Wednesday, July 29, 2009

Traveling and Playing Music

Am playing at a music festival through early August , so posts will be less frequent and/or less detailed.

Monday, July 27, 2009

Storm Clouds over Globalization

Martin Wolf (7/14):
Those who expect a swift return to the business-as-usual of 2006 are fantasists. A slow and difficult recovery, dominated by de-leveraging and deflationary risks, is the most likely prospect. Fiscal deficits will remain huge for years. The alternatives – liquidation of excess debt via either a burst of inflation or mass bankruptcy – will not be permitted. The persistently high unemployment and low growth may even threaten globalisation itself.

New York Times (7/18):
Trade and climate policy have become increasingly entangled. A failure to agree on how to address global warming could undermine half a century of opening world trade.

Sarkozy (6/15) :
"Either we have reason or we will have revolt. Either we have justice or we will have violence. Either we have reasonable protection or we will have protectionism.

It is irresponsible to believe that the financial markets can continue to impose their obsession with short-term profit on the entire global economy, and on society"

Sunday, July 26, 2009

Infrastructure Bottlenecks

The World Bank recently noted the impediments that poor infrastructure is causing to growth in developing countries.

For instance, I have been looking at starting a music festival in a relatively remote region of an ASEAN country I have ties with – but in hosting a festival it's imperative that there be supportive facilities. Are the water, electrical, sanitation and communication systems reliable ? Are the roads relatively easy to travel on ? Rustic doesn’t often work when it comes to large scale productions, of any type. Yet this type of infrastructure can only be built by the state.

In a related way, Doug Henwood notes that, in terms of developing a new growth sector:
where the U.S. is still very competitive internationally—aero-space, airplanes, pharmaceuticals, computers, software, and that sort of thing—all of these things have very deep government involvement. To get some kind of new transformational energy sectors, clean technology is going to require deep government involvement, expenditure of large sums of money.

Growth - especially into new geographic areas, or new industries, requires state support. But a political hostility to taxation, regulation, and public supervision builds within a society dominated by wealthy private interests. This ultimately can undermine the ability of the state to engage in this type of support.


It's interesting to note that developing nations that were formerly 'Communist' are among the most high growth areas in the world today. This is because a strong central government and a nationwide network of infrastructure was developed during the period of 'Communist' rule. Of course, China is the best example of this. It also leads one to wonder if these type of infrastructure requirements can be met in states who do not have a strong central government, or have been under unbroken Western domination.

Friday, July 24, 2009

Why Obama Didn't 'Hit it Out of the Park' on his Health Care Speech

Krugman, a very smart fellow , doesn't understand that it has nothing to with what Obama said, or didn't say in his prime time speech.

Obama's honeymoon is over with the Fineman's of the world because the ruling class (and its mouthpieces) does not feel Obama is 'needed' as much. The financial system is no long obviously under collapse, and the survivors - the Sachs and JP Morgans of the world, are profitable again. No need to worry about finding a great unifier, or savior, to keep the masses from getting rowdy.

Wednesday, July 22, 2009

Bringing India Into the Fold

India’s rapprochement with the West has been going on since the 1990’s; economically this has meant the selling off a state owned enterprises, and privatization of the economy. Politically, it has meant the continued development of bourgeoisie democracy and parties aligned with that process.

The recent trip by Secretary of State Clinton continued this engagement, and in a way, was the U.S. attempting to play catch-up to ties already developed by E.U. states.

Three aspects of the trip: 1) Two U.S. designed nuclear power plants will be built in India, with others in the approval process. 2) U.S. designed components will be allowed on Indian non-military satellites 3) U.S. military manufactures will be allowed to bid on the upcoming multi-billion dollar contract to upgrade India’s air force.

All of these deals will allow a certain amount of state-protected technology to be transferred to India. It means a good deal of money for U.S. based corporations.

These are the same type of technology transfers that China has been blocked from obtaining. It’s a question – why India, and why not China? One can guess that China is seen as having the ability to disrupt U.S. imperial power, whereas India – much poorer on a per capita basis, and more geographically constrained, is not seen a threat. Bolstering India – and in particular its military, is probably seen as a good way to disrupt China’s influence in South Asia. The two countries fought a war a generation ago, and their border is still under dispute.

It is uncertain how all this affects climate change talks. If the goal is not only contracts for U.S. corporations, but also geopolitical, it might mean that some sort of deal is struck with India which would disrupt the rather weak BRIC alliance on this and other matters.

1"The U.S. / India Nuclear Deal" - Council on Foreign Relations

Monday, July 20, 2009

The New York Times (Politely) Endorses a Trade War

This is rather significant, though the momentum has been building for some time.

Trade and climate policy have become increasingly entangled. A failure to agree on how to address global warming could undermine half a century of opening world trade.
There are precedents for using trade measures for environmental goals. The Montreal Agreement to curb the use of ozone-depleting gases included trade controls on such substances. And the World Trade Organization has suggested that levying taxes at the border on the carbon content of imports would be acceptable if they are devised properly — in the same sort of way as some consumption taxes are levied on imports, ensuring equal treatment with domestic products.
Without such a deal, trade is going to have problems. Failing to conclude the current negotiations will be the least of them.

Given the emphasis on environmental issues in U.S. schools, it would make sense that any trade war come in an green-friendly package. Too much effort has been spent propagandizing about to Smoot-Hawley to finesse it any other way.

Sunday, July 19, 2009

Is Obama No Longer "Needed" ?

Obama’s candidacy was essentially an escape valve for the ruling class, aware of popular discontent after eight disastrous years of the Bush presidency. This culminated with the collapse of Lehman Brothers during the presidential campaign. It was shortly after this that Obama moved decisively ahead of Mc Cain in the polls, and was praised in the media for his calmness under pressure. Colin Powell endorsed him as a 'transformational figure'.

The nervousness in ruling class circles at the time was noted in Hank Paulson’s recent testimony before Congress:
The Bush administration and Congress discussed the possibility of a breakdown in law and order and the logistics of feeding US citizens if commerce and banking collapsed as a result of last autumn's financial panic, it was disclosed yesterday.

Now that there is a belief that collapse is no longer imminent, it is quite likely that Obama’s political and media honeymoon is over. As the ruling class feels more secure, attacks on the progressive aspects of his policies, weak and inadequate though they are, will become more intense.

The first such broadside occurred when Steve Balmer and the U.S. Chamber of Commerce protested Obama’s proposed tax increase on corporate foreign profits. Said Balmer,“We’re better off taking lots of people and moving them out of the U.S. as opposed to keeping them inside the U.S.”

The mounting resistance to health care reform is also noteworthy, in that it reflects a growing confidence in confronting the Obama. Though factually, it is ludicrous that there are complaints about the public cost of expanded health care, after trillions of dollars in guarantees and bailouts for Wall Street.

But this is the logic of a class-based society that has become so very polarized and unequal. If the “haves” continue on this path of unadulterated greed, in time, they will threaten the very political stability of the system that has enriched them.

Wednesday, July 15, 2009

Are Depressions Necessary ?

Asks this American Prospect piece.

Perhaps the question is not if they are necessary, but if they are inevitable within capitalism. Tendencies towards aggregate overproduction and underconsumption seem built into a system whose internal mechanics consist of private firms competing against each other, with the goal of maximizing profit. Overproduction, or excess capacity, through the inevitable turf wars that come with attempts to increase market share. Underconsumption, as companies squeeze for profit, and workers do not receive full compensation for the value they create.

While the business cycle is a smaller manifestation of these contradictions, the system also seems to periodically require a mass liquidation of weaker companies, and sectors. The associated liquidation of debt and lower profit investment allows for the market expansion of higher profit companies and industries, ultimately encouraging investment and renewed growth.

What has prevented depression since the 1970’s oil shocks is a binge of deficit spending within the developed world. Governments have run deficits to support consumption and therefore employment, while private households have done so to maintain living standards in the face of stagnant incomes.

It seems likely that this era of deficit spending is at an end. Absent the ability to resurrect the deficit bubble, this period of extended recession, and stagnation, could grind into something even more destabilizing for the current political order.

Sunday, July 12, 2009

RFID Chips and State Power

This both illustrates the general desire for personal freedom in the American public, and the government's desire to circumvent it.

Climbing into his Volvo, outfitted with a Matrics antenna and a Motorola reader he'd bought on eBay for $190, Chris Paget cruised the streets of San Francisco with this objective: To read the identity cards of strangers, wirelessly, without ever leaving his car.

It took him 20 minutes to strike hacker's gold.

Zipping past Fisherman's Wharf, his scanner detected, then downloaded to his laptop, the unique serial numbers of two pedestrians' electronic U.S. passport cards embedded with radio frequency identification, or RFID, tags. Within an hour, he'd "skimmed" the identifiers of four more of the new, microchipped PASS cards from a distance of 20 feet.

There are many centers of power in the United States, as by design, and this has prevented a consolidation of centralized power - and maintained bourgeoise democratic rule through many periods of crisis. 'Checks and Balances' hinder the move from republicanism towards dictatorship, as happened with the Roman empire. But growing inequality, and the resulting desire to control a potentially restive population, puts pressures on republican and democratic institutions.

The U.S. has a comparatively strong tradition of internal democracy compared to other nation states. (Not against an ideal, of course) These type of I.D. programs, which use to technology to eliminate personal privacy, put 'the people' overtly at odds against their own government. This could undermine the political foundation of the United States over time.

Friday, July 10, 2009

The Tottering G8 and IMF

The headline , "Despite Obama's pledge, G8 Makes Little Headway on Climate Change", says it all.

Is a trade war, in the guise of an environmentally friendly carbon tariff, on the way ?

Meanwhile, the World Banks is having to sell bonds, and possibly gold. Not a good sign if you're supposed to be the lender of last resort. But developing nations don't trust it given that the traditional powers don't want to give up significant control.


Related : Reforming the IMF

Thursday, July 9, 2009

The Politics of Destabilization

The accusations from Iran and China against Western meddling are reactions to what could be called the politics of destabilization. This is how governments will be tested as the 'peace bubble' (relatively speaking) continues to inflate under the threat of nuclear warfare. Unable to move forward with total war, countries will use their economic and security apparatus to promote fissures in potential rivals. With their military a stone's throw from Western China, it's easy to see how the U.S. could destabilize Xinjiang province by supporting Islamic movements, just as they did in Afghanistan to the Soviet Union. This is not to say they are or will. A stable China is too important to American big business at the moment. But if necessary, it would not be a difficult process to implement.

Sunday, July 5, 2009

The Obama Administration and the Honduras Coup

The Obama adminstration faces a dilemma with regards to the recent coup in Honduras. On the one hand, Obama does not want to 'lose Honduras' to the left-oriented president Manuel Zelaya and trigger a further decline in U.S. influence in its backyard. On the other, supporting the coup , or not fully backing the ousted president, puts a lie to his words of new and humble United States foreign policy.

The U.S. has the ability to alter the dyanmic of the situation if it so wants. 70 % of Honduras' exports go to the United States. There is also a sizeable, though now suspended, aid package - and a long established military presence in the country.

The Organization of American States has suspended Honduras' membership and looks poised to bring in other regional leaders to support Zeyala. Latin America's greater political independence really began with the failed coup of Hugo Chavez in Venezuela , a coup met with favor by the New York Times and the State Department. Chavez's reinstatement opened the door to a new and local source of support for various left political groups in Latin America.