This is a simple scientific fact.

Unfortunately for you the world does recognize economics as a science, and equally unfortunate for you your ideology does not survive and cannot survive scientific scrutiny. That is why you spend so much time spewing misinformation and attempting to discredit economics. Economists do more than model past events, they model future events as well. And it works and it is valued. That is why the world is heavily reliant on economic forecasts produced by the Federal Reserve, the World Bank, the International Monetary Fund, the Congressional Budget Office, etc.

I am rather perplexed as to why you think the use of the term “animal spirits” disqualifies the field of economics as a science. Animal Sprits was a term Keyes used to describe human instincts and irrational behaviors. Economics is a social science. It studies humans and how can one study humans without recognizing human instincts and behaviors? You cannot predict those behaviors if you fail to even recognize them. Coincidentally, that is one of the problems with your particular ideology; you don’t recognize human instincts and behaviors. As we have discussed on numerous occasions, libertarianism and communism fail to recognize and are inconsistent with basic human behaviors. That is why every libertarian precept ends with an implied “and then magic happens”. Libertarianism and communism assumes people will stop behaving like people and everything is known and nothing changes. I have never seen a chemical reaction behave irrationally. However I have witnessed irrational human behaviors many times over the years, including our little discussion over the years.
 
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Yeah well Forbes is a trust fund baby who has never had to work a day in his life. And if you were foolish to take his investment advice seriously you would be in dire straits. But hey, Forbes doesn’t need to invest; he is a trust fund baby. And that is why no one with any brains and a decent business education takes Forbes seriously.

I'm not so much interested in what Forbes has to say, per say, in as much as this serves as yet another example of the crack-pottery that passes itself off as a bonafide "science", that is to say: Economics. It reminds me of psychologists, you have Cognitivism, Behavioral, the Psychoanalytic schools of Freud and neofreudian, various Systems psychology, Functionalism, Humanistic/Gestalt.... Likewise with Economics, there's Classical, Keynesian, Monetarist, Neoclassical, New classical, Austrian and etc....

Want to know where you don't have 50 totally and fundamentally different schools of thought? Biology, Chemistry, Genetics, Physics. Are there disagreements? Yes, of course. But not at the fundamental level.

Actually, you are not being honest, either that or you are being stupid or some combination thereof. Neoclassical economics was a body of economic theory that was developed more than a century ago. And much of it endures today. This may come as a surprise to you, but theories evolve as evidence accumulates. There was a time, more than a century ago, when physicians believed in bloodletting. As knowledge accrues, theories and models evolve and that occurs in any science. The Standard Model of physics has evolved and it continues to evolve, that doesn’t mean physics is not a science.

Your problem and it is a big problem, is that your ideology rapidly melts away when confronted with empiricism and reason. It is heavily reliant on magic as has been discussed ad nauseam with you over the years. Every libertarian ideological precept ends with an implied, “and then magic happens” statement.

And as Ice has said, your so called schools like Austrian, Stockholm, etc. evolved almost a century ago and have been roundly debunked. They only stay alive because wealthy trust fund babies like the Koch brothers and Forbes use their wealth to keep them alive to aid them in their rent seeking endeavors.

Bernanke was literally clueless right up until the GFC was upon us. Does this happen in Engineering? Chemistry? No. Where it does happen is in Psychology. Take the Diagnostic and Statistical Manual of Mental Disorders, where homosexuality was at one time a mental disorder. Where millions of Americans children are diagnosed with varying degrees of ADHD and parental bonding issues (nevermind most didn't spend hardly any time with their parents, where hit as a form of 'discipline' and then shoveled into insane asylum Government Schools). Well well well, the Director of the National Institute of Mental Health (NIMH), Dr. Thomas Insel, just stated the DSM5 (the Psychologists "Bible") is useless.

Yeah it does happen in engineering and chemistry. Bridges and homes have collapsed because of engineering flaws. Chemical engineering plants have blown up because of chemical engineering mistakes. They happen all the time. It’s just they don’t make the evening news that often. A few years ago, a chemical plant near where I lived blew up. It made local news briefly, but it never made national news. And that incident occurred in a heavily populated metropolitan area. And in each case the responsible engineers never saw the disaster coming.

And by the way, the field of psychology has come a long way over the course of the last century. Decades ago, about 35 years ago, a finance professor once told my class about jury consultants (i.e. psychologists), they are damn good at predicting human behavior. They are uncanny in their accuracy, but it isn’t magic. It’s science.

One final point here, you are mixing psychology and psychiatry. The two are different. Psychologists don’t shovel people into insane asylums. Policemen do, psychiatrists do, and once there psychiatrists treat the mentally ill. Psychiatrists are physicians. Psychologists are not.

It may take decades and decades, and perhaps the USA will be an even bigger shithole than it's already become. But, sooner or later reality catches up. As far as I'm concerned, the USA economically (which is to say, socially and morally) collapsed decades ago.

Well yeah, except for all the hard data that says otherwise. The US does face significant challenges, and many of them have been caused by people like you.
 
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And game theory, demographic analysis, geographical analysis, physical analysis, etc.

[video=youtube;9QpD64GUoXw]https://www.youtube.com/watch?v=9QpD64GUoXw[/video]

Ben Bernanke (2005)
"We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though."

Ben Bernanke (2005)
With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly.

Ben Bernanke (2006)
Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise.

Ben Bernanke (2007)
At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.

Ben Bernanke (2008)
The Federal Reserve is not currently forecasting a recession.

Ben Bernanke (16 weeks from the GFC)
The GSEs are adequately capitalized. They are in no danger of failing.


John Maynard Keynes (1936)
Animal spirits
From The General Theory of Employment, Interest and Money

Oh, that title may sound a little familiar, that's because Keyne's pretended his idiotic ideas (which just so happen to appeal to the notion that the State, and those that run it, are 'needed' to keep the economy running smoothly - you know, using Economic "Science" [which won him 1st Baron titled by the State for his support]) were are the same as those found in real Science: "The General Theory of Relativity". After a good solid two generations of Government School "Education" most Americans in 1936 were simplistic morons fully conditioned to accept the State, not as it's Servant, but as it's Leader. Which is why we had to invade Korea, Vietnam, Iraq two times - killing and murdering women and raping children the whole time. It's why the US Murdertary is the largest polluter in the history or humankind, consumes the most of our limited energy, levied trillions of dollars of debt to fight phony "Cold Wars" and "Wars on Terror" while the Civil Police fought "Wars on Drugs".

In short, you are a lost cause. The only viable solution is to wait for your entire generation to fully die off. Then we'll have to wait for another couple generations to grow up in an interconnected world on an internet that makes world wide communication simple and slowly, as human interactions become more and more complex, and as Government Schools are replaced by actual Learning and Education, we'll get the so-called change "We Can Believe In".

Not by electing some dumb-arse POTUS, not by creating more Agencies, but by ignoring them - All.

You needn't worry, this isn't going to happen in your lifetime. No, in your lifetime I suspect the old will be placed into Day Supervision Centers, Government Certified and run of course - something akin to a Government Hospital. Slightly better than a Government Slum Housing Project, but not by much, and in many ways worse. At least, that'll be the fate of those without loving families. We'll also get those Public Hospitals you want. They'll kill a lot more Amooorikkkans. But, meh, that's they way Amoorikkkans like it. Being told what to do and how to do it. It makes them feel 'safe' knowing their Political Masters have it all under control with their magic words like Hope, Change, Fair, Right, Progressive, etc....


So, onwards and downwards. Let's sell more debt on the functional illiterate and their children. More wars. More rules. Less privacy. Less freedoms.
 
http://news.yahoo.com/southwest-braces-lake-mead-water-levels-drop-095930749.html said:
A projected level of 1,075 feet in January 2016 would trigger cuts in water deliveries to Arizona and Nevada. At 1,000 feet, drinking water intakes would go dry to Las Vegas, a city of 2 million residents and a destination for 40 million tourists per year that is almost completely dependent on the reservoir.

That has the Southern Nevada Water Authority spending more than $800 million to build a 20-foot-diameter pipe so it can keep getting water.

The region is also stressing water conservation, prohibiting grass lawns for new homes and fountains at businesses. ... But severely restricting water use for swimming pools or lawns in a city like Phoenix wouldn't make much difference, said Kathryn Sorensen, the city's Water Services Department director, because conservation efforts need to be applied across the western U.S.
Sorry this 28 July 2014 photo is so small
d338ee608d90941f5c0f6a7067001c7a.jpg
but compare to one below to see how rapidly lake Mead is going dry in less than 2 years!
Also note that as the lake's surface area shrinks, every acre foot of water removed drops the lake level more than the previous acre foot removed did.
Watch this video: http://news.yahoo.com/southwest-braces-lake-mead-water-levels-drop-095930749.html to see some of the economic damage already done, but much worse is soon to come.
{part of November 2012 post here: http://www.sciforums.com/showthread.php?105212-The-U-S-Economy-Stand-by-for-more-worse-news&p=3215891&viewfull=1#post3215891} ... But large, long-term, great-benefit projects are not possible in the US. For example:
LrgDSC_5097.jpg
Scripps Institution of Oceanography / University of California, San Diego:
".. There is a 50 percent chance Lake Mead, a key source of water for millions of people in the southwestern United States, will be dry by 2021 if climate changes as expected and future water usage is not curtailed, ... Without Lake Mead and neighboring Lake Powell, the Colorado River system has no buffer to sustain the population of the Southwest through an unusually dry year, or worse, a sustained drought. In such an event, water deliveries would become highly unstable and variable, ..." From: http://scrippsnews.ucsd.edu/Releases/?releaseID=876

If the US were as well run economically as China is, then this foreseeable disaster could be avoided. - Re-filling Lake Mead & Lake Powell with excess Great Lakes water is possible, for a Chinese type of government with long range planning capacity. This year´s drought, should be taken as warning that LA, etc. may lack water - an economic and humanitarian disaster. Unfortunately, the US Congress and Administration is at least 90% trained as lawyers instead of more than 95% trained as engineers as China´s leadership is. As a general rule: lawyers make problems whereas Engineers solve them. ...

Found larger 28 July 2014 photo:
667850e48f169b1f5c0f6a70670015ec.jpg
 
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Re-filling Lake Mead & Lake Powell with excess Great Lakes water is possible
Yes, it is. And if we did that, in 30 years people would be posting pictures of the receding shorelines of Lake Superior, so maybe it's best we learn to live with less water in the West.
 
Yes, it is. And if we did that, in 30 years people would be posting pictures of the receding shorelines of Lake Superior, so maybe it's best we learn to live with less water in the West.
Are you suggesting that Niagara Falls would go dry if some of the great lakes water were sent to SW?

I do; however, agree it would best if US's SW stopped using so much water. I don't have the link, but recently learned the falling ground water level in SW is so rapid, it is slightly reducing gravity there by easily measured amount!

If you want "receding shoreline" photo, here is one from Lake Mead, that is hard to beat:
cc4ab8368c588e1f5c0f6a7067009892.jpg
His business has been slow, for 3+ years.

BTW: " The average St. Lawrence River flow, recorded at Cornwall, Ontario, during the period 1900-95, is 6,910 cubic metres (244,000 cubic feet) per second." from: http://www.great-lakes.net/envt/water/levels/flows.html
The Colorado river flow is quite variable. Following data from: http://en.wikipedia.org/wiki/Colorado_River
average 22,500 cu ft/s (637 m3/s) [3]
- max 384,000 cu ft/s (10,900 m3/s) [4]
- min 422 cu ft/s (12 m3/s)

Thus less than 10% of the flow over Nigara falls diverted to the lake Mead / Colarado River would DOUBLE the Colorado River flow!

You should check facts before such wild speculation about receding Great Lake shorelines.
 
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Are you suggesting that Niagara Falls would go dry if some of the great lakes water were sent to SW?
Niagra? Probably not; but Lake Superior would certainly see its water levels dropping with no end in sight.
I don't have the link, but recently learned the falling ground water level in SW is so rapid, it is slightly reducing gravity there!
Not surprising. And the people who live around the Great Lakes don't want to see their lake suffer the same fate.
 
... Lake Superior would certainly see its water levels dropping with no end in sight....
Non-sense. Lake Superior's water lever is one of the most stable / constant in the world because it stores so much water compared to inflow and out flow variations.
Great_Lakes_Depth_Profile.jpg
 
Non-sense. Lake Superior's water lever is one of the most stable / constant in the world because it stores so much water compared to inflow and out flow variations.

I recall similar things said about the Colorado. There's NO WAY we could ever use all that water.

And now:
=================
Concerns Mount Over Declining Water Levels in Great Lakes
Kristen Rodman

July 03, 2013; 4:00 AM

Forming the largest group of freshwater lakes on Earth and making up 21 percent of the world's total freshwater supply, the Great Lakes are recording all-time low water levels, posing economic threats to numerous industries that rely on the lakes water supply, including, tourism, hydroelectric generation and recreational boating.

Lakes Michigan and Huron set new record-low water levels in December of 2012, breaking the previous record set in 1964. Water levels dipped to an all-time low at 576.15 feet, according to the US Army Corps of Engineers, Detroit District. Not only did the water levels break record lows but the levels made this the longest stretch of below average levels in the lake's recorded history dating back to 1918, and thus continuing a 14 year streak of below average levels. Many factors have contributed to the significant decrease in one of the world's most important waterways but among them, one of the most notable causes is in fact, the area's weather patterns.

2012 proved to be a year of bizzare weather for the Great Lakes region. The year was warm and dry with the lakes receiving very little snow in the 2011/2012 winter and as a result, very little runoff water. However, due to the sheer size, large surface area and volume of the Great Lakes, just one year would not result in the dramatically low water levels that have been recorded.

"Water levels don't respond to just one year," said Ann Clites, a Physical Scientist at the NOAA Great Lakes Environmental Research Lab. "These low levels are not because of the precipitation for one year, the lakes are just too big and there are too many factors to say that. However, the last 15 years of low levels got the lakes ready to hit all time record lows," said Clites.
===========================

And they are worried about the West's insatiable thirst as well:

============================
Great Lakes face increasing pressure for water from world, own backyard
Lawmakers and advocates hope compact will protect Lakes in face of climate change, population growth
June 21, 2011


The Great Lakes hold six quadrillion gallons of water. That’s 20 percent of the world’s fresh surface water. As scarcity grows, there’s concern more and more people are eying that water -- it's been likened to death by a thousand straws.

"We are leaving the century of oil and we are entering the century of water," said author Peter Annin. "And so in the next 100 years and beyond, I really do think it’s going to be all about water. We really don’t know how much pressure will come in the future on the Great Lakes."

A historic compact designed to protect the Great Lakes against that pressure from diversions was signed into law in 2008.

Now it's facing its first big test in a thirsty suburb of Milwaukee.

To get a sense for just how vast the lakes are, and what is at stake, I went out to the shores of Lake Michigan with Joel Brammeier, head of the Alliance for the Great Lakes. We saw a tiny corner of Indiana, and then just the blue horizon.

"It’s pretty dramatic," Brammeier said.

"When you stand on the shore of the Great Lakes, you absolutely believe that there’s no way this water could ever all be used up and yet we’ve seen things play out in the Southeast and Southwestern United States where resources that were thought to be inexhaustible eventually found their bottom. We don’t want to get anywhere close to that here in the Great Lakes basin."

Consider the mighty Colorado River, where so much water’s diverted for irrigation, the river often slows to a trickle by its end.

That’s why the Great Lakes compact became law. It's part of an agreement between the eight Great Lakes states and two Canadian provinces to decide who gets Great Lakes water. It’s like this invisible international shield that keeps Great Lakes water inside the basin.

What helped spur the agreement was a fear that Great Lakes water would end up around the world, or out West, filling swimming pools in the desert.

"To people in the Great Lakes region, suggesting that that water could be transferred to other parts of the continent is like someone suggesting that the Rocky Mountains could be transferred to other parts of the United States," said Peter Annin, the author of “The Great Lakes Water Wars.”

That fear has a basis in fact. In 1998, Canadian officials OK’d a proposal to let the Nova Group ship tankers of water to Asia.

"It was seen as the nightmare potential legal precedent because if you can send Great Lakes water to Asia, where can’t you send it?" Annin said.

Lawmakers realized they had nothing on the books to stop it. After years of negotiations, they announced their agreement. Annin says it did more than just prevent diversions. It contained provisions to conserve water and protect the ecosystem.

"It wasn’t just copying other compacts in the past," he said. "What this compact was trying to do was recognize the environment had a seat at the table, and that humans weren’t just carving up the water for human’s sake."

"The compact sets a very high bar for decisions to be made about who gets Great Lakes water and who doesn’t," said Joel Brammeier from the Alliance for the Great Lakes. "If you don’t have strong legal protections in place for Great Lakes water, anybody can come and make a claim and say I want some of that."

But for now, it’s not Asia or the parched West going after Great Lakes water -- it’s our own suburbs. The compact is getting its first major test in Waukesha, a city just outside the basin. Waukesha is draining down its aquifer. It’s had to build an elaborate system to make its water drinkable.

Dan Duchniak, the general manager of the Waukesha Water Utility, said they have to add a slurry of chemicals here in the well to filter out radium. That's a radioactive element that can increase the risk of bone cancer.

"As you draw down deeper and deeper in these aquifers, you get to a point where it’s brackish water or higher levels of salt," Duchniak said.

"Do you have any wells that aren’t a problem?" I asked.

"No," Duchniak said. "Simple answer? No."

Under the compact, towns outside the basin aren’t allowed to get Great Lakes water. That’s because the basin is like a giant bathtub, and outside of it, water flows away, so water is lost to the Great Lakes. The compact was designed to keep water in.

There are a few exceptions. Towns that are right on the basin line or like Waukesha – in a county that is – can apply, but even then it’s a tough process. To get a sense how tough that process is, I went to the Wisconsin Department of Natural Resources. Eric Ebersberger showed me Waukesha’s application.

"Oh, we’ve probably got 8 inches of documentation here," he said.

"And this isn’t everything?

"No, it’s not everything," he said. "[The] significance is, it’s the first application for a diversion to a community within a straddling county. So a lot of people see it setting a precedent for future such applications if there are any."

Waukesha will need approval from all eight Great Lakes governors. From now on, every town that wants to divert Great Lakes water is going to have to go through something like this.

But does that mean the compact is ironclad? An upcoming Natural Resources Defense Council report finds some states already missed deadlines for water efficiency and conservation goals. Several environmentalists worried that could put the compact at risk, as water scarcity increases.

Henry Henderson‘s director of the NRDC’s Midwest Program:

"Clearly Congresses can undo what they have done," he said. "What becomes vulnerable is having a lackadaisical, tattered and underinvested set of institutions. Things that work right don’t invite reform."

A law professor at Wayne State University, Noah Hall, thought it was "very" unlikely though, that the federal government would tamper with the compact:

"There are dozens of interstate water compacts," Hall said. "Some have been in existence for almost 100 years. And Congress has never disturbed the settled agreements in any of those compacts."

And if the states do fall behind, he said, there’s a tried-and-true remedy: lawsuits.

"You rarely get environmental protection without citizens going to court and enforcing it."

Citizens can be powerful outside of court, too. When the Nova Group wanted to ship water to Asia, it was public outcry that turned the tide. Either way, along with politicians and advocates, vigilance must also come from citizens who have made their lives on the Great Lakes, like a group of retirees who keep a close eye on Lake Superior.

"I know everyone is trying to take our water away from us," said one of the men. They gather every morning for coffee near the lake's western border.

"You’ve got to watch these governors from Michigan and Wisconsin and Illinois and Minnesota," one of the other men said. "Once they get in a group in a room together, a lot of things can happen. They’ll go right through their Congressmen and within two years, you can have water trailing out of here faster than you can make it."

The compact was designed to prevent that -- even in the face of climate change and exploding population counts -- if everyone does their part or is made to do so in court.
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