Friday, May 29, 2009

"Out of Money"

In California and the United States ?

The governor of the Golden State just announced a proposal to eliminate health insurance for 1 million poor kids.

This can be juxtaposed with the 103 Fortune 500 companies who are headquartered in California. And the 80 + billionaires who reside there. Clearly, there is money and many people in the state are not broke. It's just a matter of taxation.

But taxing wealth in today's world means the wealth will move elsewhere. It's not difficult to move capital, as well as many areas of production. So this is the bind California and most governments are in.

It's not quite accurate when Obama says that "Well, we are out of money now."

The United States is not out of money, just its public sector, which is basically held hostage by wealthy private interests.

Wednesday, May 27, 2009

Korea, etc.

In the unlikely event of an all-out war involving North and South Korea, it's hard to see how China stays on the sidelines. North Korea would eventually be defeated in a confrontation with the United States and South Korea and, with that, U.S. troops would end up in large numbers on China's border. That is as unacceptable to China now as it was in the original Korean War. China might also intervene preemptively in North Korea if it saw dramatic instability, or the real possibility of war.

Tuesday, May 26, 2009

The Shadow CIA

Stratfor, founded by George Friedman, was given the moniker of the 'Shadow CIA' by Barron's a few years ago. Its website has testimonials from retired U.S military brass, and Friedman has briefed at organizations such as the Rand Corporation, as well as "senior commanders in all armed services". (1)

Because of these relationships, Stratfor reflects aspects of U.S. geopolitical strategy, and is interesting for that reason alone. Friedman often points out that economics is under the umbrella of geopolitics. As such, economic predictions need to be viewed within the prisms of military power, demographics, and national interests.

Some thoughts by Friedman on the "The Next 100 Years" (his recent book) can be read here, or seen here.

Summarized, they include:

1-The power of the United States will only grow during the next 100 years, due to its geographic position as the center of world trade, and ability to control international trade through its Navy.

2- Given the strategic importance of North America, and a host of other reasons, Mexico - at the end of this century - will be in a position to disrupt U.S. world dominance.

3- The population explosion is coming to an end, and with it, many patterns of debate about economic growth, immigration, and environmental degradation.

4- China will fragment or turn inwards because of rising inequality between the coastal and interior regions, repeating a historical pattern.


Note: Somewhat obviously, mentioning another person or companies' work does not mean one agrees with their philosophies or conclusions. It is just another source of information.

Sunday, May 24, 2009

Cheney advises Obama: "Think Very Carefully About the Course Ahead"

Words from former Vice-President Dick Cheney, to President Obama :
“I would advise the administration to think very carefully about the course ahead. All the zeal that has been directed at interrogations is utterly misplaced. And staying on that path will only lead our government further away from its duty to protect the American people.”
Despite his unpopularity with the American public, Cheney remains an extremely influential person within the political establishment. He has three decades worth of ties built up, beginning with his promotion to Chief of Staff for President Ford during the 'Halloween Massacre' of 1975. This 'Massacre' was a cabinet shake-up that sought to marginalize Republican moderates, and promoted Donald Rumsfeld to Secretary of Defense and George H.W. Bush to Director of the CIA. It was likely instigated by Rumsfeld, and reflected a position within the ruling class to swing hard to right, following the defeat in Vietnam and the domestic mass movements of the 1960's.

When Cheney speaks in these kind of strident tones, it is likely he does not just speak for himself, but also a significant faction within the military and intelligence apparatus.

Friday, May 22, 2009

Divide et Impera : The Limits of Identity Politics

Divide and Conquer, or Divide and Rule, has been the axiom of ruling elites for millennia. Machiavelli wrote that, in the case of war, "A Captain ought, among all the other actions of his, endeavor with every art to divide the forces of the enemy, either by making him suspicious of his men in whom he trusted, or by giving him cause that he has to separate his forces, and, because of this, become weaker."

In Iraq, Divide et Impera meant encouraging the division of the country into ethnic based political parties, none strong enough on their own to topple the influence of the United States. The original Coalition Provisional Authority government of Iraq was picked entirely on sectarian lines - 12 slots for Shia, 5 for Kurds, 5 for Sunnis, and 1 each for Christians, Chaldeans and Turkomen. The post-invasion Iraqi national identity card identifies each person by their religion. The country was re-designed as a federation, and split largely along religious boundaries.

In India, for the British, it similarly meant playing pre-exisiting regional power structures against each other until they were politically incapable of uniting.


Domestically, divide and rule is a useful strategy whenever a small elite wants to maintain disproportionate power over the larger masses of the general population. The encouragement of sectarianism is a typical way in which to do this.

In the late 1960's this type of strategy gained a foothold in response to the mass protests of the civil rights movement and the anti-draft movement of the Vietnam War. The Democratic Party was particularly instrumental, beginning with their 1972 convention, of basing mainstream liberal politics around the idea of what has become 'identity politics'.

A generation later, the United States is more diverse, and more open towards diversity than probably ever before. There are college degrees ranging from African-American , to Asian-American, to Gay and Lesbian Studies. Mixed ethnicity relationships are generally accepted, and there is a president who is from a mixed 'racial' background. These are, in and of themselves, wonderful things.

But the United States is also country more economically unequal than at any time in the last 80 years. The labor movement is on life-support, at best. These conditions illustrate the limits of identity politics. Sectarian analysis disrupts the common class perspectives of the general population, to the benefit of a wealthy elite - though it may be an elite that is marginally more diverse than it was a generation ago.

Wednesday, May 20, 2009

The Emerging Economy of Southern Texas

Southern Texas will offer some of the better opportunities in the United States for developers and private investors over the next generation.

In many respects, it is still largely undeveloped, and has some things in common with emerging economies for that reason. Emerging markets have seen faster growth than developed economies since the 2001 recession, largely because capitalism seems to be 'tapped out' in the G7 countries. More growth potential, and cheaper wages, are offered in less developed markets.

While the speculative bubble of oil and natural gas collapsed during this recession, it is a fact that the long-term price trend of energy resources is upwards. This also means the long-term trend in transportation costs is higher.

Texas still produces significant quantities of oil and natural gas, which will help its economic stability as prices increase.

More importantly, its likely that future transportation costs related to Asian sources of production will be more expensive than any offsetting labor or infrastructure cost benefits. Because of this, there will be the further growth of industrial production in Northern Mexico, from which Texas has historically benefited.

Southern Texas is one of the few places in the country that has added jobs over the past year.

1 "Punta Colonet and West Coast Port Wars"

Saturday, May 16, 2009

California Requests Federal Aid to Fund its Deficit

California has a long-term problem with its budget, which the current recession has merely exacerbated.
California Treasurer Bill Lockyer asked U.S. Treasury Secretary Timothy Geithner on Wednesday to authorize assistance for his state from the federal Troubled Asset Relief Program, warning that depressed tax revenues may cut into basic services and halt the building of infrastructure.

In a letter, Lockyer asked Geithner for TARP assistance for California and "other financially strapped states and local governments which face a severe cash flow crunch."

"If we cannot obtain our usual short-term cash-flow borrowings, there could be devastating impacts on the ability of the State or other governments to provide essential services to their citizens," Lockyer wrote.
California's Proposition 13 limits increases on residential and commercial property taxes, for existing owners, to 2 % a year - below the rate of inflation. This creates a dependence on cyclical types of revenue streams, such as income and capital gains taxes. The fluctuation of the later has been especially damaging to the budget during the multiple stock market collapses of the last decade.

This was noted in a UC-Berkeley Haas School of Business study, from 2003:
Proposition 13 caused the state to rely more on sales, income, and corporation taxes as sources of state and local funding, leaving those more cyclical taxes to shoulder 70% of the tax burden.

This proportion is the highest among the large states, making California's tax revenue base among the most cyclical, making California's revenue base more vulnerable to economic downturns. At the same time, large parts of the expenditure stream are locked in by voter mandate or statute.

They recommended a 'rainy day fund':
(The authors) suggest a $5 billion baseline for capital gains revenue, with excesses above that amount being considered temporary revenues and siphoned off into a "rainy day fund" to allow for a stable expenditure stream when capital gains revenues fall below that baseline.

There is a constitutional requirement in California that requires the budget, and any tax increase, to be passed with a two-thirds vote in the state legislature. This allows a minority, or even a substantial minority, to wield a good deal of control. Apparently, Democrats are thinking of proposing a referendum to amend the two-thirds rule, maybe in 2010. Though this has apparently polled above 50 % recently, its prospects are dubious during a recession when a good portion of the states' homeowners are underwater.

There is good reason to believe Californians are tired of the referendum process in general, as it has resulted in a large number of mandates to the state budget (noted in the Haas excerpt), and created quite a bit of inflexibility. It looks like nearly all of the proposals slated to be voted on in a few days will down to defeat, including a 'rainy day fund'. Although, one is polling well:
The only proposition passing in the 10News poll is Prop. 1F, which would prohibit pay raises for legislature, governor and other elected officials if the state is expected to have a deficit. It is leading by 10 points, according to the poll.

Friday, May 15, 2009

U.S. to Increase Military Trainers in Pakistan

I mentioned this possibility in a post last week. It will strengthen links between the two armed forces, and through that give the U.S. critical influence on the political establishment.

U.S. officials are in early talks with Pakistani leaders to develop a program that could increase the number of U.S. special operations trainers in that country, with a goal to slash the training time by as much as half for more than 9,000 members of Pakistan's paramilitary Frontier Corps, said a senior defense official.
In addition, the Pentagon would like to further broaden the training to include the Pakistan Army. U.S. special operations forces have been training the Pakistani special forces for some time, and the program was expanded to the Frontier Corps last October.

The destabilization of Pakistan was not an accident. In order to control, one must first weaken. Pakistan is fast on its way to becoming a client state of the United States.

This is devastating towards China's geostrategic goals in South Asia, in ways that will become obvious in the coming decade. China is needed by U.S. corporate interests for its reservoir of cheap labor. But the exploitation of this cheap labor 'must' coincide with the choking off of an independent Chinese state or competitive ruling elite. Thus, the United States is committed to a process of surrounding China , by land and sea.

Sri Lanka is another emerging 'sphere of influence' conflict between the U.S/India and China. That's why it's been in the news so much recently.

G.M. to Outsource Jobs

Figures in the outline show the proportion of GM cars made in those lower-wage countries (i.e. Mexico, South Korea, and China) and sold in the U.S. would rise to 23% from 15% over the next five years, the report said.

The continued outsourcing of formerly bedrock manufacturing jobs begs the question - where are new jobs going to come from in the United States, with the numbers and quality commensurate to those lost ?

Given increased unemployment, tapped out credit, wage cuts, and outsourcing, the U.S. consumer is in for an extended retrenchment. Who will fully replace that decreased demand in the world economy ?

Friday, May 8, 2009

Thomas Friedman's Greatest Hits

Longtime New York Times columnist Thomas Friedman can be considered a prominent voice of the United States ruling establishment. He is hailed as a 'genius' and regularly trotted out as a guest on politically oriented television shows. He has several best selling books which are focused on, and lectured about, during professional seminars - at least, one I attended. And, there is a column in the most mainstream of all national newspapers.

But, judging by his own words, Thomas Friedman is someone who enjoys watching the dispensing of violence. He gets off on it. Yet, he is keenly attuned to how violence is used to achieve the geopolitical goals of United States. That's why I have one of his quotes as link:
“The hidden hand of the market will never work without a hidden fist. McDonald’s cannot flourish without McDonnell Douglas, the designer of the U.S. Air Force F-15. And the hidden fist that keeps the world safe for Silicon Valley’s technologies to flourish is called the U.S. Army, Air Force, Navy and Marine Corps.”
There is more than a little truth in this quote and, in my opinion, economics is partly about understanding the geopolitical strategies going on in the world. Raw power and violence can alter lab-modeled theories, and one can't just live an ivory tower.

Regarding his lust for violence, consider these quotes.

During Bosnia:
It should be lights out in Belgrade: Every power grid, water pipe, bridge, road and war-related factory has to be targeted.

Like it or not, we are at war with the Serbian nation (the Serbs certainly think so), and the stakes have to be very clear: Every week you ravage Kosovo is another decade we will set your country back by pulverizing you. You want 1950? We can do 1950. You want 1389? We can do 1389 too.

Collective punishment is a war crime under Section 3, Article 33 of the 4th Geneva Convention, completed in 1949, and ratified by the U.S. in 1955. Friedman fails to mention this, or forgets it in his head rush.

After Iraq:
"What (Iraqis) needed to see was American boys and girls going house to house, from Basra to Baghdad, and basically saying, 'Which part of this sentence don't you understand? You don't think, you know, we care about our open society, you think this bubble fantasy, we're just gonna to let it grow? Well, Suck. On. This."


So, it should not be surprising that he recently wrote a column glossing over the United States' policy of torture after 9/11.

Friedman: "First, Al Qaeda was undeterred by normal means. Al Qaeda’s weapon of choice was suicide."

This is silly. It's a variation of the "they are worse than Hitler" mantra that has been applied to American adversaries since I was a lad, when we first 'defended' Kuwait.

Let's put things in perspective. At least 73,000,000 people died during World War 2, after which, the 4th Geneva Convention was signed, and all torture (even corporal punishment) was outlawed. A little more than 3,000 people died during 9/11 and it can only be handled with torture ? Were we really that much more traumatized ?

It should also be remembered that Japanese soldiers were convicted of waterboarding Americans after the World War 2.

After World War II, we convicted several Japanese soldiers for waterboarding American and Allied prisoners of war. At the trial of his captors, then-Lt. Chase J. Nielsen, one of the 1942 Army Air Forces officers who flew in the Doolittle Raid and was captured by the Japanese, testified: "I was given several types of torture. . . . I was given what they call the water cure." He was asked what he felt when the Japanese soldiers poured the water. "Well, I felt more or less like I was drowning," he replied, "just gasping between life and death."

Friedman: "Second, Osama bin Laden and Al Qaeda aspired to deliver a devastating blow to America...Third, Al Qaeda comes out of a stream in radical Islam that believes that it has religious sanction for killing absolutely anyone, including fellow Muslims. Al Qaeda in Iraq has blown up Muslims in mosques, shrines and funerals. It respects no redlines or religious constraints. One of its leaders personally severed Daniel Pearl’s head with a butcher knife — on film."

Hitler , or Tojo, were restrained compared to this, how ? (Since the "they are worse than Hitler" subtext is being played out.)

Friedman: "Finally, Al Qaeda’s tactics are designed to be used against, and to undermine, exactly what we are: an open society. "

A policy of torture undermines any aspect of openness we may have achieved.

(Incidentally, Bin Laden is dead. Does anyone really believe he is alive ?)


The lack of historical perspective , and lack of respect for the law, is striking. There is not even the pretense of abiding by treaties signed, or following the legal doctrine that was used to convict Axis war criminals.

To which Friedman might say (and has said), "Give War A Chance".

That he is given such a prominent voice, is reflective of the moral and ethical perspective of the U.S. ruling class.

Related Articles:1, 2

Thursday, May 7, 2009

Pakistan and China

From China's official press agency:
(Apr. 30, 2007)- Prime Minister of Pakistan, Shaukat Aziz, revealed on April 26th that the country was considering constructing a pipeline to transfer natural gas from the Arabian Sea to China and Pakistan, without passing through the Strait of Malacca. Currently, China is helping with port construction in Gwadar of Balochistan Province. The Gwadar deep-water harbor will have an advantage in facilitating the transportation of oil by land to China.

Framed in terms of the "Malacca Dilemma" by Hu Jintao, China has long sought to diversify its sources of energy away from the Strait of Malacca. About 80 % of its oil imports travel through this corridor between Indonesia and Malaysia, representing a crucial chokepoint in the case of a dispute between powers. The proposed pipeline between the Gwadar deep water port, and Xinjiang province, would have partly alleviated this strategic vulnerability.

Pakistan has traditionally maintained good relations with China, partly as a balance against India. In Brzezinski's "The Grand Chessboard", it is identified as part of a "Regionally Dominant China's Sphere of Influence" (page 167). Therefore, in the pursuit of dominance over Central Asia's energy resources, the United States government needs to undermine the relationship between the two countries.

As mentioned in an earlier post, the frequent U.S. drone attacks in Pakistan's Northwest territories are militarily worthless. They kill many more civilians than Taliban, and are not disruptive to its leadership. They do serve to destabilize the region, which makes sense in the context of a projection of U.S. military influence.

Destabilizing Pakistan's civilian government, already on an IMF loan and receiving U.S military aid, gives the U.S. great leverage. It increases the odds that the Pakistani military 'must be' given greater influence to help stabilize country, and the civilian government weakened, or forced out. Through that, the U.S. can, if necessary, install the proverbial boots on the ground in Pakistan. This would not be in an occupying role, but in a training and advisory role. (It is possible that U.S. special forces are already guarding Pakistan's nuclear weapons.) A similar strategy of influence is being attempted in Iraq and in the Mindanao province of the Philippines.

In large respects, U.S. geo-political aims in Pakistan are close to being achieved. Beijing's influence has diminished greatly. For instance, they did not extend a substantial loan to Pakistan during its current economic crisis. Given the instability, it's now impossible for the Gwadar-Xinjiang pipeline to be completed. The pipeline would also have been a tool for developing the impoverished province, decreasing the possibility of regional splintering on China's Western edge. As well, the U.S. has strengthened a long-term military presence within a stone's throw of the energy states in the the heart of Eurasian continent.

The U.S., through its chief bastion of dominance in world affairs, the military, is furthering its strategic position in the 'Great Game'.

Source: Perry-CastaƱeda Library Map Collection, University of Texas


For those who think Obama is too bright-eyed to think in this manner, consider a quote from an unnamed source regarding his pressuring of Chrysler creditors:

One person described the administration as the most shocking "end justifies the means" group they have ever encountered. Another characterized Obama was "the most dangerous smooth talker on the planet- and I knew Kissinger." Not sympathetic characters in their own right, they do offer a view of how the administrations strategizes.


Related articles on China - Pakistan ties, in relation to the Gwadar port and proposed pipeline: 1 2 3


Related Post: U.S. to Increase Military Trainers in Pakistan

Wednesday, May 6, 2009

The End of the Population Boom

The end of the population boom, and its effects, is a historical theme that will begin to take shape this century. The United Nations predicts world population will peak at just above 10 billion, around 2100, up from the current 6.8 billion.

This will represent a sea change in human history, and yet it is not much discussed. We humans have almost continuously expanded in numbers since the beginning of recorded history. Our social and economic structures are based around the idea of growth.

Capitalism is most successful when it is expanding into new markets, and accessing new sources of (usually cheaper) labor, to exploit for profit. What happens to world capitalism when markets become non-expansive and new sources of labor shrink ?

Environmental degradation has partly occurred because of an expanding human population. Will these effects diminish as the population plateaus ?

Countries that can successfully integrate immigrants seem poised to be the most successful in a time of population plateau, or decline. Germany, Japan, and Russia are among the major powers with extremely low fertility rates (around 1.3), that have a weak record in regards to integrating immigrant communities. How will retirees be supported when their proportion swells in relation to the number of workers ? There will have to be seismic shifts in cultural attitudes towards immigration, if aging developed countries want to maintain prosperity.

Three Charts

1-Fertility rates of some major countries

2-of selected regions

3- of countries stereotypically thought as having high fertility rates
(they are declining dramatically, as well)


Tuesday, May 5, 2009

An Arms Race Coming to the Pacific

This was entirely predictable:
Almost two decades after the end of the cold war, a new arms race may be under way in the Pacific. Responding to the expansion of China's military, Australian Prime Minister Kevin Rudd sparked a storm of controversy on Saturday when he released a report calling for a $72 billion expansion of the military over the next 20 years.

Among other upgrades, Australia would purchase 100 F-35 fighter jets, 12 hunter-killer submarines, 46 Tiger helicopters, and 100 armored vehicles, while also investing in cyber and electronic warfare technologies, according to the 140-page report titled "Defending Australia in the Asia-Pacific Century: Force 2030."

Japan is also making noises:
Speaking in Perth yesterday, Mr Nakasone said Tokyo was worried about China's splurge on defence.

"Certainly in relation to China, as you've indicated over the last 21 years, China has continued to increase its military expenditure in double-digit figures, and from the point of view of the region it is an issue of some concern," he said.

The general view in East Asia is that the U.S. will increasingly be unable to maintain its military dominance in the region. Because of this, countries such as South Korea, Japan, and Australia face internal pressures to assert their military capacity and tip the balance back against China. And, in many cases, this might be encouraged on some level by Washington, given the expense in maintaining a military presence on four corners of the earth. Given that all three countries, as well as Taiwan, could become nuclear armed in a matter of years, East Asia is poised to become a tinderbox. The main question is timing - how quickly or slowly all these factors come to the fore, and begin interplay with each other.

From China, a reaction :
A Chinese military strategist, Rear-Admiral Yang Yi, told the Herald yesterday that Australia had spawned a new variation of "the China-threat thesis" that could be emulated by other nations and encourage them to accelerate their rearmament programs.

"I really can't understand this stupid, this crazy idea from Australia," he said. "I am very concerned and worried about it."

China faces several obstacles to expanding its international influence, if that's the route its leadership chooses. 1) It is still mostly a poor, to middle income country, with a per person GDP (PPP), at around 100th in the world. 2) Empires based upon the notion racial or ethnic superiority, or prominence, are over. Germany and Japan both spectacularly failed to achieve this during the Second World War. The United States, with its multiculturalism (less than 50 % of K-12 students are "white"), is a society more people around the world can visually identify with. 3) Geographically, China faces the same constraints it has through history. It is surrounded by economically developed foes, and its shear size makes it difficult to avoid internally fragmenting. 4) It is in no sense a free or democratic society, even by the limited standards of Western bourgeois democracy, such that exists in Japan, South Korea, and increasingly, India. This makes it brittle and prone to internal repression, or collapse, during times of social or economic stress.

Monday, May 4, 2009

The Bestest and the Brightest : Niall Ferguson

This post by Dr. Krugman reminds me of an interview I read in February. In it, Dr. Niall Ferguson displays a penchant for rambling, drama, and self-contradiction, and the inability to approach things from a consistent world view. It's hard to be entirely consistent in an interview setting. But still, one expects more from a Harvard prof, after all.

Regarding the financial crisis, and declining world trade.

Quote 1:
The epicentre is the United States, but the rest of the world, and particularly America's trading partners, will get hit harder than the U.S.”

“It suggests virtue is its own reward. You don't get any reward beyond the self-satisfaction of having been virtuous. This is a crisis of globalization. Therefore, the more an economy depends on the global system, the harder it hurts. Canada is not finding the worst. Asian economies are going to be really slammed this year. But it's an unfair world. The U.S. won't be as badly affected as most countries.”

Quote 2:
This is going to be the beginning of a whole new investment strategy in which companies that can't roll their debt over end up being sold at bargain basement prices, or broken up and their assets sold at bargain-basement prices, in very, very large numbers. And it doesn't take a lot of imagination to see that the buyers will be sovereign wealth funds or other entities in surplus countries. The world divides in two, the debtors and the creditors. The debtors … (U.S., Europe) ... are going to have to sell of their assets. Call it the global foreclosure. They're going to be selling their assets cheaply to those who have the surpluses. This is not going to be like the Chinese buying Blackstone at the top of the market.

“It's revenge of the sovereign wealth funds. They got burned. And this time, no more Mr. Nice Guy.”

He can't decide who is going to 'win' - the debtors, or the creditors. His arguments tend to be confusing because he is conflicted on that central question, without acknowledging it. In the 1st Quote, the chief debtor nation, the United States, is hurt least. In the 2nd Quote, the chief creditors are hurt least, and actually buy up the distressed assets from the debtor nations !

He further muddies things by arguing that China, the chief creditor, is dependent on Chimera (and through that, the chief debtor, the U.S.).
“They have nowhere else to go. They have no other strategy that they can adopt in time to cushion the blow. Their exports are contracting at a terrifying speed. They want at all costs to avoid any kind of big shift in policy. They want to keep, as far as possible, the U.S. importing Chinese goods. They want to keep currencies stable.

Saturday, May 2, 2009

Japan's Lost Decade

As can be seen by the above graph, Japan's "Lost Decade" wasn't nearly as traumatic as has been insinuated by American economists - ranging from garden variety libertarians, to liberals like Paul Krugman. Japan's unemployment peaked at 5.5 % in 2003, after hovering around 2 % in 1990. In the United States, 5.5 % is not far from what is considered 'normal' unemployment.

In discussing Japan's perennially lower unemployment rates, the BLS wrote in a 1984 paper that "Institutions, attitudes, and economic and social structures are certainly different in Japan than they are in the United States. Indeed, it is in these differences, rather than in statistical methods and definitions, where we find the real reasons for the low unemployment rates in Japan." Businessmen in Japan are judged by more than the ability to turn a profit - and keeping people employed is part of that.

The "Lost Decade" is really about lower growth and profit in the eyes of most Western economists. Theirs is the liquidationist mindset. Bankrupt the weak, with less regard to the social cost, so that more profitable companies can thrive. And, in terms of growth, Japan has slipped substantially against their international competitors. Its share of world GDP has been cut by over 50 % since peaking in 1994. This would not be tenable in the United States, whose leadership, by and large, seeks to maintain a global empire.

Part of how Japan weathered the 1990's was by expanding their public balance sheet, employing people and stimulating demand through government spending. In many cases, with the proverbial bridge to nowhere. Public debt has grown to 170 % of GDP, according to the CIA Fact Book. But, this is mitigated to an extent by reserves totaling nearly a trillion dollars.

Japan today is still a prosperous country, with a GDP per person basically equivalent to Germany. And, a lower level of inequality than the United States, with a Gini coefficient of 24.9, versus 40.8.

Speaking with doom about "going Japan" seems to be at odds with what actually happened. Are we heading for a Japan-style "Lost Decade" ? Given the current economic environment, we (the average American) should be so lucky.

GDP Sources:1, 2
Japan Unemployment Source: 1

Friday, May 1, 2009

Don't Count On It, Mr. Zimerman

From the UK Guardian:
Polish pianist stops show with anti-US tirade

'Get your hands off my country' ... Krystian Zimerman's outburst stunned the crowd.

Krystian Zimerman, the great Polish concert pianist, is usually a man of few words. He doesn't, as a rule, talk to the audience during performances. He says little or nothing in the press between his all-too-rare concert tours - not even about his habit of traveling everywhere with his own Steinway grand piano...

So he triggered more than the usual rumble of discomfort when he raised his voice in the closing stages of a recital at Los Angeles' Disney Hall on Sunday night and announced he would no longer perform in the United States in protest against Washington's military policies.

"Get your hands off my country," Zimerman told the stunned crowd in a denunciation of US plans to install a missile defence shield on Polish soil. Some people cheered, others yelled at him to shut up and keep playing. A few dozen walked out, some of them shouting obscenities.

"Yes," Zimerman responded with derision, "some people when they hear the word military start marching."

Zimerman's 'outburst' was obviously planned out - and therefore, not an 'outburst', really. Throw in the angry picture, and the 'tirade' descriptor, and the reader is left feeling that this guy is unhinged. It's the sort of newspaper writing that demonstrates a reflexive bias against critics of the government, or those in power. Of course, that's part of the job, and that's partly how one gets the job. Telling a potential boss in an interview that you aim to take down powerful people (i.e. them ?), usually only works in movies.

As one of the world's best musicians, Zimerman doesn't have to answer to a boss, and has the kind of freedom that most people don't. But, Poland is in a contested sphere of influence between the U.S., Eurozone and Russia. So it's unlikely that his wish will come true, in the long run.