Systemically Important Financial Institutions

What do you think this phrase means? Yup, the biggest of the big boy financial institutions… including the next batch of “too big to fail monoliths.” These mega-babies have the ability to borrow cheap money from the Federal Reserve – because they are federally insured commercial banks – and have trading desks that create, buy and sell equity and debt instruments, inventing new secondary markets (so-called derivatives) with virtually no oversight. The law once prevented these various financial functions from being performed within the same institution, but then President Bill Clinton signed a bill to permit them all to merge into a single entity. And boy did they?! These bad boys float debt instruments and bundled assets, often requiring a rating by one of our nation’s sterling credit rating agencies in order to justify the market . Yes, the same credit rating agencies that believed bundles of subprime mortgages deserved A or better ratings. Oh and these behemoths – the ones that the rating agencies need as clients to survive – are also the ones to pick those agencies in the first place.

Sure, there are a few new regulations, debt-to-equity ratios are more carefully regulated, cash reserves are monitored, bailed out banks have restrictions on some executive compensation, etc. But even implementing rule-making under significant sections of the lobbied-to-death Dodd-Frank legislation, mostly too little too late, is being delayed, especially in market segments that played a major role in the big fall. This is particularly true with proposed rules wrapped around derivatives (where people trade based on economic values that occur in other tradable instruments or bundles of such instruments as opposed to dealing directly in them), including “swaps” (where one party with a risk-oriented right to income sells that right to another party who has a willingness to assume that risk for a le sser cost) and “credit default swaps” (literally a form of credit default insurance): “[On June 29^th,] the SEC … proposed new standards of conduct for banks and other firms that deal in complex financial instruments known as ‘swaps.’

“The proposed rules are part of the government’s push to impose order on the vast but historically unregulated trade in derivatives, an often lucrative but risky business… The SEC has jurisdiction over swaps tied to securities. The Commodity Futures Trading Commission has authority over others and has proposed parallel standards… Both agencies have fallen behind s chedule in writing a host of rules about derivatives and have given the industry a temporary reprieve from some of the Dodd-Frank requirements.” Washington Post, June 29^th. What??!!

For the most part, very little has changed, except that the surviving big boys absorbed the failed big boys and got bigger. Oh sure, some of them are bracing for the obvious downturn as the government heads toward an economy-contracting austerity program. Goldman Sachs even announced [on June 29^th] 230 intended lay-offs in New York, but these fat dudes are in no danger of succumbing to the economic mess they fomented. Wall St. even got the Federal Reserve to buy a whole pile of questionable bundles of debt off their books (their mistakes!); the euphemism was “quantative easing.” The Fed is clearly under-capitalized… er… well… except they do have the ability to increase the money supply (the modern equivalent of printing money). When foreign buyers aren’t buying U.S. treasuries, the Fed steps in and makes the purchase, with phantom money they have just manufactured.

The governmental bailout was intended to increase the flow of credit, for middle level and ordinary businesses. That just didn’t happen, but hording and using money to buy up little companies did. Credit is tight unless you are a very big economic player. These institutions are so big that they are hard to control or even understand. So big that senior managers can embezzle millions, and it is often dumb luck that such crimes are discovered: “Gary Foster toiled away as a mid-level accountant in Citigroup’s Long Island City back office, collecting around a $100,000 paycheck last year… But federal prosecutors claim Mr. Foster gave himself a bonus fit for a star investment banker by embezzling more than $19.2 million from Citi before its auditors picked up on the scheme… In this case, it took nearly a year after the claimed embezzlement began before Citigroup’s internal auditors uncovered that millions of dollars were missing.

“According to the complaint, Mr. Foster transferred the money from various Citigroup corporate accounts to his own bank account at JPMorgan Chase late last year. From July to December 2010, he moved about $900,000 from Citigroup’s interest expense account and about $14.4 million from Citigroup’s debt adjustment account to the bank’s main cash account. Then, on eight separate occasions, he wired the money to a personal account at Chase.” New York Times, June 27^th. His own personal bank accounts?! As I said, “dumb” luck.

Federal Reserve Bank of Kansas City President Thomas Hoenig is profoundly skeptical of the minimal financial reform efforts taken by the federal government (mostly under the watered-down Dodd-Frank bill). Indeed, administration efforts have stymied at every turn by well-healed Wall St. lobbyists, political action committees funded by financial institutions (literally unchecked under the horrific Citizens United Supreme Court decision), lurking campaign contributors making the connection between getting enough money to run and being friendly to Wall St. very clear, and smart lawyers and accountants finding all the loopholes necessary to render much of this purported regulation ineffective. Hoenig has been blunt in his criticisms: “‘The Dodd-Frank reforms have all been introduced before, but financial markets skirted them,’ he continued. ‘Supervisory authority existed, but it was used lightly because of political pressure and the mis-perceptions that free markets, with generous public support, could self-regulate.’…

“Regulators will lack the will to wind down failing companies deemed systemically important financial institutions, or SIFIs, Hoenig said. The power to force large firms into liquidation was the centerpiece of the Obama administration's plan to reform the financial system in the wake of the crisis and Great Recession.

“‘I just can't imagine it working,’ Hoenig said. Speaking of the difficulty of forcing a large, complex firm like Citigroup or Goldman Sachs into bankruptcy-like proceedings, the Midwesterner admitted that if he were the one ultimately making the decision, ‘I would be inclined to bail them out.’… ‘One of the difficulties in terms of supervision of these SIFIs is they are so horribly complex their directors don't understand it, their management don’t understand it, and the supervisors certainly can't deal with all the issues,’ Hoenig said.” Huffington Post, June 28^th. The inmates are still running the prison, and if you think this seemingly never-ending litany of financial catastrophes will never happen again, that the global powers have reined in a system that was rife with abuse, think again. They’re baaaaaack!

I’m Peter Dekom, and as we stare down the barrel of the double-dip of our recession, we really need to remember where it all started, and why it most certainly can happen again.

Educating Khan Artists

While I seem to have fallen short of being a “one note Johnny,” my obsession with all things education is very obvious. This priority is based upon my passionate belief that the future of the United States is inexorably linked to the productivity of her citizens, which in turn is welded to the level of training and education of her students. Fundamentally, economic value at a macro national level is derived from two factors: natural resources and value-added-productivity. While we still have agricultural output (despite changing water availability) and many mineral values (particularly coal and natural gas), the vast majority of America’s wealth comes from the skills and innovative excellence of her people. We’ve exhausted significant resources and need to generate increasing value from our people.

As we face the “double dip” of this recession, the orgy of who can cut more from our national and local budgets seems to have produced the greatest threat to our educational system since its inception in the middle of the 19^th century. Our math and science literacy rates and the percentage of high school graduates are below average for most developed countries (Wikipedia), and many developing nations – particularly India and China – are pushing their educational systems to generate vast numbers of graduating students who perform at level significantly above U.S. averages. Still, at almost every level in the United States – from local to federal – educational budgets are being slashed or are on the chopping block. With every cut, our long-term economic health, our ability to improve the trade imbalance and generate enough value to reduce our deficit in the future, takes a giant step in the wrong direction.

Public education in the U.S. has a long history: “Until the 1840s the education system was highly localized and available only to wealthy people. Reformers who wanted all children to gain the benefits of education opposed this. Prominent among them were Horace Mann in Massachusetts and Henry Barnard in Connecticut. Mann started the publication of the Common School Journal, which took the educational issues to the public. The common-school reformers argued for the case on the belief that common schooling could create good citizens, unite society and prevent crime and poverty. As a result of their efforts, free public education at the elementary level was available for all American children by the end of the 19th century. Massachusetts passed the first compulsory school attendance laws in 1852, followed by New York in 1853. By 1918 all states had passed laws requiring children to attend at least elementary school.” Essay by Deeptha Thattai (a volunteer with the Cincinnati chapter of the Association for India's Development).

Past blogs have focused on the use of programmed learning in the classroom, allowing teachers to intervene where bottleneck arise with individual students. We’ve looked at innovative programs across the nation, but with approximately 14,000 public school districts across the nation, and little in the way of coordination of national standards and resources, school districts are often distracted by social and policy issues (creationism vs. evolution, for example), letting the issue of how to raise standards while cutting the number of teachers fall into the garbage pile of secondary issues.

The fact is that most school curricula are mired in a traditional “textbook, class lectures and homework and test” structure that appears to work well only in manageable classrooms with a good student to teach ratio, a fact that appears to be expendable in an era of budget cuts. But we live in a YouTube era, where young minds, eyes and ears are trained to look, see and learn. YouTube has become the second most utilized search engine (kids often want their answers visually) in the U.S., and one non-profit, the Khan Academy (khanacademy.org), has generated YouTube-type content that might just revolutionize and revitalize American education.

Sal Khan was “just another hedge fund analyst,” when he started answering his cousin’s math questions by sending them little videos with answers and explanations. They could play the videos back without Khan’s ominous “don’t you understand” judgmental responses, look at the parts that matter most and master the subject. As these videos evolved, they were followed by a series of questions which, when ten in a row were answered correctly, led to the next video. The videos were posted on YouTube and became an instant hit. Kahn left his analyst position and created a non-profit (Bill Gates is one of the supporters) that has created literally thousands of online videos on primary and secondary (and a whole lot of college) level subjects, from history to science to math. To date, the Khan Academy has delivered close to 60 million lessons.

When the Los Altos, California (Silicon Valley) School District began applying these videos to fifth and seventh grade math classes, not only did overall standards soar, but even students that used to lag behind were given the ability to catch up at their own pace. Computers analyzed each student’s pace and progress, and as individual bottlenecks occurred, in-class teachers (or even fellow students who had developed sufficient proficiency) would aid those with questions and move them to the next level. Homework became class work, and lectures were no longer the mainstay of teaching under this format.

If you really want to see what is possible, where one giant ray of hope resides, I urge you to visit the above Website and watch the TED presentation. If you agree with me that this is an extraordinary method with immeasurable potential, bombard you local school districts with emails and letters and let them know that there is another way. Whether this is the solution is far from clear, but it clearly represents a solution that merits pursuing.

I’m Peter Dekom, searching for problems and looking for solutions.

Sea Here, Young Man

We’ve heard it all before, and there remain a number of skeptics, but a recently-released report, conducted at the Sea Level Research Laboratory at the University of Pennsylvania, confirms that sea levels are rising today at the fastest level in history. A Penn team, led by Associate Professor Benjamin Horton from Department of Earth and Environmental Science, studied the history of sea level change by examining the physical evidence, specifically off the U.S. Atlantic coast in under-examined areas like North Carolina’s Outer Banks. The team applied techniques such as measuring “microfossil transfer rates” using advanced radiocarbon dating and combined “tide gauge and high-precision geological reconstructions of relative sea-level.”

The report is the first of its kind to summarize the continuous history of sea level rise since the time of Christ: “Looking back in history, the researchers found that sea level was relatively stable from 100 B.C. to A.D. 950. Then, during a warm climate period beginning in the 11th century, sea level rose by about half a millimeter per year for 400 years. That was followed by a second period of stable sea level associated with a cooler period, known as the Little Ice Age, which persisted until the late 19th century…The researchers found that since the late 19th century – as the world became industrialized – sea level has risen more than 2 millimeters per year, on average. That's a bit less than one-tenth of an inch, but it adds up over time.” Huffington Post, June 22^nd. According to Horton’s work, the movement of sea level is associated with temperature change, which many experts believe is the inevitable result of carbon emissions creating a greenhouse effect forcing increasing global warming.

Horton’s report avoided predicting the future, but other experts, like Kenneth Miller, chairman of the Department of Earth and Planetary Sciences at Rutgers University (the State University of New Jersey, note the importance of the University of Pennsylvania’s research: “‘This is a very important contribution because it firmly establishes that the rise in sea level in the 20th century is unprecedented for the recent geologic past,’ said Miller, who was not part of the research team. Miller said he recently advised New Jersey Gov. Chris Christie that the state needs to plan for a sea level rise of about 3 feet by the end of the century.” Huffington Post.

But a uniform rate of sea level change, even and predictable, may not be so easily calculated. For example, as giant icebergs melt and glaciers slide into the sea, the earth loses both the cooling factor of vast white surfaces reflecting sunlight back up into the atmosphere but increases the darker, heat-absorbing ocean surface as a result. While natural occurrences (e.g., very large volcanic clouds) can reverse the heating trend for a time (causing other havoc), they are difficult to predict. Thus, there could be a very slow beginning to the irreversibly rising tides that accelerates rapidly as time passes and more ice melts.

Flooding of oceanfront communities, especially high-density cities, and loss of fresh water river resources as salt water pushes inland are two of the most cited consequences of rising seas. Some however believe that God will prevent these results, while others believe it is simply too late to stop the phenomena. A minority of Christians, for example, believe in an implied Biblical promise not to repeat the catastrophic flood that launched Noah’s ark or in the notion that the earth was given to t hem by God to use however they want (as “stewards” of the earth) – even use up all the natural resources – since God will be creating a new restored earth in the “end of times.” On the other hand, some environmentalists feel that it is too late to stop the rising seas, but that prudent cutbacks in fossil fuel emissions can at least ameliorate the degree of damage.

The vast majority of climate-trained scientists have their position as well. Two of the co-authors of the Penn report, for example, “calculated in an earlier paper that sea level could rise by between 30 and 75 inches by the end of this century. And it might even rise faster than that, Martin Vermeer of Aalto University in Finland and Stefan Rahmstorf of Germany's Potsdam Institute for Climate Impact reported in 2009… ‘Accurate estimates of past sea-level variability provide a context for such projections,’ co-author Andrew Kemp of Yale University's Climate and Energy Institute said in a statement.” Whatever your beliefs, suborning disease-causing and lifestyle debilitating pollution in the name of encouraging global economic growth would seem to be exceptionally short-sighted.

I’m Peter Dekom, and the more we know, the better we can design solutions to maximize our future.

The Microaviary

The word on the street… er unpaved, barely passable mountain trail… is that al Qaeda’s leadership is in disarray, that as a note in the Osama bin Laden lair suggests he was less than content that his senior officers were busier trying to stay alive than in implementing anti-American terrorism, the impact of American drones (both surveillance and missile-loaded) and deep intelligence work by the C.I.A. as wells as too many al Qaeda attacks on religious institutions generating negative local press have indeed taken their toll on al Qaeda operatives.

As reports surfaced that Ayman Zawahiri was succeeding bin Ladin, it was clear that he was inheriting a weakened political structure: “Al Qaeda and its offshoots have further splintered, Zawahiri lacks Bin Laden's charisma, and the U.S. drone campaign in Pakistan, where Zawahiri is presumed to be hiding, will make it more difficult for him to communicate, said Daniel Byman, director of research at the Brookings Institution's Saban Center for Middle East Policy, a Washington think tank.

‘It's an organization prone to division. You have multiple power centers. There is a significant disagreement on priorities. And while he's been in the terrorism business for 40 years, no one ever used the word 'charisma' in talking about Zawahiri,’ Byman said.” Los Angeles Times, June 16^th. The Obama administration could use this news, combined with the elimination of bin Laden, as the basis of an accelerated withdrawal from Afghanistan.

With the budget deficit talks stalled, Obama needs to send a clear deficit reduction budget to his constituency, and it’s pretty clear how Americans feel about this war: “The [internal] administration debate [on withdrawal] will take place in summer, a time when the pace of fighting and the number of casualties traditionally increase. Unlike past wars, however, in which casualties were a singular source of frustration, voters seem more annoyed by the drain on U.S. resources… A new poll by the Pew Research Center found that most Americans believe that the wars in Afghanistan and Iraq are the main expense driving the federal budget deficit.” LA Times, June 13^th.

The most recent U.S. attack on senior al Qaeda operatives, coming very shortly after bin Ladin’s death, was on June 4^th: “An overnight attack by an unmanned aircraft killed Ilyas Kashmiri, an Al Qaeda-linked operative blamed for several high-profile attacks in Pakistan and India, local news reports and a statement by his banned militant organization said [June 5^th]… ‘We confirm that our emir [leader] and commander in chief, Mohammed Ilyas Kashmiri, along with other companions, was martyred in an American drone strike on June 3, 2011, at 11:15 p.m.,’ Abu Hanzla Kashir, who identified himself as a spokesman for Kashmiri's Harkat-ul-Jihad-e-Islami group, said in a statement faxed to a Pakistani television station. ‘God willing … America will very soon see our full revenge,’ it added. "Our only target is America.’” LA Times, June 5^th. Sometimes, the dead guys come back, but this time, we are reasonably sure we got Kashmiri. Before the Navy Seal attack, bin Laden’s Pakistani compound was carefully examined by a new bat-winged stealth drone, the RQ-170 Sentinel, otherwise known as the “Beast of Kandahar.”

Nevertheless, coupled with a corrupt and clearly ungrateful Hamid Karzai, the war in Afghanistan is losing what little traction it had with the American people. The balance of power in the Afghan struggle may have to be struck with more technology and fewer “boots on the ground,” which means that our drone surveillance and attacks simply need a place from which to launch; they are clearly controlled from bases in the United States. That little technology is getting well… smaller. “From blimps to bugs, an explosion in aerial drones is transforming the way America fights and thinks about its wars. Predator drones, the Cessna-sized workhorses that have dominated unmanned flight since the Sept. 11, 2001, attacks, are by now a brand name, known and feared around the world. But far less widely known are the sheer size, variety and audaciousness of a rapidly expanding drone univer se, along with the dilemmas that come with it.

“The Pentagon now has some 7,000 aerial drones, compared with fewer than 50 a decade ago. Within the next decade the Air Force anticipates a decrease in manned aircraft but expects its number of ‘multirole’ aerial drones like the Reaper — the ones that spy as well as strike — to nearly quadruple, to 536. Already the Air Force is training more remote pilots, 350 this year alone, than fighter and bomber pilots combined.” New York Times, June 19^th. The little stuff is being developed and tested at Ohio’s Wright-Patterson Air Force Base, in a building they call the Microaviary. The Pentagon is spending big bucks on these programs, requesting $5 billion in the current budget. The writing is on the wall, and the Pentagon, despite outgoing-Defense Secretary Robert Gates’ protestations to the contrary (he wants bargaining leverage with the Taliban), is simply going to have to make do with less; tiny certainly fits the mood and temperament of the times.

I’m Peter Dekom, and it is clear that it is time for the big compromise and the even bigger and faster withdrawal.

Weiner, Weiner, Weiner

Even if you don’t care a whit about an elected official’s personal life and think that even they are entitled to a private life, however bizarre, you truly do have to ask the “stupid” question, “WTF were they thinking, and if they are that stupid, should they really be serving as my representative?” Forget the “lying to the public” part (bad choice of words, I know), because, well, remember that line: “How can you tell if a politician is lying? His/her lips are moving”?

It would be one thing for “stuff” to be ancient history (way to cover up Governator… wow, a full decade), but when the conduct is while in office, the old “What goes on the Internet stays on the Internet” adage kicks into full gear… not to mention that ubiquitous press corps joined by civilians with camera-laden cell phones looking for dirt. Stupid is not an endearing quality in elected representatives, but that hasn’t stopped most from running and getting elected…. really, really stupid, on the other hand, can drive them from office!

Oh, there have always been rumors (and more) of political mistresses and casual lovers even (especially) in the White House – from Ike, FDR to Jack Kennedy, Billy and his willie and Monica, did Thomas Jefferson (one of my favorite presidents, pictured above) really have his Sally Hemings? But some of the moments in the era of television reporting and beyond, moments you may have forgotten, are just plain amazing. The June 8^th Washington Post reminds us of a few (visit the Post for a more complete list):

“[In 1974], Rep. Wilbur Mills (D-Ark.) gave up chairmanship of the House Ways and Means Committee after being stopped in his car with Anabell Battistella, known as ‘Fanne Foxe, the Argentine Firecracker.’ Foxe jumped into the Tidal Basin while Mills was being questioned. Mills did not seek re-election.”

Barak Obama may actually owe his political ascendancy to a sex scandal: “[In 2004] Republican Jack Ryan dropped out of the Illinois Senate race after his wife, Jeri Lynn Ryan of Star Trek fame, filed divorce papers alleging he had taken her to ‘bizarre clubs’ and asked her to have sex in front of other people. Ryan's Democratic opponent, Barack Obama, easily won the Illinois seat.”

“[2007] Sen. Larry Craig (R-Idaho) was arrested for lewd conduct in the men’s restroom at the Minneapolis-St. Paul International Airport. He finished his term but did not run again.” I was particularly amused when Craig told reporters that his apparent game of between the stalls footsie was really because of his particularly “wide stance” while relieving himself.

This year, “Rep. Chris Lee (R-N.Y.) resigned within hours after it was revealed that he sent a topless photo of himself to a woman he met on Craigslist.” Craiglist? What were you smoking?

Sigh – and in politics, apparently sighs matter – it is so interesting. To Americans. In France, it is expected, and the rumors of President Nicholas Sarkozy and his wife having affairs draws yawns. In Italy, the antics of Prime Minister Silvio Berlusconi, accused of serious misconduct with a minor, draws snickers and shoulder shrugs. Still, you really can’t downplay that “really, really stupid factor,” although I am told that being a CNN anchor pays a heck of a lot better than being Governor of New York.

I’m Peter Dekom, and despite the title, I didn’t even talk about the really, really stupid antics of one particular now ex-Congressman from New York who apparently didn’t Tweet like a bird.

The Vietnam War

Historical records show that Chinese attacks on what is presently Vietnam began in 258 B.C., with China conquering the northern part, renaming it Annam, in 111 B.C. They dominated that nation for almost a millennium before Vietnam shook free. Struggles between China and Vietnam continued over the centuries. Half a million troops led by Mongol/Chinese Emperor Kublai Khan (Genghis Kahn’s grandson) retook the area in 1284 A.D., but by 1428, with the Khan Dynasty (Yuan Dynasty) long since replaced by the Ming, the Vietnamese reclaimed their independence.

In the middle of the 19^th century, the French waged a series of wars, ending with the creation of French Indochina (of which Vietnam was a strategic part) in 1850. During World War II, the French Vichy government handed control to Japan, but the real French returned after the war, until their ignominious defeat at Dien Bien Phu, a small outpost in the far northwest corner of the country, by the Communist Viet Minh (backed by the Peoples Republic of China – the PRC). Communist forces seized control of the north, and pro-western forces took control of the south; Vietnam was split in half, very much along the lines of the split of North and South Korea.

After the French departure, communist forces continued to press southward, at first through local Vietcong partisans and eventually with NVA (North Vietnam Army) regulars, to attack the pro-Western government, all with the backing and support of the PRC. The U.S. had supplied the South with military and other aid, but by the mid-60s, U.S. military advisers played a regular role in training South Vietnamese forces to repel the communist advances. Fearing a sequential fall of southeastern nations to communist rule (the so-called “Domino theory”) and smarting from the Chinese attacks against U.N. forces in Korea in the early 1950s, the U.S. upped its forces in Vietnam from 900 advisers during the Eisenhower administration to 16,000 troops under the Kennedy administration in 1963.

In November of 1963, after a coup deposed the South’s President, the resulting instability drew the United States fully into this escalating conflict. The final excuse was a purported August 1964 North Vietnamese attack against two U.S. destroyers in the Tonkin Gulf, but the die for the U.S. escalation has long been cast. A long, bloody war, in which the American military suffered over 58 thousand killed and more than 153 thousand wounded, ensued with catastrophic results. “U.S. military involvement ended on 15 August 1973 as a result of the Case–Church Amendment passed by the U.S. Congress. The capture of Saigon by the North Vietnamese [communist] army in April 1975 marked the end of the Vietnam War.” Wikipedia. We basically lost, and a domino fell. Some compare Vietnam to the combat in both Iraq and Afghanistan, and indeed, it is difficult to see how American interests will be served just a few short years after our inevitable departure… as forces hostile to the U.S. retake their land.

But there is another Vietnam war hovering just beyond the horizon that most of us don’t have a clue about, and it is between two long-term regional enemies who only recently found common cause in communism: China has its sights on Vietnamese-claimed islands in the South China Sea. Hundreds of miles south of China’s border lie the resource-rich Spratly Islands (fishing, plus oil and gas reserves), which China claims by reason of ancient maps from eras long gone. The islands also are claimed by Vietnam (which recently conducted military live fire exercises in the area), the Philippines, Malaysia and Brunei.

While the United States presses for open sea lanes in the area, China wants the world to know that it will take and hold those islands (including the rich surrounding waters) by force if necessary. Recent PRC naval maneuvers in the area made that point very clear: “On [June 17^th], [PRC] state television showed video of Chinese patrol boats firing repeated rounds at a target on what looked like an uninhabited island, as twin fighter jets streaked in tandem overhead. The report said 14 vessels participated in the maneuvers, staging antisubmarine and beach landing drills aimed at ‘defending atolls and protecting sea lanes.' … China has pressed its claim to the outcrops in the South China S ea more assertively in the last two years. Chinese civilian vessels have increasingly confronted fishing and oil-exploration ships from other countries operating in those waters.

“The latest spike in tension began [in late May] when Vietnam accused a Chinese fishing boat, escorted by two patrol boats, of deliberately severing a cable of a seismic survey ship owned by PetroVietnam, the national oil and gas company. Relations between the two countries are fraught: They waged a border war in 1979, and have since clashed occasionally at sea over the Spratlys as well as another island chain, the Paracels… The Vietnamese government is under pressure from its own intensely nationalist media and its citizenry to stand up to China. The sea skirmish in May sparked an anti-Chinese outpouring in Vietnam, and the government has permitted rare public demonstrations to allow a mostly youthful crowd to vent anger.” Los Angeles Times, June 18^th. Uh oh, here we go again…

I’m Peter Dekom, and the notion of global peace appears to be as far-fetched and remote as it has ever been.

Well-Armed Incumbent Elites

On March 26^th, in my Going Down in Up-Risings blog, I basically noted how violent uprisings only succeed on average only about 25% of the time. As Muammar Qaddafi’s forces endure the attacks from NATO aircraft, the colonel’s forces are still knocking down the disorganized, untrained and ill-equipped rebels fairly consistently, so consistently that allied commanders are going to have to address either aiding the insurrection with more or supporting a deal to see Muammar relinquish power with a “reformed” Qaddafi family (his sons) maintaining control. In Egypt, many thought that the years of greedy and repressive dictatorship were over. People were waiting to how democratic rule would be transitioned by a military that presumably sided with the people. Presumably.

It puzzled me that global opinion believed that the power elites of Egypt had finally lost control. Sure President Hosni Mubarak and his cabinet were run out of town after a mere 18 days of riots, a few “connected” families were tossed into the fire as token sacrificial lambs, but careful examination of Egypt tells you that the real power elite, a segment of the country that has its own wealth to protect, simply opted to change commanders – the military. Mubarak was Air Force all the way until he entered politics. A 1949 graduate of the Egyptian Military Academy, Mubarak moved his way up the ranks, from pilot to Air Chief Marshall from 1972 to 1975. Mubarak replaced Anwar Sadat, a former signal officer in the Army, who replaced Gamal Abdul Nasser, another former military officer. Notice a pattern here?

If you think for a minute that Egypt’s military ceded power to a yet-to-be elected populist democratically-elected government, think again. Mubarak was simply no longer fit for command. Post-Mubarak protests have continued in Cairo’s now-famous Tahrir Square as Egyptians continued to make it clear what kind of future they expect. The military, solidly in control, watched and waited… until the early morning hours of April 9^th: “Morning broke on a scene that wasn't supposed to be in the new Egypt: burned military trucks, skeins of barbed wire, blood in the dirt, one protester dead.

”In a predawn raid [April 9^th] that stunned the nation, Egyptian soldiers stormed Tahrir Square to disperse about 2,000 protesters angry at the ruling military council for failing to deliver democracy and bring corrupt officials to justice after the ouster of President Hosni Mubarak…. The capital's central square, a scene of celebration two months ago when Mubarak fell from power, became a surprise battlefield as soldiers beat protesters and tore down tents. One demonstrator was shot dead and 71 others were injured. The military said its troops fired only blanks, but prot esters said the air was peppered with live ammunition.” Los Angeles Times, April 9^th. The army called the protestors “counterrevolutionaries,” but frankly, these folks fighting for their rights were getting to be a pain in the military side.

I’m sure there will be some kind of “democratic” reform in Egypt, but it will be created and maintained under the watchful eye of the military, an organization that will crush any attempt to take away its wealth or curtail its real power: “Demonstrators say the ideals of the revolution have been abandoned by a military council led by Field Marshal Mohammed Hussein Tantawi [pictured above], who brims with swagger and holds sway over a weak transitional government. The military has scheduled parliamentary elections and has arrested a number of former ministers in Mubarak's Cabinet, but it is not a democratic institution and it is straining to balance its authority with the demands of the people.” LA Times. If you’re rich and control all the weapons you could ever want or need, why would you just give your money and power to all those angry poor people with little or no hope? Let them earn it the old fashioned way: join the military!

I’m Peter Dekom, and with the earth subject to a roiling litany of media-encrusted events, sometimes you just might miss the “after-story” of a former first page headline.

Border Wars

Same border (with Mexico), different war. This time, it’s a turf war over which Homeland Security agency should be charged with investigating corruption among our Customs and Border Protection (CBP) officers: CBP’s internal affairs or Homeland Security’s inspector general’s office? The inspector general clearly doesn’t trust the CBP with policing its own. A directive written in 2009 from the Thomas M. Frost, an assistant inspector general, to the CBP’s James F. Tomsheck, the CBP assistant commissioner for internal affairs, was incredibly less than subtle: “I direct that as of this date, your office cease criminal investigation of any matter involving a DHS program or employee.” Reported in the Washington Post, June 8^th. Insert dramatic music.

The turf war is alive and well in 2011, and a Senate Homeland Security subcommittee is holding hearings to find out what’s going on. “Charles K. Edwards, the DHS acting inspector general, plans to tell the hearing that the internal affairs office has a ‘crucial complementary role’ to the inspector general’s criminal investigative function. That complementary role includes pre-employment investigations of applicants. But it is his office, he says in prepared testimony, that has ‘the authority and responsibility within DHS for investigating allegations’ of corruption… Friction between the two agencies remains, with the inspector general’s office complaining that the internal affairs office continues to conduct criminal investigations of DHS employees even though it lacks the legal authority to d o so.” The Post. Doesn’t Edwards’ statement beg you to read between the lines?

The stakes are high, and it’s not primarily about illegal immigration or al Qaeda infiltration. It’s about powerful Mexican drug cartels getting their products over the border and into the American market, which has been and remains a seemingly insolvable issue for this country. The cartels have untold fortunes these days, and the trivial cost of bribing those charged with guarding our borders given the value of the flow is of little disruption to these criminals. They have tons of narcotics, boatloads of money and millions of Americans ready to buy across the border. The power of these cartels is most certainly emphasized in the lack of trust between two investigative units of the same governmental agency. I wonder if CBP’s managers have any concern over possible bribes to folks in the IG’s office?

While clearly, most CBP officers are doing their jobs, it doesn’t take too many security breaches to open that vast 1,969 mile border with Mexico. Investigating and prosecuting CBP corruption is a substantial endeavor: “The DHS inspector general’s office has 267 active investigations of CBP employees who have been accused or suspected of corruption. This represents 44 percent of the office’s investigations of CBP staff members and is, by far, the largest category.

“Since October 2004, 127 CBP officers have been arrested or indicted on corruption charges. Just last month, former Border Patrol agent Yamilkar Fierros of Tucson was sentenced to 20 months in prison for taking $3,000 from a suspected drug dealer in exchange for a list of 109 Border Patrol sensor locations in the Sonoita, Ariz., area. He also was indicted for accepting $1,000 in return for a sensitive law enforcement map and $1,500 to help a dealer move a load of drugs to Tucson... Last year, a CBP technician named Martha Garnica was sentenced to 20 years in prison on charges that included bribery, conspiracy to import 100 kilograms of marijuana and conspiracy to smuggle in people.” The Post.

History is a funny teacher, but I seem to remember the United States sending troops and ships to China to aid our allies in the middle of the 19^th century, pulling away only because those military assets were needed back home in our own Civil War. We were on the side of the British who were using force to open China to foreign trade. The issue? England was importing tea in such volumes that her trade balance was severely negatively impacted. Hmmmm…. Sounds a bit like the trade imbalance with China today. And damned China was trying to ban the one product that Britain had that was capable of generating any demand from Chinese consumers: opium. Silly Chinese said they didn’t like unproductive addicts lying around, slowly dying, stealing to get money for the drug.

Drug-issues consume the vast majority of our criminal investigations and prosecutions, and some aspect of the drug trade is present in over half of our criminal convictions. Murder, mayhem and ultra-violence in Mexico as cartels protect their trade routes has spilled onto our side of the border, and Americans are making a bundle smuggling illegal arms down south to fuel the fire. We spend billions on enforcement and are getting nothing back in the way of taxes. There are increasing calls to legalize the drug trade, and “medical marijuana” appears to be the tip of the growing pressure to move this activity from government prohibition and enforcement to government control and taxation. In these impaired economic times, shouldn’t we be considering this tact more seriously? Remember Prohibition?

International forces, particularly in Mexico, are beginning to clamor for a change: “Former Mexican president Vicente Fox, who has watched a national drug war claim 28,000 lives in less than four years under his successor, Felipe Calderón, says that ‘radical prohibition strategies have never worked.’… Fox, a member of the same conservative National Action Party as Calderón, was president between 2000 and 2006 and was a staunch U.S. ally in the war against drugs. But he says he now favors legalizing drugs… ‘Legalization does not mean that drugs are good,’ he wrote in an Internet posting, according to Reuters, ‘but we have to see [legalization of the production, sale, and distribution of drugs] as a strategy to weaken and break the economic system that allows cartels to earn huge profits.’” Newsweek, August 10, 2010. “We must legalize the production, distribution, and sale of drugs,” said U.S.-educated Fox in his blog last year. There are no good solutions to this problem, but whatever we are doing now is a colossal failure.

I’m Peter Dekom, and we really do need to rethink our narcotics policies from the ground up.