Monday, October 31, 2011

Fighting with the Weapons You’ve Got

In today’s complex world, the variables in global warfare have never been more diverse. People with nothing or little left to lose, often encouraged by religious doctrines that offer life in paradise instantly to those who die in their bizarre perception of the service of God, use their bodies strapped with explosive devices as weapons. More sophisticated societies use pinpoint missiles launched antiseptically from submarines or drones. Military “hit and run” irregulars have been wreaking havoc with concentrations of professional troops with superior firepower in places like Cuba in 1959 or Vietnam in the early 1970s. And the most amazing and indirect weapon of them all – economic hegemony – has moved from the domination of the British over global trade in the 18th and 19th centuries, the American supply-demand behemoth of the late 20th century to the current and most agile economic power on earth today: the Peoples Republic of China.

It’s not that China is the biggest economy in the world or that its people enjoy a particularly high standard of living, it’s just that they have excess capital to deploy in furthering their political ambitions in a world where the United States, Japan and the Western World are struggling to recapture economic stability and perhaps even growth. China can’t begin to compete with the United States on military might – at least not for a few decades. Their “paltry” $114 billion annual military budget (2.2% of their GDP) doesn’t begin to threaten the $700 billion spent by the U.S. every year (a very hefty 4.7% of our GDP); they spend between 7% and 8% of the world’s military expenditures, while we are up somewhere between 44% and 47% of the global spend. Wikipedia.

China’s superior firepower has been relegated to economic conquest: (i) locking up natural resources worldwide, (ii) supporting U.S., South African and European currencies giving them profound de facto abilities to support or bring down those economies simply by buying or not buying currency (and establishing pricing), and (iii) building a universe of trading partners among nations that the Western World has long relegated to secondary status for decades. “[The] majority of China's trading partners aren't in Europe or America: They're in Asia and Africa and South America. In other words, precisely those countries which have always spoken last on the world stage. China is using its economic relationships to create an alternative bloc of power, which can directly compete with the political might of the E.U. and America.

“You could call it checkbook diplomacy, and it's vastly different than the bedrock of our own diplomatic efforts. Granted, the U.S. does use its economic relationships abroad as a carrot, but the stick has always been our armed forces. China, by contrast, isn't exactly threatening countries overseas with potential military action (with the exception of Taiwan, of course). Instead, it's doing hundreds of billions in business with countries that are usually also-rans on the global stage.”, October 19th.

The problem with this scenario is that our having a vastly superior military force without a concomitant solid economy to pay for it – without sustainable long-term growth – is a recipe for disaster. In fact, as our military budget stays high as the rest of the economy deteriorates, the further erosion of our economic wellbeing simply accelerates until we can no longer afford even a moderately-sized military and are left with an economy that has been seriously and permanently downgraded. As China deploys her massive economic weapon, on the other hand, she grows stronger and more powerful, able to afford a military build-up that would threaten our superiority on all fronts.

The corollary to having a large military budget is our proclivity to justify its existence by using it way too easily. While China is not militarily engaged anywhere beyond its direct claim to its own borders, our forces are deployed all over the earth, with large flotillas and military bases planted everywhere. We seem to be in everybody else’s civil war, and our military excursions have not seemed to serve us well since our catastrophic loss in Vietnam, our moving the Iran-dominated Shiite political parties to majority rule in Iraq and our interminable (over a decade now) and failing efforts in Afghanistan and Central Asia. Would we have engaged in these wars without a massive military capacity? Are we safer as a result, and have we protected our standard of living? Have we tamed the stinging bees by swinging a baseball bat against their hive?

I’m Peter Dekom, and wondering if we reduced our military might to merely 30% of the global military budget, wouldn’t we still be powerful enough to protect our interests?

Sunday, October 30, 2011

Kenya Dig It?

A former British colony, Kenya has enjoyed relative stability as a democracy since achieving independence in 1963. There have been a few blemishes along the way – like the 2007 riots in the slums of Nairobi against the political dominance of the Kikuyu tribe or the 1998 East African bombings of U.S. embassies by groups linked with al Qaeda – but for the most part, Kenya has been among the successful governments in all of Africa. Climate change in the northern reaches of Kenya have recently produced drought and despair, but these negative experiences are nothing compared with the complete and seemingly perpetual disarray and dysfunction that we call Somalia.

Somalia is the poster child for drought, famine, extreme poverty, disease, war lords (with rape, pillaging and murder on their minds), terrorism, piracy on the high seas and uncontrollable chaos. Danger lurks in every nook and cranny of this country, where misery, death and destruction are simply a part of daily life. Attempts to tame this wild beast, extinguish its attractiveness for suborning terrorism and giving safe haven to some of the world’s worst (including Osama bin Laden’s fighters in his day), has simply met with failure. Picture the aborted 1993American mission (18 U.S. soldiers died) – the Battle of Mogadishu – a to subdue and capture Somali warlord Mohamed Farrah Aidid depicted in the 2001 epic film, Black Hawk Down, and you can get a feel for the chaos that never left Somalia. Humanitarian and United Nations peace-keeping efforts have all failed, and today, Somalia has descended further into the depths of desperation and despair.

Oh, and one more thing, Somalia sits on Kenya’s northern border, creating a dangerous no-man’s-land where kidnapping and extortion are commonplace. That Kenya is building a massive new harbor facility just 60 miles south of this porous border is clearly a further invitation to disaster. If Somali pirates and war lords feast on any semblance of wealth passing near their shores or borders, this new port facility would seem to be in jeopardy. Initially using the accelerating spate of border kidnappings as their excuse to mount a military invasion across the border that began on October 16th (following the kidnapping of four seaside tourists), Kenya has begun an effort to extinguish the power of local war lords and militants that threaten their economic and political goals. They are venturing into a land that no recent military force has been able to tame, but they feel they have no other choice: “Kenyan officials said it was becoming impossible to coexist with a failed state next door. They consider the Shabab [affiliated with al Qaeda], a ruthless militant group that controls much of southern Somalia, a ‘clear and present danger,’ responsible for piracy, militant attacks and cross-border raids.” New York Times, October 26th.

Claiming strategic backing from the United States and France (both countries have denied such support, but the U.S. has been mounting drone strikes against the Shabab from a civilian airport in Ethiopia for some time now), Kenyan forces have pressed into Somalia, but the Shabab have pushed back in ways that suggest that the Kenyan effort may backfire: “‘The invasion was a serious miscalculation, and the Kenyan economy is going to suffer badly,’ said David M. Anderson, a Kenya specialist at Oxford… The Shabab, who have pledged allegiance to Al Qaeda, have killed hundreds in suicide attacks in Somalia and are now vowing to punish Kenya, much as they struck Uganda last year for sending peacekeepers [into Somalia].

“There have already been two grenade attacks in Nairobi, which Kenyan officials said were the work of Shabab members, and this usually laid-back capital city has shifted into war mode. Security guards peer into purses at supermarkets, shopping centers are deserted because many Kenyans are now scared to congregate in public, and the American government has warned of ‘an imminent threat of terrorist attacks’ at malls and nightclubs.” NY Times. Military experts are suggesting the Kenya went in “too big” and with too much publicity, inviting a strong and desperate response. The suggestion was that smaller, clandestine surgical strikes to send a message would have been more effective. Indeed, Pentagon officials, who have distanced themselves from this effort, have adopted a wait-and-see attitude. Given America’s own rather consistent failure to subdue illusive terrorists, one has to question what Kenyan authorities were thinking with the present military movement.

I’m Peter Dekom, and it does appear to be strange that even Kenyan forces have seemed to skip over the recent history of how to deal with terrorist groups.

Saturday, October 29, 2011

Water We Talking About Too?

“The world is low on water, from the standpoint of supply needed for human use, and the problem has grown rapidly. Worse still, the problem has no ready solution — and probably has no solution at all...The World Resources Institute predicts that ‘By 2025, 1.8 billion people will be living in water-scarce countries or regions, with alarming implications for human wellbeing and global security.’ Much of this water will be needed to irrigate crops. That makes the problem a dual one — water for drinking and water for food.”, October 28th. Clearly, the future of human existence is significantly predicated on the ability to find and access enough water to sustain and nurture life. Here are some basic numbers from the United Nations (reproduced from that tell us how we allocate that resource and how fast demand is increasing:

Worldwide, agriculture accounts for 70% of all water consumption, compared to 20% for industry and 10% for domestic use. In industrialized nations, however, industries consume more than half of the water available for human use. Belgium, for example, uses 80% of the water available for industry.

Freshwater withdrawals have tripled over the last 50 years. Demand for freshwater is increasing by 64 billion cubic meters a year (1 cubic meter = 1,000 liters)

  • The world’s population is growing by roughly 80 million people each year.
  • Changes in lifestyles and eating habits in recent years are requiring more water consumption per capita.
  • The production of biofuels has also increased sharply in recent years, with significant impact on water demand. Between 1,000 and 4,000 litres of water are needed to produce a single litre of biofuel.
  • Energy demand is also accelerating, with corresponding implications for water demand.

Almost 80% of diseases in so called "developing" countries are associated with water, causing some three million early deaths. For example, 5,000 children die every day from diarrhoea, or one every 17 seconds.

According to the U.N., Americans and Canadians consume over sixteen hundred cubic meters of water per person per year, while Europeans and most Asians make do with about six hundred cubic meters. With dams and diversions, the United States opened up vast tracts of desert to agriculture by transporting water into previously unusable land, a fact which probably amplified our water use; that the United States and Canada rely heavily on irrigation of huge farms probably tips the scales on water usage heavily towards those nations, and the fact that North Americans have bigger homes on larger parcels only exacerbates the water usage statistics. Canada and much of the eastern part of the United States probably have enough water for a very long time, but the west of the Mississippi, access to water isn’t so easy.

I’ve already blogged about that massive underground water source that is dwindling away – the Ogallala Aquifer that stretches from the Dakotas south to Texas – so today, I would like to focus on the desert communities in California’s Imperial Valley, a place where agricultural has become big business, ever since the Colorado River was seriously diverted to turn desert sands into productive farms. In the late 1800s, engineers proposed a use for the water that overflowed the Colorado into the Almo River.

The initial efforts resulted in the Almo Canal that began to produce water flow into the Imperial Valley in 1901, but silting and other difficulties resulted in new waterways and new diversions until the flow became more consistent and controllable in 1907. By 1911, financial pressures resulted in the formation of the Imperial Irrigation District. Today, what little remains of the Colorado River by the time it hits Mexico is shallow enough for someone to walk across the river. And the upgrades to the Irrigation District (including the Imperial Dam pictured above) have created a permanent and modern diversionary structure that makes the Imperial Valley among the most productive agricultural areas in the state.

Meanwhile, the big cities in Southern California, notably Los Angeles and San Diego, have grown and created new demands for potable water (and of course, to water lawns and golf courses along the way). Farmers can make money by allowing acres to lie idle and transfer the concomitant water usage rights back to the cities for $500+/acre/year: “With water increasingly scarce in the West, some other communities are allowing farmers to sell their allotment of it for whatever price they can find, in some cases thousands of dollars for the amount it takes to grow an acre of a crop. But this comes with a hitch. Working farms provide jobs and income to their many suppliers. There are 450 farmers in the Imperial Valley, but half the jobs held by the 174,000 residents are tied to agriculture.

“When land is idled, the communities around the farms can wither. Residents here point to the neighboring Palo Verde Valley, where farmers can sell more than a quarter of their water supply at much higher prices in a process they control. As a result, nearly a third of the agricultural land was not farmed this year; over time, businesses and workers have suffered… Imperial’s fear is that a century after Colorado River water allowed this land to be a cornucopia, unfettered urban water transfers could turn it back into a desert. So the deal that Imperial water managers struck limits how much water can be sold and for what price, and it controls how much acreage is enrolled in the program and for how long.” New York Times, October 23rd.

Just as a recession-driven financial reset has changed the way most Americans will live in the future, the press of a growing population will add downward pressures to how we consume and utilize natural resources, especially water. The pattern is being repeated worldwide, particularly in hyper-growth regions like China, where water diversion projects threaten to be among the largest infrastructure projects ever attempted by mankind. Certainly, we’ll be towing icebergs from the north and depending increasingly on high-energy-use desalinization techniques… relying on engineered crops that simply need less water. But whatever the solutions, life in the future will be a whole lot different from the access to seemingly unlimited resources that most of us have grown up with.

I’m Peter Dekom, and besides “death and taxes,” the other inescapable reality is change itself.

The Lady from East Germany

Although Angela Kasner was born in Hamburg (West Germany) in 1954, her father, a Lutheran pastor, was assigned to a church in East Germany in Quitzow, and the family moved to the East German countryside (in Templin), about 50 miles north of Berlin. So young Angela grew up on the “other side of the wall,” even though unlike most families, she and her parents were apparently able to move back and forth, from east to west, with relative ease, a phenomenon that suggests her father had more than close ties to the severe communist regime that ruled in the east.

Wikipedia outlines the early phase of Angela’s life: “Like most pupils, [Kasner] was a member of the official, Socialist-led youth movement Free German Youth (FDJ). However, she did not take part in the secular coming of age ceremony Jugendweihe, which was common in East Germany, and was confirmed instead. Later, at the Academy of Sciences, she became a member of the FDJ district board and secretary for ‘Agitprop’ (Agitation and Propaganda). [Kasner] herself claimed that she was secretary for culture. When [Kasner’s] onetime FDJ district chairman contradicted her, she insisted that: ‘According to my memory, I was secretary for culture. But what do I know? I believe I won't know anything when I'm 80.’ [Kasner’s] progress in the compulsory Marxism-Leninism course was graded only genügend (sufficient, passing grade) in 1983 and 1986.

“[Kasner] was educated in Templin and at the University of Leipzig, where she studied physics from 1973 to 1978. While a student, she participated in the reconstruction of the ruin of the Moritzbastei, a project students initiated to create their own club and recreation facility on campus. Such an initiative was unprecedented in the GDR of that period, and initially resisted by the University of Leipzig. However, with backing of the local leadership of the SED party, the project was allowed to proceed. [Kasner] worked and studied at the Central Institute for Physical Chemistry of the Academy of Sciences in Berlin-Adlershof from 1978 to 1990. She learned to speak Russian fluently, and earned a statewide prize for her proficiency. After being awarded a doctorate (Dr. rer. nat.) for her thesis on quantum chemistry, she worked as a researcher and published several papers.

“In 1989, [Kasner] got involved in the growing democracy movement after the fall of the Berlin Wall, joining the new party Democratic Awakening. Following the first (and only) democratic election of the East German state, she became the deputy spokesperson of the new pre-unification caretaker government under Lothar de Maizière.” So she was a communist scientist with little or no training in modern economics, much less in the arena of the kind of capitalist economy a unified Germany would generate in spades.

But Kasner grew through the unified German political system until the very future of the German banking system… actually the very future of Europe’s entire banking system… fell directly beneath her leadership and de facto control. “‘She is not the kind of person who leads Europe because she believes that she is meant to lead like some of her predecessors,’ said Kurt Kister, editor in chief of the daily Süddeutsche Zeitung. ‘She takes responsibility when she sees that the others are not in a position and she believes that she has to.’” New York Times, October 27th. Who is this Angela Dorothea Kasner? We actually know her name by reason of her first marriage, in 1977, to Ulrich Merkel (1977-1982).

Indeed, Angela Merkel, Germany’s Chancellor since 2009, has become one of the world’s most effective and powerful leaders, literally shepherding the EU-currency nations through their most difficult moments since inception of the EU. Few believed that the lady from East Germany had the knowledge or the capability of dealing with the banking/sovereign debt crisis that threatened to impale Europe. They were wrong. Even with popular sentiments in her own constituency suggesting that voters were no longer supportive of continued German commitments to the failing nations to the south, Merkel led her parliament (and her coalition) headlong into the fray.

It was literally Germany and France, the former with vastly more economic power, that stared down the biggest banks in continental Europe… and they blinked: “It was approaching 2 a.m. [on October 27th], not long before the Asian markets would open, and the [Merkel and French President Nicolas Sarkozy] were desperately trying to nail down the last component of a complex deal to save the euro: forcing the banks to pay a greater share of Greece’s effective default… For hours, negotiators had been trying to persuade the banks to accede to a ‘voluntary’ 50 percent loss in the face value of their Greek bond holdings. The banks, which had already agreed to a 21 percent write-down, had dug in their heels.

“They knew how badly the European leaders needed a deal, and how much financial experts feared a disorderly, involuntary default. That could set off a ‘credit event,’ throwing world financial markets into turmoil, much as the collapse of Lehman Brothers did in the fall of 2008… But Mrs. Merkel called the bankers’ bluff, said officials present at the discussions. Accept the 50 percent write-down, she told the bankers, or bear the consequences of default. In effect, she was willing to risk a credit event, and to place the blame for any fallout on them.” New York Times, October 27th.

The EU bailout fund was set, and while much remained to be fleshed out, the soaring stock market around the world on October 27th was a resounding vote of confidence. Clearly, there won’t be warm and fuzzy feelings from Greeks (and except protests and even a few riots) who are having austerity shoved down their throats, but at least the debt load is lifting. She didn’t read the poll results to see what she should do; she did what she felt was the best choice for Europe… and Germany. Next: asking China to pick up some of the debt. Hmmm… I wonder what the strings will be.

I’m Peter Dekom, and leadership is not about following poll results!

Thursday, October 27, 2011

Flash Crash

Fast mega-expensive computers, programmed by some of the most highly-educated (expensive) specialists, linked very directly and electronically to the relevant commodities and stock exchanges give the Wall Street traders that own them a huge advantage over everyone else. These computer systems can spot trends – strengths and weaknesses across the board, in specific sectors or individual stocks and commodities – in tiny fractions of a second and automatically initiate buy or sell orders just as fast (flash trading). But since there are quite a few such systems operating – you may assume every major financial player on the Street has and uses these systems – they also react to each other. After when one computer detects a triggering price change and initiates an order based on that information, all the other computer systems detect that transaction – usually a large order – instantly… and themselves react. The losers are those who are left with the spoils of the market after such an automated frenzy has decimated or seemingly irrationally exploded the market.

The second big casualty of such practices is the falling confidence in the market structure itself, and in a recession where there rarest commodity appears to be confidence at every level, these practices only undermine the possibility of restarting our economy. The market rises 500 points, falls 300 points, another 150 points, rises 200 points, all in a relatively short time span. Such big and sudden drops, precipitated by automated trading, are called “flash crashes.” Who would believe in a market with such volatility? Certainly not the vast majority of Americans who don’t have supercomputers in their basements applying sophisticated software to implement trading decisions. There are a few slogan-driven constituencies who somehow believe that there is a free market and that regulation is hardly necessary, but then these folks don’t read my blog… or anything that contains documented facts versus unsubstantiated and mistaken assumptions.

“‘There is something unholy about them,’ said Guy P. Wyser-Pratte, a prominent longtime Wall Street trader and investor. ‘That is what caused this tremendous volatility. They make a fortune whereas the public gets so whipsawed by this trading.’” New York Times, October 8th. It’s not just that this power elite has a technological advantage that only vast wealth can buy, but it also has a mechanism to manipulate the market itself, a fact that may be illegal but most difficult to enforce.

“Layering” is one such manipulation, in which the trader issues a large order (that they never intend to carry out) and then cancels. The market reacts to the order, and the trader takes advantage of the market move they created without implementing. Occasionally, these fakes are discovered and fined, but often they emerge without any sanctions. A secondary impact is when the computer issues an order for thousands of transactions that is countermanded by man or computer, one that really was intended but cancelled for any number of reasons. The results are the same.

The reality is that market-trading has changed without a concomitant change in how the markets are regulated. “High-frequency trading took off in the middle of the last decade when regulatory reforms encouraged exchanges to switch from floor-based trading to electronic. As computers took over, daily turnover of stocks rose to 8 billion shares in the United States from about 6 billion in 2007, according to BATS Global Markets… The trading, done by independent firms or on special desks inside big Wall Street banks, now accounts for two of every three stock market trades in America… Such trading has expanded into other markets, including futures markets in the United States. It has also spread to stock markets around the world where for-profit exchanges are taking steps to attract their business…

“Global regulators are considering penalizing traders if they issue but then cancel a high degree of orders, or even making them keep open their orders for a minimum time before they can cancel. Long-term investors worry that some traders may be using their superior technology to detect when others are buying and selling and rush in ahead of them to take advantage of price moves. This is driving some investors who buy and sell in large blocks to move to new so-called dark pools — venues away from public exchanges. As more trading takes place in these venues, prices on exchanges have less meaning, critics say.

“In the United States, the Securities and Exchange Commission has been looking into the new market structure for almost two years. In July, it approved a “large trader” rule, requiring firms that do a lot of business, including high-speed traders, to offer more information about their activities in case regulators need to trace their trades… After the flash crash [on May 6, 2011], exchanges introduced circuit breakers to halt trading after violent moves. Bart Chilton, a commissioner at the Commodity Futures Trading Commission, called for regulators to go further. He wants compulsory registration of high-frequency firms and pre-trade testing of their algorithms.” NY Times.

The Dodd-Frank bill was supposed to empower the Securities and Exchange Commission to impose new regulations in this Wild West, cowboy-driven market sector, but budget cuts and resultant staff reductions have produced only about 10% of the regulations that even this watered-down legislation was supposed to create. Meanwhile, Wall Street is engorged in the excess of their own creation, reveling in the almost complete lack of oversight, and enjoying the power of being able to contribute unlimited sums to political action committees without restraint. Yes, American, any notion that deregulation is good for America seems to fly in the face of… FACTS.

I’m Peter Dekom, and if you think our nation is polarized right now, let the power elite continue to have its way and we will have distant memories of what was once the American middle class.

Wednesday, October 26, 2011

Death n’ Things

The news has report two recently important deaths in the Islamic world in recent days: Muammar Qaddafi and the positive relations between Pakistan’s sort of positive relations with United States. Whether he was going to be killed or captured, there had been virtual certainty that the Colonel (never got a promotion in those 42 dictatorial years!) and Libya were destined to part company in most significant ways. That he perished in such a violent and awful way was truly horrific. That Muslim monarchs, fearing similar occurrences, did not have to deal with his exile may have been their only blessing in these eventual days.

The other death is far more problematical. As the Taliban-linked, Haqqani terrorist network moves its forces back and forth between safe havens in Pakistan, transporting weapons, troops and explosives directed at American targets in Afghanistan, inflicting heavy U.S. casualties, while seemingly working hand and glove with Pakistan’s Inter-Service Intelligence Agency (their CIA and NSA combined, known as the ISI), Americans are duly outraged: “‘This is a time for clarity, [U.S. Secretary of State, Mrs. Hillary] Clinton declared in Kabul, Afghanistan, where she met President Hamid Karzai before leaving for Islamabad, the Pakistani capital. ‘No one should be in any way mistaken about allowing this to continue without paying a very big price.’

“‘There’s no place to go any longer,’ Mrs. Clinton added, referring to Pakistan’s leaders, whom the administration has accused of equivocating by supporting the Afghan insurgency.” New York Times, October 20th. Yet no Pakistani leader could survive an election in his or her home country by openly supporting American anti-terrorism policies. Rightly or wrongly, America is viewed as a Judeo-Christian nation making war on Islam, and Pakistan is one of the largest Islamic nations on earth. Our efforts in support of Israel and in drone strikes with lots of collateral damage across the Afghan border into Pakistani territory are immensely unpopular with the Pakistani electorate.

Indeed, the lines seem clearly drawn in the sand: “The Haqqani network uses Pakistan’s tribal areas as a base and has become the most potent part of the insurgency in Afghanistan. Before stepping down last month, Adm. Mike Mullen, General [Martin] Dempsey’s predecessor [as Chairman of the Joint Chiefs of Staff], called the Haqqanis ‘a veritable arm’ of Pakistan’s intelligence service… The public accusation added to tensions in America’s relationship with Pakistan, which plummeted to a new low this year as Pakistan arrested a C.I.A. contractor and American commandos killed Osama bin Laden deep inside the country in May.” NY Times.

When, based on intelligence reports, U.S. military officials requested Pakistani military aid to stop a possible Haqqani-controlled truck laden with explosives and destined to an unknown American target, they were rebuffed. In mid-September, 77 Americans were subsequently injured and 5 Afghans killed when that truck surfaced in an attack on a U.S. military position in eastern Afghanistan.

American aid to Pakistan has averaged about $2 billion a year of late, although in July the military portion of that aid (about $800 million) was temporarily (??) suspended over clashes concerning Pakistan’s commitment to America’s anti-terrorism concerns. But what is really at stake here? Do we really believe that government officials will tow the American party line and then face almost certain defeat in the next election? We’ve made it clear to Pakistan that if they won’t stop the anti-American extremists within their border, we have every intention of continuing to pursue our enemies well-within Pakistan.

But the “big threat” is one that hovers above and below the drama in the press: Pakistan is an unstable nuclear power with an estimated 100 active warheads ready for use. Pakistan also has a nasty history – through father of the “Islamic bomb,” Dr. A.Q. Khan (who only suffered short-term house arrest for his “indiscretion”) – of furnishing anti-American governments with the know-how to extract explosive fissionable material and manufacture nuclear warheads accordingly. One recipient of such technology information, North Korea, has already built and tested nuclear weapons, and the other, Iran, seems ever-closer to that same goal.

So we are between that proverbial “rock and a hard place.” We effectively are bribing Pakistan not to spread anymore nuclear technology to terrorist nations, and without that aid, the Pakistani military is severely impacted, but they are also supplying and encouraging our terrorist enemies to wreak havoc in the Afghan war. While I have consistently maintained that there is virtually no benefit to us from our efforts in that war in Afghanistan – a tribal land that will deteriorate into chaos whether we leave tomorrow or in a decade – the thought of paying Pakistan such vast sums during our recession is beyond galling. Yet to stop the aid is to open the door to Pakistan’s sharing the nuclear wealth with anti-American extremists worldwide.

To make matters infinitely worse, the ingrate, mega-corrupt Afghan President Hamid Karzai – who owes his very office and billions of allegedly purloined wealth to the U.S. that effectively created his presidency – has absolutely no allegiance to the United States: “‘If fighting starts between Pakistan and the U.S., we are beside Pakistan,’ Karzai said in an interview with private Pakistani television station GEO that aired [October 22nd]. ‘If Pakistan is attacked and the people of Pakistan need Afghanistan's help, Afghanistan will be there with you.’…He said that Kabul would not allow any nation, including the U.S., to dictate its policies.” HuffingtonPost, October 23rd.

Our ill-conceived military expeditions have once again placed our nation in a difficult and compromising position in implementing our bona fide goals (this time, proliferation of nuclear weapons to extremists via Pakistan), a strong argument for limiting American under-planned knee-jerk military responses to international incidents in favor of diplomatic solutions, quick-strike surgical attacks or covert activities aimed at creating clear liabilities for attacks on America or Americans wherever they may be… instead of commencing prolonged wars with untenable consequences.

Note how the United States is now actually withdrawing its troops from Iraq by reason of a failure to reach an agreement with the Shiite-controlled government to maintain some defensive presence in that country. Seems that their government doesn’t want to grant U.S. troops immunity from things such as collateral damage: “When the Americans asked for immunity [from lawsuits or criminal prosecution], the Iraqi side answered that it was not possible,” according to Iraqi President Nouri al-Maliki. Although total withdrawal is the right result, it would seem pretty obvious that Iraq – a majority-Shiite nation with profoundly strong ties to fellow-Shiite Iran – wouldn’t really want Americans there against Iran’s wishes anyway. No matter that it was American forces that crushed the Sunni rulers and installed what had to be an inevitably pro-Iranian government in its place.

I’m Peter Dekom, and we need to stop pulling the military trigger to start things that we really cannot contain… and we haven’t won a major war since World War II even with the largest and most power military on earth, bar none!

Tuesday, October 25, 2011

Bad Ass Business Side of Healthcare

Unions are pretty docile these days, knowing that their members are often skating on the edge of unemployment, feeling the pain as overtime hours evaporate and basically accepting the fact that big raises aren’t really in the cards in most companies. In fact, two-tiered pay systems – one for new hires and another for those who have been around for a while – is becoming a nasty part of life for those younger employees even able to find union work. But where you do see threats of labor disputes, it almost always comes down to healthcare cutbacks and having employees pick up an increasing share of the coverage. Union members scream like stuck pigs at the thought of losing or decreasing those benefits, but for those without the benefit of company or union health insurance, the costs are even more absurdly high – the highest on earth. And while we may have the best-trained doctors with the latest equipment, we also have insurance companies denying their members access to the best available when cheaper (usually less effective) alternatives exist.

While “Obamacare” was supposed to cut healthcare costs by tearing away at the layers of administrative and “mal-practice-avoidance testing” excess of the existing system, with no real competition, our medical costs actually increased 9% in the past year, a vast multiple above the increase in the cost of living. With powerful lobbies and the frequent and indelicate use of the words “socialism” and “costly and inefficient government bureaucracy” sprinkled into the healthcare debate, the controversial plan to provide direct government insurance to those unable to afford the better private plans died in a flurry of compromise, and the insurance companies laughed all the way to the bank. They even got the government to force folks to become new customers. Further, the restrictions on bringing in meds from Canada and other comparably-regulated nations had the big pharmaceutical companies adding their snickers to the mix. With no new competition added to the market, there really was little reason to tear down rate structures and pricing considerations.

Writing for the September 30th New York Times, Princeton economics professor Uwe E. Reinhardt, analyzed the ratio of money paid into the system versus the amount actually spent for medical services (versus administrative or profit costs), and found that both Medicaid and Medicare, two federal programs, were significantly more efficient than the private sector, both programs allocating over 92% of such funds to actual services. So much for the accusation of inefficient government bureaucracies, even though there will always be anomalies and abuses in a system this large.

But a more significant observation was made by Dr. Fareer Zakaria, journalist and political scientist, in his The Post-America World, Release 2.0 (pages 225): “Consider the automobile industry. For a century after 1894, most of the cars manufactured in North America were made in Michigan. Since 2004, Michigan has been replaced by Ontario, Canada. The reason is simple: health care. In America, car manufacturers have to pay $6,500 a year in medical and insurance costs for every worker. If they move the plant to Canada, which has a government-run health care systems, the cost to the manufacturer if around $800 per worker. In 2006, General Motors paid $5.2 billion in medical and insurance bills for its active and retired workers. That add[ed] $1,500 to the cost of every GM car sold.” It also was the straw that broke GM’s bank, shoving it into bankruptcy and resulting in a government bailout of this significant industry.

Zacharia continues his analysis (page 226): “Jobs are not going [just] to places like Mexico but to places where well-trained and educated workers can be found: it’s smart benefits, not low wages, that employers are looking for. Tying health care to employment has an additional negative consequence. Unlike workers anywhere else in the industrialized world, Americans lose their health care if they lose their job, which makes them far more anxious about foreign competition, trade and globalization. [A] Pew survey found greater fear of these forces among Americans than among German and French workers, perhaps for this reason.” The photograph above is of the Chrysler plant in Brampton (Ontario, Canada), where Dodge Magnum, Dodge Charger, Dodge Challenger, and Chrysler 300 M and other popular cars are/have been built since 1986.

As the Obama administration presses the U.S. Supreme Court for an expedited review of its omnibus healthcare legislation, all those in opposition to such medical program should really be aware of its impact on jobs… and perhaps that it doesn’t go far enough. Whatever the outcome, Americans are dealing with the most expensive medical system on earth and also one of the most inefficient, one that delivers the “best in class” medical care only to those with the money to afford the platinum insurance plans available only to those able to afford this higher-level policies… or those rich enough not to care. For the rest of us, we have to limit our choice of doctors and often have to opt for second-rate treatment, because that’s all the insurance company will pay for. And pay for the most expensive pharmaceuticals in the industrialized world.

I’m Peter Dekom, and I wonder how the nay-sayers would (will?) respond if they could no longer afford health insurance (and their employers simply terminated that benefit).

Monday, October 24, 2011

The New Safety Schools

For those of us who have participated in the college application process – either as applicants or parents or both – we dearly (??) remember listing the schools we really, really want at the top, the secondary schools that would be nice enough and the “safety” schools where we were/are pretty sure of acceptance. For the highest achievers in America, those top schools often included the cherished Ivies, the Seven Sisters, Stanford, Georgetown, Duke, a handful of superstar state institutions (Berkeley, UVa, etc.)… or Cal Tech and MIT for the engineering spirits. With admissions rates hovering around 10-15%, these are indeed elite schools.

But what would you think of a set of 16 engineering colleges where the admissions rate is more like 2% or a governmental university where tuition is generally less than $500 a year, but where scoring in the 95th percentile in national exams just isn’t good enough to get into a basic economics program. India is the country, and the academic pressures on the teenaged intellectual elite of this country are staggering. They study their butts off – hours that would make even the most committed American teenagers cringe – but intensive tutoring to prepare students for the national entrance exams suck up dozens of additional hours per week, particularly in the last two years of high school. Poor Korean kids, who are in the same boat, where they are lucky to have sufficient breaks from school and tutoring to get five, maybe six hours of sleep a night.

The Indian universities suggested above include 16 campus Indian Institutes of Technology, scattered about India, each with its own area of specialization (e.g., mechanical, civil, electrical, computer science, etc.). Every years 500,000 prequalified applicants take the admissions tests, but only 2% of that group gains entrance, and only the cream of that crop winds up in the computer science specialized school. The winning scores are often at or ever-slightly-below 100% on that most-difficult, intensely mathematical test. Delhi University is the great school where a 95th percentile just isn’t good enough, and the qualifications of those who gain admission to such top schools would shame our top Ivies or Oxford/Cambridge in the UK.

Indeed, the performance level of such young Indian scholars is so superlative that our top schools send recruiters to countries like India, Japan and Korea for potential freshmen, students whose parents find a way to scrape together the money to pay intensely expensive U.S. tuition rates, often north of $40 thousand a year, without needs of scholarship support or student loans. It’s just good business in a recession to get paying students, but sometimes these foreign students are so incredibly gifted that the American schools offer scholarships as well.

When Indian kids don’t get into their top local choices, they often find these America alternatives sufficiently enticing: “American universities and colleges have been more than happy to pick up the slack. Faced with shrinking returns from endowment funds, a decline in the number of high school graduates in the United States and growing economic hardship among American families, they have stepped up their efforts to woo Indian students thousands of miles away.

Representatives from many of the Ivy League institutions have begun making trips to India to recruit students and explore partnerships with Indian schools. Some have set up offices in India, partly aimed at attracting a wider base of students. The State Department held a United States-India higher education summit meeting [October 13th] at Georgetown University to promote the partnership between the countries… Indians are now the second-largest foreign student population in America, after the Chinese, with almost 105,000 students in the United States in the 2009-10 academic year, the last for which comprehensive figures were available. Student visa applications from India increased 20 percent in the past year, according to the American Embassy here.

Although a majority of Indian students in the United States are graduate students, undergraduate enrollment has grown by more than 20 percent in the past few years. And while wealthy Indian families have been sending their children to the best American schools for years, the idea is beginning to spread to middle-class families, for whom Delhi University has historically been the best option… American universities have now become ‘safety schools’ for increasingly stressed and traumatized Indian students and parents, who complain that one fateful event — the final high school examination — can make or break a teenager’s future career.” New York Times, October 13th. Safety schools like Dartmouth (pictured above), Brown, Cornell, Bryn Mawr, Duke, Wesleyan, Barnard and the University of Virginia.

Funny how education is such a priority to those rapidly emerging markets… and how for some reason we think it’s just fine to cut our overall educational budgets to meet our deficit challenge… even though we are going to compete with these brilliant Indian, Korean, Chinese, etc. minds for generations to come. I guess we believe that our undereducated and under-prepared children will figure it out… later. Gee, it sure is exciting to listen to candidates tell us how we are so close to winning that war in Afghanistan… what’s it been now… ten years? How many billions?

I’m Peter Dekom, and it sure pisses me off how our government knows how to throw money away a whole lot better than it knows how to invest in its own future.