Restoring Regularity to the System

You’ve heard me wail and flail on numerous occasions at the Wild Wild West mentality of the massive financial services sector of our global economy. It’s not that I have the slightest repugnance over folks getting filthy, stinking, rotten rich – for that is a part of capitalism that I embrace – it’s just that I feel sick when they make big money through distortion, market manipulation, hard-to-trace complex bundles of obscure derivatives, insider information, rules and regulations that tilt the playing field in their favor and tax rates that only apply to folks lucky enough to work for funds where their bonus compensation is called a “carried interest” and then get a tax rate half that of their peers in other industries making the same amount. Bottom line: we need transparency, accountability, a level playing field for everyone and, most of all, sufficient regulation to make sure that an industry that has proven beyond a shadow of a doubt that it cannot regulate itself adheres to such principles.

Yet Wall Street resists the kind of oversight that might even save it from its worst possible enemy: Wall Street. Would JP Morgan Chase have lost the estimated $9 billion in rogue-trading losses if it were properly supervised? Would our banking community even have needed a bailout if they had avoided packaging subprime loans at values that no sane investor would ever accept… except the government failed to supervise the credit rating agencies who blessed such “trading crap” as lovely-smelling, value-impregnated, A-rated debt? Or would the “too big to fail” players like Bear Stearns and Lehman Bros. – exempted by the S.E.C. from normal and more modest ratios of debt (based on debt) and prone to hide true financial values by hiding the bad stuff in “off-balance” sheet machinations – have survived with a regulation that would never have allowed 30+ to-one multiples of debt over equity EVER!!!!

In a world where such missteps (a polite understatement, I might add) tank the value of virtually every house in the United States, pull the financial rug out from under the entire nation necessitating massive layoffs with concomitant long-term unemployment as its unjust reward, and decimate the local tax base of virtually every state and municipal government in the land, doesn’t the public have a right to demand regulations that say: NEVER AGAIN? Does it even matter that during this debacle, the power elite – the infamous 1% – was able to pick up additional assets that had fallen in value because of these misdeeds and raise their stake in America such that they now own 42% of this country’s entire wealth… a number that just keeps rising?

In Jolly Olde England, Barclays PLC is a mega-financial institution that provides everything from investment to commercial banking, sitting in 22^nd place on the London Stock Exchange and the fourth largest bank in the world. Big. But their British bankers weren’t sufficiently “Wild Wild West” aggressive enough, so they imported an American – Bob Diamond – to be their “Wild Wild West” chief executive officer. As you may be aware, Barclays is at the heart of a massive scandal in the UK because they admittedly manipulated the European equivalent of America’s prime rate, known as LIBOR (London Interbank Offered Rate) which is set as various banks report the interest rates they charge and expect to charge each other, to be much less than they were actually paying in order to drive their borrowing rates downward and to project a rosier financial picture of Barclays’ financial strength that they actually had. Basically, they knowingly submitted false data to the rate-setting authorities.

The manipulation was apparently pervasive throughout the bank and invariably involved some heavy collusion from other banks with an equally strong motivation in dropping their effective borrowing rates. Since financial transactions all over the world are based on LIBOR rates, this distortion rippled through global markets and has seriously impaired the credibility of the entire London-based banking sector. LIBOR is established daily based on a poll that asks banks at what rate they think they will be able to borrow money from each other in 10 major currencies and for 15 borrowing periods ranging from overnight loans to 12 months.

Barclays was fined about $450 million for its role in this rate-fixing scandal, but it could not have operated alone. Big Bad Barclays Banking Bob Diamond, claiming he was not aware of the collusion within his company to rig the interest rates, had to go anyway. After testifying before a Parliamentary committee and protesting his innocence (actually suggesting that some of his subordinates might have to face criminal sanctions), it was clear his time was at hand… and out he went, resigning for the good of the shareholders. German regulators are now looking at their giant Deutsche Bank. “Authorities in the United States, Europe, Japan and Canada are examining more than a dozen big banks over suspected rigging of the London Interbank Offered Rate … Britain's Barclays has so far been the only bank to admit wrongdoing…The rate-fixing scandal has exploded into the front ranks of politics, especially in Britain, where politicians say the bankers responsible should end up in jail.” Reuters, July 6^th.

We’re so used to banks’ lying and manipulating that this story barely got any coverage in the United States, even as it completely dominates European headlines. As Joe Nocera wrote in his July 6^th New York Times column: “Britain and America have reacted to the Libor scandal in completely different ways. Britain is in an utter frenzy over it, with wall-to-wall coverage, and the most respectable, pro-business publications expressing outrage. Yes, Barclays is a British bank, and the first word in Libor is ‘London.’ But still: The Economist ran a headline about the scandal that read, in its entirety, ‘Banksters.’

“Yet, on these shores, the reaction has been mainly a shrug. Perhaps we’re suffering from bank-scandal fatigue, having lived through Bank of America’s various travails, and the Goldman Sachs revelations, and, most recently, the big JPMorgan Chase trading loss. Or maybe Libor is just hard to gets one’s head around.

“But the Brits have this one right. They may not understand the intricacies of Libor any better than we do, but they sense, powerfully, that banks have once again made a mockery of the role that society entrusts to them.”

Since rate-fixing has been going on for years, even conservatives on both sides of the Atlantic are asking the big question: “As big banks face the fallout from a global investigation into interest rate manipulation, American and British lawmakers are scrutinizing regulators who failed to take action that might have prevented years of illegal activity.” NY Times, July 10^th. You mean the same U.S. lawmakers who only allowed only a very watered-down Dodd-Frank financial regulatory bill to pass Congress and then voted against adequately funding the regulatory agencies that were designated to create and implement the necessary regulations so the statute became almost meaningless?

Try this little survey for a reality check on the need for regulation: “In a survey of 500 senior executives in the United States and the UK, 26 percent of respondents said they had observed or had firsthand knowledge of wrongdoing in the workplace, while 24 percent said they believed financial services professionals may need to engage in unethical or illegal conduct to be successful… Sixteen percent of respondents said they would commit insider trading if they could get away with it, according to [survey sponsor and whistle-blower law firm] Labaton Sucharow. And 30 percent said their compensation plans created pressure to compromise ethical standards or violate the law.” Jobs.aol.com, July 10^th.

How in the world can there be any significant body of Americans who support reducing our regulatory oversight of these financial behemoths? And yet this combination of unbridled greed laced with the ability to secure votes (hey, hey, hey Super PACs paid for by Wall Street mavens!) from undereducated and gullible Americans has produced precisely this result in droves. How many more financial collapses will it take to get this point across… or is it already too late?

I’m Peter Dekom, and the seeming lack of concern by our largest financial institutions that they are undermining the entire political structure that allows them to exist still shocks me.

The Hole in the Whole

For some, National Federation of Independent Business v. Sebelius (the recent Supreme Court case upholding the Affordable Care Act, also labeled “Obamacare”) was about limits to what a governmental body could impose on individuals. They argued that nothing in the constitution could possibly mandate people to purchase products or services, from the over-used “broccoli” parallels to health insurance, and while the court agreed that this power did not reside in constitution’s grant to Congress of control over interstate commerce, writing for the majority, Chief Justice John Roberts did find justification for the “individual mandate” to have healthcare insurance in the taxing powers accorded to Congress. The decision was not, however, a total vindication of the statute.

There is another, mostly overlooked until now, provision of the court’s decision, one that focused on the Tenth Amendment’s relegation to the states of power over everything that the constitution did not grant to the federal government. This is a touchy fine line, but there have been some standards that effectively give the fed “bribing power” to get states to do what the feds want: “While the Supreme Court has made it clear many times that the federal government cannot command state governments to do anything, it has also upheld federal grants conditioned on compliance with federal dictates, so long as the penalty didn’t cross the line from ‘encouragement’ into ‘compulsion.’ The seminal case was South Dakota v. Dole (1987), in which the Court upheld a provision in the federal highway bill that allowed the Secretary of Transportation to dock 5 percent of a state’s federal highway funds if they refused to raise their drinking age to 21.” NationalReview.com, June 29^th

The part of National Federation of Independent Business that was most overlooked addressed the federal program aimed at providing healthcare for the poor – Medicaid – and how the Affordable Care Act purported to force states to take over a small portion of the overall burden (10%, but only after 2017) or lose the entire funding. The Roberts decision allows states to opt out of the new Medicaid provisions without penalty. “That ruling, experts say, could leave some of the poorest Americans in a ‘no-man’s land:’ Not covered by the federal entitlement program but not eligible for the subsidized health insurance… ‘Governors and state legislatures have a fundamental decision to make,’ said Sue Sherry, deputy director of Community Catalyst, a Boston-based think tank. ‘They have to decide whether they’ll provide basic health care to their poorest residents.’ ... The Medicaid expansion is expected to extend health insurance coverage to about 17 million Americans by 2019 by expanding the program to cover everyone below 133 percent of the federal poverty line (about $14,500 for an individual).” Washington Post, June 28^th.

Since the law created a mandate for people to carry healthcare coverage, sustained by the Supreme Court, Congress expanded Medicaid to pick up the tab for those who fell into the above-defined poverty level, providing subsidies for those at slightly higher levels of income. To cash-strapped states and those that will do anything to limit or restrict this statute that, this judicially-determined hole has become a cause célèbre among conservatives have seen a light at the end of their opposition tunnel – short of depending on electing federal officials who pledge to repeal the entire act.

Since the effective result of a state’s rejecting that provision would to leave its impoverished citizens without federal healthcare coverage, the only way to remedy this situation would be to pass the coverage 100% back to the federal government or provide more expensive state alternatives. However, since nothing remotely supportive of any of the president’s healthcare package could ever pass in a Congress where either Republican-controlled (through majority or filibuster) chamber chooses to oppose, the battle will move to the state legislatures, where decisions along party lines are to be expected.

Texas may well lead the charge: “Expanding Medicaid was the major portion of the health care law that the Supreme Court restricted in its decision, allowing states flexibility to opt out of the expansion without penalties. Thomas M. Suehs, the commissioner of the Texas Health and Human Services agency, said he remained concerned that expanding Medicaid without reforming it multiplied the costs the program put on states, adding that Medicaid already consumed a quarter of the state budget… As a result, many of the uninsured in Texas who would be eligible for coverage under the expansion remain in a state of limbo.” New York Times, June 29^th. “The financial burden would be higher on states that have traditionally had less expansive Medicaid programs. Texas, for example, only covers parents up to 26 percent of the Federal Poverty Line (about $2,900). The state would end up spending an estimated $2.6 billion on the coverage expansion between 2014 and 2019.” The Post.

Republican Governors in Kansas, Nebraska, South Carolina are already exploring this right to opt out now, while Wisconsin and Louisiana will at least wait to see the outcome of the November election before moving in that direction. There is potential a huge hole in healthcare looming, “leaving a huge question mark over the law’s mechanism for providing coverage to 17 million of the poorest people… In writing the law, Congress assumed that the poorest uninsured people would gain coverage through Medicaid, while many people with higher incomes would receive federal subsidies to buy private insurance. Now, poor people who live in a state that refuses to expand its Medicaid program will find themselves in a predicament, unable to obtain either Medicaid or subsidies.” The Post.

The law of unintended consequences might find those who will be disenfranchise should states opt out of coverage for the poor angry enough, and with nothing else to lose, willing to attack the system, violently if necessary. Class warfare? Others may simply move to states that have elected to remain in the Medicare system, placing a greater strain on state budgets in those states that support the legislation. Sure, workers in menial jobs might cause some disruption in the states unwilling to bear the Medicaid burden, but the state savings could be large. On the other hand, states where impoverished folks might move will be slammed.

California is likely to suffer greatly from such an effort, cannot discriminate against recent residents under the constitution and is already plagued by a hugely disproportionate share of this nation’s welfare recipients, an unfairness that has led California into crushing budget deficits and massive cutbacks in state programs. “Advocates of welfare reform in California often cite one, eye-popping statistic as they have pressed for cuts and changes to the [welfare] program in recent years: The state has one-eighth of the nation’s population but one-third of all welfare recipients.” BusinessWeek.com, December 11^th.

In these impaired economic times, increasingly there is a “every man for himself” mantra, an effective disavowal of our notions of Judeo-Christian charity at a national level, and the polarization that continues to split this country into intransigent factions suggests to some historians that we are witnessing the “beginning of the end” for this great country. Whether you are right, left or center, the unwillingness to compromise is a powerful vote against continuing in one amazing democratic experiment called the United States of America.

I’m Peter Dekom, and while compromise may seem like an anathema to many, for the United States learning to compromise is a question of our surviving as a nation.

Pain in the Grain

Sure we see out-of-season fruits and vegetables with foreign labels on them, meat-lovers are no strangers to beef from Argentina or even lamb from New Zealand and tons of the shrimp we eat come from shrimp farms in Thailand, but grain, that mainstay of American agriculture, may soon become an import of necessity. For all the poo-pooing of man-made global warming as a giant manipulative governmental hoax, the United States is absolutely shuddering under the impact of steadily rising temperatures and rapidly dwindling water supplies. Those who oppose environmental regulation cite either the unaffordable costs to correct this trend in a down economy, believe environmental regulation is anti-business at a time where need to incentivize job creation with vastly less government regulation, think that whatever is happening is nature not man or that we really shouldn’t worry about it because after the Great Flood God promised mankind never to impose such massive global disaster ever and again and will “fix” the problem in His own way.

It doesn’t take much in the way of climate change to alter the capacity of the land to grow designated crops. UCLA Professor Jared Diamond, in his very popular book Guns, Germs and Steel tells us that the reason civilization moved along an east-west ribbon around the globe was because when people moved from nomadic hunter-gathering to stationary agriculture, the crops they planted only prospered in the same latitude, failing when attempts were made to plant those same crops 500 miles farther north or south. If you look at a map of the Middle East, where civilization began and moved directly east or west, you can easily see the pattern of the early stages of the growth of civilization. If indeed global warming effects more than the equivalent of 500 miles of climatic difference, then we should in fact be witnessing the nascent stages of regional crop failures and a general notion that old land will no longer be suited for the crops that have been traditionally grown there.

We even have to look beyond the impact of the number of increasingly-intense hurricanes in the Atlantic and the Gulf, rising oceans claiming low-lying lands, the acceleration of heat and storms generally such as the one that has recently broiled the east from St. Louis to Washington, D.C. after an intense destructive wind-rain swath and record-breaking temperatures, or even the wild fires in the southwest that have devastated vast tracts of woodland in Arizona, California, Texas, New Mexico and most recently Colorado. We need to look directly at the land that grows our feed grain, constitutes one of America’s most vital exports and provides the very bread and corn we put on our tables.

Let’s start with Texas, where the ground is so dry that once fertile farms are drying out and cracking like a barren moonscape from drought. “[In late May,] a panel of specialists [met] at the 2012 Texas Water Summit hosted by the University of Texas at Austin’s Academy of Medicine, Engineering and Science... [Their survey found that as of] October 2011, eighty-eight percent of the state was rated as experiencing exceptional drought, putting heavy stress on many of Texas’ water systems. Ron Ellis, a representative of the Texas Commission on Environmental Quality’s (TCEQ) Water Availability Division, said that over fifteen first-time water rights priority calls were made leading to the suspension and curtailment of over 12,000 water rights in the state. Water systems with less than 180 days of water supply remaining were designated as High Priority Public water systems, and the TCEQ was compelled to provide a series of seven emergency planning workshops around the state... And there was less water for farming and ranching. The increasing trend of water reallocation from agricultural uses to municipal and industrial users over the last decade has considerably decreased water supplies available for agriculture, the panel said. This comes as demand increases particularly due to rice crop irrigation needs.” A StateImpact report from NPR.com, May 25^th. That drought is anything but over, and water resources in Texas are stretched to the limit.

North Texas supplies rainwater to replenish the Ogallala Aquifer, the largest underground source of water in the United States (which extends from South Dakota), 174,000 square miles that feeds 27% of the irrigated land in the United States. Texas’ drought has resulted in the largest decline in that water table in 25 years. Combined with the used of electric and turbine-powered pumping that began in large scale in the 1930s, the Aquifer is losing water faster than it can be replaced. “The [United States Geological Survey] estimated that total water storage was about 2,925,000,000 acre feet (3,608 km³) in 2005. This is a decline of about 253,000,000 acre feet (312 km³) (or 9%) since substantial ground-water irrigation development began, in the 1950s... At some places, the water table was measured to drop more than five feet (1.5 m) per year at the time of maximum extraction. In extreme cases, the deepening of wells was required to reach the steadily falling water table. The water table has been drained (dewatered) in some places, such as the Texas Panhandle. Using treated, recycled sources of water in agriculture is one approach to safeguarding the future of the aquifer. Another method of reducing the amount of water use is changing to crops that require less water, such as sunflowers.” Wikipedia. Is it “if” or “when” that water source will run dry?

But it’s not just the grain-land under and around the Ogallala Aquifer that is suffering. “Across a wide stretch of the Midwest, sweltering temperatures and a lack of rain are threatening what had been expected to be the nation’s largest corn crop in generations… Already, some farmers in Illinois and Missouri have given up on parched and stunted fields, mowing them over. National experts say parts of five corn-growing states, including Indiana, Kentucky and Ohio, are experiencing severe or extreme drought conditions. And in at least nine states, conditions in one-fifth to one-half of cornfields have been deemed poor or very poor, federal authorities reported [in early July], a notable shift from the high expectations of just a month ago.” New York Times, July 4^th.

Are our expectations real that while we may have depleted much of our petroleum reserves and extracted the majority of our mineral wealth, we sure have ample food supplies and will be able to feed ourselves and fuel our exports for some time to come? Can we really afford to continue to ignore the warning signs?

I’m Peter Dekom, and while this is a global problem that only global solutions can solve, shouldn’t we at least accelerate our own efforts to save ourselves by implementing vastly more time-sensitive and tangible goals?

Hail to the Chief

Hong Kong is a “special administrative region” (SAR) region of the Peoples Republic of China, the last “the sun never sets on the British Empire” colony; the Brits handed Hong Kong over to the PRC on July 1, 1997, but China pledged to honor locally-significant liberties in the former colony through at least 2047. There are 3.4 million registered voters in this SAR out of population in this crowded city-state of just over 7 million people. Its very existence as a global powerhouse has always been predicted on finance and trade, a place which accelerated in importance after it became a part of a settlement of the notorious “Opium Wars” in the middle of the nineteenth century. Because of a horrific balance of trade deficit at the time, stemming from a massive importation of Chinese tea with no offsetting exports to China, Britain began forcing a commodity that she had in excess – opium stored in India – into China, sometimes under the guise of a generally curative medicinal drug. As addiction grew, China naturally resisted. Britain and her allies (including the United States for a while) reciprocated and attacked Chinese forts and military forces with the most modern weapons available at the time. Hong Kong was one of several treaty concessions extracted by the allies after humiliating China’s antiquated military.

But Hong Kong was not a permanent transfer, although for those alive in 1842, it probably seemed that way. 1997 was programmed into the treaty as an end date. Today, there is a duly elected legislature that operates within the limits imposed by the PRC-driven “Basic Law” and the confines of the PRC tolerance for freedom in Hong Kong. It is an uneasy balancing act, made more difficult by the process of electing a “Chief Executive” – the effective president/governor – of the region. All those voters, well, they actually don’t have a say in this selection process. The Chief Executive is elected by a “1,200-member election committee for the chief executive drawn from broad sectoral groupings, central government bodies, municipal organizations, and elected Hong Kong officials.” CIA World Factbook. What isn’t exactly stated, but is obvious to every resident in Hong Kong, the folks who elect the Chief Executive always tow the Beijing party line and represent the former colony’s power elites, very much to the exclusion of the “average” worker.

If we think economic polarization is bad in the United States, and it really is, what has happen in Hong Kong since 1997 has further divided the haves from the have-nots. The wage gap between the top 5% and the rest of Hong Kong is widening by the minute, and real estate costs in this city with mainland and island holdings severely limiting residential possibilities is soaring to heights that would make millionaires in Beverly Hills blanch. The business elite have learned to smile and accept Beijing’s gradual contraction of local liberties, not caring much as long as their financial interests are protected. The quality of life for those in the middle and at the bottom is plummeting, as life is good, very, very good, for those at the top. A new Chief Executive took office on July 1^st in a ceremony presided over by China’s leader Hu JinTao, the third such executive since the takeover.

All is not peaceful in this mega-rich land. Protests exploded on July 1^st. “Surging down broad avenues between high-rises in a central shopping district, the protesters marched toward two government office complexes carrying a variety of banners. A wide range of causes were represented, including greater democracy in Hong Kong and calls for better state pensions and day care… But the most common theme was derision toward Hong Kong’s new chief executive, Leung Chun-ying [above]. He was widely portrayed as a wolf because democracy activists contend that he is ‘a wolf in sheep’s clothing,’ whose sympathies for the Chinese Communist Party may lead him to roll back some of the city’s cherished civil liberties — although Mr. Leung has denied that…

“People streamed out of Victoria Park, where the protest began, and into the march for more than four hours, making it one of the largest political protests in Hong Kong in the past decade — or anywhere in China, for that matter, since protests are banned on the mainland… The Hong Kong police said that the number of people in the park at the beginning of the march had been 55,000. Organizers said that 400,000 people had participated in the march, including many who joined along the nearly two-mile route…

“[But the stench of privilege permeated the protestors’ words and banners.] When Mr. Leung entered the election campaign last autumn, he was widely seen as an underdog partly because many Hong Kong residents saw him as a close ally of the Chinese Communist Party. His rival, Henry Tang, the scion of a wealthy manufacturing family originally from Shanghai, had strong support from the influential Shanghai faction in mainland Chinese politics.

“But Mr. Tang’s candidacy imploded in a series of setbacks, notably the disclosure early this year that an extensive basement had been built under his wife’s house without planning permission from the government or the payment of real estate taxes and fees. So it came as a surprise a week ago when it turned out that Mr. Leung had six illegal structures at his home — valued at 500 million Hong Kong dollars, or $64 million — in one of Hong Kong’s most prestigious neighborhoods… Mr. Leung, one of the city’s most successful real estate surveyors, has publicly apologized and said that four of the structures were already there when he bought the house in 2000 and that he did not realize the other two, a glass canopy and a trellis, were illegal.

“The disclosure of Mr. Leung’s real estate transgressions has particularly hurt his image because a central theme of his campaign was to address the city’s acute shortage of affordable housing. Among the housing issues facing him as he takes office is whether to force the demolition of thousands of illegal structures in outlying areas; whether to halt the encroachment of residential construction on parks and other government land; and whether to step up the pace at which the government makes land available for public and private housing projects.” New York Times, July 1^st. The “two systems, one country” approach is eroding, but that cannot come as a surprise to anyone familiar with Chinese politics. However, the disenfranchisement and economic polarization that pits workers against the power elite is an issue that the central authorities in Beijing know must be handled across all of the PTC… and handled soon… if peaceful economic growth is to continue.

I’m Peter Dekom, and the issue of polarization has given rise to everything from the Arab Spring to the above protest in Hong Kong to the very impasse we see in our own Congress.

Ye Olde Court

One of the much-overlooked mega-powers of the U.S. presidency is naming Supreme Court Justices with the advice and consent of the Senate (majority only required). Absent impeachment or retirement, these appointees serve for life. Because there are only nine justices, each has more individual power than any Senator or Congressperson, and arguably, they have almost as much power as the president because of the potential length of their tenure.

The appointment process was once simple. The President nominated, and the Senate voted. The process of an interview of the nominee before the Senate Judiciary Committee only started in 1925, and no one dared ask the candidate about their judicial views on specific issues… until 1955. In the history of the confirmation process, the Senate has only rejected 12 nominees, most recently Robert Bork in 1987. “In modern times, the confirmation process has attracted considerable attention from special-interest groups, many of which lobby senators to confirm or to reject a nominee, depending on whether the nominee's track record aligns with the group's views. The Senate Judiciary Committee conducts hearings, questioning nominees to determine their suitability. At the close of confirmation hearings, the Committee votes on whether the nomination should go to the full Senate with a positive, negative or neutral report.” Wikipedia. And oh, how political the court has become as a result!

The recent ruling on immigration and their reaffirmation of Citizens United suggest that the court has stepped away from its long-admired legacy of political neutrality into partisan politics with increasing frequency, sometimes openly and shamelessly. “Justice Scalia in his dissent [on the recent immigration ruling] asked, ‘Must Arizona’s ability to protect its borders yield to the reality that Congress has provided inadequate funding for federal enforcement — or, even worse, to the Executive’s unwise targeting of that funding?’ … He then complained about the Obama administration’s plan to exempt about 1.4 million illegal immigrants not over 30 and asserted that the court’s statement that Arizona contradicted federal law by enforcing applications of the Immigration Act ‘that the president declines to enforce boggles the mind.’” New York Times, June 27^th. This partisan vitriol was added to his opinion based on events that occurred after the case was heard before the bench. No matter your political persuasion, the one element that we wish were absent from such court edicts would be purely gratuitous and clearly political positioning, particularly that which is totally irrelevant to the case under consideration.

The issue of Supreme Court appointments carries even more weight in an election year, particularly with more than a few justices creeping along in years. “It is, of course, impossible to predict when a vacancy will occur. (Justice John Paul Stevens spent 35 years on the court and retired at 90, while Justice Robert H. Jackson, who served in the 1940s and 1950s, died of a heart attack at 62.) A 2006 study in the Harvard Journal of Law and Public Policy found that the average retirement age for justices was 78.7.

“Justice Ginsburg, a stalwart of the court’s liberal bloc, has been treated for pancreatic cancer. Justice Antonin Scalia, the court’s most visible conservative, is 76. Justice Anthony M. Kennedy, frequently the swing vote, is 75. And Justice Stephen G. Breyer, like Justice Ginsburg a Democratic appointee, is about to turn 74… None have shown any interest in stepping down, though Randall L. Kennedy, a liberal Harvard Law professor, argued last year that Justices Ginsburg and Breyer should quit so Mr. Obama could name younger like-minded replacements. Professor Kennedy presented his argument in an article published in The New Republic under the headline ‘The Case for Early Retirement.’” NY Times.

With polarization increasingly defining American politics, factions are increasingly unwilling to compromise to keep the nation moving even if the result is a downgrade to the national credit rating, and bitter divisiveness has rendered our Congress into a powerless and angry assemblage of slogan-writers engaged in perpetual electioneering. The court represents the potential of stability in this quagmire we call Washington, D.C. And indeed there is a ray of hope as the Chief Justice himself (aligned with the conservative side of the court) joined with the four
“liberal” justices and wrote the majority opinion in the recent National Federation of Independent Business v. Sebelius (determining the fate of the Affordable Care Act) case – stepping over what many had viewed as a mandate for the conservative appointees to eviscerate the “Obamacare” and upholding the statute’s individual healthcare mandate as consistent with the government’s ability to tax its citizens

I’m Peter Dekom, and the steady erosion of the bastions of American democracy cannot be good… for any American… in the long run.

A Rial-ity Check

The mantra isn’t, “it’s the repressive theocratic regime and impossible religious police” stupid. Bottom line, people vote with their stomachs and their standard of living… where their vote makes any difference… and rebel when they cannot effect change at the ballot box. The Arab Spring was about power elites keeping all the goodies for themselves. The return of the Institutional Revolutionary Party (P.R.I.) – the iron hand that guided Mexico for 70 years until Vicente Fox unseated that infamously corrupt party in 2000 – with an easy victory for Enrique Peña Nieto as President was simply a signal by the populace that the folks in power had delivered little more than a failed economy and murderous, cartel-driven instability. THE issue in the American presidential campaign is clearly the seeming lack of economic growth.

Iran is no different, although we see this apparent monolith of Shiite extremism, a government that is elected but in fact reports entirely to a “higher authority,” with strong rumors that the Ayatollahs are thinking about abolishing the elected presidency. In fact, the relatively minimal support from local extremists has Iran’s leadership casting a wary eye on the Arab Spring and has them voicing strong support for the Alawite (a Shiite faction) Assad regime in Syria.

As Iran’s economy tanks from a combination of crass mismanagement and the impact of various economic sanctions imposed by many of the larger global trading nations – Iran cannot even get insurance for ships carrying its oil to the few remaining buyers – the local currency (the rial) has dropped in half against most major currencies. Inflation has driven local food prices by at least an annualized 25% increases. And they’ve even taken to repainting their ships to hide their identity in an effort to stem the significant reduction in their oil exports: “[Iran even has] a fleet of about 65 Iranian tankers serving as floating storage facilities for Iranian oil, each one given a nautical makeover to conceal its origin and make a buyer easier to find… International oil experts say Iranian exports have already been cut by at least a quarter since the beginning of the year, costing Iran roughly $10 billion so far in forgone revenues. Many experts say the pain is only beginning, since oil prices have been falling and Iran’s sales should drop even more with the European embargo that went into effect on [July 1^st]. New York Times, July 4^th.

Like many in the region, those well-connected seem immune from the vagaries of economic pain. Ensconced in their expensive German cars, living in well-appointed mansions, there are cadres of businessmen who can make good use of economic pain to generate profits. “At first glance, Tehran, the political and economical engine of Iran, is the same thriving metropolis it has long been, the city where Porsche sold more cars in 2011 than anywhere else in the Middle East. City parks are immaculately maintained, and streetlights are rarely broken. Supermarkets and stores brim with imported products, and homeless people are a rare sight on its streets… But Iran’s diminishing ability to sell oil under sanctions, falling foreign currency reserves and President Mahmoud Ahmadinejad’s erratic economic policies have combined to create an atmosphere in which citizens, banks, businesses and state institutions have started fending for themselves.” New York Times, July 1^st. The country puts on a good show for the world, but the vast majority of Iranians are suffering.

The economic undercurrents reflect this reality instead: “Some … exchange their rials for dollars and other foreign currencies as fast as they can. More sophisticated investors invest their cash in land, apartments, art, cars and other assets that will rise in value as the rial plunges… For those on the losing end, however, every day brings more bad news. The steep price rises are turning visits by Tehran homemakers to their neighborhood supermarkets into nerve-racking experiences, with the price of bread, for example, increasing 16-fold since the withdrawal of state subsidies in 2010.” NY Times.

Ahmadinejad has tried to rally internal support by blaming the outside world for seeking to destroy Iran as a nation, or at least to control its policies and goals. He has all but begged for Israel (with the United States sure to be blamed as well) to attack his country by denying the Holocaust, threatening to push Israel into the sea and seemingly developing a nuclear program with the ability to do just that. Strangely, he seems to believe that such an attack would galvanize a skeptical Iranian body politic to circle the wagons against an outside military strike and provide support for the incumbent regime that is falling apart day by day. Iran would also rise in the eyes of majority of the Islamic world that feels the West is their biggest threat.

For years, the Iranian government attempted bribing the populace by subsidizing the basics, spending gobs of money importing foreign commodities under this scheme. But the money has run out, and shortages and expensive foodstuffs have sent a very different new message to the people these days. “For Iran’s army of employees, even state jobs no longer hold security. On [June 28^th], an official within Iran’s elite Islamic Revolutionary Guards Corps admitted in an interview with the corps’ own publication, Sobh-e Sadegh, that the government had been late in paying soldiers their wages.

“Government officials and lawmakers have been quick to blame the West for Iran’s troubles. Last week, the head of Parliament, Ali Larijani, accused the Ahmadinejad administration of failing to take measures to ‘counter the enemy’s hostile policies.’ ... Many economists, though, say that even without the sanctions, Iran would still have big problems: a legacy of inflationary oil spending and budget-busting state subsidies of food, gasoline and other basic items that encouraged over-consumption and the steady erosion of the country’s industrial base.” NY Times.

Public unrest is met instantly and viciously by local police and the Revolutionary Guards, but the tea kettle is whistling with boiling pain. The clock is ticking, and the sanctions have accelerated local discontent. Whether that brings Iran back into meaningful dialog to sacrifice her nuclear ambitions – a factor that could at least generate more oil revenues and drop the cost of Iranians’ shopping for needed international goods – or keeps this ragged nation on its self-destructive course remains to be seen. Perhaps Israel will cooperate and stage that much-needed, politically unifying attack.

I’m Peter Dekom, and it truly does seem as if “it’s the economy, stupid” is this planet’s supreme guiding force.

It’s the Lease We Can Do

Here’s a trivia question for you. How many buildings and properties – approximately, of course – are owned or leased by the federal government? Hint (not a very good one): it is far and away the largest landowner in the land. Give up? According to the General Accountability Office (GAO), that number is 400,000. Okay, some of those properties can run into the millions and millions of acres, so we not talking a series of tool sheds here. But does our government really need all that land and all those buildings? How many of the relevant structures are still viable, how many need to be or even can be repaired, and how many stand vacant, underutilized or are beyond repair (the picture above is from an old V.A. hospital in Chicago)? These are questions that the Obama administration has asked of its federal agencies in an effort to find areas where budget savings could be implemented.

It would seem like a pretty simple question, one that federal agencies, you would think, could answer just based on their current records, but perhaps they could be sure with a little down and dirty verification. Well, it is government, after all, and waste is nothing new to this sector. The GAO looked at the inventory lists they were provided with and began their own internal verification and assessment of the accuracy of that information. The GAO report was issued on June 20^th, and what it found should surprise absolutely no one, but then, the report was equally likely to piss off a whole lot of taxpayers.

The GAO found, for example, that “[P]roperties listed as occupied were found to be vacant or nearly vacant and sometimes in deplorable condition, according to the report…. An Agriculture Department building listed as in near-perfect condition and in full use was found to be vacant and with ‘multiple safety and health issues, including rat and beehive infestation.’ It has been demolished.” Washington Post, June 20^th. Oh my. The goal was to save $3 billion a year by making more efficient use of federal buildings, but that seems a rather modest goal when you think about the vastness of expected waste.

The story isn’t very pretty. “GAO researchers found that despite warnings that property information and management were flawed, the government knows very little about the condition and use of properties it owns. The problems also persist despite efforts to create a central database that would facilitate the sale or lease of properties that the government does not need or use.

“The General Services Administration acts as landlord or real estate broker for many federal agencies. In a statement on the agency’s blog [on June 19^th], the acting commissioner of GSA’s Public Building Services, Linda Chero, said the agency ‘has been working tirelessly with all federal landholding agencies to dispose of unneeded properties and since 2002 more than 3,355 federal properties have been taken off the government’s rolls… But more still needs to be done… …Our mission at GSA is to make government more efficient and save money, and as the federal government’s landlord, we will continue to do that by working with agencies to identify and dispose of buildings and facilities that are no longer needed.’ …

“In compiling its report, the GAO visited 180 buildings listed as vacant or underused at 26 sites in Washington, Dallas, Los Angeles and Oak Ridge, Tenn. They found ‘inconsistent and inaccurate’ data at 23 of the 26 locations, ‘raising concern that the database is not a useful tool for describing the nature, use and extent of excess and under-utilized federal real property.’” Oh my (again). Hard to get a handle on what should be done when you have absolutely no faith in the knowledge of what you actually have.

There are lots of additional suggestions on how to generate some short term budget deficit solutions, but some of them might just cost us more in the longer term. One is to sell U.S. government properties in super-prime locations and then build a substitute structure somewhere else (hopefully for vastly less). Or how about this one: sell a few key buildings to key developers and then lease them back over a longer term. This would provide a big cash infusion now and spread the payback over a longer term, say proponents. Aside from the corruption issue and the thought of a government bureaucracy trying to figure out the fair market value of a prime building location, isn’t that simply shifting the budget deficit problem to future generations that will have to pay the extra rent on those structures? Hmmmm…. I wonder what the White House would go for… or the Capitol?

The fact is that so many of our buildings that really weren’t needed represent “pork barrel” projects in favored Congressional districts where the representatives (often getting structures named for themselves) “played the game well”… while other federal structures languish in such sorry states of disrepair that they are barely useable. Marble and sandstone architectural marvels with malfunctioning steel filing cabinets and office walls that age without the hint of a possible paint job for decades. I mean what do you do with such massive waste, and exactly who is it that decides to consolidate office space, shut down entire buildings, sell off what we do not need…

Are you picturing some truly nasty turf wars here? “Hey, I need that building right where it is. My work force lives around here, and folks know where to come when they need our services.” “No you don’t! Move it or lose it! You’re going to share some space over there by the federal penitentiary that seems to be languishing from disuse!” Argh! I hate this, but at some level, there is one huge missing ingredient from this mix, one that seems to have left the building, gone out of town and may be headed out of the country: common sense. Maybe our federal administrators should have a conference on this subject… maybe in Hawaii or Las Vegas… NOT!!!

I’m Peter Dekom, and I am picturing Americans toiling to pay taxes to fund waste like this!

I Want My Mommy… or a Good Job

It’s summer! Warm weather. Vacations. Good times, right? Not if you are young and looking for a job, worse if you are looking for a resume-enhancing summer job. While the rest of the nation is staring at raw unemployment numbers at 8.2% (with the alternative measure adding those who can only find part-time employment or who want jobs but have stopped looking approaching 17%), the non-seasonally adjusted (NSA) statistics for young adults are even nastier by comparison:

-- The youth unemployment rate for 18-29 year olds specifically (NSA) for May 2012 is 12.1 percent.

-- The declining labor participation rate has created an additional 1.7 million young adults that are not counted as "unemployed" by BLS because they are not in the labor force, meaning that those young people have given up looking for work due to the lack of jobs.

-- If the labor force participation rate were factored into the overall 18-29 youth unemployment calculation, the actual 18-29 unemployment rate would rise to 16.9 percent(NSA). PR Newswire, June 1^st.

God help you if you are a dropout, although depressed people still buy dope on street corners. But you’re a recent high school, trade school or college grad looking for work, with little more than unpaid or underpaid internships out there, how do you live? Who pays for your food? Housing? Stuff? That would appear to be pretty obvious. “In 1980, some 11 percent of young adults lived in multigenerational households, suggesting that a strong economy helped youngsters gain independence more quickly. Today, some 29 percent of 25- to 34-year olds either never moved out of their parents’ home or say they returned home in recent years because of the economy, according to the Pew report. Among 18- to 24-year olds, that figure is even higher – 53 percent of young adults in that age group live at home.” Christian Science Monitor, March 15^th.

“We are now at the end of the season when college graduates move out of their dorms and on to their new lives. But it seems as if many of them end up back in their old rooms at home. To support that observation, the [third week of June] saw the release of new census data pointing to the toll the recession has taken on certain kinds of domestic arrangements. Across the country, from 2007 to 2010, the number of adult children living with their parents increased by 1.2 million. Despite constrictions of space, and despite the sense that the economy has rebounded more successfully [in New York City] than it has in many other parts of the country, the trend is very much in evidence in New York. According to an analysis of census data by the Queens College sociologist Andrew A. Beveridge last week, 45 percent of the city’s 22- to 24-year-olds live at home. Among those ages 22 to 39, nearly a quarter — 22 percent — do. These numbers have increased since 2000 and went up more during the recession...

“As Anne Kreamer, a writer specializing in workplace issues, [noted]: ‘Post-recession, businesses are fueling growth through permanent interns. There’s an unwillingness of companies to actually put the real numbers of employees on their balance sheets, which means kids into their late 20s are working for zip and have no health insurance either.’ .. As grim as these realities are, it seems worth remarking that the current phenomenon unfolds at a time when parents and children — because of technology and the shared cultural affinities that are the product of hyper-attentive parenting — seem more connected than they had been before in this country. A Pew Research Center study, released this spring, revealed that 68 percent of respondents between the ages of 18 and 34 who were living with parents reported being ‘very satisfied’ with their family life.” New York Times, June 23^rd.

The long-term ramifications of this phenomenon may well turn out to be disastrous for a country looking to future generations of high-value-added workers to grapple with our long-term problems ranging from paying off our massive deficit to caring for an increasingly graying population. Not only are these young workers delaying entry into the marketplace, when they do get jobs they might actually want, the fact that they are achieving entry-level jobs later in life – at a time when real wage rates have effectively fallen for almost all but the most highly compensated Americans in the labor force – tells us that their raises through life, usually based on a percentage increase based on years past, will put them well-behind their parent’s comparable levels when they were at the same age. The net aggregate lifetime earning power of this large cadre of unemployed and under-employed youth will, corrected for inflation, be significantly less than the earnings of past generations.

While this trend may well be good for reinforcing familial ties that may have frayed during the industrial and post-industrial era, providing that “extended family” support system that predated Social Security and retirement plans, it is also a sign that our nation as a whole may well be contracting into that same economy that existed back then, before the United States become a global power. To create long-term economic sustainability at the levels most people think of when they picture the American way of life, we need a whole lot more young people with exceptionally high skill-sets in the labor force… now.

I’m Peter Dekom, and we better start believing in America and investing in her growth or in the very near future there won’t be an America anything like what we grew up with.

Blame it on Rio

Environmental concerns are often challenged on any number of bases. From poor nations: you in the West got rich by raping the environment thus becoming industrial powers, and now you expect the developing nations to abide by a new and different set of rules that restrains our economic potential?! From the rest of us: It’s really not man-made, just one more expected cycle from Mother Nature that will right itself as it has throughout the ages. Man was given the richness of the planet by God with a mandate to use those resources to build and grow; if there is concomitant environmental degradation that imperils mankind, don’t worry, because God has already pledged no more human-destroying mega-global disasters after the great flood (remember Noah and his ark?) and will protect us from harm. Nobody can prove that man created any real problems. The harm from climate change is vastly exaggerated; it will create new opportunities… we will easily adapt. Pick one – economic growth or environmental purity. Or the big one today: we cannot afford environmental purity in a time of profound economic difficulty; we need jobs and growth far more than we need clean air and water or to prevent climate change.

All of the above is fine until “IT” happens to you. The massive droughts that have raged throughout Africa and currently consume most of America’s southwest from Texas to Arizona and even California, where wildfires rage like never before, consuming millions of acres in parched devastation. The Oglala Aquifer – once the size of Lake Huron that sits under most of the Plains States and supplies water to much of our grain production – is slowly drying out, seemingly destined to be void of meaningful irrigation potential in the next few decades. Or the increase in the number of really powerful hurricanes that feed their intensity on rising Gulf and Atlantic Ocean temperatures. Forget about the rising tides inundating coast regions, the migration of toxic insects and disease that requires warmer weather or the failure of crops that were appropriate when they grew in a different average temperature zone. Don’t worry about polluted waterways, reduced food production for the rising global population, the increasing scarcity of safe water or air so thick with gaseous and particulate emissions such that sickness and death from simple breathing are not uncommon anymore.

But while food production suffers, potable water disappears and disease spreads in some parts of the world, Canada and Russia will see vast tracts of tundra slowly evolve into useable farmland. So what if the methane trapped in that tundra is over twenty times heavier than mere carbon dioxide, creating a more rapid greenhouse effect. And we are seeing a new Northwest Passage evolve above Canada. Forget that Russia and Canada are both claiming control of this waterway and building armed ships to implement their control.

What do Americans really think about the environment? “According to the poll, twice as many Americans think the environment will get worse over the next decade as think it will get better. More than three-quarters of those who see an eroding environment say humans have a mostly negative impact. Even among those who say the environment has not changed or has improved in recent years, a slim majority — 52 percent — say people are making things worse.

“Americans’ views of the environment divide along party lines, according to the poll. More than seven in 10 Democrats and independents say human activity has had a ‘mostly negative’ effect on the environment over the past decade; only a bare majority of Republicans agree. Democrats and independents are also more apt to say the environment has gotten worse over the past decade and are more downbeat about its prospects… Four in 10 Americans expect the environment to get worse in the coming decade — similar to the number who think it will hold steady — and about two in 10 think it will get better…Although the overall U.S. environmental outlook is far from rosy, pessimism has receded in recent years. A majority of the public in a 2006 ABC News-Time-Stanford poll—six out of 10—predicted that the environment would get worse in the coming decade.” Washington Post, June 19^th.

So nations have met, in Rio, Kyoto, Stockholm, Amsterdam, etc. to consider a unified multinational approach to saving our environment, noting that Mother Nature is hardly bound by international borders. Promises are made, treaties, accords and protocols are signed and even on occasion, some countries – notably excluding the United States and China, the biggest polluters – sign treaties with fixed emission goals to be achieved by dates certain. Well, it’s June and official representatives from over one hundred nations have gathered again in Rio de Janeiro, Brazil for yet another Earth Summit also known as the United Nations Conference on Sustainable Development or the Rio+20 Earth Summit (there was another such summit in Rio 20 years ago).

There were a few changes in this year’s gathering, but little in the way of concrete goals and meaningful timelines… lots of platitudes and lofty ambitions. A few major corporations attended, and that’s new, with more in the way of programs that they are committed to follow. “Coca-Cola pledged to develop plans to protect the water sources for its 200 bottling plants worldwide, while Dow Chemical said it will assess the economic value it gets from the ecosystems connected to its new bioplastics plant in Brazil.” The Post. In the end (June 22^nd), there was a 49-page report, nothing legally binding, dealing with the balance between poverty, development and environmental sustainability. The delegates went home, knowing little was accomplished, and effluents continued to pour into the atmosphere with no concrete steps to contain the damage.

And while nations often appear hamstrung between competing political factions, majors of cities that are becoming increasingly unlivable have begun to tackle the problem in the absence of meaningful direction from larger governmental bodies. “Four dozen of the world’s largest cities have taken steps to cut 248 million tons of greenhouse-gas emissions by 2020, according to a report issued [in mid-June], an announcement aimed at demonstrating that environmental progress can continue in the absence of a broad international climate agreement… The C40 Cities Climate Leadership Group — a network of 59 cities, including Los Angeles [; New York]; Tokyo; Bogota, Colombia; and Addis Ababa, Ethiopia — was launched in 2005 to provide support for mayors hoping to cut greenhouse-gas emissions in urban centers across the globe. The group analyzed data from 48 cities to determine a suite of policies that are now in place to cut 248 million tons of greenhouse gases, the equivalent of taking 44 million passenger vehicles off the road for a year.” The Post, June 18^th.

We may have passed the tipping point where we will never be able to return to the environment we may have had a decade or two. Major environment change won’t happen overnight, although a few natural disasters like hurricanes, floods and fires can strike quickly. There are jobs that come with pollution controls, if that is a consideration, and many of us will not be alive when true mega-change alters our entire standard of living. But that begs the big questions. What kind of world are we leaving behind for the trillions of people who will follow us? And why should we care? After all, when the economy falls, it is way too frequently, “me now, me first, let the rest take care of themselves”… even if the rest really can’t.

I’m Peter Dekom, and the next generations will be dealing with a planet very different from the one most of us were born on.

Santiago de Querétaro

Clean air, safe streets, friendly people, and oozing old world charm, not to mention the highest GDP in the country. Sound like a place you'd like to move? Those things have made the beautiful Mexican city, Santiago de Querétaro (the capital of the state of Querétaro), the fastest growing metropolis in the country.

Originally settled as early as the year 200, and later developed by several indigenous tribes, it was eventually occupied by the Spanish in the early 1600s for it's strategic location between Mexico City and the ocean. The first woman to appear on a Mexican coin, Josefa Ortiz de Domínguez, was the wife of Querétaro's mayor and a heroine of the Mexican Revolution. The city became the capital of Mexico for a time during the Mexican-American war, and it was in Querétaro that Emperor Maximilian was eventually captured, tried, and executed in 1867.

In 1996 UNESCO declared the historic center of Querétaro as a World Heritage Site because of its tradition for peaceful co-existence between the indigenous tribes and eventual settlers from outside. From UNESCO's website, "the old colonial town of Querétaro is unusual in having retained the geometric street plan of the Spanish conquerors side by side with the twisting alleys of the Otomi quarters. The Otomi, the Tarasco, the Chichimeca and the Spanish lived together peacefully in the town with similar standards of living, a rare occurrence at a time when the Indigenous and Hispanic were usually separated by a large income gap and at odds with one another in other parts of the nation.” Querétaro has also preserved most of the stone streets, public plazas, and gorgeous civil and religious monuments and buildings from its golden age in the 17th and 18th centuries. In 2008, National Geographic named Querétaro as one of the top 15 historic destinations of the world."

Now Mexico's 4th largest city, Santiago de Querétaro is getting crowded, evidenced by the long, peaceful lines of voters waiting to cast their ballots for a new President, Senator, and Governor yesterday. The current population already exceeds one million and many thousands of Mexican citizens continue to flock to this international gem. One can only hope that the city will be able to continue to preserve the magnificent streets, churches, buildings and heritage as they've worked so painstakingly to do for these hundreds of years.

I'm not Peter Dekom, just one of the hundreds of employees here at Unshred America, but I thought you might like to know anyway. Back to Mr. Dekom...