Wednesday, May 30, 2012

Tarnish in the Golden Years

Aside from the millions who have given up and opted for a Social Security exit before they ever imagined are the millions of older workers for whom retirement is no longer an option. Unemployed workers eligible to access Social Security were and are literally twice as likely to opt into that governmental retirement pool as those who retain(ed) their jobs. “‘The fact of the matter is that this aging-but-not-yet-aged segment of the baby boomer class can’t afford to retire,’ said David A. Rosenberg, the chief economist of Gluskin Sheff, a Canadian firm, noting that overall household net worth was 15 percent lower than at the pre-recession peak. ‘Dreams of the 5,000-square-foot McMansion being a viable retirement asset have morphed into nightmares of a deflationary ball and chain.’” New York Times, May 18th.

The notion of working until you drop, seemingly a vestige of the 19th and early 20th centuries, seems to be back, but Americans are living longer than they did back then. Not only are the de facto “implied savings from owning a home” gone, but too many retirement accounts have been decimated in value or used when premature layoffs and pay cuts required emergency access to money intended for later years.

Many older Americans had to dip into their savings to cope with the impact of the recession. A quarter of Americans age 50 and over report exhausting all of their savings during the recession, according to an AARP Public Policy Institute... Nearly half (48 percent) of older workers have had trouble making ends meet over the previous three years, typically because household expenses increased (60 percent) or household income fell (56 percent), the survey of 5,027 older Americans who are currently employed or who have been in the labor force at some time during the past three years found. Those who had trouble making ends meet were particularly likely to withdraw money from a savings account (57 percent). The majority of those surveyed (75 percent) are worried about depleting their savings too quickly in retirement.” US News and World Report, May 27, 2011.

The net impact is more people remaining in the labor force longer, literally bottlenecking normal job growth through attrition and retirement at the younger, “other end” of the normal labor cycles: “In general, for workers it was better to be older in the current cycle. The employment-to-population ratios are higher now than before the recession began for both men and women in all age groups above 65. More than a third of men ages 65 to 69 are working, as are more than a quarter of women… But the proportion of both sexes working is down from the peak for all age groups under 60...

Labor Department figures indicate that the percentage of workers over the traditional retirement age of 65 is at a record high. But, the figures show, job totals fell sharply for men under 55 during the recession and have only started to recover, while the proportion of women ages 25 to 54 with jobs also slid and is close to the lowest level of the last two decades… For the first time since the government began keeping track of the numbers in 1981 — and probably the first time ever — one in nine American men over the age of 75 was working in April. About one in 20 women over that age have jobs.” NY Times. For many, the years where retirement was expected, only years of stress, the question of whether their health will hold out long enough to allow work to continue and the big issue of when their companies will demand an exit make life exceptionally difficult.

I’m Peter Dekom, and I’m one of those who may just work until I drop.

Tuesday, May 29, 2012

The New Birthers

Europe’s growing minorities very much reflect the vast colonial holdings that once allowed Europe to dominate the world. They immigrated to the continent to better their lives, to live in the center of their universe to move from being part of providing Europe with cheap labor, raw materials and natural resources to the vastly more relevant “value-added” portion of the global economy: manufacturing. Colonies were often impoverished, lacking serious upward mobility and mired in local politics where old world families with European connections flourished while the masses just served, constantly reminded of their third class status in the eyes of their European masters. The poverty and the stifling local political realities became ingrained into the cultural realities of many of the colonies, particularly in Asia and Africa, especially in regions that were only able to break the yoke of European colonial rule in the twentieth century. The wounds were still fresh in those most recently liberated nations.

And so it is with the immigrants from those relatively recent “former colonies” that their resentment of their colonial masters and the lingering feeling of still being looked down upon by Europeans still drives a cultural wedge between these immigrants (even several generations later) and the general population around them. Many are regaled with the history of Muslim greatness when Europe was still in the Dark Ages, creating higher mathematics (“algebra” is an Arabic word), geography and modern medicine while preserving Greco-Roman literature that was being burned on the continent as heretical material… or of Asian monarchs whose conquests sent shudders down the spines of fearful Europeans. They long for a return of their cultural greatness, and secretly find joy that Europe must now pay dearly for her most basic raw materials, particularly Middle Eastern oil. The resent being treated and labeled as sub-class “rag-heads” or other pejoratives.

Today, many of these European immigrants are dark-or-darker-skinned players, many of whom practice a religion that is viewed as a threat to Western civilization. France has banned the trappings of Muslim conservatism on women, England and Germany are rife with tales of militant Islamist cells operating within their midst. A Norwegian maniac slaughters 77 people, mostly children, in the name of racial and ethnic purity. When you look at the next big European Union issue beyond irreconcilable debt problems, you see the EU grappling with the “immigration problem,” claiming that Europe can no longer support this flood of new minorities. Thus, Europe’s view on immigration is a major concern of admitting hostile enemies into their midst. Europe is also in that part of the Western world where nations are crowed in close proximity to each other, a short bus ride, plane trip or boat sojourn away.

Modern immigration in the United States, the area in the Western world where vast distances separate the United States from the more populated regions of the world and where we really have only two international borders with friendly nations, is driven primarily by economic betterment. Beyond the horrific slave trade that marked our nation until the middle of the nineteenth century, the driving force to coming to the United States has been opportunity. Our multicultural world has grown not from resenting minorities seeking to find reward in the colonial control center (still harboring resentment of colonial exploitation and third class status), but from human being genuinely believing in American freedom and our democratic form of government, that the level playing field allowed hard work and education to create upward mobility without regard to “status at birth,” and the powerful economic engine that grew not from colonial labor and raw stock in distant lands but from invention and ingenuity in the homeland. And where there is American resentment of immigrants, it is usually focused on job competition and fear of rising crime… and that good old racial and ethnic bias that once targeted Irish and Italians before their assimilation into the mainstream.

And so in these economically impaired times, where American opportunities appear to be on the wane and drug crime (the new failed “Prohibition”) has provided alternative sources of new wealth to minority communities, new anti-immigrant forces are at work. But we need educated engineers from Asia, cheap service labor (to become medical doctors and MBAs) from Latin America and additional well-educated contributors to our society such as the Persians who escaped persecution from fundamentalist Ayatollahs in Iran. Still our border and most of our immigration issues differ profoundly from the more generalized fear in Europe that immigration represents the admission of anti-European time bombs waiting to wreak revenge for centuries of colonial imperialism. Hard to worry about attacks from Canada or Mexico.

Immigration fears, heightened by a new economy lean on growth, are still fundamentally perceived very differently on each side of the Atlantic. Europe sees darker-skinned minorities successfully completing the equivalent of the Muslim invasion that was stopped only outside Vienna, Austria centuries ago, an attack that drove the Pope out of Rome. Americans are just worried about conserving the fewer economic opportunities for those who got here first (excluding, of course, Native Americans). Talk to Europeans about our rising “minority” population, which they feel moves the United States farther away from its European roots and our ties to them. Watch their eyes belie their view of ethnic immigration.

Which brings me to the headlines. The United States of America is no longer a nation where the majority of its people are going to be whites of European heritage. “For the first time in U.S. history, most of the nation’s babies are members of minority groups, according to new census figures that signal the dawn of an era in which whites no longer will be in the majority… Population estimates show that 50.4 percent of children younger than 1 last year were Hispanic, black, Asian American or in other minority groups. That’s almost a full percentage point higher than the 49.5 percent of minority babies counted when the decennial census was taken in April 2010. Census Bureau demographers said the tipping point came three months later, in July.

“The latest estimates, which gauge changes since the last census, are a reflection of an immigration wave that began four decades ago. The transformation of the country’s racial and ethnic makeup has gathered steam as the white population grows collectively older, especially compared with Hispanics…Although minorities make up about 37 percent of the U.S. population, the District [of Columbia] and four states are majority minority — California, Hawaii, New Mexico and Texas.” Washington Post, May 16th.

Are we resentful? Or can we recognize that the vast majority of this “minority” segment came to this nation to make it and themselves better? These folks aren’t creating sleeper cells determined to take us down; they represent much of the new blood, blended with the old blood, that might just bring the United States back up to the top. Our heterogeneity spawns new combinations of thoughts and ideas that define our innovative spirit.

I’m Peter Dekom, and as the Statue of Liberty reminds us, we are a great nation because of immigration and not in spite of it.

Monday, May 28, 2012

Attacking the United States

We call it the “Department of Defense,” but the last time another country attacked our territory – and the United States had to defend itself against an enemy nation – was World War II with the Japanese bombing of Pearl Harbor on December 7, 1941. The attacks on the Twin Towers and the Pentagon on September 11, 2001 were mounted by a pan-national terrorist organization (not a country), al Qaeda, using irregular soldiers employed on a suicide mission. All our nuclear warheads, vast array of fighting ships and aircraft and the huge accumulation of ground forces that constitute the bulk of our military sat idly by as terrorists sequentially decimated two of this nation’s greatest buildings and attempted to destroy the heart of our military mind in seriously damaging the Pentagon.

Today, we are smarter, accessing global telecommunications, the Internet, infiltrating where we can, sharing information with other countries facing the same terrorists, employing drones, satellites with incredibly-high-resolution cameras, smart bombs and financial weapons to dry up the support systems that allow terrorist groups to operate. The deployment of vast forces of American might has managed to wound, perhaps fatally, the al Qaeda operatives who are desperately trying to reestablish their presence in Yemen and to find a foothold in Lebanon as Syria’s grin on the nation loosens, but al Qaeda’s extreme policies and fanatic willingness to inflict wanton collateral damage probably lost them many of the hearts and minds they were counting on anyway.

Meanwhile, other forms of anti-American Islamic fundamentalism – replete with Hamas, the Muslim Brotherhood, Taliban and other “replacement” terrorists – is alive and well. Korea, Vietnam, Iraq, Afghanistan – the major conflicts we have fought since WWII – have either ended in stalemate (armistice), total failure or the installation of unstable and often anti-US governments. We haven’t won a single large-scale military effort since WWII. All having a huge military has done is to involve the United States in wars all over the earth, making us appear to be a global bully and less a global policeman. And we still have the largest military on earth.

As two wars ended or are ending and given our deficit pressures, we’ve dropped from spending 47% of the world’s entire military budget two years ago: “The 2009 U.S. military budget accounts for approximately 40% of global arms spending. The 2012 budget is 6-7 times larger than the $106 billions of the military budget of China, and is more than the next twenty largest military spenders combined. The United States and its close allies are responsible for two-thirds to three-quarters of the world's military spending (of which, in turn, the U.S. is responsible for the majority).” Wikipedia. Some of this is because of cuts, and part of it is because some nations – Russia and China, for example – are beginning to spend a bit more on weapon systems.

So here’s the mega-trillion dollar question: how big (or small) does the United States military have to be to keep the United States and its citizens safe? Could we live with 35% of the global military budget? 30%? 25%? Would we be OK if we outspent merely the next five largest militaries combined?

Remember when Republican President Dwight David Eisenhower (above) warned how, if we were not vigilant, military vendors would generate such vast economic wealth, with plants scattered about many Congressional districts across the land, that they would literally have the political clout to force massive military expenditures – further enriching their coffers – on American taxpayers with no genuine benefit to the country at large. (See the excerpts from his famous pair of “military industrial complex” speeches reproduced in significant part in my April 7th blog). We have most certainly ignored this great WWII general’s words.

While we can’t just dump hordes of U.S. soldiers into an economy that has no jobs to welcome them home, we can at least begin a further long-term, phased reduction in our armed services, like 2.5% per year until we hit new reduced target levels. We could then move most of those savings into education, infrastructure and research to create both new jobs to absorb some of those returning soldiers, but, more importantly, to invest in a new and more vibrant future that would make the United States that much more worth defending. Or we can continue to fund an unwarranted level of military force and spend ourselves out of existence, following in the path of ancient Sparta , Rome and the Ming Dynasty or the modern fall of the Soviet Union. Do we wake up now or simply wait until it is too late to fix this broken economic model?

I’m Peter Dekom, and if we cannot effect the above savings, let’s at least change the name to “Department of War.”

Sunday, May 27, 2012

Religious Persecution

The Civil Rights Act of 1964 is the platinum anti-discrimination statute. Title VII of that Act applies to companies of 15 or more employees (including state and local governments) and bans employer discrimination on the basis of sex, race, color, or national origin. One tiny little catch: Title VII does not apply its ban on religious discrimination within “a religious corporation, association, educational institution, or society with respect to employment [i.e., hiring and retention] of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution or society of its activities.” Religion, for purposes of the Act, is defined as “all aspects of religious observance and practice, as well as belief, unless an employer demonstrates that he is unable to reasonably accommodate to an employee’s or a prospective employee’s religious observance or practice without undue hardship on the conduct of the employer’s business.”

So why the legal lesson, Dekom… we’re getting’ bored. Well, let me ask you if you would work for an employer that makes you sign the binding Lifestyle pledge as a condition of employment to reject homosexuality, premarital sex, adultery, drug use and public drinking near the employer’s place of business, a document that also mandates that staff be active in a local church. How about at a place where you have already been working for years? Wanna keep your job? Gotta sign. Why, because the employer is a small Baptist school in Georgia: Shorter University [pictured above], and the pledge was introduced last October to faculty and senior staff contracts with a requirement that these agreements be accepted in order to continue working at Shorter.

The result: “In an anonymous survey in April, only 12 percent of faculty and staff said that they planned to stay at Shorter University, a 139-year-old Baptist school, reports Inside Higher Ed. More than 50 resigned before the new contracts were even distributed, and certain departments, such as science and fine arts, have been ‘eviscerated,’ according to Michael Wilson, a tenured librarian for the university who's worked there for 14 years.

“‘Through our policies, we seek to honor Jesus Christ,’ the university said in a statement. ‘We understand that there are those who do not agree with our beliefs. We are not trying to undermine their right to those beliefs, but want to be transparent about our own.’

“‘Where is today's American Taliban? At Shorter University,’ tenured Shorter professor Sherri Weiler wrote in the Rome News-Tribune. ‘Religious fundamentalism in any form (Muslim or Christian) is sheer lunacy in today's divided, fractured, and tormented world. True peace is only to be found in opening the doors, not closing the gates.’”, May 15th [emphasis in the original].

Not all the students at Shorter are Baptists; it was simply the university they wanted to attend. For so many long-standing employees, the contractual pledge represented a position that many found unconscionable, one over which they were willing to give up their secure jobs that they had once expected to continue until retirement. Reality sank in: “Evangelical protestants, like Southern Baptists, are more conservative on social issues than any other religious group in the U.S. In fact, they're the only major religious group in which a majority think that gay and lesbian relationships shouldn't be accepted by society, according to a 2011 Pew Religion Research Institute survey.

“‘Our relationship with the Georgia Baptist Convention is that they are the sole member of our corporation,’ Shorter spokeswoman Dawn Tolbert explained to the Rome News-Tribune. ‘We are Shorter University Incorporated. We are owned by them.’ [Yet, t]he school only receives 4.2 percent of its $50 million budget from the convention… [T]here's a good chance that many students will be alienated [by this turn of events]. While 63 percent of older evangelicals oppose same-sex marriage, according to the 2010 General Social Survey, only 44 percent of younger evangelicals feel the same.” And it’s all perfectly legal. How do you feel about this move and the university’s right to implement this policy… mid-stream… after many workers had been there for well over a decade?

I’m Peter Dekom, and perhaps the rules being changed in after 139 years is the part that’s hard to swallow.

Saturday, May 26, 2012

We’re Halfway There

On April 7th, I repeated my Dwight David Eisenhower & the Military Industrial Complex blog, presenting excerpts from two of this distinguished WWII commander’s Presidential speeches back during his term in office in the mid-1950s to early 60s. The summary, basically, is that the United States should be very wary of the defense industry’s expected out-of-control demands, supported by flag officers of the U.S. military, for mega-expensive weapon systems and defense commitments, coining the phrase, “military industrial complex.” He felt the political power of such well-heeled military contractors, and the Congressional support that local communities would exert to get lucrative local contracts, might become unstoppable.

We obviously didn’t listen to this Republican president, as retiring generals and admirals routinely know that if they play the game, they will get lucrative post-career jobs with defense contractors. Though we have not won a military conflict of significant since WWII, our military currently spends more than the next ten largest military budgets combined, equaling not quite half of the world’s total military budget.

The Republican-controlled House of Representatives recently passed a defense appropriations bill that actually defied their agreement to maintain budget cuts in support of deficit reduction and increased their allotment to the military well beyond what the administration actually requested, saying that they would instead insist on cuts in other government programs. Though the bill has no chance of becoming law and seems to be little more than pre-election grandstanding in defiance of an administration that many have pledged to do anything to defeat, it also defies both history and reality. We have wound down one tragic conflict in Iraq and are in the process of extracting ourselves from another less-than-stellar effort in Aghanistan – shutting down two wars we fought at the same time. Why in the world would a nation that is ending two wars need to increase its military spending?!

Since we have ignored the words of a great WWII general and a prescient president from decades ago, I thought that it might be relevant to see how one current military expert views this situation. Retired Marine Corps Gen. James Cartwright and former Vice-Chairman of the Joint Chiefs of Staff (pictured above) provides the necessary insight, in a recent interview in the Washington Post (May 21st).

“The former Joint Chiefs of Staff vice chairman questioned the emphasis on additional manned aircraft, tanks and land vehicles, saying unmanned systems will prove more effective… He also spoke of the ‘fallacy of the two-war scenario’ and argued against an emphasis on cyberdefense rather than cyberoffense. He made his off-the-cuff remarks during a presentation [May 15th] at the annual Joint Warfighting Conference, hosted by the U.S. Naval Institute and the industry group AFCEA International (Armed Forces Communications and Electronics Association).

“Although the House is adding about $4 billion to next year’s spending, Cartwright said that ‘truth be told,’ the Pentagon had been planning $480 billion in reductions over the next 10 years. ‘It was just a question of when and how,’ he said… What concerns him is that $480 billion ‘was about a 10 percent reduction, and historically we’ve run about 20 percent reductions after these [military] conflicts. We’re about halfway there.’” The Post.

While it’s true that he believes it will be difficult to cut the budget much below this 20% level with an all-volunteer military, and retaining good soldiers in an era of deficit-cutting will be difficult, he asked some tough policy questions, challenging the notion that the military has been used as a friendly force supporting the people of the countries where military force is used and instilling local leadership with democratic ideals and the ability to control their own destiny in their own way. “He … spoke of the need to recognize that the United States has become an ‘occupying force.’… “When you go to battle by getting up in the morning in your compound, getting into your armored vehicles, go out and patrol, and return to your compound at night, that is an occupation force,’ he argued… As the country prepares to rebuild its fighting forces, he asked: ‘Are we going to build an occupation force for the last war or [build a force for] the next war we want to prepare for?’” The Post.

Global policeman, high-tech bully spending itself into deficit destruction or a balanced military ready to protect the United States from the real threats without spending ourselves out of existence? Is this really that difficult a question to answer? Particularly since the former strategy – from Vietnam through Iraq and into Afghanistan – has failed to impose the kinds of regimes in any of these nations that we really expected. Vietnam went totally communist, Iraq’s new Shiite majority has made it very clear that their sentiments are now with one of America’s greatest threats (Iran) and Afghanistan threatens to return to Taliban rule, usurping the American imposed Karzai regime, one of the most corrupt in all of history. When will common sense replace political games and raw hubris? Or will we simply be a nation that “spent so much on defense that it engendered complete economic collapse”?

I’m Peter Dekom, and history is littered with governments and dynasties – from Greece to Rome to China to the USSR – that destroyed their own systems by spending too much on their military, fomenting economic collapse.

Friday, May 25, 2012

Pound Down Syria

Before Syria began experiencing the undertow of insurgency, well before the Syrian dictatorship crushed its own people under the heavy and deadly arm of a full military attack killing an estimate 9,000 so far, it took 47 Syrian “pounds” to equal one U.S. dollar. Today, it takes 62, and the pound is going anywhere but up. If you deal in the currency markets in Lebanon, the rate is an even nastier 67 to $1. Whatever may be said about the sustainability of the government attacks against a mounting rebellion, now moving strongly into the universities of Syria’s second city, Aleppo, the underlying economy is withering under the pressures from within – as local business people panic and move their resources out of the country as best they can – and without from the international community that, with the exception of the Russian investments in that Arab nation, is pulling back and out wherever possible.
If the Assad regime were counting on the local conservative business cronies to provide additional moral and general support for their remaining in control… and not simply rely on the military for it all… there’s a very good chance that such support will find the hit to their pocketbooks intolerable. And for the ordinary citizens shopping for what stores make it through, the news is dismal. “The economy may contract 5.9 percent in 2012 after shrinking 3.4 percent in 2011. Prices of imported products have soared. In Damascus, a jar of Nescafé instant coffee that sold for 325 pounds ($6.90) a year ago is now 525 pounds. A packet of sliced French cheese that was 85 pounds now costs 150.” Bloomberg Businessweek, May 10th.
With credit card purchases measured in dollars, the cost of repaying that debt has slowly slid out of reach for many Syrians. And as much as the government is trying to create stability by subsidizing basic staples, it too is running out of currency reserves to fund such efforts indefinitely. With “terrorists” sabotaging oil pipelines (bringing oil from the Gulf to its Mediterranean ports) that generating much needed tax revenues, the major source of international currencies is literally drying up.
Foreign banks, even in the region, are loathe to deal with Syria in light of international sanctions: “Banks in neighboring Lebanon, where Syria has long wielded political influence, have halted all transactions with Syrian lenders to conform with United Nations sanctions, according to Gaith Mansour, head of capital markets for Beirut-based bank Credit Libanais. ‘Lebanon can’t afford politically to override any UN Security Council decision despite the strength of the ties between Lebanon and the Syrian regime,’ he says. EU governments stiffened sanctions on April 23, banning the export of luxury goods to Syria and adding more products to a list of banned technologies that could be imported by the regime and used to suppress dissent. The UN is sending 300 unarmed monitors to oversee the April 12 cease-fire agreement that has so far failed to stop daily attacks by government forces on urban areas.
“Tightening credit and a slowing economy are having a ‘big psychological impact on those who have been sitting on the fence like the business community, those that have been supporting the regime,’ says Salman Shaikh, director of the Brookings Doha Center. ‘Is the banking sector facing the threat of collapse? I suspect it probably is,’ he says. ‘Assad is piling all his money into this war, draining resources from other sectors like education and finance. This can’t go on forever.’” Businessweek. We read about the violence, but there is erosion in every sector of the ravaged nation that will impose pain and suffering on millions well beyond the bullets and the bombs.
            I’m Peter Dekom, and sometimes getting the full picture means digging behind the obvious headlines.

Thursday, May 24, 2012

The Ethos of the Silly Con Valley

Facebook’s offering results in another fleet of tech millionaires and even a few billionaires being added to the ever-rising assemblage of mega-wealthy scions of the Silicon Valley’s tech entrepreneurs. In Hollywood, wealth comes with mega mansions, flashy Ferraris, Bentleys and an occasional Aston Martin, tailored flashy designer clothes that just scream money, even when the underlying careers may not actually support the expense. In the sports world and in that remaining vestige of the music business that once generated a multiple of the total industry gross today, it’s bling, hot parties at expensive clubs, an entourage of hangers-on and even a bevy of body guards, and maybe even buying into a major sports team or starting your own fashion label.

But the Valley is different. Money is the measurement of success, to be earned, posted on the NYSE or the NASDAQ, but never flashed in ways that makes the rest of the world go oooh and aaaah. Still, the little flashes are a permitted indulgence, “inside” expenditures that others might not recognize: “Fabulous home theaters are tucked into the basements of plain suburban houses. Bespoke jeans that start at $1,200 can be detected only by a tiny red logo on the button. The hand-painted Italian bicycles that flash across Silicon Valley on Saturday mornings have become the new Ferrari — and only the cognoscenti could imagine that they cost more than $20,000.” New York Times, May 17th. And for heaven’s sake, if you didn’t found the company, please do not drive your Maserati to work! That old Jeep will do fine thank you.

Indeed, if your social network page is a reflection of your wealth, the Valley will ridicule and turn their back on you. Keep the garage door of your mega-million-dollar tract home closed. If you want to flash money, invest in another start-up, repeat the glory that made you rich in the first place and show that it wasn’t a fluke. And make sure to avoid expensive Italian suits and anything but the Zuckerberg-hoodie or the Jobs-black-mock/jeans equivalent signature look. You can spend a fortune on that “ordinary” look, but it better appear ordinary!

So does that mean folks are willing to work for less in the Valley? Not exactly. “Make no mistake. In this, Silicon Valley’s gilded age, money is chasing money. Lucrative salaries and stock options are dangled to recruit or hold onto engineers. The shares of established companies like Apple have soared. And Facebook itself has turned to Wall Street for a vast infusion of fresh funds… But here in one of the richest corners of the country, the tech elite display an ambivalent, sometimes contradictory approach to wealth. Money, as one scholar of the Valley described it, is treated as a measuring stick, gauging the power of the companies that entrepreneurs have built, rather than a thing to display.” NY Times.

Wanna flash? Try some hot socks… for as long as this trend continues: “In a land where the uniform — jeans, hoodies and flip-flops — is purposefully nonchalant, and where no one would be caught dead in a tie, wearing flashy socks is more than an expression of your personality. It signals that you are part of the in crowd. It’s like a secret handshake for those who have arrived, and for those who want to… ‘I have been in meetings where people look down and notice my socks, and there is this universal sign, almost like a gang sign, where they nod and pull up their pant leg a little to show off their socks,’ said Hunter Walk, 38, a director of product management at YouTube, whose favorite pair is yellow, aqua and orange striped.” NY Times, February 3rd. Solid American values. Recession? What recession?

I’m Peter Dekom, and living in this Los Angeles “Silicone Alley,” it’s interesting to note that successful local tech entrepreneurs dress like they live in the Valley, but have homes that scream they live in the Alley!

Wednesday, May 23, 2012

Eurobondage (Strapped for Cash!)

The notion of a single economy utilizing a single currency – the very premise of the Euro Zone countries in the European Union – seems like a joke in retrospect. Not only is the economic and standard of living as disparate and often at near-polar opposites within the Zone, but some countries – notably Greece – actually fabricated economic performance numbers to support its membership in the EU and the Zone.
Greece currently has no genuine path to repay its $170 billion rescue/EU bailout debt, much less that portion of institutional and national debt that still remains on the books. A new left wing government threatens to renege on that debt, and talks of “drachmageddon” are rampant – where the euro is abandoned in favor their former currency, making it almost impossible for locals to use what will be a highly inflated (valueless) drachma to service their euro-based debt and purchases. Spain and Portugal are also facing severe economic strains, Italy is not too far behind, and the notion of unity is looking further untenable. With Germany arguing as strongly as ever for individual nations to swallow the bitter austerity pill on their own, the question of what the Euro Zone is and why it even exists appears to hover over the EU like a mushroom cloud from a nuclear blast.
In the U.K., which maintains a separate currency within the EU, there was a run on banks several times in recent history, but when the Bank of England (their central lender) stepped in to guarantee the solvency of the deposits (much like our recent stepped up FDIC guarantees during the height of our crisis), the instability settled and the banks remained intact. But the European Central Bank, crafted by inflation-fearing Germans as their “contribution” to the overall Euro Zone structure, simply doesn’t have that arrow in their economic quiver of remedies. Spain’s banks, for example, are teetering, but there is little appetite in the rest of Europe to back these financial organizations. If they fall, they may well precipitate a collapse of what little remains in an economy that suffers from 25% unemployment.
In Europe, the pig-headed unwillingness for Germany to allow a blended borrowing rate for the unitary economic system they voted to create clearly threatens the future of not only the euro and the Zone, but the EU itself. The net impact of failing to at least begin to consolidate some form of overall European borrowing base – the hallmark of a single economic unit – means that the weakest members (whose credit ratings have plunged to ”junk” levels) have to borrow at staggeringly-high rates, and further imperils these countries’ existence as well as the structural stability of the EU itself.
A pan-EU bond would create a tenable borrowing rate for those who have the right to access these funds. But fears from Germany that you “don’t solve a debt crisis with more debt” and “pan-EU borrowing could seriously inflate the euro if member nations default” augur against German support. “German officials remained adamant that there was no way they would bend on collective debt...
“After a focus for months on cutting spending and budget deficits, the discussion has shifted to ways to bolster growth. Many economists and policy makers now say that the surest way to end the crisis is for European states to move toward jointly issued debt, known as euro bonds.
“The sense of crisis escalated [May 22nd], as the Organization for Economic Cooperation and Development cut its growth forecast for the euro zone and said Europe risked creating a self-sustaining cycle of decline that could have dire effects for the world economy… Depending on the country’s perspective, euro bonds are either an old and particularly persistent rash (Germany and a few others) or an increasingly popular idea for addressing the region’s economic plight (almost everyone else). Although many details would need to be worked out, the idea is to have the euro zone countries collectively issue bonds that would be guaranteed by all 17 members. But the most creditworthy countries, like Germany, would almost certainly have their borrowing costs rise, as they, in essence, would guarantee the loans of their debt-saddled neighbors.” New York Times, May 22nd. Austria, the Netherlands and Finland side with Germany.
Probably the correct path would be an issuance of euro bonds for very specific and limited purposes at first, as the EU generates more detailed rules on the use of such bonds for other purposes and the relative structures to deal with default, perhaps targeting new and needed infrastructure projects, which will in turn spur job growth that is sorely lacking in the German-mandated austerity programs that have heaped so much suffering in the most profligate member nations forced to take EU bailout money. German Chancellor Merkel leads the German stubbornness movement, but even her political future is very much in doubt.
As much as Germany thinks that most of the rest of Europe needs to swallow its austerity medicine for the foreseeable future, most of the rest of Europe thinks Germany needs to promulgate a new growth policy and take some long-term medicine in the form of slightly higher borrowing rates needed to create that unitary economic structure German helped to create. For economy-watchers worldwide, a simple look at austerity without concomitant growth (another word for “hope”) should send shudders of fear down the spines of the politicians who are hell-bent to kill government spending even if it means the massive firing of millions of workers and the removing government demand from the economic system long before consumer demand is in a position to replace it. Governments that are insensitive to these realities are falling all over the world.
            I’m Peter Dekom, and you can bet that President Obama hopes the Europeans get their priorities out of the “austerity is the only path” movement, because the probable fall of the EU if those no-growth policies continue is a general global economic downgrade, which moves the election more to Mitt Romney’s camp.  

Tuesday, May 22, 2012

Series of Earthquakes Hit European Union, Aftershocks Expected

We are watching Europe shudder and quake as dissention and rigid dogmatic purism collide in the inevitable search for a solution to Europe’s malignant debt crisis. The ripples could rise to an economic tsunami that will plunge the rest of the world back into a formal recession, deeper than the contraction that has already imposed that result on Britain. The fact remains that sooner or later spending more than you make, seemingly infinite borrowing, will spur inflation and require measures that definitely contract the average standard of living. Further, in the world of “the rich getting richer,” the overlooked after-effect is that only those who own significant assets – particularly the business assets that grow beyond mere borders – are likely to see an inflation-driven appreciation of the relative value of what they own, while the rest of the population simply pays more to live.

Germans have a particularly harsh aversion to hyper-inflation, stemming from the decimation of the Reichsmark after Germany struggled with post WWI war-reparations that provided the fertile soil in which Hitler’s Nazi party took root. For the vast majority of Germans, particularly in cities, homeownership and stocks are not their investment/retirement vehicles of choice. With state healthcare and solid pensions, their investments tend to be in cash-measured instruments like annuities, insurance policies and direct cash savings. So their focus is generally on keeping their currency stable, since most of their investments are tied directly to that value. When the underlying policies that created the European Central Bank (located in Germany, by the way) were created, German financial architects insisted on prioritizing anti-inflationary policies even at the expense of recession or worse. But that’s Germany, and Teutonic sacrifice to keep out demon inflation is increasingly not the priority of a vast number of other Europeans.

As recent elections have illustrated in France and Greece (still struggling to create a coalition government to move forward, threatening that country’s ability to remain in the Eurozone), German austerity values focused on currency stability are not particularly popular in much of Europe these days. In Spain, where austerity measures have made a bad employment situation worse (with a quarter of all workers jobless), a wave of M-15 (May 15th – the date the austerity measures were implemented in 2011) protests rocked the nation as thousands of protestors took to the streets in 80 cities across the land.

Even worse, within Spain, some regions are facing imminent collapse: “Underlining the extent to which Spain is fighting the economic crisis, the national government in Madrid warned … that it might need to take over the finances of Asturias, a northern region, because of concerns that the government there cannot meet deficit-cutting targets. Spain also announced further measures to shore up the banking sector, just days after seizing control of Bankia, the largest and most troubled mortgage lender.

“‘Taxpayers will now be paying for Bankia and all the others, while the greedy people who have been paid massive salaries to run them will just continue to enjoy themselves,’ said Juan Márquez, a 23-year-old student…Since taking office in December, Prime Minister Mariano Rajoy has announced billions of euros of additional spending cuts to lower Spain’s budget deficit to 5.3 percent of gross domestic product, from 8.5 percent last year. On Friday, however, the European Commission warned that the Spanish deficit was likely to hit 6.4 percent this year.” New York Times, May 13th.

With productivity tanking as austerity accelerates, the cherished measure of economic progress – the ratio of debt to GDP, which is hardly improving as austerity-proponents have suggested would happen – seems to illustrate rather severe reality that Europe is in worse conditions than before the austerity programs began. Proponents say that situation would have been worse had austerity not been implemented, and that medicine takes time to work.

Still, the newly-elected European leaders are seeking to prioritize growth over currency stability. They want to see government expenditures to create jobs, including retraining and education programs to prepare their youth – where unemployment is staggeringly high – for a productive future. Europe’s pocketbook – Germany has the greatest ability to support the financial requirements for any policy shift – has repeatedly signaled a refusal to relieve countries that accepted rescue packages from lifting some of the austerity measures that were conditions to such support. But are there signs that this German rigidity might be weakening?

Chancellor Angela Merkel’s conservative Christian Democrats suffered a stinging defeat in mid-term local elections, most recently in North Rhine-Westphalia, where a more-leftist Social Democrat easily defeated his Christian Democrat in parliamentary elections. “Ms. Merkel’s party has performed poorly in numerous recent state elections. [In early May], the Christian Democrats were ousted from power in Germany’s northernmost state, Schleswig-Holstein. The next federal election is scheduled for September 2013, but the recent defeats have led commentators to speculate that Ms. Merkel could be forced into an early election… Voters across Europe have expressed growing displeasure with Ms. Merkel’s path, punishing the mainstream parties in Greece that signed the country’s loan agreement with foreign creditors, which required deep spending cuts. In France’s presidential election, François Hollande defeated President Nicolas Sarkozy, Ms. Merkel’s close ally.” NY Times.

For those of us in the United States, where austerity measures have been passed but will not be significantly implemented for some time, the backlash to a crumbling standards of living and rising unemployment – necessary components to any major deficit-cutting effort – may crush American proponents of such efforts when Americans finally experience what such deficit-reduction measures really mean for them, particularly with no concomitant increase in taxes for rich or collection of the billions and billions of dollars sitting in corporate coffers overseas to avoid U.S. taxes. And without massive cuts in defense-spending and comparable increases in education, infrastructure and research allocations, the growth we need to pull ourselves out of this economic malaise will never materialize. I watch with horror as my own California, struggling with higher-than-anticipated budget deficits, looks to another round of education cuts at a time when California needs a future more than ever.

I’m Peter Dekom, and I am seeing an increasing trend among American voters to champion slogans without the slightest understanding of how their lives will be slammed when that meaningless rhetoric becomes law.

Monday, May 21, 2012


The Japanese are facing an aging population, a serious decline in childbirths with their usual “isolated island for centuries” mistrust of immigration. The Japanese very clearly had an opportunity to convert their kanji charter-driven script (with a few alphabetical concessions to modernity) into a more recognizable phonetic alphabet after WWII, but they preferred their adaptation of ancient Chinese character-pictographs to insulate them from the prying cultural eyes of foreigners. They simply did not want to be more transparent to the rest of the world, nor were they inclined to make foreigners feel welcome to become Japanese citizens.

But with a declining available workforce necessary to look after an elderly population, and with a traditional Japanese reluctance to allow “guest-workers” from other nations to supply cheap labor to effect elder-care, Japanese engineers are instead working on robots who can respond to, care and feed for the elderly. No foreigners needed. Hmmmm… I wonder what other uses such human droids could be found?

With increasing abilities to mimic a genuinely human and lifelike appearance with robotic innards, the notion of other … er…. “uses”… for robots has increasingly come under the light of social scrutiny. In countries where couples are allowed one child (like China) or where boys support the family and girls just get married off, making sure the fetus is a favored male has resulted in a disproportionate number of males over the number of females. And without enough women to go around, well, the above robotic solution has reared, you will pardon the expression, its ugly head. To see where this new direction (pronounce carefully please) , might be going, I was gently directed to this online article by the father of my brand new daughter-in-law, a miscreant dentist in Atlantic City, who thought this subject deserved to be placed at the feet of those in my blog-audience.

“In the next five years or so it will be possible to build lifelike robots. These robots will look, move, and feel like fellow humans — but, unless the technological singularity comes early, these robots won’t be excellent conversationalists. According some recent research, though, they will make fantastic prostitutes…For a start, sexbots are likely to be very expensive; Realdolls, the world-famous, lifelike silicone sex dolls … start at $6,000. Adding motors and computers — animatronics — will likely drive that cost upwards of $20,000 (though, with increasing demand and improvements in technology, that price would come down). Even so, the depressing truth is that trafficked humans are cheaper and more plentiful.

“There’s also the human element of sex. While one day it might be possible to create living, breathing, sweating, robots — skin-job cylons — they will never be truly human. These sexbots will almost certainly fall smack bang in the middle of the Uncanny Valley, and — unless you have a robot fetish — will be incredibly creepy as a result. [We] don’t want to turn this into something resembling a psychology midterm, but sexual desires (both healthy and otherwise) can be very specific. If a businessman really wants to sleep with a young Russian girl, and experience everything that goes along with that (the screams, the squirming, the illicit thrill, and so on), a sexbot just won’t cut it. The human face is capable of expressing a wide gamut of emotions — if you want to see fear, or shock, or awe in the eyes of your sexual partner, robots won’t do it for you.”, May 11th.

Hey, girls, what makes men think that they are the only ones who should have the mechanical option? And is it really infidelity when the bod is a bot? Even if the bot evolves to the level of Commander Data?! Well maybe this mechanical distraction could have some benefits, if you think about it enough: “Instead of heading down to the local red light district and engaging in dangerous coitus with a prostitute that might be infested with a veritable smorgasbord of STDs, you could book a session with a sterilized-between-tricks prostibot. If you had enough money, you could of course just buy your own sexbot, and just haul her out of the cupboard when needed.

“In one fell swoop, at least according to Ian Yeoman and Michelle Mars (the authors of recent paper called ‘Robots, men and sex tourism.’ [paywalled]), robots will cleanse the world of… well, almost every sex-related ill that plagues humanity. With robots that bend and flex and kowtow to our every desire, the sexual side of human trafficking — the billion dollar trade of moving (usually young) sex slaves around the world — will disappear. Sexual predators, instead of abducting victims, will be able to order a sexbot to spec; if they want a robot that looks like a young child, or a wrinkly geriatric, so be it.” Argh! It all sounds pretty sick, if you ask me… which probably means there will be a huge market for these… er… products. Whadyathink? Let me know where you think this is all going? Don’t ask, don’t tell?

I’m Peter Dekom, and I am feeling very old fashioned right now.

Sunday, May 20, 2012

Death, with an Explanation

On April 23rd, I wrote about California’s Proposition 7 ballot initiative, an effort by a conservative group that had fought for an expanded capital punishment law in 1978 now to repeal the state’s popular death penalty as being financially untenable, wasting literally billions of dollars since the law was enhanced. With the judicial appellate safeguards, the special housing and the actual cost of the execution, across the land the price tag for executing criminals is always a vast multiple above the cost incarcerating them for life without parole. Simply put, in these financially impaired times, particularly in deficit-slammed California, capital punishment might not be affordable anymore.

But there is, to me anyway, a more compelling reason to do away with the death penalty: every now and again we simply execute an innocent. There is no “re-opening the case” based on new evidence, whether it’s strong DNA (or whatever future scientific method may be applied) or a recanting witness or simply proving someone else was the actual perpetrator through confession. Death is final. Sure you can argue there are clear cases where people are caught on camera doing the nasty deed, and in those cases, where there is absolute certainty, the death penalty should be allowed. But as a lawyer, I also know that if “absolute certainty” were the standard instead of “beyond a reasonable doubt,” there would still be fudging in the court as prosecutors seek to add another conviction notch to their upwardly mobile careers. Innocents would still be railroaded even with a statutory standard meant to prevent that possibility.

The statistics on recent wrongful convictions in the United States send chills down my back: “As of April 2012, 289 people previously convicted of serious crimes in the United States had been exonerated by DNA testing since 1989, seventeen of whom had been sentenced to death. Almost all (99%) of the convictions proven to be false were of males, with minority groups also disproportionately represented (approximately 70%).” Wikipedia. Texas license plates should read “The Execution State,” with almost four hundred executions since 1976, almost ten times the rate in the second highest state, Georgia. And so it is pretty obvious that Texas should provide the example I would like to talk about today.

“Carlos De Luna [left above] was executed in 1989 for stabbing to death a gas station clerk in Corpus Christi six years earlier. It was a ghastly crime. The trial attracted local attention, but not from concern that a guiltless man would be punished while the killer went free… De Luna, an eighth grade dropout, maintained that he was innocent from the moment cops put him in the back seat of a patrol car until the day he died. Today, 29 years after De Luna was arrested, [Columbia University law professor James Liebman and a team of students] published a mammoth report in the Human Rights Law Review that concludes De Luna paid with his life for a crime he likely did not commit. Shoddy police work, the prosecution's failure to pursue another suspect, and a weak defense combined to send De Luna to death row, they argued.” Huffington Post, May 15th.

The report noted that De Luna’s own lawyer didn’t believe his client was innocent, thus mounting an insipid defense, and the list of key errors that could have easily swayed a jury to a different result includes:

Among the key findings in the Columbia team's report:

  • The eyewitness statements actually conflict with each other. What witnesses said about the appearance and location of the suspect suggest that they were describing more than one person.
  • Photos of a bloody footprint and blood spatter on the walls suggest the killer would have had blood on his shoes and pant legs, yet De Luna's clothes were clean.
  • Prosecutors and police ignored tips unearthed in the case files that Carlos Hernandez [right above], an older friend of De Luna, who had a reputation for wielding a blade, had killed [the victim, Wanda] Lopez. The defense failed to track down Hernandez, who bore a striking resemblance to De Luna.

‘If a new trial was somehow able to be conducted today, a jury would acquit De Luna’ said Richard Dieter, executive director of the Death Penalty Information Center, who read a draft of Liebman's report. ‘We don't have a perfect case where can agree that we have an innocent person who's been executed, but by weight of this investigation, I think we can say this is as close as a person is going to come.’” Huffington Post.

For those who say, the system is not perfect, but for the overwhelming majority of felons who meet their fate in the state lethal injection chamber (or even via Utah’s optional firing squad), they get what they deserve… well worth the very few who are executed wrongfully, I ask, “What if that wrongfully convicted person were actually you? Would you feel good that the system was working… well enough?”

I’m Peter Dekom, and it should be a very, very big deal to Americans that innocent people are executed for capital crimes they did not commit.

Saturday, May 19, 2012

Where Mold Replaces Gold

It is known to many as “Panel Bay,” that Japanese coastal region near Osaka where flat panel manufacturers grew fat building a new generation of televisions to replace the fat boxy sets of old. The Fukushima meltdown may have accelerated the process, challenging the notion of where electrical power to support Japanese industry will now come from, but competition from cheap technology manufacturers in China, Taiwan and Korea have pretty taken most of the going-forward business in routine-assembly technology manufacturing. Even on this side of the Pacific, we are relying increasingly on plants in Mexico for much of this kind of labor. Japan has long prided itself on excellence in “making things” – monzukuri – but routine quality manufacturing has slowly moved elsewhere, eroding the entire Japanese economy. That the population is both aging and contracting has only made the problem worse, since social and retirement benefits for the elderly, are generally supported by a younger vibrant workforce, a factor that is evaporating rapidly in Japan. Panel Bay is becoming a footnote in history; time is simply passing it by.

“The demise of Panel Bay is the latest sign of what many Japanese fear is the hollowing out of their heavily industrialized economy, which has been in a gradual but relentless decline since the bursting of its twin real estate and stock bubbles in the early 1990s. The decline is largely a result of growing competition from Asian rivals, an aging work force and merciless gains by the yen. ‘We already had a sense of crisis about the loss of manufacturing and manufacturing jobs,’ said Tetsuya Tanaka, a director of manufacturing promotion at the Ministry of Economy, Trade and Industry, or METI. ‘Now we are afraid the concerns about electricity could give manufacturers the excuse they need to move offshore.’

“The increased price pressures have wounded many of Japan’s corporate giants. [In early April], Sony — the Apple-like innovator of the 1980s — forecast a $6.4 billion loss amid reports it may cut 10,000 workers, a drastic step in a nation where layoffs are still seen as socially unacceptable. Even Japanese carmakers like Toyota, which last year handed back the title of world’s largest auto company to General Motors after the supply disruptions from the tsunami, fear that they are becoming vulnerable to game-changing competition in electric cars or just lower-cost producers in South Korea and elsewhere…

It is a similarly bleak story for many of the small factories that were the loyal foot soldiers of Japan’s postwar export machine. According to METI, the number of manufacturing companies in Japan dropped by a third, to 540,000, in the 10 years up to 2006. The share of manufacturing in Japan’s overall economy has also shrunk to 18 percent in 2009 from about 35 percent in the 1970s, according to the Cabinet Office… By comparison, while the United States is still the world’s largest manufacturing country, such industry accounts for just 9 percent of its overall economy.” New York Times, April 15th. In Late February, Elpida Memory, Inc. – a major supplier of DRAM computer/mobile chips (the only such maker in Japan) – filed the largest manufacturing bankruptcy in Japanese history.

So Japan is facing a similar crisis that impaled many American companies in the last decade or two: if “stuff” can be made less expensively elsewhere, where was American job growth to come from? The United States shifted its focus to information, software, content and financial services, leaving traditional military technology and agriculture as continuing industries that were not impacted by the job shift. Germany reinvented itself by shifting into the highest end of making “stuff,” creating jobs at the top end of manufacturing, where precision, complexity and reliability were essential. But can Japan change gears and implement the American or the German model? In a service economy, how does the esoteric, unwieldy Japanese language (spoken by a very small percentage of people on earth) impact that reality? And what does Japan do with that large body of trained engineers, who are not so much in demand anymore?

With massive layoffs becoming a new fact of life in Japan, engineers not old enough to receive their pensions have to scramble to survive until retirement age, a reality that has proved to be a boon to technology-hungry China: “Their technical skills helped Japan’s corporate giants sweep all before them in the 1980s, and now thousands of aging Japanese engineers are finding a new lease on life in a booming China…. Japan suffered its first technology brain drain about 20 years ago, when South Korean companies like Samsung Electronics and LG Electronics poached scores of front line semiconductor and white goods engineers from big Japanese electronics firms… Since then, South Korean electronics manufacturers have bounded into the global top ranks, helped along by that transfer of technical knowledge… Japanese technology giants, meanwhile, have floundered…

“‘People aren’t making products in Japan anymore,’ said [Masayuki Aida, a 59-year-old who made molds for a Tokyo-based company for 30 years], who [now] makes molds for products like toys, earphones and coffee machines [in Dongguan, a manufacturing hub in the Pearl River Delta in southern China]. ‘I wanted to pass on to younger generations all the knowledge and technology about molds I had obtained.’… For Japan, marred by two decades of economic stagnation, the little-reported exodus of engineers means rival Chinese firms are getting an injection of the technology and skills behind ‘made in Japan’ products… Japanese government data show that 2,800 Japanese expatriates live in Dongguan, a city of more than eight million.” New York Times, April 17th.

But Japan must change, maybe at the expensive of a continuation of bad economic news and a downward-pointing standard of living – perhaps just until the new Japan emerges. Policy planners and educators are struggling with the next direction in job growth for this tiny island nation. Its people are highly educated and have one of the strongest work ethics on earth. With large budget surpluses and currency reserves generated from decades of productivity, Japan has a reasonable cushion to moderate the blow. And its tradition of manufacturing quality would seem to be a giant arrow pointing in an obvious new direction, a strong sign that this part of the Japanese economy should not be abandoned, just upgraded. Japan needs more start-ups and a greater entrepreneurial spirit to enter a new era.

Still, the developing world may soon step into these higher reaches of manufacturing complexity, but perhaps by the time they reach that pinnacle, they will no longer have the labor cost advantage they enjoy today. Indeed, in just a few years, Chinese labor costs – corrected for productivity – may not be much different from comparable costs in either Japan or the West. Change is the only constant! We all must accept its ravages and its opportunities.

I’m Peter Dekom, keeping it real and looking at how others are grappling with change.