Ceiling Our Fate

As the squawking parrots in Washington rhythmically emitted their immutable sounds, as the debt ceiling caw-cusses in the House went nowhere fast, it’s time to consider a few realities that may have been overlooked if Congress doesn’t vote for the McConnell/Obama compromise worked out on Sunday:

1. August 2^nd is hardly fixed and precise as the drop dead date. That was a good faith estimate, but there may be a few additional days left in the system: “‘They can go a little bit beyond Tuesday, but once we’re into the second half of August … then we’re in serious trouble,’ said Nancy Vanden Houten, senior analyst at Stone & McCarthy Research Associates in Princeton, N.J… She projected the government would be able to survive until Aug. 15, when $41 billion in payments are due, including $29 billion in interest on government securities. At that point, the Treasury would come up short, Vanden Houten said… But the exact date on which the nation’s bills will exceed its cash balance remains a moving target, analysts said. It depends on the unpredictable flow of tax revenues into the government's coffers and financial juggling by Treasury officials.” Los Angeles Times, July 29^th.

2. While the President and his legal staff have not found solace in this argument (recommended to Mr. Obama by former President Bill Clinton), there is a Constitutional basis in the Fourteenth Amendment for a unilateral action by the President to raise the debt ceiling without Congress, and if Congress doesn’t move, like it or not, Obama may be forced to find out if the provision works (or at least stall the issue while the courts decide): “At issue is this provision [section 4]: ‘The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.’” The sentence was intended to ensure the payment of Union debt after the Civil War [for example, if the South had won, they were expected to reneg on Civil War debts], though it was more broadly written…” ABA Journal, July 25^th. “‘I have talked to my lawyers,’ Mr. Obama said. ‘They are not persuaded that that is a winning argument.’ … Adding another element of uncertainty, and possible court battles, to the debate do not seem to appeal to the White House. And it is, in any event, not clear that the nation’s creditors would continue to lend money to the United States were the president to take unilateral action…In recent weeks, law professors have been trying to puzzle out the meaning and relevance of the provision . Some have joined Mr. Clinton in saying it allows Mr. Obama to ignore the debt ceiling. Others say it applies only to Congress and only to outright default on existing debts. Still others say the president may do what he wants in an emergency, with or without the authority of the 14th Amendment.” New York Times, July 24^th.

Whatever the band aid, a permanent solution is mandatory. The lack of a willingness to compromise despite a massive popular groundswell for middle ground may indeed destroy the political careers of the intransigents – in 2012 – but the country and its people will face higher costs in almost every category if we hit that ceiling and lose our credit rating (which may happen anyway if there is only a short-term solution, since the ratings agencies are concerned about the seeming inability of our government to work together). While we probably won’t technically default on the bonds we’ve issued (we might, but tax dollars are constantly flowing in; it’s a question of priorities), there won’t be any new ones issued and as I have blogged before, about $135 billion will fall out of our economy very quickly. Whatever the mega-rich have gained in tax cuts, they, like the rest of us, will lose in high debt and other costs across the board (maybe they’re moving out of dollars and into ???). Maybe we should stop paying members of Congress and their staffs until they do work out a permanent solution… Oh, they have to vote on that.

As noted above, they tell us that Senate Minority Leader, Republican Mitch McConnell and the President really worked out a package that the children in the House of Representatives will vote for. We’ll see…. Let’s hope so or let’s take away their allowance!

I’m Peter Dekom, and whatever the result, the 2012 elections may be among the most “memorable” in our nation’s history… if the voters still remember!

Правда

Russians have an obsession with this word – pravda. It means “truth,” and it is the name of a popular Russian newspaper that has its roots in Soviet times. But extracting truth by whatever means possible is not only the thing old Cold War movies involving the “Ruskies” were made of, but by some accounts, still remains a popular focus of the current Russian police and military. Naturally, if there have been technologies developed that can find the lies in our common daily speech patterns, chance are pretty good that they also probably had their roots in the Soviet era.

But before we get into such prophetic technologies, let’s take a step backwards. As protecting privacy appears today to be nothing more than a desired and unachievable goal in statutory and judicial matters, it may be inevitable that the invasion of our privacy is about to enter the area of interpretation of our words and actions as well. If what you say or do doesn’t jibe with what some analytical technology says you are or what you mean, you may be saddled with the negative consequences. Picture your every word run through a constant lie detector with pretty good accuracy… but I bet a sociopath could fool it! It’s interesting to note the technology used by Vegas casinos to track those banned from the gambling palaces in Sin City: retinal scans and facial analytics based on cranial measurements and spacing of eyes, nose, forehead, etc.

So clearly, to introduce such technology into the mainstream, we clearly need to see some legitimate and easily-digestible social justification for the intrusion. For example, if you apply for a loan, banks need some proof of financial bona fides, often reflected in a combination of loan application information and the infamous, privacy-invading credit check. There might be another layer of analytics that the credit agency applies that takes into consideration changes in your spending habits: for example, moving from routinely shopping at expensive department stores to Wal*Mart or using your credit card for marital counseling… divorce is financially destabilizing! But if I added that you had to take a lie detector test, you might just freak out a bit.

What if you de facto took a lie detector test just by talking to a loan officer? How about an ATM with a built-in lie detector? How about little technology about to be made a part of daily life in Moscow? “A voice-measured polygraph to be installed in the electronic tellers of Russia's state-run Sberbank can tell if patrons are talking truth or hogwash in applying for a credit card or loan. The audio recognition technology is touted as the latest weapon against fraud -- but it has roots in the old Soviet Union. The inventor, Speech Technology Center, is contracted by the Federal Security Service, Russia's modern version of the KGB… The ATM also takes fingerprints, scans identification such as passports, and logs a 3-D facial image.” DailyFinance.com, July 18^th.

Hey, think of the convenience: “Consumers with no previous relationship with the bank could talk to the machine to apply for a credit card, with no human intervention required on the bank’s end.” New York Times, June 8^th. My guess is that as you are reading about this, you aren’t exactly thinking how wonderful this capacity may be. If the bank rejects that loan or credit card application, what exactly does that mean for your future credit rating? And if someone deploys that technology under less than voluntary circumstances, there is damage waiting to happen. Think what it would be like if your boss installed that technology in his or her office and invited you in for a chat.

Gee, where did this technology come from, you ask? “The voice-analysis system was developed by the Speech Technology Center, a company whose other big clients include the Federal Security Service — the Russian domestic intelligence agency descended from the Soviet K.G.B… Dmitri V. Dyrmovsky, director of the center’s Moscow offices, said the new system was designed in part by sampling Russian law enforcement databases of recorded voices of people found to be lying during police interrogations… The big bank involved, Sberbank, whose majority owner is the Russian government, said it intended to install the new machines in malls and bank branches around the country eventually, but had not yet scheduled the rollout. Technology consultants say the machines, if they go into commercial use, would be the banking world’s first use of voice analysis in A.T.M.’s.” NY Times. Kind of creepy, right? Think of what else technology has in store for your personal life! Excited? Oh….. What could go wrong, go wrong, go wrong, go wrong, go wrong…

I’m Peter Dekom, and I am giddy at the prospect of this technology coming to a bank or company near you….. NOT!

Life in the Very Fast Lane

Notwithstanding some of the worst pollution problems of any country on earth, China is moving at warp speed to modernize its economy and infrastructure, spending at a level that the world has never seen before. This need to “get there fast” may well be born of Chinese history. Until the 1800s, China pretty much saw itself as the biggest superpower for the last two millennia. The word for China in Chinese means “Middle Kingdom,” but it really translates into the “center of the earth without rival anywhere else.”

In the early 15^th century, the Ming Dynasty Emperor Zhu Di (also known as the Yongle Emperor and pictured above) exemplified the power and reach of the Middle Kingdom. His treasure fleets, consisting of hundreds of ships, each holding as many as 500 men in the first boats with water-tight compartments (making them very hard to sink), sailed the earth looking for “tribute,” wealth easily extracted from local leaders who did not want a confrontation with this obviously superior naval force. While his efforts explored Africa, the India and the rest of Asia, he made no effort farther west. He noted that aside from some interesting religious experiments, the people living from the Middle East and into Europe were just too barbaric with little to offer.

In fact, China did not even receive ambassadors from other countries until the late 19^th century (after the Opium Wars where they came up on the short end of the stick), because that would have implied that other countries were the equal of China. They only accepted tribute ambassadors, bringing gifts to the emperor. The underlying arrogance is deeply embedded in the Chinese psyche, and in many ways China really did have the most powerful nation on earth for centuries.

The degradation of China really began with modern and very successful Western military attacks on coastal Chinese ports in the middle of the 19^th century (the Opium Wars, where the West forced China to accept the drug as a trade good to balance England’s massive trade deficit from the tea market). Attempts to reassert Chinese power, like the failed Boxer rebellion at the turn of the century aimed at ousting Westerners, were literally the nails in the coffin. The Manchurian Dynasty (Q’ing), the last such political structure to rule China unraveled in the late 19^th century, collapsing in its entirety in 1911.

The subsequent battles with war lords, the Japanese invasion before and during WWII and the crushing repression of Maoist China left China a sad comparison to the obviously superior lifestyles and military power of the West, particularly the United States. If the Chinese were truly the most powerful and relevant nation on earth, Chinese wondered, how could this happen? So when China modernized after Mao was gone, the feeling in every Chinese soul was to recapture the glory of the past and ascend to the perceived pinnacle of humanity that was believed to be China’s birthright. Chinese believe that there is nothing that the West can do that China cannot do better, cheaper and more efficiently. Nothing. Understanding this underlying feeling is essential in understanding modern China and Sino-American relations.

It is also basic to understanding why Chinese leaders believe that their mandate is to reconstruct China to its past glory as quickly as possible. We’ve seen how the economic miracle had radically altered the Middle Kingdom, but even with trillions of dollars in currency reserves, China’s infrastructure ambitions are biting off such massive costs – and concomitant debts – that many economists are worried that China is expanding too fast, that there is a very big bubble waiting to burst that would shake the rest of the world with an economic tsunami. That much of this effort is municipal, where finances are not subject to the same level of international scrutiny, is particularly worrisome to some of these global economists.

The level of such infrastructure construction is staggering: “As municipal projects play out across China, spending on so-called fixed-asset investment — a crucial measure of building that is heavily weighted toward government and real estate projects — is now equal to nearly 70 percent of the nation’s gross domestic product. It is a ratio that no other large nation has approached in modern times… Even Japan, at the peak of its building boom in the 1980s, reached only about 35 percent, and the figure has hovered around 20 percent for decades in the United States… China’s high number helps explain its meteoric material rise. But it could also signal a dangerous dependence on government infrastructure spending.” New York Times, July 6^th.

To put this level of expenditure in perspective, the Times examined the level of activity of a mid-China industrial town (on the Yangtze River), Wuhan, the ninth largest city in the country: “In the seven years it will take New York City to build a two-mile leg of its long-awaited Second Avenue subway line, this city of nine million people in central China plans to complete an entirely new subway system, with nearly 140 miles of track… And the Wuhan Metro is only one piece o f a $120 billion municipal master plan that includes two new airport terminals, a new financial district, a cultural district and a riverfront promenade with an office tower half again as high as the Empire State Building.”

China consumes about 23% of the world’s energy (the U.S. about 19%) with parallel consumption of commodities across the board. Her impact on global prices, currently massive, continues to grow. Her economy will soon pass that of the United States. When China sneezes, the rest of the world comes down with pneumonia. Remember when they said that about us?

I’m Peter Dekom, and understanding feelings thousands of miles away is essential for Americans to plan their own future.

Pork Barrel Politics, Chinese Style

Forget the battle over raising the national debt ceiling. Purge your memory of memories of rich folks – like the Hunt family – trying to corner the silver and other commodities markets. Ignore global warming, and damn the recession. There is a diabolical movement afoot to corner another market, precious ponderous porcine products! Beware! It is more petulantly pernicious than you think.

Start with your last visit to your local Chinatown. If you don’t have one of those nearby, then at least think Chinese menu (and please ignore those Kosher Chinese restaurants!). Notice how much pork there is on the menu? Cha shiu steamed buns (stuff with pork), pork ribs, sweet and sour pork, black bean pork, garlic pork, etc. Pig tremble in fear at the sight of a Chinese chef, and as China’s average per capita earns rise, one of the biggest losers is the universe of pigs. As Americans cherish beef when they can afford meat, so the Chinese value pork. “[T]he average citizen’s meat consumption has quadrupled since 1980, while pork consumption has doubled in the last two decades. And China’s meat packers are just getting started--only 22 percent of China’s pork production takes place in industrial feedlots, compared to 97 percent of America’s.” FastCompany.com, July 14^th. So has demand for soy beans

Pork is big business in the Peoples Republic. “China is a porcine superpower as well as a human one. The Middle Kingdom boasts more than 446 million pigs -- one for every three Chinese people and more than the next 43 countries combined. So when there's a major disruption in the pork supply it hits the economy hard; the ‘blue-ear pig’ disease that forced Chinese farmers to slaughter millions of pigs in 2008, for example, drove the country’s inflation rate to its highest level in a decade.

“To prevent further disruptions, the Chinese government established a strategic pork reserve shortly afterward, keeping icy warehouses around the country stocked with frozen pork that can be released during times of shortage. The government was forced to add to the reserve -- taking pigs off the market -- in the spring of 2010 when a glut led to prices collapsing.” Foreign Policy Magazine, May/June. The “Strategic Pork Reserve” was a top secret effort, and while this program might draw an American chortle or two or a shoulder shrug from Middle Eastern Countries, there are serious ramifications in the global commodities markets for food generally, as the People Republic reaches out to control pig farms not only inside China but wherever they can.

“[M]aintaining all those pigs has led to a massive dependence on corn and soybean imports for animal feed, which in turn is leading China’s agribusinesses to fan out abroad in a quest to control the means of production. China's attempts to control the means of production in other countries just rising out of developing world is causing tension with its natural allies, and could be just the first step in an ever-escalating series of resource-based conflicts… China’s strategic pork reserve is the direct consequence of an emerging, meat-eating middle class and a government determined to feed them. As the sociologist Mindi Schneider points out, [former PRC Chairman Deng Xiao ping’s] economic reforms in the late 1970s privileged industrial farms over small plots to guarantee a steady supply of cheap pork.” FastCompany.

The impact on the global markets is particularly strongly felt in feed grains, and given pigs proclivity towards soybean and corn, China has been focused on those grains in particular… just as the United States is coveting corn to be converted in to fuel as ethanol. And since such feed grains impact the price of just about all meat products, there has been an upward pressure across the global commodities markets pushing American agricultural products to swelling price increases… good for farmers, bad for consumers.

But only buying corn and soybeans on the open market is too scary for China’s strategic planners, so they have begun sucking up farmland, though leases, long-term output deals or even purchase, all over the world: “The Politburo’s solution was to command state-owned enterprises to ‘go out’ and buy or lease farmland by the millions of acres. Last fall, Heilongjiang Beidahuang Nongken Group--China's largest state-run agricultural conglomerate--agreed to develop almost 500,000 acres of farmland in Argentina, followed by another 200,000 hectares this year. A month later, Chongqing Grains’ announced a $2.5 billion deal to produce soybeans in Brazil.

“While much has been written about China’s lopsided deals in sub-Saharan Africa, Latin America is a more likely candidate to become the world’s next bread basket. Last fall’s controversial ‘land grab’ report by the World Bank noted that, since 1990, Latin American soybean yields grew at twice the speed of America’s.” FastCompany.com. The undercurrent here is the battle or dwindling resources between rising superpowers with lots of growing cash reserves and mature Western powers whose cash reserves have been drained. Put another way, China’s standard of living will rise as our quality of life falls. Sobering, huh?

I’m Peter Dekom, and the increasing pressures toward America’s turning inwards create an isolationist movement that simply does not work in our globally connected world.

The Babies in Washington

Maybe our politicians feel squeezed, but it is American people who are getting crushed. “I want…. I want… Gonna hold my breath until I die, mommy….” Disgust is the emotion that most thinking Americans feel against all of the “deciders” they elected and sent to Washington. It’s all about slogans, and “I’m right and you are wrong.” The two most dangerous words in the English language – “always” and “never” – dominate the verbiage. Legislators who outsourced their jobs to make decisions by signing “never” pledges – guess that would include “never” even if the United States were invaded by waves of foreign troops – are stuck with the inevitable confrontation (if they “break” their pledge and do their jobs) in the next election by another stupid idiot who will challenge these incumbents with another “never” pledge.

Bottom line is folks (yup, Republicans and Democratic Congressmen and women voted for it) spent like bandits while reducing taxes, particularly in waging two very costly wars costing trillions, and many in Congress simply don’t want to pay the bill. If you or I acted that way, our creditors would send us cascading into court and then, if we really didn’t fork over the cash, into bankruptcy.

Even if we raise the debt ceiling and reach an agreement, unless we show some signs of adult responsibility, the credit rating agencies are looking at the dysfunctional economic mess that Washington has created and may downgrade America’s rating from AAA to something less. If we don’t fix this immediately and have to do a retroactive repair, the magnitude of the drop in credit rating could be even more catastrophic. Why does that remotely matter?

First, the dollar will lose some of its status as a reserve currency and many will no longer run to the dollar when the going gets tough. Many institutions, public and private, are required by their own charters to hold AAA bonds and must move into safer bonds if any of their holdings fall below that level. That will flood new dollars into the marketplace as buyers seek alternatives, and in a world based on simple supply and demand, the oversupply of dollars will fall in value because of the decline in demand. Less valuable dollars means our earnings in dollars are worth less and will hence buy less. And once a country loses AAA status, there is no guarantee that beginning to act like adults later will result in a return of that rating anytime soon.

Inevitably on default (assuming we “undefault” enough to operate later), the cost of placing our national debt in the global markets will increase as lower credit ratings are tied directly to higher interest payments. That applies to existing national debt instruments as they are rolled over in the marketplace. More interest and the federal budget has to grow by that amount, increasing our deficit to accommodate this higher cost… exactly the opposite result of those hell-bent on cost cutting. The combined reduced demand for hard dollars and the pressure on federal dollar accounts to pay more interest has the double whammy of increasing the cost of anything we import – from gasoline to manufactured goods – or anything priced by the global marketplace (any commodities… like foodstuffs) – by the amount of the fall while increasing the cost of every other consumer/business lending structure: from corporate borrowings to support their operating cash flow (and jobs) to credit cards, auto loans and mortgages. Consumer costs will rise further as corporate America passes its increased borrowing costs on to consumers as well.

How’s that for starters? Yeah, starters… Because about $135 billion (the shortfall) that was being pumped into the U.S. economy – for whatever reason – will stop almost instantly. 41% of the federal budget will be unfunded… and while we probably won’t technically default on our bond obligations, we should brace for an economic tsunami. Take that much money out of the U.S. in one moment, through mass layoffs or furloughs, stopping infrastructure projects dead in their tracks, pulling entitlement payments away from those who were about to spend that money back into the system won’t, a huge pile of aid to states from the feds will stop on a dime… and exactly what does common sense tell you will happen?

Oh sure, some money will continue to flow because it has been prefunded or comes from other sources. Current taxes do fund almost 60% of the fed’s operating budget. But removal of that money and the cost in jobs alone will send credit card and mortgage defaults ever higher, dropping real estate values again and reigniting the possibility of a very deep double dip recession. In short, everything that cost-cutting and self-proclaimed “responsible” Congressmen and women say that want – lower government spending and job growth – will unravel fast. Global markets that look to the United States for stability are already reflecting a rapidly falling confidence in our (and their) future.

What’s the biggest blocking point? Increasing taxes on the wealthiest Americans. These folks frankly know that if someone doesn’t resolve the budgetary impasse, they will bear a substantial portion of the impact of higher U.S. interest rates. Still, lower taxes might be a cause that a billionaire might support strongly. Because of the Citizens United case, we know that there is no limit to political action committees in espousing various political perspectives with their marketing dollars… marketing dollars that get Congresspeople who sign pledges not to raise taxes elected. And since nobody with money is going to hire more workers when they know there isn’t sufficient consumer demand to buy the resulting goods and services, virtually none of that money retained by not paying taxes is going to create any new jobs. It will sit in nice bank accounts, probably not in U.S. dollars, where it will invoke coos and smiles. What’s in it for most Americans? Oh, if 2012 elections were this fall….

I’m Peter Dekom, and this is absolutely the most stupid, self-inflicted massive economic damage that our elected representatives could ever foment against the American people.

Right On!

To some, it is just a continuation of the seemingly continuous invasions and attacks from Islamic forces that began in the 7^th century and continued on and off unabated until roughly the 18^th and 19^th centuries when the Ottoman Empire – dubbed the “sick man of Europe” – and the Mughal Empire in India began to crumble before an onslaught of modern European expansionism enabled by vast improvements in military technology. Islam took a breather until oil and corrupt leadership supported by Western powers fueled “empowerment” from a toxic mixture of anger and oil money ignited new angry violence. To a growing right wing movement throughout Europe the Muslim attacks have begun again. They see a clash of civilizations and a failure of a philosophy of religious tolerance as the story of the twenty-first century.

Unlike the economic immigration from Latin America to the United States, much of it undocumented, the “invasion” of Muslims is seen by the European right wing in terms of an “us versus them” survivalist movement based on subverted warfare, one that may have generalized negative feelings to people of color or even Europeans from poorer nations, gypsies or anyone seen as “different.” That destructive Islamist cells, with terror on their minds and bombs in their hands, can be found with increasing frequency in cities like Frankfurt, Germany or Manchester, England lends credence to the hardliners who seek a new exclusionary policy. When extremist fundamentalist clerics speak of total destruction of Israel and the West of Holy War (Jihad), this generates a growing suspicion of all things and all people who and which are Muslim. Intolerance breeds intolerance.

Most people on earth want to be able to make their livings, live their lives, practice their faith, and simply be left alone. But there are always extremists who thrive in societies driven by corruption, poverty, lack of educational opportunities, particularly in generally impaired economic times. They need scapegoats and forces to rally against to increase their power. With the Internet age, their ability to speak and reach millions has never been greater… and they can cross international boundaries as electronically disguised ghosts. Their visibility, sparked with occasional attacks with real weapons, has raised the fear factor and has created a strong movement with retaliation and closed borders as their methods of choice.

The brutal July 22^nd murders in and around Oslo and Utoya, Norway, which left over 90 people dead, were purportedly implemented by a desperate Norwegian farmer – their version of Timothy J. McVeigh (the Oklahoma bomber) – who believed that the liberal elite leadership (and their children gathered on the island of Utoya to camp and meet government ministers) had betrayed the country in an ocean of openness and religious tolerance that had brought Muslims to the heartland: “The police have identified the suspect as Anders Behring Breivik, who in his writings has portrayed himself as a modern knight, charged with driving out Islam and immigrants and the political correctness that he said had been wrongly invited into Norway and was thriving there.” New York Times, July 23^rd.

While Breivik’s methodology was universally condemned, his underlying message resonated with a growing right wing European movement that shares his views: “The attacks in Oslo on Friday have riveted new attention on right-wing extremists not just in Norway but across Europe, where opposition to Muslim immigrants, globalization, the power of the European Union and the drive toward multiculturalism has proven a potent political force and, in a few cases, a spur to violence… The success of populist parties appealing to a sense of lost national identity has brought criticism of minorities, immigrants and in particular Muslims out of the beer halls and Internet chat rooms and into mainstream politics. While the parties themselves generally do not condone violence, some experts say a climate of hatred in the political discourse has encouraged violent individuals.

“Last November a Swedish man was arrested in the southern city of Malmö in connection with more than a dozen unsolved shootings of immigrants, including one fatality. The shootings, nine of which took place between June and October 2010, appeared to be the work of an isolated individual. More broadly in Sweden, though, the far-right Sweden Democrats experienced new success at the polls. The party entered Parliament for the first time after winning 5.7 percent of the vote in the general election last September.

“The bombing and shootings in Oslo also have served as a wake-up call for security services in Europe and the United States that in recent years have become so focused on Islamic terrorists that they may have underestimated the threat of domestic radicals, including those upset by what they see as the influence of Islam.” NY Times. We can expect this clash of civilization to remain a significant undercurrent in global politics, and with continuing economic devastation and with many in the West facing permanent unemployment, Western rage is also likely to find scapegoats in immigrant communities, a lesson that history has taught us from the past.

I’m Peter Dekom, and we need to look at violence being fomented against us from outside forces… and obviously from the anger of our own citizens.

Doggie Outfits

When you see canines embellished with artsy outfits strolling down the avenues, you have to wonder if the “other dogs” are rolling their eyes at such doggone festive uniforms. If Fluffy does well in pink with a matching beret and a diamond studded collar to boot, does King look down in winceful disdain? Doggie booties anyone? Dark glasses for that “hope no one recognizes me” look? OK, I can understand the hapless Chihuahua bundled up for a Minnesota winter – the dog’s from Mexico, folks! But hey, enough is enough already.

Unless you are ready for the next “rage” of must haves for that macho hound, that killer within, that manly beast that protects hearth and home. Body armor! Yeah! Cool! My dog can beat your dog, and your dog can’t even bite my dog! Grrrrr. There! This category of doggie apparel is nothing new. Police departments have been using this form of hound-vest for years as they hunt down armed suspects, known to shoot at the dogs first, people later. But as Seal Team 6 – the decimators of all things bin Laden can attest – there’s nothing like a well-armored dog at the spear tip of your attack when you are hunting down a terrorist.

“Last year, the military spent $86,000 on four tactical vests to outfit Navy Seal dogs. The SEALs hired Winnipeg, Canada,-based contractor K9 Storm to gear up their four-legged, canine partners, which it has used in battle since World War I. K9 Storm’s flagship product is the $20,000-$30,000 Intruder, an upgradeable version of their doggie armor … The tactical body armor is wired with a collapsible video arm, two-way audio, and other attachable gadgets…They’ve even gone stealth. A silent hardware system prevents any metal to metal contact--you won't hear any jangling or see any reflective give-aways .” FastCompany.com, May 16^th. Oooh! I’m getting excited! Pricey, but definitely on the Christmas shopping list… Who needs a new car anyway? The photo above is from K9 Storm’s catalog, by the way.

Picture the invasion unit, going in for bin Laden: “In Abbottabad, the patented load-bearing harness would have enabled a Navy SEAL handler to rappel from the helicopter with his dog strapped to his body. Once in the compound, the dog could run ahead to scout as the handler issued commands through an integrated microphone and speaker in the armor. The proprietary speaker system enables handlers to relay commands at low levels to the dog. ‘Handlers need to see and hear how their dog is responding,’ said [Jim] Slater [K9 Storm’s founder]. ‘In a tactical situation, every second counts.’ The encrypted signal from dog to handler penetrates fortified barriers like concrete, steel-fortified ships, and tunnels. That translates to standard operating ranges up to four football fields.” FastCompany.com. Woof!

Strange when it comes to dealing with insurgent terrorists – versus the large combat units of established governments – how direct contact, on the ground and in close quarters, is the best strategy available. Sure we like those drones and stealth aircraft, but in the end, it is the men and women – and dogs – of our military that are the ultimate implementers of our military policy.

I’m Peter Dekom, and I just remembered… I only have two cats!

The New American Economy

The long term prognosis for work in the United States suggests that a very large number of American workers will find that their jobs have been displaced… permanently. The recession was only the accelerant of inevitable change. Manufacturing has been decimated by lower-cost labor overseas (the “Rust Belt” is heavily oxidized), and retail has taken a double “Internet hit” from the most diabolical form of price comparison the world has ever known to the easiest shopping experience available in history. Managed care and reduced consumer earning power have hit the government regulatory wall as healthcare workers, while guaranteed with longer term employment, are also slammed with earnings-killing cost control structures. Likewise, lawyers who depend on personal representation – versus tax, securities and corporate lawyers who have the joy of complex multinational legalities to deal with – are finding a significant decrease in individuals’ ability to afford routine legal services and a plethora of Web-based alternatives.

Want to see where the next millionaires are coming from? You only have to look at those cities and towns where the recession is barely visible: rural communities, those not impacted by the drought that rages across so much of America, are wallowing in the rich mud baths of commodity price increases. Or cities like Washington, D.C., where the rich and power gather to pressure government to do their bidding, the Silicon Valley/Seattle where entrepreneurial excellence continues to produce global digital products that are very much in demand and New York City, where global financial barons plot their next international miscreant endeavors. Look at the local real estate prices. There will be pockets of exceptions all over America, and some will represent microcosms that mirror the success of NYC and the Silicon Valley, while others will provide t hose glaring exceptions in uniquely creative cultural and entertainment achievements. We won’t even talk about the military industrial complex that will continue to provide cutting-edge technology and specialized employment for decades to come.

Make no mistake, the United States will continue to provide massive new inventions and services that are absolutely going to be mega-wealth-creating endeavors. The better our universities and educational systems, the more such economic benefits will flow into our national coffers. If you abstract what we seem to be doing better than the rest of the world, creating new ideas and providing financial services are clearly the big drivers. But if any of those new ideas require where any massive, non-automated manufacturing, pretty clearly they will be outsourced overseas until the U.S. dollar falls to a level where American labor becomes competitive again. These two arenas may be drivers of wealth, but they are not drivers of American jobs. Never before has the American economy been so dependent on entrepreneurial invention, and never before have the major vectors of our economic future been so obviously polarizing: wealth for the few who have those ideas or provide those services and lowered expectations for most everyone else. Look at England after the empire fell if you want a very concrete model of what our future may well become.

We’ve already seen the profits statements from the big New York banks, and most Americans have been tracking that excess with a reasonable eye… watching how the taxpayer bailout money made others rich. Washington is obvious as we watch special interests dilute any legislative threat to their financial well-being. But take a really good look at the Silicon Valley: “Traffic chokes the 47-mile stretch of Highway 101 from San Francisco to San Jose. Dueling billboards on the side of the highway compete for engineers who, with bidding wars for their skills, have seen their pay and stock options soar… New Prius hybrids purr into employee parking lots, and a Tesla roadster and even a Lamborghini have already been spotted at LinkedIn Corp., which went public in May, turning nearly every pre-IPO employee into a paper millionaire.

“Office rents have shot up as much as 35% in some prime locations. Hotel occupancy rates have topped 80%, sending room rates higher. Business is brisk at the Menlo Park branch of upscale grocery chain Draeger's, which takes pride in stocking its shelves with the kind of duck foie gras and other delicacies found at Harrods in London or Fauchon in Paris. Hot start-ups such as Dropbox in San Francisco, which helps its 25 million users store and share photos, videos and documents, are negotiating funding rounds that would make them worth billions. Even the rooftop parties popular during the last major tech boom are making a comeback.” Los Angeles Times, July 17^th. With this obvious economic displacement comes the concomitant political anger with a tendency towards ineffective “slogans in lieu of solutions” and denial in place of invigorated efforts to upgrade educational skills to provide services that the world actually wants.

The battle over the debt ceiling seems to be nothing more than the arrogance of a society that simply does not know how to deal with this polarization, with the rather obvious failure to cope with a contracting standard of living for the majority of Americans. It is the rather immature rant of those who ran up a very big tab, particularly waging two major wars while reducing taxes, and now don’t want to pay the bill or even invest in their own future. If the ratings agencies lower our debt rating, we will pay more money to service that debt… requiring… er… increased taxes and decreased spending. We are government of legislative followers – tracking poll numbers and making blind pledges so they don’t have to make the hard decisions when the nation requires; we have not had any serious leaders for several decades. The world has changed. The values that can keep America working and strong have changed. If the United States falls into the black hole of economic devaluation of her own making, how many of our former and current enemies will be cheering? If we default and everyone, including the U.S. government on the national debt, pays higher interest on everything (credit cards, mortgages, loans of all kinds), who will care… except us? How frustrating will that be when so many of us know that we really didn’t have to go there?

I’m Peter Dekom, and denial is a very ugly emotional state.

Voting for Names, Not Legislation

There are so many problems with the men and women we have elected to both the U.S. Senate and the House of Representatives, a problem that is amplified at least 50 times in state legislatures and who knows how many times at the local level. Aside from the fact that we no longer elect leaders, rather poll-watching, trend-following, unthinking followers, the vast majority of proposed legislation is never read by those who vote on these proposals. Congressmen and women rely on several “alternatives to reading” from following the dictates of party leaders to relying on summaries provided by Congressional staffers. But there is one even more pernicious method employ by these “purported leaders,” a system that plays right into the hands of weak-minded- constituents whose political choices are determined solely by titles and slogans; they vote for bills based on their name, a weakness that clearly drives sponsoring legislators into clever naming decisions to enhance the likelihood of passage.

The most infamous culprit, a massive USA Patriot Act (over 300 pages) was introduced on October 23, 2001 and was passed on October 26, 2001 in the House by 357 to 66 (of 435) and in the Senate by 98 to 1. While parts of the legislation had been around for a while, proposed and rejected by various committees, the attacks on the Twin Towers and the Pentagon on September 11, 2001 got administration staffers, mostly under the leadership of Vice President Richard Cheney, cutting, pasting and drafting to implement the previously failed legislative elements into a broad new bill with sweeping powers: “The title of the Act is a ten letter acronym (or more correctly, a backronym) (USA PATRIOT), which stands for Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001. The Act dramatically reduced restrictions on law enforcement agencies' ability to search telephone, e-mail communications, medical, financial, and other records; eased restrictions on foreign intelligence gathering within the United States; expanded the Secretary of the Treasury’s authority to regulate financial transactions, particularly those involving foreign individuals and entities; and broadened the discretion of law enforcement and immigration authorities in detaining and deporting immigrants suspected of terrorism-related acts. The act also expanded the definition of terrorism to include domestic terrorism, thus enlarging the number of activities to which the USA PATRIOT Act’s expanded law enforcement power s can be applied.” Wikipedia.

Think of an opposing candidate in an ensuing election accusing his or her opponent of being profoundly unpatriotic by voting against the “Patriot Act,” in spite of the fact that huge portions of that legislation were repeatedly declared obviously violative of the United States Constitution by federal courts across the land, decisions that were supported by the Supreme Court. The fact is, not one Congressman or woman read that statute before the voted on it, even though it was the most important law to pass Congress in years. And when you look at the overwhelming number of legislators who swept this bill into office without reading its contents, it is clear something is very wrong with government.

The Defense of Marriage Act was passed in 1996, and once again a name made sense to lots of Congresspeople: the House passed it 342 to 67, and the Senate voted 85 to 14 in support before it was signed into law by Democratic President Bill Clinton. How could you vote against marriage? That would be totally un-American! The statute defines “marriage” as a “legal union between one man and one woman as husband and wife”; similarly, it defines “spouse” as “a person of the opposite sex who is a husband or a wife.” It was clearly aimed at those embracing gay rights and single sex marriage, the real agenda. An equally “artfully” named bill has now been proposed by Senator Diane Feinstein (D- Cal) called the Respect for Marriage Act, aimed at repealing the Defense of Marriage Act, legislation with strong presidential support.

But the point to all this is not the thrust of the underlying law, but the use of labels that can inflame, falsely motivate, misdirect, mislabel and market substantive issues of dire importance to the American people. Remember laws like “Taft-Hartley” or “Dodd-Frank,” where at least the bills didn’t market themselves in the title, being based instead on the names of the sponsoring legislators. Or how about the simple numbering system so many states use for complete neutrality? Regardless of your political point of view, wouldn’t you prefer neutral titles that would at least make legislators try and find out what they are really voting for?

I’m Peter Dekom, and both “common sense” and “obviously wrong” appear to be two concepts that have been de facto repealed by our Congress.

New Times, New Borders?

Anyone who collects old maps knows how international boundaries change over time. Romans get carved up by Visigoths, Nazi Germany’s collapse creates new East-West zones, ancient societies vaporize for unknown reasons (Anasazi Native America people disappear from our Western states), environmental and resource exhaustion depopulate the Easter Islands, Spain discovers America, etc. Ever wonder about the United States? Given the degree of political polarization – factions completely unwilling to entertain compromise, economic upheaval and job displacement and long-term environmental damage, ever wonder how the United States would reconfigure if it broke apart? After all, nations do not continue forever, and 400 years is generally an outside average date for most social structures. We’re at 236 years and probably have a few more to go, but ….

If the seas do actually rise and invade our coastal communities, if global warming does continue and expand the current drought that stretches from Florida to Arizona, if raging massive fires increase, if hurricanes intensify, and if the water used to irrigate much of the plains states (the Ogallala Aquifer) does dry out, these elements are probably going to occur within a century… and given their proximate likely occurrence, will probably cause a massive and simultaneous demand on the federal government (what will the deficit look like then?) for disaster relief. Add the rise of China and India in relative importance and the decline of the United States suffering from an undereducated and hence less productive workforce due to cutbacks earlier in the century.

Okay, we all know Texas is already packed and ready to leave, but what about the rest of the United States? There are folks who see New York and New England breaking off, maybe with New Jersey, Delaware and parts of Pennsylvania. The South might form its political unit, although Florida might go its own way. Chicago and the upper Midwest would have to see whether they wanted to merge with the now decimated Plains States, and the Western States might play off their mineral wealth for higher status within one political configuration or another. Access to the sea will be a big issue.

On the West Coast, other issues abound, as California is very likely to go its own way, with natural resources and strong linkage to a growing Asia, if it has conquered its financial malaise and dealt with “The Big One” (earthquake) and handled the ocean rise. Unless part of California rolls into Cascadia (flag above): “Cascadia is the proposed name for an independent nation that would be created by the combination of British Columbia, Oregon, and Washington through the secession from their respective federal governments. Other definitions of Cascadia include a large bio-region extending from north to south from the tip of southern Alaska down into Northern California, and encompasses to the east parts of Alberta, the Yukon, Idaho and Western Montana. The boundaries of the proposed government could incorporate those of the existing province and states.” Wikipedia. The natural resources of that combination would be staggering, but why would Canadian s accept such a nation?

Shorter term, we are already seeing movements within various of our own United States. For anyone who lives here, California has long been too big to be governed effectively. While most of us who have speculated believe that the state could be carved into southern, central and northern sections, there are folks in the southeastern part of the state (centered around Riverside and San Bernardino Counties) who want nothing to do with the rest… or Los Angeles for that matter. The movement reflects the political polarization that is gripping the rest of the nation: “Frustrated by a state government he calls ‘complete ly dysfunctional’ and ‘totally unresponsive,’ a conservative Republican county supervisor is pushing a proposal for roughly a dozen counties in the eastern and southern parts of the nation’s third-largest state — conspicuously not including the heavily Democratic city of Los Angeles — to form a new state to be called South California.

“‘We have businesses leaving all the time, and we’re just driving down a cliff to become a third-world economy,’ said the supervisor, Jeff Stone, who once ran for the Legislature. ‘Anyone you ask has a horror story. At some point we have to decide enough is enough and deal with it in a radically new way.’ … He added: ‘I am tired of California being the laughingstock of late-night jokes. We must change course immediately or create a new state.’

“Mr. Stone’s list of complaints is long — too much money spent on state prisons, too much power for public unions, too many regulations and not enough of a crackdown on illegal immigration. It seems clear that he has struck a nerve in some quarters; he said that his office has been inundated with thousands of e-mails, letters and phone calls supporting his call for secession.” New York Times, July 12^th. Given the total collapse of both the job and housing markets in this part of California, Mr. Stone might be gratified (and later sorry) as to how many Californians in other parts of the state might support such a succession movement! Whatever the result, the fact is that people are now busier emphasizing their differences and individual needs – a very common social response in severely impaired economic times – than they are looking for commonality. It really isn’t a very good sign for the future of the United States… as we know it.

I’m Peter Dekom, and acting selfishly and taking the existence of the United States for granted is the surest way to end our great legacy.

Someday My Prints will Come

The days of “cash is king” may be numbered. Not only are credit and debit cards the general currency of modern American consumer transactions, but new virtual credit cards, operating through apps on your cell phone, are threatening to expand the power of cashless economics further. Even the old world of paper checks is not exactly cash. Currency crosses borders, not in suitcases (well…. there may be a cartel or two and a dude in North Korea) but via interbank wire transfers. When the Federal Reserve needs more money to buy unsold U.S. treasuries, it doesn’t print more paper currency to effect the transaction; it simply “increases the M-1 money supply” and buys the bonds with its virtual cash. The reality of paper currency, a huge change from the ancient and heavy coinage of old, which itself was a vast improvement over pure barter, is that human economic transactions are experiencing the next huge leap in the evolution of currency.

Which means that paper currency is also experiencing a transition: “The number of dollar bills rolling off the great government presses [in Washington, D.C.] and in Fort Worth fell to a modern low last year. Production of $5 bills also dropped to the lowest level in 30 years. And for the first time in that period, the Treasury Department did not print any $10 bills…The meaning seems clear. The future is here. Cash is in decline… You can’t use it for online purchases, nor on many airplanes to buy snacks or duty-free goods. Last year, 36 percent of taxi fares in New York were paid with plastic. At Commerce, a restaurant in the West Village in Manhattan, the bar menus read, ‘Credit cards only. No cash please. Thank you.’

“There is no definitive data on all of this. Cash transactions are notoriously hard to track, in part because people use cash when they do not want to be tracked. But a simple ratio is illuminating. In 1970, at the dawn of plastic payment, the value of United States currency in domestic circulation equaled about 5 percent of the nation’s economic activity. Last year, the value of currency in domestic circulation equaled about 2.5 percent of economic activity…Production of paper currency is declining much more quickly than actual currency use because the bills are lasting longer. Thanks to technological advances, the average dollar bill now circulates for 40 months, up from 18 months two decades ago, according to Federal Reserve estimates.

“Banks regularly send stacks of old notes to the Fed, which replaces the damaged ones. Until recently, notes were simply stacked face down and destroyed, as were dog-eared notes, because the Fed’s scanning equipment could not distinguish between creases and tears. Now it can. In 1989, the Fed replaced 46 percent of returned dollar bills. Last year it replaced 21 percent. The rest of the notes were returned to circulation where they may lead longer lives because they are being used less often.” New York Times, July 6^th. See those new parking meters in your home town? The ones that take credit cards and charge more?

OK, some folks, generally evil versions of Scrooge McDuck, still love the stacks and stacks of U.S. currency – notwithstanding its seemingly endless fall against other notable currencies – whether piled into the back of an armored van or delivered in a dark and dingy Latin American cartel headquarters via a couriered suitcase. As I have noted before, Dear (and soon-to-be-replaced) Leader, North Korea’s Kim Jong-il, demands a truckload of U.S. currency ($70 million a year) to pay for the cheap labor (he keeps most of it, sharing a minority with the workers) from special factories just above the DMZ serving South Korean corporations. Maybe he too has a currency swimming pool.

I’m Peter Dekom, and we are surrounded with change… just not as much loose change.

Nattering Nay-bobs of NATOism

“Who ya gonna call?” is less a fake ad from Ghostbusters than the rallying cry from any nation of earth or any relevant faction within that is either pro-American or at least neutral about us when they need specialized military deployment. Because we are at the cutting edge of military technology – with pinpoint targeting from smart bombs/missiles dropped from stealth aircraft, drones or launched from submarines – and since we actually do spend 44% of the world’s military budget, we are seemingly the first defense (offense) when these folks need a powerful punch to be administered on their behalf.

We seem to be the only guys who have the “real stuff,” and when the going gets tough, the tough start asking… for U.S. military assets. NATO is about America and ________. Outgoing Defense Secretary Robert Gates (appointed to that post by both George Bush and Barak Obama) addressed NATO leaders on June 10^th in Brussels, Belgium. What he said wasn’t pretty and may presage the demise of that cross-oceanic alliance itself. Here are what I believe are the key portions of his talk: “In the past, I’ve worried openly about NATO turning into a two-tiered alliance: Between members who specialize in “soft’ humanitarian, development, peacekeeping, and talking tasks, and those conducting the “hard” combat missions. Between those willing and able to pay the price and bear the burdens of alliance commitments, and those who enjoy the benefits of NATO membership - be they security guarantees or headquarters billets - but don’t want to share the risks and the costs. This is no longer a hypothetical worry. We are there today. And it is unacceptable.

”Part of this predicament stems from a lack of will, much of it from a lack of resources in an era of austerity. For all but a handful of allies, defense budgets - in absolute terms, as a share of economic output - have been chronically starved for adequate funding for a long time, with the shortfalls compounding on themselves each year. Despite the demands of mission in Afghanistan - the first ‘hot’ ground war fought in NATO history - total European defense spending declined, by one estimate, by nearly 15 percent in the decade following 9/11…

“I am the latest in a string of U.S. defense secretaries who have urged allies privately and publicly, often with exasperation, to meet agreed-upon NATO benchmarks for defense spending. However, fiscal, political and demographic realities make this unlikely to happen anytime soon, as even military stalwarts like the U.K have been forced to ratchet back with major cuts to force structure. Today, just five of 28 allies - the U.S., U.K., France, Greece, along with Albania - exceed the agreed 2% of GDP spending on defense [the U.S. is between 4% and 5%]…

“Let me conclude with some thoughts about the political context in which all of us must operate. As you all know, America’s serious fiscal situation is now putting pressure on our defense budget, and we are in a process of assessing where the U.S. can or cannot accept more risk as a result of reducing the size of our military. Tough choices lie ahead affecting every part of our government, and during such times, scrutiny inevitably falls on the cost of overseas commitments - from foreign assistance to military basing, support, and guarantees… But some two decades after the collapse of the Berlin Wall, the U.S. share of NATO defense spending has now risen to more than 75 percent - at a time when politically painful budget and benefit cuts are being considered at home.

“The blunt reality is that there will be dwindling appetite and patience in the U.S. Congress - and in the American body politic writ large - to expend increasingly precious funds on behalf of nations that are apparently unwilling to devote the necessary resources or make the necessary changes to be serious and capable partners in their own defense. Nations apparently willing and eager for American taxpayers to assume the growing security burden left by reductions in European defense budgets.

“Indeed, if current trends in the decline of European defense capabilities are not halted and reversed, future U.S. political leaders- those for whom the Cold War was not the formative experience that it was for me - may not consider the return on America’s investment in NATO worth the cost.” If we didn’t have all of those weapons, if we had enough assets to defend ourselves and our major policy interests overseas and no more… we would be cutting our deficit and avoiding prolonged military expeditions that would threaten our future fiscal survival. It’s time of a change. For those who are saying our military budget is not on the table, it’s time to face reality: that position is no longer defensible.

I’m Peter Dekom, and we just do not have the financial capability to continue spending on our military as we have in the past.