Monday, January 19, 2004
What are they really up to in space?
As Ken was pointing out, they don't give a crap about Mars. They want to get rid of the expensive space shuttle, pay their friends to put missiles on the moon, and monopolize resources in another landgrab.
Yahoo! News - U.S. Eyes Space as Possible Battleground
U.S. National - Reuters
U.S. Eyes Space as Possible Battleground
Sun Jan 18, 2:27 PM ET
By Jim Wolf
WASHINGTON (Reuters) - President Bush (news - web sites)'s plan to expand the exploration of space parallels U.S. efforts to control the heavens for military, economic and strategic gain.
Defense Secretary Donald Rumsfeld long has pushed for technology that could be used to attack or defend orbiting satellites as well as a costly program, heavily reliant on space-based sensors, to thwart incoming warheads.
Under a 1996 space policy adopted by then-President Bill Clinton (news - web sites) that remains in effect, the United States is committed to the exploration and use of outer space "by all nations for peaceful purposes for the benefit of all humanity."
"Peaceful purposes allow defense and intelligence-related activities in pursuit of national security and other goals," according to this policy. "Consistent with treaty obligations, the United States will develop, operate and maintain space control capabilities to ensure freedom of action in space, and if directed, deny such freedom of action to adversaries."
No country depends on space and satellites as its eyes and ears more than the United States, which accounted for as much as 95 percent of global military space spending in 1999, according to the French space agency CNES.
"Yet the threat to the U.S. and its allies in and from space does not command the attention it merits from the departments and agencies of the U.S. government charged with national security responsibilities," a congressionally chartered task force headed by Rumsfeld reported 10 days before Bush and he took office in 2001.
Theresa Hitchens of the private Center for Defense Information said the capabilities to conduct space warfare would move out of the realm of science fiction and into reality over the next 20 years or so.
"At the end of the day it will be political choices by governments, not technology, that determines if the nearly 50- year taboo against arming the heavens remains in place," she concluded in a recent study.
Outlining his election-year vision for space exploration last week, Bush called for a permanent base on the moon by 2020 as a launch pad for piloted missions to Mars and beyond.
One unspoken motivation may have been China's milestone launch in October of its first piloted spaceflight in earth orbit and its announced plan to go to the moon.
"I think the new initiative is driven by a desire to beat the Chinese to the moon," said John Pike, director of GlobalSecurity.org, a defense and space policy research group.
Among companies that could cash in on Bush's space plans are Lockheed Martin Corp., Boeing Co. and Northrop Grumman Corp., which do big business with the National Aeronautics and Space Administration as well as with the Pentagon (news - web sites).
The moon, scientists have said, is a source of potentially unlimited energy in the form of the helium 3 isotope -- a near perfect fuel source: potent, nonpolluting and causing virtually no radioactive byproduct in a fusion reactor.
"And if we could get a monopoly on that, we wouldn't have to worry about the Saudis and we could basically tell everybody what the price of energy was going to be," said Pike.
Gerald Kulcinski of the Fusion Technology Institute at the University of Wisconsin at Madison estimated the moon's helium 3 would have a cash value of perhaps $4 billion a ton in terms of its energy equivalent in oil.
Scientists reckon there are about 1 million tons of helium 3 on the moon, enough to power the earth for thousands of years. The equivalent of a single space shuttle load or roughly 30 tons could meet all U.S. electric power needs for a year, Kulcinski said by e-mail.
Bush's schedule for a U.S. return to the moon matches what experts say may be a dramatic militarization of space over the next two decades, even if the current ban on weapons holds.
Among other things, the Pentagon expects to spend at least $50 billion over the next five years to develop and field a multi-layered shield against incoming missiles that could deliver nuclear, biological or chemical weapons.
Ultimately, this shield -- first proposed by President Ronald Reagan (news - web sites) and dubbed "Star Wars" by critics -- may include space-based interceptors, the first weapons in space, as opposed to sensors that guide weapons.
Last year, the Pentagon's Missile Defense Agency obtained $14 million for research on basing three or more missile interceptors in space by the end of the decade for tests.
The plan would field satellites armed with multiple "hit-to-kill" interceptors capable of destroying a ballistic missile through a high-speed collision shortly after its launch, according to Wade Boese, research director of the private Arms Control Association. Such a system could also function as an anti-satellite weapon.
No decision has been made yet to deploy space-based interceptors as part of the U.S. missile defense program "although we are conducting research and development activities in that area," a Defense Department official said Friday.
As Ken was pointing out, they don't give a crap about Mars. They want to get rid of the expensive space shuttle, pay their friends to put missiles on the moon, and monopolize resources in another landgrab.
Yahoo! News - U.S. Eyes Space as Possible Battleground
U.S. National - Reuters
U.S. Eyes Space as Possible Battleground
Sun Jan 18, 2:27 PM ET
By Jim Wolf
WASHINGTON (Reuters) - President Bush (news - web sites)'s plan to expand the exploration of space parallels U.S. efforts to control the heavens for military, economic and strategic gain.
Defense Secretary Donald Rumsfeld long has pushed for technology that could be used to attack or defend orbiting satellites as well as a costly program, heavily reliant on space-based sensors, to thwart incoming warheads.
Under a 1996 space policy adopted by then-President Bill Clinton (news - web sites) that remains in effect, the United States is committed to the exploration and use of outer space "by all nations for peaceful purposes for the benefit of all humanity."
"Peaceful purposes allow defense and intelligence-related activities in pursuit of national security and other goals," according to this policy. "Consistent with treaty obligations, the United States will develop, operate and maintain space control capabilities to ensure freedom of action in space, and if directed, deny such freedom of action to adversaries."
No country depends on space and satellites as its eyes and ears more than the United States, which accounted for as much as 95 percent of global military space spending in 1999, according to the French space agency CNES.
"Yet the threat to the U.S. and its allies in and from space does not command the attention it merits from the departments and agencies of the U.S. government charged with national security responsibilities," a congressionally chartered task force headed by Rumsfeld reported 10 days before Bush and he took office in 2001.
Theresa Hitchens of the private Center for Defense Information said the capabilities to conduct space warfare would move out of the realm of science fiction and into reality over the next 20 years or so.
"At the end of the day it will be political choices by governments, not technology, that determines if the nearly 50- year taboo against arming the heavens remains in place," she concluded in a recent study.
Outlining his election-year vision for space exploration last week, Bush called for a permanent base on the moon by 2020 as a launch pad for piloted missions to Mars and beyond.
One unspoken motivation may have been China's milestone launch in October of its first piloted spaceflight in earth orbit and its announced plan to go to the moon.
"I think the new initiative is driven by a desire to beat the Chinese to the moon," said John Pike, director of GlobalSecurity.org, a defense and space policy research group.
Among companies that could cash in on Bush's space plans are Lockheed Martin Corp., Boeing Co. and Northrop Grumman Corp., which do big business with the National Aeronautics and Space Administration as well as with the Pentagon (news - web sites).
The moon, scientists have said, is a source of potentially unlimited energy in the form of the helium 3 isotope -- a near perfect fuel source: potent, nonpolluting and causing virtually no radioactive byproduct in a fusion reactor.
"And if we could get a monopoly on that, we wouldn't have to worry about the Saudis and we could basically tell everybody what the price of energy was going to be," said Pike.
Gerald Kulcinski of the Fusion Technology Institute at the University of Wisconsin at Madison estimated the moon's helium 3 would have a cash value of perhaps $4 billion a ton in terms of its energy equivalent in oil.
Scientists reckon there are about 1 million tons of helium 3 on the moon, enough to power the earth for thousands of years. The equivalent of a single space shuttle load or roughly 30 tons could meet all U.S. electric power needs for a year, Kulcinski said by e-mail.
Bush's schedule for a U.S. return to the moon matches what experts say may be a dramatic militarization of space over the next two decades, even if the current ban on weapons holds.
Among other things, the Pentagon expects to spend at least $50 billion over the next five years to develop and field a multi-layered shield against incoming missiles that could deliver nuclear, biological or chemical weapons.
Ultimately, this shield -- first proposed by President Ronald Reagan (news - web sites) and dubbed "Star Wars" by critics -- may include space-based interceptors, the first weapons in space, as opposed to sensors that guide weapons.
Last year, the Pentagon's Missile Defense Agency obtained $14 million for research on basing three or more missile interceptors in space by the end of the decade for tests.
The plan would field satellites armed with multiple "hit-to-kill" interceptors capable of destroying a ballistic missile through a high-speed collision shortly after its launch, according to Wade Boese, research director of the private Arms Control Association. Such a system could also function as an anti-satellite weapon.
No decision has been made yet to deploy space-based interceptors as part of the U.S. missile defense program "although we are conducting research and development activities in that area," a Defense Department official said Friday.
More China Stuff
Quick info on China's currency
Chinese Paper Currency
Interesting Analysis by UPI Courtesy of Brett:
Analysis: China, today's Creditanstalt?
Analysis: China, today's Creditanstalt?
Thursday, 16-Oct-2003 4:01PM PDT Story from United Press International
Copyright 2003 by United Press International (via ClariNet)
--------------------------------------------------------------------------------
WASHINGTON, Oct. 16 (UPI) -- Wednesday, the American Enterprise Institute held a seminar to discuss whether China will revalue the renminbi. The bottom line was: economically, they should, but it would be very difficult and so they won't. The seminar's analysis, however, was more interesting than the conclusion.
The general view was that the Chinese authorities would prefer to keep the renminbi at around 8.3 to the dollar, because their principal concerns are unemployment and the agricultural sector, rather than the country's balance of payments. In any case, China's balance of trade as a whole is far less positive than its balance of trade with the United States; the $100 billion per annum surplus with the United States is offset by a $70 billion per annum deficit with the rest of the world, primarily other countries in emerging Asia. Approximately two thirds of China's exports are processed goods, with substantial amounts of the inputs coming from other Asian countries, and China supplying primarily the labor factor. Thus the net surplus on current account, 3 percent of gross domestic product in 2002, will be less than 2 percent of GDP in 2003.
At the time of the Asian crisis of 1998, there was considerable expectation that the renminbi might decline against the dollar (it has been pegged at its current exchange rate for a decade.) However, the continued high level of foreign investment in China (currently around $50 billion per annum by official figures, although half or more of that may be "round-tripping" of domestic money exported illegally) and the consequent rise in China's foreign exchange reserves has since made the renminbi strong rather than weak. In the past year, the decline of the dollar against the euro and to a lesser extent the yen has been tracked by the renminbi, and by a number of other Asian currencies that also track the dollar, and whose economies are intimately bound up with that of China. Currently, the top 5 Asian holders of foreign reserves own around $1.8 trillion of U.S. Treasury bonds, of which China owns $350 billion.
China's capital account is also an upward force on the renminbi. According to Nicholas Lardy, of the Institute for International Economics, China's capital account was positive by about $30 billion in 2002, a similar amount to the previous year. However, its foreign exchange reserves are building more rapidly than the surplus on capital account, having risen above $350 billion in the first half of 2003. The errors and omissions item in the balance of payments, which generally represents unreported private capital transfers, having fluctuated around $10 billion negative (transfers out) in the years from 1994-2002, was nearly $10 billion positive (unrecorded transfers in) in 2002, and is likely to be larger in 2003 as Chinese savers speculate on a possible revaluation of the renminbi.
Harvey Chen, of Shanghai Jiao Tong University, pointed out that the major political pressure on China to revalue comes from those U.S. multinationals which have not relocated part of their production to China, and from the European Union, against whose currency the renminbi has of course substantially declined, in line with the dollar. U.S. multinationals manufacturing in China would suffer from any substantial revaluation.
Because of the high foreign content in much of the Chinese export volume, it is likely that a revaluation of the renminbi will affect the balance of payments much less than might at first be expected; Lardy estimated that a revaluation of 15-25 percent would be necessary to remove the Chinese payments surplus of only 3 percent of GDP.
Yusuke Horiguchi, of the Institute for International Finance, suggested that rather than a single revaluation, China might widen the trading bands of the renminbi against its current central rate, so that the currency appreciated gradually; repeated such steps, and re-peggings of the central rate, could be undertaken over a period, so that Chinese exporters, and more particularly China's weak banking system, would have time to adjust.
The most difficult problem facing the Chinese government if it wished to revalue the renminbi is in the banking system. This is funded by the very high savings of the Chinese people, who are not allowed to take money out of China, except in very limited circumstances, or to hold non-renminbi deposits with Chinese banks, unless they earned the foreign currency abroad. As Randal Quarles, U.S. Treasury's Assistant Secretary for international affairs pointed out, since only about a third of the increase in foreign exchange reserves has been sterilized, the result has been a huge increase in the Chinese money supply, by 22 percent in the 8 months to August 2003.
This money in turn has been recycled by the state owned Chinese banking system into loans, which according to Lardy are likely to increase by a staggering 33 percent of Chinese GDP, 3.6 trillion renminbi ($435 billion) in 2003. Non-performing loans, which were already around $500 billion, have risen significantly in 2003 and are of course likely to rise even more rapidly as 2003's new loans go sour. Much of the money has been lent to real estate and industrial park developers, to the benefit of U.S. multinationals seeking to manufacture in China, but with a high probability of producing a huge space glut in the near future. China's increase in loans in 2003 is a larger relative increase than in any of the Asian bubble economies of the middle 1990s; as John Makin of AEI pointed out, China has the potential to be the "third bubble" after 1990 Japan and 2000 Wall Street.
In Lardy's words, the Chinese banking system is currently insolvent, in that its liabilities exceed its assets by a substantial margin, but it is not illiquid, as Chinese savers have nowhere else to put their money. This does however mean that for China to remove exchange controls would be highly dangerous; Chinese savers, to whom the parlous condition of the domestic banks cannot entirely be a secret, would instantly move their savings out of the system and into foreign banks. The foreign exchange effect of this would probably be bearable, given China's huge volume of dollar reserves, but the banking system effect, by making the domestic banks both insolvent and illiquid, would almost certainly cause a collapse, the immediate effect of which would however be felt primarily by the Chinese savers with deposits in the banks, rather than by foreign multinationals in China or by the international banking system which (unlike in other Asian countries) does not have a huge exposure to China.)
Of course, if China does not remove exchange controls, it is impossible for a true market rate for the renminbi to be determined. Nevertheless, as a number of participants pointed out, an exchange rate system of either fixed or floating exchange rates can in practice be combined with capital controls relatively easily; this was done in Europe until the middle 1980s.
The principal beneficiaries of a revaluation of the renminbi would be the Chinese middle classes, who would also be the principal beneficiaries from a relaxation of exchange controls, that would allow them to move their money to safer, more lucrative environments abroad. If the Chinese government was motivated purely by the welfare of its people, it would in my view revalue the renminbi by around 10 percent, and at the same time engage in a substantial relaxation of exchange controls that was heavily weighted towards the small saver, rather than to business, as is currently contemplated, or towards the rich (who can mostly get their money out anyway.) For example, if each family was allowed to convert $10,000 worth of renminbi into foreign currency deposits, of which $2,000 could be removed from the Chinese banking system altogether -- in cash or by wire transfer to a foreign bank -- the adverse liquidity effect on the Chinese banking system could be moderated, and the small saver in particular granted that most precious of economic freedoms, the right to remove his money from the system if he wishes. Since transfers would be made through domestic Chinese banks, policing the "once a year" requirement would in principle be straightforward.
The collapse of the Chinese banking system is in the long run inevitable; by 2007 foreign banks must be allowed to enter China, under China's World Trade Organization obligations, and the poor quality of the current tsunami of loans will presumably become apparent well before then. Much more important than prolonging the lives of the Chinese banks, however, is preserving as much as possible of Chinese middle class savings from the collapse. Such savings are the only way in which small businesses can be funded, and if they are allowed to be expropriated by the collapsing banking system, the result will be a recession lasting a decade or more, as new business formation drops catastrophically and unemployment soars.
In 1929, a huge U.S. stock market boom burst. In 1930, the stock market began to recover, at a lower level, and the U.S. economy was also only moderately affected by the collapse. In May 1931, the Austrian bank Creditanstalt failed, causing a knock-on liquidity crisis throughout Europe, the insolvency of many European countries, a collapse in world trade, and a downward spiral into the Great Depression.
It is unlikely that China will revalue the renminbi, or free up exchange controls for its unfortunate citizens; the short term political and economic costs are too great. Doing so, however, would at least mitigate the cost of a Chinese banking system collapse, since it would prevent that collapse from destroying the Chinese domestic savings base. In such a case, the Chinese banking system could indeed prove today's Creditanstalt, causing a collapse of world trade, and a re-run of the Great Depression.
Quick info on China's currency
Chinese Paper Currency
Interesting Analysis by UPI Courtesy of Brett:
Analysis: China, today's Creditanstalt?
Analysis: China, today's Creditanstalt?
Thursday, 16-Oct-2003 4:01PM PDT Story from United Press International
Copyright 2003 by United Press International (via ClariNet)
--------------------------------------------------------------------------------
WASHINGTON, Oct. 16 (UPI) -- Wednesday, the American Enterprise Institute held a seminar to discuss whether China will revalue the renminbi. The bottom line was: economically, they should, but it would be very difficult and so they won't. The seminar's analysis, however, was more interesting than the conclusion.
The general view was that the Chinese authorities would prefer to keep the renminbi at around 8.3 to the dollar, because their principal concerns are unemployment and the agricultural sector, rather than the country's balance of payments. In any case, China's balance of trade as a whole is far less positive than its balance of trade with the United States; the $100 billion per annum surplus with the United States is offset by a $70 billion per annum deficit with the rest of the world, primarily other countries in emerging Asia. Approximately two thirds of China's exports are processed goods, with substantial amounts of the inputs coming from other Asian countries, and China supplying primarily the labor factor. Thus the net surplus on current account, 3 percent of gross domestic product in 2002, will be less than 2 percent of GDP in 2003.
At the time of the Asian crisis of 1998, there was considerable expectation that the renminbi might decline against the dollar (it has been pegged at its current exchange rate for a decade.) However, the continued high level of foreign investment in China (currently around $50 billion per annum by official figures, although half or more of that may be "round-tripping" of domestic money exported illegally) and the consequent rise in China's foreign exchange reserves has since made the renminbi strong rather than weak. In the past year, the decline of the dollar against the euro and to a lesser extent the yen has been tracked by the renminbi, and by a number of other Asian currencies that also track the dollar, and whose economies are intimately bound up with that of China. Currently, the top 5 Asian holders of foreign reserves own around $1.8 trillion of U.S. Treasury bonds, of which China owns $350 billion.
China's capital account is also an upward force on the renminbi. According to Nicholas Lardy, of the Institute for International Economics, China's capital account was positive by about $30 billion in 2002, a similar amount to the previous year. However, its foreign exchange reserves are building more rapidly than the surplus on capital account, having risen above $350 billion in the first half of 2003. The errors and omissions item in the balance of payments, which generally represents unreported private capital transfers, having fluctuated around $10 billion negative (transfers out) in the years from 1994-2002, was nearly $10 billion positive (unrecorded transfers in) in 2002, and is likely to be larger in 2003 as Chinese savers speculate on a possible revaluation of the renminbi.
Harvey Chen, of Shanghai Jiao Tong University, pointed out that the major political pressure on China to revalue comes from those U.S. multinationals which have not relocated part of their production to China, and from the European Union, against whose currency the renminbi has of course substantially declined, in line with the dollar. U.S. multinationals manufacturing in China would suffer from any substantial revaluation.
Because of the high foreign content in much of the Chinese export volume, it is likely that a revaluation of the renminbi will affect the balance of payments much less than might at first be expected; Lardy estimated that a revaluation of 15-25 percent would be necessary to remove the Chinese payments surplus of only 3 percent of GDP.
Yusuke Horiguchi, of the Institute for International Finance, suggested that rather than a single revaluation, China might widen the trading bands of the renminbi against its current central rate, so that the currency appreciated gradually; repeated such steps, and re-peggings of the central rate, could be undertaken over a period, so that Chinese exporters, and more particularly China's weak banking system, would have time to adjust.
The most difficult problem facing the Chinese government if it wished to revalue the renminbi is in the banking system. This is funded by the very high savings of the Chinese people, who are not allowed to take money out of China, except in very limited circumstances, or to hold non-renminbi deposits with Chinese banks, unless they earned the foreign currency abroad. As Randal Quarles, U.S. Treasury's Assistant Secretary for international affairs pointed out, since only about a third of the increase in foreign exchange reserves has been sterilized, the result has been a huge increase in the Chinese money supply, by 22 percent in the 8 months to August 2003.
This money in turn has been recycled by the state owned Chinese banking system into loans, which according to Lardy are likely to increase by a staggering 33 percent of Chinese GDP, 3.6 trillion renminbi ($435 billion) in 2003. Non-performing loans, which were already around $500 billion, have risen significantly in 2003 and are of course likely to rise even more rapidly as 2003's new loans go sour. Much of the money has been lent to real estate and industrial park developers, to the benefit of U.S. multinationals seeking to manufacture in China, but with a high probability of producing a huge space glut in the near future. China's increase in loans in 2003 is a larger relative increase than in any of the Asian bubble economies of the middle 1990s; as John Makin of AEI pointed out, China has the potential to be the "third bubble" after 1990 Japan and 2000 Wall Street.
In Lardy's words, the Chinese banking system is currently insolvent, in that its liabilities exceed its assets by a substantial margin, but it is not illiquid, as Chinese savers have nowhere else to put their money. This does however mean that for China to remove exchange controls would be highly dangerous; Chinese savers, to whom the parlous condition of the domestic banks cannot entirely be a secret, would instantly move their savings out of the system and into foreign banks. The foreign exchange effect of this would probably be bearable, given China's huge volume of dollar reserves, but the banking system effect, by making the domestic banks both insolvent and illiquid, would almost certainly cause a collapse, the immediate effect of which would however be felt primarily by the Chinese savers with deposits in the banks, rather than by foreign multinationals in China or by the international banking system which (unlike in other Asian countries) does not have a huge exposure to China.)
Of course, if China does not remove exchange controls, it is impossible for a true market rate for the renminbi to be determined. Nevertheless, as a number of participants pointed out, an exchange rate system of either fixed or floating exchange rates can in practice be combined with capital controls relatively easily; this was done in Europe until the middle 1980s.
The principal beneficiaries of a revaluation of the renminbi would be the Chinese middle classes, who would also be the principal beneficiaries from a relaxation of exchange controls, that would allow them to move their money to safer, more lucrative environments abroad. If the Chinese government was motivated purely by the welfare of its people, it would in my view revalue the renminbi by around 10 percent, and at the same time engage in a substantial relaxation of exchange controls that was heavily weighted towards the small saver, rather than to business, as is currently contemplated, or towards the rich (who can mostly get their money out anyway.) For example, if each family was allowed to convert $10,000 worth of renminbi into foreign currency deposits, of which $2,000 could be removed from the Chinese banking system altogether -- in cash or by wire transfer to a foreign bank -- the adverse liquidity effect on the Chinese banking system could be moderated, and the small saver in particular granted that most precious of economic freedoms, the right to remove his money from the system if he wishes. Since transfers would be made through domestic Chinese banks, policing the "once a year" requirement would in principle be straightforward.
The collapse of the Chinese banking system is in the long run inevitable; by 2007 foreign banks must be allowed to enter China, under China's World Trade Organization obligations, and the poor quality of the current tsunami of loans will presumably become apparent well before then. Much more important than prolonging the lives of the Chinese banks, however, is preserving as much as possible of Chinese middle class savings from the collapse. Such savings are the only way in which small businesses can be funded, and if they are allowed to be expropriated by the collapsing banking system, the result will be a recession lasting a decade or more, as new business formation drops catastrophically and unemployment soars.
In 1929, a huge U.S. stock market boom burst. In 1930, the stock market began to recover, at a lower level, and the U.S. economy was also only moderately affected by the collapse. In May 1931, the Austrian bank Creditanstalt failed, causing a knock-on liquidity crisis throughout Europe, the insolvency of many European countries, a collapse in world trade, and a downward spiral into the Great Depression.
It is unlikely that China will revalue the renminbi, or free up exchange controls for its unfortunate citizens; the short term political and economic costs are too great. Doing so, however, would at least mitigate the cost of a Chinese banking system collapse, since it would prevent that collapse from destroying the Chinese domestic savings base. In such a case, the Chinese banking system could indeed prove today's Creditanstalt, causing a collapse of world trade, and a re-run of the Great Depression.
Friday, January 16, 2004
We should start a new blog called "TodaysCorporateGiveAwayByBUSH". This is the sort of stuff that has me worried.
Peer Review Plan Draws Criticism (washingtonpost.com)
and this:
Yahoo! News - Bush Challenges U.N. Report on Obesity
Peer Review Plan Draws Criticism (washingtonpost.com)
and this:
Yahoo! News - Bush Challenges U.N. Report on Obesity
Jerry's thoughts on China
Posted by Matt in the absence of our comment system...
It will hurt, but it will be a good hurt: things from China are simply
too cheap and they distort the worlds value system. In making the
materials of the earth so cheap they are disposable, we are enticed
into the process of converting the sacred into the profane.
As to democracy in Taiwan... Taiwan belongs to China: it is in its
sphere of influence as much as the entire western hemisphere is in
ours, though we take umbrage at yellow people having anything like a
Monroe Doctrine (the Europeans felt we were totally nuts when we
established that doctrine! Who??? those Americans, dressed in buckskin
and living side by side with Indians???)
We also threatened England in no uncertain terms while they supported
the southern rebellion. And we still treat Cuba as some 1800 lunatic
fit to be locked in a primitive dungeon.
Honk Kong is gone. Taiwan will also go. And China is indeed becoming
reasonable democratic, and what with our moving toward them with
iterations of the patriot act, who knows where we will end up in the
ranking.
I like the notion of easing up trade with China. I like the notion of
staying a little closer to home, with Mexico and Canada and Central and
South Amreica. I like the notion of the US cleaning up its own house.
Mostly, we use Chinese goods like we use Mexican labor: to keep the
labor costs to local American corporations cheap. Screw the heath
care, OSHA, etc.
What are we going to do when China starts using its fair share of air
and then some? Who you gonna call then? (Ghostbusters... NOT)
Our national focus is on long term economic growth, and short term
economic gain, but things like eating, the arts, the good life,
spirituality, and the true heart of man.... nah.
We, the people, all the people, love our children. The governments,
the IMF, the WMF... they don't. It ain't "evil" but it sure is true,
and truth is what you deal with.
Posted by Matt in the absence of our comment system...
It will hurt, but it will be a good hurt: things from China are simply
too cheap and they distort the worlds value system. In making the
materials of the earth so cheap they are disposable, we are enticed
into the process of converting the sacred into the profane.
As to democracy in Taiwan... Taiwan belongs to China: it is in its
sphere of influence as much as the entire western hemisphere is in
ours, though we take umbrage at yellow people having anything like a
Monroe Doctrine (the Europeans felt we were totally nuts when we
established that doctrine! Who??? those Americans, dressed in buckskin
and living side by side with Indians???)
We also threatened England in no uncertain terms while they supported
the southern rebellion. And we still treat Cuba as some 1800 lunatic
fit to be locked in a primitive dungeon.
Honk Kong is gone. Taiwan will also go. And China is indeed becoming
reasonable democratic, and what with our moving toward them with
iterations of the patriot act, who knows where we will end up in the
ranking.
I like the notion of easing up trade with China. I like the notion of
staying a little closer to home, with Mexico and Canada and Central and
South Amreica. I like the notion of the US cleaning up its own house.
Mostly, we use Chinese goods like we use Mexican labor: to keep the
labor costs to local American corporations cheap. Screw the heath
care, OSHA, etc.
What are we going to do when China starts using its fair share of air
and then some? Who you gonna call then? (Ghostbusters... NOT)
Our national focus is on long term economic growth, and short term
economic gain, but things like eating, the arts, the good life,
spirituality, and the true heart of man.... nah.
We, the people, all the people, love our children. The governments,
the IMF, the WMF... they don't. It ain't "evil" but it sure is true,
and truth is what you deal with.
Another outtake from the Project for a New American Century paper, pg. 42. Emphasis mine
American landpower remains the essential link in the chain that translates U.S. military supremacy into American geopolitical preeminence. Even as the means for delivering firepower on the battlefield shift – strike aircraft have realized all but the wildest dreams of air power enthusiasts, unmanned aerial vehicles promise to extend strike power in the near future, and the ability to conduct strikes from space appears on the not-too-distant horizon – the need for ground maneuvers to achieve decisive political results endures. Regimes are difficult to change based upon punishment alone. military preeminence.
American landpower remains the essential link in the chain that translates U.S. military supremacy into American geopolitical preeminence. Even as the means for delivering firepower on the battlefield shift – strike aircraft have realized all but the wildest dreams of air power enthusiasts, unmanned aerial vehicles promise to extend strike power in the near future, and the ability to conduct strikes from space appears on the not-too-distant horizon – the need for ground maneuvers to achieve decisive political results endures. Regimes are difficult to change based upon punishment alone. military preeminence.
Good point about Bush's moon plan Ken. I think you're right on. They probably couldn't sell another military strategy to the public with things in Iraq going poorly, so why not capitalize on the media frenzy surrounding the Mars landers and sell everyone on colonizing the moon. They just haven't mentioned the part about putting missiles up there yet, but that is in their plan for sure.
Pentagon Report Calls for the United States Control of Space:
"Issued September 30 (2001), the QDR report was the product of senior civilian and military leadership of the DoD. "This report outlines the key changes needed to preserve America's safety and security in the years to come," writes Donald Rumsfeld, U.S. Secretary of Defense, in the foreword to the report."
Pentagon Report Calls for the United States Control of Space:
"Issued September 30 (2001), the QDR report was the product of senior civilian and military leadership of the DoD. "This report outlines the key changes needed to preserve America's safety and security in the years to come," writes Donald Rumsfeld, U.S. Secretary of Defense, in the foreword to the report."
Yuan Revalue? Lots to think about with regard to China these days. When they revalue, Wal-Mart and the whole industry that centers around cheap Chinese goods will take a hit as the products become more expensive.
From New York Times: Small Business: Struggling With the Falling Dollar
Key point: The cost of imports from China, the United States' fastest-growing trading partner, have not gone up significantly because Beijing pegs its currency, the yuan, to the dollar. Yet that exchange parity has added to the pain of some American small-business owners who import goods from Europe and elsewhere that compete with Chinese-made products. Complicating matters, China has come under international pressure to revalue the yuan, and any relaxation of its policy could suddenly make its goods more expensive to Americans, too.
And in the news...
News reports regarding revaluing the Yuan (removing the peg). Conflicting reports, but it looks like it will happen soon.:
Google Search: china yuan revalue
From New York Times: Small Business: Struggling With the Falling Dollar
Key point: The cost of imports from China, the United States' fastest-growing trading partner, have not gone up significantly because Beijing pegs its currency, the yuan, to the dollar. Yet that exchange parity has added to the pain of some American small-business owners who import goods from Europe and elsewhere that compete with Chinese-made products. Complicating matters, China has come under international pressure to revalue the yuan, and any relaxation of its policy could suddenly make its goods more expensive to Americans, too.
And in the news...
News reports regarding revaluing the Yuan (removing the peg). Conflicting reports, but it looks like it will happen soon.:
Google Search: china yuan revalue
The Bush administration threatens our security with short term focus on his election. Iraq, weak dollar, leads to debt and subservience to China
From http://www.saag.org/papers9/paper858.html
China currently has nearly 500 missiles aimed at Taiwan and has been increasing them at nearly 15% each year. In addition, it periodically issues loud threats to the renegade province and even warns the US to rein in Taiwan and restrain itself. This leads to insecurity and anger on the island. The Taiwanese president seeking re-election and previously flirting with declaring independence has chosen to hold a referendum on the withdrawal of Chinese missiles. This is a euphemism for independence. China has stated indirectly through high-ranking Peoples Liberation Army officials, that it is willing to face economic and military setbacks to prevent Taiwan from declaring even an intention of independence. The warning is to America that trade sanctions or gunboat diplomacy will not work and the One China policy is sacrosanct. China is smart. It knows that America is bogged down in Afghanistan and Iraq. North Korea has thumbed its nose at the US in nuclear proliferation and it needs Chinese help in the six party talks to put the North Korean genie back in the bottle. China and Hong Kong hold over half a trillion dollars in US treasuries and can sink the dollar. This, an America with budgetary and current account deficits projected infinitely in the future cannot afford, especially with an ambivalent Saudi Arabia and hostile Iran waiting in the wings to price oil in Euros and dethrone the dollar as a reserve currency. China has ignored the desperate pleas of the Bush administration to revalue its currency upwards. Not that it would help too much, because it would ultimately ignite the dormant fire of American inflation. The Congress is sliding towards huge tariffs on Chinese exports. TVs and textile quotas have already been restricted. Punitive tariffs would decimate the Chinese economy and aggravate the regional economic disparities that are already a present threat of fissiparous disintegration to China. This would make it abandon restraint and make it more aggressive towards renegade Taiwan.
This is why America is sending emissaries to stop the Taiwanese referendum and contrary to its hypocritical democracy preaching preventing the progress of democracy in Taiwan. Latin America and much of Asia have already realized that. The Middle East and Africa are getting there. When Taiwan utters the words that some Cherokee nay have uttered on the Trail of Tears---The Great White Father in Washington speaks with a forked tongue the whole world may become enlightened.
http://www.china-ready.com/news/WeakUSDollarPolicyWillBoostChinaInvestment052803.htm
[...]
According to their thinking, a cheaper US dollar will stimulate exports, as US products will become cheaper. Increased demand for US products will lead to hiring of more US workers, which will stimulate more US consumer spending. Happier US consumers and a smoother economy will be less likely to vote out the Bush administration in 2004. At least, that is the conventional wisdom.
But the reality may be very different. A weak US dollar is like a crack high; it may make you feel like the king of the world for a short while, but the comedown can be a potential killer. Foreign investors will not put their capital in the US because their rate of return will be way down. Importers of foreign goods in the US will at first absorb smaller profit margins in order to remain competitive, but will then be forced to raise prices. In order to bring in more foreign capital to finance US debt, interest rates will have to go up, causing inflation. Remember, the US economy relies on foreign capital and investors to finance its debt. And it is unlikely that foreign companies will choose to put their manufacturing in the US because of weak consumer demand and higher costs. Handled poorly, the US economy will end up with the worst of all possible worlds: little or no job creation, weak consumer demand and inflation.
When it comes to job creation in the US, the best that can be said for the Bush administration's economic policies are that the link between tax cuts, economic stimulus and job creation are very tenuous. When it comes to new business, most US companies are trying to offer a security angle in the hope that they can get federal contracts from the Department of Homeland Security, since they seem to be the only organization with any purchasing budget.
So where will the capital go?
Capital always goes where it generates the best rate of return, and it continues to be China, even after the SARS crisis. China is now the factory to the world in many sectors, and this pace will accelerate with the depreciation of the dollar. Because the Chinese yuan is pegged to the US dollar at 8.2 to 1, Chinese products will become even cheaper and Chinese makers will enter more manufacturing sectors and markets. As China's export markets reach full capacity, Chinese companies will turn their attention to developing and stimulating demand in the Chinese domestic market. When the manufacturing sector reaches capacity, growth will be focused on China's service sector.
US, Japanese and European makers will continue to enter the China market and set up factories, but more and more, the emphasis will be on serving the China market instead of their own stagnant markets because that's where the growth will be. Competition in the Chinese consumer market, already hot, will become red hot.
US baby boomers will begin retiring in 2010. Faced with a foreign debt overhang, low job creation, a stretched health insurance and social security system, US consumers will cut their spending even more, which will in turn lead to a fall in the US standard of living. Interest on foreign debt will take a growing piece of the US budget. Hardest hit will be US workers entering the US workforce after 2010; they will have to support all the retiring baby boomers and the combined deficit/demographic timebomb, where a smaller, shrinking tax-paying population supports a growing deficit and growing retired population.
[...]
From
http://www.dailyfx.com/article_rr_005.html
President George W. Bush has told the markets repeatedly that his administration is committed to a strong dollar. However, the Bush administration's recent monetary and fiscal policy initiatives lead us to believe that behind the scenes the US is actually supporting a weak dollar policy. [...]
From http://www.saag.org/papers9/paper858.html
China currently has nearly 500 missiles aimed at Taiwan and has been increasing them at nearly 15% each year. In addition, it periodically issues loud threats to the renegade province and even warns the US to rein in Taiwan and restrain itself. This leads to insecurity and anger on the island. The Taiwanese president seeking re-election and previously flirting with declaring independence has chosen to hold a referendum on the withdrawal of Chinese missiles. This is a euphemism for independence. China has stated indirectly through high-ranking Peoples Liberation Army officials, that it is willing to face economic and military setbacks to prevent Taiwan from declaring even an intention of independence. The warning is to America that trade sanctions or gunboat diplomacy will not work and the One China policy is sacrosanct. China is smart. It knows that America is bogged down in Afghanistan and Iraq. North Korea has thumbed its nose at the US in nuclear proliferation and it needs Chinese help in the six party talks to put the North Korean genie back in the bottle. China and Hong Kong hold over half a trillion dollars in US treasuries and can sink the dollar. This, an America with budgetary and current account deficits projected infinitely in the future cannot afford, especially with an ambivalent Saudi Arabia and hostile Iran waiting in the wings to price oil in Euros and dethrone the dollar as a reserve currency. China has ignored the desperate pleas of the Bush administration to revalue its currency upwards. Not that it would help too much, because it would ultimately ignite the dormant fire of American inflation. The Congress is sliding towards huge tariffs on Chinese exports. TVs and textile quotas have already been restricted. Punitive tariffs would decimate the Chinese economy and aggravate the regional economic disparities that are already a present threat of fissiparous disintegration to China. This would make it abandon restraint and make it more aggressive towards renegade Taiwan.
This is why America is sending emissaries to stop the Taiwanese referendum and contrary to its hypocritical democracy preaching preventing the progress of democracy in Taiwan. Latin America and much of Asia have already realized that. The Middle East and Africa are getting there. When Taiwan utters the words that some Cherokee nay have uttered on the Trail of Tears---The Great White Father in Washington speaks with a forked tongue the whole world may become enlightened.
http://www.china-ready.com/news/WeakUSDollarPolicyWillBoostChinaInvestment052803.htm
[...]
According to their thinking, a cheaper US dollar will stimulate exports, as US products will become cheaper. Increased demand for US products will lead to hiring of more US workers, which will stimulate more US consumer spending. Happier US consumers and a smoother economy will be less likely to vote out the Bush administration in 2004. At least, that is the conventional wisdom.
But the reality may be very different. A weak US dollar is like a crack high; it may make you feel like the king of the world for a short while, but the comedown can be a potential killer. Foreign investors will not put their capital in the US because their rate of return will be way down. Importers of foreign goods in the US will at first absorb smaller profit margins in order to remain competitive, but will then be forced to raise prices. In order to bring in more foreign capital to finance US debt, interest rates will have to go up, causing inflation. Remember, the US economy relies on foreign capital and investors to finance its debt. And it is unlikely that foreign companies will choose to put their manufacturing in the US because of weak consumer demand and higher costs. Handled poorly, the US economy will end up with the worst of all possible worlds: little or no job creation, weak consumer demand and inflation.
When it comes to job creation in the US, the best that can be said for the Bush administration's economic policies are that the link between tax cuts, economic stimulus and job creation are very tenuous. When it comes to new business, most US companies are trying to offer a security angle in the hope that they can get federal contracts from the Department of Homeland Security, since they seem to be the only organization with any purchasing budget.
So where will the capital go?
Capital always goes where it generates the best rate of return, and it continues to be China, even after the SARS crisis. China is now the factory to the world in many sectors, and this pace will accelerate with the depreciation of the dollar. Because the Chinese yuan is pegged to the US dollar at 8.2 to 1, Chinese products will become even cheaper and Chinese makers will enter more manufacturing sectors and markets. As China's export markets reach full capacity, Chinese companies will turn their attention to developing and stimulating demand in the Chinese domestic market. When the manufacturing sector reaches capacity, growth will be focused on China's service sector.
US, Japanese and European makers will continue to enter the China market and set up factories, but more and more, the emphasis will be on serving the China market instead of their own stagnant markets because that's where the growth will be. Competition in the Chinese consumer market, already hot, will become red hot.
US baby boomers will begin retiring in 2010. Faced with a foreign debt overhang, low job creation, a stretched health insurance and social security system, US consumers will cut their spending even more, which will in turn lead to a fall in the US standard of living. Interest on foreign debt will take a growing piece of the US budget. Hardest hit will be US workers entering the US workforce after 2010; they will have to support all the retiring baby boomers and the combined deficit/demographic timebomb, where a smaller, shrinking tax-paying population supports a growing deficit and growing retired population.
[...]
From
http://www.dailyfx.com/article_rr_005.html
President George W. Bush has told the markets repeatedly that his administration is committed to a strong dollar. However, the Bush administration's recent monetary and fiscal policy initiatives lead us to believe that behind the scenes the US is actually supporting a weak dollar policy. [...]
Thursday, January 15, 2004
Bush promises us the Moon.
Well yesterday President Bush came out with his great plan about going to the moon. We hear from excited space geeks about how wonderful it all is. About how human mission to Mars is now just around the corner. We hear from spoilsports who tell us we cannot afford to do it (since when were we afraid to spend a little money on our dreams?). Bush said the cost is expected to be $12 billion. (Wow, with the $87 billion that Bush is laundering in Iraq we could have built 7 moon outposts. That sure puts the Bush theft in perspective.) Yet people associated with space exploration say such a cost target is far too low. When the first Bush ruled a proposal to send a team to Mars was estimated at $400 billion, and that is in 1989 dollars.
So why is Bush promising us the moon and under funding it? Well that is nothing new. This administration is renowned for promising all sorts of stuff but not funding it
9-11 Commission Funding Woes.
Senator urges Bush to fully fund 'No Child' law.
Homeland security funding isn't reaching most cities, report finds
So it is no big surprise that, once again, Bush gives a promise that he does not actually plan to keep. But I think that the real reason is different. I think that this Moon-Mars plan is, a ruse, a deception, a cover (sort of like Iraq is a means to transfer large sums of cash from the U.S. Treasury to Bush’s pals.) The plan here is to spend this money to militarize space.
Let me give you the most important piece of advice when it comes to trying to figure out what the Bush administration is up to. When they announce some big plan, go to The Project for a New American Century web site and search for a similar project. These are the people who gave us the Iraq war and the desire for control of the Middle East. Here is an outtake from their first project paper
From page 12…
CONTROL THE NEW “INTERNATIONAL COMMONS” OF SPACE AND “CYBERSPACE,” and pave the way for the creation of a new military service – U.S. Space Forces – with the mission of space control.
INCREASE DEFENSE SPENDING gradually to a minimum level of 3.5 to 3.8 percent of gross domestic product, adding $15 billion to $20 billion to total defense spending annually.
So there you have it. The REAL reason we are “going to the moon” is to divert everyone’s attention while we militarize and "take control of" space.
Ken
"To announce that there must be no criticism of the President, or that we are to stand by the President, right or wrong, is not only unpatriotic and servile, but is morally treasonable to the American public". - Theodore Roosevelt, 26th US President (1858-1919)
"Now what I get a sense of from all of this -- and then topped obviously by spending all the money in 2000 to basically buy the election -- is that this is not a family (Bush) that has a particularly strong commitment to American democracy. Its sense of how to win elections comes out of a CIA manual, not out of the Declaration of Independence or the Constitution."
-- Kevin Phillips former Nixon staffer and author of "The Emerging Republican Majority.”
I love my country and because I do, I fear the president.
"Now what I get a sense of from all of this -- and then topped obviously by spending all the money in 2000 to basically buy the election -- is that this is not a family (Bush) that has a particularly strong commitment to American democracy. Its sense of how to win elections comes out of a CIA manual, not out of the Declaration of Independence or the Constitution."
-- Kevin Phillips former Nixon staffer and author of "The Emerging Republican Majority.”
I love my country and because I do, I fear the president.
Wednesday, January 14, 2004
George Will
Ken's comments in BOLD
Afflicted By Comfort
"What good is happiness? It can't buy money."
— Henny Youngman
Social hypochondria is the national disease of the most successful nation. By most indexes, life has improved beyond the dreams of even very recent generations. Yet many Americans, impervious to abundant data and personal experiences, insist that progress is a chimera. Maybe because Americans are not comparing their lives with 50 years ago but four years ago?
Gregg Easterbrook's impressive new book, "The Progress Paradox: How Life Gets Better While People Feel Worse," explains this perversity. Easterbrook, a Washington journalist and fellow of the Brookings Institution, assaults readers with good news.
American life expectancy has dramatically increased in a century, from 47 to 77 years. Our great-great-grandparents all knew someone who died of some disease we never fear; as recently as 1952, polio killed 3,300 Americans. Our largest public health problems arise from unlimited supplies of affordable food. This is great. Of course 100 years ago no one died from West Nile, or SARS, or AIDS. But it is true that life IS better today than it was 100 years ago. How about better than 4 years ago?
The typical American has twice the purchasing power his mother or father had in 1960. A third of America's families own at least three cars. In 2001 Americans spent $25 billion — more than North Korea's GDP — on recreational watercraft.
Factor out immigration — a huge benefit to the immigrants — and statistical evidence of widening income inequality disappears. This is REALLY good news. The statistic that household incomes are only moderately higher than 25 years ago is misleading: Households today average fewer people, so real dollar incomes in middle-class households are about 50 percent higher today. Since 1970 the number of cars has increased 68 percent and the number of miles driven has increased even more, yet smog has declined by a third Thanks to federal government regulation that this administration wants to weaken. and traffic fatalities have declined from 52,627 to 42,815 last year. Once again thanks to federal governemnt regulations that once again could face weakening. In 2003 we spent much wealth on things unavailable in 1953 — a cleaner environment, reduced mortality through new medical marvels ($5.2 billion a year just for artificial knees, which did not exist a generation ago), the ability to fly anywhere or talk to anyone anywhere. The incidence of heart disease, stroke and cancer, when adjusted for population growth, is declining. Good news.
The rate of child poverty is down in a decade. America soon will be the first society in which a majority of adults are college graduates.
And so it goes. But Easterbrook says that such is today's "discontinuity between prosperity and happiness," the "surge of national good news" scares people, vexes the news media and does not even nudge up measurements of happiness. Easterbrook's explanations include:
"The tyranny of the small picture." The preference for bad news produces a focus on smaller remaining problems after larger ones are ameliorated. Ersatz bad news serves the fundraising of "gloom interest groups." It also inflates the self-importance of elites, who lose status when society is functioning well. Media elites, especially, have a stake in "headline-amplified anxiety."
"Evolution has conditioned us to believe the worst." In Darwinian natural selection, pessimism, wariness, suspicion and discontent may be survival traits. Perhaps our relaxed and cheerful progenitors were eaten by saber-toothed tigers. Only the anxiety-prone gene pool prospered.
"Catalogue-induced anxiety" and "the revenge of the plastic" both cause material abundance to increase unhappiness. The more we can order and charge, the more we are aware of what we do not possess. The "modern tyranny of choice" causes consumers perpetual restlessness and regret. Well said, I agree.
The "latest model syndrome" abets the "tyranny of the unnecessary," which leads to the "10-hammer syndrome." We have piled up mountains of marginally improved stuff, in the chaos of which we cannot find any of our nine hammers, so we buy a 10th, and the pile grows higher. Thus does the victor belong to the spoils. Once again, well said.
The cultivation — even celebration — of victimhood by intellectuals, tort lawyers, politicians and the media is both cause and effect of today's culture of complaint. Agreed. It's funny to hear all these people (especially on the right) talk about responsibility yet run to victumhood when the public eye turns on them (e.g. Rush Limbaugh and G.W. Bush).
Easterbrook, while arguing that happiness should be let off its leash, is far from complacent. He is scandalized by corporate corruption and poverty in the midst of so much abundance. Good! And he has many commonsensical thoughts on how to redress the imbalance many people feel between their abundance of material things and the scarcity of meaning that they feel in their lives. The gist of his advice is that we should pull up our socks, spiritually, and make meaning by doing good while living well.
His book arrives as the nation enters an election year, when the opposition, like all parties out of power, will try to sow despondency by pointing to lead linings on all silver clouds. His timely warning is that Americans are becoming colorblind, if only to the color silver. The irony here is that so much that Will points out about what is good is under attack by this administration.
Ken's comments in BOLD
Afflicted By Comfort
"What good is happiness? It can't buy money."
— Henny Youngman
Social hypochondria is the national disease of the most successful nation. By most indexes, life has improved beyond the dreams of even very recent generations. Yet many Americans, impervious to abundant data and personal experiences, insist that progress is a chimera. Maybe because Americans are not comparing their lives with 50 years ago but four years ago?
Gregg Easterbrook's impressive new book, "The Progress Paradox: How Life Gets Better While People Feel Worse," explains this perversity. Easterbrook, a Washington journalist and fellow of the Brookings Institution, assaults readers with good news.
American life expectancy has dramatically increased in a century, from 47 to 77 years. Our great-great-grandparents all knew someone who died of some disease we never fear; as recently as 1952, polio killed 3,300 Americans. Our largest public health problems arise from unlimited supplies of affordable food. This is great. Of course 100 years ago no one died from West Nile, or SARS, or AIDS. But it is true that life IS better today than it was 100 years ago. How about better than 4 years ago?
The typical American has twice the purchasing power his mother or father had in 1960. A third of America's families own at least three cars. In 2001 Americans spent $25 billion — more than North Korea's GDP — on recreational watercraft.
Factor out immigration — a huge benefit to the immigrants — and statistical evidence of widening income inequality disappears. This is REALLY good news. The statistic that household incomes are only moderately higher than 25 years ago is misleading: Households today average fewer people, so real dollar incomes in middle-class households are about 50 percent higher today. Since 1970 the number of cars has increased 68 percent and the number of miles driven has increased even more, yet smog has declined by a third Thanks to federal government regulation that this administration wants to weaken. and traffic fatalities have declined from 52,627 to 42,815 last year. Once again thanks to federal governemnt regulations that once again could face weakening. In 2003 we spent much wealth on things unavailable in 1953 — a cleaner environment, reduced mortality through new medical marvels ($5.2 billion a year just for artificial knees, which did not exist a generation ago), the ability to fly anywhere or talk to anyone anywhere. The incidence of heart disease, stroke and cancer, when adjusted for population growth, is declining. Good news.
The rate of child poverty is down in a decade. America soon will be the first society in which a majority of adults are college graduates.
And so it goes. But Easterbrook says that such is today's "discontinuity between prosperity and happiness," the "surge of national good news" scares people, vexes the news media and does not even nudge up measurements of happiness. Easterbrook's explanations include:
"The tyranny of the small picture." The preference for bad news produces a focus on smaller remaining problems after larger ones are ameliorated. Ersatz bad news serves the fundraising of "gloom interest groups." It also inflates the self-importance of elites, who lose status when society is functioning well. Media elites, especially, have a stake in "headline-amplified anxiety."
"Evolution has conditioned us to believe the worst." In Darwinian natural selection, pessimism, wariness, suspicion and discontent may be survival traits. Perhaps our relaxed and cheerful progenitors were eaten by saber-toothed tigers. Only the anxiety-prone gene pool prospered.
"Catalogue-induced anxiety" and "the revenge of the plastic" both cause material abundance to increase unhappiness. The more we can order and charge, the more we are aware of what we do not possess. The "modern tyranny of choice" causes consumers perpetual restlessness and regret. Well said, I agree.
The "latest model syndrome" abets the "tyranny of the unnecessary," which leads to the "10-hammer syndrome." We have piled up mountains of marginally improved stuff, in the chaos of which we cannot find any of our nine hammers, so we buy a 10th, and the pile grows higher. Thus does the victor belong to the spoils. Once again, well said.
The cultivation — even celebration — of victimhood by intellectuals, tort lawyers, politicians and the media is both cause and effect of today's culture of complaint. Agreed. It's funny to hear all these people (especially on the right) talk about responsibility yet run to victumhood when the public eye turns on them (e.g. Rush Limbaugh and G.W. Bush).
Easterbrook, while arguing that happiness should be let off its leash, is far from complacent. He is scandalized by corporate corruption and poverty in the midst of so much abundance. Good! And he has many commonsensical thoughts on how to redress the imbalance many people feel between their abundance of material things and the scarcity of meaning that they feel in their lives. The gist of his advice is that we should pull up our socks, spiritually, and make meaning by doing good while living well.
His book arrives as the nation enters an election year, when the opposition, like all parties out of power, will try to sow despondency by pointing to lead linings on all silver clouds. His timely warning is that Americans are becoming colorblind, if only to the color silver. The irony here is that so much that Will points out about what is good is under attack by this administration.
Tuesday, January 13, 2004
BuzzFlash interview: Kevin Phillips
Author of American Dynasty: Aristocracy, Fortune and the Politics of Deceit in the House of Bush
This interview originally appeared on BuzzFlash, the pro-democracy news source.
"Now what I get a sense of from all of this -- and then topped obviously by spending all the money in 2000 to basically buy the election -- is that this is not a family that has a particularly strong commitment to American democracy. Its sense of how to win elections comes out of a CIA manual, not out of the Declaration of Independence or the Constitution."
-- Kevin Phillips
Hey, you would expect this kind of talk from a lefty, right. But Kevin Phillips ain't no lefty. He's a former Nixon staffer and authored "The Emerging Republican Majority" back then. He hasn't had any transformation that has turned him into a -- God Forbid! -- Democrat. As he tells BuzzFlash, he voted for Reagan twice and would have eagerly voted for John McCain.
He hasn't stopped being Republican. It's just that he's appalled at what the Republican Party has become under the Bush dynasty.
In "American Dynasty," Phillips weaves evidence of the Bush family's dynastic sense of entitlement -- and corruption -- throughout this erudite book.
"Few have looked at the facts of the family's rise, but just as important, commentators have neglected the thread -- not the mere occasion -- of special interests, biases, scandals (especially those related to arms dealing), and blatant business cronyism" Phillips writes in his preface. "The evidence that accumulates over four generations [of the Bush family dynasty] is really quite damning."
"Three generations of immersion in the culture of secrecy...deceit and disinformation have become Bush political hallmarks," Phillips notes.
Entitlement, elitism, privilege, secrecy, mediocrity, corruption, financial cronyism, bailouts of family failures by the taxpayers -- these are some of the true characteristics of the Bush Dynasty, according to Phillips.
To Phillips, however, the greatest threat to America posed by the Bush dynasty is not its inherent unfitness to rule. What most offends and angers Phillips is the threat that the imposition of the Bush dynasty on America poses to democracy itself. The American rebellion in 1776 represented the creation of a nation built on the foundations of a government elected by the people, not determined by the restoration to power of corrupt bloodlines.
No book makes a stronger case against an American sitting in the White House who believes that he is in power because of hereditary entitlement and divine choice. Patriots rebelled against King George in 1776. Phillips notes that Americans have the opportunity to dethrone the Bush dynasty at the polls in 2004.
That is if the electronic software is not rigged in favor of the monarchy.
More on Keven Phillips .
Author of American Dynasty: Aristocracy, Fortune and the Politics of Deceit in the House of Bush
This interview originally appeared on BuzzFlash, the pro-democracy news source.
"Now what I get a sense of from all of this -- and then topped obviously by spending all the money in 2000 to basically buy the election -- is that this is not a family that has a particularly strong commitment to American democracy. Its sense of how to win elections comes out of a CIA manual, not out of the Declaration of Independence or the Constitution."
-- Kevin Phillips
Hey, you would expect this kind of talk from a lefty, right. But Kevin Phillips ain't no lefty. He's a former Nixon staffer and authored "The Emerging Republican Majority" back then. He hasn't had any transformation that has turned him into a -- God Forbid! -- Democrat. As he tells BuzzFlash, he voted for Reagan twice and would have eagerly voted for John McCain.
He hasn't stopped being Republican. It's just that he's appalled at what the Republican Party has become under the Bush dynasty.
In "American Dynasty," Phillips weaves evidence of the Bush family's dynastic sense of entitlement -- and corruption -- throughout this erudite book.
"Few have looked at the facts of the family's rise, but just as important, commentators have neglected the thread -- not the mere occasion -- of special interests, biases, scandals (especially those related to arms dealing), and blatant business cronyism" Phillips writes in his preface. "The evidence that accumulates over four generations [of the Bush family dynasty] is really quite damning."
"Three generations of immersion in the culture of secrecy...deceit and disinformation have become Bush political hallmarks," Phillips notes.
Entitlement, elitism, privilege, secrecy, mediocrity, corruption, financial cronyism, bailouts of family failures by the taxpayers -- these are some of the true characteristics of the Bush Dynasty, according to Phillips.
To Phillips, however, the greatest threat to America posed by the Bush dynasty is not its inherent unfitness to rule. What most offends and angers Phillips is the threat that the imposition of the Bush dynasty on America poses to democracy itself. The American rebellion in 1776 represented the creation of a nation built on the foundations of a government elected by the people, not determined by the restoration to power of corrupt bloodlines.
No book makes a stronger case against an American sitting in the White House who believes that he is in power because of hereditary entitlement and divine choice. Patriots rebelled against King George in 1776. Phillips notes that Americans have the opportunity to dethrone the Bush dynasty at the polls in 2004.
That is if the electronic software is not rigged in favor of the monarchy.
More on Keven Phillips .
Monday, January 12, 2004
Fome the Hussman funds site again.
January 12, 2004
Blame Keynes
John P. Hussman, Ph.D.
All rights reserved and actively enforced.
Einstein once said every theory should be made as simple as possible, but no simpler. I think about that a lot when I work on financial analysis. It's clear that making things very complicated can be dangerous – every extra element has the potential to interact with the others. While there is only one relationship to examine between two points, there are 15 relationships between 6 points. The possible relationships increase by nearly the square of the number of elements you have in your theory [n x (n-1)/2 to be exact].
An overly complicated model quickly becomes impossible to analyze, and as the geniuses at Long Term Capital Management found out, it can become completely unstable even if the relationships change a tiny bit.
At the same time, oversimplifying can be equally dangerous if you leave out important elements. There is probably no better example of this than the field of economics.
Apart from a tiny group of academic economists who write arcane mathematical articles intended for a tiny group of academic economists who write arcane mathematical articles, the popular view of how the economy works is broadly speaking, an entirely unrealistic caricature of reality (though I say this as a former academic economist who used to write arcane mathematical articles.)
As long-term readers of these comments know, I blame Keynes. It's no exaggeration that if college graduates remember anything of their economics courses, they escape with little but Keynes. During my years in academia, I was constantly amazed to see even brilliant colleagues reduced to Keynes-blubbering pod people when they were asked questions about the actual economy. See, most academic economists don't actually study the economy. They study economies in a very abstract sense, as in “consider an economy in which there are two islands, a turnpike, and five guys named Jack, one of whom is the government but nobody knows it…”
Garbage in, garbage out
The main problem with Keynes is that he assumes that the economy consists of a single good, that investment is fixed, and that even though there are investment goods, they effectively serve no purpose (there is no production function in standard Keynesian theory).
The basic idea goes something like this. The economy produces output Y which is equal to consumption C, plus investment I, and government spending G. People consume some fraction c of income Y, so C = cY. So we've got
Y = C + I + G
Y = cY + I + G
So Y = (I + G) / (1 – c)
Now assume that investment I is fixed, and people try to save more of their income (c declines, so the denominator gets larger). In that event, output falls. End of story. The reason this “recession” happens is that as a rule, saving has to equal investment, and by assuming that investment is fixed, the attempt to save cannot actually translate into more saving either, so income has to fall. And look, with investment I fixed, the only way to drive the economy higher is to a) increase government spending G, or b) spend more and save less, so c increases and (1-c) becomes as close to zero as possible. In Keynesian theory, the best outcome is for people to spend 99.999999% of their income.
And that, in a nutshell, is why people think saving is bad for the economy and makes recessions worse. The implicit assumption is that greater saving will not translate into greater investment. Anyway, investment is really just another kind of spending to Keynes. Since there is no production function in Keynesian theory, there's no reason to invest anyway. It's not like the investment is what produces the output, for gosh sakes, so the spending might as well be consumption.
Don't worry. Be happy.
In Keynes' view, recessions are essentially periods when individuals erroneously decide to save rather than consume. As a result, Keynesian theory offers a simple way to counteract recessions: get the government to spend money. Drop it from helicopters. Or as Keynes suggested in his General Theory, fill bottles with money and bury them at suitable depths for enterprising young men to dig up. Recent U.S. fiscal and monetary policy have been based on precisely these notions.
Unfortunately, the result of these policies is that U.S. households, businesses, the government, and the nation itself have developed the worst balance sheets in history.
Despite the so-called recovery in the U.S. economy, the American Bankers Association reports that credit card delinquencies and defaults have just reached a new record. There has been precious little improvement in corporate balance sheets – the reduction in default rates and the narrowing in credit spreads has much more to do with swap financing tied to unsustainably low short-term interest rates, along with improvements in equity prices that have reduced debt/equity ratios. The U.S. now faces the deepest current account deficit in the nation's history, meaning that even current levels of U.S. consumption and investment activity are dependent on the largest continuous inflows of foreign capital than we've ever required. Meanwhile, mainstream economists have completely ignored how cyclical productivity growth can be, and how unreliable rapid short-run productivity growth is as an indicator of long-term trends. Indeed, they've even fooled themselves into confusing the rapid expansion of imports and labor downsizing with beneficial growth in productivity (see the November 10th comment for more on the “productivity boom”).
Recessions imply a mismatch between what is demanded and what is supplied
If our nation is to improve its balance sheet and achieve sustainable economic growth, the first thing is to understand that the economy does not produce a single good. It is exactly the emergence of new goods, their associated scarcity and profitability, and expansion of those industries through new investment and competition that drives economic growth forward.
Recessions result when a mismatch develops between what is demanded versus what is supplied. Economic downturns are not simply periods where people reduce their consumption of some “representative good.” Rather, we see most industries virtually unaffected by recessions, with a few industries actually experiencing shortages, but with a handful of industries experiencing devastating drop-offs in demand. Turning this around is not as simple as “stimulating aggregate demand,” because quite literally, buyers don't want the stuff that those industries are producing.
So recessions are really periods of adjustment. As a result of overconsumption, overinvestment, competition from new substitutes, or changes in preferences, some industries simply fall out of favor. New industries may or may not emerge, and of course, there is no easy transition for workers from the industries in downturns to other industries that may or may not emerge to replace them. This is a painful process for some industries, as we've seen in technology and telecom during recent years. But it's hardly noticeable in others, as we've seen in retail and health care.
The implication is that policy cannot simply be geared to mindlessly stimulating demand, particularly in an economy that is precariously burdened with debt. The best and most seriously overlooked policy toward this economy would be tax incentives for research and development. In addition, to the extent that we've seen a Keynesian weakness in investment, the objective should not be to seek remedies through greater consumption, but instead to encourage productive investment through much more direct means than rebate checks and capital gains reductions.
Above all, the U.S. economy has a balance sheet problem. This will not be solved by spending more. Even here, increased saving would at least allow the U.S. to reduce its dependence on foreign capital and allow the nation to avert a dollar crisis that is otherwise likely at some point in the next few years.
If one thing is entirely clear, it is that this “expansion” is far different from those of the past. Capacity utilization remains low, employment growth has profoundly lagged typical patterns, consumption has been unusually and even recklessly stimulated as an alternative to balance sheet improvement, and rather than beginning from a current account surplus as all previous expansions have, this expansion began with the deepest current account deficit on record.
Call me a skeptic, but watching the panorama of bullish economists and Wall Street analysts is almost like walking into one of those 3-D movies where everybody is wearing those geeky glasses with the red and green lenses. Except that here, all the lenses seem rose colored.
January 12, 2004
Blame Keynes
John P. Hussman, Ph.D.
All rights reserved and actively enforced.
Einstein once said every theory should be made as simple as possible, but no simpler. I think about that a lot when I work on financial analysis. It's clear that making things very complicated can be dangerous – every extra element has the potential to interact with the others. While there is only one relationship to examine between two points, there are 15 relationships between 6 points. The possible relationships increase by nearly the square of the number of elements you have in your theory [n x (n-1)/2 to be exact].
An overly complicated model quickly becomes impossible to analyze, and as the geniuses at Long Term Capital Management found out, it can become completely unstable even if the relationships change a tiny bit.
At the same time, oversimplifying can be equally dangerous if you leave out important elements. There is probably no better example of this than the field of economics.
Apart from a tiny group of academic economists who write arcane mathematical articles intended for a tiny group of academic economists who write arcane mathematical articles, the popular view of how the economy works is broadly speaking, an entirely unrealistic caricature of reality (though I say this as a former academic economist who used to write arcane mathematical articles.)
As long-term readers of these comments know, I blame Keynes. It's no exaggeration that if college graduates remember anything of their economics courses, they escape with little but Keynes. During my years in academia, I was constantly amazed to see even brilliant colleagues reduced to Keynes-blubbering pod people when they were asked questions about the actual economy. See, most academic economists don't actually study the economy. They study economies in a very abstract sense, as in “consider an economy in which there are two islands, a turnpike, and five guys named Jack, one of whom is the government but nobody knows it…”
Garbage in, garbage out
The main problem with Keynes is that he assumes that the economy consists of a single good, that investment is fixed, and that even though there are investment goods, they effectively serve no purpose (there is no production function in standard Keynesian theory).
The basic idea goes something like this. The economy produces output Y which is equal to consumption C, plus investment I, and government spending G. People consume some fraction c of income Y, so C = cY. So we've got
Y = C + I + G
Y = cY + I + G
So Y = (I + G) / (1 – c)
Now assume that investment I is fixed, and people try to save more of their income (c declines, so the denominator gets larger). In that event, output falls. End of story. The reason this “recession” happens is that as a rule, saving has to equal investment, and by assuming that investment is fixed, the attempt to save cannot actually translate into more saving either, so income has to fall. And look, with investment I fixed, the only way to drive the economy higher is to a) increase government spending G, or b) spend more and save less, so c increases and (1-c) becomes as close to zero as possible. In Keynesian theory, the best outcome is for people to spend 99.999999% of their income.
And that, in a nutshell, is why people think saving is bad for the economy and makes recessions worse. The implicit assumption is that greater saving will not translate into greater investment. Anyway, investment is really just another kind of spending to Keynes. Since there is no production function in Keynesian theory, there's no reason to invest anyway. It's not like the investment is what produces the output, for gosh sakes, so the spending might as well be consumption.
Don't worry. Be happy.
In Keynes' view, recessions are essentially periods when individuals erroneously decide to save rather than consume. As a result, Keynesian theory offers a simple way to counteract recessions: get the government to spend money. Drop it from helicopters. Or as Keynes suggested in his General Theory, fill bottles with money and bury them at suitable depths for enterprising young men to dig up. Recent U.S. fiscal and monetary policy have been based on precisely these notions.
Unfortunately, the result of these policies is that U.S. households, businesses, the government, and the nation itself have developed the worst balance sheets in history.
Despite the so-called recovery in the U.S. economy, the American Bankers Association reports that credit card delinquencies and defaults have just reached a new record. There has been precious little improvement in corporate balance sheets – the reduction in default rates and the narrowing in credit spreads has much more to do with swap financing tied to unsustainably low short-term interest rates, along with improvements in equity prices that have reduced debt/equity ratios. The U.S. now faces the deepest current account deficit in the nation's history, meaning that even current levels of U.S. consumption and investment activity are dependent on the largest continuous inflows of foreign capital than we've ever required. Meanwhile, mainstream economists have completely ignored how cyclical productivity growth can be, and how unreliable rapid short-run productivity growth is as an indicator of long-term trends. Indeed, they've even fooled themselves into confusing the rapid expansion of imports and labor downsizing with beneficial growth in productivity (see the November 10th comment for more on the “productivity boom”).
Recessions imply a mismatch between what is demanded and what is supplied
If our nation is to improve its balance sheet and achieve sustainable economic growth, the first thing is to understand that the economy does not produce a single good. It is exactly the emergence of new goods, their associated scarcity and profitability, and expansion of those industries through new investment and competition that drives economic growth forward.
Recessions result when a mismatch develops between what is demanded versus what is supplied. Economic downturns are not simply periods where people reduce their consumption of some “representative good.” Rather, we see most industries virtually unaffected by recessions, with a few industries actually experiencing shortages, but with a handful of industries experiencing devastating drop-offs in demand. Turning this around is not as simple as “stimulating aggregate demand,” because quite literally, buyers don't want the stuff that those industries are producing.
So recessions are really periods of adjustment. As a result of overconsumption, overinvestment, competition from new substitutes, or changes in preferences, some industries simply fall out of favor. New industries may or may not emerge, and of course, there is no easy transition for workers from the industries in downturns to other industries that may or may not emerge to replace them. This is a painful process for some industries, as we've seen in technology and telecom during recent years. But it's hardly noticeable in others, as we've seen in retail and health care.
The implication is that policy cannot simply be geared to mindlessly stimulating demand, particularly in an economy that is precariously burdened with debt. The best and most seriously overlooked policy toward this economy would be tax incentives for research and development. In addition, to the extent that we've seen a Keynesian weakness in investment, the objective should not be to seek remedies through greater consumption, but instead to encourage productive investment through much more direct means than rebate checks and capital gains reductions.
Above all, the U.S. economy has a balance sheet problem. This will not be solved by spending more. Even here, increased saving would at least allow the U.S. to reduce its dependence on foreign capital and allow the nation to avert a dollar crisis that is otherwise likely at some point in the next few years.
If one thing is entirely clear, it is that this “expansion” is far different from those of the past. Capacity utilization remains low, employment growth has profoundly lagged typical patterns, consumption has been unusually and even recklessly stimulated as an alternative to balance sheet improvement, and rather than beginning from a current account surplus as all previous expansions have, this expansion began with the deepest current account deficit on record.
Call me a skeptic, but watching the panorama of bullish economists and Wall Street analysts is almost like walking into one of those 3-D movies where everybody is wearing those geeky glasses with the red and green lenses. Except that here, all the lenses seem rose colored.
Thursday, January 08, 2004
Wednesday, January 07, 2004
Tuesday, January 06, 2004
Monday, January 05, 2004
From Hussman Funds site.
Investor's Intelligence reports that “sentiment readings are the worst since 1987 for advisors, and now just below the worst ever for insiders. Insiders are now selling just under seven shares for every share bought.” Investment advisory bullishness has been above 50% and bearishness below 25% for thirty-five consecutive weeks. In 1987, bullishness was above 50% for twenty-three weeks, and even those were not consecutive. The percentage of industry groups in uptrends is an extremely overbought 92.8%.
That strong uniformity of industry uptrends confirms what we observe from our own measures of market action, and is an indication that investors remain willing, for now, to take speculative risk. This speculative merit - alone - is why we continue to hold a generally positive (though moderate) exposure to market risk. However, given that market action is also extremely overbought, we also hold a small “contingent” position in put options (a fraction of 1% of assets) sufficient to hedge another 20-25% of our market exposure in the event of an abrupt decline.
In short, the market continues to have a favorable, but increasingly precarious speculative tone.
Investor's Intelligence reports that “sentiment readings are the worst since 1987 for advisors, and now just below the worst ever for insiders. Insiders are now selling just under seven shares for every share bought.” Investment advisory bullishness has been above 50% and bearishness below 25% for thirty-five consecutive weeks. In 1987, bullishness was above 50% for twenty-three weeks, and even those were not consecutive. The percentage of industry groups in uptrends is an extremely overbought 92.8%.
That strong uniformity of industry uptrends confirms what we observe from our own measures of market action, and is an indication that investors remain willing, for now, to take speculative risk. This speculative merit - alone - is why we continue to hold a generally positive (though moderate) exposure to market risk. However, given that market action is also extremely overbought, we also hold a small “contingent” position in put options (a fraction of 1% of assets) sufficient to hedge another 20-25% of our market exposure in the event of an abrupt decline.
In short, the market continues to have a favorable, but increasingly precarious speculative tone.
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