Saturday, July 31, 2010

My Afghan is Between I-Raq and a Hard Place

I’m picturing an old silent movie – Keystone Cops – running in all the wrong directions, miscreants sneering with joy. How ‘bout this? Circus cops chasing red-nosed clown-bandits in never-ending circles. And U.S. troops – “Mission Accomplished” – chasing all over Iraq to “make the bad man stop.” It seems as if the wonderful political system we set up in Iraq after we toppled another “bad man” – sad, sad Saddam – to force three clear factions (Sunnis, Kurds and Shiites), who truly hate each other to pretend that an artificial border set by a French-British treaty with no reference to anything but pretty lines could define a viable nation… surprise… just doesn’t work. Let’s see if we can get our troops out before the whole place implodes!

The New York Times (July 28th) summarized the problem: “As the top American military officer [Admr. Mike Mullen] arrived [in Baghdad] to press Iraq’s leaders for a resolution to their political impasse, the country’s new Parliament canceled an already postponed session on [July 27th] and announced that it would not even try to meet again until further notice… Nearly five months after elections in March ended without a decisive winner, [Prime Minister Nuri Kamal al-Maliki] and the leaders of the other political blocs are divided over his efforts to stay in power for a second term.” In short, Iraq is rudderless with no captain and no clear path to find one either. While opposition leaders eagerly met with Mullen, al-Maliki – obviously sensing a shove was imminent – suggested that Mullen should meet with his military counterpart, but hardly was important enough to meet with a head of state (sort of, I guess).

Will we let this get us out of Dodge? Will our troops continue to evacuate this sinking ship? You bet! ““We don’t see anything right now that will affect the transition and the continued troop drawdown,’ the admiral said, adding, ‘Certainly sooner is better in terms of government formation.’” The Times. My mind is picturing the last U.S. forces leaving Saigon in March of 1973… locals desperate to find a way to hitch a ride on a departing helicopter crammed with fleeing Americans.

With any political resolution literally months away, at the earliest, Iraq is unraveling: “This summer, Iraqis took to the streets to protest the government's inability to deliver more than a few hours of electricity per day. Iraqis increasingly speak disparagingly about their leaders, and imams around the country have spoken out against poor governance at Friday prayers… ‘Now, everything is stopped,’ said Nadjha Khadum, the editor of the Ur News agency Web site. ‘There's no work, no jobs. People are waiting. People are just buying food and saving money because they are afraid the situation will get worse in the future -- worse than in 2006 and 2007,’ years marked by a brutal insurgency… ‘Right now, if you ask any Iraqi: What do you think of democracy? They will say it’s blood, stagnation, unemployment, refugees, cheating,’ [former prime minister Ayad ] Allawi said. ‘If democracy does not succeed in Iraq and tyranny is replaced by another tyranny, there will be no legacy.’” Washington Post (August 1st)

Yeah, we haven’t done particularly well in large-scale military actions since that war. I won’t even dwell on the loss of billions of dollars that slipped through our fingers according to a recent government audit. Alright, I know you really want me to… So: “The audit said that the Department of Defense had failed to account adequately for $8.7 billion of the $9.1 billion it received from 2004 to 2007 from a fund authorized by the United Nations to redistribute Iraq’s oil revenue…. Investigators blamed weak financial and management practices among several agencies within the department that had received the funds and had released them for reconstruction projects. While the report did not address the question of whether money had been wasted, it said the Pentagon ‘could not provide documentation to substantiate how it spent $2.6 billion.’” The Times. Ah yes, a trifle of the trillions sunk down those military holes.

Must have brought some peace and stability to this nation, right? The August 1st LBN-Alert begs to differ: “A double bombing that killed four people in Baghdad [July 31st] added to an already record-breaking month for the civilian death toll in Iraq. Officials announced that 396 civilians were killed in July, nearly doubling the number for June (204) and marking the highest total since June 2008. July also saw an additional 680 Iraqi civilians wounded, while 50 soldiers and 89 police officers died. Along with that data, the Iraqi government published the number of detentions in July and that too seems on the rise. Security forces made roughly 700 arrests last month, surpassing the highest mark for 2010 of 685.” Ugh!

But hey, there’s always hope that we will prevail in Afghanistan, right? That’s what the Bush administration told us, and we’ve pretty much got that impression from President Obama too. Okay, okay, there’re these 90,000+ documents (200,000+ pages) “leaked” from military sources that document, rather convincingly, that the Taliban forces (not exactly loved by anyone) have never been stronger, that Pakistan’s intelligence agency and military (funded in no small way by U.S. aid) have been actively supporting the Taliban against U.S. forces, and that there are no real serious measures of progress anywhere in the entire nation, led by one of the least-like, most corrupt individuals – Hamid Karzai – we’ve ever supported. The government didn’t even deny any of the reports, just saying that it’s nothing that should surprise us. Particularly if they have been reading the Peter Dekom blogs on the subject for the past few years (obviously neither President Bush nor President Obama seems to have noticed… very frustrating, but then I could say “toldyaso!” directly to them).

What exactly are we expecting that the longer-term outcome will be in either Iraq or Afghanistan? We set goals, sent troops and aid missions, lost thousands of American lives and have inflicted a multiple of that in civilian casualties, spent trillions and we are going to leave unstable corrupt governments that are likely to topple and suffer bloody civil wars, leaving the militant extremists in vastly better position than when we arrived. If this were an isolated failure on the part of American foreign policy, perhaps we could look at this as a valuable lesson. But when this is the consistent result of consistently failed American military incursions brought on in unthinking rash responses to emotionally distraught moments, we really need to look deeper. We really must stop setting goals that history has clearly established as unreachable, particularly when the result is a strengthening of our real enemies and resentment amongst our purported allies.

I’m Peter Dekom, and I once thought Americans were smarter than that.

Friday, July 30, 2010

Hot Chocolate

Nelson Bunker Hunt and his brother Herbert Hunt were rich – oil billionaires (their daddy left it to them) with cash to burn. But they wanted more, a lot more. So they figured that if they could “corner the market” in a precious metal – like silver – they could create a legal monopoly and drive the price of that metal through the roof… and get wildly richer. So in the late 1970s, they started buying up silver, silver futures and whatever they could; at one point, they actually owned or controlled somewhere between one third and half the earth’s commercially available silver.

Needless to say, their buying that much silver in the market drove the price up, even for them – from $11 an ounce in September of 1979 to almost $50 in January of 1980. “The situation for other prospective purchasers of silver was so dire that the jeweler Tiffanys took out a full page ad in the New York Times, condemning the Hunt Brothers and stating We think it is unconscionable for anyone to hoard several billion, yes billion, dollars worth of silver and thus drive the price up so high that others must pay artificially high prices for articles made of silver.” Wikipedia.

The total cost of all that precious metal – most of it on paper – created too big of a cash need even for the Hunts, so they bought a lot of stuff “on margin” (read: borrowed money). There was a lot of pressure on the commodities exchange (Comex) to “do something” about these nasty Hunt brothers, so on January 7, 1980, the passed a new rule (“Silver Rule 7”) limiting how much a buyer could stake a market “on margin.” And price of silver began to tumble, 50% in just four days. On March 27, 1980 (“Silver Thursday”), after the price of silver had fallen below the minimum price required on margin buys and the brokerage firms called the Hunts’ margin loans, the Hunt brothers stared a massive 1.7 billion dollar call in the eyes, which they had no way of paying, threatening to bring down more than one brokerage house with them.

With some pressure from the government and some help from a consortium of banks, loans were hastily arranged, but by 1988, the Hunt brothers lost 80% of their once glorious $5 billion fortune (in 1980, that was the equivalent of a multiple in billions today). In 1988 the SEC investigated and found the brothers guilty of federal conspiracy changes in connection with their efforts to monopolize silver, an event which triggered one of the biggest bankruptcies on record.

Cornering the market has always been the stuff of legends and vain aspirations. The Hunt debacle even inspired a 1983 comedy motion picture, Trading Places (it spoke of orange juice futures), starring Dan Aykroyd and Eddie Murphy. Why the history lesson? Because another dude, British hedge fund (Armajaro) manager Anthony Ward, has just managed to buy 7% of the world’s cocoa bean output, enough to have a very significant impact on prices.

Dubbed “Choc (or “Chocolate”) Finger” (an allusion to the villain in the 1964 James Bond film, Goldfinger), it appears Ward actually purchased 241 metric tons of cocoa (and had the stuff actually delivered to his storehouses in West Africa – he maintains buying operations on the Ivory Coast, Indonesia and Ecuador) and invested another $1 billion in cocoa futures. London-based Armajaro is all about cocoa, a commodity that has risen 150% since 2008, and is threatening to soar beyond those rates based on Mr. Ward’s efforts. The July 24th New York Times: “‘We even have our own weather stations — our very own that no one else has in some parts of the world,’ Mr. Ward, soft-spoken and tan, said in a video interview this year with a financial news service… With candy makers starting to stock up for the holiday season, they may be forced to pay him ever-higher prices… ‘The squeeze was really timed perfectly,’ said Eugen Weinberg, an analyst at Commerzbank in Frankfurt.” Mr. Ward appears to have profited handsomely from a similar “squeeze” in 2002, and with the harvest season coming up this fall, any shortfall could amplify Mr. Ward’s impact on the market.

While some have charged Ward with “manipulation,” so far the relevant exchange has indicated “no evidence of abusive behavior.” Will you be able to afford candy this year? “In any case, chocolate lovers should not worry too much, analysts said. Cocoa accounts for only about 10 percent of the price of most ordinary chocolate bars… The situation could change, however, if the next cocoa harvest falls short of expectations — or if Mr. Ward keeps buying.” The Times. You will probably pay a bit more.

I’m Peter Dekom, and while candy is dandy, chocolate is dicey and pricey.

Thursday, July 29, 2010

Managing Cities 2010 Style – Fire Everyone!

When budgets get tight at the municipal level, administrators tend to cut programs, impose furlough days and lay-off workers according to one or more priority and seniority lists. Sometimes pay cuts can supplement the above, but since this economic slump is likely to continue for years – taxes on reduced income, lower sales volumes and reduced property values suggest no end in sight – new action plans are being created and tested across the country. One small town, on the edge of the Los Angeles, CA monolith, has another solution: fire absolutely everyone… and outsource the essential services to others.

Maywood, California imposed the above drastic measure in June. Residents were bracing for rampant crime in the streets, shuttered parks and a complete denial of traditional city services. But the firing of employees was not intended to eliminate basic services; instead city managers reasoned that other, larger, municipalities would be able to “add capacity” while maintaining their existing levels of overhead, something a smaller government would not be able to do. The July 20th New York Times: “While many communities are fearfully contemplating extensive cuts, Maywood says it is the first city in the nation in the current downturn to take an ax to everyone… The school crossing guards were let go. Parking enforcement was contracted out, City Hall workers dismissed, street maintenance workers made redundant. The public safety duties of the Police Department were handed over to the Los Angeles County Sheriff’s Department.”

But the change became a blessing; Maywood was hardly the poster child for competent government, and the scandal-plagued police department not only sucked up half of the city’s revenues, but it threatened the very survival of the town as a whole: “A report by the state attorney general last year concluded the culture of the department ‘is one permeated with sexual innuendo, harassment, vulgarity, discourtesy to members of the public as well as among officers, and a lack of cultural, racial and ethnic sensitivity and respect.’ … There are $19 million in claims pending against the police, which made it effectively impossible for the city to get insurance for any of its employees. If Maywood did not dismiss the municipal work force, officials said, bankruptcy would have been the only option.” The Times.

The plain fact is that everything seems to be working better, and except for the police force which seemed to be beyond repair, most of the other “fired” governmental workers were rehired by the outsource entities now providing the underlying services. The new Sheriff’s deputies on patrol have gone out of their way to reassure the residents, and the general response has been overwhelmingly positive. The financial benefits along the way have made more than one taxpayer smile: “The budget for the Police Department last year was nearly $8 million, more than half of Maywood’s revenues. The contract with the Los Angeles County Sheriff’s Department will cost about half of that. Insurance premiums for the city have fallen to $200,000 from $1 million.” The Times.

While this most definitely is not the “master plan” to save American cities, it does represent the need to look beyond traditional remedies to potential “big picture” solutions. With fringes and pension costs literally skyrocketing out of most state and local government’s range of affordability, outsourcing at least shifts the burden on such benefits to the vendors supplying the services, which in turn have to insure that their benefits are in line with its billing rates. I fear that the solution that will ultimate reach too many municipal governments, ripped apart by political interests, will be a filing for bankruptcy under Chapter 9. Maywood seems to have side-stepped that risk; more power to them!

I’m Peter Dekom, and I’m looking for answers.

Wednesday, July 28, 2010

Sittin’ on Cash

What do you do when you are a CEO of a big company, have cut operating costs to the bone, generated a pile of cash as a result but don’t believe there are enough folks out there to buy what you make? What do you do next? When do you make the “let’s hire some more workers and make more products” decision? Do you take the first step? Wait for your competitors to take the risk first and then react as fast as you can? When? What signs are you looking for? Multiply that conundrum times thousands of employers and you define this lingering recession. Foreclosures increased 38% last quarter, retail sales dropped half a percent in June, credit is still tight for consumers and small and mid-market companies, and the only real heat in this economy are the financial sector and the heat waves generating sweat under a burning sun.

The Washington Post (July 15th) presents this index of “things to come”: “A survey last month of more than 1,000 chief financial officers by Duke University and CFO magazine showed that nearly 60 percent of those executives don't expect to bring their employment back to pre-recession levels until 2012 or later -- even though they're projecting a 12 percent rise in earnings and a 9 percent boost in capital spending over the next year… When asked why companies are holding back so much, many economists cite broader uncertainty that goes well beyond anything happening in Washington. Firms aren't sure whether the economy can sustain a strong recovery. And as long as consumer spending remains low, there’s not much incentive for companies to ramp up.”

Catch-22: companies won’t start hiring again until consumer start buying; consumers won’t start buying until they are more certain about the job market. Under a threat of deficit devastation, there is increasing pressure on the ultimate consumer – the U.S. government – to reign back its own spending habits to get its borrowings under control. Trust me, there is more than enough corporate money out there to pay for new workers: “Nonfinancial companies are sitting on $1.8 trillion in cash, roughly one-quarter more than at the beginning of the recession. And as several major firms report impressive earnings [in mid-July], the money continues to flow into firms' coffers.” The Post.

The fact is, losing your job or getting a reduction in income as a result of reduced pay, contracting overtime or dissipating bonuses is at the forefront of most working Americans’ fears. The statistics seem to sustain not only the raw numbers of unemployed or under-employed but the duration of the job crisis: “The average length of time that the typical unemployed person has been looking for work increased again in June, to yet another record high of 35.2 weeks.” New York Times (July 2nd).

The usual chorus of “cut taxes and regulations” and jobs will flourish rings hollow: “Some analysts said it may be hard to create policy that compels companies to use some of their cash to hire workers. ‘CEOs don't like taking risks. They kind of move in packs,’ said Zachary Karabell, president of River Twice Research… ‘There's not a whole lot that you could do to entice companies to hire,’ he added. ‘You could cut taxes on them, but they're not going to hire just because they have the extra cash, because they already have the extra cash.’” The Post. This slump is both a paradigm shift that has taken out unsustainable business plans and obsolete job skills – in a global economy where your competitor may be 12,000 miles away (and could change overnight) – as well as a seri es of vicious circles that no one seems to be able to break at any meaningful level.

I’m Peter Dekom, and I still cannot get used to the notion of “this is just the way it’s going to be for many years.”

Tuesday, July 27, 2010

Rescue Mode

Between now and 2050, the number of French pensioners will increase by 47% while the number of folks under 60 will remain the same. The May 22nd New York Times tells us why the social safety net, so carefully constructed over decades… all over Europe, but particularly in France… is failing fast: “Gross public social expenditures in the European Union increased from 16 percent of gross domestic product in 1980 to 21 percent in 2 005, compared with 15.9 percent in the United States. In France, the figure now is 31 percent, the highest in Europe, with state pensions making up more than 44 percent of the total and health care, 30 percent.

The challenge is particularly daunting in France, which has done less to reduce the state’s obligations than some of its neighbors. In Sweden and Switzerland, 7 of 10 people work past 50. In France, only half do. The legal retirement age in France is 60, while Germany recently raised it to 67 for those born after 1963…

“According to the European Commission, by 2050 the percentage of Europeans older than 65 will nearly double. In the 1950s there were seven workers for every retiree in advanced economies. By 2050, the ratio in the European Union will drop to 1.3 to 1.” Anybody see a problem here? Think maybe the United States is also facing this “graying” effect? So let’s see, nobody will ever be able to retire again? This is a notion that is not too far from reality unless we figure out how to extract more money while folks work to allow them to retire when they can’t. And realistically, as healthcare improves and people live longer, it seems pretty obvious that retirement ages are of necessity going to rise. Seventy may be the new fifty… at least when it comes to retirement ages. Do I hear seventy-five? Who knows what an average lifespan will be in 2050. I am assuming that we will live longer, but people might not actually want to if the standard of living plunges enough.

The new buzzword all over Europe… and I suspect we will be hearing over here as well… is austerity. Civil servants working short hours, retiring early and getting fat defined benefit (they are promised a specific number plus cost of living increase when they retire) pensions are no longer tolerable anywhere on earth. How to reduce those commitments when they have already vested may bring down more than one elected official, but there just isn’t enough money in the system to allow these “easy days” to continue. “‘We’re now in rescue mode,’ said Carl Bi ldt, Sweden’s foreign minister. ‘But we need to transition to the reform mode very soon. The ‘reform deficit’ is the real problem,’ he said, pointing to the need for structural change.” The Times.

Bottom line: it’s over; we all just have to figure out how to implement the change. Anecdotally, the writing is on the wall, obviously in failing Greece but ominously enough, in relatively solvent France as well: “Gustave Brun d’Arre, 18, is still in high school. ‘The only thing we’re told is that we will have to pay for the others,’ he said, sipping a beer at a cafe. The waiter interrupted, discussing plans to alter the French pension system. ‘It will be a mess,’ the waiter said. ‘We’ll have to work harder and longer in our jobs.’” The Times. Yup, ya betcha! But think about the impact on the younger side of the job market when those older folks aren’t leaving fast enough or early enough to allow a reasonable number of job openings as well as a reasonable chance of promotion. Not pretty, huh?

Sure, if you don’t have cost of living provisions built into the pensions (but many do), add a little inflation and voilĂ , you’ve solved the financial issue. So what if pensioners are reduced to dire poverty and have to think of food, clothing and shelter as luxuries. Their pensions would be toast, houses no longer would be underwater, and the government would get to tax the “fake appreciation” of values measured in an inflated currency and make enough money to resume a profligate path. Or we can downsize our lifestyles and our expectations to match our ability to pay. We’ve got problems, bu t Europe… they have a total disaster waiting for them.

I’m Peter Dekom, and these are indeed the times of a huge social change.

Monday, July 26, 2010

The Fattest Canary in the Coal Mine

The big question facing global economic planners is whether this recession has in fact ebbed and is beginning, albeit an ultra-slow, path to recovery or whether we are either about to experience of "double dip" (recession, part deux) or even whether we ever got out of part one. The austerity measures favored by European central planners is both a reaction to the undisciplined "over-borrowing" at every level in the PIIGS (Portugal, Ireland, Italy, Greece and Spain) and the near collapse of at least two of those European Union economies (Greece and Spain with Ireland quivering). Conservative EU governments (notably pressured by economic powerhouse Germany) have forced severe austerity measures on the weakest member and increasingly harsh austerity on themselves. Deficits have been ruled the new super-menace by these nations, and there are many factions in the United States that agree deficit reduction is priority one. Indeed, Europe in general, but Germany in particular, dread the inflationary menace of a devalued currency based on the historical economic horrors of the post-World War I, perhaps more than an out-and-out depression.

But the other faction, notably led by the Obama administration and voiced by both the President and Treasury Secretary Tim Geithner, is equally terrified that imposing governmental spending cuts too fast, removing the only major spending consumer in the marketplace, the government, before the private sector is comfortable enough to resume spending, will send the global economy into an even bigger downward spiral. Corporate America, at least at the highest levels, has accumulated enough cash to begin hiring again, but they are completely unwilling to add workers without a whole lot more in the way of evidence of sustained growth and clear consumer demand. So in the question of where we are, recession or recovery, it might be valuable to take a look at that segment of the consumer marketplace most able to spend money.

Bottom line, how individuals spend pretty much determines how the economy is doing. The July 17th New York Times: "The American consumer accounts for an estimated 60 percent of the country's economic activity [Dekom: some say 70%] But the Top 5 percent in income earners, those households earning $210,000 or more, account for about one-third of consumer outlays, including spending on goods and services, interest payments on consumer debt and cash gifts, according to an analysis of Federal Reserve data by Moody's Analytics.

The most recent numbers are not reassuring and tend to support the Obama administration's view that the consumer demand is insufficient to replace the government's stimulus spending at this time or any time in the near future. "According to Gallup, spending by upper-income consumers, defined as those earning $90,000 or more, surged to an average of $145 a day in May, up 33 percent from a year earlier." Then in June, that daily average slid to $119. "I think a lot of that feeling that the worst was over has sort of abated," said Dennis J. Jacobe, Gallup's chief economist. The Times. It appears that there was momentary optimism, defeated by a too-conservative-too-soon European Union reaction to the malaise followed by a downgrade in recovery projections by the Federal Reserve.

Indeed, the trend lines at some of the highest-end consumer indexes all say the same thing: rich folks don't believe that the recovery has really taken hold, and they are retrenching in their consumer outlays. While the wealthy emerged from their late 2008 consumer-wallet shut down in 2009, the numbers suggest that the latter half of 2010 is going to reign in that spending once again: At the high end, luxury hotel chains like the Four Seasons and Ritz Carlton said bookings were much stronger earlier this year but had recently slowed. And upscale retailers, including Saks and Neiman Marcus, said sales growth eased in June. Overall retail sales slid in June from May, the government said this week." The Times.

My next quote comes from a insider business Website, (July 16th), which took a little journey into the not-so-distant past when governments played the austerity card a bit too soon: "The [contemporary] parallel here is with the 1930s, when the British Labour Prime Minister James Ramsay MacDonald attempted to maintain a balanced budget despite falling tax revenues after the Wall Street Crash. MacDonald eventually caved in to pressure to cut spending on unemployment benefits and public-sector jobs, and destroyed his political reputation and mental health in the process. Austerity on both sides of the Atlantic, as we now know, helped snuff out a nascent recovery and kept the world in an economic depression. Which lasted years and years and years, the markets didn't fully recover until well after WWII."

Is Britain's new Prime Minister, David Cameron, the new James Ramsey MacDonald, hell-bent on cutting his country's deficit even if it plunges the UK back into the economic mire, a policy that is sweeping the European Union? It sure looks like it. "With a relentless battery of policy announcements, Mr. Cameron and his coalition of Conservatives and Liberal Democrats have proposed to couple the deep deficit cuts the conservatives sketched out during the May general election campaign with a wider effort to break the mold of big government in Britain that, despite Lady Thatcher's best efforts, has largely prevailed since World War II." New York Times (July 21st).

The balancing act of monetary and fiscal policy is never easy, a high-wire balancing act constantly in need of very sophisticated fine tuning. For those who believe in simple solutions, let the government solve everyone's financial problems by spending, on the one hand, or cutting taxes, lowering deficits and eliminating business regulations, on the other, they would all be disappointed at the overall economic impact on their standard of living if the government indeed always followed such simplistic and obviously appealing uniform policies. Large deficits are very disruptive of longer term economic growth, but severe recessions (perhaps even depressions) can truncate the ability to have longer term growth rather significantly. Reading tea leaves and checking the fattest canary in the mine are essential parts in the constant monitoring and tilting of the impact of governmental policies on our economic survival.

I'm Peter Dekom, and in a complex economic world, simplistic uniform economic solutions based on appealing slogans and simple philosophic assumptions never work.

Saturday, July 24, 2010

Fat Tax

The July 29, 2009 USA Today cited a study about the cost of healthcare for those who are significantly overweight: “Americans who are 30 or more pounds over a healthy weight cost the country an estimated $147 billion in weight-related medical bills in 2008, double the amount a decade ago, according to a study by government scientists and the non-profit research group RTI International… Obesity now accounts for 9.1% of all medical spending, up from 6.5% in 1998. Overall, an obese patient has $4,871 in medical bills a year compared with $3,442 for a patient at a healthy weight…‘Obesity is the single biggest reason for the increase in health care costs,’ says Eric Finkelstein, a health economist with RTI and lead researcher on the new study. ‘If you really want to rein in health care dollars, you have to get people dieting, exercising and living a healthier lifestyle. Otherwise somebody is going to be paying for treating these weight-related illnesses.’”

Diabetes and coronary illness are high on the list of resulting ailments, and let’s face it, if you are really heavy in a society that seems to worship the slim and fit, the state of your body has to weigh heavily on self-esteem and probably impacts job prospects and promotions, as one study after another shows a statistical bias against “bigger” people. According to the July 10th, a man who is obese at age 20 will live 8 years less than an average male. Ads with everything from diet pills to drastic surgical measures tout slim is in, but all of this costs money, and in a horrible economy, some folks just find solace in comfort food… a strange name for an eating habit that will ultimately render the participant less-than-really-comfortable. For a segment o f the obese people in our world, there are deep medical reasons for the obesity, a body miss-wired, a chemical imbalance, an anatomical anomaly. For most, however, it’s just a bad combination of diet and a lack of exercise.

While the recent U.S. healthcare reform package has added some preventative measures to help stem the tide of growing obesity – like requiring vending machines and restaurants with more than 20 locations to post caloric information – and local communities have banned some of the less healthy food choices from school campuses, the emphasis on widespread educational campaigns that reach into the earliest school years and the invigorating physical education programs seem to push against the budget realities of financially decimated school districts. And in countries with extensive healthcare and social benefits that are accorded to all citizens, the recent pressures on deficit-laden governmental budgets has resulted in some rather strange suggestions, one of which is hovering in Germany.

When you think “German cuisine,” “lite” isn’t the first word that leaps to mind. “Germany, famed for its beer, pork and chocolates, is one of the fattest countries in Europe. Twenty-one percent of German adults were obese in 2007, and the German newspaper Bild estimates that the cost of treating obesity-related illnesses is about 17 billion euro, or $21.7 billion, a year.” (July 23rd). The beer capital of the earth has a weight problem?! Nooooo! But as Germany’s healthcare funds are running “unhealthy” deficits, more than one Parliamentarian has suggested a special tax on the obese: “Marco Wanderwitz, a conservative member of parliament for the German state of Saxony, said it is unfair and unsustainable for the taxpayer to carry the entire cost of treating obesity-related illnesses in the public health system… ‘I think that it would be sensible if those who deliberately lead unhealthy lives would be held financially accountable for that,’ Wanderwitz said…” Others think it would more fair just to tax the evil snacks and foods that foster fat. Teachers have, well, another concept of how to stem obesity in the early years: “Others are suggesting even more extreme measures. The German teachers association recently called for school kids to be weighed each day, The Daily Telegraph said… The fat kids could then be reported to social services, who could send them to health clinics.”

What is interesting about these reform movements is the fact that they have risen on the priority list less for humanitarian sympathies than for the hard fact that having a lot of heavier people in your society costs a lot of money… and right now, money is in very short supply. But if it takes a financial disaster to focus attention on a dire medical problem and, as a result, save millions of lives and help folks that really want a better, healthier lifestyle to get there, then maybe financial chaos has at least one silver lining.

I’m Peter Dekom, and it is increasing clear that everything seems to be linked to… well… er… everything.

Friday, July 23, 2010

Fractious Factions and the Cost of Waging War

Starting with the Vietnam War, the United States has had a perilous time when it has committed serious troops to conflicts where some semblances of civil war or fractious and seemingly irreconcilable groups occupy the national stage. This is more particularly evident in countries where the elements are driven by philosophical or religious “purity” and are willing to fight generations if necessary to stake their claim. Tribalism doesn’t help either. We literally got blown away in Vietnam as the communist insurgency (the Viet Cong) – backed heavily by North Vietnamese regulars – tangled with the pro-Western, anti-communist and profoundly corrupt forces backed by the United States… ultimately making the war a lose-lose for “our side.”

Iraq was no better as we stepped into a nation with Western-imposed artificial boundaries that shoved Kurds, Shiites (the majority) and Sunnis into a hateful mix that was further complicated by the distribution of plump oil fields in often difficult strategic regions. The constant news about car bombs and other malevolent explosions in places like Baghdad, attacks across religious boundaries and the like… well, if you think we “liberated” an oppressed people and placed them into a functional and harmonious nation-state, think again. Iraq, as our troops extract, is a mess.

Afghanistan is another mess that we literally cannot win. For starters, this is a regional conflict with much of the negative fuel coming from places where are troops cannot operate – like our purported ally, Pakistan, where the electorate equates American policies to a mandate from hell. If you haven’t noticed, not only are there language differences within this central Asian “country,” but there is severe tribalism, with various districts literally owing their allegiance to warlords and strong-men who love weapons, power and money. The U.S. set up a government, now festering under the notorious and mega-corrupt Hamid Karzai regime, which has itself lost faith in the NATO (read: U.S.) military support that continues to suck dollars out of our seriously impaired economy with absolutely no sign of meaningful progress.

Reading the writing on the wall, Karzai is sending feelers (with the aid of Pakistan) to the profoundly anti-American Taliban just as our new military commander in the region, General David Petraeus , is arming locals to defend against Taliban incursions. Just what the region needs: more guns. Indeed, NATO leaders are even coming to the belief that a power-sharing arrangement between the Taliban and Karzai may actually be the only solution (trust me, there are no solutions) to a peaceful future in the country.

And exactly what kind of a reaction would you expect from local tribal leaders to this potential challenge to their local autonomy? Exactly. “The man [Amarullah Saleh] who served as President Hamid Karzai's top intelligence official for six years has launched an urgent campaign to warn Afghans that their leader has lost conviction in the fight against the Taliban and is recklessly pursuing a political deal with insurgents… That view is shared by a growing number of Afghan minority leaders who once participated fully in Karzai's government, but now feel alienated from it. Tajik, Hazara and Uzbek politicians have expressed increasing concern that they are being marginalized by Karzai and his efforts to strike a peace deal with his fellow Pashtuns in the insurgency.” Washington Post (July 23rd)

Meanwhile, back at the ranch, it is becoming increasingly clear that the United States simply cannot afford such prolonged and unwinnable wars… or the military budget required to wage them. It would be much cheaper to spend money on history books so that our “deciders” can actually see how history has punished other “foreign” incursions into these very same regions in the past before they commit to defy the lessons of such struggles. Blank checks to the military are no longer sustainable. Defense Secretary Robert Gates is looking for ways to trim his budget, but the elephant in the room is the massive deployment of U.S. forces in interminable overseas campaigns that cannot be won.

[I]n the longer term, with concern mounting about the government’s $13 trillion debt, a bipartisan deficit-reduction commission is warning that cuts in military spending could be needed to help the nation dig out of its financial hole… ‘We’re going to have to take a hard look at defense if we are going to be serious about deficit reduction,’ said Erskine B. Bowles, a chief of staff to President Bill Clinton who is a co-chairman of the deficit commission. Senator Judd Gregg, a Republican from New Hampshire who is also on the debt commission, said that if the panel pushes for cuts in discretionary spending, ‘defense should be looked at,’ perhaps through another base-closing commission.” New York Times (July 23rd). Hit the “easy button,” Mr. Gregg; stop fighting wars history tells you clearly cannot be won.

I’m Peter Dekom, and the lack of leadership in Washington is abundantly clear as our elected officials now seem always to defy common sense to appeal to the momentary emotionalism of their electorate.