Hire Expectations

Damned stimulus package just doesn't seem to be creating a whole pile of jobs. And the administration isn't particularly optimistic about the situation, at least not near-term. Take for example an August 3^rd interview of Treasury Secretary Tim Geithner by Good Morning America's George Stephanopoulos: "When they see a little hope that there may be jobs out there, they start to come back in again. And that can cause the measured unemployment rate to go up — temporarily… But what we expect to see, and I think most forecasters expect this…is an economy that's gradually healing, gradually strengthening, businesses starting to add people back.," said Geithner. Geithner also admitted it's a "tough economy" and that the unemployment rate could get worse for a few months before it gets better.

You know, it might seem way too obvious, and, in this world where Congress men and women are tripping all over themselves to prove that they don't spend money – except on unwinnable wars – maybe an unlikely choice, but if the object is to create more jobs, why not… er … hire more people directly? Yeah, why doesn't the government just become the direct employer and provide infrastructure repair or social service jobs or whatever work that needs getting done? Like what the government did with the WPA during the Great Depression: "The Works Progress Administration (renamed during 1939 as the Work Projects Administration; WPA) was the largest New Deal agency, employing millions to carry out public works projects, including the construction of public buildings and roads, and operated large arts, drama, media, and literacy projects. It fed children and redistributed food, clothing, and housing. Almost every community in the United States had a park, bridge or school constructed by the agency, which especially benefited rural and Western populations. Expenditures from 1936 to 1939 totaled nearly $7 billion." Wikipedia.

Sounds too "socialist"? Cost too much? Really? What would it cost? Okay, here are the numbers, according to the August 3^rd DailyFinance.com: "[S]traightforward suggestions that can actually help put the country's record long-term unemployed back to work tend to get far less glory. And one such far-more-levelheaded recommendation comes from Yale economist Robert Shiller: The U.S. government should simply hire workers directly for public services, much as it did during the Great Depression… Bringing aid to those at the bottom of the socioeconomic pyramid -- where job losses have done the most damage -- would hardly break the budget, either. The $30 billion it would cost to hire a million people at $30,000 a pop, for example, would amount to 0.2% of national debt and 4% of the entire stimulus package spending package, Shiller points out.

"Hiring a million people at home would cost roughly the same as what Congress set aside last month to send 30,000 more troops into Afghanistan despite an avalanche of recent criticism about the U.S. strategy there. For the estimated $1 million a year it costs to station one U.S. solider in Afghanistan beyond salary and equipment, the country could provide jobs for 33 workers at home.

"Much as the vast majority of the American public has suspected, stimulus measures so far have been ineffective at creating jobs. To illustrate this point, Shiller uses the anecdote of a road-construction site funded by stimulus dollars that's packed with steamrollers and heavy equipment but light on workers… 'Like many such stimulus projects, it could be justified if you accept the idea that gross domestic product, not jobs, is central – a misconception rooted in economic theory, or at least in the way Keynesian economic theory has evolved,' he wrote." Sometimes, the obvious is… well… the obvious solution.

I'm Peter Dekom, wondering why straight lines appear to be so mysterious to so many elected officials.

Does Baby Go Boom?

The United States and its Western Allies (plus Japan) have been pressuring Iran to give up its quest for a nuclear program that appears in significant part directed at a weapons capacity. China has been in an uncomfortable squeeze – wanting Iranian oil but also a tad nervous as being on the outs with the anti-nuclear policies of much of the world – but Russia has been almost gleeful in its ability to thwart U.S. containment policies by entering into a series of what America has viewed as rogue treaties with a rogue state – ranging from Russian-Iranian mutual defense pacts to an agreement from Russia to begin providing nuclear fuel rods for Iranian reactors.

Russia’s move, which the Western Allies/Japan have sought to delay pending larger nuclear concessions from Iran, is ostensibly aimed at generating nuclear fuel outside of Iran – short-circuiting Iran’s finalizing its own internal capacity to create fissionable material (non-accountable material by treat organizations that clearly could be diverted for weapons purposes). Ever since Pakistan’s Dr. A.Q. Khan – the father of Pakistan’s nuclear weapons program – transferred technology expertise to Iran (and N. Korea) that enabled the building of exceptionally complex centrifuges needed to separate out most active plutonium from lower grade materials, a good section of the world has simply looked on in horror as the nation that promised to destroy Israel and officially denies the holocaust moved towards full nuclear status.

Russia is now ready to begin fulfilling a $1 billion agreement with: “Russia's state atomic agency, which is overseeing the plant near Bushehr [Iran], said low-enriched uranium would be added Aug. 21 but that the power station may not be fully active for months. Work on the facility began in the 1970s, when Iran staked much of its national pride on the development of nuclear energy.” Los Angeles Times (August 14^th). Russia believes that this move is consistent with Western pledges to provide nuclear fuel for power-generating purposes so that Iran does not have to continue its own program. However, without the concessions sought by the West, the timing of this effort appears to send mixed messages and is a slap in the face to American policies.

But there is a more horrific reaction to this Russian effort to provide nuclear fuel for apparently peaceful power-generating purposes. An article written in the September 2010 the Atlantic magazine by political analyst, Jeffrey Goldberg, projects an obvious moment when Israel may deploy a first strike to take out the reactor (and the rest of Iran’s nuclear facilities), since attacking a reactor once the fuel rods are installed would disperse nuclear waste into the atmosphere with unpredictable consequences. With the prospect for a regime change in Iran non-existent and that nation’s standing defiant against all attempts to extract a commitment to dismantle its nuclear program, Israel is addressing the possibility that if Obama doesn’t sanction a military attack – exceptionally unlikely given the failed efforts in both Iraq and Afghanistan – it may be incumbent on Israeli forces to take out Iran’s nuclear capacity by force as an act of survival.

Goldberg writes that: “What is more likely, then, is that one day next spring, the Israeli national-security adviser, Uzi Arad, and the Israeli defense minister, Ehud Barak, will simultaneously telephone their counterparts at the White House and the Pentagon, to inform them that their prime minister, Benjamin Netanyahu, has just ordered roughly one hundred F-15Es, F-16Is, F-16Cs, and other aircraft of the Israeli air force to fly east toward Iran—possibly by crossing Saudi Arabia, possibly by threading the border between Syria and Turkey, and possibly by traveling directly through Iraq’s airspace, though it is crowded with American aircraft. (It’s so crowded, in fact, that the United States Central Command, whose area of responsibility is the greater Middle East, has already asked the Pentagon what to do should Israeli aircraft invade its airspace. According to multiple sources, the answer came back: do not shoot them down.)”

Regional Arab powers, most Sunni Muslim nations that fear Shiite Iran as a nuclear power as well are equally fearful of any Israeli military efforts, however beneficial they might be to reduce Iran’s threat in the region… at least at the Arab government level; grassroots “pride” at an Islamic nuclear nation seems to be growing. But such an attack would provide rogue Iran with justification, at least in its own eyes, for retaliatory strikes using its own missiles and a greenlight for terrorists funded by Iran to strike targets globally, perhaps even within the United States herself. All hell might break loose, and Iran might even blockade ship traffic in the Persian Gulf, blowing up fully loaded oil tankers headed for the West, sending gasoline prices to levels yet not reached.

These are hard questions for hardened politicians and military strategists, but passions run high on this subject. Will Israel risk burning some big bridges with the United States by warring unilaterally on Iran, loosing a litany of potential horribles on the rest of the world? It just might… if it feared that a nuclear Iran was a direct and immediate threat to its very existence. The world is watching. Some folks think Israel has just under a week to strike. Wow!

I’m Peter Dekom, and there are too many volatile powder kegs on this planet not to be very concerned.

The Tyranny of the Majority

I’ve explored the tyranny of the minority – the moneyed classes that buy politicians and favoritism with every twist and turn of their checking accounts; but it’s also time to look at the greatest fear that underpins the Constitution of the United States of America: fear of the tyranny of the majority. Our forefathers witnessed persecution of religious minorities, unpopular political fringes, British soldiers bursting into homes without notice and ransacking residences in search of God knows what in the name of fighting sedition. They’d called it the “Church of England,” an official state religion in a nation with a powerful history of killing and persecuting Catholics. Indeed, that self-same Church of England was founded to allow King Henry the VIII to have his own religious freedom – being able to divorce without beheading, a practice with which he was all too familiar.

Thomas Jefferson, George Washington, James Madison, John Quincy Adams, Benjamin Franklin… well we all know the list… fought for a nation where minorities would be safe from persecution, where speaking your mind wouldn’t get you thrown in a dank prison, where practicing your faith wouldn’t lead you to the pillory, stocks and bondage… perhaps a flaming and bitter end for not agreeing with the Protestant fundamentalists known for witch trials and flaming punishments. The earliest Americans fought and died for those principals, further embodied after the Revolution in the Bill of Rights, the first ten amendments to our Constitution.

When I hear folks tell me that protesters – right and left – need to be silenced and jailed even when they are not preaching violence, or when people tell me that America is a Christian country and I have to watch the faces of my Jewish or Buddhist friends as they hear these words, very contrary to the promises there were made by the very nature of our government… I cringe. I am a lawyer in love… in love with that magical document called the Constitution. When I listen to those who decry allowing certain religious temples to be built, where Christian rules and ethos must be taught, where minorities are not to be accorded with the same rights as the majority… and who make claims that to think otherwise is un-American… well… I wonder why virtually burning the Constitution and vilifying its essence is considered to be pro-American? Is it patriotic to condemn free speech, decry true equality among people and limit the practice of any particular well-recognized religious sect?

We are no better than the toughest cases of intolerance that tempt us. We become our bigoted and zealous enemies when we adopt their rules of exclusion and rigid adherence to extreme religious credos. The building of a mosque at Ground Zero may rub many the wrong way… or it may be seen as an obvious defensive prophylactic against another attack a la 9/11… but it is what so many Americans died for when they defended this nation – defined by its Constitution – across a spectrum of wars over the centuries. I have most certainly excoriated President Obama’s policies in Iraq and Afghanistan among other political choices, but his position supporting the right of Muslims to build a mosque at Ground Zero is not only legally correct; it is the moral American high ground. Either you believe in the First Amendment or you don’t. Whether you believe in Islam or not, the right to practice that faith in the United States is protected!

On August 3^rd, New York’s Republican Mayor, Michael Bloomberg, said it best, as the New York Times on that date wrote: “With the Statue of Liberty as his backdrop, the mayor pleaded with New Yorkers to reject suspicions about the planned 13-story complex, to be located two blocks north of the World Trade Center site, saying that ‘we would betray our values if we were to treat Muslims differently than anyone else.’” The Washington Post added: “‘We do not honor their lives by denying the very Constitutional rights they died protecting,’ Bloomberg said of the firefighters and police officers who died on Sept. 11, in language he proposed. ‘We honor their lives by defending those rights -- and the freedoms that the terrorists attacked.’”

But other voices cry to stop the process. Whether those who have elected to build this religious building as such a sensitive spot are correct or incorrect begs the question. Are we hypocrites – suspending our moral and legal imperatives when we choose – or do we really have American values that transcend our personal preferences? Senate Majority leader, Harry Reid (D-Nevada), tried to mumble his way out of a tough spot in a tougher reelection campaign by suggesting that the mosque should be built "somewhere else." But some have voiced greater concerns with stronger language: “‘The decision to build this mosque so close to Ground Zero is deeply troubling, as is the president’s decision to endorse it,’ said House Minority Leader John A. Boehner (R-Ohio). ‘This is not an issue of law, whether religious freedom or local zoning. This is a basic issue of respect for a tragic moment in our history.’” The August 14^th Washington Post.

Aside from the fact that the President didn’t endorse the mosque itself, only the Constitutional right to build it, I’m sorry Mr. Boehner, it is precisely an issue of law – the very essence of being an American… what separates us from the malevolent states that seek to do us harm. It’s easy to support the Constitution in unchallenging cases, but it takes a real believer in the United States and what it stands for to make that choice when it is truly difficult. What’s the problem, Congressman, you don’t believe the United States has room for that form of tolerance? You think we are weak and unable to stand strong while allowing unpopular minorities the rights guaranteed to them by the very Constitution you swore to uphold when you took federal office? Good to know Mama Grizzly is on your side!

I’m not sure how many of you have ever walked through a military cemetery… particularly the Arlington National Cemetery… where many of this nation’s heroes – from two U.S. Presidents William Taft and John Kennedy) to winners of the Congressional Medal of Honor – are buried. But the honored soldiers mostly died to support that Constitution… not a piece of paper with “not really” loopholes… but the rock upon which America was founded, was defined and which sustains her life. Respect that, John Boehner, and understand why all those proud Americans perished in her honor.

I’m Peter Dekom, and trying to push minorities out from under the Constitutional umbrella is profoundly un-American!

Nursing a Grudge Chinese Style

In this country, “going postal” is our workplace-maniac-attacking-fool-paradigm descriptive epithet that says it all. Maelstroms from malcontent males maneuvering mail. But it applies to loosing it in a violent way in any workplace. Other cultures, other metaphors for going postal. Like China.

2006 was the last year that the Peoples Republic of China reported instances of attacks on medical workers by patients and their families. While China is a very big country, the number was rather staggering (and think of what was not officially reported): 5,500 medical workers attacked that year. In the land where acupuncture is king, accuracy might not be. It got so bad in Shenyang in June that authorities ordered police reinforcements for the city’s 27 hospitals, an order that was soon countermanded because it just didn’t look right, and that the cops should not be viewed as personal bodyguards to imperious doctors. New York Times (August 11^th).

The problems stem from a local perception – very justified – that the standard of medical care differs for government cadres and the new rich and middle class (class??? In China???) who can afford what it takes versus the impoverished peasants and unskilled workers who are at the bottom of… well… everything. The NY Times presents this picture of the issue: “In June alone, a doctor was stabbed to death in Shandong Province by the son of a patient who had died of liver cancer. Three doctors were severely burned in Shanxi Province when a patient set fire to a hospital office. A pediatrician in Fujian Province was also injured after leaping out a fifth-floor window to escape angry relatives of a newborn who had died under his care.

“Over the past year, families of deceased patients have forced doctors to don mourning clothes as a sign of atonement for poor care, and organized protests to bar hospital entrances. Four years ago, 2,000 people rioted at a hospital after reports that a 3-year-old was refused treatment because his grandfather could not pay $82 in upfront fees. The child died… Such episodes are to some extent standard fare in China, where protests over myriad issues have been on the rise. Officials at all levels of government are on guard against unrest th at could spiral and threaten the Communist Party’s power.”

In fairness to the highest levels of China’s government, they understand the problem, have noticed that coastal and larger cities have shown vastly more prosperity than the rest of the country, that unevenness and high-handed bureaucrats have favored those with power and money, and are taking steps to push the overall prosperity to all section of this gigantic nation. Unfortunately, the global economy is not cooperating, and even China is bearing the brunt of a lower global consumer demand.

Change is happening, even faster than it is here in the U.S.: “By 2000, the World Health Organization ranked China’s health system as one of the world’s most inequitable, 188th among 191 nations. Nearly two of every five sick people went untreated. Only one in 10 had health insurance… Over the past seven years, the state has intervened anew, with notable results. It has narrowed if not eliminated the gap in public health care spending with other developing nations of similar income levels, health experts say, pouring tens of billions of dollars into government insurance plans and hospital construction… The World Bank estimates that more than three in four Chinese are now insured, although coverage is often basic. And far more people are getting care: the World Bank says hospital admissions in rural counties have doubled in five years.” The Times. Let’s just home that “going medical” doesn’t become a habit in China… or the United States.

I’m Peter Dekom, taking it in and spitting it out.

America’s Big Charge Account

There’s a significant body of historians who will tell you that hydroelectric dams built in the Great Depression years as public works projects won World War II. The Tennessee Valley Authority was created in 1933, Hoover Dam (once known as Boulder Dam) in 1936, Bonneville Dam in 1937, Grand Coulee Dam in 1942, etc. Seems all that excess electrical power was what it took to manufacture with steel: planes, tanks, ships, etc. Without those vital supplies, the Allies would have crumpled under the Axis boot. But dams don’t have an unlimited life; they silt up, the infrastructure wears out, and building new hydroelectric projects has a profound impact on the rivers upon which they are built.

Where once the ability to gather masses of armies – under threat or promise of booty – determined the outcome of wars, perhaps in a modern world it has become access to energy and technology that creates the new “power.” And that takes money and know-how. As Dr. A.Q. Khan – the father of Pakistan’s nuclear weapons program – distributed the technology to make bombs to at least North Korea and Iran, believe me, they followed suit. Technology leaks and gets reverse-engineered… filling ignorant dictators with abilities as long as the wallet is willing. But energy to make complex military hardware, well, now that’s really expensive.

As the BP debacle in the Gulf illustrates, the cost of seeking energy isn’t always the just cost of building the power plants and extracting raw fuel sources. Fossil fuels are limited, and the countries with the greatest remaining supplies seem to be, for the most part, not necessarily the most reliable sources of precious petroleum products. If you hadn’t noticed (you probably walk or take public transportation), prices at the pump are skyrocketing. In the slow process of running out of oil… and will take a very long time before we truly hit bottom… as the prices of fossil fuels reach untenable levels, exactly what does it cost to have a society running on alternative energy? Who seems to implement new systems effectively?

Through various conferences, most global leaders have their eye on 25% of national energy to be derived from new “alternative energy” sources – aside from nuclear power and dams. We’ve seen how geothermal, filled with so much promise, generally requires power generation in areas of geological instability, and building a plant often increases the area’s vulnerability to earthquakes. So we have tidal power, wind and solar and other comparable “clean and safe” systems. Do we have any examples of countries that have made huge inroads to building and operating with such alternative systems? Maybe we have to look at one small Western nation, one that is on the PIIGS list of over-borrowed fragile European Union economies: Portugal.

Likely to be the first major nation (maybe along with Norway) to have a reliable national network of automotive electrical charging stations (the system is expected to go online next year), Portugal is “light” years ahead of the United States in implementing a national power system that is no longer based on fossil fuels or nuclear power. Most of Portugal’s new programs were begun just five years ago, this tiny nation on the Iberian Peninsula is on the verge of generating 45% of the power on its electrical grid system from renewable sources, more than doubling its 2005 levels of sustainable power.

The U.S. is way, way behind: “Still, aggressive national policies to accelerate renewable energy use are succeeding in Portugal and some other countries, according to a recent report by IHS Emerging Energy Research of Cambridge, Mass., a leading energy consulting firm. By 2025, the report projected, Ireland, Denmark and Britain will also get 40 percent or more of their electricity from renewable sources; if power from large-scale hydroelectric dams, an older type of renewable energy, is included, countries like Canada and Brazil join the list… The United States, which last year generated less than 5 percent of its power from newer forms of renewable energy, will lag behind at 16 percent (or just over 20 percent, including hydroelectric power), according to IHS.” New York Times (August 9^th)

Portugal’s triumph wasn’t cheap, but at least they bit the bullet early in the game and will reap the benefits for the foreseeable future. Nevertheless, local consumers feel the cost very heavily, a burden that is particularly hard to carry in impaired economic times: “Portuguese households have long paid about twice what Americans pay for electricity, and prices have risen 15 percent in the last five years, probably partly because of the renewable energy program, the International Energy Agency says…To force Portugal’s energy transition, [the] government restructured and privatized former state energy utilities to create a grid better suited to renewable power sources. To lure private companies into Portugal’s new market, the government gave them contracts locking in a stable price for 15 years — a subsidy that varied by technology and was initially high but decreased with each new contract round.” The Times.

The U.S. has to deal with a hodge-podge of vast numbers of local utilities, state governments, private and public power companies, all with differing agendas and financial restrictions on what they can afford and, more importantly, what they are willing to invest when they can make more than enough money under existing, albeit archaic, systems and technologies. There are more barriers to progress in the United States than in most centrally-controlled power systems found elsewhere. Can we make the change or will “too late necessity” push us later in the game when the costs are higher and the stakes more desperate?

I’m Peter Dekom, and we either adapt and change… or, like old technologies, we are simply replaced.

Hide the Nuclear Salami

We're all concerned about rogue nations, like Iran and North Korea, spreading nuclear weapons to other rogue states and perhaps to terrorist groups like al Qaeda. Or rogue scientists, like Pakistan's infamous Dr. A.Q. Khan or several former Soviet nuclear experts now in the employ of the shadiest of nations, promulgating the specialized knowledge required to fabricate nuclear weapons. Or careless (and hence roguish) governments whose processes to safeguard their nuclear weapons/materials stashes leave much to be desired. That's what the nuclear summit addressed in the recent 47-nation gathering in Washington.

Sting operations have proved beyond a shadow of a doubt that al Qaeda and other terrorist organizations are trying to buy materials for a dirty bomb (the exploding suitcase spreading nuclear contaminants over a relatively small area) or the real thing (capable of taking out New York City). Scruples? Guilt over killing millions? Not even the slightest of deterrents. It would be a badge of significant accomplishment to any terrorist group to have killed more "non-believers" with a single blast than any other debacle in the history of mankind.

Our intelligence operations have long believed that it would be easier to trace nuclear weapons in the field that it would be to keep them from being smuggled into the United States (or any other fearful Western power). After all, the border is porous, but the number of nuclear weapons and fissionable material should be easier to track. Maybe. Perhaps. You think? The problem, of course, varies from corrupt officials willing to look the other way as a few "samples" slide out of government hands into the anxious paws of well-funded terrorists to fallen governments with nuclear weapons stored somewhere that simply have no experience in guarding and tracking what they have. And then there are simply the careless handlers who really screwed up. Like the 765 kilograms of plutonium from our Los Alamos labs which was unaccounted for in a 2004, enough to make 150 nuclear bombs.

When the Soviet Union collapsed in the early 1990s and splintered into numerous separate nations, some with large Muslim and anti-Judeo-Christian militant groups within their borders, the nuclear weapons and fissionable material (along with more than a few key scientists) parked within their new national borders fell into the dead zone of unguarded facilities and internal power struggles where "stuff" went missing. We still don't know where enough material to blow more than one city sky-high is located.

This little story, reported by ABC News on February 16, 2005, pretty much says it all: [Then CIA-director Porter] Goss said: "There is sufficient material unaccounted for, so that it would be possible for those with know-how to construct a nuclear weapon." A former top official at the Department of Energy told ABC News that Goss's statement understated the threat. There could be enough missing material in the Russian inventory to make hundreds or thousands of nuclear weapons, but no one -- neither the Russians nor Western intelligence agencies -- knows for sure, the former official said. "There is no way to determine the quantity of missing material in Russia," the source said, because neither the Russian government nor the Soviets before them ever adopted a "mass balance" inventory system that tracks how much nuclear material is produced and where it ends up being used. The U.S. government adopted a mass-balance inventory system in the 1960s, the source said.

Is it a matter of "when" or "if"? Are we living on borrowed time? Was the nuclear summit just a meeting of leaders to note the problem or will they take significant and meaningful steps to curb this menace? The threat is real and growing. There are just too many people on this planet with death in their mind's eye and America as the likely first target. It's not about wasting our resources on wars we cannot win, wars that make us an increasingly obvious target, but likewise, it is about deploying our resources against the specific targets that mean to do us in.

I'm Peter Dekom, and the earth is not exactly a friendly place, especially when you are on top of a hill that everybody wants to take.

Quantitative Easing and Learning to Live with Less

So as we slide merrily towards the “D” word – deflation or for the optimists among the pessimists, “double-dip” recession – what can the government do about this threat? Especially since Congress appears to want to prove to the electorate that it will not spend more money to stimulate the economy, even as a last resort? Mid-term elections approach! And stuff is going from worse to “OMG, you wouldn’t believe how much worse.”

“A wide-ranging sell-off on Wall Street sent stocks into the red for the year [on August 11^th] after unexpectedly bad economic news from three continents reinforced fears that the global recovery is faltering.” Washington Post (August 11^th). China can’t sell what it makes, England is in austerity land and watching the employment numbers drop… and our trade deficit – that nasty indicator of how much we import over how much we export – soared to $49.9 million last month. What’s a government to do? The Federal Reserve can’t reduce effective interest rates to below zero – although it could save more than a few bucks by refusing to lend to institutions that borrow money from the Fed to use for their own trading accounts (like Goldman Sachs, that perennial bad boy that the government seems powerless to control). So what else is in their economic quiver?

“Quantitative Easing.” QE to those who love acronyms.The August 9^th DailyFinance.com explains: “Quantitative easing was first used by the Japanese government to try to reverse stubborn deflation during the 1990s. It has also been called printing money. Essentially, the Fed issues new money and uses that invented cash to buy assets such as mortgage-backed securities or Treasury bonds from banks. The banks can then, in turn, lend that money to customers and -- presto! -- the money supply has been expanded, supposedly stimulating the economy.

“After the crash of 2008, the Fed deployed quantitative easing on a large scale, buying $1.25 trillion worth of mortgages and debts of state agencies. While its balance sheet in normal times had been $850 billion, it has now reached a whopping $2.3 trillion… In fact, the Fed had started to let its balance sheet shrink as the economy improved. It closed several credit programs, such as one designed to bolster the market for commercial paper, and in March it stopped buying mortgage-backed bonds and Treasury bonds, which it had been doing since the depths of the financial crisis. But there are signs that policy may be changing.” On March 10^th, the Fed began the implementation of their QE policy: "Federal Reserve officials agreed … to a new step aimed at supporting the economy by reinvesting money from Fed-owned securities as they mature. The action signaled deeper concerns about the slow pace of the economic recovery." Washington Post (August 10^th). Note how the markets crashed on August 11^th – too little, too late they screamed.

But without a tad more government “stimulus” to make up for the failure of consumers to spend – something this Congress is unlikely to do – what’s the going forward model we seem to be approaching? Japan? They got this “failure” thang down! Stimulus? Way too little, way too late. Here is a nation where cradle-to-grave corporate employment was supposedly the model: folks graduated from college and took a job in a Japanese mega-corporate structure with steep traditions in seniority, long hours and moderate pay… in exchange for an unwritten pledge of lifetime employment. It was the rule, until global competition and a nasty set of recessions made Japanese companies rethink the policy, betraying hordes of senior managers who found themselves on the street. But that’s only the tip of the longer term failure mode that seems to define modern Japan.

What do you do if you are a Japanese college grad, ready for the job market? Poor economic conditions have afflicted Japan for decades now, with the most recent drop dealing a particularly horrific blow to the job market. It seems that for many youths, the job market has been unforgiving with few prospects for improvement anytime soon. They may have become Japan’s “lost generation”: “The gap between extremes of income at the top and bottom of society … has been growing in Japan for years. To the surprise of many outsiders, once-egalitarian Japan is becoming a nation of haves and have-nots...

“More than one-third of the workforce is part-time as companies have shed the famed Japanese lifetime employment system, nudged along by government legislation that abolished restrictions on flexible hiring a few years ago. Temp agencies have expanded to fill the need for contract jobs as permanent job opportunities have dwindled.” DailyFinance.com (August 6^th). Younger people, often living at home with incomes generated from part-time and occasional contract work, are often left with a fraction of what they might have expected to have earned, corrected for inflation, decades ago.

They have become “freeters” (a combination of the English “free” and the German “Arbeiter” – worker): “The freeters have also come to see diminishing value in the grueling study and tortuous examinations required to compete for the elite jobs in academia, industry and government. With opportunities fading, long years of study are perceived as pointless. In contrast, the freeter lifestyle is one of hopping between short-term jobs and devoting energy and time to foreign travel, hobbies or other interests.

“As long ago as 2001, Japan's Ministry of Health, Labor and Welfare estimated that 50% of high school graduates and 30% of college graduates quit their jobs within three years of leaving school. The downside is permanently shrunken income and prospects. These trends have led to an ironic moniker for the freeter lifestyle: dame-ren (no good people). The dame-ren get by on odd jobs, low-cost living and drastically diminished expectations.” DailyFinance.com (August 6^th). Needless to say, the situation is vastly worse in 2010. This societal polarization and disenfranchisement is like a slow rusting process, eating away at a society that once was thought of powerful and unstoppable… literally built with steel. But then rust loves steel, doesn’t it? So if we don’t figure out how to get Americans back to work, how to build a viable future with educated citizens… are we next?

I’m Peter Dekom looking at a Congress that no longer knows how to lead… only to follow the latest popular political fade, regardless of the consequences.

Quit yer Winin’!

Prince Charmings and level playing fields are seemingly equally elusive. Everyone wants an edge, and while the government is ostensibly supposed to be on the side of everyman, let’s face it, everyman is a lousy campaign contributor. So as we have seen repeatedly, large constituencies that a screaming wheels (forget “squeaking,” ‘cause it jes’ don’t cut it no more!) and cash-rich special interests (often one and the same) pretty much get their way at the expense of everyone else.

Couple the proclivity to follow the screaming dollars – and even the quiet, behind-the-scenes dollars – with two incredible skill-sets: (i) spinning and (ii) justifying. Spinning is when you see a big problem – like a financial industry that literally collapses a global economy – and blame something that clear is either unrelated (immorality that leads to God’s punishment) or may indeed be the cause of the problem in the first place (blaming too much regulation and high taxes). Justifying is what lawyers do to help the spin.

Like a bill pending in Congress that its sponsors say would help clarify confusion that has resulted as federal courts have thrown out state laws that ban the sale of alcoholic beverages across state lines as violative of the jurisdiction of the federal government’s control over interstate commerce. The proposed statute would give complete control to the states over any such sales. They argue that states have the right to regulated such controlled substances within their borders and generate taxes for the resulting sales. States want to tax everything that is bought and sold in other states – particularly on the Internet – so what’s so special about alcohol? It makes you drunk, say the states! So why do they allow it to be sold in their stores (even in states with government alcohol “package stores”)?

What’s the real reason for the proposed law? Since they’re not a lot of states where alcohol is a major industry – wine in California, New York, Washington and Oregon for the most part, and distilled spirits in Tennessee and Kentucky – they’re a lot more states that would gather more “support” (read: campaign contributions) if their local retailers and distributors could force all alcohol sales through their systems, increasing both their volume and their ability to jack up the prices without fear of outside competition. Hmmm?

The folks in the alcoholic beverage industry who support the new proposal have their take: “‘It's the cumulative effect of all these lawsuits, and the confusion,’ said Paul Pisano, a vice president at the National Beer Wholesalers Assn., which proposed the legislation in the spring and backs a lobbying campaign. ‘We're asking to make sure that states aren't having their hands tied when they're trying to defend their alcohol laws.’" Los Angeles Times (August 5^th). And I’m the Easter Bunny!

For many small vintners, the ability to access the Web is literally the only way they can survive; big local distributors and retail chains simply don’t take the small stuff. These farmers would simply be frozen out of the system. “‘South Coast Winery in Temecula [California], for instance, sells almost 30% of its wine through a 10,000-member wine club and ships to customers in about 20 states, owner Jim Carter said…‘It's very important for small wineries, especially, to be able to have these wine clubs because it's our best vehicle for dealing direct with the public,’ Carter said. ‘We sell more wine through our wine club than we sell in the wholesale market.’… Th rough consolidation in recent years, many markets are controlled by only a handful of high-volume distributors, and they have little incentive, critics contend, to carry wines and beers that are available only in small quantities….

“‘The House bill would ‘devastate California's and other states' wine industries, stunt economic growth and harm consumers by allowing discriminatory law and regulation to be passed and go unchallenged,’ Reps. Mike Thompson (D-St. Helena) and George Radanovich (R-Mariposa), who head the Congressional Wine Caucus, recently wrote their colleagues… California accounted for 75% of all wine shipped directly to consumers for the fiscal year that ended March 31, according to Wines & Vines in San Rafael, Calif., an industry news, marketing and research firm…” The Times. May I propose a toast?

And so it is with regulation; some bills help level the playing field and benefit everyman. And some don’t.

I’m Peter Dekom, and I may be looking for a pour excuse!

As The Calderon Boils

In ancient times, powerful warlords massacred opponents, raped, pillaged and looted hapless villages, extorted locals, extracted “protection money” and engaged in willful criminal enterprise unless they were big enough and successful enough to get wildly rich, force all opponents from their lands and establish sufficient military presence to protect what they had. They became dukes (or the equivalent) and if they controlled enough land, kings, emperors, tsars or whatever the title du jure might be. Whether the lands were ancient Europe or ancient China, the story was the same. Some criminal enterprises – like the Mafia which was born in old Sicily – were simply locals trying to instill governance in their communities, because the officials charged with that task could not. Extortion and protection money were relabeled “taxation” when the brutal dictators firmed their hold on the necessary tracts of land.

In modern times – from Liberia to Cambodia, from Afghanistan to Serbia – we’ve seen a repeat of these ancient trends, as warlords continue to ply their trades, occasionally assuming “legitimacy” as the reward for their violent excess. Most of these cruel transitions to power have been separated from the modern United States by either vast periods of time or great distances. But this is changing, and perhaps the Arizona immigration effort – recently set aside by a federal district court – is merely a sign of a “spillover” nascent criminal takeover effort of an entire country – Mexico.

The two most likely “takeover” warlord groups – the Zetas in the north and La Familia in the west – today have large, well-organized militias that have directly challenged Mexican federal troops in the open. The areas of Mexico where they are strongest are virtually devoid of any countervailing official governmental control. In their strongholds, the Zetas and La Familia rule without opposition; in some areas, they have even replaced the local tax collectors with their own operatives. Smaller groups vie for recognition by these powerful cartels by strutting like criminal peacocks trying to outdo each other with violence and bold attacks against the established government. The 80,000 Mexican federal troops arrayed against the cartels – an effort to sidestep the local police who are as often as not on the cartel payrolls – have bee n singularly ineffective in stopping this crimson tide. “Since [Mexican President Felipe] Calderon announced the offensive when he took office in December 2006, more than 28,000 people have been killed. Most of them have been traffickers, dealers and associates. But innocent civilians account for a growing portion…

“The Zetas and La Familia have grown into trafficking powerhouses since Calderon became president. They have altered the playing field by employing methods once unthinkable, such as beheading or dismembering rivals and then displaying the remains in squares, on street corners and in other public places…. Trafficking groups flex their muscles by hanging threatening banners from bridges, stringing up corpses or parking buses across key streets to paralyze traffic, actions that appear increasingly aimed at cowing the populace.” Los Angeles Times (August 7^th). These intimidation tactics have been very successful.

These cartels control the drug routes into the United States with an iron hand; they are wealthy… like small nations with vast natural resources. “The groups also are expanding their ambitions far beyond the drug trade, transforming themselves into broad criminal empires deeply involved in migrant smuggling, extortion, kidnapping and trafficking in contraband such as pirated DVDs.” The LA Times. Drug trafficking into the U.S. has increased, the death toll has skyrocketed, and governmental efforts to defeat what has become a genuine civil war for control of the entire country – despite billions of dollars in support from both the Bush and the Obama administrations – appear to be falling increasingly behind. Guns and military-grade weapons – some left over from U.S.-backed military campaigns in Central Am erica and others secured through both legal and illegal means from U.S. border states, where “gun control” is really a four letter word – have poured illegally to the criminals in the south, making them better armed than the government soldiers that are paid to attack them.

Former politicos – like Mexico’s ex-President Vicente Fox – believe that the only solution is to legalize drugs; the August 10^th AOLNews.com explains: “‘We should consider legalizing the production, distribution and sale of drugs,’ Fox wrote. ‘Legalizing in this sense doesn't mean that drugs are good or don't hurt those who consume. Rather, we have to see it as a strategy to strike and break the economic structure that allows the mafias to generate huge profits in their business.’” Maybe he has a point, however unpopular such laws might be in the States. After all, decriminalization of major addictive drugs has in fact worked before. Take Portugal’s recent laws for example: “[A]bout 45 percent of the 100,000 heroin addicts Portugal’s Health Ministry recorded in 2000 had by 2008 decided to at least try to quit the habit, without the threat of jail time. And the number of new HIV cases among users fell from 2,508 in the year 2000 to 220 cases in 2008, Alun Jones, a spokesman for the U.N. Office on Drugs and Crime, told AOL News. ‘This was a major success,’ he said.” AOLNews (August 14^th). Meanwhile, the armed conflict rages below the border, and as time passes, the federal government slides farther behind.

What would be like to have a rogue nation – run by criminal dictators – controlling the entire nation on our southern border… hell-bent on selling drugs in the U.S. and using Mexico as a base to extend the entire panoply of their criminal enterprise to the vast, mega-wealthy north? The threat is very real: “Calderon himself acknowledged the threat [recently] in comments at a national security conference: ‘This criminal behavior is what has changed, and become a challenge to the state, an attempt to replace the state.’ … Mexican traffickers have increased their shipments of several types of narcotics north across the border, becoming titans of an industry that by some estimates earns $39 billion a year, equivalent to almost 20% of the government's annual budget…

“An assessment of the drug threat issued early this year by the U.S. National Drug Intelligence Center said Mexican drug-trafficking organizations, or DTOs, ‘continue to represent the single greatest threat to the United States.’…Mexican cartels, with operations in more than 2,500 U.S. cities, are the only ones working in every part of the United States, it said. They have largely displaced Colombian and Italian traffickers…‘The influence of Mexican DTOs, already the dominant wholesale drug traffickers in the United States, is still expanding,’ said the report, known formally as the National Drug Threat Assessment.” The LA Times.

As debate continues over the constitutionality of the Arizona immigration enforcement policies, a much bigger question remains: Is attempting to impose a tight seal on our border and expel undocumented aliens (many of whom are running for their lives) even remotely relevant or sufficient given the magnitude of the explosion and civil war erupting in Mexico itself? Shouldn’t the efforts be directed to destroy the threats to the south?

I’m Peter Dekom, and trying to put a band aid on a tumor won’t get you very far.