Category Archives: Elections 2012

These are stories associated with the coming presidential and congressional elections in 2012.

The Obama Legacy


Historians will debate the importance of the Obama Administration and its role in American history for decades to come, of course. The legacy which presidents leave behind them is always a concern of our chief executives, and it has been of even more importance to Barack Obama. As he marked a milestone in his tour of duty. leaving on a foreign tour, with a successor he opposed now chosen, he publicly drew his own optimistic record. He carefully picked, of course, in a press conference, what he considered the best interpretation of events over the last eight years. But at least for the time being, when his policies and their repercussions are still relatively fresh, it is hard to draw a balance sheet which is less than disastrous.
Obama, of course, perhaps more than any other recent president, is an ideologue – and he insisted in his political campaigns that he aimed at a “transformation” of American society. His framework for events is a combination of his studies of history but overlaid by the socialist and pro-Communist views of the little social-political group around the University of Chicago who launched his career.
There is no doubt that he has effected changes, whether they are indeed transformations, and whether any have been beneficiary, only time will tell.
But any honest examination of the effects of his strategies is a record of miscalculation and failures. Perhaps the most dramatic ones have been in foreign policy. His campaign to withdraw American power and decision-making from the international scene has demonstrated what had always been apparent to serious students of foreign affairs: the enormous power of the U.S., economic, political and military, has a role in any international confrontation even when Washington chooses to remain neutral or withdraw its influence. A world order without U.S. participation is not only unimaginable to our allies but something our adversaries always question as a possibility.
The Middle East is the most dramatic example of the failure of Obama’s effort to remove American leadership and power in the interelated conflicts there. First, his effort to weaken the U.S.-Israel alliance encouraged the Moslem terrorists in the area. Then, Sec. Hillary Clinton’s courted the brief Moslem Brotherhood regime in Egypt – overthrown by the military through popular demand. Obama and Hillary attempted to boycott the new military rulers thus providing an opportunity for Russian arms sales and influence where it had been expelled a half century ago by pro-Western Egtptians. In Syria, Obama’s initial declaration of opposition to the Basher al Assad regime was followed by withdrawal. Washington’s retreat assured the descent into a bloody, irresolute civil war sending a flood of millions of refugees into neighboring countries and Europe. The threat of force followed by its withdrawal has returned Moscow to a base in the eastern Mediterranean and helped extend Tehran mullahs’ state terrorisn excesses across the Fertile Crescent, even into Latin America. A treaty to curb Tehran’s nuclear weapons, never submitted to the Senate as the Constitution fdemands, is rapidly disintegrating
In East and South Asia, Obama’s ambivalent policies toward Chinese aggression have encouraged Beijing to aggressive territorial claims against its neighbors, discouraged unity among the Southeast Asians against Chinese Communist threats. Again Hillary’s much publicized pivot to the Western Pacific has failed to materialize. Slowly, the rape of the American economy by the Chinese through export subsides and currency manipulation – begun in the Bush Administrations — has become so clear that the Trump Administration qill have no option but a dangerous crackdown.
Obama’s role as the first American Afro-American president was, whether admitted in public discussion, seen as an important opportunity to continue to heal the historic American race problem. But whether in part because his own exotic background linked him neither to the rising black middle class nor the poor of the ghetto, he either took nondefensible positions on individual race incidents or neglected completely the mayhem of his own Chicago hometown. One has to assume that the American black leadership can only see these past eight years as a failure by a president, whatever his color, to contribute to solution of the race problem which appears to most observers to be in an even worse condition than at his entry into office.
Obama’s claim for his Affordable Care solution to long-term U.S. medical care is nearing collapse with skyrocketing costs and failure of the insurance framework which was to support it. His steady stream of executive directives for additional regulation and environmental restraints has contributed toward the slowest and most erratic economic recovery since World War II.
Despite his rhetorical skills and personal popularity as the first black president, Obama’s legacy will be a negative one. As the anti-Obama vote for Donald Trump has demonstrated, it will also cast a shadow on many of the techniques and political forms his very talented political team gave the nation.
sws-11-14-16

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Faked Obituary


Reports of the demise of the Republican Party are premature.
It makes good copy for Fox News and the few other slightly serious current spectacle reports. But the Talking Heads who spout this prediction have forgotten if they ever knew much about the history of American political parties.
They argue capture of the leadership of the Party by a billionaire populist TV star whose own past political inclinations were not those of the Grand Old Party candidate for president has led to its bifurcation. On the one side are the Trumpeters and those who have joined his bandwagon and on the other are the rock-ribbed conservative ideologues. The later dominated the Party’s serious discussions even if over more than a half century – except for the Goldwater anachronistic nomination of 1964 – their presidential candidates have been much further to the left. Even the vaunted Ronald Reagan, despite his iconic reincarnation, more often than now is admitted, turned his back on conservative decisions as he compromised for an intensely popular presidency.
The Trump takeover of the Party’s steering wheel, as a matter fact, looks very much like the seizure of the GOP from the conservatives then led by Cincinnati’s Taft family by Wendell Wilkie in 1940. Then a former Democrat, a Wall Street businessman, — and one from the utilities sector which had been the target of much of Franklin Delano Rosevelt’s own populist rhetoric — stampeded the nominating convention. He loaded the galleries and perhaps was the antecedent of the Kennedy brothers a couple of generations later and their manipulation of the media and public opinion.
Aa it turned out, of course, Wilkie didn’t have a chance against FDR despite Roosevelt’s violation of the old axiom – reputedly laid down by George Washington –against third terms. But he did develop into a statesman and it was his role as much as that of Michigan’s Republican Sen. Arthur Vandeberg to fight the old-line isolationism of the GOP in a new world dominated by American economic power.
But the conservative core, licking its wounds, remained an important part of the Republican Party. Today’s argument that the GOP is facing death through internecine warfare between its two radically contradictory wings doesn’t hold up.
First off, American political parties – for the overwhelming majority of their histories – have been amalgamations of often diametrically conflicted forces. That arises, as much as anything from the fact that any national party is a continental organization, a vast collection of local political forces in the many different locales and conditions of American life from ocean to ocean and now beyond.
The current crepe hangers ignore the history of these kinds of parties, even in recent history. It was after all a collection of the most disparate groups with whom FDR came to power in 1932. The Democrats, who held power, and dominated American political life for the next half century were a very, very strange combination. They consisted of a segregationist, ultra-conservative Southern Democrat contingent, setting the pace particularly in the Congress. There were the Big City Machines, largely built on immigrant Irish political wit and the new urbanites who could be corralled and shepherded to the voting booths. There were the Socialists and Communists activists, few but disproportionately responsible for the hard slugging of policy formulation and implementation. And all this was capped – during FDR’s lifetime – by a Hudson River bsquire pretending to be aristocracy. It could not have been more disparate. But it held together then, as the Republicans will now, by the search for power.
It remains to be seen whether this division within the Party will keep it from power. While their divisions restrained the Democrats through the 30s and 40s, it did not keep them out of the White House and in control of the House of Representatives for almost half a century. It begs belief that even the most die-hard conservative ideologue will not come over to Trump leadership if it continues to bring “moderates”, independents, and even a new crop of “Reagan Democrats” into a strengthened party. That, after all, is the road to power and that it is what it is all about. Conservatives will persuade themselves with some justification, that even in a Trump pragmatic administration they could burrow from within to achieve some limited conservative goals. And besides, the alternative is the Hillary Clinton ogre!
sws-05-06-16

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When is a Thug not a Thug


Thug, noun, pronunciation: /THɡizm/ [Early 19th century (sense 2): from Hindi, hag ‘swindler, thief’, based on Sanskrit sthagati ‘he covers or conceals’.
One of the footnotes to the postmortem on the rioting in Baltimore has been an argument over the use of the word “thug” to describe the mostly young rioters, sackers and arsonists.
The city’s African-American mayor, Stephanie Rawlings-Blake, used the term, though she later backed away from her earlier comments. In uncharacteristically strong language, Pres. Barack Hussein Obama used it too when he denounced the Baltimore violence.
Megan Garber, in an article in The Atlantic, writes that “thugs” “are [seen as] both victims and agents of injustice, they are both the products and producers of violence, and mayhem, and outrage”. Some of the media, muddling the argument even more, has trotted out arguments for excusing behavior which brought the city to near chaos. CNN has spread a clever piece of wordsmithery, “Rioting is the voice of the unheard”, when its interviewers court dissident and inflamatory reactions..
The fact is that young hoodlums [“a person who engages in crime and violence; a hooligan or gangster”] broke the peace of one of largest and once most prosperous American cities, burning and looting. Furthermore, their action did not elicit from the city’s leadership the kind of response for which a city’s police force is dedicated. It was only luck that there was not major loss of life.
That is why it is incumbent on the State’s Attorney for Baltimore City, Marilyn J. Mosby, now that she has quickly brought forward an indictment of the policemen involved in the death in custody of Freddie Gray, to go after these young miscreants. There is apparently yards of video taken during these violent acts from which the perpetrators can be identified.
Just as one mother, Tonya Graham, took the responsibility for her son when she caught him joining the mob, the Baltimore authorities now have a duty to bring the other delinquents to justice.
That won’t be easy.
There are already many voices arguing that they are victims, that they need help, that they have to be forgiven for their acts of violence against civilized society. Baltimore Councilman Carl Stokes has what he sees as their case. “It’s not the right word to call our children ‘thugs’. These are children who have been set aside, marginalized, who have not been engaged by us.”
All that may be true and must be considered if justice is to be served. But identifying these young people, naming their criminality, and bringing them before a court to have their actions explained is necessary if real peace is to be reestablished in Baltimore.
Without the rule of law, no civilized society can exist. Respect for the law has to begin in childhood. And without an attempt to bring these youngsters to justice – for their families’ sake if nothing else – the confidence that is going to be necessary if the destruction of Baltimore’s reputation [and livelihood] is to be restored will not be forthcoming..
Sws-05-03-15

Beyond Obamcare. lies the world waiting …


 

With the U.S. transfixed by the Obama Administration’s massively bungled attempt to nationalize one sixth of the economy, the health welfare system, the rest of the world watches the slow motion unfolding of another debacle: the loss of post-World War II American leadership of the worldwide alliance for peace and stability.

Pro forma protests over snooping by the U.S. National Security Administration European and Latin American leaders are for popular consumption. Spying, and unfortunately counter-espionage which the Snowden revelations appear to be, have been and will continue to be a generally unspoken part of international relations. In fact, one can imagine German Chancellor Angela Merkel berating her own intelligence organizations for superior U.S. technology’s ability to listen to her limousine cell phone. The Saudis’ “renunciation” of a UN Security Council seat is no more than a media event. With their new vulnerability brought on by the Shale Revolution in the U.S., Riyadh’s antediluvian princes in their colorful robes have no place to go.

But these are tokens, taglines to a much larger eroding international picture.

Of course, the current disarray is not sudden, nor only the product of the Obama Administration. But Obama’s missteps have exaggerated growing difficulties for international governance “inevitably” arising from changes in the international balance of power over a half century since the Allied victory in World War II. And as always, of course, there is the unanticipated and the unintended consequences of well intended strategies and policies.

America’s junior partners, the European democracies, after five decades of unprecedented peace and prosperity, are facing domestic breakdown increasingly limiting their contribution to the world system. Social democratic remedies at the workplace have failed everywhere. A demographic catastrophe not only threatens their economies, but growing unassimilated immigrants from alien societies threaten to overwhelm their post-Christian cultures. A pampered public will not accept belt-tightening much less painful surgical elimination of waste and corruption. Greece, ancient home of democracy, is the apotheosis of the problem, a ticking timebomb on the doorstep of the rest of Europe.

Furthermore, the attempt to create an integrated European economy – let along a new international polity which could speak with one voice on international affairs – is in jeopardy and probably failing. British participation, essential to the project, is now more remote than ever given the failures of the continental Euro and resurgent English as well as Scot and Irish nationalism.

European integration had been seen as the ultimate panacea. It is now clear that is not the case, nor, indeed, is it apparent it can even be effected. In Berlin Das Mädchen,, representing the disproportionately most powerful of the member nation states, talks out of both sides of her mouth. She advocates a new European superstate but zealously guards Germany’s narrowest national interest as demanded by her role as an elected leader still obligated to put together an unstable governing coalition.

The Obama Administration’s answer to this dilemma is not that different from the waning years of the Bush Administration. Pres. George W. Bush’s earlier steadfast resolve gave way to Condoleezza Rice’s “clerk” management. In any case, Washington’s stance toward Europe in part always has been a myth about who led whom and how during the post-World War II recovery. Alas! the charismatic and determined [if occasionally misguided] leadership of Churchill, Adenauer, DeGaulle, and de Gaspari, and their technocratic supporters, has been replaced by feckless politicians. The 80s decade-long common-sense reign of Prime Minister Margaret Thatcher was only brief relief from the general intellectual decline.

The American standard around which the Europeans rallied, even when they were in denial or hypercritical, has been replaced by a bogus concept of “leading from behind” That kind of Machiavellian manipulation of others’ power would under the best of circumstances have been exquisitely difficult. But in the hands of the Obama amateurs, it descends into virtual chaos. Witness the Libyan intervention as its classic example. The Obama Administration and European friends failed to provide a model for a small, fragile but oil-rich Arab state. And the U.S. paid a terrible price with the murder of an ambassador and a major psycho-political blow to American prestige which will dog U.S. foreign – and domestic — politics for decades.

The naïve “transformation” which an inexperienced but arrogant elitist presidential mafia thought they could foist at home on a traditional society but one in revolutionary technological transition has been matched with aberrant theory abroad. For whatever reason, the idea that the Obama Administration could make a pact with a nonexistent, romantic version of Islam – a political religious belief still mired alternatively in pre-modern torpor and nihilistic violence — has shredded what was left of decades of Middle East strategy.

There Washington now finds itself on the wrong side of virtually every issue. By rote it nudges Israeli-Arab “negotiations”, which long ago foundered on Palestinian corruption and incompetence. Washington mistakenly believed it were the central issue, not the region’s poverty, illiteracy, tribal warfare and demagoguery. Obama’s refusal to personally intervene for a status of forces agreement to permit a continued military presence in Iraq squandered 4,000 spent American lives. It removed all possibility Washington could have a major impact on a recreated but highly volatile Baghdad and its enormous oil resources. Obama then launched into an effort to dethrone the barbarous al Assad Syrian regime, backed away, and now finds U.S. Syrian strategy at the mercy of Russia’s Vladimir Putin, himself increasingly turning to despotism and foreign adventure to hang on to his throne.

The Obama Administration continuously has importuned Iran, oblivious to that regime’s single-minded goal of making itself the hegemonic power and arbiter of the region’s vast fossil fuel resources. In the process, the White House ignores the interests of America’s longtime allies in the Gulf including, until now, the world’s marginal oil producer, Saudi Arabia. The Obama Administration helped install and got into bed with the Moslem Brotherhood in Cairo, the fountainhead of modern Islamic terrorism, apparently believing it some sort of Islamic equivalent of European Christian democracy. When that regime collapsed from ineptitude and domestic violence, Washington refused to accommodate to a popular military takeover endorsed by its other regional allies. Pres. Obama’s “best friend”, Turkish Prime Minister Recep Tayyip Erdoğan, has turned out to be a very bad regional weathervane. Even worse, Erdoğan duplicity [confusion?] in dealings with Palestinian Islamicists, Israel, the Brotherhood, the jihadists in the Syrian opposition, aided by an intelligence chief who favors Iran’s Shia fanatics, is adding to the regional chaos. Worst of all, Erdoğan with whom Obama fellow-traveled, endangers what’s left of NATO by playing with Chinese weapons possibilities.

The continued U.S. entanglement in the Mideast, always predictable, has put into question Washington’s announced “pivot” of resources to the growing Chinese Communist aggressive feints toward East and South Asia neighbors and Washington’s friends. With that strange aloofness which characterizes this Administration’s treatment of allies, it has failed to respond enthusiastically to the first strong government in two decades in the U.S.’ keystone Asia ally, Japan. [Luckily reflex collaboration between the U.S. military and its Asian allies, hangover from the Korean and Vietnam conflicts, has reinforced strategy in the absence of White House leadership.]

Perhaps the most important politico-economic Asia-Pacific instrument in Washington’s hands, the Trans-Pacific Partnership, an effort to create a common market to meet the competition of China’s state capitalism and subsidized trading, is hanging. The concern is that the Obama Administration’s next three lame-duck years, especially after the drubbing it seems now likely to take in next year’s elections, will not pursue it forcefully. In the balance is a revolutionary overhaul of a quarter of the world’s commerce and what may be the reemergence of a more vital Japanese economy.

Alternatively, the Obama Administration’s increasing reliance on the United Nations burdens that organization with more responsibility than its corrupt and incompetent secretariat can bear. Idealistic multilateralism is an excuse for lack of U.S. policy and inaction on a huge variety of fronts. Washington has, for example, increasingly abandoned leadership of the UN specialized agencies – whether the UN International Atomic Energy Agency, ignorant of the 17-year Tehran march toward nuclear weapons, or the growing specter of out of control biological breakthroughs which have enormous potential for solving life problems, or creating new diabolical weapons of destruction.

The shock and geopolitical lesson of 9/11 has been left behind somewhere in the bowels of the State Department and the Obama Administration’s National Security Council. Lost is recognition that the American homeland was no longer – if it had ever been in the world of intercontinental missiles – immune to the kind of destruction that our allies and enemies in Europe and Asia suffered in World War II.

With the strong prospect that the U.S. domestic scene will continue an impasse, as Obamacare has proved, America’s role abroad will be in abeyance. The world will just have to get along with the beached whale of a U.S — at least for a while.

sws-10-27-13

The great wait


Looking around the world, the striking characteristic is waiting out a number of crises. Their outcome seems almost artificially suspended, and their interaction on one another and their ultimate effect on the world is at issue.

We start with the Euro. Chancellor Angela Merkel’s supplications in Beijing were perhaps laudable but a little ridiculous. There is no evidence Beijing could or would bail out the Euro. Meanwhile, Greece appears headed inevitably for default – if for no other reason than the severe austerity measures are not only the proverbial late closing of the barn door but making it impossible for growth necessary for any climb out of its debt bind while increasing social deterioration. Can Spain, Portugal, and perhaps Ireland and Italy, be far behind? Meanwhile, Germany refuses to assume the role its hard work, discipline and export-led economy has bestowed as the main source of reserves to refinance the European Union. We wait.

Israel, the U.S. and Iran wage a ferocious propaganda war, with the mullahs’ repeating their unprecedented threat to Jerusalem’s existence. Sanctions are having a disastrous effect on the Iranian economy. But past history demonstrates third world economies have no bottom – especially those propped up by oil revenues skirting restrictions to reach markets. But there is a consensus among Western intelligence circles Tehran continues to make progress toward nuclear weapons of mass destruction, perhaps even including missile delivery. Tehran surrogates also threaten Israel and the West in Lebanon, Gaza, Iraq and Afghanistan and with worldwide terrorism. How much coordination continues between Israeli policymakers and Washington has become an issue. We wait.

Syria, Iran’s ally, descends into civil war with the prospect its minorities’ ties to neighboring states will further derail any promise of The Arab Spring for a radical Mideast betterment. Egypt is already beset by a chaotic contest for power between the military and the Islamicists – with threatening problems of food and youth unemployment. Washington and Western Europe – surprisingly joined if ineffectively by the Arab League — has abandoned a hands-off policy on Damascus. However inevitable the fall of a 35-year-old dictatorship, the attenuated struggle typifies the absence of international collaboration against bloodshed. We wait.

The Chinese economy dips below levels conventionally held necessary to maintain stability under an authoritarian government with a rapidly growing workforce. Expanding exports and unlimited infrastructure growth, its two principal props for two decades, can no longer spur the economy with credit reaching explosive levels. A slowdown in China’s market for raw materials is the last straw for the worldwide economic malaise. Debate over policy within the Communist Party appears to have reached unprecedented levels, leaking to the highly censored but innovative personal communications networks. The argument comes on the eve of this fall’s planned transfer of generational leadership. Meanwhile, Beijing’s military power accelerates with chauvinistic rhetoric and threats over disputed sovereignty with its neighbors. We wait.

Japan’s political stalemate continues with the world’s third largest economy on autopilot. Another round in the prosecution of the generation’s most powerful politician, Ichirō Ozawa, comes in mid-February, with the perennial hope a restructuring of political factions will provide new, vibrant leadership. Meanwhile, a demographic catastrophe is overtaking the society as birth rates continue to drop with the most rapidly ageing population among the industrial societies and cultural obstacles to in-migration. We wait.

Russia approaches presidential elections with growing opposition toward what appeared the inevitable victor, Vladimir Putin. Failed efforts at reform of the economy and the military coupled with incredibly destructive social phenomena – a rapidly declining population, an HIV epidemic, drug addiction and alcoholism – all point toward another implosion. Immigration of capital and young skilled professionals reinforces decline. If world energy prices drop in the face of slack economies, Putin’s formula for stability could quickly evaporate. We wait.

The world as well as the U.S. enters the apex of its election season with a confused picture. An American electorate appears more polarized than ever between interventionist and market orientation with more mundane issues largely holding the debate spotlight. The world, dependent on American leadership since World War II, seeks clues whether the Obama Administration’s “lead from behind” is the leitmotiv of the coming four years with the relative success of the Paul candidacy signaling a possible new isolationism. Meanwhile, the country grapples with tenacious seesawing employment, ironically the result of technological advance as well as a credit collapse. We wait.

sws-02-3-12

A pipeline to …well, almost …eternity


Follow the money No. 97

A pipeline to …well, almost …eternity

Camouflaged by Congressional political badminton and Pres. Barack Obama’s demagoguery, the Keystone XL Pipeline Project represents solutions to economic and security issues far exceeding its general appreciation.

Half truths on all sides have obscured the project’s underlying fundamentals. Some are only emerging as additional research and technology is applied – most of it, for a change, good news in that it boosts estimates of access to available North American new fossil fuels reserves even if at higher prices.

Contrary to claims of Congressional proponents, the project is not an immediate positive economic bonanza. Like all natural resource development projects, construction employment will be temporary and jobs minimal when the pipeline is actually functional. Of course, given the current environment, any new jobs of any duration not added to the public payroll — the project is funded privately at something over $7 billion — is a godsend.

Its importance lies in its contribution to what should be a longer term U.S. energy strategy, a consideration often missing in heated partisan debate.

First of all, direct access to the Canadian tar sands affords fallback access for the almost bottomless U.S. energy maw – developing rapidly long- term whatever the short-term diminished demand of a temporarily crippled economy. Scandal after scandal is proving the Obama Administration’s so-called green energy strategy corrupt as well as wasteful and ineffectual. Keystone, on the other hand, would put crude into the Texas petrochemical refinery complex already absorbing Venezuela’s similar heavier oil – those reserves recently reestimated upward with spectacular finds on the Orinoco River.

That would give the U.S. not only an emergency alternative to the Venezuelan crude, fourth largest of our import sources, but leverage against the machinations of gringo-baiting Venezuelan Pres. Hugo Chavez. Given that country’s long troubled history, necessary insurance is needed even in a post-Chavez Venezuela [soon perhaps with reports the fiery demagogue may soon fall victim to cancer largely untreated so he could continue exercising his one-man rule].

The expanded pipeline proposal also now would pick up on its way the more attractive sweet crude from the Bakken strike in North Dakota, already one of the largest in U.S. history and apparently linked by new successful prospecting and new shale recovery technologies to huge neighboring regional deposits. With Bakken already having added an estimated 10% to American reserves, these could turn into the largest petroleum find in U.S. history.

As the pipeline travels south, it also aims at untangling a crude gathering traffic jam in Oklahoma and expanding the tanker delivery scene on the Texas coast.

But radical environmentalists had chosen – with the help of the usual Hollywood suspects assuaging their guilt for their gratuitously huge earnings – to make Keystone a major test. That was despite three years research by experts for the State Dept. had not turned up sufficient environmental issues to block the project. When local interests in Nebraska – ignoring the relatively clean record of the country’s vast pipeline networks – argued spills might threaten a critical local aquifer, the Canadian company countered with a $100-million-dollar detour around it.

Washington rumors are Sec. of State Hillary Clinton was not only not consulted but not forewarned when Pres. Obama, anticipating the 2011 election, threw a bouquet to enviromentalistas who had been increasingly jaundiced at his 2008 promises. But with even normally loyal trade unionists joining the outcry against the White House postponement to go ahead until after next year’s election, it was inevitable the issue would become a cudgel for the Republicans.

Canadian threats to transfer their affections to the Chinese market might have some validity – although even Chavez is arranging swaps with Iran for his Chinese sales with Venezuelan crude supposedly sold Beijing flowing into Texas. But level-headed Canadian Prime Minister Stephen Harper – an economist and native of Canada’s provincial giant oilwell, Alberta – may have overestimated American common sense. [Recent hints suggest Ottawa feels it is dealing with an overburdened, troubled U.S. and has to demonstrate inordinate patience for both their sakes. One has to wonder what the two chief executives talk about in frequent and what appear to be pleasant meetings!] But, in fact, Canada’s role as No. 1 foreign energy supplier to the U.S. – something forgotten in much of the talk about “American energy independence” – probably, rightfully, isn’t going away in the near future. The Republicans may be seeing to that.

sws-11-16-11

China may soon become THE problem



Creeping up on the outer edges of Wall Street and The City soothsayers’ economic crystal ball, until now dominated by American and Euro crises, is growing concern about China.

The inane idea China [and India, which is also in trouble] would somehow rescue the world economy is now, finally, dismissed by the pundits — without apologies. How a largely export-led, mercantile economy was to save the world with its principle markets in the U.S. and the EU winnowing down was never explained. Continued wishful references to Chinese leadership’s equally improbable promises to boost domestic consumption are also falling away.

There is, in fact, a growing consensus the Chinese economy is spiraling down. One respected Hong Kong economist, Ms. Wang Tao of UBS, is predicting a gross domestic growth [GDP] rate toward 7% before yearend. That’s below the red line 8% long considered by the double-domes as the minimum to satisfy jobs for China’s growing population. Soon we can hope to hear an end to those straight-line projections – so wrong two decades ago in Japan predictions – which take China’s current world No. 2 GDP to soaring heights. Indeed, China is the classic example of inadequacies of GDP as an economic barometer. Even assuming official figures are reliable — which is a far stretch — China’s GDP has inflated with vast over expansion of infrastructure and massive corruption indicating enormous activity but not necessarily a basis for continued stability and growth. [Remember Euroland’s GDP/consumption figures before the fall!] Nor do we have more than a notional figure for huge military outlays.

Granted, some of us who have been predicting a China crash for years, arguing its miraculous transformation was jerrybuilt. But we have always said what would trip the fall, when, and how the Chinese would cope with it, is unpredictable – as so many things in life. Some full-time observers are now turning to the banking structure as chief concern. Whether you look at inadequacies of Communist Party decision makers in their see-saw battle to maintain maximum growth but head off any hint of inflation, a traditional Chinese destroyer of dynasties, the outlook is grim. Larry Lang, a Hong Kong TV personality and Chinese University professor of finance, recently labeled provincial finances as “China’s many Greeces”. Beijing’s writ – as an old proverb goes – ends no longer at the village gate but increasingly at the provincial capital where regional authorities defy the center, desperate to meet growing resources demands. Local politicos have wheedled, persuaded, bribed and threatened local government banks into credit far beyond their capacity to repay. Add that to the huge stock of non-performing loans banks give their Party buddies in the huge inefficient government companies and you have what could be the mother of all financial fiascoes.

Just as politics does not end at the banks’ doors, the Communist Party is moving into a generational leadership succession year. In theory, the new president and prime minister have been anointed. But there is a lot of shin-kicking with the usual Communist turn to so-called ideological arguments masking personality, regional and purely economic interests. A kind of neo-Maoism has surfaced. And it could take on new life as economic problems deepen because there has always been a strong Party constituency for preserving Soviet controls, planning and government ownership. Never mind that the fabled Chinese entrepreneurial spirit has taken hold with the partial liberalization of the past two decades. But much of this private sector with its disproportionately higher productivity was exports now hit hard with the downturn in the U.S. and Europe.

This has collapsed thousands of private businesses, particularly in South China’s clothing and gizmo assembly operations, leading to dramatic literal disappearances of owners and managers and growing unemployment. This, in turn, has fed already escalating unrest; Beijing has stopped reporting even the very suspect official figures. It’s early on, of course, to predict this would develop into the kind of provincial disintegration bringing down virtually every China ruling dynasty through its long history. Still… Meanwhile, China’s drop in demand for raw materials is already hitting world commodity markets – iron ore, for example, and soon to be coal and soya. That will have its effects on the overseas suppliers from Angola to Brazil to Australia [which has already seen a 10% drop in its high-flying dollar of a few weeks ago]

sws-12-03-11

Obama [tries] to move the drama East


The Obama Administration is trying to turn an historical page.

The president’s current Pacific tour is promoted as “a return to Asia”, an acknowledgement of its rapidly growing economies, and, of course, recognition of China as a world power. History has a way of dictating its own terms, however. [When asked what next in his agenda, Britain’s Prime Minister Harold Macmillan reminded a young inquirer, “Events, my dear boy, events!”]

As much as the Administration stages in a too long neglected legitimate theater, it’s also an attempt on the eve of a presidential campaign to shuck emphasis on the continuing dismal Middle East scenarios – where Barack Hussein Obama plunged with such enthusiasm only a little over two years ago.

Massive PR only partly obscures how far Washington can escape the Mideast – even with a much publicized exit from Iraq [with an intermediate stop in Kuwait] and a devil-take-the-hindmost Afghanistan withdrawal. The Arab Spring is turning as feckless as its 1968 Prague Spring namesake, offering little resolution of fundamentals — e.g., jobs for the world’s largest demographic bulge. Syria, where wish has betrayed realism in American policy, ticks ominously. Mr. Obama’s repeated profitless overtures to Tehran’s mullahs are concluding with an eminent threat of Iranian nuclear weapons. NATO’s vaunted southwestern tentpeg, Turkey, lurches from one contradictory foreign initiative to another with an overblown economic bubble about to burst.

Furthermore, the President’s company of players including speechwriters cavalierly promoted to geopolitician will encounter a host of equally difficult – many no less pressing — issues. Meetings with an alphabet soup of Asia-Pacific organizations and brief encounters with national leaders won’t resolve outstanding strategic issues Washington long has had on backburner.

Taking precedence is Japan, cornerstone of all U.S. Asian strategies, after this Administration too often has given it short shrift. But Washington will have to continue dealing with a Japanese administration holding on to power by its geta hana-oh. Unresolved is Okinawa military redeployment, with this current Tokyo government more beholden than former conservative administrations to rapacious locals threatening invaluable U.S. regional bases. And now Washington has handed Prime Minister Yoshihiko Noda another piece of hot tofu: the Trans-Pacific Partnership, a proposed nine-nation free-trade pact from Chile through the U.S. and Japan to Singapore. Tokyo’s highly subsidized and politically powerful agricultural lobby sees a threat to protected food markets at a time commercial and political relations with China – not included in this party round — are Tokyo’s overriding concern. The North Korean ghost haunts from offstage: a juvenile delinquent holding weapons of mass destruction to neighbors’ heads, a trading and technological partner to every other world pariah with its own only alternative strategic prospect anarchic implosion.

Realists would ask more seminal questions: Will Mr. Obama’s one-on-one in Hawaii with outgoing Chinese President Hu Jintao smooth the unequal bilateral trade playing field, not a small cause of current world currency and fiscal imbalances? It’s not likely Chinese manipulated currency and intellectual property theft will be remedied. Complicating negotiating these Chinese practices will be Beijing’s ultra-mercantilism becoming a louder and louder wild card in coming American presidential debate. In Beijing, itself, a Communist generational switch – perhaps not going as smoothly as thought a few months ago – struggles with Party dogma attempting to finesse restraining inflation while simultaneously spurring super rapid growth, so long seen as the only card the regime holds as civil dissidence rises.

Thus the combination of Mr. Obama’s continued denigration of America’s historic role, the Washington domestic economic policy tangle, the increasingly aggressive Chinese menace, all challenge the Obama Administration’s modeling a new American Pacific presence.

In fact, it’s a call historically as inaccurate as Mr. Obama’s earlier Istanbul and Cairo speeches summoning myth rather than history for an accommodation with Islam. America’s Asian role always has loomed large since the late 19th century. But alas! Mr. Obama did not take a leaf from Pres. Ronald Reagan’s economic strategy: The Gipper used his “stimulus” in part to rebuild American defenses to face down the Soviets. A new call now to American Pacific destiny rings hollow as the U.S. Navy’s decades-old hegemonic East Asian role erodes in the face of a rapid Chinese buildup with an American fleet soon smaller than any since pre-World War II — however revolutionary its new technologies.

Careful! That trumpet call could sound tinhorn.

sws-11-12-11

Not exactly…


The cacophony from the left [and its politically correct mainstream media mirror] calling for amity, negotiation, compromise and immediate action to solve the current crisis is not only hypocritical and insincere but ahistorical. The American Republic was born and nurtured in conflict, not only on the battlefield but also in the world of ideas. No one who has read American history could deny the virulence of debate over fundamentals which initiated and always has characterized our political discourse. That it should be true today is not only logical but virtuous.

As always in a free environment, the U.S. polity is constantly in the midst of making fundamental decisions, whether they know it or not. But now an economic crisis has brought a studied reexamination of basic values and issues. It is only natural the discussion would be heartfelt and contradictory.

On one side, the Obama Administration brought to power the 60s generation. Despite their enormous impact on popular culture, they were defeated then in their attempts to reconstitute The Republic by substituting a pseudo-Marxian template. They now have slid into positions of power largely by happenstance of demography at a time a larger public is questioning the effectiveness of old formulae.

However much criticism Mr. Barack Obama gets from the left, the essence of their common worldview is cohesive: a strategy of redistribution of wealth through government fiat. It is left, therefore, largely to Republican nominees to untangle issues, however unsystematically.

In this process, confirming ideas never die, the old Rockefeller Republican – for lack of better nomenclature – hypothesis has resurfaced with gusto. The concept envisions a “correct” political party allied with powerful business interests as best able to lead to a prosperous and stable future. But in this period of severe economic crisis and unusually volatile politics, that ethos is challenged by a combination of old-fashioned populism and 19th century American constitutionalism calling for more radical approaches.

That conflict places candidates for the Republican nomination in critical competition, obscured often by personalities, “political professionalism”, accidents of region, ethnicity or race, and all the other accoutrements of mass communications politics — often trivia which unfortunately can decisively substitute for logical arguments. But Mitt Romney clearly represents that Rockefeller ghost in the argument [perhaps with a slight assist from his fellow Mormon Jon Huntsman, an irony not lost on those who recall the daring of their forefathers]. The business model, he argues, is what is needed to rescue The Republic. That model, again he quite rightly argues, always comes with convoluted solutions to what are undeniably complex political and economic problems. But in the process, Gov. Romney loses his way, abandoning The Republic’s essence: freedom of choice for as many as possible, granted at the risk of occasional horrendous miscalculation.

Romney’s meandering represents why in politics, unlike everyday life and business, sound practice often means cutting to the heart of an issue. The U.S. economic disaster is, this writer would argue, basically the result of government meddling in the markets and the unforgiving, unavoidable boom and bust of the business cycle. No better example is apparent than the attempt to wish Americans into universal home ownership through the disastrous creation of semi-government, engorged mortgage brokers, Freddy Mac and Fanny Mae. It was, after all, the housing bubble as much as any other single factor which brought on the crisis.

Analogous was Mr. Romney’s attempt as Massachusetts governor to solve health insurance problems through mandate – appropriated by Pres. Barack Obama in his own version on an eventual, clandestine trip to a national government health care system on the disastrous European and Japanese model. That too was typical of politicians who rely on business orthodoxy for success, attempting to imitate the CEO’s ability to command his organization’s cadre — so different from a heterogeneous world of democratic politics demanding persuasion above all else.

That moral as well as cognitive lapse illustrates, contrary to the calumny expounded on the left, why the high priests of laissez-faire such as Milton Friedman, Ludwig von Mise and particularly Friedrick Hayek http://www.youtube.com/watch?v=2HhsWHfGRIA  saw free markets as an instrument of morality and altruism. And, contrarily, it is disguised alliances between politicians and their crony business partners [which, incidentally, nowhere is more exemplified than by the current Obama Administration], which is immoral as well as destructive of successful economic development.

sws-10-13-11

 

Perry on the US Senate


First, a little history:
“Direct Election of Senators”, US Senate web page
“xxx After the Civil War, problems in senatorial elections by the state legislatures multiplied. In one case in the late 1860s, the election of Senator John Stockton of New Jersey was contested on the grounds that he had been elected by a plurality rather than a majority in the state legislature. Stockton based his defense on the observation that not all states elected their senators in the same way, and presented a report that illustrated the inconsistency in state elections of senators. In response, Congress passed a law in 1866 regulating how and when senators were elected in each state. This was the first change in the process of senatorial elections created by the Founders. The law helped but did not entirely solve the problem, and deadlocks in some legislatures continued to cause long vacancies in some Senate seats.

“Intimidation and bribery marked some of the states’ selection of senators. Nine bribery cases were brought before the Senate between 1866 and 1906. In addition, forty-five deadlocks occurred in twenty states between 1891 and 1905, resulting in numerous delays in seating senators. In 1899, problems in electing a senator in Delaware were so acute that the state legislature did not send a senator to Washington for four years.

“The impetus for reform began as early as 1826, when direct election of senators was first proposed. In the 1870s, voters sent a petition to the House of Representatives for a popular election. From 1893 to 1902, momentum increased considerably. Each year during that period, a constitutional amendment to elect senators by popular vote was proposed in Congress, but the Senate fiercely resisted change, despite the frequent vacancies and disputed election results. In the mid-1890s, the Populist party incorporated the direct election of senators into its party platform, although neither the Democrats nor the Republicans paid much notice at the time. In the early 1900s, one state initiated changes on its own. Oregon pioneered direct election and experimented with different measures over several years until it succeeded in 1907. Soon after, Nebraska followed suit and laid the foundation for other states to adopt measures reflecting the people’s will. Senators who resisted reform had difficulty ignoring the growing support for direct election of senators.

“After the turn of the century, momentum for reform grew rapidly. William Randolph Hearst expanded his publishing empire with Cosmopolitan, and championed the cause of direct election with muckraking articles and strong advocacy of reform. Hearst hired a veteran reporter, David Graham Phillips, who wrote scathing pieces on senators, portraying them as pawns of industrialists and financiers. The pieces became a series titled “The Treason of the Senate,” which appeared in several monthly issues of the magazine in 1906. These articles galvanized the public into maintaining pressure on the Senate for reform.

“Increasingly, senators were elected based on state referenda, similar to the means developed by Oregon. By 1912, as many as twenty-nine states elected senators either as nominees of their party’s primary or in a general election. As representatives of a direct election process, the new senators supported measures that argued for federal legislation, but in order to achieve reform, a constitutional amendment was required. In 1911, Senator Joseph Bristow from Kansas offered a resolution, proposing a constitutional amendment. The idea also enjoyed strong support from Senator William Borah of Idaho, himself a product of direct election. Eight southern senators and all Republican senators from New England, New York, and Pennsylvania opposed Senator Bristow’s resolution. The Senate approved the resolution largely because of the senators who had been elected by state-initiated reforms, many of whom were serving their first term, and therefore may have been more willing to support direct election. After the Senate passed the amendment, which represented the culmination of decades of debate about the issue, the measure moved to the House of Representatives.

“The House initially fared no better than the Senate in its early discussions of the proposed amendment. Much wrangling characterized the debates, but in the summer of 1912 the House finally passed the amendment and sent it to the states for ratification. The campaign for public support was aided by senators such as Borah and political scientist George H. Haynes, whose scholarly work on the Senate contributed greatly to passage of the amendment.

“Connecticut’s approval gave the Seventeenth Amendment the required three-fourths majority, and it was added to the Constitution in 1913. The following year marked the first time all senatorial elections were held by popular vote.

“The Seventeenth Amendment restates the first paragraph of Article I, section 3 of the Constitution and provides for the election of senators by replacing the phrase “chosen by the Legislature thereof” with “elected by the people thereof.” In addition, it allows the governor or executive authority of each state, if authorized by that state’s legislature, to appoint a senator in the event of a vacancy, until a general election occurs. xxx”

http://www.senate.gov/artandhistory/history/common/brief

So, the argument for NOT returning the election of senators to the states for them to determine how they will do it comes down to the accusations at the time of “a millionaires’ club”.  Hello?

Returning the selection of the States’ representatives to the federal legislative process might not cure all our aches and pains, but it would be another blow for federalism!

Energy at home, energy abroad: disaster


Pres. Barack Obama’s war on fossil fuels is adding to world instability already wracked by international debt, demographic bulges and largely unpredictable galloping technology.

Domestic implications of his policies are increasingly apparent: the closing in of prospecting and drilling is costing tens, perhaps hundreds of thousand of jobs. The attempt to choose winners and losers through “green energy” subsidies is producing market distortions, huge losses of taxpayers’ funds and corruption rarely seen since the old Soviet Union’s Gosplan. Using executive fiat for arbitrary environmental rulings after Mr. Obama’s “cap and trade” quietly died in Congress is eroding Constitutional government by creating “precedent” for defying public opinion as expressed through the legislative process.

On the world scene, the impact is equally grim, although as always with intricate politico-economic problems, difficult to quantify.

It is a given, of course, that world energy is, as the economists say, an imperfect market. It runs the gamut: Pres. Hugo Chavez gives 100,000 bbl/da to his ideological buddy Fidel Castro to keep Havana lights on from Venezuela production, a principal source of American imports. Hand-me-down restrictive policies, a heritage of the Carter Administration’s misbegotten Department of Energy and its first head, James R. Schlesinger, dogs natural gas. Cartelization of the industry despite all the legislation and litigation since the Supreme Court broke up John D. Rocekefeller’s Standard Oil in 1911 continues to inhibit competition with the Organization of Petroleum Exporting Countries [OPEC] trying to set production quotas to control prices.

Yet, by and large, world energy is fungible – that is, production, stocks and therefore prices in one region impacts the worldwide market. After becoming a net importer in 1970, then doubling imports since the mid-80s to 50% of total consumption in 2010, the U.S. as world’s No. 1 consumer [and a producer of 25% of the world’s liquid gold] is decisive in establishing price, stocks and supply in other markets.

By impeding U.S. production through its refusal to lift controls, dragging out decisions or initiating or threatening to initiate new controls, the Obama Administration helps put a floor under world prices. That’s despite their erosion by a fall in consumption impacted by the worldwide economic recession, a very “leaky” OPEC struggling to control its 40% of world production, and production in the Persian Gulf for some grades a fraction of costs in North America. At a time of growing worldwide economic stagnation, despite the argument the real price of oil is skewed by a depreciating petrodollar in which most of it is traded, cheap oil remains as it has always been the sine qua non of American prosperity – and probably for world recovery.

Higher prices gorge feudal satrapies with their small backward populations in the Persian Gulf, unable to absorb and efficiently utilize capital. Worse, they indirectly finance world terrorists wherever they may be. For example, Saudi subsidies to mosques and community activities in the U.S. and the West as well as in the rest of the Muslim world carry with them Wahhabbi sect preachers insinuating sharia [pre-modern Islamic law] into Western legal codes, advocating armed jihad against “:infidels” and even fellow dissident Muslim sects or reformers.

Higher prices produce a petroleum bonanza for the increasingly authoritarian and corrupt Russian regime permitting it to avoid basic post-Soviet reforms. They give Moscow’s inefficient producers increasing international political leverage through gas sales to Germany and other Western countries. They reinforce the Putin regime’s efforts to reestablish Soviet hegemony over Ukraine and Central Asia and Moscow’s hope to intervene in a post-U.S. withdrawal Afghanistan.

Higher prices for its meager oil exports has propped up – along with Obama Administration appeasement – the bloody al-Assad dictatorship at war with its own Syrian people.

Not only has the natural gas snafu produced a temporary domestic surplus –with new technology pointing toward vast new production but it prevents potential liquefied natural gas [LNG] exports to high priced markets such as East Asia. U.S. sales to South Korea, for example, would block a proposed Moscow-Seoul gas project whose transit fees through North Korea would bolster the bankrupt, peace-threatening regime in Pyongyang.

Much of this, again, is the Obama Administration’s heritage. But its pandering to environmentalistas within its ranks has exacerbated old problems and invented new ones. With most of the President’s foreign policy initiatives in shambles, the external manifestations of his energy policy could be the straw that breaks the camel’s back.

sws-09-23-11

All American


Maybe this is a stretch too far, but I watched two TV interviews with Cheney on Fox Sunday afternoon [Sept. 4, 2001]. And I came away with a good, warm feeling: seems to me he is the example of what good old American common sense can do/does in the artificial hothouse environment of Washington. I mean here is a guy who came into public life via the Republican Establishment [after all, he was Ford’s chief of staff! and had made his way pretty much through the “normal” Washington career ladder to near the top], yet, faced with the horrible decision-making that came when he became “assistant president” rather than the usual [“a bucket of warm p___”] vice president with Bush II, he acted with integrity and in the face of an overwhelming opposition within the Bush
cabinet most of the time. [I am forgiving him backing Kay Bailey Hutchison against Rick Perry in the GOP primary for governor of Texas; he had a friendship with her during their Washington sojourns.] By the way, his wrestling match with a bad heart certainly didn’t make any of this easier.
Of course, I am probably taking him “out of context”; Even with all we know about a public figure, we don’t know and never will know the ins and outs of motivation. But we do know that he pretty much hit rock-bottom in his early days — alcohol, dropped out of school, was working as a lineman, not that that isn’t a worthy occupation. [We had proof of that in this damned hurricane!] One story I have heard is that Liz Cheney — whom I also see as a pretty admirable character and we know an intelligent public speaker — did it by refusing to marry him until he went back to school, straightened up, etc.
Then there is Wyoming which I don’t know, but dream of as a pretty wonderfully, “pure” place — and I don’t want to be disenchanted!
Anyway, in a peculiar way, it brightened my day.

And no Golden Tablet either


Mitt Romney is a fossil leftover from the age of the Rockefeller Republicans.

Paralyzed? no, numbed a bit!


from a dear friend:

It is not the US President, Senate of Congress, but the full application of “check and balance”:
in the past “balance” was not applied to the full because Republicans and Congress shared the same basic values; now Congress as well as Senate are fundamentally divided, and Congress, Senate, Legislative and Executive all blocking each other. The US Government is paralysed, no matter who is President, and how good the President is…

I don’t see it this way at all.
First of all, the financial crisis [the 20107-08] was initially brought on by government interference resulting from the housing debacle which was the product, not of the markets, but of government legislation and regulation intended to manage the housing scene for supposed beneficial and narrower partisan ends.
The nature of the crisis was also exaggerated in the heat of the debate: there was no threat of immediate default given the government’s revenues, etc. Obama & Co. were trying to use  concern with default to force their philosophy of government intervention in the economy on the majority which still opposes it, at least in theory although the electorate has to some extent been “bought off” with populist arguments and “spoils”. It is a basic argument over whether more of the resources of the economy are to be used to fund government and its intervention in the markets and the society or to permit the markets with all their imperfections to dictate the direction and progress of the economy and the society generally by  maintaining maximum personal freedoms and choices.
The debate was useful and necessary as nasty as it looked. Great ideological battles are always ugly in a democratic society with representative government. After all, what is the use of having a debt ceiling if it is a matter of “routine” as the Administration argued, to keep voting it larger and larger, without this fundamental examination.
The partial resolution of the crisis has, for the moment, been effective. While it was a compromise of the goals of one party — the fiscal conservatives — it did accomplish its purpose by making increasing debt and additional taxation the main subject of the debate, which it had not been and which the opposition — the Obama Administration and its supporters — had refused to accept until now.
I think a watershed in thinking has been achieved and will have its long-term effect.
All this fashionable commentary — such as this BBC piece, which I see as typical of the “bien pesant”, and I must say, more trypical than not, of the BBC and The Economist — about the paralysis of government, etc., etc., is superficial and ahistorical. The U.S. has always gone through these kinds of crises when big issues are being debated. They are inevtiable, a part of the life of a relatively effective system of representative government but one based on a division of powers. [Please note that the European style of the monopoly of a legislative body — where it hasn’t broken down — rather than an intended balance of forces among legislative, executive and judicial certainly doesn’t work better. The evidence, if further historical references were not enough, is the crisis of the Euro and the EU which is as deep if not deeper than the present situation in the U.S. with less possibility of resolution, I would argue.]

What Obama Could Do


The dust has far from settled on the Washington stalemate over setting a new debt limit. As Thomas Sowell pointed out, so logically, were an increase in the debt ceiling only  “routine”, held up by pesky Congressional Tea Partiers, as the spenders charged, then what would be the purpose of having a ceiling at all? But while an indecorous debate encapsulated the larger ideological divide, America rapidly moves on, remorselessly, to threatening politico-economic issues cascading in from Europe and Asia as well as at home.

Ironically the current world crisis proved one thing: a continuing overwhelming faith in America’s importance, whether economically or culturally. Proof is “the flight to quality” by investors worldwide into the American Republic’s indebtedness as witness all-time record low interest in U.S. Treasuries auctions. Prime Minister David Cameron’s turn to American police [overcoming the usual our British Greek to your American Roman prejudices] in the face of chaotic English urban rioting is another indicator. But disquieting news from Libya approaching indecisive civil war and tragic events in Afghanistan where withdrawal leaves a highly vulnerable Pakistan indicate just how wanting is continued Obama Administration “leading from behind”.

US economic amelioration and patching up its world role would require extraordinary statesmanship. And as many observers, Pres. Harry Truman for one, have judged, the Constitution and history has made the presidency a very strong executive, and it sometimes matters less what he decides but that he act. “The buck stops here”, Mr. Truman’s pithy saying, remains a call for presidential courage on Pres. Barack Obama.

Here’s the kind of action that might result were that summons answered:

  • Send Michelle and the kids off to Martha’s Vineyard while making a seminal Oval Office Labor Day speech on economic affairs.  The spin might be: while holding to fundamental beliefs for a new era of economic justice, pragmatism demands that agenda be put on hold to meet the deepening emergency replaced by a program of cooperation with business to produce jobs immediately.
  • Ask the Congress to skip vacation and reconvene in special session, if needs be three days a week, to consider economic-political measures necessitating legislative action, or simply as a forum to vent the public’s criticism.
  • Call for a summit at the highest level with our allies in Europe and Japan on the world economy — including the simultaneous attendance of all central bankers –to discuss coordinating economic strategies and tactics.
  • Begin weekly meetings in closed session with a group of recognized private sector leaders to brainstorm recovery strategies and tactics.
  • Call for an immediate minimum two-year extension of the Bush tax cuts, ask Congress immediately to cut capital gains to zero, and begin the examination of longer term tax alternatives including a flat tax.
  • Propose a tax reform commission of experts modeled after the Defense Base Closure and Realignment Commission to suggest immediate incremental incentives for small businesses – the fountainhead of jobs.
  • Lift all administrative restrictions on discovery and production of fossil fuels, especially in the Gulf and Alaska and Virginia, creating perhaps a quarter of a million jobs immediately.
  • Use the extensive administrative powers written into Obamacare to suspend any implementation for at least five years and suggest its review by a body of medical, insurance and regulatory technocrats to be presented to the Congress before November 2012.
  • Ask Congress for a one-time tax remission for multinationals to encourage repatriation of an estimated $2.5 trillion in profits held overseas, on condition 25% be invested immediately in an infrastructure fund [highways, bridges, airport, rail reconstruction, etc.], a private sector Reconstruction Finance Corporation administered by those companies in collaboration with local governments.

And then sit back and see the American economy take off!

Alas! I fear we have as much hope for such a program, either thematically or in its specifics, as the proverbial snowball in the nether regions. Hangers-on, leftwing Democrats and the kept mainstream media will continue to hope for victory in next year’s elections, clinging to an agenda designed to enthuse the President’s “politically correct” base, demonize his opponents and flimflam independents by pretending a position of compromise.

Unfortunately, it looks like that indomitable American economy with its incredible history of jobs creation will have to continue to tread water – as it will manfully — against a Washington tide.

sws-08-12-11

Poor Richard’s Debt Almanac


The debt crisis is likely to be with us for quite a while. And since TV talking heads speak in gobbledygook, what better than a layman’s glossary? Herewith:

Banks  Safehouses where hardworking individuals and corporations put their savings supposedly to discreetly finance other people’s worthy projects.

Bonds  Paper representing company or country debt bought and sold with interest paid to owners whose value peaks when repayment looks more and more unlikely.

Central Bank Each government’s own bank to protect the national prosperity by printing money at a proper level and manipulating it against other currencies.

Correction When the bottom falls out of the stock market, and small investors get caught with their pants down, not knowing whether to ride it on down and hope or sell at a loss.

Derivatives Bets on bets on bets hidden in computers until someone punches the wrong algorithm and all hell breaks loose.

Dollar The USA currency, devaluing in a deteriorating economy, but still the standard for international transactions and guarantee for other even weaker currencies.

ECB European Central Bank, the Euro mother bank unable to salvage bankrupt Greece, Portugal, Ireland, Spain and, perhaps, Italy, who can’t pay their bills because they borrowed too much elsewhere.

Euro The European Community’s common currency but uncommonly in trouble because 17 different finance ministries drive their countries’ earning and spending in different directions.

Financiers Technocrats who believe they have mastered markets in order to feather their own nests but in times of crisis panic endangering the system by calling for government handouts.

GDP Gross domestic product is an estimate of all national economic activity, often divided to give a widely used per person figure not revealing much about you and me.

Geithner The U.S. chief financial officer who is looking for a way to get off the Obama ship of state after his government bureaucratic instincts called all the shots wrong.

Gold It’s a precious [as in valuable not cute] metal which shines when polished whose value is considered immutable and therefore a refuge when currencies cheapen wherefore now at all time highs.

IMF The international money pot, the cavalry supposed to come to the rescue when individual donor members got into trouble before the whole caboodle got too big and complicated.

Inflation When too much money chases too little goods, the prices begin to spin upward and shortly get out of control if the government simply continues printing money to chase it.

Intervention When Central banks buy up or sell their own currency in order to halt, slow or accelerate its value against other currencies which often doesn’t work and results in further panic.

Merkel Germany’s chief executive whose training as a physicist in Communist East Germany hasn’t equipped her to keep pumping out exports to countries who can’t pay in order to maintain Europe’s largest economy’s prosperity.

Obama The American chief executive, the first in the 200-year history of The Republic who believes government directed redistribution of the fruits of citizens’ labor will insure future stability, prosperity, peace and justice.

RenMinBao Beijing’s currency, for which no one knows the value, only used in China except when held outside in the hope it can eventually be reinvested in China, but which is usually called the yuan.

Revenue The money coming into the government’s coffers – particularly in the US –enhanced only in periods of prosperity created by a government which promotes business and suckles taxpayers.

Stocks  Paper representing bets on the ability of corporations to profit under changing circumstances, swapped with fellow gamblers who think they know more than their trading partners.

Taxes   Money squeezed out of citizens to fund the commonwealth which when reaching exaggerated heights encourages government profligacy and citizens’ evasion blocking entrepreneurial talent.

“Terrorists” That’s what spendthrift liberal politicians call Congressmen who think they ought to stick by 2010 campaign promises to rein in Washington’s 75-year-old spending spree to pay off debts before drowning.

US Treasuries American government debt traded and still considered, despite all the US trials and tribulations, the better place to keep money as its current relatively low interest paid buyers indicates.

World Bank A collection of highly paid, income tax free Washington theoreticians which helped reconstruct Europe after WWII but mistakenly preached government to government lending could modernize backward economies and societies.

sws-08-05-11

Armagedon? Not exactly


We live in a media world constantly trumpeting something happening for the first time ever, the biggest, the best or the worst something happening or predicted, or something that inevitably will happen if something isn’t done. Often that simply doesn’t square with the facts or history. 

The Obama Administration, fighting for a second life after 2011, has joined this Hallelujah chorus to frighten the electorate into accepting a bad bargain: a short-term bailout with more taxes, bigger deficits — and more government. It gets widespread support — from “special interests” [yours and mine] to the bond rating agencies who failed so miserably in the 2007-08 financial crisis. Mind you, those agencies should also be warning us the outlook for American government securities is grim if Washington doesn’t surgically go after its runaway spending and unsustainable deficits. [Shame on old friend Stuart Varmey for not making that clear on Fox News during one of Bill O’Reilly’s tantrums.]

As I write facing a new debt ceiling deadline, one recalls Sec. of Treasury Timothy Geithner has cried wolf too many times adding further confusion. It’s certainly legitimate to speculate whether Treasury could – as many experts insist – scrape together enough cash to pay creditors for a few more weeks while longer term solutions were put in place.

True enough, the U.S. government has never defaulted on “the good faith and credit of the U.S.”. Were it to do so, all its vast implications are probably unfathomable. That it would not be good for individual citizens is obvious. Still, it is quite another matter to call it the end of the world.

While it is true the U.S. has never defaulted per se, something pretty close came about not so long ago as financial history goes. By 1970, Washington had got itself into a fix, in many ways similar to today’s. The dollar was greatly overvalued with bills coming due for Pres. Lyndon B. Johnson‘s Great Society and the Vietnam War. International balance of payments tilted with inflexible fixed currency rates established by the 1944 Bretton Woods Agreement. Inflation threatened.

On August 15, 1971, President Richard .M. Nixon unilaterally repeat unilaterally suspended theoretical convertibility of the dollar into gold, set a new lower rate, and demanded our trading partners raise their own currencies. In December 1971 they gathered at the Smithsonian to sign on; there wasn’t a lot they could do. By the way, it didn’t work: two years later, Washington again realigned gold and the world set off on fluctuating currencies tied to the dollar which it has tried to maintain ever since.

Mind you, yes, of course, it was a different world. Europe and Japan had recovered from World War II but weren’t admitting it. Japan was running up huge dollar holdings, sucking away American manufacturing jobs, much as China today. But the U.S. was seen as cock of the walk with strong – if sometimes knuckle-headed – leadership. [That was long before President Barack Obama spent two years “leading from behind”, denigrating America’s past, its uniqueness and its leadership role.] Pres. Nixon and his president-aspirant Sec. of Treasury, blustering Big John Connally, slapped on wage and price controls, a calamity abandoned three years later when inflation hit double digits. But, in effect, “the Nixon Shocku” [as the Japanese who got caught flat-footed called it] had chopped its creditors off at the ankles.

Perhaps the most significant difference, among many, from those days is a world crisis in every theater. The Euro, a figment of Brussels bureaucrats’ imagination without EU unified fiscal and monetary policy control, is on the ropes. Sterling is in equally bad straights with the UK trying to dig out of more debt than any other industrial country. The Japanese, borrowing yen from themselves with abandon for a quarter of a century, now face mammoth new reconstruction with the world’s fastest ageing population. China, with its deus ex machina of unlimited infrastructure expansion, subsidized exports and a walled-in market, is slamming on the yuan brakes against incipient inflation. India faces runaway inflation with its rupee investors taking their capital elsewhere because they don’t see massive reform of a former Soviet-bent East IndiaCo. system. Mideast sheikhs are squandering their [and our] petrobillions in the same old way.

Things look disastrous in Washington, but bottom line: compared to whom?

sws-07-22-11

A vicious circle tightens



The globalized economy’s undertow is ripping all around the world.

Even the economic optimists’ two darlings, China and India, are now troubled. Seen as the world’s growth machine [along with a now overheated Brazil] in a period of advanced economies’ stagnation, their downturn produces a universally grim world outlook.

India, now the world’s largest population, had promise to overtake

China – perhaps more stable with its veteran private sector and representative government. But inflation threatens with food almost half its consumer index rising to more than 9 percent last month. Prime Minister Manmoham Singh, after all a graduate of Soviet-style Indian planning, has his foot on the brake and gas pedal at the same time. Reserve Bank of India rates force lending for preferred firms to 13 percent and notorious paper-shuffling babus [clerks] hobble initiative, sending Indian coal companies, for example, despite some of the world’s largest reserves, chasing projects from Australia to North America. A spate of influence peddling scandals, including $16-billion in telecommunications, further clouds the scene.

New Delhi’s geopolitical rival, China, has turned its back on its 25-year strategy to prevent destabilization of one-party dictatorship with maximum growth. With incipient inflation, Communist leadership enters a generational succession next year trimming its investment-led behemoth’s sails. Widespread civil violence – despite enormous expenditures for the most elaborate hi-tech suppression machine in the history of authoritarianism – jeopardizes any new tactics. In fact, all the Chinese boom’s contradictory chickens simultaneously are coming home to roost: vast overexpansion of infrastructure feeding the boom [along with subsidized exports] has produced marvels for photographers but a real estate bubble including, literally, empty new cities. There’s growing resentment over second class citizenship and lack of services among more than 200 million migrant labor from rural areas stampeded to coastal cities employment. Declining foreign markets, roaring imported commodity prices [ironically brought on in part by speculation on “unlimited” Chinese demand], wage pressure, competition from export-led cheap-wage producers, monumental corruption, all now threaten “the Chinese model”. Consumption continues to decline as a percentage of domestic product mocking talk of redirecting a growth strategy. A combination of nonconvertibility and hot money chasing an undervalued yuan demonstrates how empty talk of it as an international reserve currency is. Beijing’s capacity for foot in mouth disease is epitomized in its increasing hoard of dollars and Treasury debt [again on the upswing] while officials continuously publicly denigrate the dollar.

So much for “the emerging markets”.

Turning to the developed world, there, too, crises are escalating.

A bureaucratic hassle over the Euro with divergent views in Berlin, Paris, Brussels and Frankfurt is turning into a dragged out effort to save the 17 European Union members’ common currency. Meanwhile other integration efforts — a free labor market and common defense and foreign policy — are faltering. A Greek default could produce a European banking crisis [even contagion for North America]. In other words, a fiscal and monetary crisis is turning into a major political upheaval threatening accepted European patterns. Half-baked intervention in Libya, dragging in NATO and the U.S., was announced in idealistic terms by Europe’s leaders. But it encapsulates European concerns – unlike the increasingly hot American debate over Obama Administration’s opting for “a war of choice”. For Europe “Libya” is linked directly to falling birthrates and need for imported labor and unemployed North African, Middle Eastern and Black African youth almost literally swimming the Mediterranean at a time Muslim immigrant assimilation is increasingly questioned.

Europe faces, too, the fact the world’s window to the U.S. consumer maw which supplied the post-World War II economy not only with unlimited markets but revolutionary technology has a “closed for repairs” sign with no reopening time indicated. Whatever happens after decades of drunken sailor’s spending, there will be no substantial U.S. economic strategy in place until after November 2012. Current Washington debate, if it can be dignified with that title, over raising the debt limit and reducing government spending, is simply a foretaste of the pain necessary to get the U.S. economy – perhaps now sliding into a double-dip recession — back to its historic miraculous production of jobs and expanding markets.

It’s going to be a long hot summer and a grim fall — despite the American sideshow of political shenanigans with the curtain only temporarily coming down on the first [Weiner] scene.

Meanwhile back at the ranch …


Mesmerized by the Osama Ben Ladin drama, world attention has swung away from world economic issues. That may not be for long. A three-ring circus of instability matching P.T. Barnum’s extravaganzas is in full swing. But unlike Ringling where only the viewer’s attention connects acts, so intertwined are these convulsions even the most arcane market punter is having difficulty telling us what is going on – much less how to invest.

  • · Ring No. 1 is the soap opera – to change my metaphor — playing out with Europe’s common currency. It is becoming increasingly clear, as some of us predicted at the beginning of the crisis, the Euro cannot survive in its present form. With Greece near civil war, the markets tell anyone listening there is no confidence in bail-outs even as a new one is underway in Greece and one just put together for Portugal. Because default could come at any moment, borrowing rates are too high for recovery even where recalcitrant politicians have the courage to inflict the pain of austerity. Joining Ireland, and soon probably Spain, clinging to the Euro vitiates unavoidable belt-tightening their separate currencies once forced on earlier regimes. Threat of a German taxpayers’ revolt grows for German Chancellor Angela Merkel’s increasingly shaky federal coalition — wounded recently by loss of the largest state after 34 years of conservative rule but still soon facing four state elections. Public opinion sees Berlin doing the heavy lifting for spendthrifts but ignores it was those miscreants who gobbled up German exports. Unfortunately, the Brussels EUrocrats’ rescue stratagems invite a future dramatic Euro crash. By procrastinating, they increasingly are making the common currency’s fate synonymous with the whole “European project” of creating a united continent to avoid wars and preserve prosperity.
  • · Chinese delegates have decamped Washington after another annual talkathon with a befuddled Obama Administration trying to spin what is in reality a dismal impasse. Just as everyone was being lulled into myths of Beijing’s boosting consumption, April marked record trade surpluses. The combination of higher imported commodities, slackening appetite for its subsidized exports and growing concern about its real estate bubble did not stem the tide. Beijing’s escalating humongous dollar holdings show where big chunks of the Fed’s “quantitative easing” [printing dollars] have gone. Meanwhile, Beijing further screws down political repression. Announced internal security costs are larger than its understated publicized defense budget. On the eve of a generational transfer of power, there is paranoia about “Arab spring” contagion and much shin-kicking among leaders. The Communist politburo is in no mood for “experiments” but “keeps on digging its [financial] hole”. That is now leading to inflation [if paused for the moment], especially in food, the overwhelming concern for most Chinese. Thus, recruits to the tiny China-will-implode prognosticators, among them yours truly, is growing.
  • Our third ringmaster [or perhaps snakeoil salesman to mix out metaphor again] proclaims greedy oil companies are the cause of high gasoline prices. Mr. Obama’s own clamp on Gulf offshore drilling as well as Alaskan oil are the real culprits. Of course, as markets showed in mid-May, probably temporarily, a sudden stronger dollar and lower commodities prices could sink notoriously unpredictable crude oil prices – but probably only as a sign of a descent into double-dip recession. For the moment, relief seems unlikely for Memorial Day weekend driving with Louisiana’s 15% of refining capacity threatened by the Mississippi River flood  And continued high prices at the pump could just be the 2011 election eve deciding lollapalooza rather than the current concern for fiscal discipline by an American electorate burdened with  joblessness and foreclosures now running three months in arrears.

Interconnections among all these phenomena are infinite and mostly unpredictable. But the 1997-8 crash apparently did not teach us – there are signs among our bankers – clever derivatives and exotic algorithms are not going to give us a road map to recovery. Just as the self-emulation of a single unemployed Tunisian – the least likely trip-wire in the whole Muslim world — set off a wave of unpredictable revolutionary unrest among 300 million Arabs, the world economy, too, is at the mercy of unforeseen events and their unanticipated consequences.

Tighten your seat belts!

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Obama’s foreign policy: Look the other way to avoid disaster


Whatever the motives by all parties behind the Libyan intervention, the worst fears expressed in the UN resolution “authorizing” the use of force are coming true.

At this writing, half a million civilians in Libya’s third largest port-city of Misurata feel the blast of Muammar Qadaffi’s only half-crippled firepower. Pitifully, they include tens of thousands of Black African illegal migrants trying to get to Europe –hostages like oil in Qadaffi’s blackmail games with the Europeans. Two Western journalists’ deaths dramatized what could well turn into the kind of humanitarian catastrophe the UN trumpets but repeatedly fails to prevent. [A harbinger of a coming catastrophe, ignored by the media, was loss of 200 souls on a refugee ship in early April.]

Misurata is emblematic as the rebels’ outpost in the west close to the Libyan capital, 500 miles from their Benghazi stronghold in eastern Cyrenaica, proof Qadaffi rules largely by terror.

But the Obama Administration has failed to hand off to NATO the dictator’s ouster for which Washington itself along with the Europeans and most Arab states repeatedly calls. Half-hearted attempts to arm the rebels – first with “non-lethal” equipment and later with armed drones – are too little and too late to end what Washington admits is stalemate.

At the UN Security Council, opposition from China and Russia [and hypocritical India] always ready to sabotage Western initiatives, blocks expanding sanctions, including tens of billions Qadaffi’s family still dispenses. They help bribe African states – long on Qadaffi’s dole — who call for a negotiated settlement to rescue the regime. It also whets Russia and China’s appetite for re-initiating lucrative weapons sales to Qadaffi.

This fiasco is only the most flagrant in a growing list of Obama foreign policy disasters. Granted most crises are long in the making, nevertheless, Mr. Obama’s indecisiveness in all but his adamant refusal to fulfill the U.S. role as leader of the Western alliance aggravates every Mideast problem:

· Washington’s obstinate pursuit of accommodation with Syria, perhaps the Arab world’s bloodiest regime, has come a cropper as opponents test whether Dictator Basher al-Assad will escalate current dozens of killings against peaceful demonstrators to the tens of thousands during his father’s reign or abdicate to proliferating Muslim radicals.

· The Obama Administration’s insistence on pressing the issue of outposts in the West Bank, putting the Jewish state’s security at risk, has brought a near Washington-Jerusalem breakdown, endangering the U.S.’ only stable alliance in the region, further negating Israeli-Arab compromise.

· Washington’s indecision in fostering a Mubarrak transition opened the floodgates to the Moslem Brotherhood [whom only Mr. Obama’s Arab experts characterize as “moderate”], weakening Cairo’s military leadership and jeopardizing Egypt’s opposition to Iranian regional expansion.

· The Administration’s belated tepid support for Tehran’s dissidents has not only emboldened the mullahs to strengthen their terrorist tentacles to the Mediterranean and into Afghanistan, but encouraged the Germans, Indians, and of course, the Chinese, to continue flaunting economic sanctions.

· The President’s pretentious “outreach” rhetoric only strengthened the Arab/Muslim “victimization” complexes and symbolic bows to the Saudi monarchy have soured with what Riyadh sees as sabotage of its interests in Egypt, Bahrain and Yemen resulting in its noncooperation on boosting OPEC quotas thereby hiking petroleum prices.

· Everywhere U.S. prestige is taking a shellacking, not only from its opponents, but increasingly becoming suspect to European allies who suddenly have been set adrift without their traditional recourse to American leadership and firepower, in the midst of their own Euro/EC crisis.

The approaching electoral season’s probable concentration on domestic concerns is likely to give the Obama Administration some respite from foreign policy critics. Grounding his campaign headquarters in Chicago – to mask his dependence on its political base among the chattering classes on both coasts – may help obscure international issues. Indeed, American foreign policy since its emergence on the eve of World War I as a major player on the world stage has too often been piquancy for violent fluctuation between withdrawal and forced engagement.

But in the 21st century the digital revolution has sounded the death knell of many older perceived choices with instantaneous communication, globalize economics and space age weapons of mass destruction missilery. And, in the end, what may well be building is a new and unforeseen crisis – at the level of Pearl Harbor or 9/11. Turning away may not be a real option the American public will have this time.

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