The Big Reset

When we read history books, there is always this damned thing about what happened on which date. Think about those tests where getting the exact date right was mandatory. Times in history reflect change, some good (July 4, 1776), some bad (September 11, 2001), but whenever there is change, there are winners and losers. The unfortunate part of what is happening now – events that will paralyze some test-taking kid decades from now – is that the post-recession United States (whenever that occurs) will not look a whole lot like what was there before.

Older workers will have been phased out of the job market, a whole host of young people (even with educations) will have limited, if any, prior work experience, solid entry level jobs will remain scarce and pay less, promotions will be slower as older employees stay at work beyond their expected retirement ages to make up for losses in their retirement accounts and there will be a vast uptick in outsourced, contract work, where workers are engaged on a temporary basis without benefits to perform tasks that were once done by regular employees.

With service jobs able to travel to distant lands where serious expertise can be accessed at significantly lower costs, even professionals from patent lawyers to financial analysts will find that their skill-sets are being offered in places like India or the Philippines at a fraction of domestic rates. We’re still more productive than many of the overseas choices, but even with that “corrective factor,” it’s still cheaper to send a great deal of complex transactional analysis and servicing overseas. Over time, these pay anomalies will fade away as currency devaluation will bring the dollar in line with labor rates overseas. A unit of labor value in India will eventually have the same price in the United States, even if that is accomplished by serious currency devaluation.

Factoring in that productivity factor can provide some interesting changes in the cost of overseas expertise. As the Peoples Republic of China keeps wages rising (12% per annum at last count), corrected for productivity, the average cost of Chinese labor will rise to 69% of comparable U.S. wages by 2015. This suggests that in the near future we will resource domestically some of what we currently send away, but it will only because the effective cost of U.S. labor (based on currency values and pay scales) must inevitably fall. As we denigrate our educational institutions compared to what schooling is provided overseas, our wage rates may take an additional hit in future years.

All this points to a society in which the majority of people are making less in terms of buying power and definitely living a notch or two below where their parents resided just a few short decades before. Those at the top of the food chain, not dependent on wages for income, can migrate their capital to wherever in the world their money gets the biggest bang for the buck. The phrase we use for this is, “The rich get richer.”

How about this little tidbit to make the hair stand up on the back of your neck: “Twenty-five of the 100 highest paid U.S. CEOs earned more last year than their companies paid in federal income tax, a pay study said on [August 31^st]… It also found many of the companies spent more on lobbying than they did on taxes.” Huffington Post, August, 31^st. Special interests have the money to shape our society to their needs. Indeed the kind of class polarization that is now typical Britain is a very likely model for post-recession America. We are simply a society that, as a whole, had pretty much better get used to a downsized version of life as we once knew it.

The sad thing about all this is that such pessimism has already merged into the general consciousness. We don’t like to discuss such realities openly, and we think we can elect leaders to undo our past fiscal errors and “make the bad man stop.” Foreclosures and layoffs are a way of life, today, and nobody’s job is safe. Without real growth, unlikely to be significant based on current vectors, the life we knew is relegated to the history books. Americans are feeling the pain, and their expectations have been seriously tempered by the reality of change that just won’t go away, a feeling that will only grow worse as the government moves further into austerity mode. We’re scared.

The writing on the wall couldn’t be clearer: “Consumers’ confidence in August dropped almost 15 points to the lowest level since April 2009 as worries about the economy fueled the wildest stock market swings since the financial meltdown in 2008… At a time when Americans are increasingly worried about a weak job market, higher costs for food and clothing and recent stock market turmoil, the falling confidence numbers raise new concerns about their willingness to spend and jumpstart the economy. That's particularly important since consumer spending accounts for 70 percent of U.S. economic activity.” Huffington Post, August 30^th. For those out of work, the news remains grim: “The average length of time a person is unemployed rose to 40.4 weeks last month, the longest period ever, and an estimated 1.1 million Americans have given up on looking for work entirely.” Washington Post, August 30^th.

With bank loans, home equity and private savings drying up, there has also been a corollary decrease in the unemployed turning around to start their own businesses: “A new study from Challenger, Gray & Christmas shows that only 3.7 percent of laid-off workers launched their own businesses in the first half of this year — an all-time low. By comparison, in 2009, 8.9 percent of the unemployed became entrepreneurs.” MLive.com, August 12^th.

We all know what’s going on, but getting used to the “big reset” is still overwhelmingly difficult for most. If there is anything Washington needs to hear, it’s not how we have to reign in government; it really has to be how government will help its constituency cope with the horrific new economy that irresponsible government helped create.

I’m Peter Dekom, and I hope that American creativity and inventiveness can reverse this nasty trend.

Where Do All the Weapons Go?

North Korean dictator Kim Jong-Il collects porn and nukes. “Gone but not forgotten” Libyan strongman Muammar Gaddafi collected pictures of Condoleezza Rice and stores of mustard gas (some also say a few nasty biological weapons as well). Syria’s brutal despot, Bashar Assad, has resisted calls to step down, choosing instead to attack pockets of local insurrection with powerful military responses, but his caches of weapons of mass destruction are the stuff of legend. Iran, with a repressive theocracy very much in power, is also having fun spreading weapons around the region, and Pakistan’s instability – which could easily turn into an Islamist state – makes Western and Israeli leaders shiver at what might happen should Pakistan begin sending its existing and significant nuclear arsenal to be shared with other anti-Western forces, ones less restrained at deploying such weapons anywhere on earth.

The signs are everywhere. Army Gen. Martin Dempsey (the next chairman of the Joint Chiefs of Staff), in testimony last month before the Senate Armed Services Committee, noted that Iran was stepping up arming local Iraqi Shiites in order to stage at least one massive strike against remaining American forces there: “Iran's activities in southern Iraq are intended to produce some kind of Beirut-like moment and, in so doing, to send a message that they have expelled us from Iraq.” CBS News, July 26^th.

You know that NATO has to be struggling to contain Libya’s military assets, and while the world wants Syria’s Assad to leave voluntarily, if his government were to fall from armed insurrection, his massive weapons stores would be up for grabs. Aside from his clandestine efforts with a nascent nuclear program, Assad has some painful weapons in reserve: “Syria is one of a handful of states that the U.S. government believes possess large stocks of chemical agents in militarized form -- that is, ready for use in artillery shells and bombs. The arsenal is thought to be massive, involving thousands of munitions and many tons of chemical agents, which range, according to CIA annual reports to Congress, from the blister gases of World War I -- such as mustard gas -- to advanced nerve agents such as sarin and possibly persistent nerve agents, such as VX gas.

“In the hands of Assad -- and his father Hafez before him -- these weapons have been an ace-in-the-hole deterrent against Israel's nuclear capability. The Assad regime, however, has never openly brandished this capability: It did not employ chemical weapons in the 1982 Lebanon War against Israel, even after Israeli warplanes decimated the Syrian Air Force. Nor have they been deployed, or their use threatened, in attempting to bring Assad’s current domestic antagonists to heel. And although Syria is accused of providing powerful missiles to Hezbollah, including some of a type that carried chemical warfare agents in the Soviet arsenal, Assad has not reportedly transferred lethal chemical capabilities to the Lebanon-based Shiite organization.” Foreign Policy Magazine, August 23^rd.

It is strange that Assad has been the voice of restraint in this one narrow arena of weaponry, but it also a sticky diplomatic issue for those nations, like the United States, that wish him to leave. His presence is actually containing the spread of such weapons of mass destruction, but his forced departure could result in a transfer of these deadly stores to Islamists hell-bent on destroying Israel and wreaking havoc in the United States and the West. This could occur directly by a takeover by willing Islamists or by the complicity of departing officials trying to build their future net worth by selling such weapons to unscrupulous arms dealers, looking for the highest bidders. An arms race is bad enough, but an arms race among those willing to use weapons of mass destruction without restraint is vastly worse.

I’m Peter Dekom hoping that the Arab Spring doesn’t turn into a desolate Arab Winter anytime soon.

Austerity May Just Do Us In

It is an ugly balancing act – protecting our national credit reputation by controlling the deficit vs. not providing sufficient stimulus to bring the country out of its recession. With projected annual growth rates projected at or around 1%, in medical terms, we are virtually flat-lining. Britain’s comparable deficit reduction program generated higher unemployment (hmmm… that appears to be happening here), fewer homes sales (ditto), lower retail sales (started well, but they are slipping again), lower growth (ditto) and a whole lot of riots (not here, at least, not yet).

Conservative forces on this side of the pond are hell-bent on deficit reduction, no matter the cost. Many in Congress made blanket “pledges” about what they would or wouldn’t do about deficits and taxes, again, no matter the cost. Did they really believe that their judgment was or would be so inferior, so impaired, that they needed firm rules to replace analyzing problems and voting for real solutions at the relevant time the issues were presented again?

Rick Perry’s “traitor,” Fed chief Ben Bernanke (maybe, he’s in that new category, Traitor-Nerd-Wonk) was the center of attention in Jackson Hole, Wyoming at an annual policy conference on August 26^th. Wall Street wanted more “quantative easing” (read: buy the bad paper off our books so we can make more money), and where there is still funding to do that, the Federal Reserve Chairman stopped short on making that pledge. Instead, he chastised elected Washington to recognize their role in the recent economic turndown: “‘The country would be well served by a better process for making fiscal decisions,’ he said.

“Mr. Bernanke said he remained optimistic about future growth — he gave no indication that the Fed would increase its economic aid programs, though he said the central bank’s policy-making board would revisit the issue at a scheduled meeting in September — but he warned that the government had emerged as perhaps the greatest threat to recovery… ‘The quality of economic policy-making in the United States will heavily influence the nation’s long-term prospects…’” New York Times, August 26^th.

As popularity polls suggest, we may have the least competent, least intelligent Congress in recent memory. When a quick economic fix to a problem that had been decades in the making wasn’t forthcoming, the recent mid-terms produced an anti-intellectual, anti-incumbent backlash that placed clearly unqualified candidates in office. If smart people can’t solve our problems, let’s elect doctrinaire dummies! Their vector – that Washington wasn’t working and that the big Wall Street stimulus programs did little for the average American – was dead-on; their solutions pushed slogans and mythologies that clearly have made matters vastly worse.

If there is another major downturn, these individuals are without the slightest doubt the responsible culprits… and President Obama, effectively endorsing their choices and pressing on in useless wars, must accept his culpability in this process. Watch him propose a jobs/infrastructure construction bill, requiring more stimulus expenditures, that he knows will be shot down by the Tea Party in the House… just to be able to pin any economic downturn on his opponents. There’s little consumer demand and severely contracting government demand out there in the marketplace, and folks are talking about “growth”? Growth is the only path out of this mess, by the way, but Congress is going out of its way to stab that prospect in the heart.

And here’s a huge hint, Washington, folks care a whole lot less about the deficit than you think… and those that do often mistakenly think somehow reducing federal spending will have a positive impact on employment. They’re the ones who probably got a D in entry-level college economics. While that old maxim, “It’s the economy, stupid,” still applies in spades, let me refine that quote to the summer of 2011: “It’s unemployment, stupid,” noting that not having a job or worrying about losing your job is now America’s pastime.

As Nicholas Kristof wrote for the August 27^th New York Times: “Some 25 million Americans are unemployed or underemployed — that’s more than 16 percent of the work force — but jobs haven’t been nearly high enough on the national agenda… When Americans are polled about the issue they care most about, the answer by a two-to-one margin is jobs. The Boston Globe found that during President Obama’s Twitter ‘town hall’ last month, the issue that the public most wanted to ask about was, by far, jobs.” Add the corollary fear, collapsed housing prices, and you will understand the country a whole lot better.

While fiscal conservatives – both Democratic Blue Dogs and Republican Tea Party members – believe that pulling government out of the spending pool is a good thing, that private decisions are always going to be better, there also appears to be a failure to appreciate the difference between investing and spending. That may be why they have decimated school budgets, withdrawn infrastructure repair/growth and scientific research, all of which represent a cash investment with a hard dollar rate of return… because they believe the private sector will do those jobs better???? Explain to me how that works. Bad schools with increasing class size and less classroom time will be better with less government money because?????

If we ignore fixing budgets, roads and levees, the natural disaster that may ensue that will cost billions more is a good thing? Americans will be vastly better off by our continuing battle in Afghanistan (we borrowed the entire cost of this war, by the way, since we reduced taxes during this process), which will unravel and fall apart whether we leave today or in ten years…and that’s worth every penny because????? Is stupid a necessary prerequisite for federal office these days?

I’m Peter Dekom, and it is unfortunate how few members of Congress still believe in America enough to invest in America.

There’s No Business with Slow Business

Back to my fascination with math scores among high schoolers and the prognosis for longer-term productivity. The December 6, 2010 Wall Street Journal reviewed the last PISA (Programme for International Student Assessment) standardized test – in 2009 – of the top nations’ high school averages for 15-year-olds: “Mathematics was the category where the U.S. lagged most, performing below average compared with students in other nations. U.S. students had an average score of 487, while the OECD [Organisation for Economic Co-operation and Development, the group that sponsors the PISA test] average score was 496. The U.S. math score in 2006 was 474 compared with an average that year of 498. Seventeen other industrialized countries performed better on average.” South Korea, with a math score of 546, sat atop the list. Don’t worry, we’re cutting school budgets, so we won’t have to be worried about being eighteenth anymore; we can have an even wider distance from the top next time around.

But South Korea, according to the CIA World Factbook for 2010,where the per capita income (the technical measurement is gross domestic product per capita) is a whopping $30,000 a year, is rising fast; the United States is still higher (at $47,200), but expect Korea to catch up and pass us in the not-too-distant future as their productivity is skyrocketing. There used to be more polarization of the rich and the rest in Korea that that in the U.S., but that statistic has reversed of late.

Economists have also discovered broadband Internet penetration as a new leading economic indicator. But what is broadband? “Broadband is often called ‘high-speed’ access to the Internet, because it usually has a high rate of data transmission. In general, any connection to the customer of 256 kbit/s or greater is more concisely considered broadband Internet access… The US Federal Communications Commission definition of broadband is 4.0 Mbit/s. The Organization for Economic Co-operation and Development (OECD) has defined broadband as 256 kbit/s in at least one direction and this bit rate is the most common baseline that is marketed as ‘broadband’ around the world.” Wikipedia.

We currently have about 1.9 billion Internet subscribers around the world, and about 37% of those have broadband by most definitions. But once again, Korea is kicking butt and leading the world in broadband access, according to Gartner, a leading research firm: “Korea topped the … study with 93% penetration in 2007, with this figure expected to hit 97 percent in 2012… Next on the list are the Netherlands and Hong Kong…” ZDNetAsia. It’s pretty clear that nations with small rural populations and tightly compacted massive urban centers (like Korea, Hong Kong, Netherlands and Singapore) have an easier time wiring for such access than countries with wide open spaces and large and scattered rural communities. The U.S. is stuck at 60%, a wall that seems difficult to climb because of our vast physical land mass. But the Obama administration has prioritized a change, and America’s farmers are high on the list of intended beneficiaries, so high in fact that it is the Department of Agriculture that has taken on the role of extending broadband access into our rural areas.

The August 22^nd Washington Post looks at the specifics of our problem: “As many as one in 10 Americans can’t get Internet connections fast enough to engage in such common online activities as watching video or teleconferencing, and two thirds of schools have broadband connections that are too slow to meet their needs, the Commerce Department reported earlier this year… Last year, the Federal Communications Commission released a national broadband plan that set a goal of hooking up 100 million U.S. households to broadband connections of 100 megabits per second by 2020. That’s at least 20 times faster than many existing home connections… About 28 percent of rural America, or nearly 19 million people, lack access to Internet with speeds of three megabits per second or faster, compared with only 3 percent, or 7.2 million people, in non-rural areas, according to an FCC report titled ‘Bringing Broadband to Rural America.’”

Well, help may be on the way, unless of course Congress kills this productivity-boosting initiative: “Telecommunications companies in 16 states [with vast territory to cover] will share more than $103 million in federal funding to help expand broadband Internet access to those areas of rural America that haven’t been reached by the high-speed service or are underserved, the U.S. Department of Agriculture announced [August 22^nd]… Policymakers, public interest groups and telecom companies are seeking to bridge the digital divide by reaching even the most remote pockets of the U.S. with broadband internet, hoping to improve economic and educational opportunities there.

“‘There’s a big gap that remains between rural and urban areas because it’s just hard [for carriers] to make a business case in rural areas,’ said Jonathan Adelstein, the agriculture department’s rural utilities service administrator, in a conference call with reporters. ‘Rural areas’ future depends upon access to broadband and we’re not where we need to be today.’… Adlestein said there’s still a ‘long way to go’ in terms of bringing rural America in line with the rest of the country, and he added that one of the challenges is that young people won’t stay in communities without broadband Internet access… ‘There’s not a future there for them,’ he said. ‘Not only do they expect it, but they need it ... if young people want to stay rural areas where they grew up.’” The Post. And given global competition, we need every productivity boost we can get. Growing access to broadband is a fundamental part of that effort.

I’m Peter Dekom, and if we believe in America, we need to invest in America’s future… or write our future off and stop investing to save our governmental budgets.

The Half Widows of Kashmir

Kashmir has no oil, so whatever violence and genocide may occur in this most northern Indian state, one that borders Pakistan, is often overlooked in the headlines. But despite the tourist literature showing the famed houseboats on Dal Lake in heart of picturesque Kashmir (above), make no mistake, this is a violent arena where Muslim separatists battle Indian troops over the future of this territory. In the great 1947 post-British-rule-partition that created a primarily Muslim country in the north (Pakistan and ultimately Bangladesh) and a primarily Hindu nation in the south (India), Kashmir – also a primarily Muslim state – wound up on the Indian side of the equation. Both Pakistan and a group of extreme indigenous Kashmiri Muslims have been trying either to force Kashmir into Pakistan or, alternatively, at least into an autonomous country.

India and Pakistan have fought wars in 1947, 1965, 1971 and 1999, and despite recent talks, this remains a particularly tense border. The nuclear arms race in the region is directly related to this hostility, and there have been massacres on both side of the conflict. Muslim separatists attacked the coastal Indian city of Mumbai in 2008, and between bombs and guns, killed over 100 people; the terrorists were linked to Pakistan, where purportedly training and financings for such activities were generated. Bombings that occurred in July of this year, where 17 people were killed, have been allegedly traced to Pakistan as well.

But there are still thousands of people in Kashmir who have disappeared, so many that a human rights inquiry has attempted to chart their dubious path to obliteration. “Thousands of bullet-riddled bodies are buried in dozens of unmarked graves across Kashmir, a state human rights commission inquiry has concluded, many of them likely to be those of civilians who disappeared more than a decade ago in the brutal insurgency in the troubled region… The inquiry, the result of three years of investigative work by senior police officers working for the Jammu and Kashmir State Human Rights Commission, brings the first official acknowledgment that civilians might have been buried in mass graves in Kashmir, a region claimed by both India and Pakistan where insurgents waged a bloody battle for independence in the early 1990s.

“The report catalogs 2,156 bodies found in graves in four districts of Kashmir that had been at the heart of the insurgency. It called for a thorough inquiry and collection of DNA evidence to identify the dead, and urged that anyone killed by security forces in Kashmir in the future be properly identified to avoid abuse of special laws shielding the military from prosecution there… Thousands of people, mostly young men, have gone missing in Kashmir. Some went to be trained as militants in the Pakistan-controlled portion of Kashmir and were killed in fighting. Many others were detained by Indian security forces. The wives they left behind are known as half widows, because the fate of their husbands is unknown. Parents keep vigil for sons who were arrested two decades ago.” New York Times, August 22^nd. For those of us concerned about injustice in the world, we should be equally concerned with the unheralded deaths, unexplained disappearances and unmarked graves of injustice, anguish and pain… even where we might not covet natural resources.

I’m Peter Dekom, and I believe that where we let mass killings slide without demanding accountability, we are all diminished by this injustice.

Shakin’ in DC

With a 5.8 quake August 23^rd on the east coast, traveling fast with lots of granite and other massive rock formations deep under that terrain, chaos and a momentary expectation of a terrorist attack brought our nation’s capital to an abrupt halt. Most downtown office buildings were immediately evacuated. Cabinet officers were whisked to safety “just in case.” The White House area was immediately cordoned off (even though the President was vacationing hundreds of miles north), and federal employees flooded the streets. A nearby nuclear power plant in Virginia (the epicenter was actually in Virginia) was taken off line fairly quickly. When public transportation got back into operation, the lines to the subway and busses were intolerably long. My son, who is an investment officer with the Department of Energy, elected to make the long walk instead, first to check on his fiancée (a medical student at George Washington University) and then to his apartment in central D.C.

I don’t see any Evangelicals telling us that God was punishing Washington for its recent debt-ceiling crisis or the complete unwillingness of our two political parties to be willing to work together. The Episcopal National Cathedral was damaged – the tips of three beautiful spires fell off (see above) – as was the Washington Monument, the old Smithsonian Castle and even parts of the National Mall. Didn’t seem like a violent retribution from an angry deity, but for those of in California, a 5.8 is barely news. At least our buildings are generally built to tolerate a modicum of shaking and baking.

Well, not so fast: there’s New York’s Rabbi Yehuda Levin who feels there was punishment involved: “In a video uploaded to YouTube, Levin says gay rights legislation, like the gay marriage law passed in New York, are responsible for earthquakes, like the one that struck Washington, D.C. [August 23^rd]....‘The Talmud states, 'You have shaken your male member in a place where it doesn't belong. I too, will shake the Earth,'’ Levin says.” Huffington Post, August 24^th. Oy!

Back to the real world. DC schools were closed, lots of federal employees were authorized to “telecommute” or take a quick leave of absence, and here’s a partial list of federal buildings in DC that were closed the next day: Federal Aviation Administration (headquarters),Department of Health and Human Services (Hubert Humphrey Building), Department of Labor (Frances Perkins Building), Independent U.S. Government Offices (National Building Museum), National Endowment for the Arts (Post Office Old), Department of Agriculture (Agriculture South), Department of Homeland Security (Nebraska Avenue Complex) and the Department of the Interior (headquarters).

Even as building and bridge inspectors make the rounds to insure safety, there is little long-term concern for the DC area, where hurricanes are more of a threat than such tumblers. According to the Tacoma Park Patch (August 23^rd): “This is metropolitan Washington’s second quake in just over a year. A 3.6-magnitude tremor—less than one-tenth the strength of today’s quake—struck five kilometers beneath Gaithersburg last July…Maryland’s earthquake history dates back to a 30-second quake reported in Annapolis in 1758…USGS archives list no significant Maryland-based seismic events since an 1885 quake near the Frederick County-Loudoun County border. Reports over the last few decades have come from earthquakes in neighboring states, including:

o A 4.3-magnitude earthquake near Elgood, W. Va. in 1969

o A 1972 tremor centered in Wilmington, Del.

o A minor earthquake near the Delaware-New Jersey-Pennsylvania border in 1973”

So many other communities in the United States face natural disasters that make the shaker in the DC area seem trivial by comparison, but then except at primary/election time, they do not suffer from a plague of politicians that infests Washington on a regular and consistent basis… except at primary/election time.

I’m Peter Dekom, and I wonder what most Americans really would have preferred to have happened to Washington instead of a pretty innocuous earthquake.

The Big Shortcut

It has been a dream since the earliest phases of North American history: find a passage through North America to link Europe to Asia by sea. The Panama Canal was a man-made shortcut, but it was more focused on trade to the west coast of the United States than anything else. The Suez Canal made trade with the Middle East and parts of Asia easier, but the prize-of-prizes, the Northwest Passage was pretty close to international trade’s equivalent of the Holy Grail.

“In 1776 Captain James Cook was dispatched by the Admiralty in Great Britain under orders driven by a 1745 act which, when extended in 1775, promised a £20,000 prize for whoever discovered the passage. Initially the Admiralty had wanted Charles Clerke to lead the expedition, with Cook (in retirement following his exploits in the Pacific) acting as a consultant. However Cook had researched Bering's expeditions, and the Admiralty ultimately placed their faith in the veteran explorer to lead with Clerke accompanying him.

“After journeying through the Pacific, in another west–east attempt, Cook began at Nootka Sound in April 1778, and headed north along the coastline, charting the lands and searching for the regions sailed by the Russians 40 years previously. The Admiralty's orders had commanded the expedition to ignore all inlets and rivers until they reached a latitude of 65°N. Cook, however, failed to make any progress in sighting a Northwestern Passage.

“Various officers on the expedition, including William Bligh, George Vancouver, and John Gore, thought the existence of a route was 'improbable'. Before reaching 65°N they found the coastline pushing them further south, but Gore convinced Cook to sail on into the Cook Inlet in the hope of finding the route. They continued to the limits of the Alaskan peninsula and the start of the 1,200 mi (1,900 km) chain of Aleutian Islands. Despite reaching 70°N they encountered nothing but icebergs…

“The first explorer to conquer the Northwest Passage was the Norwegian explorer Roald Amundsen. In a three year journey between 1903 and 1906, Amundsen explored the passage with a crew of no more than six. Amundsen, who had sailed just in time to escape creditors seeking to stop the expedition, completed the voyage in the converted 47-ton herring boat Gjøa [pictured above]… Amundsen set out from Oslo in June 1903 and was west of the Boothia Peninsula by late September. The Gjøa was put into a natural harbour on the south shore of King William Island; by October 3 she was iced in. There the expedition remained for nearly two years, with the expedition members learning from the local Inuit people and undertaking measurements to determine the location of the North Magnetic Pole. The harbour, known as Gjoa Haven, has become the only settlement on the island.” Wikipedia.

Dozens of other attempts were mounted, but almost all were doomed to failure. Only when nuclear submarines were able to dive beneath polar ice caps (as did the Nautilus in 1958) was a very difficult “undersea” passage found. Many mariners who tried that same journey on surface ships died for their efforts. In the 1940s, a fortified “ice schooner” sort of made the journey with exceptional difficulty, but a genuine trade route was truly impossible. Until the last decade. For those who doubt the existence of global warming, the frenetic activity of world powers jockeying for legal justification to control the Northwest Passage would seem to be the clearest and most incontrovertible evidence to the contrary: “In 2007, while many of us were busy arguing about whether or not climate change is real, a Russian mini-sub planted a titanium flag on the sea floor far beneath the floating ice lid, claiming the North Pole for the Motherland. Not surprisingly, that claim didn't go over well with the representatives of the United States, Canada, Norway, Sweden, Denmark, Finland, and Iceland, all of whom also have strong territorial interests--and military presences--in the Arctic.” FastCompany.com, August 22^nd.

Indeed, nations have been planting flags on all sorts of tiny islands and outcroppings of land pushing up from the oceans. “Under the Law of the Sea Treaty [signed by most countries], even the smallest patch of land offshore can anchor territorial rights to huge swathes of surrounding ocean. Russian geologists and politicians now say that the Lomonosov Ridge, an undersea belt of rock bisecting the heart of the Arctic Ocean, is an official extension of their mainland. This, of course, ignores the fact that it lies beneath thousands of feet of water and also comes close to the continental rims of Canada and Greenland, as well. In July of this year, a Russian nuclear icebreaker mapped the sea bed in hopes of bolstering that bold assertion. If the United Nations approves the claim, then Russia stands to gain 380,000 square miles of what used to be considered international waters, along with exclusive rights to massive reserves of oil and gas on the shallow continental shelves.

“Ironically, the artificial global thaw that spawned this land grab was largely caused by the nations that are now hoping to cash in on it; the United States, for example, was the planet's largest emitter of greenhouse gases until China surpassed it recently. Stay tuned for more drama as some of the world's most powerful nations squabble over a high-stakes bonanza that will reshape the geography of the far north for thousands of years to come. Let's hope that this burgeoning ‘cold rush’ doesn't trigger any hot conflicts, as well.” FastCompany.com.

I’m Peter Dekom, and did you ever get this sinking feeling about global greed?

Goin’ Fission

Dr. AQ Khan is the famous Pakistani nuclear scientist (a metallurgist by training) who leaked detailed blueprints to both North Korea and Iran on how to refine fissionable plutonium/uranium for use in nuclear weapons. Making the weapons is the easy part: a small non-nuclear explosion in a contained shell shoves two less-than-critical-mass (critical mass = the point when it creates nuclear detonation) lumps of high grade plutonium into one lump of critical-mass plutonium. Boom! Make that a really, really big BOOM!

The hard part is getting enough weapons-grade material in sufficient quantities to make an explosive bomb or warhead. “Only certain fissile isotopes of plutonium and uranium can be used in nuclear weapons. For plutonium, it is plutonium-239 (Pu-239), while uranium has uranium-233 (U-233) and uranium-235 (U-235)… Pu-239 is produced artificially in nuclear reactors when a neutron is absorbed by U-238, forming U-239, which then decays in a rapid two-step process into Pu-239. It can then be separated from the uranium in a nuclear reprocessing plant.” Wikipedia. While there are several methods of such extraction – “reprocessing” – the method conveyed by Dr. Khan involved a massive and complex array of high-speed centrifuges that very slowly extracted minute levels of fissionable material, aggregating enough for a weapon over a very long period of time.

“Though never convicted of a crime, Dr. Khan, a hero to his people and the Muslim world, was placed in house-arrest, but was released fully in 2009: “Early yesterday, the Pakistani scientist at the center of one of history's worst nuclear scandals walked out of his Islamabad villa to declare his vindication after five years of house arrest. ‘The judgment, by the grace of God, is good,’ a smiling Abdul Qadeer Khan told a throng of reporters and TV crews.

“Moments earlier, a Pakistani court had ordered the release of the metallurgist who had famously admitted selling nuclear secrets to Iran, Libya and North Korea. Through years of legal limbo, Khan, 72, had never been charged, and now he never will be. ‘The so-called A.Q. Khan affair is a closed chapter,’ a Pakistani government spokesman said.” Washington Post, Feb. 7, 2009

But General Electric has (??) recently made a scientific break-through that should make it vastly easier for nations with their laser technology to secure enough weapons-grade nuclear material to make thousands of bombs and warheads. Ain’t that wonderful?! “One idea, a half-century old, has been to do it with nothing more substantial than lasers and their rays of concentrated light. This futuristic approach has always proved too expensive and difficult for anything but laboratory experimentation… Until now… In a little-known effort, General Electric has successfully tested laser enrichment for two years and is seeking federal permission to build a $1 billion plant that would make reactor fuel by the ton.

“That might be good news for the nuclear industry. But critics fear that if the work succeeds and the secret gets out, rogue states and terrorists could make bomb fuel in much smaller plants that are difficult to detect.” New York Times, August 20^th. No one in the government will verify that this technology is actually online and working; it is beyond top secret. But if the New York Times can get this story, and if making the actual weapons is a slam-dunk, a technology available online or in a public library, could lurking and massive danger be far behind? It only take one well-placed nuclear device to disable Israel or to bring the U.S. to financial Armageddon. Should we be concerned? I am.

I’m Peter Dekom, and some research really seems quite unnecessary.

Moody’s Blues

Are we at the mercy of the credit ratings agencies? We’ve watched how downgrades of creditworthiness of some of the lesser European Union members has dragged the rest of Europe into an unpleasant economic decline that’s beginning to undermine the recovery and look a whole lot like a full blown recession. The EU did have a choice – one they have not made because it increases the burden on the mainstays of the EU “euro” nations (France and Germany) – to issue a never-before “euro bond” at a reasonable rate, guaranteed by the Union itself, and then to provide this capital to the unsteady economies like Greece, Spain, Ireland, etc. to lift the latter out of their current 10-14%+ borrowing rates. And when they didn’t, the markets tumbled to the darkest depths we have seen since 2009, when the market showed us how far it could fall.

Earlier, this month, one agency decided that the United States needed a downgrade as well – warning of increasing downgrades if sense and reason do not return to economic governance. Standard & Poor’s, the only major agency to impose this lowered AA+ rated on the U.S., held to this downgrade, even after acknowledging a $2 trillion miscalculation, saying: “The downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenge.” The markets have been in a yo-yo movement – mostly down – ever since, and S&P rubbed salt in the gaping wound it opened by downgrading the investment portfolios of state and local governments that hedged with U.S. Treasuries: “S&P cut its rating of [Los Angeles, CA’s] general investment pool to AA from AAA. It also downgraded dozens of other municipalities with large investments in U.S. Treasury notes.” Los Angeles Times, August 18^th. Ooooh. LA removed S&P from the list of acceptable ratings agencies to rate their municipal bonds.

This trickle-down of negativity wasn’t relegated to S&P: “The Moody’s review, which put five states and 161 AAA-rated local governments on the negative-outlook watch list, found that Massachusetts was second only to Virginia in the number of communities at risk, largely because both states’ economies are highly dependent on federal spending.” Boston Globe, August 9^th. With austerity, the dish best served cold, as the only item on the federal menu, guess what the credit rating agencies think this means for so many state and local governments?

But wait, weren’t these rating agencies the same ogres who were paid by the big Wall Street investment firms to assign AAA ratings to sub-prime mortgage bundles, one of the major factors that encouraged the over-borrowing that tanked our private sector? I continue to be staggered by the fact that we still let financial institutions and other large-scale borrowers (governments, corporations, etc.) pick which rating agency they will use to rate a new debt issuance. Why would anyone pay an agency with a reputation for being tough and fair on such assessments over an agency that “will play ball”? This is a flaw in the system that you could drive a truck through… hell every truck in America! The agencies, under scrutiny from the government and involved in litigation over this subject, rage that they were/are always honest and fair. Easter bunny time!

Well, maybe this little exposé in the August 19^th Washington Post will set you straight: “In an 80-page letter to federal regulators, a former Moody’s senior vice president says the firm systematically squelched its analysts’ private doubts to keep deals and profits flowing… Moody’s managers intimidated analysts who stood in the way of favorable ratings, and its compliance department harassed employees who took an independent stand, according to the former analyst, William J. Harrington…According to Harrington, a fundamental conflict of interest permeated the firm’s culture: Like other credit rating agencies, Moody’s is paid by the very companies whose securities it is supposed to grade objectively…

“‘The goal of management is to mold analysts into pliable corporate citizens who cast their committee votes in line with the unchanging corporate credo of maximizing earnings of the largely captive franchise,’ he wrote… Repeatedly, Moody’s management ignored internal warnings that employees responsible for rating securities backed by home mortgages were ‘pumping out worthless opinions,’ he wrote.” Moody’s, of course, denied the allegation and responded with their “highest integrity” card. Whom do you believe? And why exactly, has our Congress failed to deal with regulating this obvious flaw in the system? Instead they cry that “regulations are job-killers.” Exactly how many jobs did these credit rating agencies kill by helping to tank the entire American… er global… economy? Can’t we at least get a couple of indictments out of this behavior?

I’m Peter Dekom, and there goes the “screw common sense, because I have a better-sounding, catchy-if-totally-inaccurate slogan that will get me re-elected” factor that has undermined confidence in the entire system.

A Mountain to Climb? KP-1461

According to Wikipedia, globally somewhere north of 33 million people are infected with the HIV virus; a steep rise from the estimated 8 million who had the disease in 1990. While the U.S. infection rate is above 1.2 million, the worst area on earth is Africa: “19 countries worldwide with the highest prevalence of reported infections are all African countries with more than 24.5 million, and more than 60% of the HIV-infected population.” And you may have noticed of late that HIV infections have slid far off the headline pages, relegated to occasional reporting of the ranging success of one set of “cocktails” – an expensive combination of medications – that seems able to extend HIV-lives almost indefinitely. Basketball great and entrepreneur Magic Johnson has become the poster boy for the success that is possible here, and stories about him seldom note his long-standing HIV condition. It’s just not news anymore.

But to date with about 30 million deaths worldwide since the epidemic began (about 11 thousand Americans die every year from HIV-related causes), the notion of a cure for this dreaded disease has been elusive. What if you could incent the virus to destroy itself? Is this even possible? “Koronis Pharmaceuticals, a Seattle-based biotech company, has a potential solution to the HIV epidemic with KP-1461, a new kind of drug that essentially mutates HIV into oblivion. If it works, patients could eventually get off the drug altogether and remain HIV-free.

“Traditional HIV drugs attempt to keep the virus in check by preventing it from replicating. But Koronis's KP-1461 uses a new drug mechanism--dubbed Viral Decay AccelerationT--to insert itself into the viral genome, increasing the frequency of mutations, until eventually the virus population collapses. ‘If you think of HIV as a house made of two by fours, and the genetic backbone of the virus as the foundation of that house, [the drug mechanism] replaces the two by fours with toothpicks, and eventually the house comes crashing down,’ says Dr. Mark G. Fromhold, VP of Manufacturing and Business Development at Koronis… KP-1461 might be successful in eradicating HIV in humans, but no one is really sure yet. If it does work, it won't be a cure in the traditional sense. Patients would have to take the drug for a long time as the virus slowly mutated itself to death.” FastCompany.com, August 17^th.

But there’s a catch. In a world where treating HIV is particularly expensive, the beneficiaries of this cost are, of course, the big pharmaceutical companies that rake in huge profits from expensive drugs required to keep HIV-infected people alive. They hate the possibility of a cure for this virus almost as much as they dread a cure for diabetes: “[As the clinical KP-1461] tests continue, Koronis may run into problems forming partnerships with major pharmaceutical companies that are happy with the current state of the HIV drug market. ‘The business model is predicated on the chronic application of drugs that have very high margins,’ says Koronis CEO Don Elmer.” FastCompany.com. And Koronis doesn’t have the capital to go this alone.

I’m Peter Dekom, and don’t stories like this just make you feel warm and fuzzy inside?

Africa’s Hidden Battleground

How many of us have received emails with startling financial offers totally millions of dollars to help high-ranking “Nigerian officials” expatriate their money? Corruption is a way of life here. Seems like a national pastime – “Cyber-Fraud R Us,” but there is a vastly more sinister force moving across this rather large and heavily populated (155+ million) north-central West African coastal nation, where English is the language of commerce and law. It is also a country wracked with violent religious struggles. Fundamentalism abounds, particularly Islamists in the north, and Nigeria’s brand of Evangelical Christianity (they’ve even sent missionaries to the United States) in the south. Most Nigerians are in that vast “just leave me alone to live my life” place, a few practice only ancient tribal faiths, but extremists are each trying to one-up the other for political control.

Oh, did I mention that the big prize? Aside from having the second largest stock exchange in Africa, it is a massive net oil exporter: “Nigeria is the 12th largest producer of petroleum in the world and the 8th largest exporter, and has the 10th largest proven reserves. (The country joined OPEC in 1971). Petroleum plays a large role in the Nigerian economy, accounting for 40% of GDP and 80% of Government earnings. However, agitation for better resource control in the Niger Delta, its main oil producing region, has led to disruptions in oil production and currently prevents the country from exporting at 100% capacity.” Wikipedia.

Two years ago, Nigerian authorities operating with what they thought was violent efficiency, believed that they had at least eradicated the nascent Al Qaeda presence that was fomenting militant Sunni unrest: a local group with ties to Al Qaeda, Boko Haram, was literally slaughtered virtually out of existence as they tried to fight back with the most primitive weapons. Or so the government believed. But as global forces in Central and Southeast Asia seemed to circle and decapitate Al Qaeda’s effectiveness in those regions, these malevolent Islamists refocused on various parts of Africa to rebuild their crumbling political power. Nigeria was a natural for this resurgence.

“Now, insurgents strike at the Nigerian military, the police and opponents of Islamic law in near-daily assaults and bombings, using improvised explosive devices that can be detonated remotely and bear the hallmarks of Al Qaeda in the Islamic Maghreb, Western officials and analysts say. Beyond the immediate devastation, the fear is that extremists bent on jihad are spreading their reach across the continent and planting roots in a major, Western-allied state that had not been seen as a hotbed of global terrorism.

“In the past two years, Boko Haram has met and trained with Qaeda affiliates outside the country, American and Nigerian officials and analysts say, and the group has begun waging a propaganda campaign that includes conference calls with reporters — another sign of its growing sophistication.

“‘Where are they getting this knowledge of I.E.D.’s?’ said Kashim Shettima, the new governor here. ‘Some of them went as far as Sudan. Why? I believe they are making efforts to reach out to the global terrorism network.’ … The Nigerian government appears to have only a shaky grasp of how to confront the threat, responding with such a broad, harsh crackdown that many residents see the military as more of a danger than Boko Haram. Shops are shuttered, vans laden with refugees can be seeing heading out of town and the normally wide, traffic-choked streets lined with neem trees are unexpectedly clear.” New York Times, August 17^th.

Boko Haram has infiltrated the police, the military, and virtually every relevant urban security force. They are well-trained now, have access to modern weapons, and seem to outmatch the incumbent authorities at every turn. Heavy-handed military assaults have only played into Boko Haram’s search for new recruits. Nigeria seems so far away; its problems certainly couldn’t mean anything for American interests, could they?

I’m Peter Dekom, and foreign policy seems increasingly like a deadly game of whack a mole.

Will Revolutionaries Become Resolutionaries?

As long as the votes take place within the United Nations Security Council, the United States (along with several other nations), as a permanent member, has veto power. That extraordinary super-voting power does not exist at the larger, vastly more inclusive, General Assembly (pictured above), where a two-thirds majority is sufficient for the United Nations to recognize a new nation as a viable state. And the question of Palestinian autonomy will probably be presented to the General Assembly next month.

Such a vote is not the be-all-and-end-all of UN membership, however: “It is a near certainty that the United Nations General Assembly will consider a resolution recognizing Palestinian statehood in September 2011. The vote would be largely symbolic – the General Assembly cannot grant statehood. U.N. membership is not assured without prior consent from the permanent Security Council members. Outside the ivory tower of the U.N., such recognition is only achieved through unilateral acknowledgement by independent, sovereign states.” Foreign Policy Journal, July 13, 2011.

It appears, however, that such a General Assembly vote is all but certain, forcing the issue to the Security Council for a membership vote, and placing the United States in an exceptionally awkward position, particularly if it acts alone in support of Israel’s position on Palestine: “Despite the fact that this distinctively token [General Assembly] vote meets the measure of forlorn hope, its consequences will be very real… Although the formal peace process has clearly stalled, the mere discussion of Palestinian state has come at Israel’s expense. Passage of the measure would demonstrate the Jewish state’s growing isolation from the international community. Conversely, rejection of the resolution would undoubtedly escalate simmering tensions.

“Dissatisfaction and unrest among Palestinians would be acute…Concurrently, a US decision to exercise veto power at the Security Council would have disastrous consequence for American interests in the Arab world.” Foreign Policy Journal. The increase in construction of West Bank Jewish settlements has in fact sent a strong signal from Israel, currently under a hard-line Likud leadership, that it will stand in defiance of any such United Nations vote. The local peace process is going nowhere; lines have been drawn in the sand.

Both Israel and Palestinian authorities are out “in the world” lobbying support for that upcoming vote. For example, on August 14^th, “Palestinian President Mahmoud Abbas [traveled to meet] leaders of Bosnia-Herzegovina, a non-permanent member of the UN Security Council, as Palestinians plan to bring a resolution on Palestinian statehood to the United Nations in September… Foreign Minister Sven Alkalaj told media in Sarajevo that Abbas was coming to lobby for support for Palestinian U.N. membership but that Bosnia still has not made up its mind… Bosnia's Muslims and Catholic Croats may side with the Palestinians while the Serbs are likely to support Israel.” Huffington Post, August 15^th. Or this bipartisan effort from some members of our Congress: “More than 80 members of the House are visiting Israel this month as guests of the American Israel Education Foundation, a charity affiliated with the powerful American Israel Public Affairs Committee. It is the largest number of members of Congress ever to make the trip during a single recess, according to the organizers.” New York Times, August 15^th.

“Conventional wisdom suggests the Palestinians want to exceed the vote minimum in the General Assembly, thereby engaging American in a high-stakes game of diplomatic brinksmanship. However, this collision is likely to end in conflict rather than conciliation, and the Palestinians know it. On the streets of the West Bank and Gaza, talk is building of hundreds of thousands taking the streets in the ramp-up to the U.N. vote, supported by millions of fellow Arabs, in a powerful demonstration of cultural solidarity and frustration with Israel’s perceived intransigence… This should come as little surprise. Palestinian attitudes and expectations for the September vote remain upbeat, if tempered by the political reality of United States’ ultimate determination of the resolution’s achievement.” Foreign Policy Journal.

There is little doubt, given the social media-linked protests of late, that there will be seismic reactions to any negative vote against Palestine’s statehood, at any level. With America’s credibility on the line – her very ability to negotiate throughout the Muslim world where American military struggles abound – what transpires in the next few months may set the tone for years. With domestic pressures, fueled by budgetary realities, to withdraw from Afghanistan and to finalize the last vestiges of the American presence in Iraq, a growing hostility at America’s position on Palestine could make such decisions increasingly difficult, forcing more military and fewer diplomatic efforts in the future.

I’m Peter Dekom, and all of these decisions have severe political and economic consequences for each and every one of us.