Wednesday, September 30, 2009

Six to One

I see it every day… friends, even family. Skilled people, elusive job market, lower pay where jobs do exist. The Department of Labor began measuring the ratio of job openings to those seeking employment in 2000. Clearly, the current statistic in the title above, six job seekers for every opening, is the worse in that survey’s short history, but it seems to be a more valuable way of look at unemployment than the national 9.7% official unemployment rate, the 16.8% “alternative measurement” (adding in those who want jobs but either can only find part-time or occasional work or simply have given up looking).

Another sign of the times? Social Security has seen a 23% increase in retirement claims than the year before (disability claims are up 20%), and for the first time since the 1980s, claims exceed the taxes paid to fund them. AOL Money (September 27th): “‘A lot of people who in better times would have continued working are opting to retire,’ said Alan J. Auerbach, an economics and law professor at the University of California, Berkeley. ‘If they were younger, we would call them unemployed.’” Those folks know their jobs aren’t coming back.

The bad economy literally shorted every teetering business plan, accelerated the demise of businesses that really were on the edge and crushed the retailers who sold those products and services, taking their landlords with them. That kind of erosion is a permanent job killer… one that takes out jobs that were marginal or unsustainable or dying in technology paradigm shifts. The problem is that this explosion of joblessness all hit at once because of the economic collapse, which in turn has not given the system time to create new directions to absorb the excess labor. Had these businesses failed over time, the market would have taken those blows in stride, but with the suddenness of it all, it seems highly probable that replacing these lost jobs is going to take years.

For those just graduating, the news really couldn’t get much worse. With no real experience, what jobs are being made available at an entry level are paying less than ever. And with a smaller starting base – for those lucky enough to find employment – the lifetime earnings are likely to carry that initial impairment until such people retire; they will make less even if they get the same percentage raises as those with more experience simply because they started lower.

The Department of Labor reports that there are 2.4 million job openings… and that there are 14.5 million people looking to fill them. The law of supply and demand should tell you all you need to know about their expected pay level. What’s worse, with mandatory furloughs and reduced working hours, many workers can take up a lot of slack when consumer demand returns without a single additional hire. That excess capacity that exists even with employed people, now working an average 33 hour work week, needs to be absorbed before new workers are truly needed.

The September 26th New York Times: “During the last recession, in 2001, the number of jobless people reached little more than double the number of full-time job openings, according to the Labor Department data. By the beginning of this year, job seekers outnumbered jobs four-to-one, with the ratio growing ever more lopsided in recent months… Though layoffs have been both severe and prominent, the greatest source of distress is a predilection against hiring by many American businesses. From the beginning of the recession in December 2007 through July of this year, job openings declined 45 percent in the West and the South, 36 percent in the Midwest and 23 percent in the Northeast.”

“Shrinking job opportunities have assailed virtually every industry this year. Since the end of 2008, job openings have diminished 47 percent in manufacturing, 37 percent in construction and 22 percent in retail. Even in education and health services — faster-growing areas in which many unemployed people have trained for new careers — job openings have dropped 21 percent this year. Despite the passage of a stimulus spending package aimed at shoring up state and local coffers, government job openings have diminished 17 percent this year.”

The ripple effect will be seen for years. Fewer and lower paychecks will hold down consumer spending and real estate prices. Governments will have a reduced tax base for years to come, and the desire to make up the difference with higher taxes will only amplify contractions in both spending and job creation. This massive “reset” will be with us for a very long time… for most adults in the job market, it is a time they will never forget.

I’m Peter Dekom, and I approve this message.

Tuesday, September 29, 2009

Af-Again-istan – Osama, yo’ Momma!

Our military is telling the administration they need more troops or all is lost. Not adding more troops, warned U.S. General Stanley McChrystal in a 66-page report to the Secretary of Defense on August 30th, “will likely result in failure.” Want more from this esteemed general? “Failure to gain the initiative and reverse insurgent momentum in the near term (next 12 months) — while Afghan security capacity matures — risks an outcome where defeating the insurgency is no longer possible.” Yum! I’m old enough to remember when “escalator” was not a moving staircase… it was what our leadership seemed to be in Vietnam before we lost that battle.

Arab TV personality and bon vivant recluse (his name is so common, it is incorporated in “spell check”) – Osama bin Laden – issued one of his “warning tapes” on September 25th to the European powers to withdraw their forces from Afghanistan… because all is lost. He alluded to possible reprisals and reminded the Continent of past attacks in London and Madrid (more from his recorded message below). And the warm and fuzzy Taliban, tossed out on their posterior after 9/11, have never controlled more territory in Afghanistan since they were in command of the whole place! Oh, the Taliban remind us constantly of the resemblance of the current war to the utter defeat of Soviet forces in 1989, shortly before the USSR fell… all was lost.

Afghani opium production is still outrageously high, and the last “democratic election” that secured Mr. Hamid Karzai’s victory (he’s not in spell check, by the way), even with the most optimistic review, shows no less than 25% of the vote “suspect.” Like a full ballot box when the polls opened? We’re fighting for these dudes? In honor of the Jewish New Year, “oy!” So what we want is to keep the Taliban and al Qaeda out of Afghanistan – permanently – and what we have is the Taliban (with al Qaeda support) having more power and control than at any time in the past eight years. “Oy” again.

They love their safe havens across the border in Pakistan – an “ally” that really can never be our ally because the locals actually hate us – and operate with virtual impunity in the region. And true to bin Laden’s wishes, European nations participating in the NATO operation in Afghanistan (about 40% of the troops) are having second thoughts about staying. Many European leaders wonder what the odds are of Afghanistan’s remaining “Taliban/al Qaeda free” once the troops leave… which is sooner or later no matter which “plan” you adopt.

On September 4th, a German commander ordered a U.S. airstrike against two suspected fuel tanker trucks that were purportedly hijacked by Taliban fighters. While Taliban soldiers were killed in droves, so were 30 civilians that had nothing to do with the incident. The issue rapidly became an issue in the German elections, and cries for the removal of the 4,200 German troops in Afghanistan were less than subtle. Threats against Germany by various terrorist groups put that country’s police force on high alert. As noted, an increasingly greater number of European nations are beginning to question why their troops are part of the NATO strike force in Afghanistan and whether the objectives that such military operations were intended to accomplish are even possible. With elections looming all over Europe, if this sentiment continues, the U.S. could find itself fairly alone in any continued operations in this region.

Alluding to the above misdirected attack and addressing the killing of innocent women and children, Osama’s purported words continued: “You are aware that oppression topples those who commit it and injustice has unhealthy consequences for the unjust… So on what basis are you violating what you talk about holding in high esteem, like justice and human rights?... If today Europe is suffering the travails of the economic crisis, and the heart of Europe is no longer No. 1 in world exports, and America is reeling from the hemorrhage caused by the economic war, then how do you think you will fare after America pulls out, Allah permitting, for us to retaliate from the oppressor on behalf of the oppressed?”

It’s not like I think Americans should run from a fight, and I hate doing anything that Osama remotely wants. But fighting worms with safe havens… using sophisticated technology against a hit and run insurgency with increasingly local popular support… is a bit like attacking a huge underground nest of ants with a hammer. What I really don’t see… what no one in the Obama administration has presented… is a realistic plan for stabilizing Afghanistan in such a way that when we leave, it remains a safe and stable nation. And without that clear path, exactly what are we doing in Afghanistan?! Are we sacrificing American lives and spending American dollars for a cause that really can be accomplished?

I’m Peter Dekom, and I wonder.

Monday, September 28, 2009

The Missiles of Late September

“Allahu Akbar” (God is great in Farsi) was heard above the din as Iran’s Revolutionary Guard Air Force test-fired two short-range missiles in central Iran on September 27th. In case you weren’t able to attend, the government released an official tape showing the launch. Air Force leader, General Hossein Salami, was quoted by the official press: “The message of the war game for some arrogant countries which intend to intimidate is that we are able to give a proper, strong answer to their hostility quickly.” The next day, the war games, lovingly entitled “Great Prophet IV,” continued with the test-launch of Iran’s advanced and powerful medium range missiles (with an estimated range of 1,250 miles). The U.S. had just warned Iran that its nuclear program was unacceptable to the rest of the world, words spoken by President Obama after it was learned that Tehran was building a secret underground nuclear facility – another one.

European leaders issued even stronger challenges to Iran’s not-so-secret-secret nuclear weapons program. Talk was of harsh sanctions and increasing isolation for this Shiite nation. President Ahmadinejad had been in fine form of late denying the Holocaust, proselytizing with anti-Western venom during speech at the United Nations as the representatives of many Western nations walked out, and generally enjoying his role in bating the U.S. and the West. He seemed almost to be begging for the West to impose those sanctions so that he could show his people that the world was powerless to stop Iran in any path it might choose. Tehran is sending a clear signal to the West just in advance of the upcoming “face-to-face” direct discussions between the U.S. and Iranian officials this week.

But all is not well in the Islamic Republic. Protests continue. Admissions of government-supported torture are constantly in the news, and the once solid political rock that Iran likes to present to the world appeared cracked, chipped and flawed. Iran’s economy was not particularly great before the global meltdown, and the recession has dropped the quality of life there several nasty notches downward. The very questionable election results that returned Ahmadinejad to power only seemed to reinforce that the powers in Tehran are truly concerned. Using the outside world as the scapegoat for internal failures is hardly new, and Ahmadinejad is clearly in need of that distraction, but has he used this strategy once too often? Perhaps that only makes what is happening in Iran that much more dangerous. Ahmadinejad can’t fall back to the “same old, same old” anymore; he might just be forced to escalate.

Despite pledges of seeking only a peaceful use for nuclear fuel that began with the Ayatollah Khomeini in the earliest stages of this country, the West has never believed them. Indeed, with stories of Venezuelan strongman, Hugo Chavez, wanting access to Iranian uranium and technology, this is most certainly no time for complacency. (Sept. 5th) reported: “Hugo Chavez, the Venezuelan president, has given his backing to Iran's nuclear programme, which world powers suspect of having non-peaceful aims…. Chavez, who was visiting the Iranian capital Tehran… said that Iran had the right to use atomic energy for peaceful purposes.” On September 6th, Chavez said: “There is no single proof that Iran is building a nuclear bomb.” Chavez is sitting on oil surpluses that will last a century or more; I suspect nuclear-generated power isn’t exactly what’s on his mind.

Can there be any level of sanctions that would actually be effective against this religious dictatorship? Would bordering Russia cooperate or simply provide an alternative to the supplies and business lost by reason of sanctions. Would Israel mount a preemptory military strike, with or without American support? And exactly what would such a strike do to the price of oil, stability in the Middle East, the mining of the Strait of Hormuz (though which much of the earth’s oil supply must pass), Iran’s support of terrorist activities all over the world and the vestiges of the U.S. presence in Iraq? Our own Secretary of Defense, Robert Gates, as quoted in the September 27th Washington Post: “[T]he list of possible sanctions is plentiful, and that there is ‘no military option that does anything more than buy time… Sanctions on banking, particularly sanctions on equipment and technology for their oil and gas industry… think there's a pretty rich list to pick from, actually.’”

As the U.S. and Russia meet to discuss extending the treaty, set soon to expire, regarding the proliferation of nuclear weapons, there are a whole host of nations who see a need to build the very kind of arsenal we are trying to dismantle. What kind of a world will the next generations face?

The issues are extremely complex. The side and after-effects of our upcoming decisions concerning Tehran could be devastating, and indeed, the failure of sanctions would indeed make us look powerless. The only benefit of such sanctions, which will have a cruel impact on the Iranian people (many of whom deplore their system of government and their dogmatic leaders), is to denigrate the quality of life even more in this Islamic republic such that the protests continue and perhaps escalate, cracking the rock of Iran with dozens of new fissures… fomenting the opposite internal response than that desired by the leadership. There are no clear options, but the Middle East is boiling and bubbling with complexity, and change – good and bad – is inevitable.

I’m Peter Dekom, and I approve this message.

Sunday, September 27, 2009

Evidence of Decline

Until 1984 – when control of Hong Kong passed from Britain to China – the sun never set on the British Empire. Holdings in Africa, the Subcontinent, Austral-Asia and even the “New World” had made England the global powerhouse for centuries (probably from 1588 – when British ships defeated the Spanish Armada – to the middle of the 20th century). She drew natural resources from diverse regions on the planet, enriching her coffers disproportionately considering her relatively small population and tiny land mass for the home country. Few empires last. The Romans fell in 476 AD; the Chinese succumbed to Mongol hordes in 1279 AD.

The pattern seems to be familiar. Complacency, taking a superior status for granted, placing the priorities of special and narrow interests (the “power elite”) above those of the ordinary citizen, even hiring mercenaries to fight the battles that used to be fought with regular soldiers, the adoption as “normal” a style of life considered luxurious and wasteful by most of the rest of the world, the rise of power from the residents of lands from which economic resources are taken and the acceleration of military and economic power in other regions of the world.

What the British did with actual occupation of lands far from her native border has shifted in the 20th and 21st centuries. Occupation is no longer a necessity; a global corporate world – led by the United States – has altered that requirement by simply owning or controlling certain assets and/or market access all over the planet. As technology has increasingly dictated growth and power, global control of patents now rivals possessing vast pools of natural resources like oil and gold reserves.

Read the second paragraph above again. And think about the United States. From engaging “contractors” in Iraq and other militarily sensitive areas around the world to allowing mega-financial institutions to grow at the expense of ordinary citizens, to a denigration of many forms of hard physical labor which are now either outsourced or relegated to undocumented aliens, to average home sizes that clearly exceed global averages and quality of construction by quantum leaps, to the declining number of new U.S. “hard” patents, to maintaining our standard of living by massive borrowings from foreigners… and the list goes on.

This all just pisses me off. Negative thinking that lurks behind the conscious minds of so many Americans. We seem to think we’re falling, but that “someone else” is going to figure it out and make it “all better.” Well folks, that someone else is US… or U.S. Those jobs we have lost? Most of them won’t be coming back – ever. So people who are waiting for the same old, same old may have a very long wait. We haven’t had a long-term period of under and unemployment like this since the Great Depression. We need to create new values, not turn out undergraduates with “business” or “marketing” or “communications” degrees. We need products to create businesses, have something to market and about which we can communicate. Our community colleges may be the next “oil discovery” that will train human beings to perform real jobs creating real values.

The tea leaves that need to be read are everywhere, most recently the meeting in Pittsburgh of the G-20 nations. What happened to the G-7? The September 25th NY Times: “President Obama [announce September 25th] that the once elite club of rich industrial nations known as the Group of 7 will be permanently replaced as a global forum for economic policy by the much broader Group of 20 that includes China, Brazil, India and other fast-growing developing countries, administration officials said Thursday…. The move highlights the growing economic importance of Asia and some Latin American countries, particularly since the United States and many European countries have found their banking systems crippled by an economic crisis originating in excesses in the American mortgage market.” There is talk of ending the dollar’s reign as the “reserve currency” (the money nations retain for international dealings and by which global commodities are priced) by an amalgamation of currencies, including the dollar, in a “special drawing right” virtual currency. Tea leaves everywhere.

We don’t deserve a great quality of life; we have to earn it. Every day! And damn it, we’re Americans! We can dream. We can build. We can invent and create. We can do! We need that spirit of American invention, drive and determination that made us great. Most of all, we need to reinvent ourselves. But this clearly isn’t a government policy that will be determined at the top and shoved down to the “people.” This has to be a decision by each and every one of us, regardless of age or experience, to take tangible steps to adapt into this new era and reinvent our own value-contribution to our country. What’s your path to reinventing yourself… or do you think what you are doing can continue just the way it has?

I’m Peter Dekom, and I approve this message.

Saturday, September 26, 2009

Schools are for Fish!

I had a gentleman from India visit me recently – not a tech guy, but a scholarly type – and we began discussing the profound interdependence of the United States and India – the former supplying the graduate schools, a broad customer base and an environment where Indian engineers and entrepreneurs have been able to immigrate to the United States and found new, US-based technology companies that have actually created, contrary to popular belief based on large-scale “outsourcing,” millions of American jobs in leading-edge technologies – companies like Sun Microsystems or Momenta Pharmaceuticals Inc.,

According to the Boston Globe, “[L]egendary investor John Doerr , partner at the venture firm Kleiner Perkins Caufield & Byers, which has backed start - ups like Google and, suggested that 50 percent of the gains at Kleiner's portfolio companies were generated by [Indian born entrepreneurs].” According to, “Indian-born entrepreneurs were principal founders of 26 percent of immigrant-led Silicon Valley ventures, just overtaking Chinese and Taiwanese founders, who accounted for 24.4 percent of the total.” Yeah, Chinese and Indian émigrés are creating the “new values” for this country. Why did they come here? Why America? What did they see here that they did not have at home?

My friend and I bantered back and forth, noting that even though Indian English was a common thread among educated Indians, the lack of American cultural fluency pushed Indian émigrés into the universal languages of engineering and mathematics, where clearly they have excelled. This appears to be the case for Chinese-born entrepreneurs as well. He asked me what he thought was America’s greatest contribution to India might be. I noted that unlike England, which had been notorious as the oppressor-exploiter of India’s people and resources during a significant period of British rule over the Subcontinent, the United States may have taught Indians of every socio-economic level to dream.

He thought about that for a while and said simply, “You’re right.” Americans from any stratum of society have been taught to dream, that the “American Dream” is achievable by anyone with enough drive and ambition to do what it takes. We are risk-takers, out-of-the-box thinkers, and a heterogeneous society where ethnic diversity slams cultures together in this lettuce bowl/melting pot to create explosive new ideas and creative vectors.

The great equalizer for Americans has been general access to quality public education, from kindergarten to the highest reaches of post-graduate studies. But India and China are beginning to get it; their people are beginning to dream… dream that they can rise in their home countries, where clear and significant economic growth is projected for the foreseeable future… and perhaps that America’s seeming struggles make her a less attractive place to take their dreams.

So I am deeply saddened by the collapsing of American public educational standards, a fall that has been accelerated by this economic meltdown as states slash educational budgets because tax revenues have dried up and social safety nets need to catch and hold more people. We are losing the ability to dream as this great educational equalizer plunges in quality across the land, just as emerging nations are escalating the quality of their educational systems.

In simple business analysis, we are losing the ability to generate the revenues that better educational standards inevitably provide. Our children cannot earn as much as the current working generations, because they are not trained sufficiently to create the same economic values of earlier generations. Further, the U.S. is not even able to attract enough foreign-born engineers to make up for this deficiency. We used to have upward mobility, but that is unfortunately changing. With less money coming in, educational budgets for future generations will be impaired as this pattern cycles American values downwards.

But what’s even worse are the hard economic costs that are rising as a result of overcrowded and inferior schools that cannot retain students even through a paltry high school education. With public high school dropout rates in our ten largest cities above 50%, the concomitant long-term social costs are staggering. The September 24th Los Angeles Times summarized one study on the impact of such dropouts in California: “High school dropouts, who are more likely to commit crimes than their peers with diplomas, cost the state $1.1 billion annually in law enforcement and victim costs while still minors, according to a study [released on September 24th]…. The California Dropout Research Project at UC Santa Barbara found that cutting the dropout rate in half would prevent 30,000 juvenile crimes and save $550 million every year… [They also] previously studied the economic effect of not finishing high school and found that for each group of 20-year-olds who fail to complete high school (roughly 120,000 per year), the economic loss is $46.4 billion.”

Multiply these numbers across the entire United States, and you have over half a trillion plus dollars of hard dollar costs to this nation as a whole. Understand that these dropouts are likely to become parents to children with equally educational proclivities and you are looking at trillions of dollars of losses to the nation. In simplistic business analysis, with revenues going down and costs going up, at what point does America file bankruptcy?

I’m Peter Dekom, and I approve this message.

Friday, September 25, 2009

It Ain’t Coal-Ahhhh!

Is it a dead horse that I’ve beaten once too often – that there really is no such thing as “clean coal”? Or is this anthracite topic worth dredging up one more time? I know that the U.S. would love to have such a beast – after all, we are the “ Saudi Arabia of coal” – but we really have to bury our heads in the sand… er coal tar… the live in that mythical world.

Oh, it is possible to burn coal completely, leaving recyclable residue, but that process is hardly commercial; what we’re trying to get the rest of the world to believe is that we can take the greenhouse gasses that are generated from coal-fired power plants and compress them into the ground in old wells, dry aquifers, and abandoned mines and oil fields… to be dealt with later, when someone figures out what to do with the mess. It looks clean as long as you don’t look at what is hidden underground… kind of like reverse smoke stacks… polluting into the earth.

The eyes of the world – at least the energy world – are all on the Mountaineer coal-fired power plant in New Haven, West Virginia… right on the Ohio border. You see this little beauty, an old smoke-belcher (built in 1980) was retrofitted with a carbon capture technology that will take a large “chunk” of carbon dioxide emissions and shove them deep below the surface, perhaps for thousands of years.

The September 22nd New York Times describes the process: “If all goes smoothly… engineers will begin pumping carbon dioxide, converted to a fluid, into a layer of sandstone 7,800 feet below the rolling countryside here and then into a layer of dolomite 400 feet below that. The liquid will squeeze into tiny pores in the rock, displacing the salty water there, and assume a shape something like a squashed football, 30 to 40 feet high and hundreds of yards long. American Electric Power’s plan is to inject about 100,000 tons annually for two to five years, about 1.5 percent of Mountaineer’s yearly emissions of carbon dioxide. Should Congress pass a law controlling carbon dioxide emissions and the new technology proves economically feasible, the company says, it could then move to capture as much as 90 percent of the gas….

“For now the project consists of the two wells and a small chemical factory. In the factory, smoke diverted from the plant’s chimney is mixed with a chilled ammonia-based chemical. The chemical is then heated, releasing the carbon dioxide, which is pumped deep into the wells.” Not that this is particularly cheap; the cost of the carbon capture part of this process is reported to be around $73 million, and experts believe that the pumping and conversion equipment cost over $100 million.

Why does this seem a bit like sweeping your carpet clean but storing all the dirt, every time you sweep, under that carpet? Scientists suggest that this is an interim technology (like this is really a technology worthy of labeling it a technology!) that will be solved as we evolve better methods of electrical power generation. I guess if you can’t see it… it’s not there. Better than nothing, I guess, but a pretty sorry state of engineering for a nation like the United States to tout.

And you may have noticed that the above process involves pumping and converting. And you may be wise enough to know that those efforts require… er… you got it… energy. And well, this is an energy-generating plant, so that of necessity, its efficiency will be compromised by the loss of energy needed to pump and convert – somewhere between 15% and 30% of the plant’s total output, depending on whom you talk to.

As officials from foreign power companies – some having come from as far away as India and China – have arrived to watch the plant apply this new technology, clearly there is a lot at stake. Why am I not thrilled with this expensive and inefficient “sweeping under the rug” technology?

I’m Peter Dekom, and I approve this message.

Thursday, September 24, 2009

Death by Insufficiency

Fact is that no health insurance plan is going to work as well as we want. There will always be something to criticize. So whatever side you may be on in connection with the national health insurance debate, well you’re going to be right, and you are going to be wrong.

This week, in the Republican response to the President’s healthcare speech, North Carolina Congresswoman Susan Myrick noted: “Nine years ago, I was diagnosed with breast cancer. I knew something was wrong with my body – but it took six doctors, three mammograms and one ultrasound before they finally they found my cancer. This process took only a few weeks…. Under the government-run healthcare system they have in Canada and the United Kingdom, I wouldn’t have had the opportunity to get those tests so quickly. One international study found that three times as many citizens in those countries wait longer than a month to see a specialist. When it comes to life-threatening diseases like cancer, delay could mean death.”

Valid point Sue, but you are criticizing someone else’s healthcare system, you are making assumptions that did not in fact take place (you actually didn’t apply to a Canadian or UK system for a diagnosis)… and most of all, you could afford health insurance. Fact is that our elected representatives in Washington have some of the best health insurance in the land. Of the 46.3 million Americans who don’t have such insurance, probably 30 million actually can’t afford to get coverage. What do you say to the person whose pre-existing conditions put healthcare insurance out of reach? Or someone who has capped out on the lifetime maximum benefits? Or someone whose insurance company just terminated them because they were costing too much?

Most importantly, what do you tell the families of the approximately 45,000 Americans who die every year because their ailments didn’t get the needed treatment because they didn’t have health insurance? According to a report issued on September 17th by a Harvard University-based research group – "Health Insurance and Mortality in U.S. Adults," in the American Journal of Public Health – that’s the number, and it is rising rapidly (double the number of such deaths as reported in 2002). Fact is that there is 40% higher risk of death if you don’t have healthcare coverage.

Small businesses are dropping health insurance benefits simply because it costs too much. People are watching premiums skyrocket, even in recession times, but these costs have been accelerating well beyond the average annual cost of living for decades. The ranks of the uninsured are swelling at an alarming rate. To support the continuation of the current healthcare system in this country is both heartless and avoids dealing with who really stands to gain as we debate these issues. Insurance companies and for profit medical businesses love the ability to extract profits from an industry that generates 16% of our GDP, even if a few folks have to die or suffer. Do you think GM and Chrysler would have gone out of business if they didn’t have to pay the massive healthcare benefits they agreed to in their collective bargaining agreements they negotiated back when business was good?

Big health insurance companies don’t oppose mandatory health insurance for every American, even if some of that is government subsidized. As long as it goes through them. If the government requires everyone to have health insurance, and the only providers are the big insurance companies, I would consider the healthcare insurance industry to be a huge growth business, with massive new profits being shoved in their direction from the shipload of new customers that the government is forcing in their direction. Why do I get the feeling that this is not the best method of containing costs? And remember, big businesses (16% of the GDP!) finance a lot of political campaigns. Don’t believe everything you hear from a politician who got elected with sizeable campaign contributions from the healthcare industry… Oh, almost of them did. Oh well…. It’s the American way.

I’m Peter Dekom, and I approve this message.

Wednesday, September 23, 2009

Revolting Gadgets

According to the September 20th NY Times, in 1980 the average American household had three consumer gadgets in it; today that number has increased to twenty-five! While mainstream appliances are regulated by the feds as to efficiency, and there are Energy Star valuations to assist in the comparison, for most electronic gadgets, they are not remotely concerned with efficiency.

So many of our “gadgets” remain “on” in stand-by mode, sucking down energy with no off-setting benefit. When standards are applied, we all see the incredibly positive results. The Times: “In 1990, refrigerator efficiency standards went into effect in the United States. Today, new refrigerators are fancier than ever, but their power consumption has been slashed by about 45 percent since the standards took effect. Likewise, thanks in part to standards, the average power consumption of a new washer is nearly 70 percent lower than a new unit in 1990.”

Indeed consumer electronics manufacturers are centered on the cool stuff their products can do, and most certainly not on what waste they cause and how they make dealing with global greenhouse emission that much more difficult. Exactly how much more power is likely to be required in the near term to satisfy the global growth of this gadgetry? The Times: “Worldwide, consumer electronics now represent 15 percent of household power demand, and that is expected to triple over the next two decades, according to the International Energy Agency… To satisfy the demand from gadgets will require building the equivalent of 560 coal-fired power plants, or 230 nuclear plants, according to the agency.” Not good.

Turning off that stand-by power can cut energy usage by an average of 15% per year. And paying attention to the kind of big screen – wasteful plasmas versus much more efficient LEDs – can significantly drop energy bills. A big screen television can draw more power than a refrigerator over a year. And you’ll love this little analysis from the Times: “Noah Horowitz, at the Natural Resources Defense Council, calculated that the nation’s gaming consoles, like the Xbox 360 from Microsoft and the Sony PlayStation 3, now use about the same amount of electricity each year as San Diego, the ninth-largest city in country.”

The solution, unfortunately, is to begin mandating electronic efficiencies in the mass of “small to large” consumer electronics that aggregate a huge drain on our power supply. If we can accomplish even a fraction of what we have done with large consumer appliances, the savings will be monumental. Yes, these electronics will cost more… at least in what you have to pay for them when you buy them… but in the end, perhaps the overall cost to our society will be profoundly less.

I’m Peter Dekom, and I approve this message.

Tuesday, September 22, 2009

Contracting, A Disease

It’s old news that the U.S. uses well-armed “contractors” in place of armed military forceds to perform “various tasks,” most notably “guarding” diplomatic posts and personnel. Fatalities and other casualties among these “mercenaries” aren’t counted among our military statistics. Useful, huh? We know the most controversial Blackwater paramilitary group became so infamous in its seemingly cavalier treatment of Iraqi civilians – engaging in what were purported to be “defensive firefights” with what others believed were excessive civilian casualties – collateral damage – that it was forced to change its notorious name (it’s now Xe Services). Criminal accusations and prosecutions against our “contractors” are well-reported… as well as a recent binge-party – laced with nudity (nice picture above) – by contractors engaged to guard a U.S. Embassy.

Arrogance and dark glasses. Hard men looking for hard pay. Have you read about all the good they are going, reaching into the countryside to help farmers and villagers upgrade their lives? Rescue trapped children? Bringing medical help to the isolated? No? Well, neither have I. These well-armed soldiers of fortune are yet another face that locals have learned to identify with American arrogance, new symbols to focus their rage at us. You’d think that the Obama administration would have ended this Rumsfeld/Cheney transfer of military options to the high-profit world of soldiers for hire… to the highest bidder. Sure doesn’t look that way.

You can exclude these contractors from your “number of military deployed.” They come out of different budgets; the Department of State has a “guard” category that no longer draws on the vast hordes of U.S. Marines (and out of the Department of Defense budget!) that were once charged with guarding our diplomatic facilities. We can play cool new games with dollars and numbers of personnel. Doesn’t save the taxpayers a dime; if anything, these defense contractors are even more costly. Just goes into a different budget category. Games.

But I continue to be concerned that these contractors are at least one step removed from the kind of oversight that you would think America would want from people, armed to the teeth, who are seen as America’s representatives to so many international venues. How much does the hatred that these folks have engendered costs the U.S. – in hard dollars – as their faces and actions help extremists recruit new “freedom fighters” to oppose, even destroy, U.S. interests here and abroad? Blackwater gave us the blackest of diplomatic eyes. Hated and feared, they symbolized everything that the world thinks is wrong with the US.

And new companies are springing up to supply a seemingly insatiable need by the U.S. government for armed mercenaries. Somehow, the results of such efforts don’t seem to change, but we keep hiring more. The September 19th New York Times: “Pakistani police raided a local [Islamabad] security firm that helps protect the U.S. Embassy on [September 19th], seizing dozens of allegedly unlicensed weapons at a time when unusually intense media scrutiny of America's use of private contractors has deepened anti-U.S. sentiment… Two employees of the Inter-Risk company were arrested during the raids in Islamabad, police official Rana Akram said. Reporters were shown the seized weapons -- 61 assault rifles and nine pistols. Akram said police were seeking the firm's owner.”

The report continues: “In particular, Pakistani reporters, anti-U.S. bloggers and others have suggested the U.S. is using the American firm formerly known as Blackwater -- a claim that chills many Pakistanis because of the company's alleged involvement in killings of Iraqi civilians… The U.S. Embassy denies it uses Blackwater -- now known as Xe Services -- in Pakistan.” Yeah, we use them “elsewhere.”

The damage that utilizing these “government vendors” – and the concomitant loss of direct government control over their actions – far outweighs the budgetary and statistical tricks that don’t save U.S. taxpayers one thin dime. It’s time for our government to phase out this most toxic habit of recent government policy. The face of the U.S. government should at least be… the U.S. government.

I’m Peter Dekom, and I approve this message.

Monday, September 21, 2009

Nothing More Serious

The residential mortgage crisis is over right? OK, housing prices haven’t exactly been swinging upwards, and if you can’t buy a house within the limits of those federally-insured programs, chances of getting a mortgage are pretty slim. Hey, let’s hear it for those federally-insured mortgages! Unfortunately, “Houston [and Boston, Los Angeles, Biloxi, Denver and every other region in the United States], we’ve got a problem.”

The Federal Housing Administration has guaranteed 23% of all the mortgages issued in the United States this year (back in 2006, that number was 3%!). “The percentage of FHA-backed loans at least 90 days overdue or in foreclosure was 7.78% for the second quarter, up from 5.43% a year earlier…” September 19th Los Angeles Times. The FHA is required to maintain cash reserves at a meager 2% of the mortgages that they guarantee a relatively small amount. Well, it seems that the defaults on FHA-guaranteed home loans have been somewhat steeper than planned. Simply, the FHA is running out of money. They really have only two sources of money: you and you! Phrased slightly differently: U.S. taxpayers and homeowners who access the program.

But if rates are raised for FHA home loans, a very sensitive and still teetering home sales market (and the residential values that go with it) will begin to tilt back to “really bad.” Further, if FHA rates go up, you can pretty much bet that home mortgage rates in general will rise. OK, so Congress will just have to write a few billion more in new checks. Yeah, right, more bailouts are really what Congress wants to vote for right now! Or Congress could reduce the reserve requirement and let America guarantee these loans with… er… air?

The September 18th Washington Post: “‘It's very serious,’ FHA Commissioner David H. Stevens said in an interview. ‘There's nothing more serious that we're addressing right now, outside the housing crisis in general, than this issue.’… The FHA, which is part of the Department of Housing and Urban Development, insures home mortgages against losses, thus helping prospective borrowers obtain loans. It uses the insurance premiums paid by these borrowers to pay for mortgage defaults. Since its creation in 1934, it has never used taxpayer money to cover losses at its flagship home-buying program. But rapidly rising defaults have burned through the agency's reserves, raising the prospect that it would have to take dramatic action.”

How important is the FHA to our struggling economy? Stevens cited in the above Los Angeles Times article: “‘Without FHA, there would be no housing recovery,’ he said, noting that 80% of its business now is new-home buyers.” We all know that this problem will be solved; it is most certainly not the end of the world. Stevens is looking for other answers, notably focusing on mortgage fraud and the underlying lenders’ responsibility for not supervising loans sufficiently to prevent that fraud. But if you look around, maybe you get the same feeling that I do: the United States is a leaky political and economic boat, and although we think we’ve patched and bailed sufficiently, every now and again (okay, a whole lot more often than that), a problem we believe we have fixed comes back because we didn’t really get it right the first time.

TARP loans to those “too big to fail” financial institutions seem to have fallen into a hole where even government experts can’t measure the effect. And while we all thought we “won” the conflict in Afghanistan “way back when,” we seem to be “losing” the conflict in Afghanistan because we pulled our troops out too soon to fight in an irrelevant war in Iraq, pissed off the Afghani countryside, elevated the Taliban in the eyes of the people and now have to return with over a hundred thousand NATO troop and marginal chances of victory.

Populist knee-jerk reactions are giving Congress whiplash as they follow their constituents and their lobbyists blindly; leadership and follow-up seem to be lacking. If an issue falls out of the public spotlight, we seem to have no problem focusing on the “new next” even if it means we never really accomplish what we set out to do in the first place. Time for a change. Yes… er… I hope… er… we can.

I’m Peter Dekom, and I approve this message.

Sunday, September 20, 2009

Baucus Against the Wall

Blue Dog Democrats, fiscal conservatives but socially liberal, accept the need for a national health insurance plane, but do not want any “public option” (a government-provided healthcare alternative choice for Americans who do not want to access a pool that is covered by a private insurer). Liberal Democrats think the “public option” is an essential ingredient of any plan, because the government can drive down the cost of healthcare costs better – particularly since there is no built-in “profit” for administering this alternative – hence putting pressure on private carriers to drive down costs as well. And virtually all Republicans oppose most of these healthcare proposals as expensive choices for a cash-strapped, deficit-laden government, and one that reduces individual choice and increases government interference in the system. They particularly hate the thought of a non-profit competitor taking business away “unfairly” from the huge insurance sector of our economy, and suggest that such a program would actually reduce existing Medicare coverage. Each body of political thought clearly has merit, but…

With U.S. healthcare costs consuming $2.5 trillion a year, 16% of our GDP (almost a third of which is the cost of administering the system), rising for well-over a decade at a multiple of the annual cost of living increases and with 46.3 million Americans without healthcare, something’s gotta give. American businesses that offer insurance are dropping that option as costs escalate. The union-negotiated level of healthcare benefits accorded to our nation’s largest automakers contributed significantly to the bankruptcies of both Chrysler and General Motors. Bottom line: at the current levels of cost increases built into our healthcare system, we are rapidly reaching that place where we can no longer afford what many believe is “the best healthcare system in the world.”

Everyone seems to favor stopping insurance companies from denying coverage for “pre-existing conditions” or terminating insurance for someone with significant claims. There is a focus on excessive amounts of “over-testing” of patients to eliminate potential medical malpractice claims, paying doctors to keep you healthy versus paying to heal or cure ailments, helping small businesses provide alternatives to expensive healthcare benefits, allowing pooling (even private, non-profit cooperatives that allow larger numbers of people to pool their aggregate economic power to secure healthcare), mandating that people carry healthcare coverage (with subsidies to cover those who cannot afford it), and wrestling with getting the essential components of the system (like the big pharmaceutical companies) to finding cost-reducing programs. The “abortion” issue is also controversial, and some suggest that this cannot be part of any “public option” but that it can be included, if a carrier so elects, in private plans.

Whatever the alternatives, if we are indeed going to cover 46.3 million people who currently do not have healthcare coverage, it is clear that these costs are currently not fully recognized in the existing healthcare system. For those who choose not to be covered, the young invincibles for example (younger Americans who really don’t think they need health insurance), they will be mandated to get covered. Assuming that there are a remaining 30 million individuals who really cannot afford the cost of such insurance, the money to cover them has to come from somewhere. Call it additional taxes, fees or “contributions,” the financial benefits to that huge add to our medical coverage will be anything but free. Maybe the payments from the “young invincibles” can add a revenue base that could help defray some of these costs.

Cost estimates (over ten years) – and these are estimates – of the various programs being considered range from $750 billion to well over $1 trillion. The President has suggested a budgetary safety “trigger” that would force automatic spending cuts on other programs if the actual costs exceed predetermined levels, which is nice… until you actually start making those “automatic cuts” and the screaming starts. Or if providing healthcare to the missing 30+ million results in premium increases to the rest.

The latest contribution to this litany of healthcare options has come from the Democratic Chairman of the Senate Finance Committee, Montana’s Max Baucus. This Senate program, which is estimated to cost $856 billion over ten years, eschews the “public option” (but allows for non-profit “cooperatives” to pool resources), mandates that all who can afford insurance would be required to have it (and would provide subsidies for the rest) or else pay a fine, prevents insurance companies from denying or terminating coverage (based on expensive medical conditions or pre-existing conditions), and would allow consumers to explore their choices online.

The September 18th Washington Post: “Some Senate Democrats, along with a key moderate Republican, Sen. Olympia J. Snowe (Maine), are now discussing ways to increase assistance for individuals and families who could face premium costs of up to $15,000 per year by 2016. Sen. Charles E. Grassley (Iowa), the ranking Republican on Baucus's committee, is suggesting government assistance to insurance companies to help them control premium costs. And lawmakers in both parties are questioning whether Baucus's main revenue source, an excise tax on insurance companies for their most generous insurance policies, would simply be passed on to consumers.” Battle lines are being drawn, and the outcome is anything but clear.

Baucus: “The cost of America's broken health care system has stretched families, businesses and the economy too far for too long… For too many, quality, affordable health care is simply out of reach. This is a unique moment in history where we can finally reach an objective so many of us have sought for so long.” The position of most Republicans? Senate Minority Leader Mitch McConnell (R-Ky.): "Democrats in Washington are pushing another trillion-dollar bill or calling for more spending, more taxes, and more debt… The American people want health care reform -- not with more government, but with less. They don't want a new government-run system; they want us to repair the system we've got.” It sure looks like national healthcare is a policy that will have to pass without Republican support. America appears to be fighting two wars: one in Afghanistan and another in Congress over healthcare.

I’m Peter Dekom, and I approve this message.

Saturday, September 19, 2009

Russian So Fast

Dmitry Anatolyevich Medvedev is President of Russia. He got there when Russian strong-man, Vladimir Vladimirovich Putin (gotta love dem middle names!), termed out as President and moved into becoming the Prime Minister instead. Putin’s power rises and falls based on the price of oil, but he is the power in Russia. Oil prices are going up. Medvedev and Obama hit it off and seem to be able to communicate. Putin seemed to have based his international strategy on shoving American interests down, making Russian power and political agendas move up accordingly. He smiles at U.S. failures in Afghanistan and in trying to contain Iran. Medvedev seems to be a peace-maker. Makes for a big diplomatic mess, doesn’t it?

One of Putin’s biggest gripes has been the potential construction of two “defensive” missile bases – a shield for European and American interests against the potential of an Iranian missile strike – in Poland and the Czech Republic. These bases were announced during the Bush administration; Russia screamed like a stuck pig at the construction of missile platforms so close to Moscow, right in the middle of the former Soviet Union’s old stomping grounds in Eastern Europe. To then-President Putin, it was as if the United States were rubbing Russia’s face into powerless dirt.

Putin watched as the U.S. economy collapsed. While Russia fared badly in the early stages of the economic fall, as oil prices plunged, her vast reserves of natural resources – particularly oil and gold – suggested more than enough financial power to rise to the top again as commodity prices recovered. While Medvedev attempted a rapprochement with Washington, Putin pushed back – interesting game, huh… like these two leaders aren’t really talking with each other every day! They have effectively kept U.S. policy off-balance as President Obama has to deal with this seemingly contradictory duo.

So when Obama announced on September 17th that the two proposed missile bases in Poland and the Czech Republic were not really necessary – ending the programs – the change of American policy provoked the following reaction, as noted in the September 17th Washington Post: “Russia said it was encouraged by the news but was waiting to study the U.S. decision. ‘We need to see the full text before we can make any comments. So far, I can say that a possible review of the U.S. position on missile defense would be a positive signal,’ Foreign Ministry spokesman Andrei Nesterenko told a press briefing, adding that no backroom deal had been struck between Moscow and Washington.” Putin called the decision “correct and brave.” Would Russia now assist American efforts to contain Iran’s nuclear program? Time will tell, but I wouldn’t hold my breath.

Since these bases were also straining Czech and Polish relations with Russia, these two Eastern European powers shouldn’t be too upset at this change of heart, but reaction was surprisingly negative. “‘This move will be discussed here as another example of the Obama administration putting less into relations with Eastern Europe than his predecessor did,’ said Lukasz Kulesa, head researcher at the Polish Institute of International Relations in Warsaw. ‘That is seen as worrying.’… Former Polish President Lech Walesa criticized the decision, and former Czech Prime Minister Mirek Topolanek called it ‘bad news for the Czech Republic.’… Official reaction was more circumspect. In the Czech Republic, where polls have consistently shown a large majority of the public opposed the project, Prime Minister Vaclav Klaus said, ‘I'm 100 percent convinced that this decision of the American government does not signal a cooling of relations between the United States and the Czech Republic.’” AOL News (September 17th)

Conservatives in Washington railed at the thought of contracting the U.S. missile shield that was directed at Iranian extremism. Citing better technology and the more effective use of sea-based missiles than what would be offered in the proposed land-based system, President Obama explained: “Our new missile defense architecture in Europe will provide stronger, smarter and swifter defenses of American forces and America's allies… It is more comprehensive than the previous program; it deploys capabilities that are proven and cost effective, and it sustains and builds upon our commitment to protect the U.S. homeland.” American intelligence seems to have concluded that Iran is no longer emphasizing the design and construction of longer-range missiles and that the new approach would be more than sufficient to contain Iranian aggression. Could this “floating missile shield” actually provide a greater threat to Russia, or is all of this about the appearance of power?

Fact is that there is a big treaty up for renegotiation involving the U.S. and Russia – finding a replacement for the Strategic Arms Reduction Treaty, or START, which expires in December. These missile bases were considered a barrier to reaching an agreement. Will Putin be assuaged enough? Does it matter? Some say we compromised our strategic defense to improve relations with a leader who will only find another reason to berate America. But then, seeing two large immobile targets – albeit missile bases – in a world of highly mobile and increasingly effective technology does seem a bit anachronistic.

I’m Peter Dekom, and this is just one more piece in a giant foreign relations puzzle.