Wednesday, June 27, 2012

Vacation time!

Greetings loyal readers. Unshred America will be taking a brief, much needed, vacation. Not to worry... We'll be back telling you how to save the World on July 2nd.

For now, please feel free to go back and see what you may have missed.

See you next Monday...

Math Debaters

After my dad blew up a part of the chemistry lab at George Washington University way, way back… a long, long time ago, he stepped into what he thought was a safer major: statistics. But in mind mind’s eye, blowing stuff up with explosive chemicals seems to be whole lot less destructive than manipulating and messin’ with statistics, knowing that millions (or more) of people will plan their retirements, nations their budgetary spending policies and multinational organizations will rely on those numbers to accept or reject massive financial commitments based on the resulting projections. Sometimes, statistics can just kill you.

In 1957, China’s Mao Zedong began his infamous Great Leap Forward program, a national call to action enforcing massive collectivization and widely dispersed steel manufacturing (melting down everything in sight to fuel backyard smelters that produced exceptionally low-quality steel). Communist cadres in the field outdid themselves in promising humongous (and statistically-projected) yields from these collective farms. Beijing only asked for one third of the output for national needs, allowing two-thirds to remain behind to feed and care for the workers and other locals responsible for the food production.

Only one little tiny catch: seeking stature in the Communist Party, these cadres over-projected what they could deliver, and even when the farms produce abysmal yields, their statistical reports continued to overstate yields, sometimes by more than 200%. But Beijing had to receive the promised “one-third” or the cadres would have failed to meet their quotas. Trains carried the foodstuffs away to Beijing as “projected.” The result? “No one is sure exactly how many people perished as a result of the spreading hunger. By comparing the number of deaths that could be expected under normal conditions with the number that occurred during the period of the Great Leap famine, scholars have estimated that somewhere between 16.5 million and 40 million people died before the experiment came to an end in 1961, making the Great Leap famine the largest in world history.” The University of Chicago Chronicle, Vol. 15, No. 13, March 14, 1996

And how about this one in our modern era: “Greece has admitted it joined the euro in 2001 on the basis of figures that showed its budget deficit to be much lower than it really was… Eurozone states are expected to have deficits below 3% of gross domestic product but revised data show Greece has exceeded that limit since 1999.”, November 14, 2004. That is putting it mildly. Not that this was an accident, mind you; it appears that with some seriously professional help from Wall Street, Greece knowingly manipulated their national economic statistics for a very long time. The alleged culprit? “Goldman Sachs is reported to have systematically helped the Greek government mask the true facts concerning its national debt between the years 1998 and 2009. In September 2009, Goldman Sachs, among others, created a special credit default swap (CDS) index to cover of high risk of Greece's national debt.” Wikipedia. Clearly, Greece’ participation in the euro zone has been one of the major factors in the European debt crisis that threatens to reignite the global recession.

Back to the PRC in today’s world: China is clearly the second major economic power on earth, behind the United States, and while her per capita pales by comparison to the older industrial powers, the rise and fall of China’s economy has a major impact on global growth and economic resiliency. While China has downgraded its projected growth for 2012 from an initial forecast of over 9% to a little over 8% and now to 7.7%, are these really the numbers? “As the Chinese economy continues to sputter, prominent corporate executives in China and Western economists say there is evidence that local and provincial officials are falsifying economic statistics to disguise the true depth of the troubles.

“Record-setting mountains of excess coal have accumulated at the country’s biggest storage areas because power plants are burning less coal in the face of tumbling electricity demand. But local and provincial government officials have forced plant managers not to report to Beijing the full extent of the slowdown, power sector executives said… Electricity production and consumption have been considered a telltale sign of a wide variety of economic activity. They are widely viewed by foreign investors and even some Chinese officials as the gold standard for measuring what is really happening in the country’s economy, because the gathering and reporting of data in China is not considered as reliable as it is in many countries.” New York Times, June 22nd. How much of this rises to the level of criminal fraud? How much of this comes from folks not really looking at the basis for the calculations? And how much of this just falls into that human frailty we call bragging?

I’m Peter Dekom, and the most dangerous human beings in the world just might be politicians with a whole host of statistics to justify their cause.

Tuesday, June 26, 2012

Is Nuclear the New Clear?

Of all nations on earth, no one has had a worse experience with the atomic era than has Japan. As the only nation ever attacked with nuclear weapons – the World War II-ending strikes by the United States that decimated the Japanese cities of Hiroshima and Nagasaki – Japan reacted with a new constitutional prohibition: “Since the bombing of Hiroshima and Nagasaki, Japan has been a staunch upholder of antinuclear sentiments. Its postwar Constitution forbids the establishment of offensive military forces, and in 1967 it adopted the Three Non-Nuclear Principles, ruling out the production, possession, or introduction of nuclear weapons.” Wikipedia. In 1970, it ratified the Nuclear Non-Proliferation treaty.

But with regional powers like Russia, North Korea, China, India and Pakistan clearly possessed of nuclear strike capacity, Japan’s government focused on its own constitutional language – particularly the word “offensive” – and began contemplating deploying tactical (versus the bigger strategic) nuclear weapons for “defensive” purposes. “While there are currently no known plans in Japan to produce nuclear weapons, it has been argued Japan has the technology, raw materials, and the capital to produce nuclear weapons within one year if necessary, and some analysts consider it a de facto nuclear state for this reason. For this reason Japan is often said to be a ‘screwdriver's turn’ away from possessing nuclear weapons.” Wikipedia. With China rising in power and North Korea adding an extensive missile program capable of delivering a strike directly to Japan, the Japanese ambivalence over such weapons continues to shudder through the highest levels of government.

Nuclear power has not exactly fared well in Japan either. While the cost to contain the effects of the 1986 meltdown at the Ukrainian nuclear plant at Chernobyl and massive relocation of hundreds of thousands of regional residents certainly was one of the major contributors to the economic pressures that brought down the Soviet Union, it was only one of two such “level 7” catastrophes. The other, in March of 2011, was the earthquake/tsunami-generated meltdown at the Fukushima-Daiichi nuclear power plant in coastal northeastern Japan. And while the ultimate release of nuclear contaminants from Fukushima did not reach the level of Chernobyl, the relative impact on the Japanese economy was certainly comparable.

Unlike Russia, which continues to generate nuclear power to this day, Japan reacted by shutting down its fifty nuclear reactors which had supplied 30% of the nation’s electrical power, mandating off-setting power cuts for everything to the garish neon signs in Tokyo to power allocations to larger manufacturing facilities as the nation scrambled to find replacement power: “The government asked major companies to reduce power consumption by 15%, and some shifted their weekends to weekdays to even out power demand.” Wikipedia. Fossil fuels – mostly liquefied natural gas and coal – surged in importance, but blackouts and brownouts have become commonplace, playing hob with an economy already in serious jeopardy.

The government is running out of options: “In a rare personal appeal on national television, Prime Minister Yoshihiko Noda asked for his nation’s support on [June 8th] in restarting the first of Japan’s idled nuclear plants, saying that keeping the plants offline could cause blackouts and economic chaos at a time when the country’s struggling economy can least afford it…

“He also cited national security, saying Japan needed nuclear power to avoid relying too heavily on oil and natural gas from the politically volatile Middle East. ‘Cheap and reliable electricity are essential for supporting prosperous and decent livelihoods,’ Mr. Noda said. ‘Japanese society cannot function if we stop or try to do without nuclear power generation.’” New York Times, June 8th.

Critics say that the previous Prime Minister Naoto Kan simply overreacted to the disaster, effectively generating a policy that threatened to drop Japan’s economy even further into the abyss. But even some of those who favor returning power generation to nuclear facilities are wary, suggesting that the plants only be fired up for the high-use summer season and then returned to idle. Many other Japanese citizens, terrified of their nation’s tumultuous history with things nuclear, raged in protest over the possibility of the return to nuclear power. Noda responded with a pledge of new levels of regulatory policies, stricter enforcement and inspection as well as mandatory upgrades to any reactor put back on line.

Germany also promised to be free of nuclear reactors within eleven years following the Fukushima disaster, and indeed, that country has reduced its nuclear power dependence from about 22% of the total required power to 17% by the end of last year. Still, experts insist that it is very likely that if Germany adheres to this pledge, it will not be able to meet the country’s power requirements through “clean tech” alternatives and will unable to meet environmental standards as it will be forced to return to burning fossil fuel to replace lost nuclear capacity. The United States has not materially altered its nuclear power policies by reason of the Fukushima disaster, although it has stepped up inspections and compliance requirements.

In the end, we have reached a crossroads in the conflict from a world thirsty for more electrical power among the impact of greenhouse gasses from power generation from burning dwindling supplies of fossil fuels, the inability to generate sufficient “green” power through environmentally-friendly sources (not to mention the side effect of causing earthquakes when geothermal power is tapped) and the obvious risks inherent in the use of nuclear reactors, particularly in active fault zones. But in the end, it does seem as if the momentary pause in accelerating nuclear power reactors to meet these nears may soon be over. Let us hope that at least we drastically improve the safety and dependability of this less-than-perfect solution.

I’m Peter Dekom, and at a time when the world needs growth to get us all past this economic meltdown, let’s hope that we don’t experience another kind of meltdown instead.

Monday, June 25, 2012

Invested Interests

For a Wall Streeter or a corporate executive – and those folks who receive tips from them – when it comes to information on public stocks that impacts their value that is not available to the public, buying and selling those shares (including puts, calls, options, warrants, etc.) is flatly illegal. The “insider trader” is liable for big fine, an obligation to return the resultant profits and, to make this ever-so-much-more-interesting, it is a felony with substantial time in a federal penitentiary as a potential parting gift (thank you, Martha Stewart!). This statutory restriction has been with us for a pretty long time, and it is one of the few playing field levelers that widely investigated and enforced by the feds.

Yet despite years of trying to get a statute on the books that would prevent such anomalies, there was one class of Americans that had, until very recently, absolutely no restrictions on its ability to trade based on one more category of inside information including pending legislation and Congressional investigations, etc. – Congress itself. Finally, earlier this year, an embarrassed Congress passed the Stock (“Stop Trading on Congressional Knowledge”) Act that now prevents lawmakers and all senior federal workers from making financial trades based on information they have obtained from their oversight work.

The Washington Post (June 24th) did a post-mortem on how Congressmen and women fared with this inside information during the financial meltdown. It isn’t a very pretty picture, but the startling days of the fall and winter of 2008 are where this most recent self-serving orgy was most evident. “In January 2008, President George W. Bush was scrambling to bolster the American economy. The subprime mortgage industry was collapsing, and the Dow Jones industrial average had lost more than 2,000 points in less than three months.

“House Minority Leader John A. Boehner became the Bush administration’s point person on Capitol Hill to negotiate a $150 billion stimulus package... In the days that followed, Treasury Secretary Henry M. Paulson Jr. made frequent phone calls and visits to Boehner. Neither Paulson nor Boehner would publicly discuss the progress of their negotiations to shore up the nation’s financial portfolio… On Jan. 23, Boehner (R-Ohio) met Paulson for breakfast. Boehner would later report the rearrangement of a portion of his own financial portfolio made on that same day. He sold between $50,000 and $100,000 from a more aggressive mutual fund and moved money into a safer investment… The next day, the White House unveiled the stimulus package.

“Boehner is one of 34 members of Congress who took steps to recast their financial portfolios during the financial crisis after phone calls or meetings with Paulson; his successor, Timothy F. Geithner; or Federal Reserve Chairman Ben S. Bernanke, according to a Washington Post examination of appointment calendars and congressional disclosure forms… The lawmakers, many of whom held leadership positions and committee chairmanships in the House and Senate, changed portions of their portfolios a total of 166 times within two business days of speaking or meeting with the administration officials. The party affiliation of the lawmakers was about evenly divided between Democrats and Republicans, 19 to 15.” The Post.

Sen. John F. Kerry (D-Mass.), who married Teresa Heinz of the ketchup fortune, had the highest value of overlapped trades — between $42 million and $86 million — in companies registered to lobby before him. Kerry said he does not have any conflicts, because he has no control over the assets in his and his wife’s family trusts.” The Post, June 23rd. “A ‘60 Minutes’ report last year singled out [Democratic House leader, Nancy] Pelosi, as well as several other lawmakers, suggesting she and her husband profited from an initial public offering from Visa at the same time Congress was weighing imposing new regulations on the credit card industry… Pelosi defended herself immediately following the report, touting her record of being tough on that industry. And a Pelosi aide defended the transaction …, saying there was no preferential treatment, and that the IPO was among the largest in history, with the Pelosis purchasing just a portion of their holdings at the initial price.” The Hill, February 7th.

The aggregated numbers from the Post’s analysis (reported on June 23rd) are staggering: “One-hundred-thirty members of Congress or their families have traded stocks collectively worth hundreds of millions of dollars in companies lobbying on bills that came before their committees, a practice that is permitted under current ethics rules… The lawmakers bought and sold a total of between $85 million and $218 million in 323 companies registered to lobby on legislation that appeared before them, according to an examination of all 45,000 individual congressional stock transactions contained in computerized financial disclosure data from 2007 to 2010.”

Interesting history lesson, Peter, but so what? How does this make any difference now that the Stock Act has passed? The abstract lesson is that no matter how obvious it might be for those in charge – be they corporate, financial or government mavens – to act in society’s best interest and avoid at least “looking bad” in the eyes of the public, unless there are strict and accountable laws and regulations in place to curb such “bad behavior,” they just don’t. The notion that we don’t want or need regulations to govern business, that there are too many burdens on business in this country and businesses will do what’s right anyway, fails to acknowledge human nature and does not differentiate between cumbersome obligations – usually bureaucratic permits and red tape for routinely obvious operations – and elements where society itself is harmed by conflicts of interest, inside and unfair trading and dangers that threaten our very lives (like environmental rules).

I’m Peter Dekom, and that which you do not regulate properly can denigrate your life or even kill you.

Sunday, June 24, 2012

Sunni vs. Shiite

Shiites: Believe that the Qur’an is a mystical book which can only be interpreted by the highest levels of religious leaders. Majority or largest single religious population in nations like Iran, Iraq, Bahrain and Lebanon, but only represent 15% of all Muslims. Leadership in Syria is Shiite affiliated (Alawite), but population is majority Sunni. Leadership in Shiite Bahrain is a Sunni monarchy. The most powerful Shiite nation is clearly Iran, and it actively funds and supports Hezbollah, an organization labels as “terrorist” by the U.S. but which is the party in power in Lebanon.

Sunnis: Believe that the Qur’an should be read literally, preferably in the original Arabic, by all practicing Muslims. Represents 85% of all Muslims and includes radical factions like al Qaeda, the Taliban, Hamas and the Muslim Brotherhood. Middle Eastern Sunni powerhouse is a very conservative Saudi Arabia, but many “temporary workers” in oil fields are Shiites.

Bottom line: Throughout history (after the death of the Prophet Mohammed in 632 A.D.), Sunnis have persecuted what they consider to be Shiite apostates. Leadership of the Shiite movement was concentrated into the hands of a single Pope-like Imam, with the sect falling into disarray when the 12th Imam simply disappeared in the 10th century until the founding of the Iranian Islamic Republic in 1979, seeming to fill that void beginning with the Ayatollah Khomeini.

These two major factions distrust (hate?) each other with varying intensity across the Islamic world, with Iran trying to bolster its power by appeasing some cash-strapped militant Sunni factions, and Sunni Saudi Arabia trying to contain the spread of Shiite power at every turn. The struggles between these two branches of Islam have pitted Saudi Arabia against Iran through their proxies in various regional conflicts. And while Syria would seem to be a nation where Saudis would be loath to topple a de facto monarch, the fact that the Assad regime is effectively Shiite tilts Saudi sensibilities in the other direction.

When the Arab Spring sent Bahraini Shiites into the streets to protest against their Sunni royals, Saudi Arabia sent military assistance against the insurgency to that small nation in support of its fellow monarchs. “Thousands of [mostly Shiite] Bahrainis rose up 16 months ago, demanding political liberties, social equality and an end to corruption. But the Sunni monarchy, seen by the United States and Saudi Arabia as a strategic ally and as a bulwark against Iran, was never left to face the rage on its own… [Now the anger is turning towards the United States, which maintains a naval base in Bahrain, as protestors recently attempted to demonstrate by that installation.] The march on the American naval base, the headquarters of the Fifth Fleet, never reached its destination. When the protesters got to the road leading to the base, riot officers surrounded them and fired tear gas… It was one of several protests [in May] that focused on Bahrain’s decades-old alliance with the United States, which includes close military cooperation and a free-trade agreement. Days earlier, the Obama administration announced the resumption of arms sales after a seven-month suspension.” New York Times, June 23rd.

Strangely, our own policies have actually led to a strengthening of Shiite power in the region (that old inadvertent consequences thang). When the Iraqi government of Saddam Hussein – an avowed Sunni – was extinguished by the U.S. invasion in 2003, the power passed to the majority in that country, Shiites. When the United States pulled its combat units out of that country, the Shiite leadership promptly invited radical Shiite Moktada al-Sadr and his militia to come back to Iraq (leaving Iran where they were sheltered) and join in the government, issued an arrest warrant for the highest-ranking Sunni in the land as a terrorist (a vice president of the country) and proceeded to cozy up to Iran as a natural regional Shiite ally. Today, Sunnis routinely blast bombs in Shiite areas, trying to shed their apparent impotency with such terrorist efforts.

With the “Crown Prince” baton recently passed to the Saudi Prince Salman (after the death of his brother, Prince Nayef), it was no accident that the new heir apparent was also the Minister of Defense. That the Saudi monarchy has a duel battle in its daily existence is no secret: (i) the desire keep the monarchy (and hence sympathy for similar regional monarchies) in power within a stable Saudi government and (ii) to contain Iran and its Shiite satellites, particularly in Syria, Iraq and Lebanon, where Iranian money and aid have been focused. Instability in Saudi Arabia would probably create the biggest possible spike in the price of oil, and the world can barely envision another such slam to the global economy. While social change in Saudi Arabia moves at the speed of a lethargic snail stuck in molasses, the royals have stepped their contribution to the social well-being of their citizens with a $130 billion pledge to improve life for their people.

Why the history lesson? To understand why Iran is making such a strong stand against Western pressures and tolerating the increasingly devastating economic sanctions that are truly crushing the local economy: Iran is trying to become the poster-child for Muslim resistance against the West, a desire to become the rallying point for radical Islamists everywhere, regardless of their affiliation. They desperately want to become the voice and power of Islam, supplanting any other faction, Sunni or Shiite. They are making this effort despite the fact that their interpretation of the faith has been despised by Sunnis for centuries. Just think how much more credibility they would have in that rallying effort against the West if they controlled a nuclear arsenal (or if other Muslims believed that they did). Iran needs a lot of “fuel” to counter the skepticism of the vast majority of Islam, the Sunnis, and to cripple the efforts of the Saudis and their ilk at containing them.

Additionally, Iran’s leadership, which does not enjoy the level of popular support they claim, requires a strong outside set of enemies, personified by Israel and the United States, to justify their power and rally what popular support they can. An attack by Israel or the United States would go a long way to retrench this theocratic government in the eyes of a very wary and unhappy electorate.

Meanwhile, Russia – even as it distances itself from anything that would smack of a friendly gesture towards anything the U.S. might want (especially in deposing a rogue regime in Syria) – has begun to see the extreme dangers in a direct conflict between the United States (and what the world believes is our proxy, Israel) and Iran over the latter’s nuclear enrichment program, one that creates weapons-grade nuclear fuel purportedly for peaceful electrical power generation. A conflict here would slam the global economy really hard as well. So even Russia has stepped into the fray to convince the Iranians that (i) it will make sure their power reactors have enough fuel and (ii) that Iran should really consider taking down its enrichment program for the stability of the entire region. But today, Iran seems only to have its eyes on the prize of “Islamic spokesman” no matter the cost to its daily existence.

Russia launched a desperate bid [on June 19th] to save nuclear talks between six world powers and Iran from collapse and lessen the chances of a Middle East conflict that could draw in the United States… Failure to reach an agreement that limits Iran's nuclear activities would increase the chances that Israel – already skeptical of diplomatic efforts to prevent Iran from building a nuclear weapon – could launch an attack, a scenario that potentially could pull in the U.S. and spread chaos throughout the Middle East…

“Expectations were restrained after [a June 18th] meeting ended on a downbeat note, with diplomats saying Iran had toughened its conditions in exchange for considering six-power demands that it stop enriching from low levels to higher purities closer to the consistency needed to arm nuclear missiles… [D]espite pleas from the presidents of the U.S. and Russia for Iran to agree to curb nuclear activities[,] Iran says sanctions crippling its oil industry must be lifted before it does anything.” Huffington Post, June 19th. The talks failed, and there are no signs of any future such negotiations anywhere on the horizon. Shiite vs. Sunnis, Chapter 3, approaches.

I’m Peter Dekom, and I wonder if a long fuse to an inevitable conflict has just been lit or if some semblance of calm has a chance to simmer as well.

Saturday, June 23, 2012

A Military Tradition Continues

As soon as the Egyptian Supreme Court held that about a third of those who were elected to parliament failure to fall within constitutional mandates, effectively dissolving that legislative body, the Egyptian military stepped in to block access to the Parliament and insure that the court’s mandate was literally followed. “[T]he Mubarak-appointed judges charged with overseeing the vote held news conferences leveling accusations at the Muslim Brotherhood that seemed intended to scare away voters. First, the judges suggested the Brotherhood had infiltrated an official printing facility to produce pre-marked ballots favoring their candidate. But state news media later reported that none appeared to have been used.

“Then the judges also suggested that the police had found evidence that the Brotherhood was planning violence. Hatem Bagato, the general secretary of the election commission, said three operatives had been arrested outside a polling station with a laptop computer containing photographs of ‘military training in other countries.’” New York Times, June 17th. On the eve of presidential elections, the military also invoked a new interim constitution giving them authority that eclipsed that of the new president. The move seems to have shifted the election away from a former Mubarak minister (whom the court permitted to run), pushing the vote towards the conservative and Islamist-leaning Muslim Brotherhood candidate, Mohamed Morsi (above), an American-educated engineer (he received a PhD from USC in 1982), who seems to have won. Ah, but the military seems to have delayed posting the results… Gee, nothing suspicious in that, huh? Troop movements suggest that the army is preparing for something, or perhaps they are just hoping the people are ready for “stability” and tired of protesting.

The Brotherhood and the military are clearly on opposite side of the ledger: “After meeting with Gen. Sami Hafez Enan of the military council, the Brotherhood-affiliated speaker of the Parliament, Saad el-Katatni, declared that the military had no authority to dissolve the Parliament or write a constitution. He said a separate 100-member panel picked by the Parliament would begin meeting within hours to write up its own constitution, raising the prospect of competing assemblies… Brotherhood supporters called the apparent victory by their candidate, Mohamed Morsi, a rebuke to the military’s power grab. ‘Down, down with military rule!’ a crowd at Mr. Morsi’s campaign headquarters chanted as he prepared to give a victory speech shortly after 4 a.m. [June 18th].” NY Times, June 17th.

Another military government in Egypt? A full coup soon? Didn’t that die with the demise of Hosni Mubarak or was he simply abandoned by the generals because he was no longer able to rule effectively? Increasingly, it appears as if the military simply sat on the sidelines in a wait-and-see mode to understand how much public “democracy” would be tolerable. But a secular army, unhappy with this fundamentalist Islamist trend, seems to have made a decisive step to eviscerate the public voice. So what’s new? After a short, post-WWII British-supported monarchy fell in the early 1950s, the military has ruled, directly or indirectly, ever since.

On 18 June 1953, the Egyptian Republic was declared, with General Muhammad Naguib as the first President of the Republic. Naguib was forced to resign in 1954 by Gamal Abdel Nasser – the real architect of the 1952 movement – and was later put under house arrest. Nasser assumed power as President in June, 1956.” Wikipedia. Nasser had worked his way up from a Second Lieutenant in Egyptian Army until he reached the highest ranks of the military. His reign in Egypt ended in 1970 when Nasser died of a heart attack. A fellow military officer, Anwar Sadat, who had served with Nasser during the latter’s long military career, assumed power until his assassination in 1981. Yet another military officer, Hosni Mubarak, succeeded him until the Arab Spring (or was it simply an abandonment by his fellow military, seeking to buy calm by his ouster?) deposed him, theoretically to be replaced by a democratically-elected regime.

So the military is back, right where they have been since 1953. “The generals have not spoken publicly or explained their actions, which have been announced without fanfare in the official news media. A rushed decision issued [June 14th] by a Mubarak-appointed court had initially provided at least a legal veneer for the dissolution of the Parliament, but the swift consolidation of power has quickly taken the feel of a counterrevolution in the making… The military’s charter ‘really does complete the coup in many obvious ways,’ said Nathan Brown, an Egypt expert at George Washington University, in an e-mail message. It brings back martial law and protects the military from any public, presidential or parliamentary scrutiny. And it perpetuates the generals’ dominance of the political system.” NY times. Will there be new riots? Additional repression? Will the military finally accept civilian rule? Whatever happens, stability seems to have left the building.

I’m Peter Dekom, and one should never underestimate the vicious power of vested interests, from the military to the power elite, in any country.

Friday, June 22, 2012

Tip of the Iceberg

And we’re not talking lettuce, unless you mean the kind you can spend. 8.2% unemployment sounds nasty but not like those 25% numbers in Spain or the 21.9% in Greece. Even at 14.8%, the so called “alternative measurement” propounded by the Bureau of Labor Statistics (U.S. Dept of Labor) which adds in those wanting full time work but stopping the search in frustration or those only able to get part time jobs, the number suggest that 85.2% of Americans are properly and fully employed. Not exactly.

No matter what you call the extended economic malaise that has coated our economy since 2008, it doesn’t take much of an onion peel removal to see how deep the lingering pain. Too many of us are working at below our skill-sets or for wages that make us wince. “Recessionists” claim late 2007 was the official beginning, and that the actual recession ended in 2009 when the U.S. economy experienced technical growth, which seems to have benefited only a limited few in hot cities or in certain sectors like finance. With a rapidly contracting middle class, the majority of American workers are either terrified about their employment future or experiencing a significant downgrade in actual earnings and available benefits. Europe’s “economic malpractice” only makes us shudder more at the potential devastation that could be just around the corner.

Looking at those Americans with jobs, and eschewing the 1%-ters, the picture isn’t very hopeful. “These are anxious days for American workers. Many… are underemployed. Others find pay that is simply not keeping up with their expenses: adjusted for inflation, the median hourly wage was lower in 2011 than it was a decade earlier, according to data from a forthcoming book by the Economic Policy Institute, ‘The State of Working America, 12th Edition.’ Good benefits are harder to come by, and people are staying longer in jobs that they want to leave, afraid that they will not be able to find something better. Only 2.1 million people quit their jobs in March, down from the 2.9 million people who quit in December 2007, the first month of the recession.

“‘Unfortunately, the wage problems brought on by the recession pile on top of a three-decade stagnation of wages for low- and middle-wage workers,’ said Lawrence Mishel, the president of the Economic Policy Institute, a research group in Washington that studies the labor market. ‘In the aftermath of the financial crisis, there has been persistent high unemployment as households reduced debt and scaled back purchases. The consequence for wages has been substantially slower growth across the board, including white-collar and college-educated workers.’” New York Times, June 18th.

For younger and less-skilled workers, the news can be devastating, and even in the professions, entry-level jobs can be hard to come by. Take for example my area, the law. Bar Association Journal (June 19th), for example, looked at the plight of recent law school graduates: “[A]ccording to an analysis of new ABA data by Law School Transparency, 55.2 percent of grads had full-time, long-term legal jobs, while 26.2 percent were underemployed. Law School Transparency defines underemployed as unemployed and seeking work, pursuing an additional advanced degree, in a nonprofessional job, or employed in a short-term or part-time job.” It is factors like these that continue to devastate consumer confidence, and a scared public just doesn’t spend enough to accelerate us into any sort of real recovery. The crumbling euro zone has eaten heavily into American industries that export into that market.

With continuing pressures to reduce spending at a governmental level – still the major source of market demand in the United States – without a concomitant increase in private sector demand (unlikely as long as consumer confidence and buying power remain low)… these suggest that the austerity promises that are popular in election year rhetoric from both sides of the aisle could actually plunge this nation into something worse than we have seen to date. Countries like China, even with their massive cash reserves, have moved to bolster internal demand from its own citizens to steady their economic ship. We have to balance an untenable budget and control an absurd deficit, especially given our proclivity to self-destruct with an addiction to military spending that still has the United States responsible for north of 40% of the earth’s military budget, with the need to provide some demand stimulus in our tortured economy to keep from sinking any lower.

Indeed, for most Americans, the feeling of well-being has simply vaporized, perhaps never to return. “[H]ousehold wealth is dropping. The Federal Reserve [in mid-June] that the economic crisis left the median American family in 2010 with no more wealth than in the early 1990s, wiping away two decades of gains. With stocks too risky for many small investors and savings accounts paying little interest, building up a nest egg is a challenge even for those who can afford to sock away some of their money.” NY Times. For policy-makers, the answers lie in funding activities that provide the backbone for long-term growth into high-value-added sectors and not to waste money on elements that look and smell like pork or fuel our involvement in expensive military expeditions with blowback and unintended negative consequences.

According to the BBC, China spends 9% of its GDP on infrastructure building and repair, India 7% and the U.S. 2%. Approximately 700+ of this nation’s bridges are near collapse (as their permitted weight limits are constantly reduced), most of our levees are in dangerous condition and we have potholes and failed roads that slow our nation’s traffic and increase our slorping of costly gasoline and diesel fuel. Our schools are falling in quality and producing only a fraction of the value-added engineers, scientists and mathematicians we need. Our trimmed research budgets leave future innovation to other countries with the willingness to invest in their future competitiveness. These arenas are each investment opportunities – government spending that actually pays hard cash dividends in new industries and more efficient work flow across the country. They should be our new priorities. But instead, they appear to be sacrificial lambs in a downward spiral that a polarized political machine seems powerless to stop.

I’m Peter Dekom, and the lack-of-common-sense leadership is rising in the United States as the number of “I’ll do whatever the latest polls tell me I should do” politicians is swelling.

Thursday, June 21, 2012

The Extreme Court

As a lawyer, I have always had this exceptionally positive sentiment for what was once an independent judiciary, guided by a very old and wise document, amended seldom, called the Constitution of the United States. I’ve watched justices, appointed by the left or the right, rise to the occasion, put their individual political preferences behind and make tough decisions that make those Presidents who appointed them cringe. When that has happened, the vast majority of Americans who were aware of the decision took some pride and satisfaction that their judiciary was indeed independent, federal judges appointed for life after Senate confirmation, not swayed by their political affiliation. Democrat Roosevelt pushed hard from the left and got blown out of the saddle as he tried to “stack the court,” and Republican Eisenhower found his appointees profoundly involved in social activism and protecting minority rights. The era of judicial independence seems to have died.

Today, there are stacks and piles of waiting federal judicial nominees who simply cannot get into the Senatorial approval process to vet their qualifications. Where judges do appear before the Senate committee charged with review, the questions are less about integrity, experience and excellence than they are about political affiliation and their willingness to support the questioning legislator’s particular view on a politically controversial issue. You can always tell Congressional naiveté when they bellow for “strict construction” of a document drafted hundreds of years ago, where such “construction” would most certainly disallow the creation of our Air Force or the copyright of any digital creation. It seems obvious that the demand today is not for an independent judiciary but for ideologues, left or right, who follow the party line even if it flies in the face of the common sense that our forefathers imbued into the Constitution.

This belief that our federal judicial system in general and our U.S. Supreme Court specifically are nothing more than the political mouthpieces of the party in power when they were appointed is both an anathema to our democratic system as well as a source of general disaffection in the American electorate. Americans no longer believe that the federal judicial system, particularly the highest court in the land, is/are independent: “Just 44 percent of Americans approve of the job the Supreme Court is doing and three-quarters say the justices’ decisions are sometimes influenced by their personal or political views, according to a poll conducted by The New York Times and CBS News.

Those findings are a fresh indication that the court’s standing with the public has slipped significantly in the past quarter-century, according to surveys conducted by several polling organizations. Approval was as high as 66 percent in the late 1980s, and by 2000 approached 50 percent.

“The decline in the court’s standing may stem in part from Americans’ growing distrust in recent years of major institutions in general and the government in particular. But it also could reflect a sense that the court is more political, after the ideologically divided 5-to-4 decisions in Bush v. Gore, which determined the 2000 presidential election, and Citizens United, the 2010 decision allowing unlimited campaign spending by corporations and unions.” New York Times, June 7th.

When these decisions favoring a political ideology or underlying religious tenet are issued, about half the people in the country are thrilled for the moment – the Court decided according to their vote – but in the end, even these “victors” sense that the system has lost its independence (hence the abysmal poll numbers, which embrace right and left). We have watched our nation fracture into polar opposite views, our Congress unable to function because of a lack of a willingness to compromise based on these polar perspectives and now, we have lost confidence in that ultimate American “check and balance” – that third branch of government sworn to look after the nations ultimate values – our judicial system. Exactly how many signs of dysfunction at the highest levels of government do we need until we understand that our great nation is unraveling?

I’m Peter Dekom, and no matter how much either side may revel in a politically-motivated judicial decision, the price for this noxious trend is the ultimate collapse of a country we should all hold in vastly higher esteem than we seem willing to do today.

Wednesday, June 20, 2012

Grading Papers, Jobs and a Passionate Heart

What exactly makes a great essay? And if the nuance and detail, the commitment to thought and the ability to express oneself well are particularly important criteria, the essence of excellence, who are the evaluators, the “graders,” with a sufficiently objective eye to do the job right? With applications to post-secondary education riding in significant part on writing skills, from the SAT essay section to the individualized efforts required by most institutions of higher learning, it is obviously important that applicants know that they are treated equally, free from bias and the foibles of subjectivity that logic would dictate are inherent in those engaged in such evaluations, however professional they might be.

On the other hand, there is an innate revulsion of an automaton grading such essays, a fear that the shades of excellence would be lost in a mechanical heart, a computer analysis of the results. To date, the primary use of computer analytics in evaluating student applications has been relegated to finding technical mistakes and in identifying those who submit work, which they purchase online or from other self-anointed essay mills with deep catalogs or past success, through computer scans and comparisons with the vast pool of essays on file. But what about evaluating those writings that are not plagiarized? How do we manage that flood? In a world of too many students, too many applicants, too many competitors and not enough teachers, professors or graders – and an economic impairment making increases in efficiency mandatory – there appears to be another way.

OK, as I present this alternative, I have to admit to my own squeamishness at the process. Although my writings today themselves aren’t really fodder for such analyses and since I am not entering into a money-award-motivating writing competition, this discomfort probably stems from my time in undergraduate and graduate studies, as well as my applications to esteemed institutions of higher learning. I wanted sufficiently to impress those charged with my evaluation to move forward in life, to achieve my goals and succumb to the pressures of peers and, ok I admit it, my parents. I am thinking back and asking, “what if…?” And since rising to the level of being asked to make such evaluations myself as a professor, am I marginalized by this new process?

Here’s the premise: complex algorithms have been developed to analyze not just sentence structure, grammar and punctuation, but substantive text as well. Not only can these computer analytics address technical excellence, the creators claim, but they are equally capable of addressing the underlying message and research as well. The June 9th New York Times summarizes this seminal experiment: “This spring, the William and Flora Hewlett Foundation sponsored a competition to see how well algorithms submitted by professional data scientists and amateur statistics wizards could predict the scores assigned by human graders. The winners were announced [in May] — and the predictive algorithms were eerily accurate.

The competition was hosted by Kaggle, a Web site that runs predictive-modeling contests for client organizations — thus giving them the benefit of a global crowd of data scientists working on their behalf. The site says it ‘has never failed to outperform a pre-existing accuracy benchmark, and to do so resoundingly.’

“Kaggle’s tagline is ‘We’re making data science a sport.’ Some of its clients offer sizable prizes in exchange for the intellectual property used in the winning models. For example, the Heritage Health Prize (‘Identify patients who will be admitted to a hospital within the next year, using historical claims data’) will bestow $3 million on the team that develops the best algorithm… The essay-scoring competition that just concluded offered a mere $60,000 as a first prize, but it drew 159 teams. At the same time, the Hewlett Foundation sponsored a study of automated essay-scoring engines now offered by commercial vendors. The researchers found that these produced scores effectively identical to those of human graders.

“Barbara Chow, education program director at the Hewlett Foundation, says: ‘We had heard the claim that the machine algorithms are as good as human graders, but we wanted to create a neutral and fair platform to assess the various claims of the vendors. It turns out the claims are not hype.’ … If the thought of an algorithm replacing a human causes queasiness, consider this: In states’ standardized tests, each essay is typically scored by two human graders; machine scoring replaces only one of the two. And humans are not necessarily ideal graders: they provide an average of only three minutes of attention per essay, Ms. Chow says.”

And what about introducing these processes into daily classroom work within the schools themselves? So far, the computers are just looking at the simple stuff: “Teachers would still judge the content of the essays. That’s crucial, because it’s been shown that students can game software by feeding in essays filled with factual nonsense that a human would notice instantly but software could not.” NY Times. At least not yet.

With the cost-per-student-per-year for classroom essay evaluation through computer algorithms expected to drop from the current $10-$20, the possibility of replacing (firing?) human graders looms large. But perhaps what bothers me more from within is the temptation (the excuse?) to use such systems to help manage larger classrooms, further depersonalizing the educational experience. And if my own academic experiences are any measure, I wouldn’t be here today without a rather wonderful and oft-repeated one-on-one time with some of the finest minds in the land, frequently initiated by the essays I submitted. I’m wondering, what’s your feeling about this process and what boundaries, if any, you believe should be placed around it. Or is the reality simply going to expand anyway in a world of budget deficits and limited resources?

I’m Peter Dekom, and if you haven’t figured it out by now, my most fundamental belief is that a nation without a solid educational system for its young has absolutely no future in a modern world.

Tuesday, June 19, 2012

Im-Migration Headaches

“Give me your tired, your poor, your huddled masses yearning to breathe free.”

Inscription on the Statue of Liberty

Not really… we don’t want ‘em. Go back where you came from. Do not darken our door. Oh, and our unemployment statistics makes us wonder why you picked us anyway? For a nation founded by immigration, one whose very greatness depended on the polyglot that resulted from immigrants coming here to work and grow a new life, our immigration policies are truly out of step with America’s best interests. We are desperately in need of functioning engineers, high level mathematicians and cutting-edge scientists, but we make their getting into this country so difficult that many no longer try. And if the barrier for their entry into the United States is lowered, restrictions on their immediate family joining them are often untenable.

Even for people who have traveled to the United States to attend college, remaining here after graduation can often be prohibitive. So many of these are from emerging countries that all they do is return to their native lands with the expertise to compete against us. Our colleges and universities need their tuition in an era of budget cuts, so we encourage them to come to learn but make it clear their new-found, U.S.-based expertise is not welcome to stay. The United States does not become a lesser economy because trained people are invited to build their lives here.

Almost one in five small businesses is owned by an immigrant, and small business is where most our future job growth is coming from… and where little software companies become Google. “Meanwhile, the United States only accepts 140,000 permanent immigrants a year based on Citizenship and Immigration Services' employment-based standards. A recent report by The Partnership for a New American Economy found that immigrants or their children founded more than 40 percent of the 2010 Fortune 500 companies. Further, these U.S. companies employ more than 10 million people worldwide and have combined revenues of $4.2 trillion. And these are the very people we are turning our backs to.”, March 23rd. They return to their emerging economies while like it or not, the United States is on track to be one of the world’s most visible submerging economies.

On the other side of the economic spectrum are the jobs we really cannot find American labor willing to perform – for example, stoop labor on our farms, housekeepers in our homes and if we ever reignite construction, the lowest, back-breaking labor in that sector. The notion of legal temporary schemes haven’t fared well, and the illegal “coyote” trade is alive and well… except since this economy has tanked, the number of folks coming over our southern border has dwindled significantly.

Despite these obvious needs, America has pretty much succumbed to the slogan callers, people who seem to believe that the above categories of people are sucking the job-blood out of the American labor force. We seem very expert at shooting ourselves in the foot to enhance our ability to walk! With an election looming, and a very critical Hispanic vote literally sitting at a balancing point between Republican and Democratic office-seekers, the Obama administration has seized on an emotional soft-spot that could just tilt the November election slightly in his favor: the children of illegal immigrants who literally have lived here for almost all of their lives and arrived because they had no choice: “Hundreds of thousands of illegal immigrants who came to the United States as children will be allowed to remain in the country without fear of deportation and able to work, under an executive action the Obama administration announced on [June 15th].

Administration officials said the president used existing legal authority to make the broad policy change, which could temporarily benefit more than 800,000 young people. He did not consult with Congress, where Republicans have generally opposed measures to benefit illegal immigrants… The policy, while not granting any permanent legal status, clears the way for young illegal immigrants to come out of the shadows, work legally and obtain driver’s licenses and many other documents they have lacked.” New York Times, June 15th.

Dogma, polarization, opposing what the other side embraces “because,” willingness to follow the statistically abysmally-incorrect statements of extremists seeking office because constituents want to will the statistics into truth and their rather complete unwillingness, perhaps because they suffered under our failing educational system where math skills have plummeted, to look at the underlying facts and numbers… are what marks the United States today. But if we don’t find that needed labor to carry our country forward, by educating the necessary masses to take those jobs (expect we are going the other way by slashing our educational budgets) or importing the talent we must have to create true value-added jobs, the United States might just find itself as a leader in a very undesirable category: king of the growing body of submerging economies.

I’m Peter Dekom, and the ability of people seeking office to explain the truth in the issues facing us has never been lower.

Monday, June 18, 2012

In Name Only

Euro zone? Elections in Greece between candidates who wanted to reject the austerity measures entirely or at least significantly renegotiate those terms (the latter narrowly slid by), Spanish banks surviving only because of a huge bailout from the EU, German voters growling that they will not sacrifice their economic wellbeing to save Europe, their Chancellor Angela Merkel telling the us that the world has overestimated Germany’s ability to do so anyway and that austerity takes a long time to work, and a new French President – who brought down the former President who towed the German line – who is rejecting that austerity vector with a cry for measures to instill new growth into the euro zone, Irish politicians, having just convincing their voters to accept mandated austerity measures, are crying foul at Spain’s relatively light restrictions, and Italy looms dark as the next big PIIGS to fall. What a mess.

Greece, which apparently manufactured national economic statistics just to get into the EU in the first place, seems powerless to force their richest citizens to consider repatriating funds and paying taxes and has absolutely no chance of repaying its new bailout debt, since growth is completely non-existent in this ancient land. Spain’s unemployment numbers hover at 25%, while Greece’s rate has rising to almost 22%. The quality of life in the PIIGS is somewhere between miserable and unbearable. Despite all the rhetoric of uniting these economies into a more functional and centralized union – clearly what was intended in the first place – the euro zone has deteriorated to a “every country for itself” plague that suggests that the common economic union and shared currency are merely unsustainable fictions bound to unravel more than unify to solve the problems at hand.

On paper and in the press, EU leaders are pressing for a new centralized governance of banks throughout the entire zone, standards and controls that will solidify European banking across the entire zone, to recreate global confidence in Europe’s financial sector. “[O]n the ground in the euro zone, there seems little appetite for such a compact right now. In fact, banks and their national regulators, anxious about the Greek elections and Spain’s hastily arranged bailout, are behaving more parochially than ever… That poses a threat to the interbank lending across borders that is crucial to maintaining liquidity — the free flow of money that is the lifeblood of the global financial system… French and German banks have clamped off much of the lending to their counterparts in Italy and Spain, which in turn are mainly giving loans only to their own debt-strapped governments.

“And in Madrid, even after European finance ministers agreed to a €100 billion, or $125 billion, rescue of Spain’s failing banks, the always proud Spanish government is insisting that it — and not Brussels bureaucrats — will take charge of how and where the funds are deployed… With interbank cooperation at perhaps its lowest level since the creation of the euro currency union, European officials say they are moving toward a broader solution… Experts warn, though, that what is needed now is not another working paper proposing new levels of euro-bureaucracy, but a clear action plan that addresses the root issue: Markets and investors have lost faith in Europe’s ability to regulate its banks.” New York Times, June 17th.

Oh, European leaders at the Central Bank talk about a new “grand plan” to stabilize the zone, but talk is cheap at a time when the entire global economy could be sent reeling back into a recession, this one clearly to be blamed on Europe’s rather complete inability to deal with a crisis of its own making. “The plan will include measures to prevent bank runs and reduce what has become a vicious cycle of government debt problems turning into banking crises, as has happened in the past two years. In addition, the plan will push for countries to remove the regulations and layers of bureaucracy that inhibit competition, keep young people out of the work force or make it difficult to start a new business… The goal would be to make the euro zone less vulnerable to crises and better able to grow its way out of the current debt crisis. But it is unclear whether yet more pledges of reform, which would face significant hurdles, will calm financial markets.” NY Times, June 16th. “Unclear”? You’ve got to be kidding! Even assuming there were sufficient willingness at the local level to accept the parameters, such a plan would at best take years and years to implement. Who is going to give an ounce of credit to Europe for that?!

The totally unrelated ways different regions look at the world remind me of the four blind men sensing an elephant for the first time through touch. The rather fundamental disparity in how Greeks and Spaniards view life when compared to Austrians and Germans would seem akin to convincing ants and grasshoppers that they are the same species. Is the euro zone sustainable? If it falls apart, is a deep global recession inevitable? If it cannot come to terms with this debt crisis and a failed effort to reignite the European growth engine, is at least a mild global downturn likely? And what exactly can be done as the devastation of Father Time eats away at the solutions?

I’m Peter Dekom, and that the world is simply one giant reactive economy has its blessings… and its detriments.

Thursday, June 14, 2012

The Lebanese Squeeze

A confluence of change is sweeping the Middle East. The Arab Spring and the resulting elections in Tunisia and Egypt (and the subsequent military takeover today) have altered the political landscape, a plus for democracy but not necessarily an advancement of American interests. The U.S. withdrawal from Iraq, leaving a Shiite majority in a rear-guard conflict with remaining Sunnis and Kurds, cozying up to Iran like a promiscuous slut, and its failure to curtail the Afghan Taliban and the opium that finances their subversion leave the United States with dwindling power in the region. And it is into this power vacuum that Iran lunged, carrying huge military and financial aid to anyone willing to call themselves an ally.

There are not a lot of Shiites in the Islamic world. Since the movement began very shortly after the death of the Prophet Muhammad in 632 AD, it has been persecuted by the majority Sunnis (85% of the Muslim faith) for the former’s perceived heretical views that the Qur’an is not to be read literally as the word of God but is instead a mystical message from Allah that only religious leaders (Imam and Ayatollahs) can interpret. So when Shiite Iran, seemingly relegated to brotherly ethnic connections to nations with Shiite majorities (like Iraq), Shiite (or quasi-Shiite) leadership even where Sunni majorities exist (like Syria) or large Shiite populations (like Lebanon), the potential reconfiguration of these Shiite locals because of these earth-shaking changes is a threat to Iran’s goal of becoming and remaining the regional power in the Middle East… at least in their minds.

And what is happening in Syria – Iran’s brother in arms and most certainly a conduit to its Shiite allies in Lebanon (on the other side of Syria) – threatens to pry away Iran’s seeming hold on Lebanon and its Iranian-supported Hezbollah-elected government, led by a Harvard-educated telecom billionaire premiere, Najib Mikati, himself a Sunni (an anomaly, in leading what is effectively an anti-Zionist Shiite party labeled by the United States and a number of its allies as a terrorist organization). Mikati’s brand of leadership has moved Hezbollah to “Hezbollah light.” The Lebanese capital, Beirut, has become a major party town, with the sound of mainstream Western bands resonating from the rooftop clubs that have exploded in Beirut. The visions of Lebanese modernity, a mixture of Christian Maronites, Sunnis, Shiites and a few Druse, permissiveness in a conservative part of the world, flies in the face of Iran’s theocratic repression.

Iran has spent fortunes financing and arming Hezbollah in Lebanon, and unlike Iraq – with which Iran shares a border – Lebanon (that tiny dot of blue on the Mediterranean above) is a full two large countries (Iraq and Syria) away. But Iran has been profoundly dependent on Syria’s hegemony over Lebanon – murdering local opponents to Syrian policies in Lebanon and fomenting Iran’s support of Hezbollah – in transporting money and military aid to that terrorist organization. Even as allied sanctions have decimated Iran’s economy, sending massive financial support to Lebanon in exchange for political fealty has been Tehran’s unwavering commitment. The non-Shiite parties, still uncomfortable with Hezbollah’s power in the country, have tolerated Iran’s presence in the country because of the massive economic aid that they have received.

Iran has funneled huge sums of cash through Hezbollah into Lebanon to gain friends by rebuilding what Israeli bombs have destroyed, adding infrastructure, hospitals and humanitarian aid to win friends and influence people. Tehran is now promising to solve Lebanon’s electricity shortage with a new hydro-electric project. But with Syria teetering and that quasi-Shiite minority government seemingly vulnerable to collapse, Iran has redoubled its efforts to maintain its hold on Lebanon: “Iran’s eagerness to shower money on Lebanon when its own finances are being squeezed by sanctions is the latest indication of just how worried Tehran is at the prospect that Syria’s leader, Bashar al-Assad, could fall. Iran relies on Syria as its bridge to the Arab world, and as a crucial strategic partner in confronting Israel. But the Arab revolts have shaken Tehran’s calculations, with Mr. Assad unable to vanquish an uprising that is in its 15th month.

“Iran’s ardent courtship of the Lebanese government indicates that Tehran is scrambling to find a replacement for its closest Arab ally, politicians, diplomats and analysts say. It is not only financing public projects, but also seeking to forge closer ties through cultural, military and economic agreements.” New York Times, May 24th. Yet Iran’s control is threatened by political change in Syria, and Lebanese locals are indeed concerned with what Iran is going to assure its influence.

“The Lebanese have largely accepted that Iran serves as Hezbollah’s main patron for everything from missiles to dairy cows. But branching out beyond the Shiites of Hezbollah is another matter… ‘They are trying to reinforce their base in Lebanon to face any eventual collapse of the regime in Syria,’ said Marwan Hamade, a Druse leader and Parliament member, noting that a collapse would sever the ‘umbilical cord’ through which Iran supplied Hezbollah and gained largely unfettered access to Lebanon for decades… ‘Hezbollah has developed into being a beachhead of Iranian influence not only in Lebanon, but on the Mediterranean — trying to spread Iranian culture, Iranian political domination and now an Iranian economic presence,’ Mr. Hamade said. ‘But there is a kind of Lebanese rejection of too much Iranian involvement here.’” NY Times.

The big threat to Lebanese politics has always been the Syrian presence, often military or Syrian secret police operating in Lebanon to enforce their view of the world, one not-so-coincidentally shared and financed by Iran. With the exception of the Shiites and their Hezbollah, there has always been Lebanese resentment and fear of this large Syrian threat (which has often escalated to direct intervention by force) on their border. But with such overwhelming Syrian military superiority, the Lebanese have been force to accept their harsh subservient reality... until now, as Syria’s military and political focus has moved from dominating Lebanon to its own internal survival. Yet conflicts, so far confined to the northern Lebanese city of Tripoli, between local Alawites (the highest reaches of Syria’s power elite are members of the Shiite-affiliated religious sect) sympathetic to the Assad regime and Lebanese Sunnis who are solidity behind their disenfranchised Syrian brethren, the majority in Syria, have claimed almost a dozen and a half lives in recent weeks.

Therein lies the rub. Syria, run by a nominally Shiite Muslim sect [Alawites], fostered its alliance with Iran as a counterweight to Sunni Muslim powers like Saudi Arabia. The alliance was built more on confronting the West and its allies than on any sectarian sympathies… In Lebanon, a nation of various religious sects, many interpret Iran’s reference to ‘Muslim’ as solely ‘Shiite Muslim.’ Hezbollah insists that that is not the case and that the money comes with no strings attached and is for the good for all Lebanese.” NY Times. Iran pushed Sunni PM Mikati to the top of Hezbollah to make that point, but most Lebanese are skeptical. Will Syria’s Assad government fall? Can Iran maintain its power in Lebanon if that happens? What is Lebanon’s future in a world with a dismembered Syria? It is a fascinating turn of events, and hopefully the United States will simply let the politics unfold, since anything that America supports is likely to find instantaneous local rejection.

I’m Peter Dekom, and as the son of a U.S. diplomat living in Lebanon in my teenage years, I witnessed first-hand the massive Lebanese distrust of Syria and her cronies.